External influences – 2018 and beyond

The world in which Electrolux operates is constantly changing. Global trends and sustainability issues create challenges for business – but also bring about enormous opportunities. Our business is also affected by new legislation and global initiatives, such as the UN Sustainable Development Goals (SDGs).

Megatrend	Description	Implications for Electrolux
Demographics	Global demographic trends – such as population growth, the growing middle class, an aging population and urbanization – are increasing the demand for home appliances, which puts more pressure on natural resources. In the next 15 years, another billion people are expected to buy their first refrigerator.	Significant growth potential in emerging markets Continued need to improve the environmental performance of products Growing importance of the silver-haired consumer group and the increasing number of smaller households Potential for new business models, e.g. shared ownership
Climate & resources	The need to reduce greenhouse gas emissions, and adapt to a changing climate and resource limitations, will drive appliance manufacturers toward ‘circular business’ models that promote resource efficiency, cleaner chemistry and waste reduction.	Continued need to improve the environmental performance of products Pressure to reduce water consumption in areas with water scarcity Competition for some metals and minerals Growing importance of the circular economy Expectations to go beyond chemical legislation
Technology	New technologies are scaled rapidly and globally, with purchasing decisions increasingly influenced by online information and social media. The Internet of Things (IoT) Promises to connect billions of products in the near future.	Greater consumer empowerment and awareness requires transparency and sustainable business practices Digitalization will drive the next wave of operational efficiency, including closer integration with suppliers Connectivity offers opportunities for new business models that result in better resource efficiency IoT enables a lifelong relationship between producers and consumers, but requires high standards of data security and privacy

Megatrend

Description

Implications for Electrolux

Demographics

Global demographic trends – such as population growth, the growing middle class, an aging population and urbanization

– are increasing the demand for home appliances, which puts more pressure on natural resources. In the next 15 years, another billion people are expected to buy their first refrigerator.

Significant growth potential in emerging markets
Continued need to improve the environmental performance of products
Growing importance of the silver-haired consumer group and the increasing number of smaller households
Potential for new business models, e.g. shared ownership

Climate & resources

The need to reduce greenhouse gas emissions, and adapt to a changing climate and resource limitations, will drive appliance manufacturers toward ‘circular business’ models that promote resource efficiency, cleaner chemistry and waste reduction.

Continued need to improve the environmental performance of products
Pressure to reduce water consumption in areas with water scarcity
Competition for some metals and minerals
Growing importance of the circular economy
Expectations to go beyond chemical legislation

Technology

New technologies are scaled rapidly and globally, with purchasing decisions increasingly influenced by online information and social media. The Internet of Things (IoT) Promises to connect billions of products in the near future.

Greater consumer empowerment and awareness requires transparency and sustainable business practices
Digitalization will drive the next wave of operational efficiency, including closer integration with suppliers
Connectivity offers opportunities for new business models that result in better resource efficiency
IoT enables a lifelong relationship between producers and consumers, but requires high standards of data security and privacy

An evolving agenda

Although many of the sustainability issues facing Electrolux remain the same over a long period, their importance changes over time. The areas we have identified as emerging or of increased importance are described in the table below in no particular order.

Sustainability topic	Description	Our response
Climate change	The Paris climate agreement to limit global warming to well below 2oC.	Continued Sustainability Agenda and a 50% carbon reduction target. See our climate targets.
Renewable energy	Relevance continued to increase during 2017, as leading sustainable businesses demonstrated the importance of a renewable energy strategy.	Setting target to increase renewables for our operations to 50% by 2020. See our Promise Achieve more with less.
Food waste	Increasing in importance in recent years, driven by public and media interest. 1.3 billion tonnes of food are wasted every year.	Developing technologies for keeping food fresher, longer. Community engagement, e.g. raising awareness of food waste through the Electrolux Food Foundation, and partnerships with Worldchefs and AIESEC – including several local projects and two global initiatives. See our Promise Be a force for good.
Circular economy	Rapidly emerging concept globally as businesses adopt circular principles, and the EU prepares circular economy-inspired legislation.	Establishing strategic supplier partnerships to access high-quality recycled plastics. Increasing dialogue with EU legislators on product durability-related issues. Participating in OECD environmental meetings at ministerial level in 2017, to discuss climate change and circular economy.
Human rights	Increasingly important to investors. Recent international standards and legislation, including the UN Guiding Principles on Business and Human Rights, and conflict mineral legislation in USA and EU.	We are committed to human rights in our own operations and our supply chain – including specified objectives and KPIs in our Promises Always act ethically & respect human rights and Improve sustainability in the supply chain.
Responsible taxation	Sustained interest from socially responsible investors requesting increased transparency on tax payment approaches, and emerging global legislation.	We are transparent on taxation in our Annual Report and have a public tax policy.
Digitalization & data integrity	The Internet of Things enables a lifelong relationship between producers and consumers, but requires high standards of data security and privacy. Digitally managed processes (e.g. production, logistics, planning) requires high data integrity and strong data validation routines.	The European General Data Protection Regulation (GDPR) that will come into force in May 2018 strengthens citizens’ fundamental right to control their personal data. Electrolux runs GDPR readiness projects to ensure people’s rights to privacy and integrity.
Microplastics	Increasing public concern on microplastics in oceans.	Own research and participation in joint research projects.

New legislation

Our business is also affected by new legislation that will come into force in the coming years. Key forthcoming legislation includes:

New EU energy labeling legislation and new energy efficiency limits for washing machines, refrigerators, freezers, dishwashers and for standby power expected from the beginning of 2020. The laws are to be sanctioned in 2018.
In the US, new energy efficiency standards are under development.
EU circular economy legislation is under development.
Australia and New Zealand will apply new refrigerator energy performance ratings. The new energy performance ratings will commence in 2019 and be fully implemented in 2021.
High-impact greenhouse gases are being phased out under the Montreal Protocol. More stringent legislation is already in place in Europe and will be introduced in USA and Asia/Pacific.
EU directive on sustainability reporting, implemented in Sweden in 2017.

The Sustainable Development Goals

The UN SDGs are also encouraging initiatives from businesses and other stakeholders, which influence our business. Read more in the Electrolux and the UN Sustainable Development Goals (SDGs) section.