Annual Report 2013


CEO Statement

Bringing it home

Bringing the most efficient appliances to market will increase our positive social and environmental impacts and grow our business.

“I’m convinced that raising product efficiency for the growing middle class is where long-term shareholder value creation lies.”

At Electrolux we want to deliver smarter, more resource-efficient solutions to more people around the world. To make this kind of positive difference every day, sustainability has to be fully embedded across our organization and right at the core of our business strategy.

Getting strategic

So we’re making sustainability a business priority. Our customers and stakeholders expect it and it’s an opportunity for us to lead. That’s why sustainable innovation is among our top four R&D priorities and a third of our product-development spend is sustainability-related.

By developing innovative products and services, we add value for consumers, differentiate our brand and raise the bar in our industry. By ensuring responsible conduct and practice in line with universal standards, we build trust and minimize risk. And by making our organization efficient, we become more competitive and resilient.

New markets, new challenges

Above all, sustainability will help us engage new customers in emerging markets. Our brand scorecard research shows that environmental issues matter to consumers – including in China and Brazil. By bringing the most efficient appliances to homes and businesses around the world, we can increase our positive social and environmental impacts. At the same time, we’re growing our business and reducing use of energy, water and increasingly scarce resources.

Scaling affordable energy efficiency is no small challenge. It means ‘inverting the equation’ to deliver the innovation and design typical of the premium segment at much lower cost, on a much bigger scale. But I’m convinced that raising product efficiency for the growing middle class is where long-term shareholder value creation lies. It’s the thinking behind the launch of our new refrigerator range in Southeast Asia – and the reason we are firmly behind EU energy labeling for vacuum cleaners, to shift the market in the right direction.

Currently about 65% of our production and over 35% of our sales are in emerging markets – and our ambition is to reach 50% within four years. China and the Middle East are just two examples of where great market opportunities exist, but where new issues are emerging for Electrolux when it comes to maintaining our high ethical, social and environmental standards.

Leadership founded on strong values

The answer is to be rock solid in our principles and values. These are non-negotiable wherever we do business. During 2013 we took steps to update our Code of Conduct (CoC) in line with new stakeholder expectations, with rollout scheduled for 2014.

We also worked closely with suppliers, delivering CoC training in Egypt and China and accelerating alignment of Olympic and CTI with the rest of the Group. The results are impressive: our plant in Rosario, Argentina achieved a more than 50% reduction in accidents, while the Group as a whole achieved a 10% reduction in accident rate, putting us among the top performers in our industry.

Aligning a global organization is a journey not a destination. There’s a lot more we can do to harmonize local context and priorities with our Group culture and principles. Rollout of the Ethics Program and Electrolux Purpose workshops show we’re serious about our commitment, and the launch of our new industrial relations strategy is a further step in that direction. Going forward we will reinforce efforts to be transparent and open with stakeholders on the issues that matter to them.

Material world

As well as seeing the big picture, Electrolux has set clear sustainability priorities. One of these is energy. Our biggest environmental impact is the carbon emitted when our products are used. Addressing energy constraints, maximizing efficiency and reducing carbon are therefore top management priorities.

Our new Carbon Target to halve our impact by 2020 compared to 2005 will cut greenhouse gases from 50 to 25 million tonnes in four key areas: product use, manufacturing, transport and elimination of gases with high global warming potential. After kitchen, laundry and small appliances, we will extend the target to other product lines and regions, but among our biggest challenges are energy-intensive product lines like air conditioners and water heaters.

By setting a tough goal we hope to inspire everyone at Electrolux to deliver low-carbon innovation across all ranges. We are also working closely with partners along the value chain to drive down carbon emissions.

Looking ahead

2013 was a year of consolidation, integration and alignment. We made good strides in launching the group-wide program to certify all operations for quality, environment and health and safety, as well as in responsible sourcing, human rights and the carbon target.

For the seventh year running, Electrolux maintained its position as Industry Leader in the Household Durables category of the Dow Jones Sustainability World Index and rating agency Sustainalytics. We were cited among RepTrack’s / Forbes’ World’s most reputable companies and acknowledged by the CDP Leadership Index as one of five Nordic companies taking action to reduce carbon emissions. I’m proud of these achievements, and our efforts won’t stop there.

In 2014, the journey continues. We know sustainability makes sense to the business and is part of our strategy. High on our agenda now is to build a real sense of ownership among the sectors.

With others, Electrolux has the opportunity and the ability – and therefore the obligation – to improve people’s lives every day in a way that is sustainable. We can help people to have healthier, cleaner homes and eat more nutritious food – and by doing it while reducing our environmental footprint, we’re bringing sustainability home in the true sense of the word.

Stockholm, March 2014

Keith McLoughlin

President and Chief Executive Officer


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