2030 targets explained

ABB uses a market-based method to calculate and report Scope 2 GHG emissions. For purchased electricity and district heat, we have obtained local emission factors from suppliers.

For data prior to 2017, where necessary, we have sourced factors from the International Energy Agency’s “CO2 Emissions from Fuel Combustion 2013” database or from national or regional inventories. Emission factors for fuel used at ABB sites are sourced from the GHG Protocol’s “Emission Factors from Cross-Sector Tools” (March 2017). From 2017, emissions from ABB’s vehicle fleet are based on lease contract distances and emissions per kilometer factors per vehicle.

Scope 2 GHG emissions for electricity have also been calculated using the location-based method (source: IEA 2020).

Preserving resources /

Social progress

Cover supply spend in focus countries with SSBM approach

This target is divided into two phases:

Phase 1 (2021-2025): 80% of the high-risk supply spend in focus countries will be covered by SSBM approach

Phase 2 (2026-2030): 80% of the supply spend in focus countries will be covered by SSBM approach

For Phase 1 (focus on high-risk spend):

% high-risk spend in focus countries covered by SSBM = (total high-risk spend covered by SSBM)/(total high-risk spend in focus countries) x 100

"Spend" = Spend in reporting year on suppliers that have been assessed in past 3 years by SSBM/SSDP ( 2019, 2020 & 2021) – for reporting year 2021

"High risk spend" = Spend on high-risk MDF code materials from the focus countries

"High risk MDF code" = MDF code with environmental risk and health & safety risk score more than or equal to ‘2’

For Phase 2:

% spend in focus countries covered by SSBM = (total spend covered by SSBM)/(total spend in focus countries) x 100

"Spend" covers:

Spend in reporting year on suppliers that have been assessed in past 5 years by SSBM

2021 initial steps:

• Implemented new procedures addressing both joint integrity and human rights associated with third party management
• Trained internal ABB stakeholders on the new process
• Started testing compliance with the new process

In 2022:

• Establish Community Engagement Working Group, with representatives from all BAs, two major countries and a grass roots/youth representative
• Develop business case for community engagement strategy consistent with ABB Way of operating, including a harmonized approach to volunteering
• Receive Executive Committee approval for community engagement approach

Defined ESG targets as a necessary “boundary condition” for awards under the short-term incentive program, called the Annual Incentive Plan (AIP). This applies to Executive Committee members and senior leadership positions.

Safety KPI now also informs the individual component of AIP awards for the EC and senior leaders in operations.

The 2021 ESG “boundary condition” was the setting of plans in each ABB Division outlining the key actions and activities required to reduce or compensate for GHG Scope 1 and 2 emissions to achieve carbon neutrality in ABB’s own operations by 2030 (vs. a 2019 baseline). At the end of the year, the Board of Directors determined that the terms for this condition had been fully met.

The Governance and Nomination Committee (GNC) of the Board of Directors will review whether the company made sufficient progress at the end of the year to justify making the indicated AIP award. If, in the opinion of the GNC, insufficient progress has been made, the AIP award may be reduced on a discretionary basis by the Compensation Committee (CC).

2021 initial steps: Prepared stronger integrity and sustainability clauses for agreements/terms & conditions with counterparties, including:

• acknowledgement of ABB’s Supplier Code of Conduct
• agreement to comply with anti-bribery, anti-corruption (ABAC) and human rights laws
• audit rights clause