Evaluating a company's impact (the case of ABB)

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You are reading Green Digest Impact, a weekly newsletter that provides in-depth analyses of companies’ environmental and social impact.

OUR APPROACH

Central to our narrative is the principle of double-materiality, which recognizes that a company's impact is twofold: it affects both the environment and society at large, and in turn, these external factors influence the company's financial and operational performance.

While traditional ESG assessments focus on the latter, we aim to examine companies' direct impacts on these factors. In pursuit of this, we introduce a unique scoring system that quantifies a company's impact.

The insights and analyses presented in Green Digest Impact are brought to you by a partnership between Green Digest and Impaakt, a Swiss-based impact data provider. Contact Impaakt here to explore how they can assist you.

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THIS WEEK’S COMPANY

ABB

This week we dive deep into ABB’s environmental and social impact.

ABB is a leading global technology company specializing in electrification and automation solutions.

Some interesting facts:

• ABB offers Terra 360, one of the world’s fastest electric car chargers, capable of fully charging an electric vehicle in less than 15 minutes, delivering 100 km of range in under 3 minutes.

• In 2015, ABB introduced YuMi, the world’s first truly collaborative robot at the time, designed to work alongside people safely and efficiently, marking a shift toward barrier-free, human-robot collaboration in industrial environments.

COMPANY’S IMPACT

ABB’s overall impact score

ABB has a general impact score of +0.79 (on a scale from -5 to +5). Its impact is spread across 9 UN Sustainable Development Goals (SDGs) and 10 topics, split between positive and negative analyses.

In the socio-economic sphere,

ABB’s four key focus areas drive modern industry: Electrification powers homes and businesses with safe voltage solutions; Industrial Automation transforms sectors like transportation and pharmaceuticals; Motion keeps industries moving efficiently; and Robotics & Discrete Automation enhances automotive and machinery with advanced robotics. With over 1 million EV chargers deployed, ABB plays a pioneering role in electric vehicle (EV) charging solutions, with its e-mobility division making a significant contribution to the global EV market. ABB’s impact extends to public transportation, where its technology underpins critical rail networks. Thanks to ABB’s advanced technology and solutions, Sweden’s 15,600-kilometer rail system is one of the most advanced globally. ABB’s advanced traction solutions also power over 250 electric locomotives for Indian Railways, transporting hundreds of millions of passengers daily.

However, ABB has also been involved in corruption cases in developing countries. In 2020, it agreed to pay $103 million to settle charges related to overpayments during the construction of a power station in South Africa, a project plagued by delays, cost overruns, and design flaws. Previous instances also include payments to officials in Mexico, Iraq, Nigeria, Angola, and Kazakhstan to secure contracts.

Environmentally,

ABB emits approximately 125 million tonnes of CO₂ equivalent annually, comparable to the emissions from 32 coal plants in a year. The company also uses more than 390,000 m³ of water annually, 43% in medium-high, high, or extremely high water-stressed areas. Additionally, it generates approximately 194,000 tonnes of waste (recycles 84.5% of it) and an estimated 96,000 tonnes of end-of-life electronic waste annually.

_{*The impact score is current as of November 2024 and may be subject to changes as it is continuously updated.
**You can find details about the scoring methodology here and the information sources here.}

ESG VS IMPACT SCORE

What is ABB’s ESG rating?

For comparison, ABB has an AAA rating in MSCI's ESG evaluation.

However, ESG Ratings from MSCI ESG Research are designed to measure a company’s resilience to financially material ESG risks and they provide a window into one facet of risk to financial performance. They measure how effectively companies manage ESG risks, not their impact on these factors.

SCORES BY SDG

ABB’s impact scores by SDG

Positively (and by weight), the company scores the highest in the Decent Work and Economic Growth SDG (+1.93), followed by Sustainable Cities and Communities (+3.32), and Partnership for the Goals (+2.95).

Negatively, the company scores the worst in the Climate Action SDG (-0.55), followed by Responsible Consumption and Production (-2.19), and Peace, Justice, and Strong Institutions (-3.07).

*the analysis takes into account the weight of the SDGs

ABB’s operations have both positive and negative impacts on SDG 13 – Climate Action. On the positive side, ABB drives the transition to cleaner energy as a leader in EV charging infrastructure. However, the company’s own operations contribute significantly to GHG emissions.

CONCLUSION

Materiality Map & Final Words

So, ABB’s key social and environmental impact lies in …

its transformative role in modern industry through electrification, automation, motion, and robotics. With over a million EV chargers deployed globally and advanced traction solutions powering extensive rail networks in countries like Sweden and India, ABB plays a crucial role in promoting sustainable transit, supporting efficient industries, and advancing the global shift toward electric mobility.

However, ABB’s journey hasn’t been without ethical setbacks. In several developing countries, the company has faced corruption cases, underscoring the complexities ABB must navigate to ensure ethical operations. Environmentally, while ABB demonstrates strong recycling efforts, it produces substantial emissions and water consumption, alongside a significant volume of end-of-life electronic waste.

ABB’s overall impact score of +0.79 reflects a balance between its substantial contributions to sustainable industrial solutions and the ethical and environmental complexities inherent in its global operations.

If you’d like to delve deeper into ABB’s impact, you can explore it here.

If you'd like to learn more about the scoring methodology, you can do so here.

Do you have a specific company you'd like us to cover? Send your suggestions to [email protected]

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