ASSA ABLOY AB (publ) ($ASSAB)

Hello, everyone, and welcome to ASSA ABLOY Sustainability seminar in 2026. My name is Bjorn Tibell, and I'm heading Investor Relations. Before we dig into today's agenda, a word about safety, please ensure that you know where your nearest emergency exit is located in case something unexpected happens where you are located. Four days ago, we published ASSA ABLOY's annual report for 2025, including our second CSRD report. Today, the objective is to go through our sustainability outcomes in 2025 and also discuss our new sustainability program, which will finish in 2030. Our first speaker is ASSA ABLOY's CFO, Erik Pieder, and he will give you a high-level overview of our work with sustainability. Erik will then hand over to Charles Robinson, our Head of Sustainability, who will discuss the outcome of our sustainability program to 2025. Allan Cooper, Chief Human Resource Officer, will then discuss our HR-related outcomes in the 2025 program and also talk about the target set for 2030 before Charles Robinson will come back and go through our new program to 2030 in some more detail. Our new sustainability program to 2030. In that program, we have introduced a new target relating to innovation, which Anders Fosland, our Head of Product Sustainability will go through before we will round up the presentations. In total, we expect these presentations to take around 50 minutes. And after then, we will open up for your questions. You can submit your questions through the chat function that you see at the bottom of the webcast window, and you can start to submit them already now. All speakers who you will see now, they will be ready and available to respond to your questions when the Q&A session starts. So with that little introduction, I would like to hand over to Erik Pieder to start. Erik, please go ahead.

Thank you, Bjorn, and good morning, good afternoon or good evening, wherever you are in the world, and thanks for taking the time of participating in our seminar. If we look a bit sort of how our approach is to sustainability. We don't want to consider sustainability to be, let's say, outside of our normal operations. We sort of be integrated because we believe that when we integrate it, we can also unlock both, let's say, sales growth potential such as, I mean, say, related to, let's say, regulations, EPDs, which would then sort of mean that the customers are willing to -- let's say, to pay a premium or to use light products or it should be, let's say, from a cost perspective, where by using less material or using less energy, we would be able to reduce our operational costs. So in reality, if you put these 2 together, we see sustainability as a part of accelerating our profitable growth. As I started with, I mean, sustainability is integrated in the ASSA ABLOY's strategy. If you look at our strategy house, it is one of the fundamentals that we have in the house where we clearly mark our sustainability. But on top of that, it floats into a number of the areas where we work, okay, within the mission and the vision. Of course, this also helps us with the financial targets. But also, if you look on strategic objectives, like, for instance, growth through customer relevance. If we are relevant within the sustainability area, we're also relevant for our customer, which will also help us, let's say, as I talked about before in our growth is the same when it goes to, let's say, cost efficiency in everything we do is just another example or evolution through people. As you saw in the video, we have now successfully completed, I would say, our fourth program, but this goes back way back. So I mean our first program was started in 2007, and now we're up to the fourth program. And today, Charles will also talk about the fifth program that we're now launching. I think a very important part, which we did already 2020 was that we committed ourselves to science-based targets. And as I'm sure that you're all aware, you know that the science-based target is also related to the Paris agreement, where within the Scope 1 and 2 we should have an emission reduction of 50%. Scope 3 is about minus 28% by 2030. And then we should be net 0 by 2020. It's one thing here, which I mentioned before that it's integrated. And one thing here is that we consider, let's say, funding through, let's say, when we do a CapEx investment we sort of use the same rule when it is sort of more a sustainability funded CapEx -- sustainability CapEx as we do on the other ones. So once again, the message is that it's integrated and we believe that we get the best traction if we consider it to be a normal practice or normal operation within our companies. How far have we come so far? If you look by 2025, if you look on the Scope 1 and 2, I think we have delivered according to our promise. So that by sort of so far, we are minus 34%. So we are sort of on our way to reach the 50%. Scope 3 emissions, as you know, that one is a much more broader and also, I would say, a little bit more difficult. But at least you can see sort of by 2025, we're halfway. And as you sort of -- as you will see later on, we have, of course, plans and ideas in how to reach the target then for 2030. Now I'll briefly mention this, Charles will come back to it. As I mentioned before, we have successfully completed the FORWARD program. And now we're sort of launching the fifth sustainability program. You can see that it's more, I would say, embedded with the science-based targets where you see clearly that we have that as a part of this on the 1, 2 and 3. And that is the way that we want to drive it. On top of that, I would say, in order to reach these goals, we need to increase our ambition level, and that is something that we clearly will show when you see sort of the targets that we have for this program. Finally, as you've heard me allude to, I don't know, how many times already, sustainability is integrated into strategy, innovation, operations, et cetera. And I think sort of we are setting also the long-term foundation for successful, sustainable growth for the future. One thing that -- and you've heard me say this before, if there is one thing that you should take with you is the slide that is sort of the diagram that you see in front of you. Where it is feasible to increase our sales, but at the same time, lower our admissions. You can see that in this period, we have increased the sales with 62%, simultaneously then we have been able to achieve a reduction of 34%. With that, I sort of have done the introduction, and I hand it over to Charles for a bit on the sustainability program 2025. Go ahead, Charles.

Great. Thank you very much, Erik. Hello, everyone. I'm Charles Robinson, VP and Head of Sustainability for the group. As Erik touched on in this section, I'll give you an overview of how we progress against our sustainability program 2025. So as a reminder, our program was based on a 2019 baseline year across 3 different areas of operations, supply management and people. So taking a little bit of a closer look specifically on our operations. So in broad terms, we had, on average, a 25% reduction target against our 2019 baseline. When it comes to carbon footprint here for Scope 1 and Scope 2, very much linked with our science-based targets. The majority of our Scope 1 and Scope 2 carbon emissions come from our energy consumption. So our Scope 1 and 2, our carbon footprint is very closely linked with our energy intensity, and I'll come back to that shortly on an update on our science-based target specifically. We then take a look at our water intensity target, a 25% reduction target. We reduced by a whopping 59% against our baseline. So this is where we carried out infrastructure upgrades and increase the efficiency of our most water-intensive processes. And I'll come back with an example and case study of that shortly. When it comes to our waste, so both for our hazardous waste, nonhazardous waste, making good progress where we again exceeded our target. For organic solvents, we had an ambitious 50% reduction target, and we realized a 69% improvement against that. So there are 2 key areas where we drove that improvement. One is for our components and parts degreasing and washing processes. We've reduced the solvent component as part of that decreasing process, but also for our painting processes predominantly for our doors, we switched from solvent-based paint to water-based paint, and that's allowed us to achieve that significant reduction. When it comes to ISO 14001 Environmental Management certificate and program, we had a very ambitious goal to have 100% of our relevant manufacturing sites certified by the end of 2025. Now we did realize 88%, so quite a significant improvement against 2019. We did have some challenges in some of our more recent acquisitions where we needed to prioritize turning the business around. We are firmly committed to getting those sites certified over the next year or so. With that one on how we realize some of these targets, we have a short video to take you through on our most recent solar PV installation at our site in Guli in Chongqing, China. Please play the video. [Presentation]

So as we saw there in the video, our solar installation at our site in Guli, the largest in the ASSA ABLOY Group by over 4x compared to our significant arrays. As we continue to roll out the implementation of solar PV that, of course, helps us to reduce our carbon emissions, helps us to reduce on our energy costs as well, but it also helps to reduce our risk exposure to volatile energy markets, which we've seen over the last couple of years and indeed to today as well. So it helps us to become a little bit more energy independent, at least to a base level, which helps to reduce business risk. Another example, as I alluded to earlier, is that our Porto Feliz factory in Brazil within our Americas division. So a little background. The site was consuming in the region of 50 million liters of water per year at a cost of nearly USD 0.25 million. So this is the first time where I've seen such a combination of different technologies in order to reduce. At first, they implemented a reuse system, specifically on their plating line, the water-intensive process. They then couple that with a reverse osmosis system. And then we're able to implement an upgrade to an ion resin exchange and lastly, couple that with a vacuum evaporator as well. So by doing so, they were able to reduce the water consumption by a whopping 98%, saving about $240,000. But in addition, it also reduced the amount of chemicals needed for the process as well. So all in all, total saving of almost 100% of the water consumption but from a financial perspective, saving USD 0.5 million as well. So a true win-win project. In each of the seminars over the last 5 years, we've taken a deep dive look at one of our largest, most intensive factories, and that's Ameristar in Tulsa, Oklahoma as part of our Entrance Systems division. So back in 2021, we had a video and overview with Kristian Uldall Director of Sustainability locally. Kristian and the team have been doing an incredible job to drive sustainability initiatives locally. And we can see on the bottom right hand of the screen that the company has grown by 81% and over the 5-year period, but at the same time, managed to substantially reduced their water consumption by 38% and their solvent consumption by 81% as well. So an incredible achievement substantial growth while also reducing the footprint of the site as well. And a brief update on our science-based targets commitment. So for our Scope 1 and Scope 2, we have the target to reduce by 50% in absolute terms against our 2019 baseline. We have our 4-pronged standardized strategic approach, which we use across each division, each segment, business area, business unit and then down to site level. This then rolls back up in that standardized way to make sure that we have a good overview and controls to ensure that we're on a good track to be able to realize that. And as I mentioned earlier, the majority of our Scope 1 and Scope 2 emissions are principally driven by our energy consumption. So as we substantially increased our energy effectiveness and efficiency that one helps to reduce our energy cost, reduces our risk exposure and also our Scope 1 and Scope 2 emissions. So we've made a 34% improvement against our 2019 baseline. We're ahead of target, something we're incredibly proud of. But it's important that as we head towards 2030, it's going to get more and more difficult to realize the balance of that 50%. So we need to continue to push to be able to realize our targets out to 2030. A little on our Scope 3. So as Bjorn had mentioned earlier and as well from Erik, Scope 3 makes up 95% of our total footprint. So quite a substantial heavy lift there. We're making strong progress against our targets, just about halfway towards that 28% reduction. Again, we see on the bottom right hand of the screen here, we have the same standardized four-pronged approach to be able to realize our Scope 3. We're making good progress against the baseline but I believe that we can continue to do more, and we need to accelerate. We have a great pipeline of projects identified. We now need to accelerate the implementation of those projects. Wrapping up the sustainability program 2025. From a supply management perspective, we had a target to carry a supplier sustainability audits for 95% of our direct material spend. This is a mature process that's been in place for over 12 years, and we carry out over 700 on-site audits with our own auditors each year with our most material suppliers. We also had a target then to have all of our suppliers to sign and adhere to our code of conduct for business partners. And when I say all there, I mean both our direct suppliers and our indirects. So we had a target to have 95%, we realized 89%. I think it's important here that when we had our 2020 targets, it was for direct material suppliers only, so in the region of around 9,000 suppliers. In our 2025 program, we then added in indirect suppliers. So adding in 50,000 additional suppliers. So that was quite a heavy lift from where we were in 2020. Although we didn't quite realize the 95%, we came from a 68% to 89%. So something that we can be proud of, and we continue to push in our future program to 2030. From a people perspective, we continue to make strong progress, in particular for health and safety and a very good improvement on gender diversity. But to take us into a little bit more detail about our approach to our people I'd like to hand over now to Allan Cooper, our Chief Human Resources Officer. Allan, over to you.

Thank you so much, Charles, and hello, everyone, and thank you for joining the Peoples section. I'm Allan Cooper, the Chief Human Resources Officer here at ASSA ABLOY. And being part of the leadership team. My focus is to ensure sustainability is embracing all aspects of our culture and organization. At ASSA ABLOY, we're proud to be the global leader in access solutions, driven by a clear purpose helping people feel safe, secure and experience a more open world. And people are the foundation of everything we do and the engine behind our success. So today, I'm pleased to share the strong progress we've made and the commitments that will guide us and move us forward confidently towards 2030. So let's start with that strong progress we've achieved over the past 5 years. Safety is a clear priority across all our operations. Over recent years, we've consistently advanced our together, we are a safe program, which brings together standards, processes, procedures, training and a strong focus on behaviors and culture. A key driver of this progress has been the effective integration of newly acquired businesses into our safety framework. As a result of these collective efforts, we've reduced our injury rate from 3 to 2.2 over the past 5 years, demonstrating measurable, sustained improvement. At the same time, we've worked on the 2025 targets to strengthen diversity within ASSA ABLOY. Through transparent merit-based practices and development initiatives, we see an increased representation of women. This progress helped us foster diversity of thought and build teams that better reflect the markets and the communities we serve. Internal mobility is a top talent priority for us. And here, we've also made strong progress in strengthening our internal talent pipeline by increasing our focus on internal mobility and providing career advancement opportunities we've encouraged more employees to grow their careers within ASSA ABLOY. So as we successfully closed our 2019 to '25 sustainability program, we're well positioned to take on the next phase of our journey. I'm proud to introduce our new people strategy towards 2030, anchored in a simple belief, people make it happen. The people strategy is designed to deliver the new ASSA ABLOY's strategy towards 2030. Our people vision is to empower individuals to reach their full potential, enable a safer and more open world. This vision is brought to life through the 3 core focus areas: culture, talent and social responsibility. At ASSA ABLOY, our people are united by a shared purpose and a strong culture. This is why we've developed together we, a program that combines our common culture, rooted in the values empowerment, innovation and integrity. This shared culture connects us across the organization and across borders is something we'll continue to actively live and strengthen every day. It serves as the foundation for successful collaboration acts as a compass that aligns our diverse global workforce. This enables us to grow and succeed together. Talent is a powerful enabler of sustainable growth. We start to be a place where people can develop, grow and build meaningful careers. By attracting, developing and retaining the skills and capabilities we need for the future, supported by strong leadership continuous learning and a stronger focus on internal mobility, we unlock potentials of individuals and prepare our organization for what lies ahead. When it comes to our third strategic pillar within the people strategy being social responsibility, this acts as our guiding compass in how we operate and make decisions. By prioritizing safety, well-being and the diversity of thought, we create fair, merit-based growth opportunities for all our employees, fostering inclusive and supportive workplace. In doing so, we contribute to long-term social sustainability and a stronger future for both our people and our business. So looking ahead, we've set ambitious goals for 2030 that directly support our long-term sustainability journey. We aim to continuously strengthen employee engagement while creating more internal mobility and growth opportunities. Our safety aspiration together to 0 reflects our unwavering commitment to ensuring that every employees goes home safely every day. By 2030, we're targeting a further 20% reduction in injury rates, building on the strong progress already achieved. We also aspire to create environments and leadership teams that foster broad thinking, innovation and inclusion. It's about unlocking stronger, more resilient decision-making through building and nurturing diverse teams. Together, these ambitions reflect our firm belief that sustainability is ultimately achieved for our people, enabled by a strong culture, leadership and a continuous commitment to improvement. So in conclusion, our sustainability journey is partly a people journey. The progress we've made and the ambitions we set for 2030 reflect a clear belief the sustainable success is built through strong culture, responsible leadership and empowered people. By continuing to invest in safety, engagement, talent and the diversity of thought, we are not only shaping a resilient organization, we're creating an environment where people can thrive, grow and contribute to a safer, more open world. This is how we turn commitments into impact, and this is how together we'll create a safe and open future. So thank you again for the opportunity to share the people update with you. And of course, feel free to read all about our achievements and future ambitions in the annual report. And now I would like to hand back to Charles.

Great. Thank you very much, Allan. So I'll take you through a little bit on our new sustainability program 2030. So as Erik mentioned earlier, we had our first program back in 2007. In 2010, we set our first set of 5-year targets. And since then, we have continued to build on the momentum and success of each program. Leading out to 2030, I'm pleased to say that we are again raising our ambition level. I think this demonstrates our commitment and our willingness to lead our industry to a more sustainable future. And in addition, in the new program, we have also included product sustainability, which I think is a fantastic inclusion. So a little bit on the program itself. In the top swimming lane we have there our climate. So this is the one set of targets where the baseline year is 2019. In short, our climate targets are our science-based targets out to 2030 and then net 0, no later than 2050. For each of our other targets as part of our program, 2025 is our baseline year. As I mentioned, we've included product sustainability and innovation, and Anders will take us through that in a little more detail shortly. From an operations perspective, we've again raised our ambition level where we have our 30 by 30. So that's where we're targeting a 30% reduction by 2030, which includes energy, water, waste to have at least 30% of our energy coming from renewable resources by 2030 and that's both purchased and on-site renewable energy and then to have 95% of our sites, a relevant manufacturing sites certified to ISO 14001. From a supply management perspective, we have retained the same level of target. So to have 95% of our direct material spend to be audited with our supplier sustainability audits and have 95% of both our direct and indirect suppliers to sign and adhere to our code of conduct for business partners. And then as Allan touched on, from a people perspective, we want to further reduce our injury rate and injury lost day rate by an additional 20% to help and keep our people safe and sound. So how can we realize some of these targets? One of the approaches that we have within our operations is to use the Kaizen methodology. Kaizen comes from lean manufacturing. It means ensure continuous improvement. So what we do is we leverage on our lean manufacturing skill set. And instead of looking at typical waste that we would from a lean perspective, whether it's movement, materials, time, et cetera, one is to look at energy waste, water waste or the creation of actual waste in itself. It's a systematic process that typically yields between 50 and 100 improvement projects, and these vary anything from low cost, no cost to projects that require some investment but may have a rapid payback of a year or less. And then everything in between then to the projects that may have a long payback. We -- also we encourage all ideas within this brainstorming process. And the reason being, just because something might not have a payback now, it may do in the future. So when it comes to technology improvements, we've reached that price parity where it makes sense to invest in that technology. We're doing this in the right way, it substantially contributes to a strategic objective, cost efficiency in everything we do. By reducing our resource consumption, we reduce our costs, reduce our risk and improve our profitability as well. Another approach that we have to help to realize our targets is where we have updated what we call our Green Team playbook. We launched a Green Team playbook 10 years ago within ASSA ABLOY. The purpose of the Green Team playbook is to enable any site anywhere across the group to get to a foundational level of sustainability. This is realized by what we call our Green Team maturity tree. So across several different areas of how teams locally can increase their maturity or get to a more advanced level of sustainability. So the Green Team playbook serves as a very clear guide for our teams to be able to realize that. We have a short video to give you an overview of the Green Team playbook. Please play the video. [Presentation]

So as we saw there, our Green Team playbook brings us to that foundational level across the group. So there's no one single approach on how we can realize our sustainability targets out to 2030, it's a multipronged approach. In addition then, a key focus for ASSA ABLOY this year and looking forward is on the circular economy. Now the linear economy, take, make waste has served us ASSA ABLOY incredibly well over the last 100 years or so. we need to further explore and understand opportunities of how we can make our products and solutions more circular. How can we keep that closer relationship to our customers? Is there an opportunity to upgrade our products to extend their useful lifetime to provide additional value add for our customers, want to help them to reduce their sustainability footprint and also to extend the useful lifetime of our products. In October last year, we appointed our first Director and Head of Circular Economy, Louis Ericsson; and Louis has 3 key focus areas for this year. One to further develop a circular economy strategy for ASSA ABLOY to establish a framework for all of our divisions so we can all pull in the same direction. And then on the other hand, to -- from a circular economy, education and awareness perspective to help our colleagues to understand what does the circular economy mean, how is it relevant for me. And then to identify circular economy pilots and opportunities and to accelerate those to drive growth initiatives. We're convinced that if we embrace circular economy in the right way, it can boost our growth accelerators. So as to further generate recurring revenue to increase our service penetration to actively upgrade our installed base. As I mentioned earlier, we've included product sustainability and innovation to the sustainability program 2030, but I'd now like to hand over to Anders Forslind, VP and Head of Product Sustainability to give us a bit more of an insight as to what that means. Anders, over to you.

Thank you, Charles. So my name is Anders Forslind, and I'm VP and Head of product sustainability. And I will talk about how innovation and product sustainability will contribute to the sustainability program 2030. Going first into looking on the actual target where we have product sustainability process for science-based target Scope 3 reduction and this process should be applied on 80% of the revenue. And what does this really mean? We have an internal development process and in combination with tools where we -- that helps us to understand where do we have the carbon footprint hotspots in product, in product portfolios and also within the divisions. By that, we can find the levers, the levers we want to use to ensure that we have initiatives on those areas that enables us to reach the targets in 2030. And when it comes to the 80% of revenue covered, it is really to ensure that we are targeting the areas that is relevant for our customers. So going more into details and starting most to the left, what do we actually do on a lower level when it comes to this. When it comes to the product and the product portfolio level, it's really to understand what can we do in the products and in the portfolios. When we come to the portfolios, we are multiplying the product carbon footprint with amount of sold units and this is to focus development and sourcing efforts on the products with the highest carbon-reduction potential. Aggregating this, up to the additional level, we get much more insights how to ensure that we are reducing the right business entities and establishing our carbon-reduction road maps on the additional level. Going further on then to the ASSA ABLOY levels. Here, we can see that we very clearly addressing the levers that makes us reach the science-based targets, Scope 3 reduction goals. So it's a model where we go from lowest detail up to the highest top and the more to the right, we move in this picture the more strategic we get. Besides the science-based target, we are also looking into 4 areas where we will work a lot up until 2030. Especially, as we had mentioned before here, the strategic support to science-based targets Scope 3. We have our tools. We have our internal process. We will continue to develop these tools to ensure that we support the organization in the best of ways, so they understand where they should focus activities. And we also have tools for ensuring that we are developing sustainable solutions. Those that have been in these meetings before recognize the sustainability compass. And during this year, we will come with a new release on that one. Then when it comes to commercialize sustainable products, it is to ensure that we support sales and marketing with sustainable sales material. And one of those things that really support sales is environmental product declarations. And here, we are introducing an internal process to ensure that we can develop those fast and efficient. Last but not least we have a product sustainability compliance area. And here is really to ensure that we have a robust product sustainability compliance to reduce regulatory risk and highlight commercial openings. We have been using the sustainability compass since 2016. And it's really to ensure that we have -- we are using environmental data early in the development process. Since 80% of the carbon footprint is determined in the early phases of design and the sustainability compass creates sustainability awareness and guides towards sustainable solutions. And what we do in the sustainability compass is always that we compare existing solution with a new solution. So we know that we have a continuous improvement when it comes to our development. Looking then on the new sustainability compass 2.0. The first bullet is same as in the old one, ensure that we are guiding development towards sustainable solutions and also aligning with the goals science-based target and also ensuring that we are compliant with the regulations at hand. Then when it comes to competitiveness free market differentiation, there we are looking into how it actually looks in the market, where do you want to place our products, where are our competitors when it comes to carbon footprint and also delivering value propositions so that customers understand what they are buying from a sustainability point of view. The last one is to support what Charles mentioned just before here when it comes to circularity and to ensure that we are bringing this into our both business models and into our products. So here, we will have support for both the business model part and design guidelines to ensure that the products that we develop today will be possible to have circularity on in the future. Then when it comes to environmental product declarations and to start with what is an environmental product declaration. An environmental product declaration is a standardized third-party verified disclosure of products environmental performance across its life cycle, providing credible and comparable sustainability data. So what can we use in EPD, Environmental Product Declaration to? Of course, we see a lot of new upcoming regulations. For instance, digital product Passport. There we would need a carbon footprint data that is very fine. So there it will fit very good and also to enable our customers to get certification, both in LED and REA and also to be able to show our customers, what kind of carbon footprint level we are at. And to be able to create EPDs on a very fast efficient way, we have introduced an internal EPD process where we work a lot now to take this from external consultants and do it in-house instead. And by that, having both faster and more efficient process. Then to summarize when it comes to our strategic focus to 2030. It is to support the science-based target scope free, ensure that we develop sustainable solutions and utilize this when it comes to commercializing on sustainable products and also that have the product sustainability, compliance and all the regulations in our headwind we are developing the products. And then when it comes to the new target, it is to focus our efforts where they create maximum impact, targeting the areas with the greatest potential for science-based target Scope 3 reductions. And by that, I hand over to Erik.

Thank you Anders. For some key takeaways. I mean, I think that -- I hope that you have seen that we have shown that sort of that we sort of are on a good way of reaching, let's say, the targets that is set up for the science-based targets. We have now completed the fourth program. And as you have seen, we have shown a number of examples. We have also shown the way that we work in order then to be able to comply or to sort of to fulfill the promises that we have made and that you've also seen in our ambition level, which we're raising then for the 2030. You can also read in our annual report where now the CSRD report, we are actually on the second one. So I think that we were early in the process already last year. Now we have refined it for the second year. And sort of what you have seen also both, I think, from Charles, Allan and Anders is you can see how it's integrated in everything we do. And especially then if you go to Charles and Anders, you see that you have seen examples, both ways of, let's say, this on the EPDs when it comes to helping to increase our sales as well as from Charles, when you have seen this on the solar panels in Guli or the part on Ameristar then to reduce the material that we're having. So once again, I show you my favorite diagram when it comes to sustainability that it is possible, and we have shown it, and you can see it by fact to increase our sales at the same time to reduce our Scope 1 and 2 emissions. And we're also in a very good way when it comes to reaching our target for the Scope 3, which is, as mentioned before, which is the most difficult one. So with that, I thank you, and I presume then we go over to Bjorn, who will then lead the Q&A.

Thank you very much, Erik. Yes, it's time to open up for questions now. And we have received questions, but feel welcome to continue to submit your questions through that chat function that you have at the bottom of webcast screen. So I'll start now from the first question we have received and work myself down the list. So the first question goes like this. Have you been able to decouple sales from emissions in Scope 3 as well? And I think I'll hand that one to Charles to start with.

Yes. Thanks, Bjorn. Yes. So I think we've seen from Erik's last and favorite slide, if I believe you to tell, Erik, where we demonstrated our decoupling of sales in Scope 1 and Scope 2. So if we were to benchmark Scope 3 in there as well. So over the same period, we've reduced our Scope 3 footprint by 14%, while we've driven growth in the region of 62%. So in short, yes, we've demonstrated that we can decouple our Scope 3 reduction as well as our Scope 2. Now I think it's fair to say it's not at the same magnitude, whereby we reduced Scope 1 and 2 by 34%. Scope 3 in comparison is down by 14%. But I'm convinced if we can continue to accelerate and remain focused on our Scope 3, we can further decouple that while obviously, we're committed to growing the organization at the same time.

Thank you, Charles. We can then continue to the next question. And this one will be for you, Allan. Congratulations on great achievements between 2019 and 2024, lovely decoupling of Scope 1 emissions and sales. Welcoming the 2030 program, in particular, the enhanced strategy on product sustainability. All targets included in the 2030 program are highly relevant, but please elaborate around the decision to not proceed with the target for gender diversity and management positions as well as how we, as investors, can follow up on the people's strategies ambitions around diversity of perspectives, what indicators will we be able to follow, Allan for you.

Okay. Thank you. Thank you so much for your question. Firstly, I'd like to assure you that in no way have we lowered our ambition when it comes to diversity. Our commitment to an inclusive workplace remains completely unchanged. And gender representation, gender pay gaps will continue to be tracked and transparently disclosed through our CSRD aligned reporting. We have refined our approach to strengthen our focus on fostering an inclusive work environment and -- based on our progress, I see a strong pipeline of female leaders, especially from an early talent perspective, where we have ratios of 40% and plus. So therefore, the strategic challenge really in the 2026 to 2030 is more on sort of structural merit-based talent practices that really support sustainable progress. Operating with our decentralized organization, so many different legal contexts as well. But we see if we can convert that pool of talent into senior leadership, we'll continue the good progress that we've seen so far.

Thank you, Allan. We'll continue with the next question then. Over 90% of emissions are in Scope 3. At what point does supply climate performance start to affect sourcing decisions preferred supply status or commercial terms. I think we hand that one to you, Charles.

Yes, for sure. I mean, super relevant, absolutely spot on. More than 95% of our Scope 3 emissions are in Scope 3. 72% of that is within our category 3.1. So that's purchased goods and services, which sits directly in our supply chain. So we've already started the process to work with our suppliers from a science-based targets perspective. So we have carried out multiple rounds of science-based targets summits. Last year, we held 4 different summits at different stages, 3 sessions in English and 1 in Chinese then for our suppliers in China as well. So we clearly set out our agenda in terms of here's what our commitment is that we would like our suppliers to get to the same level, to the same commitment level and in particular, for our preferred suppliers that we work with them to support them from a maturity perspective. So to give some context, we already support our suppliers from a lean manufacturing maturity, quality maturity, health and safety. So by working closely with our suppliers to improve their maturity, so to help them with their Scope 1 and 2, can we make their -- help them to become more energy efficient. Then looking at their Scope 3, can we help them to reduce their materials to switch to low-carbon materials as well. That, of course, will support us from a Scope 3 perspective. But it also helps -- we're not the only customer who has sustainability on the agenda. So for our suppliers, if they can embrace that in a good way, it also helps them to be more competitive with their other customers as well. And if they can do it, leverage on sustainability in the right way to reduce their costs, helps to make them more profitable as well as more competitive. And so for sure, our supply chain incredibly important when it comes to Scope 3. We continue to work on that relationship that we have to work with and develop long-term partners and preferred suppliers.

Thank you very much, Charles. Let's continue with the next question then. Do you have any variable remuneration targets relating to sustainability? And I think we'll start with you, Allan.

Yes. Okay. Thank you. Yes, we certainly do. Climate and other sustainability-related targets are factored into variable remuneration for all members of our executive team reporting to the CEO as well as many management tiers throughout all the divisions. These targets are usually linked with decreasing our energy consumption, which is a key driver, of course, for decreasing our Scope 1 and 2 carbon emissions. The reduction targets aligned to our annual emissions reduction as part of our science-based targets. This and other sustainability-related targets such as health and safety, employee engagement are typically in the form of our sort of short-term variable remuneration and usually 3% to 5% of the total short-term variable remuneration targets.

Thank you, Allan. Erik, did you want to add anything on that? Or shall we continue?

No, I think that Allan summed it up quite well. And I mean, as you heard, everybody reporting to our CEO has qualitative target related to sustainability.

Thank you. And the next question is like this. How does sustainability influence product development in practice, Anders I think this is for you.

Thank you. Yes. As I showed before, when it comes to how we work with sustainability on the product level, we use the sustainability compass to guide us towards the right direction. We know that we take different areas in consideration when developing our solutions. But in addition to that, we also have easy carbon footprint calculators. So we in on every product can go in and calculate what is the impact if you change material to another material, if you have more recycled content in the product or if there is a possibility to reduce the energy use. And as I said before, looking on the hotspots in the product and by that starting to develop new products with lower carbon footprint.

Thank you, Anders. [Operator Instructions] I'll continue to the next one. Under what conditions would offset become part of your strategy, presumably here to reduce emissions. And Charles over to you for that one.

Yes, for sure. So I think in short, especially out to 2030, offsets will play no role in how we will realize our science-based targets. Over the last couple of years, there have been very public examples where different offset programs have actually been exposed to be bogus and whether they're double count or just outrightly falsified. So unfortunately, as it stands, there's no global standardization. There's no EN program, ISO program that I'm aware of for offsetting. I think it will play an important role into the future. But for now, for us within ASSA ABLOY, we want to prioritize real reductions because we have significant opportunities. If we do that in the right way, we can reduce our cost and improve our profitability. But we are committed to realizing net zero no later than 2050. And I'm convinced as we push to realize our net zero target, offsets will play an important role. But I think over the next decade, I strongly anticipate that there will be a global standardization, a framework that companies and institutions can reliably trust offset programs because I know that there are incredible projects, programs, technologies out there such as carbon capture and storage. But we need to be able to trust and rely on those. And I think an international standardization is the level that's required. So again, we prioritize real reductions. We have great opportunity that will drive business benefits. But then when we push closer to our net zero goals, offsets will play an important role in the future.

Very good. Thank you, Charles. And I'll continue to the next one, which I'll pass -- hand over to Erik. At what point could sustainability-driven cost savings or pricing premiums become visible in margins?

I think that we don't talk so much about it, but of course, it has sort of impacts already today. I mean, if you look on what Anders talked about with the EPDs, which then goes into the green specifications, which we clearly see we have a double-digit increase in the green specifications year-on-year in Europe. In reality, that sort of generates more business or if you look on our result when it comes to price versus cost, sort of when we can -- either it can sort of be that we get the premium out of it or so that it's related to, let's say, material reductions or, let's say, reductions when it comes to logistics. I mean it's there, but I believe that we have greater sort of -- I think greater sort of potential than if we look sort of in the years to come. So I think that, as I said, it is there. But as I've also said, we take this as an integrated part of our business. So we don't sort of pinpoint it out in that way, like, for instance, when we have the quarterly reports, but perhaps that could be something when they are larger than there is today, that is something that we could see in the future to come.

Thank you, Erik. There are 2 questions left on my list. So I'll start with the first one. It is a complex world for a multinational company as ASSA ABLOY such as trade policy, conflict, geopolitical tensions, et cetera. What external factors or events post the largest challenges to the targets and the areas -- target areas in the 2030 sustainability program. I'll pass that one over to you, Charles.

For sure. So yes, incredibly relevant and pertinent question. I don't think there's any one thing really that we could point to that could be an external factor that creates a challenge, potentially an extraction. So a couple that come to mind is current conflict, potential future conflict as well. We continue to see significant energy cost increases. Principally, that was from the conflict with Ukraine, now the challenge in the Middle East. And of course, that will have a knock-on effect from an overall increase -- cost increase, not least to potentially interest rates as well. And then we, of course, then always have the risk of a potential economic slowdown or even eventually a recession as well. But for us, within the group, we're very clear on what we do when it comes to sustainability. We do not drive sustainability purely for the sake of sustainability. It needs to contribute to the group's overall strategy to our strategic objectives, to our growth enablers and our growth accelerators. And it boils down to 3 things that we need sustainability to do. One is the initiatives, do they reduce our cost? Do they reduce our risk exposure and do they generate growth opportunities. I think if we continue to focus on that purpose with clarity, it doesn't really matter what the external challenges are because this should be a business enabler that supports us to become increasingly competitive whatever the challenge may be.

Thank you very much. Erik, did you want to add anything there?

I think that is also the part there is exactly what Charles says. I think for us, as we sort of -- it should -- for us, in general, of course, the sustainability should either reduce cost or create business opportunities. You can also say that some of these things that is happening is also, in a way, helping us to even use this more. I would say that the geopolitical situation is, of course, one thing that could jeopardize. And of course, it's also so that we see certain, let's say, winds who are blowing in different directions across the globe. I would prefer that they would all -- when you look from a sustainability perspective, that they would all blow in the same direction. But unfortunately, they are not. So I think that could also be something which is a bit slowing down in certain parts of the world where in some other parts of the world, we can see that it's increasing. But that's a bit also part of when you're managing sort of a worldwide organization that this is sort of normal, but that could be another one that could jeopardize. .

Thank you, Erik. Well, I just have one question left here. So let's take that one. Allan, how do you ensure improved safety in your highly acquisitive model? So that requires so many companies.

Yes, it's a really relevant question. We are very acquisitive. And acquisitions potentially pose one of our biggest safety challenges. But maybe just on a more general point, first of all, I mean, we continuously work to improve our work environment on enhancing our processes, removing hazardous risks. We work with behaviors and attitudes that collectively form our safety culture, which is grounded our values and safety beliefs. And we're building a safety culture and engagement involvement through, for example, the rollout of several workshops with tens of thousands of participants focusing on risk and behavior. So the new entrants into ASSA ABLOY come into that culture of that environment. So therefore, we systematically implement our health and safety programs, coming processes, governance, behaviors and culture transformation to get closer to 0 injury vision, and we bring our acquisitions on board with that.

Very good. Well, thank you very much for that, Allan. This means that I can't see any more questions. So we have come to the end of this year's sustainability seminar, which actually is the 15th since we started off with this sustainability roundtable discussions back in 2010. All of us, we hope it has provided you with a greater understanding of our work with sustainability, and that it goes obviously hand-in-hand with commercial interests. And that you also feel confident about that we are on a journey of improvement. As our Chairman actually said last year -- at the last year's seminar, we focus on sustainability because it makes commercial sense, but we also do this because it's simply the right thing to do. So thank you again for your interest, and thanks for your questions. And if you have any follow-up questions or feedback to us, please, as always, feel welcome to reach out to us at Investor Relations. So have a good upcoming weekend now, and goodbye.