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.
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.