Strategic CSR in practice - an integral part of Grundfos'

business strategy

Irene Quist MortensenCSR Manager

Agenda for today

• Grundfos in brief• The world around us is changing • Increasing stakeholder expectations• Key concepts of sustainability and corporate

responsibility• Grundfos’ shared value model• Climate White Paper – capitalising on sustainability• How do we work with sustainability and responsibility?

– PRODUCT– PEOPLE– PROCESS– PURCHASE

• Grundfos Brings Water to Life – our latest flagship

Grundfos in brief

• The company was founded in 1945 by Poul Due Jensen

• Headquarter in Bjerringbro; Denmark

• 85 companies in 50 countries

• 16,000 employees

• Annual production of more than 16 million pumps units makes Grundfos the largest pump manufacturer in the world

• Turn over 2,291 million EURO in 2009 – expects a record sale in 2010

• Grundfos is primarily owned by the Poul Due Jensen Foundation

Niels Due Jensen, Chairman of the Board”Grundfos has to take the lead

and simply become more sustainable in everything we do”

Business has to be part of the solution

• CO2 and climate change • Increased population

• Urbanization

• Emergent markets

• Water constraints

• New clean technologies

• Global financial crisis

“The Business of Business is Business” (Milton Friedman)

The medias as watchdogs

”Danish Company Admits to BribingIraq in Oil-for-Food Program” (The New York Times)

”Tilbud, der dræber”, (DR og diverse afledte medier)

”Kødskandale koster SuperBest 100 mio.” (DR Kontant, Jyllandsposten mmfl, 2009)

• Identify the origins of your total carbon footprint. If you can not deliver this, we will have to buy our products elsewhere!! (Befesa Group, 2009)

• Obligation to report annually on a standard regarding Black Empowerment, otherwise you cannot bed on any public tender (South African Government)

• We need to be assure that you live up to Global Compact (UNICEF)

• We need to include life-cycle-analysis in our tender to governments (contractors)

Expectations from customers

Stakeholder expectations

Benchmarking to competitiors

• Wide ethics and compliance program – In 2007-2008 ITT completed training of nearly every employee worldwide on the Corporate Code of Conduct

• In 2007 ITT assessed more than 106 new global strategic suppliers. They audit for child labor and slave labor, and require strategic suppliers to adhere to the ITT Code of Conduct.

Employees look after, that Grundfos management walk the talk

• Employee satisfaction is closely linked to company values and to conducting a meaningful job

• ”We don’t want to be part of a branding stunt”

• ”We expects our managers to be role models for responsible behavoir”

• ”If our values do not live in practice they are worth nothing”

THINKING AHEAD MAKES IT POSSIBLE

INNOVATION IS THE ESSENCE

BE RESPONSIBLE

THINKING AHEAD

INNOVATE

Legislation from Danish Government

• The Danish Government launched a CSR Plan of Action in 2008

• From 2009, large businesses in Denmark are required to account for their work on corporate social responsibility in their annual report

Reporting on sustainability

• We will communicate our progress and provide full transparency

• Global Reporting Initiative (GRI) – an international recognized standard

What is your expectations to the role of business in society?

A long history of sustainability and corporate responsibility

• Poul Due Jensen was a pioneer within social responsibility

• Corporate values BE>THINK> INNOVATE

• Responsibility towards our surroundings, local communities and own employees has always been a part of Grundfos’ values

BE RESONSIBLEIs the foundation

CSR Milestones

1968

The first flex work-shop established

2000

First OHSAS 18001certication

1996

First EMAS-Certification for the Group

1999

First Group environmental report

1989

The first Grundfos Olympics

First ISO 14001certification SQFlex launched

2001

Opening of The PoulDue Jensen Acadamy

2006

ALPHA Prolaunched

2004 2005

First Sustainability report

2002

UN GlobalCompact

EU’s environmentalaward

New Businessis established

Energy labelling of circulation pumps

The Group’s senior executives sign the Code of Conduct

2007 2008

Member of WBCSD

BioBooster launched

LIFELINK launched

Group CSRestablished

Innovation Intent

2009

Climate strategy

2010

Grundfos Brings Water 2 Life

Shared valueWe believe that Grundfos and societies in which we operate areinterdependent. Therefore our business decisions follow the principle of shared value – they benefit both sides

SustainabilityWe believe that we must be able to meet the needs of the present without compromise the ability of the future generations to meet their own needs in terms of both natural resources and social well-being.

Compliance and responsibilityWe believe that we have a moral obligation to behave responsiblyat all times – in business and in society

Key concepts of sustainability and responsibility in Grundfos

Shared value in Grundfos

PURCHASE•All Grundfos procurement •Supplier management

PEOPLE•Leadership and collaboration•Competence development•Occupational Health and Safety•Code of Conduct

PRODUCT•All Grundfos products•Research and Development •Customers •Sales & Marketing •Service

PROCESS•Operations•Inbound and outbound logistics•Properties and utilities •Community involvement

Shared value: reducing climate impact and capitalising on sustainability

Climate White Paper 2009 – our response to the climate challenge

• Five commitments which anchor our efforts:1. We will take our own medicine and never emit

more CO2 than we did in 20082. We will invest in developing new sustainable

products and solutions 3. We will continue to develop an organisation with a

green mindset4. We will influence the global climate agenda and

position Grundfos as a true global player5. We will communicate our progress and provide full

transparency

• ALPHA 2 is a highly energy efficient A-labelled circulator pump

• ALPHA2 pump no. 1 million was produced in 2009

• The total sales of ALPHA2 pumps implies annual energy savings of 200 million kWh a year (96,000 tonnes CO2)

• A-labelled pumps sold between 2005 and 2009 have led to annual energy savings of 750 million kWh (359,000 tonnes CO2) equal to larger European city.

PRODUCT – ALPHA2

PRODUCT – The global sustainability agenda

• Influencing the global agenda– EuP directive– A-labelled products– An active member of global networks to enhance

sustainability and pave the way for legislation

• Customer training – Raise awareness of sustainability among business

partners – Show the options available with Grundfos’ products

• The group target for employees on special terms is 3 %

PEOPLE – Grundfos employees

• Grundfos regretfully had to say goodbye to about 2000 dedicated employees in 2009

PEOPLE – Code of Conduct

• Celebrated its 10th anniversary in 2009

• Extended to include all aspects of Global Compact

• Grundfos Corporate Internal Control conducted 9 compliance workshops and visited 34 Group entities in 2009

• Global roll out of the Grundfos Code of Conduct

PROCESS – taking our own medicine

• Footprint strategy launched in 2009

• Grundfos will not emit more CO2 than we did in 2008

• Sustainable buildings – A policy for sustainable buildings was developed

in 2009– Pump replacement

PROCESS – Community engagement

• Grundfos companies around the world have a tradition of engaging with local communities

• Creating shared value by focusing on water– Grundfos water conservation awareness

programme in India

– Solar pump systems donated to schools in China

• A obligatory part of the contractual agreement that exists between Grundfos and our suppliers of direct material

• Based on 10 principles in UN Global Compact

• In 2009, approx. 30% of Grundfos companies communicated the Supplier Code of Conduct to their local suppliers

PURCHASE – Supplier Code of Conduct

• An example of strategic CSR in Grundfos

• Putting our Climate White Paper into action

• Not because we have to, but because we can!

• The first of its kind in Grundfos’ history

Shared value: employee engagement and Grundfos innovation

• 1 billion people in this world do not have access to clean water

• Polluted water or water stress cause more deaths than war and violence

• Every month, 200.000 people die because of water borne diseases. Half of them are children under the age of 5

• When people do not have access to clean water they are trapped in a spiral of disease and poverty. Access to clean water is the first step towards development

• Grundfos has the technology and competencies to make a difference – because we can and because we will!

WHY bring WATER TO LIFE?

OVERVIEW OF WATER2LIFE – a global CSR programme

• 16,000 employees collect money and give access to water for rural communities in developing countries

• The Danish Red Cross raises funds for the project work and community training in the Kenyan villages

• Implementation of water projects in Kenya in cooperation with Red Cross

• A comprehensive communication platform ensures an overview of the activities, results and not least the difference we make in the Kenyan communities!

Partnership between Grundfos and the Red Cross

Two organisations sharing a common goal- and building on core competencies

Community based health and development programmes. Specialist in motivating and involving local communities in water projects.

Development and manufacture of advanced Grundfos LIFELINK water solution for rural and peri-urban communities in developing countries

Lifelink video >

• 109,000 Euro donated by employees in more than 30 countries

• Four water systems funded• First water project officially opened on October

26 2010• Fundraising activities around the world – China,

Dubai, Mexico, Denmark, Germany, Hungary, USA…

• We take the first steps ourselves… After one year, in June 2011, we go external. Watch up on Facebook!

Status of Water2Life, November 2010

Expected results• Reliable access to water for minimum

16,000 people in Kenya – and many more

• Awareness raising on the link between water and development

• Awareness raising of Grundfos’ innovative solutions for water challenges

• Awareness raising of Danish Red Cross work on sustainable development

• Exerience on succesful cross-sectorial partnership for sustainable development

How Water2Life creates Shared Value• Value for Society

– Improving living conditions in developing countries– Alleviating impact of climate changes – Raising awareness on water and sustainable

development– Paving new ways for cross sector partnerships

• Value for Grundfos– Creating a vibrant culture of truly committed

employees– Strengthening employee attraction and

satisfaction– Raising awareness of Grundfos’ innovative

solutions to water challenges– Creating new successful partnerships between

Grundfos and donororganisations

Any questions, comments or suggestions?

Thank you for your attention