Maintaining momentum towards carbon neutrality

We aim to be carbon neutral by 2030 and continually reduce the environmental impact of our own operations.

Progress highlights in 2022

• Launched new reduction initiatives in non-renewable energy, fossil fuels, freshwater and landfill waste
• Reviewed and refined reduction roadmaps
• Deployed document control system for governance procedures

Scope 1 and 2 greenhouse gas emissions
tCO₂e (market-based)

We continued to work on reducing our scope 1 and 2 greenhouse gas (GHG) emissions. Our emissions in 2022 amounted to 36,767 tCO2e (market-based, excluding Mining Technologies operations), which is a 5.8% increase from 2021. The increase was driven by higher scope 2 emissions, which grew by 12% from 2021, as more people returned to work at our offices following the easing of COVID-related restrictions. Scope 2 emissions were also impacted by the loss of renewable energy certificates at two of our sites. Our scope 1 emissions decreased by 8%.

However, since our scope 1 and 2 emissions are 16% lower than the year’s target of 43,622 tCO2e, we are satisfied that we are on the right trajectory towards our goal of becoming carbon neutral by 2030.

We are determined to reinforce our reduction programmes for emissions, water and waste. We reviewed and refined our reduction roadmaps to ensure proper alignment with our current targets. This will help us identify high-potential areas and initiatives and refine policies and procedures that will create a bigger impact at our sites.

Supported Sustainable Development Goals

Developing leadership capabilities and talent

Embracing diversity, equity and inclusion, we provide the opportunity to grow in an international working environment.

Progress highlights in 2022

• Launched new leadership programme, “Leading in FLSmidth”
• Integrated Mining Technologies employees into organisation
• Offered specialist training for individuals to transition from “knowledge contributors” to “knowledge experts” 

Women managers
%

Women total
%

Planned activities in 2023

• Launch aspiring leaders programme in all regions
• Launch operational leadership programme at manufacturing facilities and sites
• Launch new company values and a leadership framework

We achieved our 2022 targets for women employed and women in blue- and white-collar positions. However, we did not achieve our target – and we saw little to no improvement – in women managers. This performance is unsatisfactory, and through active recruitment, career development and leadership training, we are committed to improving our diversity performance in 2023.

We continued our efforts to align living wages within our local regions. This is an ongoing task, particularly at a time of high inflation. Similarly, as we continue to address gender pay disparity, we have reduced gender pay gaps considerably since 2021. In 2022, we started aligning benefits and employment packages. In Denmark, we offer equal paid parental leave to both parents. Further improvements are planned in all countries.

A new leadership development programme, “Leading in FLSmidth”, helps current leaders grow leadership capabilities according to a framework that we refer to as our “leadership compass”. This includes improving personal proficiency, setting team direction, accelerating continuous improvements, evolving people and enhancing collaboration across the organisation.

Significant effort went into “Day One” of the Mining Technologies acquisition and onboarding our new colleagues. In addition to holding celebrations in locations around the world on 1 September, we launched information-sharing sessions and provided immediate access to online onboarding programmes. We also offered training courses and buddy systems. 

At the end of the year, consolidation of business areas resulted in redundancies and the discontinuation of selected product lines and services. Knowing that such programmes cause discontent to those directly affected, we aimed to communicate decisions in a personal, timely and clear fashion. 

Supported Sustainable Development Goals

5.5

Safety is everyone’s business

Building a culture of health and safety across our own sites and at our customers is core to our Zero Harm 2030 ambition.

Progress highlights in 2022

• Launched new cross-functional auditing procedure for ISO certifications
• Introduced new documentation control system in our HSEQA digital platform
• Launched hand injury campaign, eliminating approximately 240 hand injury risks

Total recordable injury rate (TRIR)
Total recordable injury rate/million working hours

Plans for 2023

• Establish an HSEQA Council across the business
• Standardise procedures in the new HSEQA organisation
• Redesign internal audit programmes and implement global audit management database
• Evaluate ISO certification and recertification approach

We did not achieve our overall targets for total recordable injury rate (LRIR) and lost time injury frequency rate (LTIF) in 2022. This was despite intensifying our focus on shop-floor safety at our manufacturing sites, service centres and customer sites. 

In our incident and injury reduction programme, each region focuses on identifying risks and creating mitigation actions to prevent them from becoming safety incidents. Approximately 70 initiatives for reducing incidents were identified in 2022, of which 38 were closed. Our near-miss programme also focuses on identifying potential risks. In 2022, 100 were identified, of which 86 were closed within 30 days. 

New auditing procedure

Focusing on safety behaviour is key to achieving our Zero Harm goal. Well-established procedures such as safety shares and the new Safety Bot, as well as leaders consistently encouraging good safety practices in their teams, are moving us in the right direction. Building on this, we reignited discussions on how safety can be further integrated into our daily culture. 

With such initiatives, we aim to improve our company-wide performance to ensure we meet our safety targets in 2023. 

It's in your hands

Our local HSEQA team in Brazil created an emotionally charged video for a hand injury campaign titled “It’s in your hands”. It’s easy to take our hands for granted, forgetting how important they are at work and in everyday life. In the video, employees are asked not just to imagine being without their hands, but to try working without them by wrapping them up in bandages. They talk about their experience of being immobilised and reflect on the risk of hand injuries.

Supported Sustainable Development Goals

8.8

Respecting the rights of all stakeholders

Safeguarding human rights requires a detailed understanding of risk, remedy and the issues to be addressed across our value chain. 

Progress highlights in 2022

• Conducted a human rights gap analysis
• Completed 2 onsite human rights assessments
• Trained 200 sales and procurement employees

Human rights reviews conducted

Planned activities in 2023

• Conduct an in-depth human rights risk analysis
• Establish a cross-functional human rights working group
• Improve the tools for due diligence procedures

We have taken significant steps to strengthen our work within human rights. This included reviewing our human rights programme, led by a newly appointed Human Rights Specialist, and updating our Human Rights Policy. To understand our current practices and identify our priorities, we conducted a gap analysis and a high-level risk assessment based on the OECD guidelines and the UN Guiding Principles framework. Risks identified included access to water, labour rights and access to remedy.

Some of our plans for 2022 were delayed by changing priorities, mainly due to the war in Ukraine. We did not achieve our target for conducting human rights reviews and e-learning. However, we have reviewed our procedures to ensure we have a more efficient process for achieving high-quality reviews. In 2023, we will review our e-learning material and we aim to improve course completion.

Onsite assessments

At two of our sites in South Africa, we conducted onsite human rights assessments in 2022. The purpose was to establish whether our onsite practices meet our human rights commitments at a local level. The site visits included high-level risk analyses and a comprehensive assessment of working conditions. We assessed policies and management systems by reviewing documents and interviewing employees. We also engaged with colleagues in the local markets to understand the local trends and challenges.

Building capacity and engagement

In 2022, we trained more than 200 sales and procurement employees across our global locations – in-person where possible and otherwise online. This training is an important means to building internal capacity and an essential element of our stakeholder engagement plan. It demonstrates our commitment to the requirements of the UK Modern Slavery Act 2015. 

Engaging stakeholders in human rights 

Improving our human rights performance involves many different people, hence our focus on stakeholder engagement and capacity building. Key to this is providing training and visiting regional sites. In 2023, we will prepare a broad stakeholder engagement strategy and form a human rights working group that will bring together representatives from different functions and regions to identify trends and salient issues. 

Supported Sustainable Development Goals

8.7

Community support

Improving primary school education

Collaborating with the humanitarian relief organisation ForAfrika, we provided donations towards the renovation of two schools in the Phola township in Mpumalanga, South Africa. 

For the past nine years, FLSmidth South Africa has helped to fund maths and science educators at the Kingsway Christian School, Randpark Ridge, Johannesburg. In 2022, we doubled our contribution to the school, helping to also provide daily nutritious meals to students. 

• In Chile, we partnered with the Complementa Foundation, which supports families with children with Down’s syndrome, participating in a football match to encourage motor, cognitive and social skills development. 
• In Tiabaya, Peru, employees from our Arequipa Supercenter delivered sanitary items and gifts to the Hogarcito de Niños Especiales San José Benito Cottolengo home for children with special needs. They spent time at the school singing, dancing and chatting with the children, teachers and volunteers. 
• In India, we provided financial support to the FIDE Chess Olympiad 2022 held in Chennai in July 2022. 
• FLSmidth Brazil supported various social projects to assist vulnerable people with donations totalling BRL 215,000 (USD 42,000).
• Contributions from employees at FLSmidth Tucson Operations (US) resulted in more than 300 toys and bikes being donated to a Salvation Army Christmas programme supporting children in need. 
• We donated DKK 2 million to various humanitarian organisations, including UNICEF, Save the Children and the Red Cross, to support victims of the war in Ukraine.

Encouraging transparency and awareness

Progress highlights in 2022

• Ensured 100% compliance with sanctions and our own policy
• Improved due diligence processes to increase efficiency
• Completed the Conflict Minerals Sub-Policy

In-depth due diligence screenings conducted

Planned activities in 2023

• Review due diligence screening process
• Integrate compliance IT systems into central IT systems
• Launch programme for registering conflict of interest cases

In 2022, our business was heavily influenced by the war in Ukraine. Trade compliance became more complex and comprehensive due to the continually expanding scope of sanctions on Russian and Belarussian companies. We screened all customers in Russia, Belarus and other countries with links to Russia, and all shipments remaining from before the war were subjected to full compliance checks, including screening for dual-use and prohibited items. We ceased new contracts and new orders on existing contracts.

We conducted 400 in-depth due diligence screenings, significantly above the target for the year. The speed at which these were completed resulted in improved processes, allowing us to scale up quickly to manage a large volume efficiently and rapidly. 

We continued training in our compliance framework. We did not achieve our goal of delivering this training to every employee due to organisational restructuring and a greater workload in trade compliance and due diligence. 

Our internal investigations work developed significantly in 2022. We received more reports than in previous years, but also closed more investigations, including harassment and conflict of interest cases, which have often been difficult to close. 

In 2022, 37 discrimination or harassment incidents were reported, which is more than average. We will continue to focus on creating a workplace environment where no individual is subject to harassment. 

Supported Sustainable Development Goals

10.3	16.5

Responsible business conduct through supplier engagement

Working with science-based targets, we encourage environmental action across our supply chain.

Progress highlights in 2022

• Engaged with >10% of supplier spend in sustainability and climate target discussions
• Improved supplier due diligence processes
• Initiated sustainability capacity building in our supplier relationship and procurement teams

Spend with suppliers with science-based targets
% of total supplier spend

Planned activities in 2023

• Set supplier engagement KPIs for procurement teams
• Improve supplier onboarding and monitoring
• Introduce capacity-building programmes for suppliers

Our commitment to the Science Based Targets initiative guides our work within the supply chain in relation to climate action. We aim to achieve 30% of our supplier spend with suppliers who have set their own science-based targets by 2025. In 2022, our spend with these suppliers was 7.7%.

We expanded our efforts to share our commitments with suppliers by engaging with them more actively, for example by sharing knowledge on how to set climate targets. We took steps to improve our supplier due diligence processes, based on the OECD Due Diligence Guidance for Responsible Business Conduct. This set the direction for our revision of the Supplier Code of Conduct in 2022 and our ongoing work to improve supplier assessments.

In 2022, we achieved our three targets: suppliers screened for sustainability, screenings resulting in findings, and findings where we have improvement plans agreed upon with suppliers.

Building capacity within our own organisation helps us achieve our sustainability goals. Our objective is to enable more procurement colleagues to advise suppliers on matters relevant to sustainability. This in turn will help us understand the supplier’s level of sustainability engagement and help facilitate meaningful, ongoing dialogue between our teams and our suppliers.

Committed to responsible sourcing

We have joined the Responsible Minerals Initiative of the Responsible Business Alliance, which helps set the direction for implementing our Conflict Minerals Policy. Having joined the Copper Mark in 2021, we participate in working groups in order to adhere to responsible production practices in the copper industry. This work will continue in 2023 as we aim to map the use of copper in our supply chain and set appropriate targets.

Supported Sustainable Development Goals

12.6

Learn more at  flsmidth.com/supplychain

Sustainability governance

We prepared new strategies for our mining and cement businesses towards the end of 2022. Reflecting sustainability’s growing importance for the company, we designated it as a key focus area, and we updated our governance model accordingly.

Key to our governance structure are targets and corresponding KPIs that are cascaded throughout the business. Our policies define how we operate according to internal and international standards, and we have incentive schemes to drive performance. Group Executive Management sits on the Sustainability Board and has the ultimate responsibility for our sustainability performance. 

KPIs and targets

In 2021, we introduced a new set of sustainability targets that we aim to achieve by 2030. Addressing areas material to our business and stakeholders, these targets are linked to our wider sustainability approach and contribute directly to the success of our MissionZero programme. Our emission targets cover our scope 1, 2 and 3 GHG emissions across the value chain and are approved by the Science Based Targets initiative (SBTi). 

Other sustainability targets, including safety, diversity and responsibility in the supply chain, have both long-term (2030) and intermediate (year-on-year and three-year) time horizons. These targets are cascaded to the relevant business functions but require company-wide commitments and prioritisation. We regularly review our KPIs to ensure that we monitor material subjects and gather data relevant to improving our sustainability performance. 

We expect our new corporate strategies to drive further developments during 2023 – including aligning our MissionZero and ESG efforts and how we will work with emerging topics, such as circularity, biodiversity and sourcing standards. We will also evaluate how these developments will influence our contribution to the UN Sustainable Development Goals (SDGs). 

Management and incentives

Accountability for the direction, progress and focus of our sustainability work rests with Group Executive Management, which acts as the company’s Sustainability Board. The Board of Directors receives sustainability updates every quarter and holds an annual sustainability workshop. 

In 2022, we introduced a new KPI in our long-term incentive plan connecting the remuneration of FLSmidth’s senior management with progress in “economic intensity” – one of our scope 3 science-based targets. We also increased the weighting of the sustainability KPI in the long-term incentive plan for Group Executive Management from 10% to 20%. All employees, including those participating in the company’s short-term incentive plan, can have a sustainability-based performance objective as part of their development plans. To drive further progress in our MissionZero programme and reduce economic intensity, sustainability is included in the bonus programme for employees working in sales functions.

Board diversity

Women accounted for 33% of the shareholder-elected Board members at the end of 2022, fulfilling the target that at least 25% of the members elected at the Annual General Meeting should be women.

Stakeholder engagement 

We engage with various external stakeholders relevant to our MissionZero ambition and ESG goals. The success of MissionZero requires more than technological solutions. To create systematic change and accelerate the deployment of sustainable solutions, we need strong collaboration across the value chain, a supportive policy environment and active involvement from civil society.

Customers

We apply technology and innovation to enable the production of sustainable minerals, metals and cement, and we partner with our customers to support a regulatory environment that stimulates demand for these greener products.

Financial institutions and investors

Our relationships with financial institutions have been instrumental in helping customers finance projects and ensuring they make a positive contribution to sustainability. 

Industry associations

We are members of, or engage with, industry associations and advocacy groups to promote policy frameworks and regulations that help accelerate the green transition. 

Suppliers

Building strong strategic relationships with suppliers strengthens our MissionZero programme, as it creates opportunities to co-develop innovative technologies adding to our existing portfolio. 

Public policy

In 2022, we continued our engagement within the Leadership Group for Industry Transition, we joined the IRENA Alliance for Industry Decarbonisation and we took part in the United Nations Climate Change Conference (COP27).

Academia

We partner with Technische Universität Dresden to develop flotation technologies and with the Technical University of Denmark and others to research the electrification of clay carbonation.

Industry peers

We initiated a collaboration with ABB to assess solutions that will de-risk mining operations and lower operating costs while reducing emissions, energy use and waste.
Similarly, we signed an agreement with Microsoft aimed at accelerating our digital journey, co-innovating and improving existing offerings.