Approach to reporting

This report was compiled as of February 23, 2023, and published on February 24, 2023. We prepared the report in accordance with the GRI Standards (2021) for the reporting period January 1 to December 31, 2022. The GRI content index is available as a separate document. In addition to the GRI Standards, the framework for our Sustainability and Integrated Reports is based on the EU Non-Financial Reporting Directive (NFRD), the Sustainability Accounting Standards Board (SASB), the European Union’s common classification system for sustainable economic activities, known as the EU Taxonomy, the Task Force for Climate-related Financial Disclosures (TCFD) Recommendations, and the 10 principles of the UN Global Compact.

We aim to maintain alignment with best practices in our sustainability reporting, and we closely follow all pertinent developments in international sustainability reporting. This includes applicable regulations such as the amended Code of Obligations in Switzerland, the Corporate Sustainability Reporting Directive (CSRD) in the European Union, and the proposed SEC Rules to Enhance and Standardize Climate-Related Disclosures for Investors in the United States, as well as developments in reporting standards such as the European Sustainability Reporting Standards and the IFRS Sustainability Standards.

Our Sustainability Report covers ABB’s material economic, environmental and social impacts and how we manage them. Omission from the material issues addressed in our report does not mean that an issue is not managed. In addition to our annual sustainability reporting, ABB reports quarterly on a selection of our strategic sustainability KPIs.

Reporting boundaries

Our formal sustainability reporting system covers all ABB Group companies worldwide, including wholly owned subsidiaries, majority-owned joint ventures and direct and indirect participations (as listed in the ABB Corporate Governance Report 2022, pages 23-24). Newly acquired businesses are typically reflected in annual sustainability reporting in the subsequent year. Businesses that are divested in the first half of the year are typically excluded from annual sustainability reporting. For a list of acquisitions and divestments in 2022, please refer to the ABB Integrated Report 2022, pages 118-119.

Data collection processes

We rely on a global, online data reporting system to measure and gather data from across ABB. The system is used to file reports on hazards, incidents, sustainability observation tours and environmental performance at every production and service site, as well as a majority of our office locations. It is also used to collect annual social data from every country. This centralized reporting system simplifies data collection and facilitates greater transparency.

The data in this report relating to health, safety and our social performance covers 99 percent of ABB employees. Data relating to our environmental performance (including energy, emissions, water and waste) was sourced from 332 ABB sites and offices, covering approximately 91 percent of employees. Data on the environmental performance of the remaining employees, who are located at non-manufacturing sites with limited impacts, is generated by estimating energy, water and waste parameters pro rata. In 2022, we added 1.3 percent of our employees to these estimates when we removed 50 of our smallest sites from our reporting system, representing a fraction of a percent of our environmental impact.

Calculation of energy and GHG data

All GHG emission factors for fuels used at our sites are sourced from the GHG Protocol’s “Emission Factors from Cross-Sector Tools” (March 2017). They include the emissions of CO₂, CH₄ and N₂O. Biogenic emissions from biofuels include only CH₄ and N₂O emission factors. Global warming potential (GWP) factors for CH₄, N₂O and SF₆ follow the IPCC’s AR5 report. Emissions from ABB’s vehicle fleet are based on lease contract distances and tank-to-wheel gCO₂/pkm (grams of CO₂ per passenger kilometer). We applied lab-to-road uplift factors from the International Council on Clean Transportation Europe to better reflect our vehicles’ real emissions on the road vs. the laboratory.

ABB uses the market-based method to calculate and report scope 2 GHG emissions. For purchased electricity and district heating, we have obtained local emission factors from utilities. Scope 2 GHG emissions for electricity have also been calculated using the location-based method; for these calculations we sourced our data from the International Energy Agency (2022).

In our 2030 Sustainability Strategy, launched in 2020, we measure our progress against a 2019 baseline, which is adjusted to portfolio changes. The adjusted 2019 baseline is 639 kilotons.

The results are provided for comparison below:

Scope 3 GHG emissions are calculated using average emission factors together with inhouse data on, e.g., product performance, sales volumes, average lifetimes, and other data required to calculate emissions in the 13 out of 15 scope 3 categories that are relevant for ABB. For example, the category “Purchased goods and services” includes all upstream (cradle-to-gate) emissions for the extraction, production and transportation of goods and services purchased or acquired by ABB in the reporting year, not included in other categories. Our calculation uses secondary data, applying spending data and global industry average emission factors per material consumed from life cycle inventory databases. In the category “Business travel”, emissions from air travel are calculated using emission factors, with radiative forcing (RF), published by the UK Department for Business, Energy & Industrial Strategy (BEIS) in its 2022 Government GHG Conversion Factors for Company Reporting. For the category “Use of sold products”, we calculated the emissions due to losses in equipment such as electric motors, drives, switches, switchgear and breakers during conduction, conversion, and transformation of electricity through our products. For products with a direct energy use, like industrial robots, we calculated the emissions due to the electricity-use during the product's service life.

Estimates

As this report was published in February 2023, the environmental data in the report is based on measured data for the first 11 months of 2022. For December, each site was required to estimate its environmental performance using data from December 2021 as a starting point and then to consider the impact of possible changes from the previous year. These may include physical changes at the site, changes in production volumes and weather conditions.

Changes in 2022

In order to extend our GRI reporting, ABB has decided for the first time to report on GRI Disclosure 301-1 (Materials used by weight or volume) in its 2022 reporting, replacing our previous disclosure on hazardous materials. Additionally, we have decided not to report on GRI Disclosure 302-4 (Reduction of energy consumption) in this report as we are currently revisiting the calculation methodology for this KPI.

Independent assurance

KPMG AG has been engaged by ABB to provide independent assurance for selected GRI KPIs disclosed in the Sustainability Report and for reported progress against the 2030 sustainability targets. KPMG AG's full Assurance Statement, including opinion and basis of opinion, is available in the following section "Assurance statement."

Certified ABB management system information

ISO management system standards enable organizations to improve performance by specifying repeatable steps that the organizations can implement to achieve their goals and objectives.

ISO 14001 sets forth the criteria for an effective environmental management system and maps out a framework for the implementation of such a system. ISO 50001 sets energy management standards, providing organizations with a clear way to improve energy use through the development of an energy management system. ISO 45001 is the international standard for occupational health and safety management systems. It is aimed at mitigating any factors that could harm the mental or physical well-being of workers; ISO 45001 replaces the OHSAS 1800 family of standards, which was withdrawn on March 31, 2021.

• 80 percent of our manufacturing and service sites are covered by a certified environmental management system (ISO 14001 or equivalent)
• 79 percent of our employees at manufacturing or service sites are covered by a certified occupational health and safety management system (ISO 45001 or equivalent)
• 32 percent of our energy use at manufacturing or service sites is covered by a certified energy management system (ISO 50001 or equivalent)Previously, we reported the coverage by certified energy management systems as percentage of employees at manufacturing or service sites. We have decided to report the coverage by certified energy management systems in this report as percentage of energy use at manufacturing or service sites to reflect the coverage more accurately.

Sustainable Development Goals

To reflect how the selected case study examples in this report contribute to the United Nations' Sustainable Development Goals (SDGs), we have mapped the main impacts of each case study to the sub-goals of the SDGs. Based on the results from this process, we have selected those SDGs most impacted by each of the case studies. During the course of the materiality assessment we plan to conduct in 2023, we intend to comprehensively map the positive impact ABB is having on the SDGs.

Additional disclosures

All of ABB’s policies, statements and declarations related to the topic of sustainability can be found on our Group website.