Sustainability governance

Sustainability principles and considerations are embedded in ABB’s business strategy and guide what we manufacture, how we operate the company and the way we behave towards stakeholders.

Our sustainability strategy is aligned with corporate strategy and is supported by objectives that address ABB’s activities and impacts along the value chain. Progress towards our objectives is driven through all levels of the business, from Executive Committee endorsement, through operational review and target setting in business units and countries to local training and execution at sites, supported by sustainability specialists at Group, country and local level. We rely on every employee to take responsibility to help us achieve our goal: A better world.

Our Sustainability Board, comprising the ABB Executive Committee, oversees sustainability policies and programs, reviews developments and monitors progress towards our targets on an annual basis.

The ABB Sustainability Affairs organization is responsible for the development and coordination of policies and programs covering health and safety, environment, corporate responsibility and security and crisis management. Sustainability Affairs reports directly to Executive Committee member Jean-Christophe Deslarzes. A network of sustainability specialists worldwide reports to and supports the Sustainability Affairs management team. In countries where ABB entities have or could have significant sustainability impacts, we have appointed country sustainability controllers, country health and safety advisors and country security managers responsible for ABB’s sustainability management program and for gathering the data consolidated in this report. All regions where ABB operates have region health and safety advisors and corporate security managers.

The country and regional specialists are supported by local sustainability officers and health and safety advisors. Overall, the sustainability network is supported by a team of some 950 employees, full-time and part-time, at headquarters and around the world.

Sustainability policies, principles and external initiatives
We have implemented environmental, social, human rights, and health and safety policies and a Supplier Code of Conduct.These policies include references to the international standards to which they relate.

As a founder member of the United Nations Global Compact, ABB has been closely involved in its development. ABB’s understanding of human rights and day-to-day business benefits from involvement in such organizations. We have also taken note of the UN Guiding Principles on Business and Human Rights and use its recommendations to assess expectations of corporate behavior.

ABB has adopted ISO 14001 for environmental management systems; ISO/TR 14025 for Environmental Product Declarations; ISO 14040–45 for Life Cycle Assessments; and ISO 19011 for environmental auditing of organizations. We have incorporated the principles of OHSAS 18001, the International Labour Organization (ILO) guidelines on occupational health and safety management systems, and the ILO Code of Practice on Recording and Notification of Occupational Accidents and Diseases into our health and safety program.

All ABB facilities are encouraged to implement management systems for environmental, health and safety and quality issues, while manufacturing and service locations are required to implement such systems. Globally, we have achieved external certification for environmental management systems at 390 sites and offices and for health and safety management systems at 378 locations.

Approach to sustainability reporting
We aim to cover all ABB Group companies in our formal sustainability reporting system, including wholly owned subsidiaries and majority-owned joint ventures worldwide that might have significant sustainability impacts. Power-One, and other entities acquired during 2013, are now integrated into this system. Integration of companies acquired during 2014 is continuing and data collection for environmental parameters, health and safety and corporate responsibility will be implemented during 2015.

We use three online data reporting questionnaires to measure and collect performance data throughout the Group via the ABB intranet – an annual social report from every country, an annual environment report from every site and a monthly health and safety report from every country which consolidates inputs from all entities in the respective country. Further details on scope and approach can be found in the Performance Summary section of this report.

Activities in 2014
During the year, the ABB Sustainability Board reviewed the Group sustainability strategy and objectives and confirmed the proposed 2015 focus activities and performance metrics. The Board agreed to include the safety metric ’hazard reporting’ in the Group-wide ’Relentless Execution’ dashboard – a panel of business-related metrics that will be reported regularly by all businesses in 2015. This is the first time a sustainabilityrelated metric has been included in a set of Group metrics.

The Sustainability Affairs organization was strengthened in order to focus activity on the constituent areas of Health, Safety and Environment, and to reflect the importance attached by the CEO and Executive Committee to safety improvement. Leaders have been appointed to drive Group activities in these three areas, working with our businesses and with the respective sustainability networks on improvement projects and initiatives, and reporting to the head of Sustainability Affairs.

As part of our continuing work to strengthen the capability of our sustainability network, more than 80 of the top sustainability leaders in ABB undertook 360 degree assessments during 2014. Results were shared with each participant during a one hour session with a 360 degree feedback coach, who assisted with analysis of results and identification of suitable development activities. Consolidated results are also being reviewed at Group level to identify any common development requirements.

To ensure that we have the right sustainability resources and structures in place to support our businesses with implementation of the Next Level strategy, we have kicked off a comprehensive workforce mapping and skills inventory. The results, available in the first half of 2015, will guide development programs and allocation of resources at different levels in our businesses.

Material issues
We have undertaken considerable work in recent years to understand what internal and external stakeholders expect of ABB’s sustainability performance and where we should focus our strategy and improvement goals. We regularly review and evaluate these material issues to determine if they remain consistent and relevant, and if there are any new and emerging issues we need to address.

In 2011, we conducted a materiality assessment with input from nearly 600 people, including senior ABB executives and employees from all parts of the business, customers, and external stakeholders specialized in key sustainability areas. We also mapped regulatory risks and macro trends, and benchmarked against peer companies to help us establish a comprehensive sustainability issues landscape. The resulting materiality matrix then shaped the development of our sustainability strategy during 2011.

We undertook a further review with our stakeholders during 2013 to update our assessment of material aspects and to seek their views on how best to report on our sustainability strategy, performance and progress. The results from interviews with ABB employees, investors, customers and external sustainability experts, in the main, confirmed the conclusions from our 2011 consultation and helped us to shape our Sustainability Objectives 2014–2020.

In 2014, we consulted our stakeholders again: to gauge their views on the newly-released sustainability objectives and the 2013 matrix, and how we report on our sustainability performance. We also sought to assess any changes in their evaluation of ABB’s material issues following the release of ABB’s Next Level strategy.

This consultation focused solely on external stakeholders, as leaders from ABB’s business, countries and functions were extensively involved in the development of the Group Sustainability Objectives and the new business strategy.

A third party conducted 29 interviews with representatives across our key constituencies: Customers, suppliers, investors, civil society, including NGOs, international organizations, sustainability experts and young people. Around 40 percent of participants had been involved in previous consultations. Overall, stakeholders found that the 2013 matrix provided a good snapshot of relevant issues for ABB, although a number of stakeholders requested better definition of the specifics considered within each issue.

Feedback from stakeholders
Eight of the material issues were considered by some stakeholders as more important – developing our people, waste and recycling, hazardous substances, innovation, human rights, working in the community, water, and health, safety and security – whereas only governance was considered slightly less important. Stakeholder views differed on the placement of three specific issues – stakeholder relations, energy efficiency and risk management.

Stakeholders expressed diverse views about new or missing issues, with some topics already encompassed in the existing material issue categories. However, there was insufficient support on any new single issue to justify its addition to the matrix.

We have updated our materiality matrix accordingly. Ratings of various issues have been adjusted in line with the feedback outlined above. We have also harmonized the terms used in the matrix with the language of our sustainability objectives to increase understanding and have developed definitions of the material issues. However, we have kept the internal and external constituencies of “People and society” separate to ensure a better focus on actions and outcomes. Other key changes are:

– “Water” and “Waste and recycling” now combined under “Resource efficiency”
– “Stakeholder relations” and “Working in the community” now combined under “Stakeholder engagement”
– “Risk management” removed from the matrix in response to commentary from stakeholders that the relevant risk – and opportunity – should be dealt with within each issue category

Last edited 2015-03-12
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