ABB in Southern AfricaSUSTAINABILITY PROFILE

THE ABB APPROACH TO SUSTAINABILITY

“We in ABB support global efforts to promote sustainability,

and we will take part in discussions in Johannesburg. But

we can do more than talk.”

Jörgen Centerman, ABB President and Chief Executive Officer,ABB Sustainability Report, 2002

ABB, the global leader in power and automation technologies,

has played a pioneering and active role in spreading the

message of sustainable development throughout the world

over the past decade, following the signing of the historic UN

Declaration on Environment and Development by world leaders

in Rio de Janeiro, Brazil.

An early mover, the group also led the way in incorporating

the principles of sustainability into all its operations and

decision-making processes when it formed an Environmental

Advisory Board in 1992. The same year, ABB signed the

International Chamber of Commerce Charter for Sustainable

Development.

In 2002, as the UN hosts the World Summit on Sustainable

Development in Johannesburg, South Africa, ABB has

undergone a profound transformation of its entire operations

to make it more responsive to our customers’ needs with a

continued effort on sustainability. ABB is already a leading

supplier of many of the new alternative technologies, including

microturbines, cogeneration systems and wind-powered

generators.

ABB believes that global poverty is the greatest threat to

the stability in the world. Being a good corporate citizen is

a vital component of the ABB philosophy. Far from being a

soft issue grounded in emotion, sustainable development

involves cold, rational business logic.

The group operates in more than 100 countries where it

employs 150 000 people, 45 000 of them in developing

countries. The support of its stakeholder base – including

employees, customers, society and shareholders is crucial.

For ABB, sustainable development involves working in

three dimensions; environmental, economic and social. The

right balance will ensure the group’s prosperity and improve

the quality of life in the communities in which it operates.

Over the past decade, ABB has taken part in a number

of global sustainable development initiatives. For example, in

2000, the group participated in the launch of the United

Nations Global Compact with nine principles of good behavior

for a global corporate citizen. The following year, ABB signed

up with “e-mission 55” an international business initiative

which calls on governments to ratify the Kyoto Protocol

without further delay.

Within its own operations, ABB believes that enhanced

environmental performance to develop eco-efficient products

increases competitiveness through optimum design, lower

costs and desirable clean products. The ISO 14001

Environmental Management System has been implemented in

almost all the group’s 551 sites throughout the world.

In addition, ABB publishes Environmental Product

Declarations (EPDs) for a growing number of core products.

The goal is to develop EPDs for all core products. An EPD

quantifies a product’s environmental performance over its

entire life cycle, based on a formal Life Cycle Assessment (LCA).

LCA is a tool to define the environmental impact during the

product’s whole life cycle, from cradle to grave.

Last year, ABB launched its new social policy, following

unprecedented consultations that included 45 round-table

discussions with stakeholders in 34 countries. The group

published its first Sustainability Report structured according

to the recommendations of the Global Reporting Initiative

(GRI) an international multi-stakeholder initiative. The GRI

guidelines are based on a “triple bottom line” reporting concept

that measures environmental, economic and social performance.

These efforts aimed at achieving a high level of

environmental awareness throughout ABB and firmly ingraining

sustainability principles into the group’s culture have been

recognised by international rating agencies. The Dow Jones

Sustainability Index has ranked ABB at the top of its industry

group for three years running.

“Corporate Social Responsibility is the commitment of business

to sustainable economic development, working with employees

and their families, the local communities and society at large

to improve their quality of life.”

World Business Council for Sustainable Development

After a decade in Southern Africa, ABB has made a significant

contribution towards supporting sustainable economic

development in the region.

ABB established a formal presence in South Africa in 1992,

following the lifting of international sanctions against the

country. Today, the company is making a major economic

contribution towards the development of economies within

the Southern Africa Development Community (SADC) regional

block, which has a population of more than 120 million.

Over the past decade, ABB has invested hundreds of millions

of rands in Southern African manufacturing facilities, participated

in many of the major infrastructure development projects in

the region, and created thousands of jobs that have sustained

households, many of them in poor areas. The group’s high

technology products and know-how have helped to improve

the competitiveness of its customers in the region.

ABB’s global strategy focuses on developing a local presence

in all its markets, including Africa. Our operations are staffed

by local people who are committed to growing our business

while contributing to economic development. Our vision is

to create value for customers, employees, shareholders and

the communities and countries where we operate by living

our commitment to sustainable development.

With more than 3 000 employees in South and Southern

Africa, ABB is committed to the development of the region.

It shares the vision of infrastucture development in the region,

and is well positioned to deliver world-class technologies and

skills to make this dream a reality.

Within Southern Africa, ABB has offices in Angola, Botswana,

Lesotho, Malawi, Mozambique, Namibia, Swaziland, Zimbabwe,

Zambia and the Democratic Republic of the Congo. The main

business is power and automation technologies for utilities

and industries.

ABB is working with Southern African utilities to realise

the goal of a regional power grid that will bring the benefits

of affordable electricity to all parts of the subcontinent. The

group contributes to the region by developing the excellence

of its people and transferring technology and know-how to

its local operations and joint ventures.

The Southern African operations have access to the latest

innovations emanating from the ABB Group’s $654 million

research and development budget that is used to finance the

activities of more than 1200 researchers at eight corporate

centres throughout world.

In South Africa, which is playing a critical role in the new

continental economic renewal plan, ABB has revenues of close

to R2bn and 2 400 employees at nine sites in Johannesburg,

Alrode, Midrand, Pretoria, Durban, Cape Town and Botshabelo.

ECONOMIC CONTRIBUTION

The ABB group, through its specialist airports management

company, Primkop Airport Management, has recently invested

R350 million of its own resources to build the Kruger

Mpumalanga International Airport (KMIA), which is situated

near to the world-famous Kruger National Park.

The development, ABB’s biggest ever single investment in

South Africa and the group’s first wholly-owned airport in the

world, has kick-started a cycle of sustainable development

with 750 people, most of them from a poor local community,

employed during the peak phase of construction.

In terms of a unique social contract, the local Mbuyane

community has a 10% stake in the development; it will also

receive a fee for each departing passenger. If traffic projections

reach the expected 200 000 passengers a year, the community

could earn other significant funds to invest in a range of

development projects.

ABB has led the way with such initiatives because it

understands the nature and scale of the sustainability challenge

in South Africa, a country that emerged eight years ago from

apartheid policies that prevented black people from

participating fully in the economic mainstream. In addition,

new emerging forms of inequality due to globalisation could

exacerbate the situation and lead to unsustainable levels of

marginalisation, vulnerability and poverty.

Reversing this legacy is a mammoth task. ABB’s contribution

has been to forge partnerships with local entrepreneurs,

community organisations, governmental and non-governmental

organisations and international agencies who share our

commitment to sustainable development.

The economic contribution in South Africa includes a

number of initiatives aimed at increasing the participation of

previously disadvantaged people in the economy, a process

that is called Black Economic Empowerment (BEE).

ABB has been at the forefront of BEE and created new

economic opportunities for black people in South Africa

through a number of policies, programmes and actions.

The company has:

• Initiated negotiations with a black investor to take a 20%

stake in ABB’s South African holding company. This transaction

will ensure that a portion of the economic value from the

company’s activities in Southern Africa accrues to previously

disadvantaged black people.

• Established joint ventures with emerging black companies,

which have created new, globally competitive engineering

businesses. In 1997 formed the first BEE company in high

voltage technologies, ABB Karebo Manufacturers. Other joint

ventures established include Desta Power Matla (distribution

transformers), together with ABB Powertech Transformers,

and ABB Kutlwanong (plastic enclosures).

• A high level of affirmative procurement across all of its

divisions. The policy encourages procurement of services

and products from mostly small and medium-sized companies.

ABB has encouraged people from within and outside the

company to start their own businesses.

• Upgraded the skills of its employees through adult basic

education and training (Abet) and skills development.

An in-house literacy programme has taught more than 100

employees to read and write, which has opened up

opportunities for further training and career development.

• A comprehensive employment equity programme fast-tracks

the development of black managers and engineers within

the company. The employment equity programme supports

the objectives of new legislation which has been introduced

to accelerate progress towards a workforce that reflects the

composition of South African society.

“ABB intends to implement its social policy thoughout its

global organisation and by doing so help raise quality of life

wherever we have a presence.”

ABB Sustainability Report, 2002

In 2001 the group launched a comprehensive social policy

after 45 round-table discussions in 34 countries. The social

policy, which commits ABB to conform to 13 social performance

principles, will be implemented in all the group’s operations.

ABB also has an ethics policy, which commits the company to

uphold the highest standards in business ethics.

Despite having the largest economy in sub-Saharan Africa,

South Africa has massive inequalities of income, and huge social

and infrastructure backlogs, which can only be confronted

through joint actions and partnerships between all stakeholders,

including government, the private sector and community-based

organisations.

ABB South Africa’s corporate social investment projects,

which have been formally running since 1994, have made a

difference in the lives of thousands of people, many of whom

live in communities with high rates of unemployment and

poverty. The projects have helped to restore hope in

communities that only knew despair.

At ABB, we believe that we can achieve the best results by

leveraging our resources – our people, management skills and

technology and not just money – through innovative

partnerships with government departments, community

organisations and other companies who support our objectives.

A Corporate Social Investment Forum, including ABB

employees and representatives of community-based

organisations, meets regularly to review progress, identify

priorities, set criteria for evaluating projects and generate new

ideas for future action.

A number of key principles underpin ABB’s corporate

social investment activities. There must be maximum efficiency

of investment, which means that ABB will not advance funds

for salaries, administration and other overhead costs. The money

must go to the people who need it.

The other emphasis is on sustainable projects that can

eventually stand on their own, without the support of ABB,

and develop entrepreneurs, managers and workers in areas

where there was previously high levels of unemployment and

poverty. In all projects, ABB adopts a hands-on approach; we

help to co-ordinate and manage activities.

There are two distinct types of corporate social investment

projects: those aimed at our own employees, their families and

the communities where they work; and those that are directed

at South African society at large. For our employees, there are

a number of projects, ranging from providing support to schools

attended by the children of ABB employees to Internet Cafés

at our facilities and adult basic education and training (ABET).

For society at large, the projects are divided into two main

areas: education and training for employment, and community

support. In education and training for employment, the emphasis

is on income-generating projects that will restore the dignity

of the unemployed through training and after-care that equips

them with the basic skills to start a business.

ABB has supported Lungisa (which means “fix it” in Nguni

languages). This is an innovative project that empowers

unemployed and disabled people by giving them the technical

training to open their own businesses, repairing household

appliances and welding.

In community support, ABB has assisted Conquest for Life

in Westbury Township near Johannesburg. The project is aimed

at unlocking the potential of the youth by encouraging them

to adopt positive lifestyles and reject the negative influences

of violence, gangsterism and drug abuse.

The ABB Group has published a photography book entitled

“What is knowledge?” to raise funds globally for an HIV/AIDS

related project in the country. Further funds have been raised

by ABB to support an AIDS orphans project.

ABB South Africa has also sponsored several graduate

students to attend a post-graduate diploma in HIV/AIDS at

Stellenbosch University and Medunsa University.

SOCIAL CONTRIBUTION

In 2000 the ABB Group undertook a case study of their

social contribution and its impact on their employees,

employees’ families and the community at large. ABB South

Africa embarked on a detailed case study together with the

University of the Witwatersrand Environmental Engineering

department. The case study was published in the group’s annual

Sustainability Report for 2001.

“I have always maintained that we cannot have a

filthy African Renaissance, and that efforts to look for

alternatives to highly polluting methods is part of our

revival as a continent.”

SA Minister of Environment and Tourism, Mr Valli Moosa, July 2000

One of the priorities of ABB is to extend its environmental

policy and management systems to all employees and activities

throughout the world, including South Africa.

In 1992 ABB signed the International Chamber of Commerce

(ICC) Charter which was the start of its global environmental

programme. The programme focused on sites and their

certification to ISO 14001 environmental management systems.

Presently we have more than 98% of sites globally (539) that

have full environmental management systems and are externally

certified.

In addition to our site programme ABB has also focused

on its products through the Environmental Product Declarations

(EPDs), which is a tool that communicates our environmental

performance. The information in the EPD is based on life cycle

assessments and is certified by external authorised bodies.

ABB South Africa has followed the example of its global

parent in adopting policies to ensure that it maintains world-

class environmental standards. Our implementation of good

environmental practice runs well ahead of South African

legislative requirements.

It involves extensive dialogue with customers, suppliers,

the community at large and government to integrate the

environmental component of the company’s “triple bottom

line” with the social and economic aspects. The result is unique

policies that are appropriate in a South African setting.

ABB has emerged as a leader in environmental care and

social responsibility in South Africa. It has won two awards as

the best company in South Africa in its industrial sector for

environmental care and Black Economic Empowerment (BEE)

from Professional Management Review.

Six of ABB’s eight operations in South Africa have already

achieved ISO 14001 certification for environmental management.

The remaining two sites have EMS systems in place and plan

for certification. The ISO 14001 environmental management

system has 39 operational performance indicators to:

• Reduce demand on resources

• Phase-out unwanted substances

• Reduce emissions and waste

• Identify potential hazards; and to

• Optimise recycling

One of the ABB companies that have achieved ISO 14001

certification is ABB Karebo Manufacturers – the first Black

Economic Empowerment (BEE) company in the field of electrical

ENVIRONMENTAL CONTRIBUTION

engineering to achieve the certification. Compliance with

the ISO 14001 significantly adds to ABB’s competitiveness and

enables exports to a number of new potential markets.

ABB also takes great care to minimise the environmental

impact of its infrastructure projects. An example is the R350

million Kruger Mpumalanga International Airport that the

company is building near Nelspruit. As part of the preliminary

work on this project, ABB did extensive environmental impact

studies that went far beyond the requirements of the law.

ABB South Africa is also supporting Bonesa, a project that

reaches 450 schools throughout the country and educates

schoolchildren about energy efficiency. This “Legacy Project”

will have a lasting impact on the country long after the World

Summit on Sustainable Development.

ABB has a common efforts programme which it drives

worldwide. The key programme is “Access to Electricity” that

will help to make a contribution towards improving the quality

of life of people throughout the world.

ABB is a global leader in power and automation technologies

that enable utility and industry customers to improve

performance while lowering environmental impact.

ABB has 150,000 employees in more than 100 countries.

ABB in Southern Africa employs 3 000 people and has

operations in Angola, Botswana, Lesotho, Malawi,

Mozambique, Namibia, Swaziland, Zimbabwe, Zambia,

and the Democratic Republic of Congo. In South Africa the

group has several empowerment companies in the areas of

high voltage switchgear, distribution transformers and

electrical enclosures.

ABB in South and Southern AfricaHead OfficePrivate Bag X37Sunninghill 2157JohannesburgSouth Africa

Tel: +27 11 236 7000Fax: +27 11 236 7001

www.abb.com/zawww.abb.com