THE VOLVO GROUP SUSTAINABILITY REPORT 2012 O UR JOURNEY TOWARDS SUSTAINABLE TRANSPORT SOLUTIONS Content STRATEGIC APPROACH 3 CEO comment 4 About the Volvo Group 6 Sustainability approach 13 Front cover: Tumelo Myeza has Governance 19 started as a Skills for Risk management 22 Life apprentice, having graduated from Star for Life schools in South Africa. She is now the FUTURE TRANSPORTS 24 first woman working as a technician at Volvo Sustainable transport solutions 25 Truck’s Pinetown Infrastructure 27 workshop. Carbon dioxide-neutral transport 28 Electromobility 30 Intelligent vehicles 32 Freight efficiency 34 Volvo Group Venture Capital 36 SOCIETY ENGAGEMENT 37 The Volvo Group – a part of society 38 Research partnerships 39 Professional training 41 Traffic safety 44 Commuting 46 Global partnerships 47 VALUE CHAIN 49 Product development 50 Purchasing 58 Production 60 Distribution and service 71 Product in use 77 Re-use 80 ADDITIONAL INFORMATION 82 About this report 83 Standards 86 Memberships 87 Independent recognition 88 Contact 91 This document is a PDF-version of the Volvo Group’s Sustainability Report 2012. The complete report is available on www.volvogroup.com/sustainabilityreport. This report was not audited by third party. For more information, read ‘About this report’ under the section ‘Additional information’ of this report. Pages 3–23 As a provider of commercial trans- port solutions, the Volvo Group’s products and services play an important part in our everyday lives – they enable people and societies to fulfill their basic needs and are drivers for economic growth. Strategic approach Content CEO comment 4 About the Volvo Group 6 Sustainability approach 13 Governance 19 Risk management 22 STRATEGIC APPROACH CEO comment A bus transporting commuters early one morning in Curitiba, Brazil. This is a positive example of the Volvo Group’s effort to create sustainable transport solutions that take into consideration the environmental, social and economic dimensions of sustainability. The Bus Rapid Transit system, the type used in mitment to contribute to sustainable develop- Curitiba, has been developed by the Volvo ment through our operation. “ The Volvo Group’s Group for many decades. Today, when nearly Several of the global challenges facing the half of the world’s population lives in cities, the world are directly or indirectly connected to vision is a bold vision need for sustainable transport solutions is the infrastructure and transport sectors: cli- that clarifies our com- increasing. Transport systems must have high mate change, population growth, urbanization capacity, low environmental impact and must and the shortage of natural resources and mitment to contribute to be safe. At the same time, as supplier, we must raw materials. The Volvo Group’s global pres- sustainable develop- adapt to the different economic conditions that ence provides us with the opportunity to act exist in the many societies in which we operate. and contribute to a positive trend. ment through our opera- The Volvo Group’s vision is to become I am convinced that sustainable products and tion.” world leader in sustainable transport solu- services will be a prerequisite for us remaining a tions. It is a bold vision that clarifies our com- globally competitive group in the future. I am 4 VOLVO GROUP SUSTAINABILITY REPORT 2012 STRATEGIC APPROACH also convinced that our vision will make us bet- ter at recognizing new business opportunities “I believe that only a sus- and thus capturing new market share, while tainable company, with contributing to sustainable development. Traditionally, sustainability in the automo- sustainable growth, is tive industry has first and foremost involved able to deliver sustaina- reducing the impact of products on the envi- ronment. Naturally, the environmental dimen- ble solutions.” sion is still very important, but to achieve sus- tainable transport solutions, we must also take into consideration the social and eco- nomic dimensions. I see a future with a highly effective transport system, with energy-effi- lished in our new Code of Conduct. Our new cient solutions that are safe and secure both Code will also send out a clear message for humans and goods. regarding what stakeholders can expect of us. During 2012, the Volvo Group implemented I believe that a responsible company has a number of activities that have brought us better prerequisites for becoming a credible closer to our vision. We are now in a period of business partner. To meet society’s needs for extensive product renewal and the launch of sustainable transport solutions, we must pri- our new Volvo FH series is very interesting marily cooperate with our customers but also from an energy-efficient and safety aspect, with other players in the industry and society. which will help our customers to make their To operate in many of our new markets, it is work even more effective. Other examples also a prerequisite to contribute to social are our methane-diesel truck that can oper- development. ate on renewable gas and the hybrid buses For example, in 2012, we initiated a train- that are able to save up to 39% in fuel in cer- ing course for mechanics in Ethiopia, trained tain applications. excavator operators in India and continued to I believe that only a sustainable company, promote our successful traffic-safety project with sustainable growth, is able to deliver in Brazil. This is in line with our philosophy to sustainable solutions. To demonstrate the contribute to social development, while creat- seriousness of our vision, the Volvo Group ing value for the Volvo Group. Another exam- has revised our CSR and sustainability strat- ple that I would like to highlight is the Volvo egy and is incorporating it into our daily work. step, our one-year training course for unem- I feel that we have a method that is clearly ployed young people in Sweden, which connected to our business model and our started in 2012 with 4,000 applicants for the strategies. The model handles risks, supports 400 first positions. The Volvo step is an our business and contributes to sustainable investment in securing our supply of exper- development. tise, while contributing something to reducing The Volvo Group is active in 190 markets unemployment in young people in Sweden. worldwide, which are characterized by various One lesson learned from this three-year pro- political, legal and cultural systems and our ject is that we in the industry must listen growth in the past decade derived primarily more to young people. They know what they from new markets. Shared core values are want, which includes working in the industry. “ This is in line with our required to ensure that our work method is I am very proud of the fact that the Volvo the same worldwide. In 2012, our Board of Group has been inspired by the principles of philosophy to contribute Directors adopted a new Code of Conduct, the Global Compact since 2001 in our effort to social development, which is based on the principles of the Global for sustainable development. The Global Compact, the UN initiative for companies’ Compact provides us with an excellent foun- while creating value for global responsibility, which includes the princi- dation on which to stand and this year’s the Volvo Group.” ples pertaining to human rights, labor issues, report explains how we integrate the princi- the environment and corruption. The Volvo ples with our value chain and our initiatives to Group’s commitment to these issues is genu- contribute to sustainable development. This ine and I trust that every employee will comply report presents what we have achieved but with these values and the guidelines estab- even more importantly, our road ahead. 4 VOLVO GROUP SUSTAINABILITY REPORT 2012 5 STRATEGIC APPROACH About the Volvo Group The Volvo Group is one of the world’s leading manufacturers of trucks, buses, construction equipment and marine and industrial engines. The Group also provides complete solutions for financing and service. The Volvo Group, which employs about 115,000 people, has production facilities in 18 countries and sells its products in more than 190 markets. In 2012 the Volvo Group’s sales amounted to about SEK 304 billion. The Volvo Group is a publicly-held company headquartered in Gothenburg, Sweden. Volvo shares are listed on OMX Nordic Exchange Stockholm. Strong positions • One of the world’s largest manufacturers of trucks • One of the largest within construction equipment • One of the world’s largest manufacturers of heavy-duty diesel engines • Global market presence This information is extracted from the Volvo Group Annual Report 2012. 6 VOLVO GROUP SUSTAINABILITY REPORT 2012 STRATEGIC APPROACH Strong brands By selling products under different brands, the Group can address many different cus- tomer and market segments in mature as well as growth markets. Global strength Share of net sales by market 2012 Since the streamlining towards commercial vehicles was initiated more than ten years ago, the Volvo Group has significantly strengthened its positions outside the tradi- 37% tionally big markets of Western Europe and North America. Positions have been moved 23% forward by acquisitions, primarily in Asia, and 23% by the expansion of the distribution and ser- vice networks in for instance Eastern Europe and South America. In the year 2000 mar- kets outside of Western Europe and North America accounted for 16 percent of Group sales. In 2012 that share had grown to 47 10 % Rest of the world percent. 7% Volvo Group net sales Share of net sales Geographic distribution of employees 2000–2012, SEK bn Trucks, 63% Construction Equipment, 21% Europe 54% 303.6 Buses, 7% North America 17% Volvo Penta, 2% South America 6% +133% Volvo Aero, 2%* Asia 20% Customer Finance, 3% Other countries 3% 130.1 Other, 2% * Volvo Aero was divested on October 1, 2012.