Investors increase interest in sustainability issues

One of the stakeholder groups showing interest in recent years in ABB’s sustainability performance are investors – mainly socially responsible investors but also some mainstream analysts and funds.

In 2014, ABB held a series of meetings with investors in New York, Paris, Stockholm and Zurich, as well as a number of telephone conferences, focusing on environmental, social and governance (ESG) issues. These sessions take the form of presentations to large groups or one-on-one meetings with individual investor funds.

Top of the agenda was interest in ABB’s Sustainability Objectives for 2014-20 period, which were announced at the end of 2013. ABB fleshed out many of the targets and key performance indicators in 2014 and was able to provide an increasing level of detail in response to investor queries.

For example, ABB faced many questions about the target to increase revenue from its energy efficient portfolio of products, systems and solutions (see Energy efficiency, renewable energy and climate) by 20 percent by 2020. Investors focused on the value of such a portfolio and whether ABB is being sufficiently ambitious. There were also questions about particular markets – such as high-voltage direct current transmission, wind and solar power, and ABB’s increasing business in battery storage and electric vehicle charging stations in different parts of the world.

ABB also faced questions about its efforts to improve health and safety performance. At the meetings, sustainability specialists explained that ABB was setting lead indicator targets (such as hazard reporting and site observational tours) rather than lag indicator targets in order to promote the kind of safety culture change ABB wishes to have in place by 2020.

The issue of how ABB manages social and environmental risks in its extensive supply chain was among the most frequently asked questions. ABB has considerably strengthened its supplier evaluation and development programs in recent years (see Responsible sourcing) and focuses efforts on potentially high risk suppliers in high risk countries. Investors see the clear correlation between effective management of supply chain risks and the company’s ability to carry out successful business.

Among the other most common areas of discussion: Governance and anti-corruption efforts in ABB; human capital development and how ABB manages issues such as staff turnover; efforts to strengthen gender diversity within the company; and how ABB manages human rights and its presence in sensitive countries.

For ABB, such exchanges allow the company to gauge which topics are of interest to shareholders, and play a part in the assessment of which issues are seen as material to ABB’s success. The commitment to engage with an important stakeholder group is continuing with roadshows in 2015.