Sustainability Reporting at Alfa Laval Reflections on ’The EU Directive (2014/95/EU) on non-financial and diversity information: Is a new toothless tiger born?’ Catarina Paulson 24 April 2018

Agenda Setting the scene: Alfa Laval The EU directive About the company Sustainability Reporting The EU directive What it meant for Alfa Laval’s reporting A few concluding remarks

Solutions Alfa Laval aims at creating better everyday conditions for people by providing highly efficient and environmentally responsible solutions for energy production, water supply and food. Alfa Laval aims at creating better everyday conditions for people by providing highly efficient and environmentally responsible solutions for energy production, water supply and food.

Our corporate mission To optimize the performance of our customers’ processes. Time and time again. Explanation of the image: The orange is used in the Pure Performance campaign in an ad when releasing the new Alfa Laval brand identity. Title in the ad: From juicy idea to global brand Text in the ad: 1883. That was the year when Gustav de Laval founded the company that today is Alfa Laval. Its success was based on his brilliant invention of the continuous separator. Since then we have added heat transfer and fluid handling to our expertise in separation. We are now the world leader in all three of these technologies, with strong positions in dynamic market segments. We grow by helping our customers to grow. It’s a fruitful partnership.

Key technologies Heat transfer Energy saving solutions for heating, cooling, ventilation, evaporation and condensation Products: Plate heat exchangers, including brazed and welded heat exchangers Shell-and-tube heat exchangers Air heat exchangers Spiral heat exchangers Thermal fluid systems Boilers

Key technologies Separation Efficient separation of liquids from liquids, of particles from liquids and of fluids and solids from gases Products: High speed separators Decanters Membrane filtration

Key technologies Safe transport and control of fluids Fluid handling Products: Pumps (hygienic and marine applications) Valves Mixers Tank equipment Installation material

Capital sales / Technology Heat transfer 47% 18% 13% 22% Separation Other Fluid handling

Key figures 2017 Order intake 3 802 Invoicing 3 665 Adj EBITA 582 MEUR (1 EUR = 9.63438 SEK) Order intake 3 802 Invoicing 3 665 Adj EBITA 582 Adj EBITA as % of sales 15.9 ROCE as % 17.7 Average No. of employees 16 521

Sustainability Business Principles Business Opportunities

Business Principles Social Respect for human rights Business integrity High ethical standards Environment Optimizing the use of natural resources Transparency Commitment to open dialogue Our Business Principles define the way we should act in society whilst achieving our business goals. The four Business Principles – social, business integrity, environment and transparency – form the basis for our sustainability work. Our approach is to focus on the areas where we have identified the highest risks and where we can have the greatest influence. The Business Principles are based on the OECD’s Guidelines for Multinational Enterprises, the United Nations Guiding Principles on Business and Human Rights and the United Nations Global Compact.

Business Opportunities Alfa Laval solutions contribute to the UN Global Goals Our solutions help create better everyday conditions for people: Energy efficiency Water supply Safe food

Reporting history 2003 2010 2015 Drivers Content External frameworks Reputation: ”Licence to operate” Stakeholders: Customers/owners Business: ”Licence to Grow” Content Presentation of Business Principles Progress on Business Principles Business Principles & Business Opportunities External frameworks Global Compact Global Reporting Initiative/CDP EU Directive 2014/95/EU Summary Reactive Active Proactive

Alfa Laval Sustainability Report 2017 Business Principles Business opportunities Implementing Business Principles and policies across the value chain Sustainability-related risks & mitigation actions Our products & service support our customers in reaching their environmental targets Alfa Laval contributes to achieving the UN Global Goals The Sustainabiltiy Report covers how Alfa Laval implements its Business Principles and policies across the value chain as well as information about sustainability-related risks and actions to mitigate these Business opportunities related to sustainability – how we help our customers in reaching their environmental targets and how Alfa Laval contributes to achieving the UN Global Goals

EU Directive: What difference did it make? Business Principles Business opportunities Implementing Business Principles and policies across the value chain Sustainability-related risks & mitigation actions Our products & service support our customers in reaching their environmental targets Alfa Laval contributes to achieving the UN Global Goals The Sustainabiltiy Report covers how Alfa Laval implements its Business Principles and policies across the value chain as well as information about sustainability-related risks and actions to mitigate these Business opportunities related to sustainability – how we help our customers in reaching their environmental targets and how Alfa Laval contributes to achieving the UN Global Goals

EU Directive – impact and effect EU Directive did not change what we report in any significant manner It did have an impact on how we report

Concluding thoughts Regulating reporting not a change agent But a catalyst Small companies vs. Multinationals The value of human & natural resources vs. financial value?

What really makes a difference may not be legislation… Examples of how our offering contributes to the UN Global Goals 2 Alfa Laval products and solutions improve shelf life, reduce waste and make food production hygienic and safe. 3 Alfa Laval delivers efficient, hygienic equipment that delivers sustainable performance to the pharmaceutical industry. 6 Alfa Laval offers a wide range of technologies to treat wastewater contributing to clean water across the globe. 7 Alfa Laval products are involved through-out the renewable production process, from heating and cooling to mixing and separation. 9 Alfa Laval invests heavily in R&D, launches between 30-40 new products per year and has over 3,000 patents. 12 Alfa Laval’s ambition is to make every new product more efficient than its predecessor in a life cycle perspective. 14.Alfa Laval offers a whole range of products in the areas of energy and environment, mainly for customers in the marine industry. 17 Alfa Laval has been a signatory of the UN Global Compact since 2011.