In 2017, we launched our new company purpose 'Shape living for the better', which includes three drivers - Act Sustainably, Create Better experiences and Always Improve. Our purpose reinforces the fact that sustainability is a top priority throughout Electrolux, along with creating more sustainable and enjoyable experiences for our customers.
Shape living for the better is not about changing who we are or how we work with sustainability. Our sustainability framework already provides us with a clear direction for how we create more efficient solutions, improve our operations and contribute to a better society. In fact, for nearly 100 years, Electrolux has sought to change the world for the better by providing innovative time-saving home solutions, which enable consumers to focus on the people and things they love.
But this new focus on our purpose is significant. Not only do purpose-led organizations perform better financially, but it's a fact that they enable employees to feel more fulfilled at work. I want everyone at Electrolux to feel inspired by our company's purpose, and to be excited that their daily actions can contribute to improving the lives of millions of people - as well as a better planet. It's the small everyday actions that make the difference, and by acting sustainably, working to create better experiences, and always looking to improve, everyone at Electrolux has the opportunity to shape living for the better for people around the world. In addition, employee fulfillment is essential in attracting and retaining talent and our core competence, which is fundamental to the success of our business.
To achieve our purpose and drive profitable growth, our strategy is implemented through a business model that focuses on creating best-in-class consumer experiences. Our approach also recognizes the increasing power consumers have, and the importance of digitalization in how social media influences consumer decisions.
Sustainable development continues to be a key element of our business model that is essential for realizing our purpose and provides us with a significant competitive advantage in many of our markets. Our sustainability priorities target nine main areas that contribute to better solutions, better operations and better society. This report details our progress in these areas in 2017.
In terms of better solutions, I want our consumers to experience on a daily basis how we shape living for the better through our products and services. Our mission at Electrolux is to reinvent taste, care and wellbeing experiences for more enjoyable and sustainable living around the world. Imagine for a moment the positive impact we can have through products that reduce food waste, make it easier to cook healthier meals, maintain garments for longer, and purify the air in consumers' homes.
As part of our commitment to better operations, we have announced several projects to re-engineer our factories in North America and Latin America. These large investments will realize significant financial and environmental savings. We plan to improve energy efficiency and to eliminate hydrofluorocarbons, as detailed in our re-engineering plan published in February 2018. As a result, greenhouse gases corresponding to more than three million tonnes of CO2 will be eliminated, a significant step towards the Group's 50% climate target.
In our work to contribute toward a better society, it is satisfying to see how our Food Foundation continues to develop - both in terms of the number of projects and people we benefit. The Foundation gives us an excellent platform to shape living for the better for many people around the world.
In December 2017, we submitted an ambitious new science-based target to the Science Based Targets initiative that includes emission reduction objectives for 2025. We will strive to meet these targets through our ongoing focus on energy efficient products, and initiatives in our own operations, such as our planned re-engineering projects in the Americas.
During the year, we continued our work to contribute toward Agenda 2030 and the Sustainable Development Goals (SDGs). As a company with strong fundamental values, and as a signatory of the UN Global Compact, we also continued to support the development of a global agenda for human rights.
I would like to thank all our employees for their fantastic efforts during the year, and I look forward to our continued journey into a more purpose-driven company together.
Stockholm, February 2018
Jonas Samuelson
President and Chief Executive Officer
Henrik Sundström, VP Sustainability Affairs, shares some of this year's highlights and explains how Electrolux will continue to drive sustainability in 2018.
What were the main highlights of the year?
We have continued to improve our overall sustainability performance and integrate sustainability during the year. The objective has been to further embed sustainability throughout our business as a key part of our new Purpose.
Electrolux was named the Industry Leader of the Household Durables category in the Dow Jones Sustainability Index for the eleventh consecutive year. CDP also included Electrolux in its Climate A list for the second year running, and we scored A- in our first response to CDP Water. At the end of the year, our new climate target for 2025 was submitted to the Science-Based Targets Initiative. We also continued to significantly increase the use of renewable energy.
The Electrolux Food Foundation began its successful work in 2017, with two global projects and seven local projects in Australia, Poland, Brazil, North America, Asia-Pacific and Sweden. Food is an area that accounts for 70 percent of our business - and where we have a significant opportunity to live up to our promise to Be a Force for Good.
We continue to launch new efficient products to minimize the use of energy and water during use. A good example is our next generation of rack type dishwashers for professional kitchens that uses just a glass of water per rack and offers the lowest running costs in the industry. We also launched campaigns to help consumers use products in a more sustainable way. The 'Don't Overwash' Care Label project was developed together with key partners from the fashion industry to raise awareness of more sustainable clothing care habits enabled by the AEG laundry range.
We continued to improve health and safety performance, and we are on track to meet our global injury rate (TCIR) target of 0.5 by 2020. This demonstrates our strong safety culture and the successful implementation of our safety programs.
Human rights assessments in Thailand and Egypt were carried out with very active participation from the local Electrolux organizations. We also started a due diligence process to investigate the supply chain for conflict minerals from first tier suppliers to smelters.
We launched a global transport dashboard to help promote low-carbon and cost-effective transport options, which is an example of how digitalization is helping to streamline our business. Another important transport-related project in Chile was a switch to low-sulphur bunker fuels. As many ports around the world still allow anchored ships to burn heavy fuel oils, which emits 3,500 times more SOx than road diesel, air pollution has become a serious issue in these cities.
Did Electrolux face any challenges in 2017?
Some challenges have been encountered during the year that limited progress in some areas.
We continue to see an improvement in product energy efficiency , although at a slower pace than before. In the US new product efficiency regulations have been put on hold and in Europe manufacturers are awaiting the outcome of new energy labelling standards for all major appliances.
The energy efficiency improvement in our own operations was also slower than expected in 2017.
As the energy to produce a product decreases, other factors outside our control will have larger impact, such as the unusual cold weather in the first quarter of the year. However, a large switch to renewable electricity more than compensated for the increased use of energy.
In the next few years, Electrolux is planning to drastically increase investments in factories and product platforms are being updated. This will significantly enhance the Group's energy efficiency and reduce carbon emissions from product use.
How will you continue to drive the sustainability agenda in 2018?
To Act Sustainably is a core driver for fulfilling the Electrolux purpose to "shape living for the better".
We will continue to drive projects in all areas that contribute to our Science Based Target to reduce our climate impact. The use of recycled materials in our products will receive renewed focus to ensure that we achieve our objectives.
Our human rights assessments and conflict minerals program will continue in 2018 by implementing the conclusions from 2017 and incorporating new areas into the programs.
Food Foundation projects will be expanded and we have the objective to replicate successful projects where possible, such as the successful professional kitchen training in Brazil for unemployed people.
I look forward to continuing to work with all these areas and to further integrating sustainability in 2018. Our new purpose will enable us to really drive our sustainability performance in the years to come.