Integrating sustainability into the business

On integrating insights of Group operations and sectors into the sustainability strategy

In the Sustainability Task Force, we pulled together leading representatives from every business sector and relevant Group function for discussions on our direction. The task force acted as a sounding board throughout the strategy process.

In organizational terms, the next step is to ensure that the resources are in place for implementation. We also dialog with stakeholders on the strategy for feedback on the way forward.

On the Board and Group Management engagement in sustainability

As part of the governance structure, the Board assesses ethical risks and opportunities and reviews sustainability-related policies on an annual basis. The sustainability strategy and related policies are defined by Group Management. It is taking a key role in pinning down what sustainability means for Electrolux.

On coordinating implementation in operations and products

Major Appliances Global Operations has responsibility for coordinating product innovation, purchasing and factory management, and are active in executing many components of the sustainability strategy, including reduction targets for energy, water and transport. Responsibility at individual business sectors cover environmental management and human resources.

In terms of product excellence: It is the responsibility of each business sector to develop its own Green Range plan, including marketing and communications. At the same time Group level has defined common environmental criteria for the ranges and Group Brand and marketing are integrating sustainability values in the brand architecture.

On the role of Sustainability Affairs

As part of Group Staff Communications, Sustainability Affairs supports business areas and Group functions with expertise, training and monitoring.  We also help define issues that are most relevant to our business.

Each business area is responsible for implementing the plan locally. In this way, learning is leveraged across markets while Electrolux is still meeting local requirements.

Relevant policies that reinforce the Group’s commitment to sustainability

The Electrolux Code of Ethics covers rules of conduct for relations with employees, business partners, shareholders and other stakeholders. It is referred to as an umbrella policy because the Code of Conduct, Environmental Policy and Policy on Countering Corruption and Bribery are all included as elements of the Code of Ethics.

All of the Group’s codes and policies are based on universal standards of doing business, including International Labour Organization and the OECD Guidelines for Multinational Enterprises. And they reflect the Group’s support of the ten principles of the UN Global Compact.

The Electrolux Workplace Code of Conduct defines high employment standards for employees in all countries and business areas as well as for all subcontractors. It covers child and forced labor, health and safety, workers’ rights and environmental compliance. The Environmental Policy outlines the Group’s commitment to improve environmental performance in production, product use and disposal. The policy prescribes the precautionary principle.

It’s not enough to present policies and codes and expect compliance. It is important to guide people on how to live up to them as well. That’s where the Workplace Standard comes in. It describes how our operations and suppliers are to meet Code of Conduct and environmental criteria. It gives good examples and outlines auditing criteria, too.

On creating a culture of engagement

Building a culture of engagement is a journey. After having been a decentralized organization where decision-making and culture was locally-defined, Electrolux is taking its first steps into creating One Electrolux, with common values and a foundation of principles that are based on sustainability elements such as diversity, ethics, safety, respect and integrity.

Human resource teams reinforce this culture through employee feedback, leadership and employee training, and performance evaluations. In 2011, they will also be crucial for rolling out the Ethics at Electrolux program. Internal award schemes, safety days and specialized activities focusing on the environment and sustainable innovation highlight how serious we are in our commitment and how our success rides on the engagement of every individual.

On encouraging high standards for the environment and labor practices upstream, among suppliers

Group Purchasing is ultimately responsible for compliance with the Code of Conduct and Environmental Policy along the supply chain. As an integrated part of the purchasing process, purchasing teams ensure that high social and environmental standards are mandatory and non-negotiable parts of evaluating potential and existing suppliers. To support monitoring and training, the Responsible Sourcing Program supports local purchasers and suppliers with training, audits and development activities in Latin America, Eastern Europe and Asia/Pacific. The manager of the program reports to Group Sustainability Affairs.

On the importance of training and monitoring

A culture of engagement requires both training and follow-ups. Electrolux runs training programs for employees covering ISO14001 certification, the Code of Conduct and Workplace Standard (also for suppliers), safety, leadership and values training. These are also supported by internal and third party monitoring. Last year, 11 of our 20 factories located in risk-defined areas were audited either internally or by a third party (including auditors Intertek and customers). We also regularly conduct audits of our own facilities. Seven external health and safety audits were also completed worldwide.

On managing non-financial risks.

We divide risks into operational risks, related to our business operations and usually managed by each unit, and financial risks, managed at Group level. Electrolux also applies a group-wide benchmarking tool for qualitative and quantitative information about the risk situation of operations. This benchmarking is done among operations and key suppliers annually, and according to 25 risk categories and six risk areas.

The Ethics Policy, Workplace Code of Conduct and Environmental Policy also help reduce non-financial risk. As of 2011, we'll have an Ethics Helpline in place so that employees can report on potential incidents of non-compliance both anonymously and confidentially.

Electrolux also maps its operations and suppliers against areas which external sources such as Transparency International and Amnesty International have identified as high-risk. Right now, some countries in Eastern Europe, China and Mexico are areas to monitor. Training, performance monitoring and third-party assurance on operations and suppliers are focused especially in these areas. At year-end, Electrolux operated 20 (21) plants in Southeast Asia, Latin America and Eastern Europe.