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Annual Report 2014 CEO statement Sustainability governance Strategic priorities Performance and progress Snapshots GRI & UNGC

Materiality Process

Actively monitoring our most material issues is a core part of setting Group priorities and making sure our sustainability strategy is on track. In 2014 Electrolux refined its approach.

As part of our overall objective to be the best appliance company in the world, Electrolux aims to be the sustainability leader in our industry. We continuously monitor emerging issues and adjust our business strategy to ensure we’re addressing the most important aspects. To keep our understanding current of the business context in which we operate, we draw insight from global trends and drivers, market intelligence, research, product lifecycle impact, internal and external dialog, expert opinion and peer learning, consumer surveys and interviews, and media and policy discussions, among other sources. Important reference frameworks to ensure our approach is leading-edge include ISO standards, the Global Reporting Initiative (GRI), UN Guiding Principles on Business and Human Rights, the OECD guidelines for Multinational Enterprises and sustainability ratings like the Dow Jones Sustainability Index (DJSI), the OECD guidelines for Multinational Enterprises and Oekom.

We’re in business to make a positive everyday difference. This means making sure we’re aligned with the needs and expectations of our most important stakeholders—our customers, employees and shareholders around the world. We also interact with legislators, other companies, non-governmental organizations (NGOs), academia and others. Stakeholder insight helps us make better decisions, keep our priorities on track, and ensure we’re addressing the most important issues proactively. That’s why our materiality approach takes into account a wide range of stakeholder needs and expectations, as well as broader, long-term trends and drivers that affect the business over time.

An evolving approach

For a number of years, Electrolux has applied The Materiality Framework developed by Accountability to identify and rank a wide universe of up to 50 possible aspects. These include topics, processes and principles relevant from a stakeholder and business perspective. In 2014, in line with broader reporting trends to concentrate on the sustainability impacts that really matter, we refined our materiality approach to capture the issues of greatest and fastest-growing relevance at Group level and across our business sectors.

Mapping priorities

During 2014, meetings were held to gain stakeholder input on sustainability aspects relevant to the business. Combined with the insights of an internal team of experts from Electrolux Sustainability Affairs, this process identified approximately 20 aspects from the wider materiality universe. These were further streamlined and clustered into 10 key themes encompassing topics considered essential for leadership in the appliance sector, and grouped across the three pillars of the Electrolux sustainability strategy.

Prioritize and validate

Group Management analyzed and prioritized these, taking into account key megatrends and drivers likely to affect the business over the next 3-5 years. Top management from all Electrolux business sectors and functions then provided vital market input to review, validate and prioritize the 10 proposed themes in individual workshops held around the world.

The result was strong global consensus on the ten core material themes. The first four are differentiators where Electrolux can drive excellence and competitive advantage. The next six are enablers where high performance is a condition of doing business and being a sector leader. Together these form 10 high-level strategic priorities consistent across the Group, with flexibility within them to address local concerns. Going forward, Key Performance Indicators (KPIs) and qualitative and quantitative targets will be linked to all 10 themes.

The 10 key themes

Business Differentiators—drive excellence and competitive advantage

Product Efficiency

Offering energy- and water-efficient products, addressing concerns about cost of product use, water scarcity and climate change. 

Material Efficiency

Designing products using recycled materials, supporting take-back and recycling systems.

Eliminating Hazardous Substances

Eliminating potentially hazardous substances in products, including high-impact greenhouse gases.

Operational Efficiency

Reducing energy, water and waste in manufacturing, shifting sources to minimize negative impact, minimizing emissions from logistics.

Business Enablers—initiatives addressing both community and business needs

Social Investment

Investing in initiatives addressing both community and business needs.

Ethical Business

Applying high ethical standards in all business activities.

Responsible Sourcing

Upholding human rights, good working conditions and high environmental standards in the supply chain.

Health & Safety

Improving health and safety for employees, with the objective of zero injury.

Middle of the Pyramid

Scaling energy- and water-efficient products for the growing middle class.

Human and Labour Rights

Respecting human rights and labor rights across our operations.

These 10 differentiators and enablers include cross-cutting aspects such as carbon dioxide emissions and climate change, which are relevant to both product, material and operational efficiency. High-impact greenhouse gases are included under eliminating hazardous substances.

Ongoing review

Getting external perspective and validation of the approach is important. In addition to ongoing stakeholder engagement activities during 2014 two workshops were held with investors and financial analysts to compare their assessment of the 10 sustainability leadership themes with Group Management analysis. Outcomes confirmed that product efficiency was the topmost material issue for investors, followed by operational and material efficiency. Human and labor rights were also considered very important.

Materiality consultation and priority mapping with additional stakeholder groups is planned in 2015, including employees and key customers, to further enhance Group understanding of stakeholder expectations and priorities and adjust our strategic management response.