Sustainability is an enormous business prospect for Cargotec
Sustainability is an enormous business prospect for Cargotec. The future growth in our business comes from increasing demands for operational efficiency, the proliferation of lifetime solutions and from increasing cargo volumes.
We serve industries that cover the majority of the world's gross domestic product (GDP). This gives us potential to enable increased welfare globally.
Offering for eco-efficiency
We can promote global eco-efficiency with our offering, as our customers - producing a large share of global GDP and welfare but also global emissions - can limit their emissions with the use of our products.
We have introduced an offering for eco-efficiency. Products within the portfolio can benefit customers’ operational, emissions or resource efficiency. In environmental industries, our products and solutions can enhance the industry efficiency.
Our strategy guides our sustainability work
Services development and digitalisation are at the core of our strategy. As a global forerunner, we can shape the industry by driving higher sustainability standards and promoting the circular economy.
Digitalisation presents optimisation opportunities, which we believe will be vital in increasing eco-efficiency. In our expanding service business, the new business models have been built according to the principles of the circular economy.
Corporate sustainability governance
Sustainability is on the Board of Director’s agenda at Cargotec, and the Board reviews sustainability on an annual basis. The Cargotec Leadership Team conducts bi-annual sustainability reviews and approves corporate level sustainability targets. Cargotec’s Senior Vice President, Communications is responsible for sustainability issues within the Cargotec Leadership Team.
Business area sustainability governance
To ensure that targets match business area operations, the management teams of Kalmar, Hiab and MacGregor hold a sustainability review at least bi-annually for their respective business areas, reviewing and approving possible adjustment needs of the corporate level sustainability targets.
Operational sustainability management
Operationally, sustainability is managed at both the corporate and business area level across organisational boundaries. The key responsible organisations are units working with strategy, quality, R&D, sourcing, QEHS (quality, environment, health and safety), corporate audit, HR and legal. The corporate level sustainability targets are proposed, reported on and monitored by Cargotec’s Corporate Sustainability function, and each business area has its own function responsible for coordinating its sustainability work.
The Cargotec Sustainability Council aligns and agrees on actions taken on the corporate and business area level regarding the development, implementation and follow-up of sustainability targets and policies. The Sustainability Council consists of the Corporate Sustainability function (SVP Communications and Director Sustainability) and the corporate strategy and business area management team members responsible for sustainability issues.
Our sustainability work and targets support our strategy. They are set to ensure the standard sustainability management level of our operations, but also to keep us as a leading provider of sustainable cargo handling solutions.
Cargotec’s 2020 sustainability targets consist of long-term targets and annual targets. Long-term targets were agreed as part of Strategy Round 2018 and cover the strategy period of 2019–2021. Short-term targets are set annually to support the achievement of long-term targets and manage risks.
2020, we have also initiated an action programme for managing climate-related risks and opportunities, and have planned to define it during 2020. To reduce the climate impact of our own operations, we have committed to increase the share of renewable energy in our operations.
Annual targets 2020
Sustainability targets 2020 (2021)
We conducted a materiality assessment during the autumn of 2019 to update our sustainability focus areas with feedback from the key stakeholder groups. The results of the assessment prove that climate solutions and safety remain high on the agenda. The key material topics are summarised below according to the Environment, Social and Governance (ESG) themes.
We also updated our value creation model to reflect our purpose and vision to become the leader in intelligent cargo handling.
The Industrial Injury Frequency Rate (IIFR) for Cargotec assembly sites was 7.0 in 2019. We were able to bring the rate down at many of our assembly sites, with about 24 percent of them achieving IIFR zero levels. Kalmar assembly sites have performed exceptionally well, achieving an IIFR of 3.8. All in all, the assembly unit IIFR has increased, after four new sites that account for a significant amount of lost time injuries, were added to the evaluation. The occupational health and safety risks are higher at these locations than at others. Improvement plans have already been put in place and we expect to see results during the upcoming months. The non-assembly sites’ IIFR has improved to 6.8. We continue our efforts to further improve health and safety in all our operations.
We have initiated an action programme for managing climate-related risks and opportunities, and have planned to define it during 2020. To reduce the climate impact of our own operations, we have committed to increase the share of renewable energy in our operations. At the end of 2019, 33 percent of our electricity use was renewable. All our sites in Finland and Sweden, as well as three sites in Italy, one site in the US and one in the Netherlands, are powered by certified renewable electricity. Our target for 2020 is to increase the share of renewable electricity to 40 percent and further to 50 percent by the end of 2021.
Mitigating climate change with low carbon solutions for customers is a great opportunity for us. Our eco-efficiency portfolio consists of products that enhance our customers’ sustainability with cleaner technologies, intelligent solutions and services promoting circular economy. The offering consists of equipment, software and services that meet at least one of the four portfolio criteria. The criteria is built around four themes: systems efficiency, efficiency for environmental industries, emission efficiency, and resource efficiency. All new solutions need to pass an external review process prior to inclusion in the portfolio. During the year 2019, two new products were added to the portfolio. Sales of the offering amounted to 21 percent of total sales in 2019 (2018: 21%).
One of our targets was to launch the global chemical risk management project. Kalmar and Hiab have initiated a current state analysis at the non-assembly sites (i.e. service sites and frontline units), which are considered higher risk sites. MacGregor had to postpone the launch due to organisational changes throughout the QEHS organisation. We will continue our work in this area during the next year based on the results of assessments across the organisation.
In our sourcing functions, we continued upgrading our supplier sustainability management programme. 93 percent of our strategic suppliers have been invited to adopt the sustainability self-assessment tool, which focuses on screening human rights and other sustainability risks in our supply chain. In addition, we proceeded with our supplier code of conduct process, which aims to mitigate any risks for breaching international human rights. Suppliers within the process now cover 89 percent of our direct sourcing spend.
During the year, we carried out an analysis of the most important operational aspects related to human rights risks and measures to mitigate those risks. We identified the main risks related to human rights violations in our supply chain and in activities concerning mergers and acquisitions (M&A). In terms of M&A-related human rights risks, we conducted a review and updated the process of screening possible risks in each M&A case to be more straightforward.
During the period we maintained a satisfactory level of sustainability reporting at all Cargotec sites. This is the second consecutive year we have the whole organisation included in the consolidated figures, and we have seen good overall progress in the timeliness and quality of the reporting. We continued to develop safety campaigns and building the safety culture throughout the company, focusing our efforts on improving the overall performance. Widening the reporting scope to include consolidated data for the recent acquisitions had a clear impact, especially on the health and safety figures reported. More information about these can be found in the separate Global Reporting Initiative (GRI) index.
Our focus is to ensure a sustainable and high supplier base performance on the basis of QDCI (Quality, Delivery, Cost Competitiveness, Innovation). With that, we want to contribute in meeting customer expectations.
We select our suppliers with care and on the basis of objective factors, such as quality, reliability, delivery and price. Each supplier is required to comply with laws and regulations and respect the international human rights.
We have established clear sustainability criteria for our suppliers. Criteria, which include environmental, health, safety and labour practices as well as compliance aspects, are being reviewed continuously. Of the topics in our supplier assessment checklist, about 20% are related to sustainability criteria.
We have clear processes and audit programmes for supplier management and collaboration development. Auditing and managing of sustainability-related issues are currently being integrated to the standard supplier management and audit progress.
Cargotec is a leading provider of cargo and load handling solutions with the goal of becoming the leader in intelligent cargo handling. As a technological leader, we can shape the way goods and materials are transported globally, bringing in various sustainability standards for the whole industry.
To support an economically, environmentally and socially sustainable development, companies need to renew their operations, innovate new business models and collaborate more with each other. The needed changes will be challenging; however, we see great opportunities to help companies move towards greater sustainability, and adapt our own operations to meet the United Nations sustainable development goals (SDGs).
UN sustainable development goals are globally agreed targets that are aimed towards ending poverty, protecting the planet and ensuring prosperity for all as part of a new UN sustainable development agenda.
Although no company alone can ensure that the world will achieve the goals, they can show their support by taking small steps towards the targets with developing their operations in line with the UN goals. We firmly believe that with our ambition of being the leader in intelligent cargo handling, we are particularly impacting the six goals marked below.
The latest Intergovernmental Panel on Climate Change (IPCC) report highlighted the need to decrease CO2 emissions at an unforeseen pace. The IPCC report is deeply linked to the UN SDGs through climate action, industry growth and innovation. We at Cargotec have developed our strategy to support both of these actions by focusing on digitalisation and productivity, and by advocating for a more-with-less approach both internally and in our customers’ operations.
Digitalisation plays a key role in decreasing emissions in the maritime and transportation industries. It will also be a major enabler for a wider social change towards a more circular economy. In the future, data sharing, common platforms and collaboration will act as key drivers in achieving these targets and connecting industries.
Digitalisation, added with electrification of traditional diesel-driven equipment, are ways with which we help support a more sustainable logistics industry. Cargotec’s offering for eco-efficiency portfolio supports our economic growth and sets an industry example on sustainability standards.
We are making a great effort to be more transparent, and are improving our communication with our stakeholders to increase environmental awareness and management. We proactively contact our partners to discuss the most relevant sustainability topics and during the year, we took part in several sustainable investment conferences.
The annual report 2019 consists of the Annual review and the Financial review. Together with the annual review, Cargotec also publishes the GRI index for the year 2019. The annual review and the GRI index aim to describe Cargotec's strategy and its realisation in 2019, the company value creation process, as well as portray the significance Cargotec gives to sustainability issues as part of its business.
Cargotec’s sustainability reporting has been prepared in accordance with the GRI standards: Core option, defined by the global reporting initiative GRI. The GRI index has been assured by an independent third party.
We report to several third parties, which award us sustainability ratings that help our stakeholders to evaluate our sustainability performance. At the beginning of 2018, MSCI and Ecovadis both rated us among the most sustainable companies in our industry (class AA and gold respectively).
We have been disclosing to CDP since 2010 and in 2019, Cargotec achieved a C ranking in the climate programme. Noteworthy is however, that the biggest emission savings supported by Cargotec are achieved when using our products, not by cutting emissions from our own operations, as the environmental impacts of Cargotec’s own operations are small in comparison to the complete value chain. To give an example, around 2.5 mil barrels (1.8 mil tCO2e) of fuel savings were enabled by Cargotec port equipment solutions during past 6 to 10 years, whereas the emission from our own operations are on the level of 51,700 tCO2e annually. Cargotec enables the fuel savings by providing hybrid and electric solutions, which replace diesel-driven solutions. An aspect the CDP does not take into consideration in their ranking process.
Annual review 2017 with sustainability section and GRI index
Annual review 2016 with sustainability section and GRI index