Assa Abloy : Sustainability roundtable discussion 2020

ASSA ABLOY annual sustainability roundtable discussion

11 November 2020

Public

Safety first

Alarm	Assembly	Emergency
	point	exit

Emergency	First aid kit	Protective
number		equipment
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Agenda

09.00  Welcome and introduction

09.05  ASSA ABLOY and sustainability - Nico Delvaux

 Q&A

09.35  People and social sustainability - Maria Romberg Ewerth

 Q&A

10.00 5 min break

10.05		Operational sustainability - David Simonsson, Charles Robinson, Stefan Calner
	Q&A
11.05	 Sustainable innovation - Zeljka Svensson
	Q&A
11.30-45		End

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ASSA ABLOY and sustainability

• Sustainability will be vital to economic and industrial development in the coming decades
• Sustainability strengthens ASSA ABLOY's long-term competitiveness
• • Maintain industry leadership
  • Be an attractive employer
  • Offer attractive products and solutions
  • Reduce and manage operational and business risk
  • Preferred partner for external stakeholders
• Sustainability is part of our value chain including
• • Innovation
  • Sourcing
  • Production
  • Sales
  • Service

Sustainability is a natural part of who we are and how we operate

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Sustainability is part of our strategic objectives to reach our financial targets

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Sustainability is integrated in our organization

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Sustainability is also a driver for growth

• Increasing demand from customers
• • ~70% of consumers* search for green products
  • About 50%^ of all new commercial constructions are expected to be 'green buildings'
  • Customers committing to science-based targets

• An important differentiator to win projects
• • ASSA ABLOY has more than 325 environmental product declarations (EPD) verified and published

* Source: UL, The Sustainable Edgec ^Dodge Data & Analysis, World Green Building Trend 2018

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Sustainability programs since 2007

• First sustainability program launched 2007
• • Integrated procedures for quality and environmental management
  • Introduced structures that allowed everyday operations to continuously improve their sustainability performance
• Second Sustainability program 2010-2015
• • Measurable targets for water consumption, energy efficiency, green house gas emissions, chemical handling
    and health & safety
• Third Sustainability program 2015-2020
• • New targets with expanded and increased ambition levels
  • Expansion of the supply audit program
• New sustainability program 2020-2025/2030
• • New ambitious targets for 2025
  • Science-basedtargets

Change 2010-2015

Total green-house gas

emissions intensity

-38%

Water	Energy	Injury rate
intensity	intensity
-34%	-30%	-17%

Change 2015-2019

Total green-house gas

emissions intensity

-47%

Water	Energy	Injury rate
intensity	intensity
-43%	-25%	-55%

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Group sustainability targets - both incremental and longer-term

	2025 - Incremental targets		2030 - Science based targets
Extension of 2010-2020 targets -		•	Reducing Scope 1 & 2 emissions
functional focus
•	Operations		•	Reducing Scope 3 emissions
•	Supply management

•	People
•	Sustainable innovation
2019	2025	2030
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Targets 2025

	Operations		Carbon, water intensity, waste and organic solvents		-25%
			ISO 14001 sites certified		100%
	Supply		Supplier audits and Code of Conduct		95%
	Mgmt
	People		Injury rates		33%
			Females in senior managerial positions		>30%

2019

2025

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Committing to science-based targets

• ASSA ABLOY commits to science-based targets
• • Halving scope 1 and scope 2 greenhouse gas emissions by 2030
  • Scope 3 emissions - footprint inventory of our value chain
     Supply and product performance
  • Reaching net-zero by 2050
• Strengthen our competitive position
• • Operational efficiency
  • Innovation focus
  • Performance of our products and solutions
• ASSA ABLOY to achieve science-based targets with existing economical framework
• • ~70% of target reduction identified
  • Remaining reduction to be identified - technology development

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Next steps

• TCFD - start to align reporting against the TCFD framework over the coming years
• Continue to work with our culture - including health and safety, diversity, employee engagement and diverse ways of working
• Action plan to achieve the
  2025 sustainability targets
• Set and ratify targets with science- based targets initiative
• Capitalize on our sustainability efforts to reaccelerate profitable growth with sustainable innovation as an enabler

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Group sustainability targets - both incremental and longer-term

		2025 - Incremental targets		2030 - Science based targets
	Extension of 2010-2020 targets -		• Reducing Scope 1 & 2 emissions
	functional focus
	•	Operations		• Reducing Scope 3 emissions
	•	Supply management
	•	People

•	Sustainable innovation
2019		2025	2030
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Group sustainability targets - both incremental and longer-term

	2025 - Incremental targets		2030 - Science based targets
Extension of 2010-2020 targets -		• Reducing Scope 1 & 2 emissions
functional focus
•	Operations		• Reducing Scope 3 emissions
•	Supply Management
•	People

•	Sustainable innovation
	Maria Romberg Ewerth
	- Executive Vice President &
	CHRO, Management
2019	2025	2030
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Group sustainability targets - both incremental and longer-term

	2025 - Incremental targets		2030 - Science based targets
Extension of 2010-2020 targets -		• Reducing Scope
functional focus		1 & 2 emissions
•	Operations
•	Supply Management		• Reducing Scope 3 emissions
•	People

•	Sustainable innovation
	David Simonsson
	- Chief Operating Officer
	Charles Robinson
	- Head of Sustainability
2019	2025	2030

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Group sustainability targets - both incremental and longer-term

	2025 - Incremental targets		2030 - Science based targets
Extension of 2010-2020 targets -		• Reducing Scope
functional focus		1 & 2 emissions
•	Operations
•	Supply Management		• Reducing Scope 3 emissions
•	People

•	Sustainable innovation
	Stefan Calner
	- Director Supply Management,
	Supply Chain /Sourcing
2019	2025	2030
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Group sustainability targets - both incremental and longer-term

	2025 - Incremental targets		2030 - Science based targets
Extension of 2010-2020 targets -		• Reducing Scope
functional focus		1 & 2 emissions
•	Operations
•	Supply Management		• Reducing Scope 3 emissions
•	People

•	Sustainable innovation
	Zeljka Svensson
	- Director Global Innovation
	Management,Product Development
2019	2025	2030
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Q&A

18

People and social sustainability

11 November 2020

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Agenda

Our people journey - HR transformation

Our identity

Health and safety

Diversity and inclusion

Code of Conduct / Whistleblowing

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Our people journey - HR transformation

1 Identity 2 HR Strategy 3 HR Process & Infrastructure

Who we are and	How we create value	What we do and how
how we want to		we do it
be perceived		- getting the basics right

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Evolution through people

The mission and strategic initiatives

Mission

• Building sustainable shareholder value
• Providing added value to our customers, partners and end-users
• Being a world leading organization where people succeed
• Conducting business in an ethical, compliant and sustainable way

Initiatives

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Our game changers and priorities

(what is going to "make it" for us)

Initiatives

Drivers	Common culture	Leadership
Cornerstones					People	Employee	Ethical and Social
				Development	Experience	Responsibility
Game changers	Our culture	Leadership	Talent Management	Adaptable
Organization
Priorities in 2020	Employee	Leadership	Internal Mobility	GPS
Engagement
Dimensions	Performance Development
	(reaction to COVID crisis)

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Agenda

Our people journey - HR transformation

Our identity

Health and safety

Diversity and inclusion

Code of Conduct / Whistleblowing

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Together we

In the beginning of 2019, we introduced our group wide change initiative Together we

Together we are	Together we grow	To put emphasis on leadership, we created
Our identity	Our strategy	Leadership Dimensions

Great 2025

We live and breathe our values and lead by example

• We understand what behaviors are aligned with our culture
• We are living our values - they are a natural part of how we act, what we do, and how we do it.

Leadership Dimensions link leadership to strategy and values

• We strive to be role models and always do our best to "walk the talk"
• We recognize the right behaviors and we speak up when we see and hear about behaviors that aren't in line with our culture

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Together we - program at a glance

Explain

Activate

Remind and Routinization

Summarizing books

Group Leader roadshows

Workshop 3 "Together ahead"

Series of films

Workshop 1 "Our purpose"

Together we on intranet

Open magazine

Workshop 2 "Our core values"

Live & lead by example

(implemented in people processes)

-

Internal & External

communication

-

Recruitment and assessment

Individual follow-up tasks

-

Onboarding

-

Performance development

-

Leadership development

2019

2019/2020

2020/2021

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Agenda

Our people journey - HR transformation Our identity

Health and safety

Diversity and inclusion

Code of Conduct / Whistleblowing

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Health and Safety - program at a glance

Building foundation

H&S Group policy

Process and tools

Hazard assessment tools

Incident investigation process

Reporting and tracking Best practice benchmarking Expanded KPI:s

Shared learnings

Safety first

Raising awareness

Safe driving & travel safety policy H&S data protection compliance

Operational safety assessment

process

Training and communication

1st workshop: Safety dialogue

Communications cadence

Safety "hotspot" focus

Safe behaviors and safer together

Leaders as safety role models Guidelines for healthy work environments

Site H&S assessments

Training and culture

Safety culture campaign

2nd workshop: Safe behaviors in

practice

Well-being

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Health and safety

Great 2025

Work toward "best in class" injury rate of 2.0

Improve employee health and well-being

Priorities / actions in 2020

Identify leadership as a safety enablers

Released ASSA ABLOY safe driving policy and travel policy Deploy new "Together we are safe" workshop Benchmark and construct "employee well-being"program

* If the injury rate remains the same as 2018

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Injuries

6,0
5,0	5,1
4,0
	4,1
3,0		3,6
		3,0
2,0
1,0
0,0
2016	2017	2018	2019

Injury rate

• Injury rates are improving steadily from 2016.
• In 2019, we landed on 3.0 with an equivalent to having 56 families less effected than it was in 2018.*
• By 2020Q3, we continuously lower injury rate.
• During the pandemic, much work has been done with a focus on COVID-19 and programs have been re-designed to include digital tools and virtual learning experiences

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COVID phases and our reactions

Phase One	Phase Two	Phase Three
"Emergency"	"Recovery"	"New Normal"
Mid march - summer	Summer to Q1 2021 (at least)	Onwards
• Office closed and lockdown	• Hybrid working and team engagement	• Utilization of the learnings to improve our
	• Preparation for opening up in a safe and	way of working and workplace culture
	controlled way	• Being more efficient, cost effective and agile
	• Phasing of employees at the office

Employer Branding

• Raise awareness as an attractive employer; show our identity and solution

•News updates on main channels and country channels

Engagement

• Support work digitally, feel connected and engaged

•Employee newsletter: Work, meet & learn virtually

•New section on Avenue and digital learning

Health, Safety and

Well-being

• Safe guard safety, health and well- being

•Setup new routines, safety communication

•Well-being program in design (with communication took in place)

Leadership

• Lead remotely and in times of changes
• Motivate people and maintain productivity

•Digital leader newsletter

•Group Leaders studio session: Lead in times of crisis

Country approach

• To align our ways of working cross divisionally

•Country updates

•Best practice sharing

• Alignments on actions

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Agenda

Our people journey - HR transformation Our identity

Health and safety

Diversity and inclusion

Code of Conduct / Whistleblowing

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Diversity and inclusion

Great 2025

People

• Our workforce reflects diversity
• Our innovation is attainable by diversity of thoughts
• Our workplace is inclusive to empower everyone

Products and communities:

• Our products are the agents of driving D&I changes externally ASSA ABLOY is a recognized champion in supporting D&I

Priorities / actions in 2020

• Form D&I (Diversity and Inclusion) strategy
• Review and embed D&I in HR processes
• Develop female talents within - a win-win situation together with Internal Mobility
• Continue with development programs focusing on diverse talents

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Gender Diversity

31%	30%	30%	29%
		23%	24%	25%
22%
2016		2017	2018	2019
		Female Manager (level 2-5)
		Female employees

• The percentage of female employees is stable
• The percentage of female managers has been increasing (steadily) compared to previous years
• There will be more focus on attracting entry-level female talents with high potentials to strengthen our pipeline

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Diversity and inclusion

Deep dive in talent attraction processes

General recruitment

	Manager positions filled with female
		candidates
40%
30%				26%	32%
20%	23%	22%	23%
10%
0%	2016	2017	2018	2019	2020 Q3

Executive search

	Executive positions (level 2-3) filled by
		female
60%
40%			48%
20%	26%
		10%
0%	2018	2019	2020 Q3

Sourcing

Selection

Conversi

on

1. Build internal (diverse) talent pool and encourage female referrals
2. Expand geographical reach, to reach a more extensive network (executive search)
3. Include "inclusive" guideline in the recruitment handbook for managers

• Focus on "transferrable skills"
• Recruit candidates with potential for stretch roles
• Require at least one diverse talent on the short list
• 50% females in graduate programs

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Diversity and Inclusion - program at a glance

Being fair, equal and objective

Talent attraction

Diverse talents on the short lists

JD audits - wording and criteria

Diverse panels and calibrations

Diverse recruitment

Performance management

Fact-based evaluations

Calibrations (encouraged)

Succession planning

Diverse successors' review

Internal talents' pool

Leadership and culture

Being aware, flexible and

supportive

Diversity in Leadership dimensions

and competencies

Our tone of voice

Employer Branding

Unconscious bias and other D&I

trainings

Being consciously inclusive

Mentoring and networking

ERG and the sense of belonging

Internal mobility programs

Leadership development programs

Inclusive managers

Hold managers accountable for

progress

Equal pay analysis		(New) work place culture

Employees and Managers' accountability

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Agenda

Our people journey - HR transformation Our identity

Health and safety Diversity and inclusion

Code of Conduct / Whistleblowing

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Social audit program overview

• We believe in responsible social and ethical behavior
• We have a responsibility to our employees serving the company worldwide
• We have an obligation to all stakeholders to observe high standards of integrity and fair dealing

Code of Conduct

• Code of conduct applies to all our employees and business partners
• Suppliers will be included via contractual provisions

Social Compliance Audits

• Independent 3rd party partners;
• Performed at select sites using applicable standards for guidance;
• Target of two audits per year.

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Complete

SCA Program - Recent audits & statusIn Process

Overdue

	Division	Site	Location		Year	Nonconformances	Observations	Overall
		(completed/identified)	(completed/identified)	Status
	APAC	Guli Security Products Ltd Company	Xiaolan,	China	2010	1/1	18/18
	HID	HID Global Sdn Bhd.	Johor Bahru, Malaysia	2010	0/0	2/2
	Global	ASSA ABLOY Hospitality (Shanghai) Co., Ltd	Shanghai,	China		2011	21/21	12/12
	Solutions
	ES	ASSA ABLOY Entrance Systems (Suzhou) Co.,Ltd	Suzhou,	China		2011	0/0	7/7
	EMEA	ASSA ABLOY Romainia	Bucharest, Romania		2012	0/0	0/0
	APAC	Shenfei Liyi Security Products Company	Zejiang,	China		2012	11/11	6/6
	Americas	Cerraduras de Columbia CERRACOL SA - Yale, Columbia	Bogota, Columbia		2013	1/1	0
	EMEA	ASSA ABLOY Czech & Slovakia s.r.o	Rychnov,	Czech Rep.		2013	0/0	9/9
	APAC	Shandong Guaqiang Hardware Technology Col, Ltd	Leling,	China		2014	11/11	6/6
	ES	SC ASSA ABLOY Entrance Systems Production Romania SRL	Hunedoera, Romania		2014	0/0	11/11
	EMEA	ASSA ABLOY Mercor Doors sp.z.o.o.	Dobrzen Wielki, Poland		2015	18/18	16/16
	Americas	ASSA ABLOY BRASIL LTDA.	Sao Paulo, Braszil		2015	n/a	n/a	Site Closed
	APAC	ASSA ABLOY BaoDeAn Security Products CO., Ltd	Taizhou Zhejiang, China		2016	37/37	9/9
	ES	Entrematic 4Front De Mexico	Reynosa, Mexico		2017	2/2	17/17
	EMEA	SSC ASSA ABLOY Romania SRL (second time thru)	Bucharest, Romania		2017	0	6/6
	APAC	Shree Mahavir Metalcraft Private Ltd.	Jamnagar,	India		2018	45/45	4/4
	Americas	ODIS SPA. Inversions y Asesorias ASSA Abloy Chile Ltda.	Santiago,	Chile		2018	7/7	10/10
	ES	FlexiForce	Debrecen, Hungary		Jan 2019	8/8	10/10
	Americas	ASSA ABLOY Brazil Udinese	Diadema, Sao Paulo, Brazil		Feb. 2019	14/14	7/7
	EMEA	Prometal and Lockwood	Dubai, UAE		April 2019	25/25	21/21
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Code of Conduct: New whistleblowing tool in 2019

Thumb-up principles

• To strive to live our culture: integrity

Maintain transparency and high business ethics

• To ensure data protection in case management

Whistleblowing messages are treated confidentially

• To ensure anonymity in case reporting

The whistleblower should feel confident

• To ensure efficiency during investigations
• To ensure oversight at group level

Whistleblowing processes

• The Policy

Published in 2010 and continuously updated

• New tool in 2019

Group-level service for reporting of suspected non-compliance with the Code of Conduct.

• The Team

Code of Conduct Committee at group level, divisional team per case

• The Process

Complaints reported to the Code of Conduct Committee

Case being screened and assigned to either group or divisions

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Priorities in 2021

(what is going to "make it" for us)

Initiatives

Drivers

Common culture

Leadership

Cornerstones

People

Employee

Ethical and Social

Development

Experience

Responsibility

Game changers

Our culture

Leadership

Talent Management

Adaptable

Organization

Priorities in 2021	Workplace	Leadership	Internal Mobility	GPS
culture	Development	Performance Development

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Q&A

ASSA ABLOY annual sustainability roundtable discussion

11 November 2020

Public

Operational sustainability

November 11, 2020

Public

Executive summary

1

2

3

• Overall good progress on sustainability agenda 2015-2020 - at, or beyond target levels for majority of KPIs
• Beyond 2020 target setting including science based targets - reducing CO2 emissions by 50% by 2030
• A 4-pronged approach for addressing scope 1 & 2, and scope 3 involving top supply categories, and ambitious R&D agenda

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Executive summary

1

2

3

• Overall good progress on sustainability agenda 2015-2020 - at, or beyond target levels for majority of KPIs
• Beyond 2020 target setting including science based targets - reducing CO2 emissions by 50% by 2030
• A 4-pronged approach for addressing scope 1 & 2, and scope 3 involving top supply categories, and ambitious R&D agenda

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Overall good progress on sustainability in the last five years (1/2)

KPIOutcomeImprovement Target Comment

				Injury rate (>1 lost day per million	6,7	3,0		-55%	-55%	• n/a
	Health and
			hours worked)
	safety
				136,0
				Injury lost day rate		60,5		-64%	• Injury severity resulting in high
						-55%
										number of lost days

Energy

Total consumption (MWh / SEK M, Value Added)

CO2 related to energy (tons / SEK M, Value Added)

Energy from renewable resources (%)

25,8 19,4 -25%-20%

9,0	7,0	-22%	-20%
9,1	12,3	+3.2 p.p.	20%

• n/a
• n/a
• No further renewable energy availability on the market (without cost premium)

Emissions from industrial processes

Total consumption (CO2 related to	6,1			• n/a
Freon usage; tons / SEK M, Value	1.0	-84%	-85%
Added)
	2015 FY 2019 FY
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Overall good progress on sustainability in the last five years (2/2)

KPI

Outcome

Improvement

Target Comment

Waste

Hazardous waste (tons / SEK M, Value	119,0	112,3			• Reclassification of waste in China
			-20%
Added)			-5%
		resulted in higher hazardous waste
Non-hazardous waste (tons / SEK M,	880.0	694,0
Value Added)		-20%• n/a
	-21%

Organic

solvents

PER and TRI* (tons)

Other types (tons)

19,0	24,3	+28%	-85%
1.255,0	765,0			-50%
		-39%

• Used in washing processes, consumed at 2 sites globally; now fully phased out
• n/a

Water

Supply

management

Water consumption (m3 / SEK M,	92,4	52,7				•	n/a
Value Added)				-20%
	-43%
Supplier Sustainability Audits (% of	90,0	97,0		97%	95%	•	n/a
direct material spend in LCC)
Business Partner Code of Conduct		93.0		93%	95%	•	n/a
(% of direct material spend)

*Perchloroethylene, Trichloroethylene	2015 FY	2019 FY
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Executive summary

1

2

3

• Overall good progress on sustainability agenda 2015-2020 - at, or beyond target levels for majority of KPIs
• Beyond 2020 target setting including science based targets - reducing CO2 emissions by 50% by 2030
• A 4-pronged approach for addressing scope 1 & 2, and scope 3 involving top supply categories, and ambitious R&D agenda

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ASSA ABLOY commits to science based sustainability targets

Current sustainability status…

ASSA ABLOY starting point…

• 2010 - 2015: 15% intensity improvement on sustainability index
• 2015 - 2020: 20% intensity improvement on sustainability index
• Short term sustainability programs

…in a changing environment…

We need to move to absolute CO2 reduction targets

• Demonstrating long-term commitment and sector leadership
• CO2 emission reduction aligned with operational excellence efforts
• Reduced supply chain risk
• Attractive employer and investment
• Be a responsible global citizen - fight climate change

Deep analysis of several companies applying science-based targets

…build on momentum from successive programs

• Extension of 5 year program, raising the bar across all indicators

…and commitment to develop science-based targets

• First long term commitment and targets
• Renewed 5 year program, running concurrently & complementing progress towards science-based targets

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To date, focus has only been on Scope 1 & 2

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First time reviewing Scope 1, 2 & 3

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Group sustainability targets - both incremental and longer-term

2025 - Incremental targets

Extension of 2015-2020 targets - functional focus;

• Operations
• Supply management
• People
• Innovation

2030 - Science based targets

• 2020 - 2030: Reducing Scope 1 & 2 emissions by -50%
• Reducing Scope 3 emissions

2019	2025	2030
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2025 incremental targets; extension of 2015-2020 program

Function:	Indicator:	2025 Target
	Carbon Footprint (Energy) - absolute	-25%
	ISO 14001 - % sites certified in reporting scope*	100%
Operations	Water intensity	-25%
Hazardous waste intensity	-25%
	Non-hazardous waste intensity	-25%
	Organic Solvents intensity	-50%
Supply	Supplier sustainability audits (% of direct material spend**)	95%
management	Business Partner Code of Conduct (% of direct & indirect material spend)	95%
	Injury rate (number of injuries per 1m hours worked)	-33%
People	Injury lost day rate (number of lost days related to injuries per 1m hours worked)	-33%
	Gender diversity (% of females in management positions)	30%
2019		2025
* Acquisitions will be given 3 years to become certified ** Spend in identified risk countries

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External outlook - clear movement towards science based targets

External peer company interviews: 8 companies with strong sustainability agenda. ~32% of Stockholm OMX30 Market Cap represented by 4 companies that have committed to science-based targets; ABB, Ericsson, Electrolux, and AstraZeneca

ASSA ABLOY customer view: Reviewing external communications from ASSA ABLOY top 250 customers suggesting known brands generally pro science based targets, and share of Global Solutions sales with high exposure to pro science based target customers

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Reviewing external communications from ASSA ABLOY's top 250 customers; known brands generally pro science based targets

Pro Science Based Targets

No known preference

Global Solutions

Americas

ESD

HID

APAC

EMEA

• of total sales value per division

Top 50 customers analysed per division

N/A

Sample customers

• pro science-based targets:

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Executive summary

1

2

3

• Overall good progress on sustainability agenda 2015-2020 - at, or beyond target levels for majority of KPIs
• Beyond 2020 target setting including science based targets - reducing CO2 emissions by 50% by 2030
• A 4-pronged approach for addressing scope 1 & 2, and scope 3 involving top supply categories, and ambitious R&D agenda

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Reducing scope 1 and 2 emissions by 50% by 2030

1

2

3

4

2019 base line

MFP 2025

Industrial CO2 elimination

Strategic sites energy overhaul

Continuous

Continuous improvement

2030 target state

CO2 (kTons)

-50%

Comments

1	• MFP - Conservative approach - reductions partly eliminated by
increased emissions in 'receiving' sites

2	• Elimination of Freon and industrial CO2 emissions 1 ton Freon
	corresponds to 700-1400 CO2 ton equivalents

3	• Major energy overhaul of top-20 carbon intensive strategic sites

4	• Lean / Kaizen based methodology (e.g. compressed air
	leakage elimination, improved controls)
	•	Green team playbook
	•	Global OpEx assessment

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Scope 3 focus starts with mapping value chain end-to-end; including supply and product CO2 impact

Need to conduct CO2 inventory mapping of entire value chain:

Supply chain focusing largest categories, and suppliers representing highest spend - target to handshake ambitions and making Scope 3 part of supplier development agenda

Product sustainability through evolved sustainability compass

Scope 3 targets have to be ambitious, though not science based

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Executive summary

1

2

3

• Overall good progress on sustainability agenda 2015-2020 - at, or beyond target levels for majority of KPIs
• Beyond 2020 target setting including science based targets - reducing CO2 emissions by 50% by 2030
• A 4-pronged approach for addressing scope 1 & 2, and scope 3 involving top supply categories, and ambitious R&D agenda

58	Public

Q&A

Sustainable innovation

November 11, 2020

Public

Sustainable innovation

Scope 3 emissions - Downstream

Agenda

• Sustainable innovation journey
• Divisional case studies
• Sustainable product approach

1. Sustainable innovation o Value proposition
   o Circular economy

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Sustainable products - a continuous journey in several steps

• Awareness program - internal trainings
• Minimize our own impact
• Maximize our customers' objectives
• Communicate the value - value proposition
• Transparency (EPD/HPD/Declare label)
• 3rd-party certification
• • LEED - Leadership in Energy and Environmental Design
  • BREEAM - BRE Environmental Assessment
  • EU Green Building

Sustainability is integrated in all Group processes: innovation, product management, manufacturing, logistics and sales

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Sustainable products part of our innovation strategy

Sustainability is a Group wide responsibility and all units should actively develop products and articulate the sustainability value proposition.

• ASSA ABLOY should lead the industry towards a circular economy and more sustainable products
• Sustainable innovation includes transparency for our customers, where our lifecycle assessment based data guides our customers and partners in their decision-making to help achieve their sustainability objectives
• EPDs and the ASSA ABLOY 'sustainability compass' are central in our strive for continuous improvements when developing sustainable products

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ASSA ABLOY Sustainability innovation

Sustainability compass

Circular economy

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The ASSA ABLOY Sustainability compass - a tool to create awareness

The sustainability compass, a tool to: (customization/interpretation per division)

• Do right thing - minimize our footprint

• Create an awareness and dialog, - what can we do…

• Focus analysis on relevant areas

• Learn and improve by monitoring/tracking performance

• Communicate targets and status to

• Team

• Management

• Customers

• 'Society'

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The ASSA ABLOY Sustainability compass

The ASSA ABLOY Sustainability Compass includes eight dimensions representing the products' 'environmental footprint'.

• Reduce => all 5 indicators should be as low as possible to decrease the environmental footprint.

• Reuse => the more the better, durability, upgrade, repair, or reuse

• Recycle => two indicators, use of sustainable recycled material in new design and also design for easy disassembly

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Progress on sustainable innovation 2015-2020

2016	2017	2018	2019	Target 2020
Sustainability	KPI established	All development
First pilots with	compass	Target set, all
the sustainability	launched globally	to measure	divisions to reach	project have a
Compass	within ASSA	usage of the	90% penetration	sustainability
	ABLOY	compass		compass

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Supporting our customers -

Building standards & certification programs

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LEED: a competitive advantage

Priority areas for products & materials in LEED

Low-carbon

• Reuse of buildings and materials
• Lifecycle analysis and disclosure
• Environmental product declarations
• Optimized low-carbon materials

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Inside an EPD -

The life cycle assessment (LCA)

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Connecting the compass to the life cycle assessment

Many of these life cycle phases align with ASSA

ABLOY sustainability compass

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Divisional case studies

ASSA ABLOY - divisions sustainability journey, products and customer projects

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Kendeda Center @ Georgia Tech Living building challenge project

Gary Jelin (AIA, NCARB, REFP, LEED GA), Interim AVP Design & Construction at the Georgia Institute of Technology:

"I would continue to emphasize the importance of well- designed hardware in any building as it is the one item that building users actually contact on a daily basis.

It conveys a sense of quality when door hardware is well designed and feels robust when contacted through touch."

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Our contributions:

Green building certification programs

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New product sustainability innovation

HID FARGO® INK1000 ID Card Printer

• An industry first!
• • Highly specialized thermal inkjet
  • Engineered to be compatible with standard, off-the-shelf PVC cards

Sustainability Innovation

• Exclusively formulated, drop-on-demand inks
• • Ultimate in ink efficiency - use only what you need
• Eliminates waste color ribbon consumables
• • Material landfill avoidance
• GreenCircle® certified
• • 84% Dematerialization compared to ribbon-based printers

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Peking CITIC tower

Solutions: ANSI mortise lock and EN Door closer, 7000+ GMK (EPD), Fire doors (Green Guard) Green Cert: LEED Gold granted as pre-cert in 2013

ASSA ABLOY

Hardware

7M CNY

Tianming		Construction
fire doors		finished in
10M CNY		2019

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Packaging design guidelines

• Global brand Yale went through a complete refresh of their packaging design, putting together new packaging design guidelines.
• The waste hierarchy is a very useful reference guide to help identify and prioritise waste that should be phased out, this serve to educate teams globally as they make their packaging design decisions.
• The FSC brand shows that the product contains wood fibers from forests that are managed / discontinued with regard to current & future generations' requirements

Through our FSC work, we contribute to the development of responsible forestry.

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Entrance Systems - optimize energy efficiency

Sensor	Vestibule system	Operator	Air curtain	Door type	Service contract
A smart detector can	Design vestibule	Open door	Install air curtain to	Choose suitable	Optimize door
help to control door	system in an energy	automatically.	prevent air infiltration	door type for	setting, maintain door
opening and closing	efficient way.		through door	various entrances.	system.
in an efficient way.			opening.

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Case study

Current door detector's pain point investigation.

Activated by cross traffic

Activated by cross traffic.

A directional sensor can help you…

 Avoid mistaken opening by cross traffic

 Don't open more than required

 Stop rotating as soon as pedestrian left

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Study - Quantify energy loss through air infiltration

• Value
• • Understand the potential of changing door behavior
  • Increased knowledge
• Cost reduction
• • Customer heating and cooling cost
• Main take away

Cost savings by shortening the opening cycle

Study - Intelligent swing door control - with smarter sensors

Healthcare	Transportation	Retail
-3,033 SEK	-4,404 SEK	-1,166 SEK

SEK

Seconds

Outside temperature 10 C

Inside temperature 20 C

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Study - Traditional swing door

Long hold open time to provide full convenience and safety

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Study - Concept 1

Limited opening angle and minimized hold open time

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Study - Quantify energy loss through air infiltration

• Value
• • Understand the potential of changing door behavior
  • Increased knowledge
• Cost reduction
• • Customer heating and cooling cost
• Main take away
• • Reduce hold open time!
  • Avoid unnecessary opening!
  • The cost for more advanced sensors will have a short payback time.

Cost savings by shortening the opening cycle

Study - Intelligent swing door control - with smarter sensors

Healthcare	Transportation	Retail
-3,033 SEK	-4,404 SEK	-1,166 SEK

SEK

Seconds

Outside temperature 10 C

Inside temperature 20 C

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Sustainable choice

- also protects nature

• Energy harvesting cylinder
• Produces it's own energy
• No cables, no batteries
• Possible to update the system countless times
• Reusable

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No trip twice - How much can CLIQ® Connect save me in unnecessary fuel costs and energy use?

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Standard mechanical key access control vs. CLIQ® Connect Why go the long way around?

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Q&A

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Summary of the day

Sustainability is a natural part of who we are and how we operate

• New ambitious sustainability targets
• • Short term - Program for 2025
  • Long term - Science-based targets
• Sustainability will contribute to
• • Operational performance - increased cost efficiency and reduced risk
  • Product and solutions offering - relevant to our customers
  • Attracting talent - together we grow, evolution through people
• Innovation will drive our development

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Thank you

assaabloy.com

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