ABB – ABB publishes its first Integrated Report
Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX Swiss Exchange
- Report covers ABB’s 2022 financial and sustainability performance
- New 2025 mid-term sustainability targets for emissions in own operations and suppliers’
- Reduction of company’s own GHG emissions by 65% since 2019
ABB today published its first integrated report, which highlights progress against the company’s strategy and demonstrates how ABB creates value holistically for its stakeholders in the short-, medium- and long-term. As ABB’s primary report at Group level, this report is aimed at a broad range of stakeholders and integrates the most important material information on the company and its strategy, business, governance as well as its financial and sustainability performance. In addition to the integrated report, ABB’s 2022 annual reporting suite published today includes its Financial Report, Corporate Governance Report, Compensation Report, Sustainability Report as well as the Form 20-F that was filed with the United States Securities and Exchange Commission.
“I am pleased to present ABB’s first integrated report, which explains how our company purpose enables us to drive performance and create value for our stakeholders. The report shows how the various parts of our global company fit together to deliver improved financial results while contributing to a more sustainable society,” said ABB Chairman Peter Voser. “It also provides an overview of the external environment in which we are operating and how we intend to meet our targets in the short-, medium- and long-term. Naturally, the report also covers our performance over the past year and it is these achievements that make me most proud and confident in our team’s ability to deliver on our ambitious financial and sustainability targets in the years ahead.”
New 2025 mid-term sustainability targets launched to improve accountability
Since the launch of its 2030 sustainability strategy in November 2020, ABB has made continuous progress toward its goals of enabling a low-carbon society, preserving resources, promoting social progress, and creating a culture of integrity and transparency along the extended value chain.
ABB CEO Björn Rosengren said: “Against the backdrop of a year of crises and setbacks for society, it is clear that ABB’s purpose – to enable a more sustainable and resource-efficient future with our technology leadership in electrification and automation – is more relevant than ever, especially when it comes to tackling climate change.”
To increase accountability, ABB today published new 2025 mid-term targets for the low-carbon society pillar of its sustainability strategy. The targets include:
- Reduce own scope 1 and 2 CO2e emissions by at least 70 percent
- Work with main tier-one suppliers1 to reduce their scope 1 and 2 CO2e emissions by 20 percent
Steady progress towards 2030 sustainability goals
In 2022, ABB reduced greenhouse gas (GHG) emissions in its own operations 42 percent. Since 2019, the company achieved a total emissions reduction of ~65 percent. In addition, ABB helped its customers reduce or avoid GHG emissions through its leading electrification and automation technologies.
ABB also continued to advance on the other three pillars of the strategy. In 2022, it strengthened its circularity approach by defining clear key performance indicators (KPIs) for every stage of the product life cycle, from design to end-of-life. One important initiative was the launch of our EcoSolutions™ label, which provides full transparency into the circularity value and environmental impact of a product, verified by a third party.
When it comes to social progress, ABB improved workplace safety with a 29 percent year-on-year decrease in its lost-time injury frequency rate (LTIFR). The company also increased gender diversity in senior management with a year-on-year increase in the share of women in senior management from 16.3 percent to 17.8 percent, and it also enhanced its human rights due diligence process. In addition, ABB made considerable progress toward its 2030 goal of implementing a comprehensive, risk-based approach to ensure a consistently high standard of integrity across our organization.
Adhering to internationally recognized standards and frameworks
ABB’s integrated report is based on elements of the International Integrated Reporting Framework while the financial statements are prepared in accordance with US GAAP. Sustainability information is provided in accordance with the GRI Standards and also covers the SASB Standards, the TCFD (Task Force on Climate-Related Financial Disclosures) Recommendations, the EU taxonomy and the 10 principles of the UN Global Compact.
The full annual reporting suite including the Integrated Report and Sustainability Report can be accessed and downloaded here.
1 Suppliers covering 70 percent of ABB’s annual procurement spend.
More information on ABB: See full profile on EMR Executive Services
More information on Peter Voser (Chairman of the Board of Directors of ABB Ltd): See full profile on EMR Executive Services
More information on Björn Rosengren (Chief Executive Office, ABB): See full profile on EMR Executive Services
More information on Timo Ihamuotila (Chief Financial Officer and Member of the Executive Committee, ABB): See the full profile on EMR Executive Services
More information on ABB EcoSolutions™: https://global.abb/group/en/sustainability/ecosolutions + Together with our customers and partners, ABB is innovating to make circular, more sustainable solutions and operations a reality. ABB’s new EcoSolutions label provides full transparency to environmental impacts across the entire product lifecycle.
ABB EcoSolutions products comply with a minimum set of key performance indicators defined in ABB’s circularity framework and carry either an environmental product declaration (ISO 14025) or an independently verified product lifecycle assessment (ISO 14040).
More information on SEC (U.S. Securities and Exchange Commission) Regulations: https://www.sec.gov/ + The mission of the SEC is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. The SEC strives to promote a market environment that is worthy of the public’s trust. The SEC’s regulation of the securities markets facilitates capital formation, which helps entrepreneurs start businesses and companies grow.
More information on the Global Reporting Initiative (GRI) Standards: https://www.globalreporting.org + GRI (Global Reporting Initiative) is the independent, international organization that helps businesses and other organizations take responsibility for their impacts, by providing them with the global common language to communicate those impacts. We provide the world’s most widely used standards for sustainability reporting – the GRI Standards.
The GRI secretariat is headquartered in Amsterdam, the Netherlands, and we have a network of seven regional hubs ensuring we can support organizations and stakeholders worldwide.
More information on the Sustainable Accounting Standards Board (SASB) Standard for Electrical & Electronic Equipment: https://www.sasb.org + SASB Standards guide the disclosure of financially material sustainability information by companies to their investors. Available for 77 industries, the Standards identify the subset of environmental, social, and governance (ESG) issues most relevant to financial performance in each industry.
SASB Standards are maintained under the auspices of the Value Reporting Foundation, a global nonprofit organization that offers a comprehensive suite of resources designed to help businesses and investors develop a shared understanding of enterprise value—how it is created, preserved, or eroded. The resources—including Integrated Thinking Principles, the Integrated Reporting Framework, and SASB Standards—can be used alone or in combination, depending on business needs.
More information on TCFD (Task Force on Climate-Related Financial Disclosures): https://www.fsb-tcfd.org/ + In 2017, the TCFD released climate-related ﬁnancial disclosure recommendations designed to help companies provide better information to support informed capital allocation.
Our disclosure recommendations are structured around four thematic areas that represent core elements of how companies operate: governance, strategy, risk management, and metrics and targets. The four recommendations are interrelated and supported by 11 recommended disclosures that build out the framework with information that should help investors and others understand how reporting organizations think about and assess climate-related risks and opportunities.
Since the publication of the TCFD recommendations, the FSB has asked the Task Force to continue its work—promoting adoption of the TCFD framework, providing further guidance, supporting educational efforts, monitoring climate-related financial disclosure practices in terms of their alignment with the TCFD recommendations, and preparing annual status reports.
More information on The European Union: https://european-union.europa.eu/index_en + The European Union’s institutional set-up is unique and its decision-making system is constantly evolving. The 7 European institutions, 7 EU bodies and over 30 decentralised agencies are spread across the EU. They work together to address the common interests of the EU and European people.
In terms of administration, there are a further 20 EU agencies and organisations which carry out specific legal functions and 4 interinstitutional services which support the institutions.
All of these establishments have specific roles – from developing EU laws and policy-making to implementing policies and working on specialist areas, such as health, medicine, transport and the environment.
There are 4 main decision-making institutions which lead the EU’s administration. These institutions collectively provide the EU with policy direction and play different roles in the law-making process:
- the European Parliament (Brussels/Strasbourg/Luxembourg)
- the European Council (Brussels)
- the Council of the European Union (Brussels/Luxembourg)
- the European Commission (Brussels/Luxembourg/Representations across the EU)
Their work is complemented by other institutions and bodies, which include:
- the Court of Justice of the European Union (Luxembourg)
- the European Central Bank (Frankfurt)
- the European Court of Auditors (Luxembourg)
The EU institutions and bodies cooperate extensively with the network of EU agencies and organisations across the European Union. The primary function of these bodies and agencies is to translate policies into realities on the ground.
Around 60,000 EU civil servants and other staff serve the 450 million Europeans (and countless others around the world).
Currently, 27 countries are part of the EU: https://european-union.europa.eu/principles-countries-history/country-profiles_en
More information on The European Commission: https://ec.europa.eu/info/index_en + The Commission helps to shape the EU’s overall strategy, proposes new EU laws and policies, monitors their implementation and manages the EU budget. It also plays a significant role in supporting international development and delivering aid.
The Commission is steered by a group of 27 Commissioners, known as ‘the college’. Together they take decisions on the Commission’s political and strategic direction.
A new college of Commissioners is appointed every 5 years.
The Commission is organised into policy departments, known as Directorates-General (DGs), which are responsible for different policy areas. DGs develop, implement and manage EU policy, law, and funding programmes. In addition, service departments deal with particular administrative issues. Executive agencies manage programmes set up by the Commission.
Principal roles in law: The Commission proposes and implements laws which are in keeping with the objectives of the EU treaties. It encourages input from business and citizens in the law-making process and ensures laws are correctly implemented, evaluated and updated when needed.
More information on Ursula von der Leyen (President, The European Commission): https://ec.europa.eu/commission/commissioners/2019-2024/president_en + https://www.linkedin.com/in/ursula-von-der-leyen/
More information on the United Nations Sustainable Development Goals (SDG):
- United Nations Global Compact (UNGC): https://www.unglobalcompact.org + The world’s largest corporate sustainability initiative: a call to companies to align strategies in operations with universal principles on human rights, labour, environment and anticorruption, and take actions that advance societal goals.
- At the UN Global Compact, we aim to mobilize a global movement of sustainable companies and stakeholders to create the world we want. That’s our vision.
- To make this happen, the UN Global Compact supports companies to:
- Do business responsibly by aligning their strategies and operations with Ten Principles on human rights, labour, environment and anti-corruption; and
- Take strategic actions to advance broader societal goals, such as the UN Sustainable Development Goals, with an emphasis on collaboration and innovation.
- To make this happen, the UN Global Compact supports companies to:
- United Nations Global Compact 10 Principles:
- Human Rights
- Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights.
- Principle 2: make sure that they are not complicit in human rights abuses.
- Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
- Principle 4: the elimination of all forms of forced and compulsory labour;
- Principle 5: the effective abolition of child labour; and
- Principle 6: the elimination of discrimination in respect of employment and occupation.
- Principle 7: Businesses should support a precautionary approach to environmental challenges;
- Principle 8: undertake initiatives to promote greater environmental responsibility; and
- Principle 9: encourage the development and diffusion of environmentally friendly technologies.
- Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.
- Human Rights
- The 17 SDGS (Sustainable Development Goals) by 2030:
- Detailed explanation of each of the 17 SDGS: https://www.unglobalcompact.org/sdgs/17-global-goals
EMR Additional Notes:
- All members of the Executive Committee and of the Board have their full profile on EMR Executive Services
- Major financial KPI’s since 2017 are available on EMR Executive Services under “Financial Results” and comparison with peers under “Market Positioning”
- ABB Q4 2022 full financial report can be found here: https://library.e.abb.com/public/0c911f20f7cc46848b2e64bde82fb4f5/ABB-Q4-2022-financial-information.pdf?x-sign=BD7iL18NxClyc/jZMypLoEnkX4K/7DtnJFLCu5Mu23MkCNY9LKaNdJ8IVroe2RsJ
- ABB Q4 2022 Group results presentation can be found here:https://library.e.abb.com/public/63461737ba8345e3aa6d2461f06fc72d/ABB%20Q4%202022%20Group%20results%20presentation.pdf?x-sign=5FXqQ/JhDK60X33QUHYXu5ygzSjC0NIRvKjkJh/IbmgD+GqqsS35xPRNFx4G9kuV
- The ABB Annual Report 2021 can be found here: https://library.e.abb.com/public/c6dae9af148d4d5fb87efc97bb4b460a/ABB-Group-Annual-Report-2021-English.pdf?x-sign=GmQyA+p+s0K/4Q+iBQ9vEKh9yaP59NfMdxeNBZl9C0AIw4xcHjMgpZ7d7xVPrAZ5
- The ABB Integrated Report 2022 can be found here: https://library.e.abb.com/public/ef5852f1e2e54cad97abcc4fc48d1d58/Annual%20Reporting%20Suite_Integrated%20Report%202022_English.pdf?x-sign=7G8OjbOECaszfrXCIyA5JiH3fGx/atL/BCzpvMeZ204bfv7LF4gr4m0zTljh9JCN
EMR Additional Notes:
- Carbon Dioxide (CO2):
- Primary greenhouse gas emitted through human activities. Carbon dioxide enters the atmosphere through burning fossil fuels (coal, natural gas, and oil), solid waste, trees and other biological materials, and also as a result of certain chemical reactions (e.g., manufacture of cement). Carbon dioxide is removed from the atmosphere (or “sequestered”) when it is absorbed by plants as part of the biological carbon cycle.
- Reduction of carbon dioxide emissions through the use of low carbon power sources, achieving a lower output of greenhouse gasses into the atmosphere.
- Global Warming: Global warming is the long-term heating of Earth’s climate system observed since the pre-industrial period (between 1850 and 1900) due to human activities, primarily fossil fuel burning, which increases heat-trapping greenhouse gas levels in Earth’s atmosphere.
- Global Warming potential (GWP):
- The heat absorbed by any greenhouse gas in the atmosphere, as a multiple of the heat that would be absorbed by the same mass of carbon dioxide(CO2). GWP is 1 for CO2. For other gases it depends on the gas and the time frame.
- Carbon dioxide equivalent (CO2e or CO2eq or CO2-e) is calculated from GWP. For any gas, it is the mass of CO2 which would warm the earth as much as the mass of that gas. Thus it provides a common scale for measuring the climate effects of different gases. It is calculated as GWP times mass of the other gas. For example, if a gas has GWP of 100, two tonnes of the gas have CO2e of 200 tonnes.
- GWP was developed to allow comparisons of the global warming impacts of different gases.
- Greenhouse Gas (GHG):
- A greenhouse gas is any gaseous compound in the atmosphere that is capable of absorbing infrared radiation, thereby trapping and holding heat in the atmosphere. By increasing the heat in the atmosphere, greenhouse gases are responsible for the greenhouse effect, which ultimately leads to global warming.
- The main gases responsible for the greenhouse effect include carbon dioxide, methane, nitrous oxide, and water vapor (which all occur naturally), and fluorinated gases (which are synthetic).
- Circular Economy:
- A circular economy is a systemic approach to economic development designed to benefit businesses, society, and the environment. In contrast to the ‘take-make-waste’ linear model, a circular economy is regenerative by design and aims to gradually decouple growth from the consumption of finite resources.
- In such an economy, all forms of waste, such as clothes, scrap metal and obsolete electronics, are returned to the economy or used more efficiently.
- Sustainability Vs. Circular Economy:
- Circularity focuses on resource cycles, while sustainability is more broadly related to people, the planet and the economy. Circularity and sustainability stand in a long tradition of related visions, models and theories.
- A sustainable circular economy involves designing and promoting products that last and that can be reused, repaired and remanufactured. This retains the functional value of products, rather than just recovering the energy or materials they contain and continuously making products anew.
- US GAAP (Generally Accepted Accounting Principles):
- Collection of commonly-followed accounting rules and standards for financial reporting.
- GAAP results are straightforward and understandable financial reports that investors and regulators can easily use to assess a business’s financial standing.
- IFRS (International Financial Reporting Standards):
- Set of accounting standards that govern how particular types of transactions and events should be reported in financial statements. They were developed and are maintained by the International Accounting Standards Board (IASB).
- GAAP are the generally accepted standards for financial reporting in the United States. IFRS are a set of internationally accepted accounting standards used by most of the world’s countries.
- The key differences between GAAP and IFRS (International Financial Reporting Standards) include: GAAP is a framework based on legal authority while IFRS is based on a principles-based approach. GAAP is more detailed and prescriptive while IFRS is more high-level and flexible. GAAP requires more disclosures while IFRS requires fewer disclosures.