By FAY REN
Assa Abloy is a Swedish access controls provider (originally a lock-maker) known for brands like Yale & HID.
The company sits in the building products industry where the primary risks relate to product safety and integrity, as well as business ethics. Assa Abloy’s niche speciality somewhat shields the company from wider industry controversies such as hazardous materials (e.g. asbestos, asphalt, harmful NOx & SOx emissions) and cladding issues in the UK.
However, being a global business that employs a large workforce and uses a large number of suppliers, often local, it is exposed to supply chain integrity issues and social responsibilities with respect to ensuring the health & safety of its employees. Assa Abloy has long been an acquisitive business, using bolt on M&As to expand geographic footprint and add adjacent capabilities. This creates complexities in the business structure, requiring robust internal controls to integrate new entities into the Group in alignment with Assa’s own ‘Code of Conduct.
Assa Abloy operates a decentralised business management style, which also permeates through its approach to managing ESG. Accountability in such a global organisation is key: Whilst the Executive team sets the broad strategic direction for a range of sustainability goals (via its ‘Five Year Plans’), the implementation is from the bottom up. Divisional heads that make up the Sustainability Council are responsible for identifying and addressing risks specific to their own business functions, ensuring Group level policies are adhered to internally as well as externally (including inhouse audits of all its 50k+ suppliers). Group level management receives regular reporting from the Council, but also has direct access to the internal ESG database, to which all 381 entities within the Group are required to report a range of ESG metrics for analysing, comparing and monitoring purposes, providing a high level of transparency across the Group.
The company’s environmental impact is below industry average, though it still has an extensive improvement program, with the ambition to halve emissions by 2030 and target net zero emissions by 2050. The industry is trending towards more sustainable solutions, where 50% of all new buildings are now expected to be certified according to ‘green building’ standards. Assa Abloy is a member of the World Green Building Council’s Europe regional network and several national green building councils, making efforts to address product lifecycle management and reducing demand on global environment and resources.
Technological evolutions in the lock industry has seen Assa Abloy migrating from old-fashioned mechanical locks to electromechanical digital solutions and adjacent areas including identification, biometrics and security systems in their expanding product portfolio. This introduces new issues of managing cybersecurity and sensitive data protection. We are also cognisant that no business is perfect. Assa Abloy, whilst not suboptimal, would benefit from more disclosures on the Governance and the Social side of ESG. We are in communication with the company to learn more of their provisions in identified areas including data security mentioned above, executive renumeration metrics, gender pay gaps and further details on their health & safety management systems.