VOLVO CAR corPoraTION sustainability report 2005 We will be happy to receive your comments on this report, and to answer any questions you may have about Volvo Cars and corporate citizenship. Please contact us at: Volvo Car Corporation, Public Affairs, Corporate Citizenship, SE-405 31 Göteborg, Sweden. Tel. +46-31-59 00 00, e-mail: [email protected], or visit us at www.volvocars.com/citizenship Volvo Car Corporation PA/PV 501252803-06 ENG. Printed in Sweden on non-chlorine bleached paper. CONTENTS 2 Our responsibility Defines the areas where we believe we have the greatest opportunity to positively impact society on a global, national and local level. 3 Corporate citizenship management Short description of the process in place During 2005 the automotive industry experienced a cars that are fun and exciting to drive, that capture the to define the issues facing our stake- challenging year. Higher oil prices strongly influenced imagination of the main public and substantially improve holders and how we incorporate these development in many countries. European car manu- energy efficiency. issues and improve our product and facturers were also facing growing competition from Asia, Globalisation is the main force that shapes today’s society. along with tougher price competition in the US. The many society. As a small company with a worldwide presence, 4 Safe and sustainable mobility global natural disasters that occurred during the year led the Volvo Cars products and brand need to respond to a Volvo Cars has developed a new way to an increased global concern for environmental issues. wide range of requirements and customer aspirations. of working to encourage greater This trend, coupled with higher fuel prices and an increase As a global employer we also influence local communities sustainability by converging safety and in environmental regulations and incentives, made the via our production and sales facilities. environment and extending strategic public consider fuel economy more than ever before. A healthy and safe workplace is top priority wherever planning. Volvo Cars sold 444,000 cars, a reduction of 3 percent we operate in the world. The concept of a healthy work- 14 Experience the brand compared with our record year 2004, mainly due to a decline place means more than employees not becoming ill, Take a tour of the recently opened in the US market. Our big product news was the new con- it also means empowerment, mutual respect and personal Brand Experience Centre at Volvo Cars vertible, the Volvo C70, which was launched in September. development. where the core values are visualised. During 2005 we focused on building up resources for the This year our Sustainability Report focuses on the 16 Globalisation future. We implemented a number of structural measures above three mentioned areas; safe and sustainable mobility, A closer look at our global impact and and streamlined our operations so that we stand on a firm workplace health and safety, and globalisation. They are our efforts during 2005 to maximize our base. Our workforce shrank by about 1,400 through all of great importance to us. I am very confident about positive contribution to society. planned retirement and fewer consultant services. what we have achieved so far, and our sustainability Streamlining will continue during 2006 as part of the scorecard continues to show a positive trend. I am also 24 Health and safety Describes the steps taken during process of running a profitable company in an increasingly aware of the many future challenges facing us. Global 2005 to reduce sickness absenteeism competitive environment. Our long-term objective of selling results can only be achieved through cooperation and through positive engagement and 600,000 cars in 2009, with an after tax return on sales of partnerships, and this report serves as one of the tools in preventative programmes. 5 percent, remains unchanged. I strongly believe that it engaging with our stakeholders. will be achieved by the comprehensive product plan that I would like to use this opportunity to restate Volvo Cars’ 32 Welcome to the world of Volvo Cars Provides company details and a brief we will present during the next coming years. We are commitment to the ten principles of the Global Compact. history of Volvo Cars, as well as, informa- facing the most intensive period ever in the company’s They continue to serve as guidelines as we strive for a tion regarding the global network of history and during the next three years we will launch sustainable future. sales and marketing units. seven new models. I hope you will enjoy reading the report. Volvo is one of the strongest brands in the automotive 34 This report Demonstrates the systematic work industry. The company’s founders stated from the start behind the report, evaluation and that the operations should be based on care for the human improvements in reporting, as well as, being. That is why safety, quality and environmental care stakeholder engagement and issue are the core values of Volvo Cars. They influence our definition. business, our cars and our behaviour. They are also encom- FREDriK Arp President and CEO, Volvo Car Corporation 36 Sustainability scorecard, 2005 passed in our long-term strategy on safe sustainable Reported facts, statistics and trends mobility: Volvo Vision 2020. The objective is to produce from 2005. 37 GRI-index Index of subjects and referenced page numbers within the report. 37 Prizes and distinctions Selected awards received and distributed by Volvo Cars. This symbol indicates that further information can be found on www.volvocars.com/citizenship This symbol indicates that the data is a scorecard indicator within the area of sustainability at Volvo Cars. 2 3 Our responsibility Corporate citizenship management Our vision is to be the most desired and successful premium car brand by creating the Corporate citizenship is an integrated part of how the company is run. Volvo Cars is governed by our safest and most exciting car experience. This vision guides us in our daily work. Our brand core values. They are central to how we plan our business. Corporate citizenship is, above all, a mindset is global and so is our influence, even though Volvo Cars is a relatively small company. whereby people also consider the social and environmental consequences of their day-to-day decisions. Our roles can be defined on three levels: as a carmaker, as a local and global player. Our business objectives and our corporate citizenship commitments feed into each other. ParT OF DaiLY BUSINESS PLANNING DEVELOPMENT OF COrpOraTE Citizenship Manager. The main purpose of Our core values are safety, environment and quality – all human-centric values. Our business plan is the basis on which all our ciTIZENShip the council is to propose cross-functional From our perspective, we do not just have responsibilities, we act on them. Therefore, our activities are managed and run. As illustrated We have an integrated approach to corporate strategies and objectives related to corporate responsibility is to live up to these values – because if we fail, the brand suffers and in the figure below, the starting point is our citizenship; however, we understand that citizenship. ultimately so do our sales. brand and our ambition to be the number one expectations regarding corporate behaviour The development of our working proced- premium brand within the automotive sector. vary over time. We have therefore established ures is also discussed in this forum, together In the end, it is our stakeholders that decide how well we shoulder our responsibilities. This ambition builds on our core values safety, two specific forums to develop our understand- with ways and means of ensuring that corpor- Our challenge is to continuously live up to their expectations. We actively engage our environment and quality. To help us focus, ing of and working approach to corporate ate citizenship is both successfully integrated stakeholders in dialogue and use various channels, in a methodical way, to amass a wealth we have four areas of priority – our common citizenship. into our business plan and in the way this of information that helps us to be a responsible corporate citizen. agenda: Customer satisfaction number one, The Corporate Citizenship Steering plan is implemented. Profitable growth,N ext Generation of Cars, and Committee is chaired by the CEO and consists Next Generation of Leaders and Employees. of another five members from executive INTERNAL COMMUNicaTION All activities must support these overall priority management representing Personnel; Our employees are one of the main target Our stakeholders include our customers, the clusions regarding the seven goals presented take responsibility for the environment and areas (see figure). Purchasing; Business, Brand and Product groups for this report. Plans and results are communities in which we operate, employees in Mobility 2030 within the framework of the combat corruption. The strategic business plan has a five year Strategy; Marketing, Sales and Service and communicated to every employee in the course and business partners – through dialogue and WBCSD Sustainable Mobility Project. We identify our material issues in this area perspective. Volvo Cars’ success is reliant on Public Affairs. The committee deals with of their ordinary work through our in-house active investigation we gain insight into their In our role as a carmaker it is crucial for us through global networks such as UN Global the strength of the brand. The core values strategic issues and development, and reports magazine Agenda, through managerial reality. By identifying what is important for to identify product issues we need to work Compact Nordic Network, our stakeholder of safety, environment and quality all work progress on objectives within the field of communication, and the CEO’s monthly news- our stakeholders we can develop a complete with.