Atlas Copco 2008 â tough ending to a record year Annual Report ...

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SUSTAINABILITY REPORTIn 2008, CO 2 emissions from energy at production sites increased3% in relation to cost of sales. The increase is related to the higherenergy consumption as explained under use of resources. Forcomparable units, the CO 2 emissions from production decreased10% in relation to cost of sales.Atlas Copco’s production units continue to work at reducingthe CO 2 emissions. For example the breaker production unit inKalmar, Sweden, invested in groundwater cooling and a new compressoras well as district heating, which reduced the environmentalimpact from the plant by 90%. This resulted in the first CO 2neutral factory building. In New Zealand, the new, efficient Intermechfacility will decrease its environmental footprint in producingclean fuel CNG (compressed natural gas) compressors.In 2008, the CO 2 emissions from transport decreased with 5%in relation to cost of sales. The reduction is partly explained by adecrease of the use of air freight. The reporting guideline was alsorestated in 2008, to facilitate the reporting. Initiatives to provideenvironmentally friendly means of transportation have alsoresulted in reduced CO 2 emissions.Several initiatives to reduce the CO 2 emissions were launchedin 2008, for example the implementation of a combination transporttrain and lorry between Sweden and Belgium, and new carpolicies in some countries. Atlas Copco also provides employeesbus transport in some countries, for example in China, India andBulgaria.In Belgium, the production unit Atlas Copco Airpower investigatedthe possibility of building wind turbines to provide thefactory with energy. However, no permission was given since therewas a risk of disturbing local air traffic.During the year, Atlas Copco has started to monitor emissionscaused by business-related travel for a few countries. The Grouptravel policy actively promotes alternatives such as interactiveinternet-based conferences, and telephone and video conferences.Atlas Copco is using cooling agents in some products (airdryers) and processes (cooling installations). The Group acknowledgesthat some cooling agents have an ozone depleting impact,and therefore offers products with zero impact (ODP) and strivesto use these agents in all products. The majority of the reportedcooling agents are in closed-loop systems in Atlas Copco productsand therefore not released during the operational life of the products.The amount of cooling agents used in relation to cost ofsales decreased by 5%.Atlas Copco tracks the generation of various categories ofwaste in the production process, including regulated (sometimesreferred to as hazardous) waste. As the main raw material goinginto the process is steel, metal scrap is not surprisingly the mostsignificant fraction of waste coming out of the process, and practicallyall of this scrap is reused or recycled. Other waste categoriesare various plastics, as well as wood and paper from incomingpackaging material and office use.In 2008, the amount of waste in relation to cost of salesincreased 2%. Of the total waste produced by the Group 6% isclassified as regulated waste and 11% is sent to landfill. Otherwaste tends to be reused on site (10%), recycled by waste handlingcompanies (61%) or burned to produce energy in municipal heatand power plants (12%).BiodiversityAtlas Copco units are located in industrial areas. In 2008, no unitsreported issues regarding biodiversity.Legal matters and environmental incidentsAtlas Copco follows applicable environmental laws in all countrieswhere the Group operates and reports incidents or fines fornon-compliance with environmental legislation, as well as incidentsinvolving chemical, oil or fuel spillages, in accordance withthese laws. No major incidents have occurred during 2008 and nomajor fines have been paid.EconomyAtlas Copco’s objective is to deliver value to its stakeholders andto achieve sustainable profitable growth. When achieved, thisgrowth clearly adds value both to the local and global economies,for example in employing local personnel and in purchasing fromlocal suppliers. The Group’s strategy for growth and financialresult is reported in the Annual Report, including the financialtargets, which state for example the Group’s proven developmentprocess: stability first, then profitability, and finally growth. Salesdevelopment in different regions is reported on page 12.In many countries Atlas Copco works in close relation withsociety, which has indirect positive economic impacts, through thetraining of engineers, for example.Atlas Copco assesses its economic sustainability in terms ofthe economic value generated by the Group’s own operations. Theeconomic value generated by selling products and services to customersis distributed to various stakeholders and/or retained inthe business.Development and distribution of economic valueIn 2008, the economic value calculation was restated for 2006–2007 to better follow the GRI guideline. The economic valueretained increased by 51% to MSEK6 440 (4 254), as a result ofincreased growth generated by the business as well as acquisitionsand no redemption of shares.Employee wages and benefits paid by the Group increased15% to MSEK 14 555 (12 696).The Group contributes to economic development within theregions where it operates, through payments to pension funds andsocial security, and payments of taxes, social costs and otherduties, for example. In 2008, payments to governments throughdirect tax was down 7% to MSEK 3 194 (3 434).Through subcontracting manufacturing and other activities,Atlas Copco generated further employment and financial growth.Operating costs include payments to suppliers for goods andservices and deducted for functional costs and employee wagesand benefits, amounted to MSEK 46 084 (38 888), an increase of19%.Atlas Copco’s providers of capital, for example shareholdersand creditors, provide funds to finance the asset base that is usedto create economic value. In turn, these stakeholders receiveannual dividend and interest payments. Further details arereported in the Annual Report and on page 115.106 Atlas Copco 2008
CustomersAtlas Copco strives to be the preferred supplier to current andpotential customers, by developing, manufacturing, and deliveringquality products and solutions that provide superior productivity.The Group’s success depends on the interactionwith customers.By providing high quality products and services which meet orexceed customer requirements, the Group adds value to its customers’own operations and business objectives.Atlas Copco customer centers track their performance interms of customer share, as a measurement of how customersvalue the products and services offered by the Group. Furthermore,in accordance with the Group’s quality policy, all units conductcustomer surveys to measure how satisfied customers arewith Atlas Copco. They are implementing the Net PromoterScore (NPS) concept to measure customer loyalty and to continuouslyimprove performance. The overall objective is to achievelong-term profitable growth.The Group recognizes it has reputation risks related to theassociation with certain customers. In countries defined to be highrisk areas or at risk, Atlas Copco seeks to minimize these risks bysafeguarding that its own commitments are met regarding its businesspractices and the safety and technological leadership of itsproducts and services. In addition to this, Atlas Copco strives tobuild awareness for the ethical guidelines supported by the Group.The Group has launched a customer risk assessment guideline, toassist Atlas Copco companies in the process. This guideline will inparticular be used in cases of financing by credit export agencies.Atlas Copco follows both local and international rules (USOFAC, UN and EU) and regulations regarding trading in highrisk countries. In all of its operations Atlas Copco follows its ownBusiness Code of Practice.Products and SolutionsAtlas Copco’s products and solutions are continuously improvedin regards to customers’ demands of quality, costs and efficiencyas well as in regards to ergonomic, environmental and health andsafety aspects.Seen over the entire product life cycle, the largest environmentalimpact takes place during the use of Atlas Copco products. Indesigning its products Atlas Copco aims to reduce environmentalimpact and improve the performance of every product. Life cycleassessments show energy consumption has the most significantenvironmental impact. All new products are also assessed from ahealth and safety perspective. Atlas Copco assesses relevantaspects of ergonomics, safety and health not only in its productdevelopment process but in all life-cycle stages of the product.Atlas Copco is organized in three separate, but still integrated,business areas. Each business area operates globally. Dependingon the nature of the products and solutions offered, the focus andpriorities vary. It is difficult to report a consolidated figure fortheir environmental impact, since each business area manufacturesa wide variety of products and solutions. Some examples ineach business area are given below.Compressor Technique business areaIn 2008, the Compressor Technique business area escalated thefocus to continuously improve both products and services,designed to reduce customers’ energy consumption and increasetheir capacity.A record number of AirScan audits were performed, resultingin recommendations for how customers could reduce theirenergy costs and carbon footprints. These audits went beyond theinstalled Atlas Copco equipment by looking at other practicalaspects of the system configuration, such as the management ofair leaks in the hose/pipe connections to the compressors.The expansion of the portfolio of equipment upgrade kits,allowing customers to benefit from service products such asAirOptimizer, provides comprehensive control for the entiresystem installations or configurations for customers. This type ofintelligent control system has been shown to produce energysavings of 25%.Product improvements were realized for compressors of allbrands owned by Atlas Copco. Examples include new refrigerantdryers that were introduced, providing an average reduction inenergy consumption of 40%. The most energy-efficient oilinjectedcompressors ever produced, using an average of 13% lesselectricity and reducing energy requirements by 5–6% comparedto previous models, were also launched.The introduction of near net-shaped rotors in cast iron,instead of starting with a steel bar and mill the shape of therotors, resulted in financial savings, capacity increases and in asaving in the use of raw materials and energy.In 2008, more variable speed drive compressors were soldthan ever before, bringing energy consumption reductions andreduced carbon footprints to more customers around the globe.Construction and Mining Technique business areaPart of the Construction and Mining Technique business area’sstrategy is to develop new products and offer services to improvecustomers’ productivity and to ensure a safe working environmentas well as reducing the impact on the environment.Ground source heating utilizes recyclable energy stored in theconstant temperature layer of the ground to realize heating inAtlas Copco 2008 107
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