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Sustainable value creation in practice Vesa Alatalo, Managing Director SKF, Finland Global Interdependence Center conference in Helsinki, 6th June 2016

ÂŠ SKF Group

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Enable the transition

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SKF Care Business Care

BeyondZeroTM

Environmental Care © SKF Group

Employee Care

SKF Care

Community Care

SKF BeyondZero Examples • Increasing the positives – customer solutions • Reducing the negatives – manufacturing efficiency

Environmental impact 0

– –

Reduce the negative environmental impact from our operations. • Raw material and components • SKF’s own operations • Transport and distribution © SKF Group

Increase customer solutions enabling better environmental performance.

SKF BeyondZero portfolio Customer solutions with significant environmental benefits

Designed for environment

Applied for environment

E2 Deep Grove Ball Bearing

Stop-start system, SKF Rotor Positioning Bearing

- 30% less energy compared to a standard bearing

- Better fuel economy of the car

Direct benefit A solution that is designed to provide positive environmental impacts

ÂŠ SKF Group

Indirect benefit A solution that through its application enables positive environmental impacts

Sustainable customer solutions: Automotive weight and friction reduction Reduction of friction, weight and size reduces fuel consumption enabling less CO2 emissions Low weight hub bearing units • Use of low weight material in non-critical parts can reduce component weight by 30% Optimized flange design • Changed design reduces the component weight by 10% – used by e.g. BMW Low friction hub bearing units • Optimized ball set geometry and a high-performance grease reduces friction by 20%

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Sustainable customer solutions: SKF technologies for emerging tidal power Tidal power

• Emerging technology

Main shaft unit…

• Harsh operating environments • SKF solutions improve reliability, availability and maintainability

• Cooperation between industry, academia and policy makers is vital for commercialization …for tidal stream turbines

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We’re in the new LEAP-engine! Leading Edge Aviation Propulsion (LEAP) engine • • •

A high-bypass aircraft turbofan engine being jointly developed by Snecma (Safran) General Electric. Focus on improving fuel consumption and reducing emissions and noise levels. In Airbus A320neo, Boeing 737 and COMAC C919 aircrafts

SKF delivers • • •

Development partner in manufacturing, design and testing of mainshaft and gearbox bearings Ceramic hybrid mainshaft bearings Gearbox bearings

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– 50% NOx emissions

– 5% fuel consumption

– 10 EPNdB Noise reduction (Effective perceived noise in dB)

Sustainable manufacturing solutions: Energy and CO2 reductions 2500

700000

Energy use, GWh

CO2 emissions, tonnes

600000 2000 500000 3 1500

9 400000 7

2 1000

300000 5 200000

500

3 100000 1

0 06 07 08 09 10 11 12 13 14 15 Energy use by net sales (100*GWh/SEKm)

06 07 08 09 10 11 12 13 14 15 CO2 emissions by net sales (Tonnes/SEKm)

Primary focus on energy use in operations, this leads to reduced environmental impact and costs. ÂŠ SKF Group

Sustainable manufacturing solutions: Lower carbon energy supply

SKF Pune, India

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Sustainable manufacturing solutions: Lower carbon energy supply • • •

1 MW installed capacity, 1,200 Tonnes of CO2 avoided Low and stable energy cost Zero investment from SKF

Made possible because of partnership • SKF willing to commit to a power purchase agreement, project finance from third party, conducive market conditions

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Sustainable manufacturing solutions: Improved efficiency via 5G Gothenburg 5G enabled manufacturing project •

Collaborative project between Vinnova, SKF, Ericsson and Chalmers

•

Dramatic improvement in environmental & economic efficiency, flexibility and traceability

•

Helps SKF to achieve World Class Manufacturing

•

Supports the development and further deployment of this technology in Sweden and beyond

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Energy and climate target setting

-17%

340% achieved 02 2015

Net sales and energy use no longer connected! 2006–2014

How? By for example higher filling rate, better route planning, more transports by boat and rail.

Customers solutions Target: 10 billion SEK

5,9 billion SEK revenue

Our BeyondZero products make a positive contribution to the environment! We want to increase their sales.

We will cut our CO2 emissions per tonne-km goods transported by a third.

How? Machine adjustments, less compressed air and other media, smart buildings, ISO 50001, solar panels, waste heat recovery etc.

We do not demand certification, but it is preferred. And those who do not have it shall work towards it.

75% certified 2015

-18% CO

Regardless of how much we produce, our energy use goes down.

We want all our suppliers to fulfill the ISO requirements for energy management systems.

Better and better! The certification aims at continuous reduction of energy use.

energy use

Goods transportation Target: –30% CO2

59% achieved 2015

100% in progress Feb 2016

ISO 50001

SKF own operations Target: –5% energy use

60% achieved 2015

Raw material Target: 100% certified

Our products and solutions help enable environmental improvements in industry.

A Beyond Zero message Firewood required to drive a machine with plain bearings 18.5 kg (most common solution on the market)

Firewood required to drive a machine with SKF Spherical Roller Bearing plain bearings (2.8kg)

SKF advert 1918

ÂŠ SKF Group

Conclusion – what sustainability means to us •

Sustainability is integrated into our business thinking

•

Sustainability contributes to improved profitability and long term cash flow

•

For some issues, partnerships are vital to make development and deployment happen

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