Efficient production and responsible sourcing

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Cornerstones of the Group's manufacturing operations

Environmental, economic and social sustainability is a long-standing cornerstone of the Volvo Group business. We have adopted and developed tools, processes and production systems to help us set a global standard of excellence and guide our employees on responsible behavior. 

Global standards
An important tool is the Volvo Production System (VPS), which is used for many processes throughout the organization, including product development, business services and logistics. VPS is a way of working with the minimum resources necessary, and using methods that streamline operations and minimize productivity losses. It includes tools for measuring and improving workplace safety, health and well-being. 

As employees influence the quality of products and services we deliver, transparency and clear communications with cross-functional teams are equally important aspects of VPS.

Quality, safety and environmental care are our corporate core values and are embedded in our sustainability approach. At each production unit, we have quality coordinators, safety delegates and environmental coordinators, and we measure, monitor and continuously improve our performance.

The Volvo Group conducts manufacturing in 18 countries worldwide. All production facilities comply with prevailing legislation and our minimum requirements for environmental management and improvement, chemicals, energy consumption, emissions to air and water, and waste management. To ensure compliance, environmental audits have been conducted group-wide since 1989.

All our wholly-owned production sites have certification for the ISO 9001 quality management system. 94% of our production is certified in accordance with the ISO 14001 environmental management standard and 37% in accordance with the OHSAS 18001 international standard for occupational health and safety.

More than 94% of our automotive products spend is with ISO 14001 or equivalent-certified suppliers.

The Group’s New River Valley plant in Virginia and Macungie plant in Pennsylvania, U.S., have both gained ISO 50001 certification – the leading international certification program for driving continuous improvements in energy efficiency. Both plants are also certified to the top U.S. energy specification – the Superior Energy Performance (SEP).

In 2013, there were 15 licensable facilities in Sweden. There is a continuous review of the environmental permits, but no environmental permits need to be renewed in 2014. During the year, there were no major environmental incidents.

Our Braås factory in Sweden is the world’s first carbon-neutral production facility for construction equipment.

Energy efficiency
Our ambitions to increase energy efficiency and attain carbon neutrality are important both in terms of environmental and economic sustainability. The Volvo Group was the first automotive manufacturer to participate in the WWF Climate Savers program. Since 2009, we have reduced carbon emissions from our operations by 13%. This is already in excess of the 12% target we are committed to achieving by 2014.

Focusing on energy saving has a clear impact on the Group’s financial results. For example, at our cab paintshop in Blainville, France, an energy reduction plan saved 320,000 euros between 2011 and 2013, equating to an average annual reduction of  4,513 MWh of energy and a 1,170 ton reduction in CO2 emissions.

Carbon-neutral manufacturing
Volvo CE's factory in Braås, Sweden, was certified carbon neutral at the end of December 2013, becoming the first construction equipment production facility in the world to be powered entirely by renewable energy. This was the culmination of collaborative efforts that began back in 1999 and involved the local energy supplier, Växjö Energi, Volvo CE and the local community. In the Volvo Group's truck operations it was the plant in Ghent, Belgium, which set the standard for carbon–neutral industrial manufacturing in 2007. And just as Ghent became the first carbon–neutral facility in the automotive sector, Braås too became the first in its industry.

Our U.S. truck assembly plants, New River Valley and Macungie, are both SEP-certified, the top U.S. energy specification, at platinum level – the highest possible.

Responsible sourcing
The Volvo Group’s responsible sourcing processes aim to reduce the risk of incidents that may interrupt our supply flow or damage the Group’s reputation, build long-term relationships with suppliers and meet growing customer expectations.

Since 1996, the Volvo Group has consistently increased supplier requirements on environmental issues, business ethics and social justice. Our supplier requirements are based on the principles contained in the Group’s Code of Conduct, which is reviewed and updated regularly.

In 2013, we created a new CSR Supply Chain Steering Group, which oversees the Volvo Group CSR Supply Chain Network, which has been in place since 2007. Both include representatives from all the Group’s purchasing organizations. The steering group members are drawn from each purchasing organization’s management team as well as the chair of the Group’s CSR and Sustainability Committee.

We also launched a series of global CSR roadshows to train purchasers on business ethics, social justice and environmental issues affecting our supply chain. During the year, we conducted training in Ageo in Japan, Shanghai in China, Bangalore in India, Eskilstuna in Sweden, and Greensboro, Hagerstown and Shippensburg in the U.S. – covering 60% of the total number of purchasers.

Ethical assessment
In line with general automotive industry practice, the Volvo Group uses a self-assessment approach to evaluate supplier performance and compliance with our ethical requirements.

87% of all suppliers that completed the assessment during 2010-2013 passed it. 68% of suppliers from countries considered to be ‘high risk’ from a CSR perspective completed the self-assessment, of which 87% passed.

Some 72% (66) of the Volvo Group purchasing spend of direct material derives from suppliers that completed the self-assessment during 2010–2013.

The main reason for not passing was a lack of adequate systems to enforce our CSR and sustainability requirements down the chain to sub-contractors. Others failed due to a lack of compliance processes.

We publish an annual plan covering supplier processes and systems, communication, measurement and targets, evaluation process, and benchmarking.

Read more in the Volvo Group Sustainability Report 2013.