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VOLVO Group Sustainability Report 2010

Environmental Performance in Production

‒ Systematic approach to improve environmental performance

Volvo Group was one of the first companies in the world to have an environmental management system certified according to ISO 14001. We carefully monitor and manage our production processes to continuously increase our efficiency and performance in all of our production facilities.

Volvo Group has production in total 65 production facilities in 19 countries, covering a wide range of production processes. Regardless of size and location, all of our production units must comply with our minimum requirements for environmental performance and an improvement program. The requirements include monitoring of energy consumption, waste levels and emissions to air and water, as well as specifying maximum emission levels to air and water.

The increase in net sales was approximately 24 percent in 2010, which has affected our emissions, energy consumption and use of resources.

Targeting energy consumption

Reducing energy usage per manufactured unit is a priority environmental target. Volvo Group’s energy usage was 2,315 GWh in 2010, an increase of 427 GWh compared with 1,888 GWh in 2009. This increase is almost proportional to the increase in net sales. Most of the recorded energy usage is for heating and production processes, and approximately one third of energy usage is used at our powertrain production facilities.

Modern and efficient foundry in Volvo Powertrain

Volvo Powertrain inaugurated a new foundry in 2010 to increase the capacity in Skövde, Sweden. The new foundry, which is the world’s most modern facility in terms of technology, energy consumption, working environment and overall environmental impact, has increased the annual casting capacity to 150 000 tonnes.

Energy consumption for the foundry has been reduced by 45 percent, and no coal dust is produced by the process.

Energy-saving targets

Since 1995 Volvo Group has worked systematically to improve energy efficiency. Between 2003 and 2008 the challenge for energy savings in production was 50 percent per unit produced. Energy efficiency initiatives, such as controlled lightning and ventilation, turning off equipment from idle running and replacing old machinery, have saved 43 percent per net sales at the Group level. We are proud of the results and are continuing to pursue energy savings.

The energy saving challenges for 2010–2012 are:

  • Idling losses, i.e. energy use outside production, shall be reduced by 50 percent
  • An additional energy reduction of 15 percent per produced unit in 2012 compared to 2008.

Most of our focus has been on our production sites, although we are striving to include most parts of our value chain in our work. One example is Volvo Trucks, where we are working with their dealers to make the plants more energy efficient and increase the use of renewable energy.

Towards carbon dioxide neutral production

Our long-term ambition is to make our production carbon neutral with no contribution of extra carbon dioxide to the atmosphere. Despite our efforts, emissions of carbon dioxide increased from 213,000 tonnes to 279,000 tonnes in 2010.

Carbon dioxide emissions increased by six percent in relation to net sales.

Environmental Performance in Production

Carbon dioxide neutral production plant

Volvo Trucks presented the world’s first carbon dioxide neutral automotive plant in Ghent, Belgium in 2007. The plant invested in wind power and a biofuel plant to produce electricity and heat, which resulted in annual carbon dioxide emissions reductions by 10,000 tonnes. In 2010 we have been working on making three Swedish plants in Tuve, Vara and in Umeå carbon dioxide neutral.

Volvo Trucks presented its first carbon dioxide neutral dealership facility in Verona, Italy, in 2008. The ambition is for more dealers to follow this initiative.

Other emissions to air

Volvo Group has a minimum standard for emissions to air. The strategy to decrease emissions of sulphur dioxide and nitrogen oxides is to use low-sulphur fuels and/or purification equipment. The emissions are largely due to the use of energy for heating.

Emissions of sulphur dioxide decreased from 38 tonnes in 2009 to approximately 33 tonnes in 2010, or by 13 percent. Nitrogen oxides increased from 322 tonnes to 719 tonnes, mainly due to intensive product development engine testing due to new emission regulations for non-road engines. Relative to net sales, emissions of nitrogen oxides increased while sulphur dioxide emissions decreased.

Emissions of solvents (VOCs) stems mainly from painting and surface treatment processes, and are high-priority issue that is subject to statutory control in most countries. Solvent emissions totaled 2,294 tonnes in 2010, representing an increase of 859 tonnes mainly due to the significant production increase. Emissions of solvents increased in relation to net sales.

Replacing solvent-based paint in Blainville

Solvent-based paint in Blainville, France, is being replaced by water-soluble paint for the truck market. This significantly reduces VOCs and eliminates the risk of inflammability. In addition it has lowered gas consumption as lower baking temperatures are required.

Increased focus on water management

During 2010, water management was included into the strategic process that precedes the review of Group targets in our business plans, a process where companies are challenged to formulate ambitious goals. Each company will establish targets related to water use, which eventually will lead to aggregated targets at a Group level.

Volvo Group has recognized water as a growing environmental concern and has been engaged in water management projects since 1992. The main issues in relation to water include inefficient water use and industrial waste water treatment systems. We initiated several after-treatment and water recycling projects in Sweden, Belgium and Peru to address the issues, aimed at reducing consumption and effluent emissions.

Water consumption and emissions to water have been measured since 1990. We also include water as an area for our minimum environmental requirements for production, with regard to substances in process water and that process water with organic content must be treated chemically or by equivalent method.

Water consumption

Water consumption compared with net sales has decreased every year, with the exception of 2009, which was due to very low production volumes.

Water consumption increased from 6,637 m3 in 2009 to 7,519 m3 in 2010.

Emissions to water

All of Volvo’s majority-owned plants have either installed their own treatment facilities or discharge their effluents to external treatment plants.

An increasing number of plants are also installing closed process water systems. This is often done when installations undergo major renovation work, as was the case with the new paint shop project at the Umeå plant. The new standard specifies the maximum permissible values for emissions of various metals, as well as treatment requirements for organic impurities.

Responsible use of chemicals

To restrict the use of chemicals, Volvo Group has maintained since 1996 a ‘black list’ of prohibited chemicals and a ‘grey list’ of products whose use must be limited.

These lists will be supplemented with additional substances which must be declared in newly designed components of products. This list, known as GADSL (Global Automotive Declarable Substance List), was drawn up in a collaboration between global automotive manufacturers and subcontractors.

We maintain a database (MOTIV) to make it easier to choose chemicals, this contains detailed information about over 6,000 chemical products.

An internal task force concluded the development of support systems during the year to enable us to fulfill our obligation to track chemicals used in our products in accordance with European REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) legislation. REACH involves registering and replacing chemicals with better alternatives from the perspective of health and environmental risks.

Volvo is mainly a down-stream user of chemicals and relies upon chemical suppliers to report according the new legislation.

Tougher follow-up on waste

In an effort to further improve material efficiency and the responsible use of resources and also encourage a more active follow-up of waste related to specific raw materials, business areas were asked to set up indicators to follow up of key material usage in 2009.

Waste is usually classified as either hazardous or non-hazardous, although definitions vary from country to country and changes over time. Although our total amount of waste has decreased over time, these changes in definitions have resulted in the amount of waste classified as hazardous increasing in recent years. The total amount of hazardous waste in 2010 was 22,730 tonnes, compared to 17,558 tonnes in 2009.

Environmental Performance in production, Industrial operations

Absolute values related to net sales 2006 2007* 2008 2009 2010
Energy consumption (GWh) 2,612 2,426 2,530 1,888 2,315
Energy consumption (MWh/SEK M) 10.5 9.6 8.6 9.1 9.0
CO2 emissions (1,000 tonnes) 282 242 291 213 279
CO2 emissions (m³/SEK M) 1.1 1.0 1.0 1.0 1.1
Water consumption (1,000 m³) 7,596 7,067 8,205 6,637 7,519
Water consumption (m³/SEK M) 30.6 27.9 27.8 31.8 29.2
NOx emissions (tonnes) 606 542 800 322 719
NOx emissions (kg/SEK M) 2.4 2.1 2.7 1.5 2.8
Solvent emissions (tonnes) 2,048 1,979 1,945 1,435 2,294
Solvent emissions (kg/SEK M) 8.3 7.8 6.6 6.9 8.9
Sulphur dioxide emissions (tonnes) 69 58 64 38 33
Sulphur dioxide emissions (kg/SEK M) 0.3 0.2 0.2 0.2 0.1
Hazardous waste (tonnes) 26,987 27,120 27,675 17,558 22,730
Hazardous waste (kg/SEK M) 109 107 94 84 88
Net sales (SEK billion) 248.1 253.2 294.9 208.5 257.4

¹ Excluding UD Trucks and Ingersoll Rand Road Development

Noise

Noise levels from most of Volvo Group’s plants are in general extremely low. Our target is to ensure that the external noise level measured at the nearest residential property does not exceed 60 dB(A).

Environmental management systems in place

The implementation of environmental management systems improves the quality of our environmental programs and helps to assure the quality of data reported. 96 percent of the total workforce at Volvo Group’s production plants were working in accordance with the certified environmental management system ISO 14001:2008 by end of 2010. This means that the management system has been audited by a third party.

Currently, 63 of our 65 production sites have been awarded an ISO 14001 certification. The Lingong site in China, and the Volvo Construction Equipment site in Tultitlan, Mexico, have not yet been certified, although the Mexico site has a similar system, approved by governmental authorities. The work of implementing environmental management systems covers the entire value chain, including product development, purchasing, sales and service.

Audits ensure consistent processes and data collection

Volvo Group has conducted environmental internal audits since 1980 to ensure adherence to the environmental policy. Environmental data is collected annually from production sites since 1990.

Environmental audits help to monitor the environmental activities and examine the data. The audit program follows a set plan, altough priority is given to auditing newly acquired operations or where the continuous improvement in environmental performance has become stagnant.

Data collection and coverage

Volvo Group had 65 (60) majority-owned production plants around the world at the end of 2010, each of which was included in the data reporting. In addition to this, eight Volvo Logistics sites and 39 Volvo Parts distribution centers have also been included in the energy use reporting.

Volvo Group has reported detailed environmental data since 1991. The data reporting is based on the global environmental standard for production plants that was introduced by Group management in 2000. This standard specifies minimum requirements and focuses on a number of key areas, including:

  • Use of chemicals
  • Energy consumption
  • Water consumption
  • Emissions to air and water
  • Waste
  • Noise

Environmental data includes about 40 indicators, and the full Volvo Group Environmental Data Report can be found at www.volvogroup.com.

Environmental risk management

The consideration of environmental risk represents a component of Volvo Group’s enterprise risk process. When assessing potential acquisitions of companies and real estate, audits consider environmental and social factors in addition to financial and legal aspects. The information provides the basis for action plans, if required.

All production plants must fulfill the minimum environmental requirements and submit to audits conducted by Volvo Group’s Environmental manager and auditor, in order to minimize risk.

Our business activities generate transports to and from plants. These transports are continuously monitored to identify potential ways of reducing environmental impact.

Environmental permits

All of the production plants in Sweden have the required environmental permits. 17 facilitites in Sweden require permits that cover waste, noise and emissions to land, air and water. No permits had to be renewed in 2010. An annual inventory is made of polluted land on our properties. Remedial operations were conducted at one real estate property in 2010. No spillages were reported in 2010.

Remediation programs

Audits may also reveal a need for remedial work at contaminated properties used for former or current operations. Through an ongoing program of remedial measures, contamination discovered in refurbishment or rebuilding projects are dealt with immediately. Installations that pose the greatest risk of causing soil and groundwater contamination, such as underground storage tanks and underground piping systems, have been targeted for rebuilding work under an internal directive focusing on such installations.

Volvo Group has insurance to cover costs related to accidents that have a negative impact on the environment.

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