Response to the Stakeholder Panel Statement - ABB Sustainability Report 2016

ABB’s response to the 2015 stakeholder panel statement
Focus area	Panel recommendation	Response from ABB
Focus area	Panel recommendation	Completed/ addressed	Work in progress	To be addressed	Will not be addressed	Additional comments
Strategy	The Panel recommends assessing the impact of the company’s sustainability strategy and expects ABB to highlight what is important but difficult to achieve, and to report on the process and progress made.					Challenges are addressed in each chapter. In 2017, methods for assessing sustainability impacts will be reviewed and a pilot assessment of an element of the eco-efficiency portfolio undertaken.
	The Panel would like to see a balanced consideration of both the opportunities and the responsibilities that the SDGs represent. ABB should also address SDGs where they have challenges.					Addressed in Material issues chapter. SDGs will form part of the detailed materiality assessment starting in 2017.
	The Panel recommends an assessment of the sustainability challenges of digitalization and the impacts of digitalization across the business.					The report includes an interview with its new Chief Digital Officer with comments regarding impacts. ABB continues to engage with a variety of stakeholders to understand the impacts of digitalization.
Progress towards targets	The Panel recommends formulating specific and measurable targets for each ambition. Absolute values, as well as reductions over the years, will help to judge the stringency of the targets and progress made.					Further development of targets is work in progress. Absolute values are reported alongside the relative values, for clarity
Materiality	Until the next formal review of the materiality matrix, ABB should ensure sustainability issues included in their enterprise risk management system are also included in the materiality matrix.
Products and Services	Explain the rationale for the launch of the ‘eco-efficiency’ portfolio and describe what is included in the portfolio.
	The panel recognizes that it is difficult to assess the impacts of the eco-efficiency portfolio such as reductions in greenhouse gas emissions and energy but recommends setting up a target or a process for doing so.					In 2017, methods for assessing sustainability impacts will be reviewed and a pilot assessment of an element of the eco-efficiency portfolio undertaken.
	The Panel would like to understand if ABB continues to sell products less efficient than current benchmarks and, if so, how it deals with this in the context of the eco-efficiency portfolio.					Energy-efficiency related products in the eco-efficiency portfolio demonstrate at least 10% higher efficiency / lower losses during the use phase compared to the industry average / installed base / applicable reference technology. ABB also continues to improve the efficiency of other products, but at a minimum, all comply with the relevant regulations.
Governance and Integrity	The Panel recommends disclosure of further indicators besides training.
	The Panel applauds ABB’s public statement in relation to tax. It should include an explanation why country-by-country reporting is not foreseen.
	The section on risk management would benefit from information about how clients and new products are being assessed.
Responsible Sourcing	The day-to-day implementation of ABB’s sustainability ambitions in the supply chain is seen as a challenge. To address this, ABB should focus on the extent to which their procurement guidelines are being used or identify why they are not being used. Potential gaps should be addressed.					Implementation of the global supplier qualification and classification process involves re-qualification of all suppliers. This is a work in progress; further activities might be developed upon completion.
	Examples of partnerships with suppliers across the supply chain should be referenced in the report. Panel members are interested in understanding how ABB is partnering with preferred suppliers to address human rights issues in the supply chain.
	The Panel acknowledges that ABB has a large and complex supply chain and that it is challenging to collect and disclose relevant data about outsourced processes. They recommend reporting about it once such a process has been started.					Current focus is full implementation of supplier qualification and classification process.
Our People	A clear description of ABB’s White Collar Productivity Program is recommended.
Human Rights	This chapter should include information about the human rights impact assessments being conducted and the steps taken during the reporting year to ensure that slavery and human trafficking do not occur in ABB’s business or throughout the supply chain.					Implementation of the requirements of UK Modern Slavery Act are covered in the chapter.
Stakeholder Engagement	In the area of community engagement, the Panel suggests strengthening the target and to disclose information about the number of lives touched, transformed or changed					Work is on-going to develop an updated target. We are investigating how we can most appropriately represent lives touched by projects, due to the diversity of projects under way across the world.
Resource Efficiency	ABB should define and disclose the boundaries of its ambitions and targets. For example in the area of water, the panel suggests disclosing in how many water scarce or water stressed sites the company is operating					Resource efficiency targets are relevant to all of our manufacturing and service operations. The water target is focused on operations in water stressed areas, but all sites are required to investigate improvement opportunities. ABB discloses the number of sites in water stressed areas.
Resource Efficiency	Targeting zero waste is ambitious. ABB could anchor its target around specific waste streams such as hazardous, industrial or electrical waste.					ABB has conducted a review of waste streams in order to better target our waste reduction programs. This is work in progress and we will report when more information is available.
Energy Efficiency and Climate Change	ABB noted that a fleet management software is being implemented to measure carbon emissions across the ABB fleet. The Panel looks forward to seeing the results of this as well as a respective greenhouse gas reduction target.					This will be addressed during 2017. A key aspect is obtaining a more accurate estimate of global, own fleet emissions to replace the high level estimate in place for the last years. This will enable us to set an appropriate baseline for emissions.
Right Materials	Instead of reporting about the use of hazardous substances by material, ABB should be reporting about inputs and outputs, as hazardous substances only represent a fraction of all materials used.					Due to the complexity of ABB’s supply chain, including own feeder factories, this presents a significant reporting challenge that will not be addressed at this time.
Right Materials	ABB could lead going beyond legal compliance. Compliance with REACH is challenging, but ABB could set a target, for a particular product or product line.					Given the wide range of material compliance requirements across our global operations, ABB remains focused on ensuring compliance in our diverse product range and supply chain.
Sustainability report	The report should be more reflective and include areas where ABB is not on track, as well as achievements. The Panel urges ABB to address the dilemmas it is facing, some of ABB’s learnings and challenges from current efforts being undertaken and to add a section ‘looking ahead.’					Challenges are addressed in the relevant chapters. ABB acknowledges that this communication is an on-going process.