Our ambition is to be a global leader in sustainability in our industry. This is a natural fit for the Electrolux brand. It speaks strongly to our Scandinavian heritage and company values. It goes hand-in-hand with our vision to be the best appliance company in the world.
Clarity of purpose
To lead we need clear, long-range vision. We need top management commitment that puts sustainability at the heart of the business. With Group management, my job in 2011-2012 has been to consolidate and integrate our vision: meeting today’s market needs and turning tomorrow’s challenges into opportunities by growing sustainably with the greatest integrity and the best environmental performance.
This includes acting along the value chain to tackle our environmental impacts and ensure high social and human rights standards across our operations, in line with the UN Guiding Principles and our ongoing support of the UN Global Compact.
We know where we want to go, we know what we need to do to get there. This year has been about putting in place the building blocks to make that happen. As part of our strategy for profitable growth, we want to deliver a sustainability step-change. This means using longer, wider planning horizons and taking an outside-in perspective. Electrolux has developed an ‘innovation triangle’ to reassess our product offering and identify opportunities. Midterm, it includes applying known technologies in new ways, as well as long-range exploration of breakthrough technologies.
Building blocks
We think we’re on the right track. In 2012, for the sixth consecutive year, Electrolux was recognized as leader of its industry sector in the prestigious Dow Jones Sustainability World Index (DJSI). We had record results in our global operations, achieving the industry benchmark for safety and our highest quality rates yet. But we’re not in a static world and we can do better in all areas.
Change on this scale takes time. It means reviewing the business to make sure the company pulls in one direction – a major undertaking for a global corporation active in 150 countries. It means squaring our business objectives with our sustainability strategy. Where called for, it means holding challenging discussions and making robust decisions that will move us in the right direction. Focus this year has been on harnessing resources – people, technology, research and investment – to get the necessary organizational alignment to achieve our long-term aims.
A key part of this is setting robust Group-wide goals to drive organizational transformation, operational excellence and product innovation. In 2012, to engage people around value creation that goes beyond market and financial objectives, a corporate purpose was introduced.
Planet
Our goal is to accelerate innovation and act on all fronts to reduce consumption of resources and cut per-unit impacts. The more efficient our products are, the more value we create for society.
In 2013, we will set a long-range target to tackle carbon emissions, our most material issue. Mid-term, we’re aiming for a 2015 operational energy reduction target of 15%, with energy, water and chemicals reduction goals already established across major product categories. Sustainable innovation is among the top four priorities of the Electrolux R&D program and at least a third of our product-development spend is sustainability-related.
People
We want Electrolux to be a responsible and trustworthy partner and work with others to manage our wider risks and impacts across the value chain. This helps keep us in line with the growing expectations of consumers, distributors, retailers and other stakeholders.
More than 60% of Electrolux production is now located in growth markets such as Latin America, Africa, the Middle East and Asia, where the share of sales has leapt from 20 to 35% in five years. It’s among our top priorities to ensure high labor and human rights standards are upheld in our factories and our suppliers’ facilities. 2012 saw greater focus on human rights, and I expect this priority to grow in importance in the coming years.
As part of our 2012 responsible sourcing initiatives for the Group, we held a summit in Thailand to engage suppliers from Southeast Asia in our sustainability strategy. In 2013, we will hold an introductory workshop for key suppliers in Brazil.
It’s my belief that how we treat people in our factories globally has to follow in letter and in spirit our company’s foundational values: respect and diversity; ethics and integrity; safety and sustainability. These are what the Electrolux house is built on and our right to grow our business depends on doing this from a solid foundation.
Looking forward
Through our global presence and emphasis on sustainability, we’re well-positioned for profitable, sustainable growth. During 2012, we made significant progress on aligning Olympic and CTI with the Group’s standards. These and coming acquisitions will help us achieve our business goal to increase the share of sales in growth markets to 50% within five years.
In 2013, we will stick to our strategy, with continuing emphasis on clarity, alignment and execution of our goals. We are also preparing for tightened standards, for example on recycling in Brazil and conflict minerals in the US.
Rapid growth of the middle class in emerging economies and increasing urbanization are driving demand for appliances. Selling more efficient products in these markets will be key to our growth in future: it is good for the planet, good for society and good for us. A key challenge moving forward is how to scale innovation more rapidly from premium to mass markets. In addition to working with others along the value chain, Electrolux will increase the focus on efficiency and other sustainability benefits in marketing messages globally.
These are just a few of the many steps we’re taking to realize our aim of making a positive difference, every day.
Stockholm, March 2013
Keith McLoughlin
President and Chief Executive Officer
