Integrating sustainability into the business

The year’s activities focused on internal alignment to the sustainability strategy. Henrik Sundström, Vice President of Sustainability Affairs explains how Electrolux is integrating sustainability more deeply into its business.

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

The importance of sustainability to the business has been a theme of the annual Top Management Meeting for two consecutive years. In 2011 we conducted workshops and meetings with business areas to find out more about their priorities as well.

On a local basis, the next step is to ensure that the resources and competence are in place for further implementation in each business area.

On Board and Group Management engagement in sustainability

While the Board as an entity has oversight of associated risks, its role is distinguished from the operational responsibilities of the Chief Executive Officer, as is typical for public Swedish companies.

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. Keith McLoughlin and his leadership team are taking a key role in pinning down what sustainability means for Electrolux.

On coordinating implementation in operations and products

In organizational terms, Electrolux is working on merging the priorities set in the sustainability strategy into Group processes—like the Product Management Flow for product development, Green Spirit Program for increasing operational efficiency and the Electrolux Foundation, sustainability-related operational values shared by all employees.

Global Operations has responsibility for coordinating product innovation, purchasing and factory management for major appliances and is active in executing many components of the strategy, including reduction targets for energy, water and transport as well as upcoming product-efficiency targets. Responsibility in individual business areas covers environmental management and human resources.

In terms of product excellence: it is the responsibility of each business area to develop its own Green Range plan, including marketing and communications of efficient products.

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. Next year, the brand scorecard will begin to monitor how our sustainability positioning is perceived by consumers.

On the role of Sustainability Affairs

Sustainability Affairs, a Group function, has responsibility for rolling out the sustainability strategy. This includes defining targets, raising awareness and monitoring progress.

Together with Group Communications, Sustainability Affairs is also responsible for engaging on sustainability issues with stakeholders, as well as raising awareness of the role of energy and water-efficient appliances and their contribution in reducing consumers’ carbon footprint.

Each business area is responsible for implementing the sustainability strategy locally, including building partnerships and stakeholder dialog. In this way, learning is leveraged across markets while Electrolux continues to meet local requirements.

On the 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 Workplace 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 those of the International Labor Organization and the OECD Guidelines for Multinational Enterprises. They reflect the Group’s support of the ten principles of the UN Global Compact.

The Workplace Code of Conduct defines high employment standards for employees in all countries and business areas as well as for all subcontractors. It covers under-age 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 procedures for how our operations and suppliers are to meet Workplace Code of Conduct and environmental criteria. It gives best practice examples and outlines auditing criteria, too.

On creating a culture of engagement

Building a culture of engagement is a journey. Electrolux now has One Electrolux firmly in place, after having been a decentralized organization where decision-making and culture was locally-defined. One Electrolux comprises core values and a foundation of operational values based on the elements sustainability, safety, diversity, ethics, respect and integrity.

Human resource teams reinforce this culture through employee feedback, leadership and employee training and performance evaluations. Local Human Resource teams are crucial for rolling out the Ethics at Electrolux program, with the support of Group Legal and Sustainability Affairs.

Electrolux has internal award schemes, such as the Sustainability Award launched this year, as well as safety days and specialized activities focusing on the environment and sustainable innovation (see case study). These all highlight how seriously we take 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 remain mandatory and non-negotiable parts of evaluating potential and existing suppliers.

The Responsible Sourcing Program is a supplier compliance and development function. It supports local purchasers and suppliers with training, audits and additional 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 robust approach to managing sustainability issues requires training and follow-ups. Electrolux runs training programs for employees covering Ethics at Electrolux, ISO14001 certification, the Workplace Code of Conduct and Workplace Standard (also for suppliers), safety, leadership and core values. These are supported by internal and third party monitoring. Last year, 14 (11) operations were audited by combined teams comprising both Electrolux and third-party representatives (auditors Intertek and SGS), including audits we did in connection with merging new acquisitions Olympic Group and CTI into the business.

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 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 Code of Ethics, Workplace Code of Conduct and Environmental Policy also help reduce non-financial risk. With the first phase of the rollout in Latin America complete, we have an Ethics Helpline in place in both Latin and North America, enabling employees to confidentially report potential incidents of non-compliance.

Electrolux maps its operations and suppliers against those areas which external sources such as Maplecroft have identified as high-risk. Right now, these include Electrolux operations in Argentina, Brazil, Chile, China, Egypt, Mexico, Romania, Thailand and the Ukraine. Suppliers are located in other high-risk countries as well.

Training, performance monitoring and third-party assurance on operations and suppliers are focused especially in these areas. At year-end, Electrolux operated 29 (20) plants in Southeast Asia, North Africa, Latin America and Eastern Europe, including our new acquisitions.

Key sustainability-related policies

Policy Policy holder* Policy approver
Code of Ethics VP, Group Sustainability Affairs Board of Directors
Workplace Code of Conduct VP, Group Sustainability Affairs Chief Technology Officer
Policy on Countering Bribery and Corruption Senior Associate General Counsel Senior Vice President, Legal Affairs
Environmental Policy VP, Group Sustainability Affairs Chief Technology Officer
*Responsible for developing, communicating, monitoring and enforcing.

ISO14001 certification

The share of factories with more than 50 employees that have certified ISO14001 environmental management systems.