TRIPLE BOTTOM LINE

Electrolux

Submitted by:
Submitted to:
Anchal Sharma
Prof. Suprava Patnaik Section 1- 16004

asharma18@iifm.ac.in

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Table of Contents

Introduction .................................................................................................................. 1

Sustainable Development ............................................................................................. 2

Corporate Social Responsibility.................................................................................... 3

Triple Bottom Line (TBL) ........................................................................................... 4

About Electrolux ........................................................................................................... 5

Electrolux on the Sustainability Front ......................................................................... 5

Recognizations ........................................................................................................... 7

Codes and Policy ........................................................................................................ 7

EnvironmentaL FRONT .............................................................................................8

Social Front ................................................................................................................9

Economy of People ...................................................................................................... 10

Economy of Company .................................................................................................. 11

Conclusion ....................................................................................................................12

References ..................................................................................................................... 13

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Introduction

The earth sustains all life on the planet. Without life nothing is possible and without the
nature and environment, no life is possible. In the modern world, complexities of everyday
day life have many a times made us to overlook the importance of the environment. To
compete and win, our daily activities are dictated by the pursuit of economic well-being
and the environment is easily placed second in priority. Sometimes environment is not in
any priority list at all. It will be no wrong to preclude that the lack of environmental
awareness and due regard with no foresight have resulted in the environmental disasters
that has not only affected the modern worlds economics but also the life and systems in
which we live and operate. We then get reminded about the delicate nature and its balance
but only after misfortune has galloped something of importance and threatened our lives.
We then remember the sensitivity of ecosystem.

Deepwater Horizon oil 2010, Seveso disaster 1976, Three Mile Island accident 1979,
Chernobyl disaster 1986, Bhopal Gas Tragedy 1984, and the list goes on. It took huge
losses in both the economic and environmental sense before we realized the importance
and value of the natural environment. Materialistic needs have had us blind folded but
now human kind have realized the need to save nature and the businesses and companies
which were the targets of blame for almost every such conflict, are actively getting involved
to work on saving the nature and conduct their business sustainably.

Today lots of concepts have evolved which essentially talk about the coexistence of
business profits and healthy environment to live. Triple Bottom line, Corporate Social
responsibility, Sustainable Development etc. are the words popping up almost everywhere.
More and more organizations are trying to comply with international standards like ISO
14000, ISO 9001:2008 etc. to perform not only at business but environment front too.
Moreover, for some this have become a marketing tool to gain popularity among public
while for some to maintain the image of environment savior is really the aim. Anyway, both
are good as far as environments safety and social upliftment is concerned. Here in this
report, we will examine a well-known multinational home appliance manufacturer,
Electrolux, on the above mentioned fronts.

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Sustainable Development

How to reduce poverty in third world countries through more industrialization and
becoming more productive without harming the environment, was the challenge for the
United Nations and their Environmental organizations. Neither the developed countries
nor the developing countries were willing to give up an economic development based on
growth, which was such having lots of environmental threats, ranging from pollution,
deforestation, acid rain, desertification, the destruction of the ozone layer, even leading
towards climate change. There was an urgent need for a developmental concept that would
allow economic development to proceed without creating environmental emergencies.

In December 1983, the then Secretary General of the United Nations, asked the Prime
Minister of Norway, Gro Harlem Brundtland, to create an organization which will be
independent of the UN, to focus on environmental and developmental problems and find
solutions. This new organization was the Brundtland Commission, or more formally, the
World Commission on Environment and Development (WCED). The Brundtland
Commission was first headed by Gro Harlem Brundtland as Chairman and Mansour Khalid
as Vice-Chairman. In 1987, the Brundtland Commission published the first volume of their
report Our Common Future,. It was in this report where the term Sustainability was
given the new life.

The Commission insists upon the environment being something beyond physicality, and
advocated to include social and political atmospheres and circumstances. It also insists
that development is not just about how poor countries can ameliorate their situation, but
what the entire world, including developed countries, can do to ameliorate our common
situation.1

Sustainable development is the kind of development that meets the needs of the present
without compromising the ability of future generations to meet their own needs. The two
key concepts of sustainable development are:2

the concept of "needs" in particular the essential needs of the world's poorest people, to
which they should be given overriding priority; and

1https://en.wikipedia.org/wiki/Brundtland_Commission
2https://en.wikipedia.org/wiki/Brundtland_Commission
http://www.iisd.org/topic/sustainable-development
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the idea of limitations which is imposed by the state of technology and social
organization on the environment's ability to meet both present and future needs.

Corporate Social Responsibility

Businesses are powerful constituents of society and the most successful, respected, and
desirable businesses exist to do much more than make money; they exist to use the power of
business to solve social and environmental problems.3 TATA Group website (under
sustainability webpage).

Corporate Social Responsibility (CSR) is a management concept under which companies

integrate the social and the environmental concerns in their business operations. The key
is to connect and get onboard all of the stakeholders into the CSR planning. CSR is
perceived as being the way by which a company tries to achieve a balance among
economic, environmental and social imperatives, while at the same time addressing the
expectations of shareholders and stakeholders. Here it becomes important to draw a clear
distinction between CSR, which can be a strategic business management concept on one
side while a charity, sponsorships or philanthropy on the other. Through CSR, can also
make a valuable contribution to poverty reduction, helping needy by providing basic
amenities, education opportunities, helping cleaning the local area of operations etc. will
directly enhance the reputation of a company and strengthen its brand. It is important to
note that according to the capacity and good margins in business, one can thing of CSR.
Today there are specific regulations too in many countries mandating certain companies
based on various criteria to contribute towards society under CSR.

In India, Section 135 and Schedule VII of the Companies Act 2013 says that- Every company
having net worth of rupees five hundred crore or more, or turnover of rupees one thousand
crore or more or a net profit of rupees five crore or more during any financial year shall
constitute a Corporate Social Responsibility Committee and company must spend at least
two percent of the average net profits of the company made during the three immediately
preceding financial years.

There are many social issues that a company can undertake to resolve under their CSR
objective like, responsible sourcing, stakeholder engagement, environmental management,

3 http://www.tata.in/sustainability/articlesinside/corporate-social-responsibility
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eco-efficiency, anti-corruption measures, labor standards and working conditions,

employee and community relations, social equity, gender balance, human rights, good
governance, etc.

Triple Bottom Line (TBL)

Triple bottom line is a phrase introduced in 1994 by John Elkington. He later used the term
in 1997 in one of his book "Cannibals With Forks: The Triple Bottom Line Of 21st Century
Business". This book seeks to broaden the focus on the financial bottom line by businesses
to include social and environmental responsibilities. Triple bottom line essentially
measures a company's degree of social responsibility, its economic value and its
environmental impact. A key challenge with the triple bottom line is the difficulty of
measuring the social and environmental bottom lines, which forms the basis to advocate
the three separate accounts to be evaluated.

Triple bottom line is intended to advance the goal of sustainability in business practices, in
which the focus of companies is extended beyond profits to include social and
environmental issues to measure the total cost of doing business. The elements of the
triple bottom line are referred to as "people, profits and planet.

People element of TBL put focus to the fair treatment of employees, off-site labor,
adopting and following favorable practices in the communities where companies conduct
business.

Planet represents the implementation of sustainable practices and the reduction of

environmental impact due to the operations of the company. Such measures could range in
scope from green initiatives such as recycling programs, substituting raw material which
leads to a toxic waste to eco-friendlier one, adopting standards like ISO 140001 etc. It
essentially means that the corporations and companies must dedicate themselves into
manufacturing products using only sustainable materials and methods.

Profits- Companies are constantly working towards increasing their revenues. but what is
important to know is that companies are also trying to integrate social and environmental
standards with corporate governance policies. The motive is to reduce the chances of
brand-damaging events. In todays world, the transformation to a triple bottom line is
increasingly seen as a vital factor in building corporate brands and goodwill.

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Nielsen report released in October 2015- 66% of Global Consumers Say Theyre Willing to
Pay More for Sustainable BrandsUp 55% From 2014. 73% of Global Millennials Are Willing
to Pay Extra for Sustainable OfferingsUp From 50% in 2014.4

About Electrolux

Electrolux is well-known Swedish multinational global leader in designing and

manufacturing home appliances and appliances for professional use. They have their
headquarters in Stockholm. They claim to offer thoughtfully designed, innovative and
sustainable solutions. They have many famous under their umbrella which includes
Electrolux, AEG, Zanussi, Frigidaire and Electrolux Grand Cuisine, the Group sells more
than 60 million products to variety of customers in more than 150 countries every year. In
2015, Electrolux had sales of SEK5 124 billion and have about 58,000 employees.
Electrolux believe that they can grow profitably while simultaneously contributing to
society by making smarter and more resource-efficient solutions accessible to an increasing
number of people around the world.

Electrolux on the Sustainability Front

Vision: To be the best appliance company as measured by our customers, employees and
shareholders.

To achieve this vision, in 2015 company developed their sustainability approach For the
Better. It sets out how they strive for Better solutions, Better operations and a Better
society.

BETTER SOLUTIONS- Constantly improve product performance & efficiency, Make better
use of resources, Eliminate harmful materials.

4 http://www.nielsen.com/in/en/press-room/2015/consumer-goods-brands-that-
demonstrate-commitment-to-sustainability-outperform.html
-Consumer-Goods' Brands That Demonstrate Commitment to Sustainability Outperform
Those That Dont
5 SEK is Swedish Krona which is the currency of Sweden.

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BETTER OPERATIONS- Achieve more with less, Ensure the best health and safety, Always
act ethically & respect human rights.

BETTER SOCIETY- Provide sustainable solutions for everyone, Be a force for good,
Improve sustainability in the supply chain.

In the sustainability report for 2015, Mr. Jonas Samuelson, the current CEO of Electrolux
have made a very interesting statement- "In todays corporate world, you cant separate
strategic business priorities and sustainability. Although Electrolux has been at the
forefront of the agenda for two decades, theres still much more to accomplish. For us, 2015
was about making sustainability core to how we run our business." This shows the
commitment from the top level which is highly desirable for any company to perform
better at the social and environment front.

Electrolux have realized that the emergence of a new global middle class and the rise of
megacities are among the major market shaping forces. Other drivers are challenges like
climate change and resource constraints. Company believes that to build competitive
advantage as a sustainability leader, they need to focuses on four main areas:

People- The global middle class is expected to reach 4.9 billion by 2030. It is also expected
that 60 % of the worlds population will live in urbanized areas by 2030.

Resources-Economic growth boosts energy use, global energy consumption may increase
by 25 % by 2030. Water Availability is already limited but need may increase by as much as
40 % by 2030. Worldwide use of material resources can rise two folds by 2030.

Environment- Atmospheric concentration of carbon dioxide has increased from a pre-

industrial level of 280 parts per million (ppm) to 400 ppm in 2014 affecting global
temperature and sea levels. Chemical pollutants Contamination from chemicals is a global
problem. Releases of bio-accumulative and toxic chemicals (PBTs) have increased across a
range of industry sectors a trend accelerating with expansion of the global middle class.
All of this are serious environmental and health concerns.

Technology- Demographic, resource and environmental factors spur new technology

development. e.g. renewable energy and resource-efficient solutions.

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RECOGNIZATIONS

Last year (2015), companys commitment to sustainability was recognized by many well-
known ranking indices:

DOW JONES SUSTAINABILITY WORLD INDEX- It was ninth consecutive year

Electrolux has been named Industry Leader in the Household Durables category.
Electrolux ranks among the top 10% of the worlds 2,500 largest companies for social and
environmental performance.

ROBECOSAM- Electrolux has been ranked Industry Leader and received a Gold Class
award in the RobecoSAM Sustainability Yearbook 2015.

CDP NORDIC CLIMATE DISCLOSURE LEADERSHIP INDEX- For the fifth year,
Electrolux has secured an honorable position and was named Disclosure Leader. Electrolux
is among the top 10% of the Nordic 260 companies taking part in the index.

GLOBAL REPTRAK100- Electrolux is included in the 2015. Reputation Institute listing of

the most highly regarded global companies across 15 countries.

Electrolux is included in the universe of the following more indices:

oekom Prime Status

Ethibel Sustainability Index Excellence Europe

Global Compact 100

Euronext Vigeo, Europe 120

FTSE4Good Index Series

CODES AND POLICY

The statement starts with- A sustainable approach starts at home: with safe workplaces,
mutual respect and common values. Our company codes lay the groundwork of how
Electrolux is to conduct its business sustainably and responsibly.

Electrolux have many types of engagements to understand the expectations of all the
stakeholders. Company have committed themselves to take a leadership role in four areas:
product efficiency, the use of post-consumer recycled materials, higher operational
efficiency and the safe use of chemicals. They claim that they have increased the use of
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recycled materials, which is over 60% more in 2015 than 2014. This shows their dedication
to move away from linear management of materials.

ENVIRONMENTAL FRONT

Electrolux research in European countries have given the company an insight about the
consumers interest in how products are made, how long they last, and how they are
disposed of. This is the growing trend in other western nations and will be an important
factor in other developing nations. Electroluxs sustainability report shows that they have
taken the research result seriously and their operations which already had sustainability in
mind have now given utter most importance and they have pledge to become leader in this
segment. They already have come out with products and policies which are very impressing
to anyone and started to match the New Sustainability Goals (COP 21 Agreements). Few of
the points are discussed below.

One of the most efficient refrigerator developed by Electrolux consumes electricity

comparable to the consumption of a little 7-watt LED bulb.
In 2015 report, company planned to reduce their own energy consumption right from
the first quarter of 2016.
Company plans to use more renewable energy and reduce dependence on conventional
energy sources. Two key factors that company considers to achieve this goal are: (a)
improving the energy efficiency of appliances, (usage of which represents around 80%
of the climate impact) and (b) efficiency improvements in operations (that has already
save about 400 million SEK in a year).
Company plans to influence the market to promote use of recycled plastic and replace
virgin materials with recycled materials in existing designs. The amount of recycled
plastic usage by the company increased by 68% in a year in 2015.
Climate Change: Company have claimed that they have already reduced CO2 impact
by 27% relative to the 2005 levels. They have also promised to further reduce their
carbon impacts by 50% up to 2020 in relative to the 2005 levels.
In last 5 years, 30% CO2 emissions reduced in Ocean Transport (part of Supply Chain).
In 2015 Electrolux went into an agreement with shipping company Maersk Line,
designed to improve performance and inspire others in container shipping industry to
follow the trend.
They claim to manage chemicals and their usage carefully and continuing to replace
those that cause concern. They believe to be in line with the best practices around the

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world and anticipate legal restrictions and customer requirements. Company have
worked hard to replace high-impact greenhouse gases (hydro fluorocarbons or HFCs)
with lower impact alternatives.
One of the group-wide commitment is that to make 13 manufacturing sites in Sweden,
Hungary, Romania, Poland, Italy and Germany to exclusively procure electricity
powered by hydro, solar, wind or bio-mass. This will reduce CO2 emissions by 75,000
tons per year, equating to 60% of companys emissions in Europe.

More targets and projects announced by Electrolux include:

Company plans to improve energy efficiency of manufacturing sites and warehouses by

20% by 2020 (baseline taken is 2015).
Company plans to reduce water consumption in manufacturing by 5% every year in
areas of water stress.
One-third of Research budget is for sustainable innovation, including energy efficiency.
{SEK 3,210 million (2,872 millions)}
Future target to improve the CO2 efficiency of transportation by 15% over next 5 years.
Increasing Population- Potential for new business models and better technology to
have reduced carbon footprint. Introduce most efficient of technology in Third World
countries (Largest emerging markets).
AEG GREEN ranges of vacuum cleaners has better-for-the-environment features
(Higher Energy Efficiency and Containing 55-70% Recycled Plastics)
Onsite energy generation at sites in Vallenoncello and Forli, Italy.
Electrolux has joined United for Efficiency (U4E) a public-private partnership led by the
United Nations Environment Programme, to help governments in emerging markets to
develop and implement national and regional strategies for improved energy efficiency.
They also support the initiative with know-how, including data and insights into energy
labelling and how to effectively manage redundant appliances.

SOCIAL FRONT

Following points shows the companys efforts on this front.

Intensify their scrutiny of the human rights impacts of the materials they use, and
develop a cohesive, group-wide program for our approach to human rights
Promoting universal norms supports human rights and raises environmental, labor and
economic standards, especially in low-cost countries

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Transparency throughout our supply chain.

Continue to reduce global injury rate i.e. Total Case Incident Rate (TCIR) by at least 5%
every year. Since 2005 incident rate has declined by 72% for Electrolux.
Attain safety certification for operations across the world.
Promoting the Code of Conduct and Code of Ethics. In 2015, company launched a Code
of Conduct training program to raise awareness of the responsibilities that every
employee carries, and the rights have.
Be responsive and respectful when dealing with issues of concern.
Participating in United for Efficiency, (UNEP-led project) to develop recommendations
on How emerging markets can Leapfrog to Greater Energy Efficiency.
Plan to develop own Social Investment Program, Targets and Key Performance
Indicators (KPIs) in 2016
Supply Chain- Responsible sourcing program has been ongoing since 2006. In 2015, 255
Purchasers and 80 suppliers were trained and Electrolux joined the Conflict-Free
Sourcing Initiative (CFSI).
Allocated SEK 3,210m (2,872m) to R&D, out of which approximately one third is for
sustainability- related. Focus on Energy, Water efficiency and Use of Materials.
Support EU legislation: 80% of major appliances has to be recovered (70% for small
appliances) for Recycling
In-depth training campaigns on our Code of Conduct, on anti-corruption and on anti-
trust policies and anti-competitive behavior.
Donating products to selected causes, supplying appliances to Emergency Relief efforts
and by Matching financial contributions made by employees in times of Humanitarian
Need.

Economy of People

Electrolux always claims that they have great respect towards and suitable products for
almost all types of economies where they operate. Following points show a glimpse of it.

Communities benefits through Jobs, Knowledge Transfers and Economic Opportunity

Offering of efficient and affordable solutions to emerging economies.
Community initiatives and financial support for not-for-profit organizations indulging
in social and environment sector.

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Community involvement projects are managed through business sectors, product lines
and operational units.

Economy of Company

Net sales for the Electrolux Group in 2015 amounted to SEK 123,511 million. Apprantly, their
sales have increased by 10.1% of which 2.2% was organic growth, 0.1% acquisitions and 7.8%
currency translation. Annual Report claims that the organic growth was mainly a result of
mix of improvements and price increases. Operating income amounted to SEK 2,741m
which leads to a margin of 2.2%.

Operating income includes costs of SEK 2,059m related to the not completed acquisition of
GE Appliances, excluding these costs the margin was 3.9%. Income for the period
amounted to SEK 1,568 m, corresponding to SEK 5.45 in earnings per share before dilution.
Liquid funds as of December 31, 2015, amounted to SEK 11,199m (9,835), excluding short-
term back-up credit facilities. Board of Directors proposes a dividend for 2015 of SEK 6.50
per share, equivalent to a total dividend payment of approximately SEK 1,868m.

Consolidated Income Statement have corroborated the above made claims.

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Conclusion

It is a beautiful picture for any multinational company to earn profits and spend some of
the liquid funds on the environmental and social concerns. Technological advancement
has no doubt been welcomed by the world and Electrolux have done well on this front as
their product targets the segment of low energy consumption and used lots of recycle
plastics. European and western legislations are well anticipated by the company and their
eco-friendly and innovative products have made the way to the market.

Yet, the claims made have to be accessed and verified. This aspect, for most of the
operations, has been taken care off by following certifications:

ISO14001 Environmental Management System Certificate for French operations

Electrolux Professional Ljungby (Sweden) ISO 9001 and ISO 14001
Electrolux Professional Rayong (Thailand) ISO 9001 and ISO 14001
ISO9001 Quality Management System Certificate for French operations
Declaration of conformity Washers, Dryers and Hydro Extractors
Declaration of conformity ironers, barrier washers and side-load washers
Electrolux Professional SpA ISO 9001:2008 (DNV)
Electrolux Professional SpA Environmental Management System ISO 14001:2004
(DNV)
Electrolux Professional Aubusson ISO 9001, ISO 14001 and OHSAS 18001
Electrolux Professional St. Vallier ISO 9001
Electrolux Professional Sursee ISO 9001 and ISO 14001(DNV)
Electrolux Professional Pordenone BS OHSAS 18001 (DNV)
Electrolux Professional Pordenone BS OHSAS 18001 Occupational Health and
Safety Management System standard (Accredia)

This shows the commitment of the company to keep performing well on the
environmental, social, managerial and economic fronts.

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References

o Electrolux Annual Report 2015

o Electrolux Sustainability Report 2015
o http://www.electroluxgroup.com/forthebetter/
o http://www.iisd.org/topic/sustainable-development
o http://www.investopedia.com/terms/t/triple-bottom-line.asp#ixzz4ZoOQtHqe
o https://www.mca.gov.in/SearchableActs/Section135.htm
o http://www.nielsen.com/in/en/press-room/2015/consumer-goods-brands-that-
demonstrate-commitment-to-sustainability-outperform.html
o http://professional.electrolux.com/Documentation/ISO-Certificates/
o http://www.tata.in/sustainability/articlesinside/corporate-social-responsibility
o http://www.unido.org

o https://en.wikipedia.org/wiki/Brundtland_Commission

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