Climate Change Data

Environmental Metrics

ESG Focus Areas

• Economic Responsibility
• Environmental Responsibility
• Social Responsibility

Environmental Achievements

• Reduced energy consumption per net sales.
• Reduced water consumption.
• Maintained 96% of employees at production units working in accordance with certified environmental systems (ISO 14001:2008).
• Volvo Group became the world’s first vehicle manufacturer to join the WWF Climate Savers Program.
• Launched a new foundry with 45% reduced energy consumption and no coal dust production.
• Volvo Trucks presented the world’s first carbon dioxide-neutral automotive plant in Ghent, Belgium.

Social Achievements

• Reinstatement of former employees following market recovery.
• Adoption of a new global policy for Workplace Safety, Health, and Wellbeing.
• Development of a new employee survey to measure commitment.
• Volvo Polska awarded the Top Employer Polska title.
• Volvo IT topped the ranking in the IT consultant category in ‘Karriärbarometern’.

Governance Achievements

• Implementation of a new management structure for governance.
• Introduction of ten horizontal Group Issue Boards (GIBs).
• Updated anti-corruption compliance program rolled out across the Group.
• Launched a new e-learning on the Volvo Group’s Code of Conduct (almost 19,390 employees completed the training).

Climate Goals & Targets

Environmental Challenges

• Climate change, depleting natural resources, uneven wealth distribution.
• Globalization and shift towards mega-cities.
• Increased focus on ‘Quality of life’ in the Information Society.
• Traffic safety concerns.
• Demand for environmentally enhanced products.
• Decline in interest in MST education.
• Increased expectations on companies to assume responsibility.

Mitigation Strategies

• Review of CSR strategy (to be completed by end of 2012).
• Focus on energy-efficient transport solutions and renewable fuels.
• Development of telematic solutions for efficient transport planning.
• Cooperation with authorities and academia to improve safety.
• Development of energy-efficient engines, hybrid engines, and vehicles operating on renewable fuels.
• Promoting interest in science and technology through outreach to young people.
• Transparency and dialogue with stakeholders.

Supply Chain Management

Supplier Audits: 25% of automotive product suppliers completed self-assessment; 500+ non-automotive suppliers assessed.

Responsible Procurement

• Master agreements include compliance with Code of Conduct.
• CSR requirements integrated into sourcing processes.
• Self-assessment tool and specific requirements for suppliers.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Carbon dioxide emissions, peak oil.

Opportunities

• Development of energy-efficient products and renewable fuels.

Reporting Standards

Frameworks Used: GRI

Certifications: ISO 14001:2008

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Hybrid technology (I-SAM), vehicles operating on renewable fuels (BioDME, methane diesel).

Awards & Recognition

• Dow Jones Sustainability World Index (DJSI World), OMX GES Sustainability Index, OMX GES Ethical Index, Nordic Sustainability Stars, Global Challenges Index, Folksam Index, ECPI Indexes.

Environmental Metrics

ESG Focus Areas

• Sustainable transport solutions
• Environmental care
• Traffic safety
• Employee engagement
• Responsible sourcing

Environmental Achievements

• Reduced CO2 emissions in Volvo trucks by 40% since 1975
• Reduced nitrogen oxides and particulate matter emissions from Volvo trucks by more than 90% since the early 1990s
• Achieved a CO2 neutral assembly plant in 2007
• Decreased energy consumption in own production processes by 46% per produced unit since 2004
• Sold 400 hybrid buses

Social Achievements

• Launched a new Diversity and inclusion policy
• Launched a Learning strategy and new global development programs for leaders
• Launched a new Volvo Group Recruitment policy
• 92% of employees responded to the Volvo Group Attitude Survey
• Volvo do Brasil rated as the best employer in Brazil for the second time

Governance Achievements

• Olof Persson assumed the position of Group President and CEO
• Carl-Henrik Svanberg proposed as new chairman of AB Volvo
• Established a new CSR and Sustainability committee
• Launched a new Competition Law Compliance Program
• 9,023 employees received training on the Code of Conduct
• 10,107 employees were trained in anti-corruption

Climate Goals & Targets

Environmental Challenges

• Climate change
• Oil resource depletion and need for alternative fuels
• Shortage of natural resources and raw materials
• Safety and security concerns
• Shortage of skilled employees
• Economic cycles impacting demand for commercial vehicles
• Stringent government regulations on environmental issues
• Corruption in some operating markets

Mitigation Strategies

• Investing in R&D for energy-efficient engines, hybrid drivelines, electrified vehicles, and vehicles operating on renewable fuels
• Improving energy efficiency and logistics systems
• Implementing a Code of Conduct and anti-corruption program
• Developing a risk management process
• Investing in employee training and development
• Collaborating with stakeholders to develop sustainable transport solutions
• Implementing responsible sourcing practices
• Working towards carbon dioxide neutral production

Supply Chain Management

Responsible Procurement

• CSR requirements for suppliers since 1996, including self-assessment tool and specific requirements on social performance, work environment, workforce rights, environmental care, and business ethics

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products and alternative fuel engines

Reporting Standards

Frameworks Used: GRI Application Level B

Certifications: ISO 9001, ISO 14001, OHSAS 18001 (in some operations)

Third-party Assurance: PwC (for financial data); Third-party audit for environmental data collection process and ISO 14001 certification

Sustainable Products & Innovation

• Hybrid drivelines
• Vehicles operating on renewable fuels
• Energy-efficient engines

Awards & Recognition

• Inclusion in Dow Jones Sustainability World Index
• Top ranking in survey on responsible business practices conducted by Sweden’s largest institutional investors
• Inclusion in OMX GES Sustainability Index series and OMX GES Ethical Index series
• Inclusion in Global Challenges Index
• Second place in Folksam Index for responsible business enterprises
• Inclusion in ECPI Global Carbon Equity and ECPI Ethical Index Global

Environmental Metrics

ESG Focus Areas

• Sustainability
• Employee Engagement
• Diversity & Inclusion
• Health & Safety
• Environmental Care
• Customer Service

Environmental Achievements

• Reduced carbon emissions by 40 million tonnes (2009-2013)
• 22% reduction in fuel consumption in Optifuel Lab 2
• 20,000 kWh energy saved in Volvo CE Operations through idle electricity reduction
• Near 40% energy reduction in Changwon plant, South Korea
• Development of waste-heat recovery technology to reduce fuel consumption
• Launch of full-electric buses and Volvo electric hybrid buses for ElectriCity project

Social Achievements

• Launched 'thank you' postcard recognition program in Malaysia
• Internal Trainer Program at Volvo Financial Services in Beijing
• Diversity and Inclusion Week
• Volvo Global Dialogue with Global Works Council
• Improved employee engagement in Electromobility Sub-systems team
• Training program for professional technicians in Zambia
• Apprenticeships in Morocco and Ethiopia with increasing female participation
• Mystery Customer initiative to improve customer service

Governance Achievements

• Appointment of Martin Lundstedt as new President and CEO
• Strategic efficiency improvement program resulting in improved operating margin and cash flow
• Review of IT operations to improve efficiency
• GTO Internal Awards recognizing achievements in Safety, Delivery, Productivity, Environment, Diversity & Inclusion, and Quality

Climate Goals & Targets

Environmental Challenges

• Driver shortage in US trucking industry
• Need to reduce lead times in production
• Maintaining high uptime for customers
• Language barriers in global operations
• Competition in the truck market
• Market downturns in Brazil and China

Mitigation Strategies

• Investment in solutions to increase uptime (telematics, Uptime Center)
• Implementation of Poka-Yoke solutions to avoid human errors
• Development of automated manual transmissions (I-Shift, mDRIVE) for improved fuel efficiency
• Adaptation of products and services to better meet local customer needs (US market)
• Strategic Competitive Intelligence to gather data on competitors
• Strategic efficiency improvement program
• Partnership with Penske Truck Leasing to optimize service intervals

Supply Chain Management

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Electric buses
• Volvo electric hybrid buses
• Waste-heat recovery technology

Awards & Recognition

• WWF Climate Savers
• NMMA Innovation Award (Volvo Penta Forward Drive)

Environmental Metrics

ESG Focus Areas

• Product safety and security
• Emissions (products)
• Energy efficiency (products)
• Financial health
• Intelligent technology
• Business ethics and integrity
• Legal compliance
• Human rights
• Supply chain
• Customer success
• Admired employer

Environmental Achievements

• 9 Mton CO2 reduction in lifetime emissions from products
• 71 GWh/year in energy savings from 400 energy saving activities
• 11% CO2 reduction per produced unit since 2013 in manufacturing supply chain
• Annual CO2 saving of approximately 380 tons from optimizing full truck loads

Social Achievements

• Training of more than 30,000 drivers in India (Eicher)
• Training of close to 1,300 operators in India (Volvo CE)
• Training of close to 3,300 drivers in Brazil and Peru (TransFORM)
• Employee engagement increased from 71% in 2015 to 72% in 2016
• Lost Time Accident Rate improved by 23% compared to 2015 (1.06 vs 1.38)
• Zero fatal accidents for the second year in a row

Governance Achievements

• Implementation of brand-based organization with clearer commercial accountability for truck brands
• Completion of sale of external IT operation and outsourcing of IT infrastructure
• Game of Conduct launched to increase awareness of responsible behavior (73% completion rate)

Climate Goals & Targets

Environmental Challenges

• Lower net sales due to weaker demand in North America and South America
• Global downturn in construction equipment market
• EU antitrust investigation resulting in a fine
• Weak economic conditions in Brazil
• Competition in the commercial vehicle industry
• Geopolitical instability
• Changes in technology
• Customer satisfaction
• Reliance on suppliers
• Operation of plants
• Human capital risks
• Residual value commitments
• Intangible assets
• Contractual conditions related to takeover bids
• Complaints and legal actions
• Environmental risks
• Interest rate risk
• Currency risk
• Liquidity risk
• Credit risk
• Market risk from investments in shares

Mitigation Strategies

• Cost reductions and productivity gains
• Strengthening product portfolio
• Focus on growing service business
• Implementation of performance plan for Volvo CE
• Full cooperation with the European Commission
• Active risk management
• Continuous improvement initiatives
• Decentralized brand-driven organization
• Talent management and employee engagement programs
• Safety programs and initiatives
• Compliance programs and training
• Responsible purchasing program
• Life cycle assessments
• Currency hedging
• Maintaining a strong liquidity position
• Credit monitoring and follow-up routines
• Annual impairment tests for goodwill and intangible assets
• Diversified funding sources

Supply Chain Management

Supplier Audits: 88% of automotive product suppliers underwent CSR assessment in 2016

Responsible Procurement

• Code of Conduct
• CSR assessment of suppliers
• ISO 14001 certification for 73% of automotive product suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Changes in emission regulations

Opportunities

• Development of energy-efficient products and alternative fuels

Reporting Standards

Frameworks Used: GRI G4

Certifications: ISO 9001, ISO 14001, OHSAS 18001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 3: Good health and wellbeing
• Goal 9: Industry, innovation and infrastructure
• Goal 11: Sustainable cities and communities
• Goal 13: Climate action

Volvo Group's initiatives in safety, innovation, sustainable transport solutions, and climate action contribute to these goals.

Sustainable Products & Innovation

• Electric and hybrid buses
• Volvo I-Shift with crawler gears
• New integrated powertrain solutions for Mack and Volvo Trucks
• Volvo Co-Pilot system
• Hybrid wheel loader
• Autonomous wheel loader and hauler prototypes
• Volvo 7900 Electric bus
• Renault Trucks D Wide CNG truck
• New highly efficient gas-powered Volvo truck

Awards & Recognition

• Volvo FH won first position in the Fehrenkötter test
• Volvo Co-Pilot won ‘most innovative HMI feature’ in the Car HMI Awards 2016
• Volvo Penta won engine & propulsion system of the year award
• Volvo Penta received an IBEX innovation award for Easy Drain
• Volvo Group won the Gold Dolphin at Cannes

Environmental Metrics

ESG Focus Areas

• Sustainability
• Human Rights
• Climate Change
• Responsible Business
• Employee Well-being
• Supply Chain Responsibility

Environmental Achievements

• Total CO2 emissions from production facilities (Scope 1 & 2) decreased by 2% to 399,000 tons.
• More than 40% of total energy use came from low-carbon renewable sources.
• Reduced CO2 emissions from Volvo Group freight transport per produced unit by 20% by 2020 (achieved 20% reduction from 2013 to 2017).
• Introduced LNG-powered Volvo trucks with 20-100% lower CO2 emissions compared to diesel.
• Volvo Buses delivered over 3,800 electrified buses.

Social Achievements

• Employee Engagement Index increased to 75% from 72% in 2016.
• Launched 'Iron Women' program in Peru to train 100 women as truck drivers.
• Continued vocational training schools for mechanics in Africa.
• New Code of Conduct launched to address ethical business practices and human rights.

Governance Achievements

• New financial targets introduced: operating margin above 10% over a business cycle and no net financial debt for industrial business.
• New Volvo Group Code of Conduct launched.
• Improved compliance monitoring and reporting.

Climate Goals & Targets

Environmental Challenges

• Cyclical commercial vehicles industry.
• Geopolitical instability.
• Intense competition.
• Extensive government regulation.
• Change in technology.
• Stretched supply chain.
• Customer satisfaction.
• Reliance on suppliers and scarce materials.
• Operation of plants.
• Human capital.
• Human rights.
• Residual value commitments.
• Malicious intents.
• Corruption.
• Intangible assets.
• Contractual conditions related to takeover bids.
• Complaints and legal actions.
• Environmental regulations.
• Interest rate risk.
• Currency risk.
• Liquidity risk.
• Credit risk.
• Market risk from investments in shares.
• Impairment.
• Change of control clauses.

Mitigation Strategies

• Continuous improvement programs (Volvo Production System).
• Proactive risk management.
• Strategic partnerships.
• Investment in new technologies.
• Supplier assessment program.
• Employee engagement initiatives.
• Human rights due diligence.
• Diligent analysis before entering residual value commitments.
• Preventive and mitigating actions against malicious intents.
• Anti-Corruption Compliance Program.
• Intellectual property plan.
• Continuous assessment of intellectual property rights.
• Strong liquidity position and credit facilities.
• Active credit monitoring and follow-up.
• Diversified funding sources.
• Currency hedging.
• Annual verification of goodwill and intangible assets.

Supply Chain Management

Supplier Audits: 95% of automotive product suppliers underwent CSR self-assessment.

Responsible Procurement

• Supplier Assessment Program
• Key Element Procedures (KEP) on CSR and Environment
• Supplier Self-Assessment Questionnaire
• Sustainable Purchasing Program
• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products and alternative fuels

Reporting Standards

Frameworks Used: GRI G4

Certifications: ISO 9001, ISO 14001, ISO 50001 (some plants), OHSAS 18001 (some plants)

UN Sustainable Development Goals

• SDG 3 (Good Health and Well-being)
• SDG 9 (Industry, Innovation and Infrastructure)
• SDG 11 (Sustainable Cities and Communities)
• SDG 13 (Climate Action)

Volvo Group's initiatives contribute to these goals through sustainable transport solutions, safety programs, vocational training, and emission reduction efforts.

Sustainable Products & Innovation

• Electric buses
• LNG-powered trucks
• Electric excavator prototype

Awards & Recognition

• Italy’s Sustainable Truck of the Year 2018
• UITP Awards 2017 (ElectriCity partnership)

Environmental Metrics

ESG Focus Areas

• Climate change
• Safety
• Human rights
• Responsible supply chain
• Diversity & Inclusion

Environmental Achievements

• Reduced CO2 emissions per produced unit from freight transport by 15% compared to 2015.
• More than 800 energy-saving activities implemented since 2015, resulting in 130 GWh/year in energy savings.
• 43% of total energy use from renewable sources.
• Three landfill-free sites achieved.

Social Achievements

• Launched Stop, Look, Wave traffic safety program for children.
• Trained more than 1,050 students in vocational training schools in Ethiopia, Zambia, and Morocco.
• Increased employee engagement through Pulse Checks and improved dialogue.
• Implemented a new mental health toolbox.

Governance Achievements

• Launched a new Volvo Group Code of Conduct.
• Implemented a strengthened Sustainable Purchasing Program.
• Performed 35 supplier sustainability audits.
• Improved compliance programs for competition and anti-corruption.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to high demand.
• Premature degradation of emissions control component.
• Geopolitical instability and protectionism.
• Intense competition.
• Extensive government regulations.
• Technology shift and convergence.
• Fluctuating demand in cyclical industry.
• Scarce materials and conflict minerals.
• Human rights risks in operations and supply chain.
• Corruption and non-compliance with competition law.
• Data privacy compliance.
• Residual value commitments.
• Natural disasters, malicious intent, and accidents.

Mitigation Strategies

• Improved risk and crisis governance, capacity management, and volume planning.
• Made a provision of SEK 7 billion to address the emissions control component issue.
• Continuous monitoring of geopolitical situations and adaptation of strategies.
• Proactive risk management to anticipate changes in the competitive landscape.
• Investing in product and service development.
• Balancing R&D resources between traditional and new technologies.
• Continuous improvement and business agility.
• Robust and flexible supply chain, close collaboration with suppliers.
• Human Rights Due Diligence program, supplier sustainability audits, training.
• Anti-Corruption Compliance Program, due diligence of business partners, training.
• Group-wide data privacy compliance program.
• Processes and procedures within each Business Area to manage residual value commitments.
• Identifying and monitoring vulnerabilities, implementing measures to mitigate risks.

Supply Chain Management

Supplier Audits: 35 audits in 2018

Responsible Procurement

• Supplier sustainability requirements
• Supplier Code of Conduct
• Conflict Minerals Traceability Project

Climate-Related Risks & Opportunities

Transition Risks

• Emissions regulations

Opportunities

• Electromobility
• Alternative fuels

Reporting Standards

Frameworks Used: GRI Standards Core

Certifications: ISO 9001, ISO 14001, ISO 50001, OHSAS 18001

UN Sustainable Development Goals

• Goal 9: Industry, Innovation and Infrastructure
• Goal 3: Good Health and Well-being
• Goal 13: Climate Action
• Goal 11: Sustainable Cities and Communities

Volvo Group's initiatives contribute to these goals through sustainable transport solutions, safety programs, emission reduction efforts, and development of electric vehicles and public transport systems.

Sustainable Products & Innovation

• Electric trucks
• Electric buses
• Electric construction equipment
• Electric marine and industrial engines

Awards & Recognition

• Volvo Group University won two international gold awards for its online team training program Meet the Customer.

Environmental Metrics

ESG Focus Areas

• Climate
• Resources
• People

Environmental Achievements

• Reduced CO2 emissions per produced unit from freight transport by 18% compared to baseline 2013 (target was 20%)
• Implemented energy saving activities resulting in an annual saving of 170 GWh (target was 150 GWh/year by 2020)
• 48% of total energy use from renewable sources in 2019

Social Achievements

• Launched several employee wellbeing initiatives, including a Gemba Safety Race resulting in over 150 safety improvement ideas
• Continued to roll out Diversity & Inclusion Labs concept
• Launched Module II training for Diversity and Inclusive Leadership

Governance Achievements

• Published Modern Slavery Statements for relevant companies within the Volvo Group
• Strengthened internal procedures on sales to high-risk customers in conflict-affected areas
• Increased dialogue with employees through Performance Touchpoints and Volvo Group Global Pulse survey

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to material supply challenges
• Reduced order intake leading to production adaptations and employee reductions
• Market slowdown in the second half of the year

Mitigation Strategies

• Improved and secured capacity management and volume planning
• Open dialogue with trade unions to manage fluctuations in demand
• Intensified work to adapt the company for the future

Supply Chain Management

Supplier Audits: 55 supplier sustainability audits in 2019

Responsible Procurement

• Supplier Code of Conduct
• Supplier Sustainability Assessment Program
• Sustainable Minerals Program

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI, UN Global Compact

Certifications: ISO 9001, ISO 14001, ISO 45001, ISO 50001

UN Sustainable Development Goals

• Goal 3
• Goal 7
• Goal 8
• Goal 9
• Goal 11
• Goal 12
• Goal 13

Sustainable Products & Innovation

• Electric trucks
• Electric buses
• Electric construction equipment
• Fuel-efficient engines

Awards & Recognition

• Volvo Technology Award (Electric Site)
• Innovation Label Award (Volvo Buses electric driveline)
• Busworld Safest Coach and Busworld Best Coach All Categories (Volvo 9900)
• Red Dot Product Design Award (Volvo 9900)

Environmental Metrics

ESG Focus Areas

• Climate
• Resources
• People

Environmental Achievements

• Reduced scope 1 and 2 emissions by 35% in five years
• Commercialized several fuel- and energy-saving solutions for customers
• Developed electric public transportation routes and solutions in several cities
• Demonstrated that electrification is viable in city traffic, on construction sites and even for heavy-duty transports
• Helped to reduce 43 million tons of customers' CO2 emission

Social Achievements

• Established the first vocational training school for the training of trainers and commercial vehicle drivers in Ethiopia
• Volvo Group was selected as one of the 25 World’s Best Workplaces

Governance Achievements

• Further strengthened our work with the principles of the UN Global Compact regarding business ethics, human rights, labor law and the environment
• Joined the Science Based Targets initiative
• Supports the Task Force on Climate-Related Financial Disclosures (TCFD)

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to Covid-19 pandemic
• Lower demand for products and services due to Covid-19 pandemic
• Intense competition
• Extensive government regulations
• Technology shift and convergence
• Reliance on suppliers and scarce materials
• Cybersecurity and IT infrastructure
• Climate related and environmental regulations
• Human capital
• Pandemics
• Corruption and non-compliance with competition law
• Credit risk
• Insurance
• Pension commitments
• Interest rate risk
• Currency risk
• Liquidity risk
• Impairment

Mitigation Strategies

• Adjusted operations to lower demand
• Accelerated the transformation towards sustainable transport solutions
• Reduced the white-collar workforce globally
• Continuously balance production levels and operating expenses
• Enhanced business agility in fulfilling demands for new services
• Utilize synergies and economies of scale
• Focus on diverse product, service and solution development
• Close monitoring of competitors
• Invest substantial resources to adhere to different legislations
• Monitoring of upcoming climate related and environmental regulations
• Governance structure to address upcoming climate related and environmental requirements
• Prioritizations and investment decisions in regular operational processes
• Leveraging the full diversity of the workforce
• Continuously monitoring changing legislation
• Increase dialogue with employees
• Grow an inclusive culture and a value-based leadership
• Managing the immediate challenges and consequences of the Covid-19 pandemic
• Focus on colleagues, customers and business partners, with health and safety as first priority
• Tight cost control and focus on cash
• Clear principles for managing external customer relationship
• Customer assessment
• Manage and measure exposure and mitigate risks
• Monitoring of the economic, political and industry conditions
• Financing solutions, collection procedures and performance follow-up structure
• CSA agreements
• Strict adherence to each plan’s investment policy
• Proactively implementing portfolio de-risking strategies
• Keep short interest-rate fixing for net financial debt
• Match funding and lending to mitigate volatility
• Sourcing and manufacturing located in major markets
• Actively manage currency flows and translation risk
• Keep a certain portion of sales in liquid assets
• Sound balance between short- and long-term debt maturities
• Long-term committed credit facilities and cash
• Purchasing agreements with commodity suppliers
• Anti-Corruption Compliance Program
• Anti-corruption due diligence of business partners
• Code of Conduct
• Regular training

Supply Chain Management

Supplier Audits: 95% of suppliers having made a CSR self-assessment

Responsible Procurement

• Code of Conduct
• Supplier sustainability requirements
• Collaboration for securing sustainable minerals

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products
• Electromobility
• Alternative fuels

Reporting Standards

Frameworks Used: GRI Standards, UN Global Compact, TCFD

UN Sustainable Development Goals

• Goal 7
• Goal 9
• Goal 11
• Goal 12
• Goal 13

See report for details on how initiatives contribute to these goals

Sustainable Products & Innovation

• Electric trucks, buses, construction equipment and drivelines
• Fuel cell systems
• Hybrid vehicles
• Vehicles running on LNG or biogas

Awards & Recognition

• Red Dot Award for product design (Volvo CE's TA15)

Environmental Metrics

ESG Focus Areas

• Climate
• Resources
• People

Environmental Achievements

• Total calculated emissions amounted to 286 million tons compared with 323 million tons in 2019. The main reason for the reduction of emissions is related to lower sales volumes of trucks compared with the baseline in 2019.
• Volvo Trucks had a 42.2% market share in fully-electric heavy-duty trucks and Renault Trucks 19.4% in 2021 in Europe.
• Delivered 942 fully-electric vehicles, mainly in Europe and North America. Order intake for fully-electric vehicles was 1,683 units.
• World’s first vehicle made of fossil-free steel.

Social Achievements

• Continued to deliver good profitability and took several important steps in our efforts to lead the transition to a climate-neutral transport system.
• The health and safety of our colleagues, suppliers and customers has been our first priority.
• Further strengthened our work with the principles of the UN Global Compact regarding business ethics, human rights, labor law and the environment.
• Upskilling for employment at Zamita Academy in Zambia.

Governance Achievements

• Moody’s raised its long-term rating from A3, stable to A2, stable, and S&P raised its rating from A-, stable to A-, positive.
• Volvo Group has a Green Finance Framework for the financing of investments and projects in the area of clean transportation.

Climate Goals & Targets

Environmental Challenges

• The situation in the global supply chain for semiconductors and other components continued to be a challenge in 2021. It was unstable, characterized by disruptions, unpredictability and lack of freight capacity.
• The ongoing and accelerating transformation of the transport and vehicle industry towards climate-neutral and sustainable transportation and infrastructure solutions entails various transitional risks for the Volvo Group.
• The covid-19 pandemic may lead to major disruptions in the economies of many countries, including the Group’s key markets, and may impact global economic activity as well as Group performance negatively going forward.

Mitigation Strategies

• Our decentralized organization was crucial. It provided us with the ability to act quickly, dare to make decisions and take responsibility locally and regionally.
• Continuous investments in new business models by innovation and new technologies
• Building resilience is key to our long-term profitability.
• High attention on keeping cost levels low, aligning them with market conditions. A strong focus on mitigating the challenging situation in the supply chain limited the negative impact on operations and deliveries.

Supply Chain Management

Supplier Audits: 97% of direct material purchasing spend from suppliers having made a CSR self-assessment (2021)

Responsible Procurement

• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI Standards

UN Sustainable Development Goals

• Goal 7
• Goal 11
• Goal 12
• Goal 13

The Volvo Group’s commitment to achieving development without exceeding the planetary boundaries includes all 17 SDGs.

Sustainable Products & Innovation

• Electric trucks, buses, and construction equipment
• Fuel cell systems
• Vehicles made of fossil-free steel

Awards & Recognition

• Engine of the Year award for the new 16-liter Stage V/Tier 4F engine

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environment
• Employees and Workforce
• Customer and End-User Safety
• Human Rights
• Business Ethics and Compliance

Environmental Achievements

• All business areas are in serial production of heavy-duty electric vehicles and machines.
• Deliveries of fully electric vehicles and machines grew by 128% to 4,996 units.
• Reduced total CO₂ emissions per net sales (scope 1 & 2) to 0.6 tons/SEK M from 0.7 tons/SEK M in 2022.
• Volvo Trucks' Volvo FH Electric was selected as “International Truck of the Year 2024”.

Social Achievements

• Continued focus on workplace safety with a goal of zero accidents.
• Initiatives to improve work-life balance and mental health.
• Programs for upskilling and reskilling employees.
• Focus on diversity and inclusion with employee networks.

Governance Achievements

• Continued work with the principles of the UN Global Compact.
• Climate targets in line with the Paris Agreement and validated by the Science Based Targets initiative.

Climate Goals & Targets

Environmental Challenges

• Geopolitical turmoil
• Continued supply chain disturbances
• Cost inflation
• Supply chain disruptions
• Fluctuating demand for products and services
• Intense competition
• Evolving regulations
• Political and social uncertainty
• Transition risks related to decarbonization
• Cybersecurity risks
• Climate-related physical risks
• Human rights risks
• Data protection risks
• Intellectual property risks
• Legal proceedings
• Corruption risks
• Competition law risks
• Insurance risks
• Credit risks
• Pension commitments
• Interest rate risks
• Currency risks
• Liquidity risks
• Impairment risks

Mitigation Strategies

• Successful mitigation of cost inflation with price management
• Strong commercial focus improving margins
• Investing in new technologies and business models
• Strengthening North American truck business
• Driving leadership in zero-emission vehicles
• Expanding ecosystem of charging infrastructure, services, and solutions
• Developing multiple solutions for decarbonization (battery-electric, fuel cell-electric, renewable fuels)
• Strategic partnerships and collaborations
• Modular vehicle architectures for flexibility and efficiency
• Increased depth of engagement in the battery value chain
• Robust supplier base and Supply Partner Code of Conduct
• Continuous improvement in industrial and logistics systems
• Efficient dealer workshops and service agreements
• Centralized Enterprise Risk Management (ERM) reporting process
• Active risk monitoring and mitigation activities
• Insurance coverage where legally or contractually obligated
• Prudent credit approval and active monitoring of loan performance
• Matching interest rate fixings on assets and liabilities
• Hedging activities to reduce currency and interest rate fluctuations
• Maintaining a strong liquidity position
• Regular impairment tests for goodwill and other intangible assets

Supply Chain Management

Supplier Audits: 93% of direct material purchasing spend from suppliers having made a CSR self-assessment

Responsible Procurement

• Supply Partner Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Natural disasters

Transition Risks

• Regulatory changes
• Market shifts
• Changes in investor preferences
• Inadequate charging infrastructure
• Unavailability or high cost of renewable energy

Opportunities

• Development of energy-efficient products
• Increased revenues from electric vehicles and services

Reporting Standards

Frameworks Used: GRI Standards 2021, UN Global Compact

Certifications: 100% landfill free (Uddevalla factory)

Third-party Assurance: Limited assurance by the Group’s auditors

Sustainable Products & Innovation

• Electric trucks, buses, and construction equipment
• Fuel cell electric trucks
• Battery energy storage solutions

Awards & Recognition

• International Truck of the Year 2024 (Volvo FH Electric)