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  May 29th, 2013 | Written by

Operate in the Green!

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If you’re looking for a global company that could be called the Corporate Grandfather of Sustainability, say hello to Electrolux. 

If you’re looking for a global company that could be called the Corporate Grandfather of Sustainability, say hello to Electrolux.

The Swedish-based manufacturer of household and professional appliances planted its green roots in the sustainability soil way back in the 1990s, practically a millennium in eco-years.

Not that the company’s original push into the green zone was voluntary. In the 1980s, a European-wide ban on ozone-depleting Freon (a chlorofluorocarbon often used as a refrigerant) forced Electrolux to look for more environmentally friendly ways to manufacturer refrigerators.

This mandated initiative injected a green strain into Electrolux’s corporate DNA, creating a snowball effect that has led the company to issue annual sustainability reports since 1995, market products as eco-friendly since 1997, take a leadership role in the Clean Cargo Working Group (which describes itself as “a global business-to-business initiative made up of leading cargo carriers and their customers, dedicated to environmental performance improvement”), get green certifications on its factories worldwide, mandate strict eco-standards for the company and its 3,700 suppliers, and devote one-third of its research and development dollars to sustainability-related initiatives such as energy and water efficiency and design-for-recycling products.

“Our ambition is to be a global leader in sustainability in our industry,” says Keith McLoughlin, the company’s president. “This is a natural fit for the Electrolux brand. It speaks strongly to our Scandinavian heritage and company values.”

GREEN GIANT Electrolux CEO Keith McLoughlin has forwarded the appliance maker’s sustainability commitment.
GREEN GIANT Electrolux CEO Keith McLoughlin has forwarded the appliance maker’s sustainability commitment.

Others have noticed. Electrolux’s efforts have generated a slew of international awards for being a sector leader in sustainability. Last fall, for instance, the Dow Jones Sustainability World Index named Electrolux the sector leader in durable household products for the sixth consecutive year.

“Once again being included in the Dow Jones Sustainability World Index confirms that Electrolux is on the right track in the way we develop products and run our business,” McLoughlin says.

Electrolux even features an “ecosavings” calculator on its website so customers can determine the positive environmental impact of replacing a 10-year-old refrigerator, freezer, washing machine and dishwasher with the latest energy- and water-efficient products. In one calculation, a single household could annually reduce carbon dioxide emissions that equate to driving a car more than 1,300 miles, conserve enough electricity to power a 60-watt light bulb day and night for almost two years, and save the equivalent amount of water that would flow from a household tap for three straight days.

There’s no denying Electrolux’s massive environmental footprint. The corporate giant—with $17 billion in annual sales, 61,000 employees in 60 countries and 50 factories around the world—annually emits about 820,000 tons of carbon dioxide from its operations (factories, warehouses and offices) and the distribution of finished goods (road, rail, intermodal, ocean carriers and air cargo). The company manufactures more than 40 million products each year.

To shrink its footprint, Electrolux has developed a detailed sustainability strategy for itself and its suppliers to “provide products and services that are more efficient and accessible to more people around the world.”

The strategy focuses on three key areas: products, services and markets; people and operations; and stakeholders and society. Electrolux has established specific green targets for itself, including a 28 percent reduction in energy use (from 2005 to 2012, a goal Electrolux shattered with a 36 percent reduction by last year); a 20 percent reduction in water from 2010 to 2014; and a 15 percent reduction in transport emissions from 2010 to 2014).

“Our goal is to accelerate innovation and act on all fronts to reduce consumption of resources and cut per-unit impacts,” McLoughlin says. “The more efficient our products are, the more value we create for society.”

Often times, it’s difficult to trace a company’s sustainability efforts to the bottom line, but Electrolux does know that its energy reduction has resulted in annual savings of more than $40 million.

“It really pays off to reduce energy for sustainability,” says Tomas Dahlman, 
Electrolux’s director of Group Sustainability Affairs.

Some ideas for the greening of Electrolux come from a basic but powerful source: its 61,000 employees. The company encourages them to submit ideas that would help Electrolux shrink its environmental footprint and rewards them monetarily for ones that are used. For instance, one factory worker in

Brazil simply suggested that a supervisor stayed 15 minutes later than his or her crew to make sure all the electricity was shut down before the plant closed for the day.

STRONG ARM An Electrolux employee  operates a robotic arm at the company’s new 750,000-square-foot manufacturing plant in Memphis.
STRONG ARM An Electrolux employee
operates a robotic arm at the company’s new 750,000-square-foot manufacturing plant in Memphis.

Other common sense measures include improved logistics planning and better packaging to ensure fewer shipments and decreased use of air cargo. The company also selects partners in its distribution chain that use environmentally friendly standards, including: a fuel-efficient fleet; low-polluting fuels and engines; smart trucks that provide drivers with feedback on fuel consumption, best routes and speed; and companies that have drivers participating in eco-driving training.

As a major manufacturer, Electrolux can flex its muscle to insist its nearly 4,000 vendors meet certain standards, including compliance with the company’s 28-page Workplace Code of Conduct and Environmental Policy.

Company officials say their strategy was to set reasonable initial standards and increase those each year.

“As a big corporation, we need to set requirements,” says Dahlman, adding that at times, Electrolux has to drop a favorite supplier because it didn’t live up to the company’s sustainability standards.

When Electrolux studied its carbon dioxide emissions, executives didn’t expect to see that the majority of pollution came from its distribution chain and not operations.

“It was a real surprise for us,” Dahlman says. “We thought our operation was a higher impact than our logistics.”

And the biggest emissions generated by Electrolux’s distribution chain came from ocean transports, accounting for 34 percent of the generated carbon dioxide. So company officials got involved in the Clean Cargo Working Group, a consortium of eco-friendly global companies seeking to “dramatically reduce carbon dioxide emissions from their global logistics networks and increasingly prioritize working with like-minded supply-chain partners.”

Founded in 2003, already 60 percent of the global container fleet (by volume) is represented by carriers in the Clean Cargo Working Group. Other CCWG accomplishments include: the development of the industry standard for assessing ocean carriers’ environmental performance; a carrier “scorecard” to quantify performance and benchmark individual carriers against industry performance; the distribution of annual aggregated environmental performance data to members; and an average 17 percent decrease in aggregated emission rates across trade lanes from 2006 to 2011.

Electrolux officials say all carriers they use will have to report using Clean Cargo by next year.

“Clean Cargo provides us with actual carbon-dioxide emissions from our carriers,” says Gorm Kjaerboll, ocean operations manager at Electrolux and a Clean Cargo steering committee member. “As a shipper, we need good quality data to set and deliver on our own carbon footprint targets. We value our carriers’ efforts and welcome other shippers to join the dialogue and continue improvement of standards and performance.”

To keep itself and its vendors accountable, Electrolux conducts up to 300 self-audits and 30 third-party audits, as well as training sessions with purchasing teams every year.

For example, Electrolux auditors visited a vacuum cleaner motor assembly plant in Ningbo City, China, that employed 400 workers for a daylong inspection. They checked worker ages, labor contracts, payroll documentation, timecards and materials used in production.

The audit resulted in a corrective action plan, which included recommendations on how to remedy the 17 findings (eight major and nine minor non-compliances), including working hours, fire safety, compensation and proper documentation for juvenile workers over 16 years of age. Auditors scheduled a follow-up visit three months later to gauge the factory’s progress.

The Electrolux teams also discussed with factory executives the importance of transparency, engagement and understanding.

“It’s not just about policing; we strive to help the supplier continually improve,” says Responsible Sourcing director Cecilia Nord.

As part of the company’s “responsible sourcing initiatives,” it held a summit in Thailand for suppliers in Southeast Asia to review Electrolux’s sustainability strategy. This year, it will hold a workshop for key suppliers in Brazil.

Another benefit to Electrolux’s commitment to sustainability has to do with the corporate environment, as opposed to the natural one. Dahlman says his company’s strong standards and the string of international awards have strengthened Electrolux’s brand among customers, workers and potential employees.

“Sustainability is now recognized as an important function in a company,” Dahlman says. “You need to treat your employees in the right way and do what’s right for the climate.”