Jörgen Centerman President and CEO Sustainability media briefing London, June 5, 2002 Jörgen Centerman President and CEO

Overview ABB in the market Commitment to sustainability Examples of sustainable products Way forward and priorities

Every single customer of ours needs power and automation technologies ABB’s focus We focus on power and automation technologies … … enabling utility and industry customers to improve performance while lowering environmental impacts Every single customer of ours needs both power and automation technologies

The customer-centric structure ABB in the market The customer-centric structure C U S T O M E R S Industry-specific power and automation products, solutions and services Oil, Gas and Petrochem External Channel Partners External Channel Partners Utilities Industries G r o u p P r o c e s s e s Generic power and automation products Power Technology Products Automation Technology Products 2

IndustrialIT key element in our sustainability ABB in the market IndustrialIT key element in our sustainability IndustrialIT – one architecture – common approach Plug and produce for all power and automation offerings Lower cost, higher quality, ease of use and integration Environmental performance part of product offering Four levels of IndustrialIT certification Optimization Integration Connectivity Information Almost 10,000 products and product groups certified All relevant (40,000) by year-end

IndustrialIT drives sustainability benefits ABB in the market IndustrialIT drives sustainability benefits Less energy consumption Less raw materials use Lower environmental impact Lower costs

Overview ABB in the market Commitment to sustainability Examples of sustainable products Way forward and priorities

A triple bottom line focus on people, planet and profit Commitment to sustainability Our triple bottom line approach ABB’s pursuit of sustainability is to balance and continuously improve the three elements of our performance Economic A triple bottom line focus on people, planet and profit Sustain- ability Social Environmental (speach note: And now I’ll take you through the 3Ps

Commitment to sustainability Economic performance To ensure ABB’s sustainability, our economic performance is the top priority n EBIT 1.2% in 2001; 4.5% in Q1 2002; aiming for 4-5% in 2002 n Net debt US$2 billion reduction in Q4, 2001; cut by another US$1.5 billion in 2002 n Revenues 8% in 2001 (local currencies) maintain 6% average growth per year

A life cycle focus Environmental performance 10-30 years Weeks Commitment to sustainability Environmental performance Customers Gate 3 Recycling 10-30 years Grave A life cycle focus Suppliers ABB Weeks Environ- mental impact ABB Gate 1 Gate 2 Cradle

Environmental performance Commitment to sustainability Environmental performance Suppliers and ABB n Environmental requirements communicated to all major suppliers, SQR (Suppliers’ Qualification Requirements) n Environmental Management Systems implemented in almost all manufacturing sites (531 in 50 countries) n Over 1,000 continual improvement projects at any point in time n Environmental Product Declarations for core products Pioneering environmental performance

Commitment to sustainability Implementation of ISO 14001 600 500 400 300 200 100 (98%) 1997 1998 1999 2000 2001 ABB’s manufacturing sites ISO 14001

Reducing hazardous waste in ABB Shanghai Transformer Co. Ltd, China Commitment to sustainability Environmental performance - Manufacturing Reducing hazardous waste in ABB Shanghai Transformer Co. Ltd, China (tons) 50% reduction in three years

Environmental performance - Manufacturing Commitment to sustainability Environmental performance - Manufacturing Reducing the consumption of electricity (MWh) for manufacturing of electrical machines at ABB Motors, Sweden 1994 1995 1996 1997 year 1998 1999 2000 2001 0,00 1,00 2,00 3,00 4,00 5,00 6,00 7,00 8,00 9,00 10,00 MWh of electricity per MW of machine size Target Result

Environmental performance Commitment to sustainability Environmental performance Customers and ABB By continuously increasing the environmental performance of our products and services, we have even bigger impact on our customers’ performance n Increased capacity n Increased efficiency of industrial processes n Increased product performance n Less energy consumption

Environmental performance Commitment to sustainability Environmental performance Improved efficiency of LV AC motors Further improved by using electrical drives 100 95 90 85 80 75 1981 1985 1995 2000 Motor Total Drive* * Frequency converter & electronics efficiency % Industry uses 50% of all electricity - of which 65% for electrical motors

Social performance detailed in in our new Sustainability Report Commitment to sustainability Social performance New ABB social policy launched last year Policy tested through stakeholder engagement (45 dialogues in 34 countries) We acknowledge the social impacts of ABB’s transformation Social performance detailed in in our new Sustainability Report

Social policy focus Employees Occupational health and safety Suppliers Commitment to sustainability Social policy focus Employees Occupational health and safety Suppliers Community involvement Business ethics ABB is committed to corporate social responsibility Social performance as important as environmental

Overview ABB in the market Commitment to sustainability Examples of sustainable products Way forward and priorities

ABB a key integrator and component supplier Examples of sustainable products Integrated energy systems ABB a key integrator and component supplier Small-scale, distributed and renewable sources of electricity are key additions

Examples of sustainable products Windpower n ABB is world’s largest supplier of components for wind technology, e.g. generators, transformers, control systems, cables, substations n HVDC Light technology transmits power to the grid with low losses n ABB’s business for wind power has increased by 25% per year over the past few years

Quick and simple installation Examples of sustainable products Microturbines n Demand for small-size power plants particulary where there is no grid n A microturbine comprises a high-speed gas turbine and a direct-driven generator n Hot gas from the turbine can be used as a resource for heating or cooling (co-generation) n 80% efficiency (50% for heat 30% for electricity) Speach notes Quick and simple installation Short payback times

Motorformer - significant savings Examples of sustainable products Motorformer - significant savings Connects directly to the grid, eliminating ancillary components Produces reactive power to support the network, i.e. less losses Replacing a 20 MW conventional machine would reduce CO2 emission by 7,500 tons over 20 years (equals 3,000 households for one year)

Examples of sustainable products Drives n Within industry, electrical motors consume 65% of all electricity n Conventional motors always run at their maximum capacity n 70% of the energy can be saved by varying the motor speed to the actual need for energy n ABB drives reduce global CO2 emissions by 50 million tons every year (equal to annual emission of a city of six million people)

Overview ABB in the market Commitment to sustainability Examples of sustainable products Way forward and priorities

Way forward and priorities Improve our economic performance n Deliver average revenue growth 6% per year n Increase EBIT to 9 – 10% by 2005 n Improve our balance sheet n Reduce and reschedule our net debt (2/3 long term; 1/3 short term) n Increase productivity, reduce costs

Way forward and priorities Improve our environmental performance n Go beyond manufacturing and apply Environmental Management Systems to our non-manufacturing organizations n Continually improve our performance, e.g. by less use of hazardous material, less use of energy n Create more value for our customers by offering more sustainable solutions (in speach note: give examples,life-cycle approach)

Way forward and priorities Improve our social performance Implement our social policy worldwide with special emphasis on local needs Measure continuous improvement by developing relevant indicators (guided by GRI triple bottom line reporting) Increase focus on business ethics (”zero” tolerance for unethical behaviour) Pursue high health and safety performance (”zero” target for serious accidents) Apply our policy to suppliers (urge same standards as ABB)

Common efforts priorities Way forward and priorities Common efforts priorities ABB advocates fair trade conditions and good development opportunities for everyone n World Energy Council CO2 emission reduction program, an ABB initiative n China Energy Technology Program, led by ABB n UN Global Compact, ABB an active, early supporter n “Access to Electricity” to provide electricity and enable development in poor communities

Transform sustainability into customer value

Asbestos – uncertain, but well-managed Operational priorities Asbestos – uncertain, but well-managed Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 * New claims Settled claims Pending claims Cash paid (pre insurance)*** 13,200 12,200 14,300 15,000 14,300 8,000 6,100 6,600 6,700 13,300 * * 71,400 77,500 85,200 93,500 94,500 $37,400 $29,000 $ 36,100 $ 33,200 $ 51,500 * Combustion Engineering considers that the full-year trends for 2002 as regards new claim filings, claims settled and cash settlement cannot be estimated reliably based on first quarter outcome * * Over 50% settled without payment * * * Thousand dollars