Strong sales
and improved
earnings
Continued acceleration
in innovation and
investments
Geared for
growth
The trans form a-
tion towards
a fossil-free
society creates
opportunities
VOLVO GROUP ANNUAL REPORT
Driving prosperity
through transport
and infra structure
solutions
100%
FOSSIL-FREE
100%
MORE PRODUCTIVE
100%
SAFE
100%
The Volvo Group drives prosperity through transport and infrastruc-
ture solutions, offering trucks, buses, construction equipment,
power solutions for marine and industrial applications, financing
and services that increase our customers’ uptime and productivity.
Founded in 1927, the Volvo Group is committed to shaping
the future landscape of sustainable transport and infrastructure
solutions.
The Volvo Group is headquartered in Gothenburg, Sweden,
employs 104,000 people and serves cus tom ers in almost 190
markets. In 2023, net sales amounted to SEK 553 billion (EUR
48 billion). Volvo shares are listed on Nasdaq Stockholm.
Shaping the world we want to live in
Every day the Volvo Group’s products deliver food and medicine,
take children to schools, power irrigation systems and construct
roads and buildings. The majority of the Volvo Group’s customers
are companies within the transportation or infrastructure indus-
tries. The reliability and productivity of our products and services
are a key factor in their success and profitability.
Climate change, population growth and increasing urbanization
are shifting the landscape and expectations on transport and infra-
structure. In all our actions, we strive to consider how to reduce
climate impact, use the world’s resources more efficiently, and
conduct business more responsibly.
Together with our customers and supply chain partners, govern-
ments, societies and other stakeholders, we are moving quickly to
develop and introduce transport and infrastructure solutions that
aim to reach our sustainability targets.
Driving prosperity socially, environmentally and financially
means that we strive towards our vision of transport and infra-
structure solutions that are 100% safe, 100% fossil-free and
100% more productive.
In this annual report, we describe in more detail how we work
to achieve this.
VOLVO GROUP 2023
2
Overview
A global Group with strong positions ........ 2
Volvo Group in 2023 ....................... 4
CEO comments ........................... 8
14
Strategy
Our mission - Driving prosperity ........... 14
Consistency in delivery of
growth and profit ......................... 18
Sustainable transport and
infrastructure solutions ...................22
Strong assets a base for the transformation . 26
Group targets ............................28
32
Our Business
Sustainability impacts across
the value chain ...........................32
Driving prosperity for
many stakeholders .......................34
Volvo Group colleagues driving
the transformation........................36
An intensive year with new
products and collaborations ...............40
56
Board of
Directors’
Report 2023
Financial performance ....................56
Financial position .........................60
Cash flow statement ...................... 64
Changes in consolidated equity ............66
Financial management .................... 67
Segments ...............................68
The share ................................80
Risks and uncertainties ...................82
90
Notes to the
Financial
Statements
Notes to the financial statements ..........90
151
Parent
Company
Parent Company ........................ 151
163
Sustainability
Notes
Impacts, stakeholders and
material topics ..........................164
Climate ................................166
Environment ............................ 173
Employees and workforce ................ 179
Customer and end-user safety ............184
Human rights across the value chain .......185
Business ethics and compliance .......... 191
Complementary disclosures ..............193
194
Corporate
Governance
Report
Corporate Governance ................... 194
Board of Directors ...................... 202
Group Executive Board ................. 208
212
Other
Information
Proposed disposition of
unappropriated earnings .................212
Audit report for AB Volvo (publ) ...........213
Key Ratios ..............................218
Eleven-year summary .................... 221
Annual General Meeting ................ 229
Preliminary financial calendar ............ 229
The Volvo Group’s formal financial reports are presented on pages 56–162, 212 and 218–220 and have been audited by the company’s auditors.
Sustainability information is integrated in the sections Overview, Strategy and Our Business on pages 8–27 and 29–35, and in the Sustainability Notes on pages 163–193, and
has been subject to limited assurance by the Group’s auditors. For information on which pages constitute the Volvo Group’s Statutory Sustainability Report, please see page 56.
1
VOLVO GROUP 2023
CONTENT
A global group with
strong positions
Volvo Group is one of the world’s leading manufacturers
of trucks, buses, construction equipment as well as
marine and industrial engines. The Group also provides
complete solutions for financing and service.
People – our most important asset
The Volvo Group’s 104,000 employees are our most important
asset. In the words of CEO Martin Lundstedt: “Succeeding in this
industry is all about people, and our people make the difference.”
Strong brands
The Volvo Group sells its products under the Volvo, Volvo Penta,
Rokbak, Renault Trucks, Prevost, Nova Bus, Mack and Arquus
brands. We also partner in alliances and joint ventures in SDLG,
Milence, Eicher, Dongfeng and cellcentric. By offering products
and services under different brands, we address many different
customer and market segments around the world.
Competitive products and leading technology
The Volvo Group’s products have been developed to contribute to
efficient transport and infrastructure solutions and to provide our
customers with reliable uptime. We drive the development of elec-
trified vehicles and machines as well as automated solutions for
the benefit of customers, society and the environment. Sales of
vehicles and machines build a population of products that requires
spare parts and services.
Partnerships and collaborations with leading companies
New technologies are developing at a faster pace than ever before.
Staying at the forefront is vital to be successful, and that is why
we work in collaborations and partnerships with other leading
companies. We have a strategic alliance with Isuzu Motors. We
have partnered with Samsung SDI on batteries. We have estab-
lished cellcentric together with Daimler Truck to commercialize
fuel cell systems for heavy-duty vehicles and other use cases.
We work together with Aurora on autonomous vehicles. And we
are pioneering a European high- performance charging network
for heavy-duty trucks and coaches called Milence together with
Daimler Truck and Traton Group.
104,000
employees
SEK 553 bn
in net sales
Sales in almost
190
markets
Production in
18
countries
World-class services
In addition to vehicles and machines, our offering includes various
types of services such as financing, insurance, rentals, spare parts,
repairs, preventive maintenance, service agreements and assis-
tance services. The range and flexibility of the offering means that
solutions can be tailor-made for each customer to secure uptime
and productivity. The service business contributes to balancing
the fluctuations in the sales of new products and improving profit-
ability over the business cycle. Growing the service business is an
area of priority.
Strong positions globally
Thanks to competitive product programs, strong dealers with
extensive service networks and increasingly more complete offer-
ings, the Volvo Group has established leading positions globally.
These positions provide for economies of scale in product develop-
ment, production, purchasing and financial services.
2
VOLVO GROUP 2023
OVERVIEW
3
VOLVO GROUP 2023
OVERVIEW
Strong financial
performance in 2023
Currency-adjusted net sales increased by 11%
to SEK 553 billion, with a strong growth in both
vehicle and service sales.
Improved profitability – the adjusted operating
income increased to SEK 77,638 M (50,467).
For more information on adjustments, please
see Key Ratios on page 218.
The adjusted operating margin improved to
14.0% (10.7).
Reported operating income amounted to SEK
66,784 M (45,712).
Earnings per share rose to SEK 24.50 (16.09).
Net sales by revenue type, % Net sales by market, %
Vehicles 77
Services 23
Europe 43
North America 30
South America 9
Asia 12
Africa and Oceania 6
Strong operating cash flow in the Industrial
Operations of SEK 45.8 billion (35.3).
Return on capital employed in the Industrial
Operations improved to 36.7% (27.4).
Continued high pace in the transformation with
an expansion of the offer of electric vehicles
and machines. All business areas are in serial
production of heavy-duty electric vehicles and
machines.
The Board of Directors proposes an ordinary
dividend of SEK 7.50 (7.00) per share and an
extra dividend of SEK 10.50 (7.00) per share.
4
VOLVO GROUP 2023
OVERVIEW
5
VOLVO GROUP 2023
OVERVIEW
Volvo Group
Net sales, SEK bn Adjusted operating
income
1
and Adjusted
operating margin
Operating income,
SEK bn
Operating margin, %
Return on capital
employed
Industrial Operations,
%
Operating cash flow
Industrial Operations,
SEK bn
Net financial position
excl. post- employ ment
benefits and lease
liabilities Industrial
Operations, SEK bn
2021
2019
2023
552.8
2021
2019
2023
14.0
77.6
2021
2019
2023
36.7
2021
2019
2023
45.8
2021
2019
2023
83.4
2023 2022
Net sales, SEK M 552,764 473,479
Adjusted operating income
1
, SEK M 77,638 50,467
Adjusted operating margin, % 14.0 10.7
Operating income, SEK M 66,784 45,712
Operating margin, % 12.1 9.7
Income after financial items, SEK M 66,726 45,077
Income for the period, SEK M 49,932 32,969
Earnings per share, SEK 24.50 16.09
Dividend, SEK per share 18.00
2
14.00
3
Operating cash flow, Industrial Operations, SEK M 45,821 35,327
Net financial position excl. provisions for post-employment benefits and lease liabilities, Industrial Operations, SEK bn 83.4 73.9
Return on capital employed, Industrial Operations, % 36.7 27.4
Return on equity, Financial Services, % 13.0 –0.3
Return on equity excluding Russia and Belarus, Financial Services, % 13.9 15.4
Return on shareholders’ equity, Volvo Group, % 28.7 20.7
Total number of employees 104,147 102,155
Share of women, % 22 22
Share of women, presidents and other senior executives, % 29 28
Energy use per net sales, Industrial Operations, MWh/SEK M 4.4 5.1
Total CO₂ emissions per net sales, Industrial Operations, tons/SEK M (scope 1 & 2) 0.6 0.7
Share of direct material purchasing spend from suppliers having made a CSR self- assessment, % 93 89
1 For more information on adjusted operating income, please see Key Ratios on page 218.
2 Proposed by the Board of Directors to the Annual General Meeting 2024. SEK 7.50 per share in ordinary dividend and SEK 10.50 per share in extra dividend.
3 SEK 7.00 per share in ordinary dividend and SEK 7.00 per share in extra dividend.
Unless otherwise stated, all comparisons refer to the same period or the same date of the preceding year.
Key ratios
6
VOLVO GROUP 2023
OVERVIEW
Net sales, SEK M Share of Group net sales, %
Adjusted operating
income
1
, SEK M
Adjusted operating
margin, %
TRUCKS
Volvo Trucks, Renault Trucks, Mack Trucks,
Volvo Autonomous Solutions, Volvo Energy,
VE Commercial Vehicles (46% ownership),
Dongfeng Commercial Vehicles (45%),
cellcentric (50%) and Milence (33%).
373,048
67
55,394 14.8
CONSTRUCTION EQUIPMENT
Volvo Construction Equipment, Rokbak
and SDLG (70%).
104,981
19
16,993 16.2
BUSES
Volvo Buses and Prevost.
22,423
4
1,059 4.7
VOLVO PENTA
Engines and power systems for
marine and industrial applications.
21,006
4
3,230 15.4
FINANCIAL SERVICES
Provides financial services to
customers and dealers.
24,012
4
3,855 N/A
GROUP FUNCTIONS & OTHER
2
Nova Bus, Arquus and common
business support functions.
16,809
–2,950 N/A
1 For more information on adjusted operating income, please see Key Ratios on page 218.
2 Including Group eliminations.
More information about the Volvo Group’s segments and how they are reported can be found in Note 6 to the Financial Statements.
Segments
2
7
VOLVO GROUP 2023
OVERVIEW
Strong performance
providing solid
foundation for the
transformation
D
uring 2023, dedicated colleagues across the Volvo
Group worked hard to keep our customer commit-
ments and reduce the lead times as we delivered
from the backlogs of vehicles and machines that have
been extended since the pandemic. It was also a year
characterized by geopolitical turmoil, continued supply chain dis-
turbances and cost inflation. In these challenging circumstances,
the Volvo Group continued to deliver strong growth, profitability
and cash flow.
Our currency-adjusted net sales grew by 11% to SEK 552.8 bil-
lion, with sales of vehicles and machines increasing by 12% and
services by 10%. Sales increased in all regions except South America.
We improved our adjusted operating income to SEK 77.6 billion
(50.5), corresponding to an adjusted operating margin of 14.0%
(10.7). Both sales and profitability were at all-time highs.
What is more, we also continued to take important steps on our
journey to decarbonize the transport and infrastructure industries.
All business areas are in serial production of heavy-duty electric
vehicles and machines and we are also expanding the ecosystem
necessary to drive the transformation. In this changing landscape,
we can provide increased value for our customers and take advan-
tage of the long-term growth opportunities that come with electri-
fication, autonomous solutions and new productivity services.
A strong 2023
Thanks to a strong commercial focus, we were successful in improv-
ing margins while managing cost inflation and disturbances in the
supply chain that continued for most of the year and affected both
productivity and costs. Despite these disturbances, our truck busi-
ness delivered 246,272 vehicles, which was an increase of 6%
compared with the previous year. This is a new all-time-high and
the result of hard work by colleagues in the Group and across the
value chain. We have a strong base with good deliveries across
regions, strengthened positions in many markets, leading customer
satisfaction and good product quality. Although our customers’
utilization of their fleets came down somewhat compared with the
very strong 2022, it continued to be on historically high levels in
our major markets. Our truck business took advantage of the good
demand for both new and used trucks as well as for spare parts
and services and increased the currency-adjusted net sales
by 14% to SEK 373.0 billion. The adjusted operating margin
improved to 14.8% (10.9).
Our truck operations continued the rollout of improved electric
trucks and supporting services and started testing fuel cell-electric
trucks on public roads.
In 2023, the construction equipment market outside of China
was more or less on the same level as the preceding year. There
was a good development in the first half of the year and a weaker
second half in both North America and Europe. In China the down-
ward pressure continued. There is uncertainty about the near-term
development due to higher interest rates and lower economic
growth, but in the long term many countries must not only renew
an aging infrastructure but also expand it as populations and econ-
omies grow. Volvo Construction Equipment’s (Volvo CE) currency-
adjusted net sales increased by 1% to SEK 105.0 billion, despite
deliveries of Volvo-branded machines decreasing by 3% and deliv-
eries from our SDLG brand in China going down by 48%. The
adjusted operating margin improved to 16.2% (13.2).
Volvo CE continued to drive the transformation with the launch of
several electric products of different sizes and supporting services
into more markets. We also announced an investment in battery
pack production at the excavator plant in Changwon, South Korea.
Furthermore, a new dedicated business unit for compact machines
and solutions was established, with the aim of driving growth and
profitability in this important and growing segment.
Demand for buses continued to improve, particularly for coaches
and on the service side as travel kept increasing. Currency-adjusted
net sales in the Buses segment rose by 15% and amounted to
SEK 22.4 billion. The underlying profitability improved, with an
adjusted operating margin of 4.7% (1.9).
On the city bus side of the business, demand for electric buses
continued to increase and Volvo Buses continued the rollout of
its global all-electric BZL chassis. During the year, we decided to
restructure the business model for Volvo Buses in Europe and for
8
VOLVO GROUP 2023
OVERVIEW
“ Decarbonizing the
transport and infrastruc-
ture industries is a criti-
cal step toward a more
sustainable future.”
Nova Bus in North America to structurally improve competitive-
ness and profitability.
For Volvo Penta, demand on both the marine and industrial side
was good in the beginning of 2023, but weakened during the
course of the year, particularly for smaller boats. For the full year,
sales of both engines and services grew, with currency-adjusted
net sales increasing by 10% to SEK 21.0 billion. The adjusted oper-
ating margin increased to 15.4% (14.0).
Volvo Penta broadened its electric portfolio on the industrial side
with battery-based energy storage solutions and the electrification
of applications in material handling and construction. On the marine
side, the Innovation Award-winning Joystick Docking was introduced
and the successful Inboard Performance System was expanded into
larger vessels.
For our customer-financing business, Volvo Financial Services,
the good customer activity levels were reflected in low credit pro-
vision expenses and a stable portfolio performance. The adjusted
operating income increased to SEK 3,855 M and the return on
equity was 13.0% (–0.3).
In addition to the strong growth and continued good profitability,
return on capital employed in the Industrial Operations increased to
36.7% (27.4). We also generated a strong operating cash flow of
SEK 45.8 billion (35.3). At year-end, we had net financial assets
of SEK 83.4 billion in the Industrial Operations, pension and lease
liabilities excluded. Our strong performance allows us to both
continue to provide our shareholders with a good return on their
investments and at the same time fund the activities that are driving
the transformation of our industries to more sustainable solutions.
The Board of Directors proposes an ordinary dividend of SEK 7.50
(7.00) per share and an extra dividend of SEK 10.50 (7.00) per share.
Improving performance and driving the long-term strategy
We are working with several strategic priorities to capture growth
opportunities and improve our underlying performance. One area
of priority is the service business, because it contributes to increasing
our customers’ uptime and productivity and strengthens our relation-
ship with them. Furthermore, it provides stability to the Group’s
earnings over the business cycle.
9
VOLVO GROUP 2023
OVERVIEW
Another important area is to continue to strengthen our North
American truck business. We have made great progress in improving
profitability over the business cycle in North America, not least thanks
to a stronger service business, and now we are taking the next step. In
the beginning of 2024, Volvo Trucks launched an all-new platform as
the base for a range of new truck models with all upcoming technol-
ogies such as battery-electric, fuel cell-electric and internal com-
bustions engines running on renewable fuels including hydrogen.
We are starting with a new version of our best-selling Volvo VNL
model. We are confident that this new platform is a game-changer
with class-leading energy efficiency.
A third focus area is to drive leadership in zero-emission vehi-
cles, where we have established a strong position thanks to being
early out in launching a wide range of electric vehicles and machines.
Step by step we are improving our electric products in terms of
increased ranges, shorter charging times and new active safety
features. We are also continuously expanding our comprehensive
ecosystem of charging infrastructure, route simulation services,
maintenance and repair and financial solutions to make our
customers’ adoption of electric vehicles as easy as possible.
We also maintain focus on our long-term vision to offer solu-
tions that are 100% safe, 100% fossil-free and 100% more pro-
ductive. We have set climate targets in line with what the latest
climate science deems necessary to keep global warming at a
maximum 1.5 °C and our pathway to reach the goals of the Paris
Agreement have been validated by the Science Based Targets
initiative. And we have continued to strengthen our work with the
principles of the UN Global Compact regarding people, business
ethics and the environment.
We know that we are at the early stages of a long journey, but
we also know that the transport and infrastructure industries are
vital in driving sustainable growth. Their pivotal roles lie not only
in their capacity to reduce emissions but also in their potential to
drive transformative change and sustainable development. Our
customers use our products and services to move goods and
materials, help people get to work or school and build and main-
tain the infrastructure we all rely on every day. With a growing
world population, increasing urbanization and growing e-com-
merce, the demand for transport and infrastructure will continue
to increase. We will meet this demand with solutions that are con-
siderably more sustainable, more productive and safer than today.
We have already begun this journey together with a growing num-
ber of customers. The shift to a decarbonized transport system is
a unique growth opportunity for us as a Group, while at the same
time enabling us to have a positive impact on our customers’ busi-
nesses and on society.
The transformation to electric products goes hand in hand with
our strategy to offer our customers complete solutions that bring
them both value and peace of mind. It is about really understand-
ing our customers’ businesses and providing complete packages
with equipment, financing, service contracts, insurance, uptime
and productivity services, and in the case of electric solutions also
charging capabilities and battery optimization. This is an opportu-
nity for us to deepen our engagement with our customers’ busi-
nesses and to build true partnerships over time.
As our customers begin their journey towards net-zero, many of
them realize that transports make up a substantial part of their car-
bon footprint. More than 7,000 companies have signed up to the
Science Based Target initiative and this creates a positive pressure
for change in the value chains. Acting as advisors and solutions pro-
viders, we work together with our customers – and sometimes with
their customers – to help them decarbonize their transport systems.
This shift will gain further momentum in the coming years when
these companies are looking to deliver on their own Science Based
Target commitments for 2030.
Three-pronged approach on the road to net-zero
On our road to net-zero, we are developing multiple solutions in
parallel because we believe that there is no silver bullet that will
solve the climate challenge. Therefore, we are investing consider-
able resources in developing both battery-electric and fuel-cell
electric technologies as well as internal combustion engines run-
ning on low carbon fuels. It is important to remember that these
technologies will complement each other, not compete. The Volvo
Group has been instrumental in creating a market for electric
trucks and construction equipment that did not exist only a few
years ago. Today, electric trucks, buses and construction machines
are part of our core business. So, customers looking to transition
away from fossil fuels do not have to wait and see which technol-
ogy will “win” – they can start looking at available options in their
local market today. The solution they are looking for to cut carbon
emissions is in most cases already available from the Volvo Group.
The involvement of other stakeholders and partnerships are key
success factors, and we truly believe that it is only by moving for-
ward together that we can make a positive impact on our climate
and facilitate a green economy. To accelerate the rate of change
even further, we are working with partners in a number of key
areas, ranging from our strategic alliance with Isuzu Motors, with
Samsung SDI on batteries, our joint venture with Daimler Truck on
fuel cells, cellcentric, and our partnership with Daimler Truck and
the Traton Group on charging infrastructure in Europe, Milence.
We are convinced that our commitment to decarbonization will
lead to increased revenues. The main driver is the higher value of
the electric vehicles and machines and increased service contract
penetration and duration. Revenue growth will also be supported
by increased revenues from autonomous solutions, new digital
services and services connected to energy solutions. This is a
great opportunity for us, as the shift drives systems thinking,
where the vehicle and machine is one part of a total solution
encompassing charging infrastructure, battery optimization,
maintenance, financing and other value-adding services.
Many milestones passed during the year
We were early out in the transformation, starting with hybrid-
electric city buses more than ten years ago and have been on
a steady development and improvement journey since then.
In 2023 deliveries of fully electric vehicles and machines grew
by 128% to 4,996 units, albeit from low volumes.
We are producing our electric trucks on the same lines as con-
ventional trucks, enabling us to utilize our existing industrial foot-
print and draw on the vast knowledge and experience of our tal-
ented colleagues in operations. Volvo Trucks has a broad electric
line-up with a total of six electric trucks designed to handle a wide
variety of transport assignments. In Q4, Renault Trucks started
serial production of heavy-duty electric trucks for regional trans-
port and construction, complementing their successful electric
10
VOLVO GROUP 2023
OVERVIEW
light- and medium-duty trucks. Our electric trucks are developed
with our customers’ diverse operations in mind. Proof that they
are already creating value came when the Volvo FH Electric was
selected as “International Truck of the Year 2024”. It was the first
time ever that an electric truck won the award.
In 2022, we showcased our future fuel cell electric trucks, and
in 2023 we tested them on public roads for the first time. These
zero exhaust emission trucks will be especially suitable for longer
distances and when using only batteries is not an option, for
example in areas with insufficient charging infrastructure. But
hydrogen is not limited to fuel cells, we also see great potential
in using green hydrogen in the internal combustion engine.
There is a growing demand for clean, efficient, and safe urban
transportation that we can tap into. In October, we announced that
we will join forces with Renault Group and CMA CGM Group to
address this demand with an all-new generation of fully electric
and software-defined vans and associated services. Production
is planned to start in 2026.
Batteries are crucial for the electrification journey. We are already
assembling battery modules into battery packs in-house and we are
taking further steps in the value chain with the start of production
of battery modules. In 2023, we had a groundbreaking ceremony
for our planned battery cell plant in Mariestad, Sweden and with
the acquisition of the business and assets of the Proterra Powered
business unit we fast forward the establishment of a battery value
chain in North America. With the acquisition, we will both comple-
ment the current and accelerate our future battery-electric road map.
In this annual report you can read more about these important
events and other achievements during a very intense year.
A solid foundation to build on
Decarbonizing the transport and infrastructure industries is a
critical step toward a more sustainable future. This transformation
requires collaborative efforts from companies, industries, commu-
nities, and governments worldwide. We in the Volvo Group are
determined to be a positive force in this shift with our ever more
efficient transport and infrastructure solutions.
We have been successful in building a solid foundation with
a strong financial position, customer satisfaction and relations,
industrial backbone, technology, products and services and – most
importantly – people. I would like to extend my gratitude to all col-
leagues and business partners for their hard work and dedication.
I have said it before, but it is worth repeating: succeeding in this
industry is all about people, and our people make the difference.
Martin Lundstedt
President and CEO
Our strong perfor-
mance allows us to
both provide our
shareholders with
a good return on
their investments
and at the same
time fund the
activities that are
driving the trans-
formation of our
industries to more
sustainable solu-
tions.
11
VOLVO GROUP 2023
OVERVIEW
12
VOLVO GROUP 2023
OVERVIEW
Renault Trucks E-Tech
In 2023, Renault Trucks expanded its all-
electric range with the start of sales and
production of two new models of up to 44
tonnes, namely the Renault Trucks T E-Tech
for regional transport and the Renault Trucks
C E-Tech for the construction industry.
Read more on page 51.
13
VOLVO GROUP 2023
OVERVIEW
STRATEGY
Our mission
– driving prosperity
Our mission is to drive prosperity through our transport and
infrastructure solutions. Our vision is to be the most desired
and successful provider in our industries, across the globe.
We develop our products, services and solutions to create value
for our customers, to contribute to the well-being and safety of
people and to sustainable societies. By doing so, we also create
value for our shareholders.
We aspire to deliver leading customer satisfaction for all brands
in their segments; to be the most admired employer in the indus-
try, and to have industry-leading profitability. The Group’s values,
Customer success, Trust, Passion, Change and Performance,
serve as a guide to our day-to-day behavior and drive decisions on
all levels of the organization. Our Code of Conduct outlines how
we in the Volvo Group do business: ethically and in compliance
with the law.
ASPIRATIONS
VALUES
CODE OF CONDUCT
VISION
MISSION
VOLVO
GROUP
Driving prosperity through
transport and infrastructure solutions
Be the most desired and successful transport
and infrastructure solution provider in the world
Customer success Trust Passion Change Performance
We respect
and care for
one another
We earn business
fairly and lawfully
We safeguard
company information
and assets
We separate personal
interests from
business activities
We communicate
transparently
and responsibly
Have leading customer satisfaction
for all brands in their segments
Be the most admired
employer in our industry
Have industry
leading profitability
14
VOLVO GROUP 2023
Seven strategic priorities
In addition to the mission, vision, aspirations, values and Code
of Conduct we have decided on seven strategic priorities to cap-
ture growth opportunities and improve underlying performance.
The strategic priorities provide the overall direction and act as a
guide in our decision-making, but should not be seen as a detailed
action plan. The order in which the priorities are presented does
not reflect their relative importance.
Providing peace of mind for our customers
To be successful the key is to create value for our customers by
impacting their bottom line profitability. By understanding our
customers’ priorities and challenges, we can provide products,
services and solutions that grow their revenues and decrease
their costs. This is the basis for our strategic direction.
Our holistic approach to supporting our customers and their
business needs is built upon a strong foundation of products,
services and total solutions. Our aim is to help our customers to
maximize their uptime and productivity. We do this in several ways.
World-class products
The Volvo Group sells its products under the Volvo, Volvo Penta,
Rokbak, Renault Trucks, Prevost, Nova Bus, Mack and Arquus
brands. We also partner in alliances and joint ventures in SDLG,
Seven strategic priorities – balancing perform and transform
Transform the Volvo Group to become a leading end-
to-end integrator and offer easy-to-integrate prod-
ucts and services through strong brands.
1
Grow the service business and target selected industry
verticals offering a portfolio of tailor-made solutions.
2
Secure a desirable and sustainable product and service
portfolio with the right quality, leveraging new and
well-known technologies, CAST (Common Architec-
ture and Shared Techology), partnerships, and digital
innovation – accelerating electromobility solutions.
3
Grow in Asia and the US: In Asia through JVs, alliances
and by strengthening the Volvo Group footprint in
China. In the US by significantly improving the Group’s
market position.
4
Develop robust profitability throughout the decentral-
ized regional value chains by leveraging global scale,
digitalization, a purpose-fit footprint and continuous
improvement using the Volvo Performance System.
5
Selectively capture, accelerate and scale-up new
businesses and develop competencies and capabili-
ties needed.
6
Reinforce value-based leadership and ways of
working where all colleagues are empowered to
take action and are accountable for the results.
7
15
VOLVO GROUP 2023
STRATEGY
Milence, Eicher, Dongfeng and cellcentric. By offering products
and services under different brands, we address many different
customer and market segments around the world.
The Volvo Group’s products have been developed to contribute
to efficient transport and infrastructure solutions and to provide
our customers with reliable uptime. We drive the development of
electrified vehicles and machines as well as automated solutions
for the benefit of customers, society and the environment. Sales of
vehicles and machines build a population of products that requires
spare parts and services.
World-class services
In addition to vehicles and machines, our offering includes various
types of services such as financing, insurance, rentals, spare parts,
repairs, preventive maintenance, service contracts and assistance
services. We also offer batteries and battery optimization, route
simulation and charging services. The range and flexibility of the
offering means that solutions can be tailor-made for each cus-
tomer to secure uptime and productivity. The service business
contributes to balancing the fluctuations in the sales of new prod-
ucts and improving profitability over the business cycle. Growing
the service business is an area of priority.
Total solutions
Digital services
Vehicles and machines
Tires & super-
structure services
Insurance
Charging services
Financing
Service contracts
Route simulation
Batteries & optimization
16
VOLVO GROUP 2023
STRATEGY
17
VOLVO GROUP 2023
STRATEGY
Consistency in delivery
of both growth and profit
The performance of the Volvo Group has improved substantially during
the last few years. Our focus has been on gradual and consistent earnings
improvement, reduced volatility in earnings and cash flow, as well as
allocating capital in a disciplined way.
We have great assets in our people, products, and services, as well
as production sites, well-established dealer networks and customer
relations. We have strong finances and are in a good position to be
able to invest further in new technologies. Our aim is to excel on the
basics and build resilience. This is key to our long-term profitability.
Growing service business
Our financial performance is ultimately decided by how close we
work with our customers and how successful we are in providing
peace of mind to them. A good indicator of this is the development
of our service sales. In 2023, net sales in the service business
amounted to SEK 127.5 billion, equivalent to 23% of Group net
sales. The compounded annual growth rate in the service business
has been 5% over the last five years. A stronger service relation
and growing service business support our profitability throughout
the business cycle. This is an area of priority for the Volvo Group.
To continue growing our service business we will focus on the
untapped potential that exists both in terms of market share and
in terms of increasing the sales of spare parts, workshop hours,
financing, insurance and uptime services. Around 2.1 million trucks,
700,000 construction machines and 80,000 buses have been
produced by the Volvo Group in the last ten years, of which many
are connected. With these as a base we can extend our service
offer and increase the uptime and productivity to the benefit of our
customers.
Transformation accelerating growth
Over the last decade, the Volvo Group has established industry-
leading profitability and a strong return on capital employed and
is now taking the next step on its strategic journey. The need for
transportation is increasing as are the investments in infrastructure,
and the drivers of transformation within our industries are clear.
Today’s trucks and construction machines are not used to their
full capacity due to e.g. congestion, insufficient route planning and
low fill rates. However, with current infrastructure, a fully loaded
Good growth in service sales
Growing the service business is an
area of priority. In 2023, net sales
of services amounted to SEK 127.5
billion, corresponding to 23% of
the Group’s total sales.
Net sales of services, SEK bn
2021 202220202019 2023
127.5
Improved through-cycle earnings resilience
Profitability has improved in recent
years. In 2023, the adjusted operating
income amounted to SEK 77.6 billion
with an adjusted operating margin of
14.0% (10.7). In 2019–2023 the aver-
age adjusted operating margin was
10.4%.
Adjusted operating income, SEK bn
Adjusted operating margin, %
2021 202220202019 2023
77.6
14.0
Strong financial position
The Group’s financial position is strong
with a net cash position in the Industrial
Operations of SEK 83.4 billion excluding
post- employment benefits and lease
liabilities at year-end 2023.
Net financial position
Industrial Operations, SEK bn
20212020 2022
2019
2023
83.4
18
VOLVO GROUP 2023
STRATEGY
truck operating on diesel is one of the most energy-efficient ways of
transporting goods on our roads. The same is true for construction
equipment in current applications. However, our view is that battery-
electric and fuel cell-electric vehicles and machines as well as
products with internal combustion engines running on different
types of renewable fuels are the future. These offers will be further
developed to meet upcoming stringent CO
2
regulations and our
customers’ increased demand for sustainable alternatives.
When it comes to safety aspects, it is a fact that people lose
their lives or are injured in traffic and on work sites with human
error by far being the main reason. It is also a fact that people and
goods spend a lot of time in
congestion. Our daily life pattern and
non-optimized infrastructure and logistics models result both in
temporary congestions and at other times heavily underutilized
road networks. We continuously invest in products and services
that offer safer, more sustainable and more productive solutions
to our customers. To accelerate this development, we have also
invested in new business models and new technology in recent
years, with Volvo Autonomous Solutions (V.A.S.) and Volvo Energy
as two examples.
V.A.S. develops commercially viable solutions for on- and off-road
applications. Our autonomous solutions make our customers’ opera-
tions more safe, productive and sustainable. Volvo Energy will offer
Perform to finance the transformation
Transform Perform
both public and private charging solutions, energy storage, battery
optimization and battery lifecycle management.
We transform our business to provide even greater value to our
customers and respond to the need for transport and infrastructure
solutions that are safe, more sustainable and more productive.
The Volvo Group has a good initial market position in electric vehi-
cles and machines and the focus is on accelerating the commercial-
ization of new technologies and business models to get traction and
Over the last decade, the Volvo Group has established an industry-leading level of profitability and is now taking the next step on its
strategic journey. Growth is expected to accelerate with the main driver being the higher value of electric vehicles and machines.
Gradual and
consistant
earnings
improvement
Reduced
volatility in
earnings and
cash flow
Discipline
in capital
allocation/
investments
Continuous
investments in
new business
models by inno-
vation and new
technol-
ogies
Transformation
accelerating
growth
Delivering on our financial ambitions and strategic direction
19
VOLVO GROUP 2023
STRATEGY
impact. The transformation is expected to accelerate our growth
with the main driver being the higher value built into the electric
vehicles and machines.
Geared for growth
At Volvo Group we are committed to offering the flexible services
and solutions our customers need to build their business in the
smartest way possible. The shift to electric equipment drives
system thinking, where the truck or machine is one part of a total
solution encompassing charging infrastructure, battery optimiza-
tion, maintenance, financing and value-adding services.
For us, this transition brings a deeper, broader, and more long-
term engagement in our customers’ business. It also provides a
significant opportunity for growth. We estimate that there is a
potential to increase our revenues by more than 50% over the life-
cycle of a product when comparing an electric vehicle to a conven-
tional version. This is primarily based on the increased sales values
of electric vehicles and machines but also on increased revenues
from autonomous solutions, new digital services and services
connected to energy solutions. Other factors expected to drive
growth are increased service contract penetration and an increase
in the duration of the contracts.
We also believe that autonomous solutions have the potential
to bring a wide range of benefits to society. The introduction of
self-driving vehicles and machines opens the way for transport
systems that have a significantly reduced impact on the climate,
are more productive, more energy efficient and safer. Since 2020,
the Volvo Group has a business area, Volvo Autonomous Solutions,
focused on developing and commercializing industrial autonomous
transport solutions.
Although autonomous solutions are in relatively early phases,
we believe that they may offer a significant growth opportunity as
they tap into substantial revenue pools that we have not previously
addressed. Instead of selling a truck or machine, we can provide
customers with complete transport systems, driving productivity
for them and revenues for the Volvo Group.
Enabling conditions
The transition to net-zero emissions in the transport and infra-
structure industries will depend on a variety of factors. In addition
to the availability of the Volvo Group’s product and service offering
but, there are external factors such as the existence of a functioning
charging infrastructure and access to renewable energy sources
to power battery-electric and fuel cell-electric products. Customer
demand in different markets will also depend on factors such as
governmental incentives for green technologies and the price
of fossil fuel.
Clear opportunity for growth
Ambition for
tomorrow
TodayYesterday
>10%
Operating margin
Sales
CAGR %
≈3%
pre-covid
• Capturing industry growth
• Untapped service potential
• Electric vehicles and machines
– higher sales value
– increased market shares
– increased service contract
penetration and duration
• Autonomous solutions
• Energy services
• Digital services
20
VOLVO GROUP 2023
STRATEGY
21
VOLVO GROUP 2023
STRATEGY
Sustainable transport and
infrastructure solutions
Transport of people and goods are essential for economic and social
development. With a growing global population, rapid urbanization
and increasing e-commerce, demand for transport and infrastructure
are expected to continue to increase. We must meet this demand
with products, services and solutions that are more sustainable.
The Volvo Group is a leading force in the shift towards the electrifica-
tion of the transportation and infrastructure industries, making a real
impact on our customers’ efforts to reduce their carbon footprint.
It is our long-term vision to offer solutions that are:
100% safe
100% fossil-free
100% more productive.
Safe
Safe because we cannot accept a situation where, every year, peo-
ple are killed and injured on roads and work sites. Safety is about
putting people at the center of everything we do. We have a vision
of zero accidents with Volvo Group products and in our own oper-
ations. We work proactively with our partners and with society
to develop intelligent solutions that not only mitigate the conse-
quences of accidents but strive to avoid them altogether. And, of
course, safety is a prerequisite for vehicle uptime and increased
productivity.
Fossil free
Fossil free because climate change is the challenge of our genera-
tion. We are enabling our customers to be leaders in the shift
towards a decarbonized transport system. We offer fully electric
solutions ranging from compact excavators to city buses and heavy-
duty trucks with zero greenhouse gas tailpipe emissions and pro-
vide our customers a fast-track to emission reduction, while man-
aging total investment and cost of operation parameters.
More productive
More productive because that will help us meet the growing
demand for transport and infrastructure while staying within the
boundaries of what our planet can sustain. Many transports are
run with half-empty loads. By optimizing flows and increasing
the utilization of equipment we believe it is possible to double the
productivity of our customers’ logistics systems. To improve pro-
ductivity and the use of available resources, we are working with
AI and Machine Learning technologies to optimize transportation
through load consolidation, capacity sharing, and to improve fleet
100%
FOSSIL-FREE
100%
MORE PRODUCTIVE
100%
SAFE
100%
22
VOLVO GROUP 2023
STRATEGY
efficiency. In addition, we are developing autonomous transport
solutions for confined areas such as quarries and mining, as well
as for hub-to-hub transports on highways.
Driving the transition to net-zero
Around the globe, businesses are starting to move towards decar-
bonization with the help of Volvo Group products and services.
Just as the Volvo Group has set ambitious targets on green-
house gas emission reductions that are in line with the Paris
Agreement and approved by the Science Based Targets initiative
(SBTi), many of our customers and their customers are also com-
mitting to their own sustainability goals. This contributes to them
phasing out vehicles and machines running on fossil fuels and
replacing them with electric products. Our range of zero-emission
products and services play an important role in supporting this.
In 2015, there were 116 companies taking action with the SBTi.
In 2022 that number was 4,200 and by the end of 2023 it had
grown to 7,000.
Shift to electric
The shift to electric propulsion systems (both battery and hydrogen
fuel cell-based) is not limited to heavy- and medium-duty trucks
– it also covers construction equipment, buses as well as marine
and industrial power applications. In addition, fossil-free biofuels
can be used in combustion engines to help reduce greenhouse gas
emissions.
Our electric vehicles and machines, based on well-proven
technology within the Volvo Group, are serving in real operations.
The electrified transport and infrastructure solutions are helping
transport operators and customers in the construction sector to
significantly reduce emissions and noise.
Already today, electric trucks and construction machines are
viable options from a total cost of ownership perspective in certain
segments in some markets. This transformation is expected to
continue to develop segment by segment and region by region,
with demand for electric trucks and machines expected to increase.
This is exemplified by the illustration below with the expected
development for trucks.
With improvements in battery and hydrogen fuel cell technol-
ogy and the development of charging networks, the Volvo Group
is convinced that there will be a transformation of most of the
transport and infrastructure industries. However, the pace of elec-
tric transportation adoption will vary from region to region and
depend on the availability of robust charging and hydrogen infra-
structure. To this end, Volvo Group is an active partner in several
battery charging and hydrogen infrastructure projects in both
Europe and North America, with the express aim of increasing
adoption rates and thereby further reducing emissions. Customer
demand will also be dependent on governmental incentives for
investments in green technologies and the price of fossil fuel.
Rollout of sustainable transport and infrastructure solutions
Our introduction of electric trucks, buses and machines has been
ongoing for some time. In fact, it started back in 2015 with our
first hybrid electric bus. We are drawing on the experience from
Taking action with science-based targets
2015 20252022
2023
116
4,200
7,000
Companies taking action with SBTi
on climate change mitigation.
Expected adoption of electric trucks
EV market
Total
Distribution
Waste
Regional
Construction
Long haul
Electrification will happen segment
by segment and region by region.
23
VOLVO GROUP 2023
STRATEGY
The Volvo Group’s path to decarbonization
100%
0%
2030 2040 20502020
Fossil-based energy
Fossil-free energy
Share
of new
vehicles
Fuel cell
BioLNG
HVO, electrofuels, hydrogen etc.
Battery
Electric
Internal
Combustion
Engine
At least
35% electric
vehicles
2030
Volvo Group
net-zero value
chain GHG
emissions
Customers’
rolling fleets
net-zero
Our ambition is to reach
net-zero greenhouse gas
emissions by 2040. This
will enable our customers
to have net-zero rolling
fleets by mid- century as
it takes approximately
ten years to renew a roll-
ing fleet. We have a
three-pronged approach
to the decarbonization of
the product offer and
customers’ fleets of
vehicles and machines:
• Battery-electric
• Fuel cell-electric
• Internal combustion
engines running on
lower carbon fuels
such as green hydro-
gen, bigoas and HVO.
The black vertical arrows
indicate that there is
uncertainty about the
future market share of the
different technologies.
the city bus applications, having built the hybrid-electric solutions
into battery-electric buses.
On the truck side, Volvo Trucks, Renault Trucks and Mack Trucks
started series production of trucks for important segments such
as city distribution, waste and recycling in 2020. The Group con-
tinued its step-by-step rollout with regional haul Volvo trucks in
North America in 2021 and of Volvo trucks for regional haul and
heavy construction in Europe in 2022. Renault Trucks started
series production of its heavy-duty electric trucks in November
2023. The Volvo Group intends to have electric products and
solutions for all relevant truck segments, eventually also the
demanding long-haul segment, which is expected to be a combi-
nation of battery-electric and fuel cell-electric vehicles. In addition,
there will be combustion engines running on renewable fuels, with
green hydrogen being one option.
The first electric compact construction equipment were intro-
duced in select markets in Europe in 2020. The rollout continued
in Europe and North America in 2021, followed by Asia in 2022.
The first medium-duty electric machine, the 23-ton EC230
electric excavator, was brought to selected markets in 2022
and in 2023 more markets in Europe were added. For heavier
construction machines, fuel-cells is also expected to be an alter-
native towards the end of this decade.
Volvo Penta is also fully committed to developing reliable
electric solutions for applications such as fire trucks, forklifts
and terminal tractors.
Both vehicle and machine equipment applications will rely on
the availability of local or onsite electric charging or hydrogen
generation and refueling infrastructure.
Electrification roadmap
2010 2015 2020 2025 2030
Urban transport
& light
construction
Demanding long-haul
Regional haul
Heavy
Large
Medium
Compact
Heavy construction
Fuel cell electric
Battery electric
Energy recuperation
Electric hybrid
24
VOLVO GROUP 2023
STRATEGY
VOLVO GROUP 2023
STRATEGY
VOLVO GROUP 2023
STRATEGY
25
Strong assets a base
for the transformation
In the shift to electric vehicles and machines and autonomous
transport, the Volvo Group has several strong assets such as a
modular platform, a well-invested industrial system and strong
partnerships.
The Volvo Group’s modular vehicle architectures can continue to
serve the Group well. They create flexibility as well as cost and
capital efficiencies in research and development as well as in the
industrial system.
CAST – the Volvo Group’s modular system
The Volvo Group and its partners can benefit from the Group’s
modular platform Common Architecture & Shared Technology
(CAST). The ambition with CAST is the continuous development of
a competitive set of modular products and services that are easy
to integrate, meet future legal, market and societal needs, as well
as meeting customer expectations. The CAST system is modular,
scalable and cost-efficient.
Through well-defined performance steps and continuous reduc-
tion of complexity, the CAST ecosystem supports our different
brand strategies across disruptive technology trends while captur-
ing synergies for the Volvo Group and its joint ventures and alli-
ance partners.
Trucks with different drivelines on the same assembly line
The Volvo Group’s modular vehicle architecture creates advan-
tages in both the development and manufacturing phase. For
example, it allows us to put either an internal combustion engine,
a battery-electric driveline or fuel cell-electric driveline in the same
truck chassis. In this way, we can reduce time and costs in the
development phase and bring new offers to the market faster. In
addition, we can manufacture the different variants on the same
assembly line in existing plants, leveraging our skilled workforce
and invested capital.
Increased depth of engagement in the battery value chain
In 2022, Volvo Group opened its very first battery pack assembly
plant. Located in Ghent, Belgium, the plant supplies ready-to -
install batteries for Volvo Trucks’ full electric heavy-duty trucks.
In the new battery plant, cells and modules from Samsung SDI
are assembled into battery packs that are tailor-made for the Volvo
Group’s products. In 2025, the plant in Ghent will start to also
produce battery modules. The decision to install battery module
Common Architecture & Shared Technology
Construction
equipment
Joint ventures
and alliances
Buses
Trucks
Volvo Penta
CAST
Common
Architecture
Shared
Technology
The Volvo Group’s
modular platform.
Trucks with different drivelines on same line
Combustion
engine
Electric
driveline
Battery
pack
Fuel cell
pack
Fuel cell
electric
Combustion
engine
Pre-assembly stations
Main assembly line
Battery
electric
Driving synergies and reducing cost.
26
VOLVO GROUP 2023
STRATEGY
manufacturing capacity is an important step for the Volvo Group
to shape its future value chain for battery systems.
Another important step is the process to establish a large-scale
production plant for battery cells in Mariestad, Sweden. Construc-
tion of the plant is planned to begin in 2024 with commissioning
towards the end of this decade. The Volvo Group plans to gradually
increase capacity to reach large-scale series production. The battery
cells will be designed specifically for commercial vehicle applications.
In the beginning of 2024, the Volvo Group acquired the battery
business from Proterra in the US, adding new capabilities and
capacity to the Group. Read more on page 52.
Leadership through partnerships
Technologies develop at a faster pace than ever before. Combined
in new ways they offer new and innovative solutions in almost all
industries. Keeping up with the latest development is vital to stay
successful and is hard to do on one’s own, and that is why the
Volvo Group works in collaborations and partnerships. Below are
some examples.
We have a strategic alliance with Isuzu Motors. The alliance aims
to capture opportunities in the ongoing transformation of the com-
mercial vehicle industry. Alliance work includes a technology part-
nership and creating a larger volume base to support investments
for world-class technology.
We also have a strategic alliance with Samsung SDI to develop
batteries for the Volvo Group’s electric products. Working together
with Samsung SDI, Volvo Group aims to accelerate the speed of
development and strengthen the long-term capabilities within
electromobility, to the benefit of customers in different segments
and markets.
Partnerships with other OEMs
The Volvo Group and Daimler Truck have a fuel cell joint venture
called cellcentric, with the intention to develop, produce and
commercialize fuel cell systems for heavy-duty vehicle applica-
tions and other use cases.
Together with Daimler Truck and the Traton Group we have
founded Milence, to install and operate a high- performance public
charging network for battery-electric heavy-duty long-haul trucks
across Europe.
Partnerships for autonomous solutions
We work together with Aurora to develop autonomous solutions
for on-highway transportation. Aurora is a US-based company
specialized on the development of virtual drivers. Volvo Autono-
mous Solutions has also partnered with customers DHL Supply
Chain and UBER Freight regarding on-highway autonomous
solutions and with for instance Holcim to further develop the
use of autonomous electric haulers in quarries.
Fossil-free steel, aluminum and clean energy
The Volvo Group collaborates with SSAB on the research, devel-
opment and commercialization of the world’s first vehicles made
of fossil carbon emission-free steel.
We also have a collaboration with H2 Green Steel for near zero
emission steel. Under the long-term agreement Volvo Group will
purchase near zero emission steel from H2 Green Steel’s new
plant in Boden in Northern Sweden. Start of production is planned
for end of 2025 with deliveries to Volvo Group starting mid-2026.
During the UN Climate Change Conference COP28 held in
Dubai in December 2023, the Volvo Group announced a new
strategic partnership with Norsk Hydro, that includes establishing
a roadmap towards supplying near zero aluminum ahead of 2030
and to enable greater use of low-carbon aluminum in Volvo’s pro-
duction towards supplying net zero aluminum in 2040. The part-
nership will also explore how Volvo Group’s innovative transport
solutions can be used in Norsk Hydro’s mining operations in Brazil
to further reduce the carbon intensity of the aluminum value chain.
Amid increasing demand for clean energy, Volvo Group in 2023
partnered with Vattenfall, the largest producer of renewable elec-
tricity in Sweden. Read more on page 44.
Driving change with public-private partnerships
We are also active in public-private partnerships to drive change.
One such partnership is First Movers Coalition which has been
established with the aim to drive demand for low carbon technolo-
gies. Volvo Group is a founding member of the coalition.
H2Accelerate is a collaboration with the aim to accelerate the
use of hydrogen as a fuel for heavy-duty road transport in Europe.
The group comprises vehicle OEMs Volvo Group, Daimler Truck
and Iveco and hydrogen suppliers Shell, OMV and TotalEnergies.
27
VOLVO GROUP 2023
STRATEGY
Group targets
– fulfilling our ambitions
The Volvo Group has targets for both financial development
and development in the area of sustainability.
Financial targets
The current financial targets were set by the Board of Directors in
2017 and encompass operating margin for the Volvo Group, net
financial position in the Industrial Operations and return on equity
in Financial Services.
A clear and straightforward operating margin target supports
the efforts to drive performance across the Group through the
business cycle. The target also aligns with the way the Group is
challenged and measured internally.
A debt-free industrial balance sheet, excluding pension and lease
liabilities, enables the Volvo Group to better manage cyclicality in a
capital-intensive industry and to secure competitive cost of funds
for the Financial Services’ operation.
OPERATING MARGIN FOR
THE VOLVO GROUP, %
2022 20232019 20212020
0
5
15
10
11.6
12.1
9.7
8.1
11.5
Target: The Volvo Group’s operating margin
shall exceed 10% measured over a business
cycle.
Outcome: In 2023, the operating margin
amounted to 12.1% (9.7). In 2019–2023
the average operating margin was 10.6%.
In 2023, the adjusted operating margin
amounted to 14.0% (10.7). In 2019–2023
the average adjusted operating margin was
10.4%. For more information on adjusted
operating margin, please see Key Ratios
on page 218.
NET FINANCIAL POSITION INDUSTRIAL
OPERATIONS, excl. post- employment
benefits and lease liabilities, SEK bn
2022 20232019 20212020
100
25
0
75
50
66.2
74.7
62.6
73.9
83.4
Target: The Industrial Operations shall under
normal conditions have no net financial
indebtedness excluding provisions for post-
employ ment benefits and lease liabilities.
Outcome: At the end of 2023, the Industrial
Operations had a net financial asset position
of SEK 83.4 billion (73.9).
RETURN ON EQUITY IN
FINANCIAL SERVICES, %
18
9
12
15
6
3
0
2022 20232019 20212020
13.0
18.0
8.3
15.0
–0.3
Target: Financial Services’ target is a return on
equity of 12–15% at an equity ratio above 8%.
Outcome: In 2023, return on equity amounted
to 13.0 (–0.3) at an equity ratio of 8.0%. In
2019–2023 the average return on equity was
10.8%. Excluding Russia and Belarus return
on equity was 13.9% in 2023 and 15.4% in
2022. In 2019–2023 the average return on
equity excluding Russia and Belarus was 14.1%.
For more information on adjustments, please
see Key Ratios on page 218.
28
VOLVO GROUP 2023
STRATEGY
Climate targets
The Volvo Group has committed and set targets in line with the
Science-Based Targets initiative (SBTi) campaign Business Ambi-
tion for 1.5°C, and we have set ambitious milestone targets in our
own operations and value chain along the way. As the most signifi-
cant emissions are in the customers’ use-phase, the Volvo Group
sees significant opportunities in helping to decarbonize their oper-
ations.
The transition towards lower emissions in our industries is at an
early stage but is expected to accelerate with increased electric
vehicle sales and with the support of fuel-efficiency improvements.
The Group’s own operations (Scope 1 and 2) make up less than
1% of total emissions. The use-phase (Scope 3.11) makes up approx-
imately 95% of lifecycle emissions and this is our main focus of
decarbonization. Consequently, we have established targets per
segment.
For Trucks and Buses, the targets are set in emission per vehicle-
kilometer. For Construction Equipment, Volvo Penta and our own
operations, the targets are set as total absolute reductions. These
targets are approved by the SBTi as science based.
Tracking of emissions in remaining scopes, representing approxi-
mately 4% of the total, is under development.
Scope 3
use phase
TRUCKS
Target 2030
–40
%
emissions per
vehicle km
Status 2023
–6%
Scope 3
use phase
BUSES
Target 2030
–40
%
emissions per
vehicle km
Status 2023
–5%
Scope 3
use phase
CONSTRUCTION
EQUIPMENT
Target 2030
–30
%
absolute
emissions
Status 2023
–40%
Scope 3
use phase
VOLVO PENTA
Target 2034
–37.5
%
absolute
emissions
Status 2023
+11%
Scope 1–2
OWN
OPERATIONS
Target 2030
–50
%
absolute
emissions
Status 2023
–23%
On an aggregated level, the total calculated emis-
sions amounted to 266 million tons 2023 com-
pared with 323 million tons in 2019. The result in
total GHG emissions is a combination of energy
efficiency, sales volumes and product mix. For
construction equipment, lower sales volumes
in China compared to baseline is the most
important factor.
The reported emissions for the year in ‘scope
3.11’ use phase make up the vast majority of
the total emissions footprint and is calculated
by including expected lifetime emissions from
all products sold in the reporting year. As such,
annual sales volumes have a significant impact
on results from one year to the next. The Volvo
Group is operating in cyclical industries, which
are linked to economic activity, and conse-
quently sales volumes and utilization of the
rolling fleet of products vary over time. See
detailed information on GHG emissions, mea-
surements and targets on pages 170–171.
GREENHOUSE GAS EMISSIONS
Mton
20202019
2021 2022
2023
241
323
286 287
266
SBTI APPROVED CLIMATE TARGETS, from baseline 2019
29
VOLVO GROUP 2023
STRATEGY
30
VOLVO GROUP 2023
STRATEGY
Volvo EC230 Electric
launched in Europe
In 2022, Volvo Construction Equipment
launched its mid-size EC230 Electric in
Norway. The battery-electric excavator has
since then been successfully deployed at
fossil-free construction sites in markets
such as Sweden and is now commercially
available to selected customers across Europe.
31
VOLVO GROUP 2023
STRATEGY
Sustainability impacts
across the value chain
Our strategy responds to a range of sustainability-related
matters. This means considering the impact on the world
around us as part of how we look at the long-term success
of our business.
Business models depending on use case
Volvo Group is continuously striving to develop business models
suitable for different customers and their specific use cases.
We summarize our key business models in three variants.
1. We offer uptime and performance with vehicles and machines
that our customers take full ownership of. Here we add value
with premium products and services as well as financing solutions.
2. We offer customers the opportunity to increase capacity through
business models based on usership, where we bundle products
and services. Examples are rental services, operating leases and
equipment as a service.
3. We offer customers productivity-based solutions where we
design turnkey solutions and where we operate sites or routes
for certain segments. This can include infrastructure establish-
ment such as charging, battery monitoring and automation.
In terms of volumes and net sales, the majority of our business
is within the first type of business model, where the ownership is
transferred to the customer.
In the transition towards net zero greenhouse gas emissions,
we see opportunities to move more into business models based
on usership and end-to-end productivity solutions.
In this shift we see opportunities to generate more value for
our customers. The shift is also a clear growth opportunity for the
Volvo Group, based on the higher sales values of electric vehicles
and machines, autonomous solutions, new digital services and
services connected to energy solutions.
CUSTOMERS SUPPLY
NETWORK
DEVELOPMENT OF
PRODUCTS AND SERVICES
RETAIL, SERVICE, MAINTENANCE
AND REPAIR
PRODUCTION AND
LOGISTICS
32
OUR BUSINESS
VOLVO GROUP 2023
Our customers
The Volvo Group’s business areas support customers in the main
segments of trucks, buses, construction equipment, marine drive
systems and industrial engines. Customers and end users are
active in many industries. Direct customers are found in the key
industries of road freight transportation, public transportation,
construction and infrastructure development sectors.
Our aim is to support our customers by providing offers that
increase their productivity, provide safe operations, secure uptime
and increase fuel efficiency and thus reduces GHG and exhaust
emissions, since the use-phase makes up approximately 95% of
CO
2
emissions.
Sustainable business focus areas
• Customer and end-user safety page 184
• Climate
page 166
Development of products and services
Fulfilling our customers’ needs and improving their safety, profit-
ability and environmental performance forms the basis of our
product and service development. Product development is also
influenced by legislation, changes in society and new technolo-
gies. There are strong trends such as automation, electromobility
and connectivity that we are investing in that need to be balanced
with investments in the development of current technologies.
We provide a range of products and services to customers on
almost 190 markets. The Group’s product offering includes new
trucks, buses, machines and engines as well as sales of used trucks,
buses, machines, trailers, superstructures and special vehicles.
Services include sale of spare parts, maintenance services, repairs,
extended coverage, connectivity solutions and other aftermarket
products. Services also includes sales in Financial Services related
to finance leases, operating leases and insurance.
Sustainable business focus areas
• R&D related to zero- and low-emission vehicles
page 169
Supply network
The Volvo Group depends on global and regional supply chains
to deliver components, parts and complete services and systems.
Approximately 12,000 suppliers support the Volvo Group’s serial
production and in total the Group’s supply network is made up of
more than 50,000 suppliers globally. When developing a robust
supplier base, we look at a wide range of impacts, opportunities
and risks. Our Supply Partner Code of Conduct sets the founda-
tion for how we work.
Our supply partners have an important role in helping to develop
the solutions needed for our net-zero ambition as well as to reduce
supply chain emissions. Our latest inventory shows that GHG
emissions from the supply chain make up approximately 4% of the
total product life-cycle emissions. Focus areas for emission reduc-
tion activities have been identified in aluminum, steel, plastics,
batteries and electronics.
Sustainable business focus areas
• Responsible purchasing and social impact page 189
• Supplier environmental assessments
page 173
• Sustainable minerals program
page 190
Production and logistics
Our global industrial and logistics system strives for continuous
improvement to deliver on customer expectations and meet inter-
nal targets. The industrial system consists of capital-intensive
component factories as well as labor intensive assembly plants.
The component factories supply the Group’s needs on a global
basis, whereas assembly plants, in most cases, are located close
to end-markets to cater for local needs and specifications, and
short delivery times.
The manufacturing operations depend on suppliers that sub-
assemble parts and systems. The Volvo Group utilizes truck
assembly partners and bus body builders to carry out certain
assembly processes for the final product.
Sustainable business focus areas
• Employees and workforce
page 179
• Health and safety
page 182
Retail, service, maintenance and repair
Our global network of dealers and service centers staffed by
competent and service-oriented personnel are key factors for
customer satisfaction and success. The business areas within
the Volvo Group support customers via efficient dealer workshops,
and through service and maintenance agreements.
We offer different levels of service contracts to optimize and
extend product life, which can lead to both resource efficiency
and business opportunities. Durable products in combination with
added services can enable good opportunities to extend product
usefulness and sell used or repurposed vehicles and parts.
Sustainable business focus areas
• Responsible sales
page 188
• Resource use
page 173
33
VOLVO GROUP 2023
OUR BUSINESS
Driving prosperity for
many stakeholders
By delivering customer value, we also create value
for ourselves, our employees, our owners, other
stakeholders and for society as a whole.
We believe that the key to being successful is to create value for
our customers by contributing to improving their profitability.
By understanding our customers’ priorities and challenges, we
are able to provide products and services that grow customers’
revenues and decrease their costs.
Key areas to create value for our customers are offers that
increase our customers’ productivity, secure uptime and increase
fuel efficiency.
INSIGHTS FOR ADDITIONAL
VALUE CREATION
TRANSPORT AND
INFRASTRUCTURE
SOLUTIONS
Value for
customers
Value for
Volvo Group
Value creation
• Productivity
• Asset uptime
• Energy efficiency
• Increased revenue
• Decreased costs
Sustainable
profitability growth
• Excellent products
and services
• Closeness to
customers
• Efficient way of
operating
• Increased revenue
• Decreased costs
Sustainable
profitability growth
For customers
For our customers, uptime is everything. Regardless of if it is a cus-
tomer that owns one single truck or a fleet of trucks, if they are a public
transport provider or a coach owner, a construction entrepreneur or a
quarry owner; their performance depends on reliable products and ser-
vices that meet the needs of their business. Around 2,1 million trucks
and 80,000 buses, which the Group manufactured in the last ten
years, perform transport work worldwide. Construction equipment
operate at sites all around the world, and we have delivered more
than 700,000 machines the last ten years.
34
VOLVO GROUP 2023
OUR BUSINESS
For employees
The Group’s 104,000 employees are our
most important asset. Employee engage-
ment and a performance culture based on
customer success, trust and passion are critical for the Group to
fulfill its mission. The Group strives to offer competitive employ-
ment terms and benefits as well as a stimulating, safe and healthy
work environment. In 2023, we paid SEK 57,020 M in salaries and
remuneration.
57.0
(SEK bn)
For suppliers
A solid supplier base and professional part-
nerships are essential for the Volvo Group.
The Group provides both income and
employment for a large number of companies and in many societies
around the world. Purchased goods and services is the Volvo Group’s
single largest expense and in 2023 we bought goods and services
for SEK 374,526 M.
374.5
(SEK bn)
For shareholders
The Volvo Group strives to generate value
for its shareholders through a positive
share price development and payout of
dividends. From 2018 to 2023 the price for the Volvo B share rose
by 126%. Shareholders normally receive a certain portion of the
retained earnings in the form of a dividend, after consideration has
been given to the Group’s need for capital for continued develop-
ment according to its strategies. In 2023, shareholders received
dividends totaling SEK 28,468 M. To the 2024 AGM, the Board of
Directors proposes an ordinary dividend of SEK 7.50 per share and
an extra dividend of SEK 10.50 per share, in total SEK 36,602 M.
36.6
(SEK bn)
For society
Our products and services make societies
function. Our customers operate bus lines
so that people can get to work, they trans-
port food and industrial goods and they build infrastructure such as
roads and hospitals. Furthermore, road transport directly creates
millions of jobs around the world. We also contribute to the local
economy by being a major employer in many communities, providing
both direct and indirect employment. In 2023, the Group paid SEK
12,891 M in social costs, SEK 5,423 M in pension costs and SEK
20,807 M in income taxes, in total SEK 39,121 M. We also pay cus-
toms duties as well as property and energy taxes.
39.1
(SEK bn)
For creditors
A long-term competitive business requires
access to capital to be able to invest. The
Volvo Group strives to ensure that the capi-
tal is used in the best possible way and to assure debt providers with
the financial strength to secure proceeds and repayment. In 2023,
the Volvo Group paid its creditors SEK 1,158 M in interest.
1.2
(SEK bn)
For the Volvo Group
A significant portion of generated capital
is normally transferred back into the busi-
ness. The capital is used for investments
that will strengthen competitiveness and create long-term value for
the Group and its stakeholders. In 2023, the Volvo Group invested
SEK 26,645 M in R&D and another SEK 13,120 M in property, plant
and equipment, in total SEK 39,765 M.
39.8
(SEK bn)
35
VOLVO GROUP 2023
OUR BUSINESS
Volvo Group colleagues
driving the transformation
For Volvo Group, creating a safe, inclusive, and engaging work environment
for its employees is an essential focus area. Digitalization, electromobility, and
automation have a significant impact on our business and ways of working,
and in this shift our people are the most valuable asset.
Our care for people comes to life in how we encourage lifelong
learning, promote upskilling and reskilling, grow talent, invest in
people and create a culture where everyone can contribute. This
approach will help Volvo Group realize its People Commitment –
to create safe workplaces, to use the full potential of our diversity
and to drive engagement, so that our employees recommend
Volvo Group as a great place to work.
Employee Safety
Volvo Group never compromises on workplace safety in its opera-
tions and works towards a zero-accident rate with proven meth-
ods that strive to avoid any conditions that put employees at risk.
In addition to seeking to reduce the most frequent accidents,
which are usually also the minor ones, Volvo Group is increasing
its focus on preventing serious injuries and fatalities. All our opera-
tions are governed by safety standards and everyone in our organi-
zation has both the right and the responsibility to raise issues to
improve workplace safety – until we reach a zero-accident rate,
there is always more to be done to improve.
Work life balance and mental health
Volvo Group is made up of a palette of unique individuals, each
with their own interests and motivations. Everyone’s work life bal-
ance equation is different. That is why we believe that in addition
to Group programs, good communication and a trusting relation-
ship between employee and manager is the foundation for a
healthy work life balance that accommodates individual needs.
Improved mental health at work leads to higher performance, trust
between individuals and within teams, and high engagement. In
Volvo Group, we believe that healthy workplaces have clear roles
and expectations, enough time to carry out tasks, appropriate
work environments, and support. Volvo Group offers a wide range
of measures to identify warning signs and prevent factors leading
to excessive stress - from apps and training videos to face-to-face
sessions with psychologists and occupational therapists.
Opportunities for personal and professional development
Volvo Group values the desire of its employees to grow and take
on new responsibilities – our people will help shape tomorrow’s
society. Here, employees are part of a global lifelong learning cul-
ture that can unlock the full potential of everyone. It allows people
to learn faster than the world around is changing, so that we can
be ready to upskill, reskill and seize the opportunities around us.
In Volvo Group, career development is backed up by regular dia-
logues on performance and growth, designed to help employees
excel and make sure that their aspirations and personal goals
are met. The company offers structured career paths and training
programs for many different roles, such as people leaders, project
managers, engineers, and specialists. While employees are in the
driver’s seat of their own careers, Volvo Group supports their
ambitions through state-of-the-art training.
Volvo Group University is the central function of the Group’s
learning ecosystem. It develops, designs and provides training and
learning experiences well rooted in both todays and future busi-
ness needs. Our corporate university is an expert on adult learning
and makes sure employees get quality assured training. Every year
Volvo Group allocates approximately half a million training days to
our employees and retail organizations worldwide. And not only
that – Volvo career opportunities also include shadowing, reverse
mentoring, individual coaching, and networking.
Diversity and inclusion
Volvo Group draws strength from its diversity. To continuously
improve inclusion and reflect the diverse world we operate in, the
Group provides leaders and employees with the chance to master
inclusive skills and works to combat unconscious bias impacts.
We work to create equitable leadership development opportuni-
ties and strive for at least 35% of each gender in all our teams.
We have an amazing opportunity to draw ideas and viewpoints
from more generations than was ever possible before in the work-
place. Today, five generations work side by side in Volvo Group.
We also have a long history of including unique and diverse abili-
ties in our operations, especially in key markets, and we are work-
ing to increase focus in this area globally.
We channel our passion for inclusion into our employee networks.
These resource groups give a voice to key diversity threads and
engage the majority as allies to build a more inclusive Volvo Group.
We have networks across the globe supporting: Women and Gen-
der balance, Generational, LGBTQ+, and Multicultural inclusion
as well as Diverse Abilities. Our networks interact with leaders
and employees to deepen understanding of these key topics.
36
VOLVO GROUP 2023
OUR BUSINESS
Ghent | Innovative approaches
for upskilling and reskilling
The training center at the plant in Ghent, Belgium is a showcase of
how Volvo Group prepares its workforce for the future truck industry.
With a holistic approach to upskilling and reskilling, the organization
has explored new ways to develop talents and build a growth mindset.
A competence map that identifies new competence needs and
assesses the current competence level serves as a strong foundation.
In addition, shifting from a yearly to a quarterly learning and develop-
ment cycle has allowed the organization to better adapt to the fast-
changing environment. This has not only increased the awareness and
involvement of the managers in the learning process, but also helped
strengthen the learning culture.
The training center has implemented several innovative methods
and tools to upskill and reskill its employees, such as:
• Gamification and Lego exercises to teach topics such as safety,
standardized work and Volvo Performance System (VPS) in a
more engaging and effective way.
• The “truck in a box”, which is a display that contains the complete
electrical circuit of a truck with cables, buttons, and lights for both
the chassis and the entire cab. This tool provides a visual overview
of how everything works and gives the opportunity to simulate and
test fault codes etc.
• Mixing theoretical training with practical exercises in a lifelike envi-
ronment. In the Battery pack training (BP1), participants practice
how to assemble parts on a training battery pack with their safety
protection on.
• Exploring future technology, by allowing engineers, trainers and first
line managers to take part in university courses to learn more about
hydrogen and fuel cell technology.
The training center in Ghent has also developed a tailor-made initia-
tive to reskill employees for a technical profile. This didactic setup with
tools and equipment in a suitcase, combined with online training and
exercises helps employees explore and learn how to e.g. connect elec-
trical circuits correctly.
“One of the best things with the didactic set-up of the training suit-
case is that it allows our employees to explore a technical talent they
didn’t know they had. Thanks to the blended approach with a combina-
tion of digital and hands-on training, they can learn independent of
time and place and work at their own pace. Just by doing some simple
exercises, they develop their interest and their skills and start to think
– wow, I can do that, ” says Nico Van Den Broeke, group leader at the
training and competence center in Ghent.
Five reasons to join Volvo Group
according to our people
We like to believe that it is the combination of
an inspiring purpose, innovation leadership, a
strong culture with growth opportunities and
fair compensation that is the reason why peo-
ple want to work and do business with us. We
asked our employees why they wanted to join
us. These are the top five reasons.
1
Be cared for and listened to
2
Design your own career
3
Get rewarded for your contribution
4
Work with the latest technologies
5
Leave society in good shape for the
next generation
Read more here
37
VOLVO GROUP 2023
OUR BUSINESS
38
VOLVO GROUP 2023
OUR BUSINESS
Meet the Mack MD
Electric
The Mack MD Electric is an all-electric
medium-duty truck with all the capabilities
and durability customers expect from a
Mack. With a focus on driver comfort and
productivity, lower routine maintenance
costs, and step-by-step integration, Mack
MD Electric combines everything needed
to bring eMobility to customer fleets.
Read more on page 49.
39
VOLVO GROUP 2023
OUR BUSINESS
An intensive year with new
products and collaborations
During the year, the Volvo Group launched new products and entered
into new partnerships to drive the transformation. We also restructured
some of our operations to improve performance.
Volvo Group | Investment
in Waabi, a developer of next
generation autonomous
trucking technology
In January, Volvo Group Venture Capital AB invested in the Cana-
dian-founded company Waabi Innovation Inc, which develops the
next generation of autonomous trucking technology. The invest-
ment highlights the companies’ shared commitment to redefine
the way we move goods and to accelerate the deployment of
future transport solutions. Waabi uses advanced artificial intelli-
gence technology to test, assess skills, and ultimately teach a
virtual driver to maneuver safely and efficiently in a commercial-
ready autonomous trucking solution.
Volvo Construction
Equipment | Battery pack
production at excavator plant
In February, Volvo Construction
Equipment (Volvo CE) announced
an investment into battery pack
production at its excavator plant
in Changwon, South Korea.
The Changwon plant special-
izes in the production of excava-
tors and is the biggest excavator
production site in Volvo CE.
The SEK 80 M investment will enable the plant to begin manufac-
turing a wide range of battery pack solutions for the Volvo Group and
become a core competence center for electric excavators. This
will enable Volvo Group to offer more sustainable solutions to its
APAC markets in a more flexible, cost-effective and agile way and
will include supply chain, manufacturing and logistics. The battery
pack production is expected to commence in June 2024.
40
VOLVO GROUP 2023
OUR BUSINESS
Mack Trucks | Introduction
of the medium-duty Mack
MD Electric
In March, Mack Trucks revealed its Mack MD
Electric, the company’s first electric vehicle in the
medium-duty segment of the trucking industry.
The MD Electric will complement its highly effi-
cient, diesel-powered MD model sibling, which has
experienced growing customer demand since its introduction in
2020. The addition of a zero-tailpipe emissions battery-electric
vehicle to the Mack medium-duty lineup also supports the com-
pany’s long-term sustainability goals. The trucks were available
for order from June.
Volvo Buses | Change of
business model in Europe and
decision to close the body-
building factory in Wroclaw
In March, it was announced that Volvo Buses would change its
business model in Europe and that they would apply the same suc-
cessful model as it has on several other markets. This means that
Volvo Buses in Europe will focus its production on chassis and
together with external bodybuilders offer customers in Europe a
complete range of city and intercity buses as well as coaches for
the premium segment. Consequently, Volvo Buses decided to close
its bodybuilding factory in Wroclaw, Poland during the first quarter
of 2024. As a consequence, a restructuring provision of SEK 1.3 bil-
lion negatively impacted operating income in the first quarter of 2023.
Volvo Trucks and Boliden |
Collaboration on underground
electric trucks for mining
In March, Volvo Trucks and mining company Boliden joined forces
to implement electric truck transport in underground environments,
where the electric trucks can deliver several big advantages –
including no exhaust emissions, a safer workplace, and quieter
working conditions.
The mining industry is today going through a period of rapid
change, with many players shifting to more sustainable production
methods to provide metals with a lower climate footprint. Just like
in many other mines, exhaust gases from diesel vehicles are respon-
sible for the majority of the carbon dioxide emissions from Boliden’s
mines. Boliden is committed to reducing its CO
2
emissions by 40%
by 2030, and to achieve its climate goals, electrification of trans-
port will play a critical role.
41
VOLVO GROUP 2023
OUR BUSINESS
Volvo Penta | Investment
in Utility Innovation Group
to accelerate electric grid
innovation
In April, Volvo Penta acquired a minority stake in Utility Innova-
tion Group (UIG). The strategic investment accelerates entry into
the utility sector to further develop Volvo Penta’s battery energy
storage subsystem and power generation portfolio as part of its
road to net zero. UIG is a US-based specialist in resilient, innova-
tive utility systems and decentralized energy solutions. Through
the investment, UIG and Volvo Penta have the potential to enhance
their collective capabilities, while jointly creating innovative solu-
tions and new market opportunities to advance electric grid infra-
structure.
CampX by Volvo Group |
Accelerating innovation for
sustainable mobility
Since the start in 2019, more than 80 startups have further devel-
oped their products and services at CampX, the global collabora-
tion hub for innovations in Volvo Group. CampX accelerates part-
nerships with startups and internal business ideas using a lean
process.
In 2023, Volvo Group took the next step by adding a new track
called Incubator where startups are invited to be located in the
CampX building, where they work side by side with Volvo Group
experts, giving the startups vital access to mentoring, industry
networks and insights on industry needs. The CampX Incubator
program is inviting early-stage startups with promising cutting-
edge technologies to collaborate with Volvo experts to bring their
new innovations to life. It continues to mark Volvo Group’s com-
mitment to supporting startups in developing viable and impact-
ful innovations with focus on sustainable mobility.
About CampX
CampX by Volvo Group is all about accelerating innova-
tions through partnerships. Startups run proof-of-value
projects together with Volvo Group expert teams to val-
idate their product-market fit. Volvo Group product and
business owners are at the core of the CampX concept,
and by focusing on their “problems to be solved”, CampX
is accelerating startup innovations to market collabora-
tively. CampX coordinates three programs tailormade for
startups: the Incubator, the Accelerator, and the Venture
Builder. CampX by Volvo Group started in Gothenburg,
Sweden in 2019 and has since expanded its concept to
include a network of hubs in Sweden, France, India, and
North America, all connected to Volvo Group’s main
R&D facilities.
42
VOLVO GROUP 2023
OUR BUSINESS
Volvo Trucks | Premiere for
tests of hydrogen-powered
electric trucks on public roads
In 2022, Volvo Trucks showcased its fuel cell electric
trucks for the first time. These zero exhaust emis-
sion trucks use hydrogen to produce their own elec-
tricity on board, can travel long distances, making
them suitable for longer transport assignments.
In May 2023, the trucks were tested on public roads for the
first time. But not just any public road. To make it extra challeng-
ing, the tests were conducted above the Arctic Circle in the north
of Sweden – in an extremely cold climate.
Fuel cell electric trucks powered by hydrogen will be especially
suitable for longer distances and when using only batteries is not
an option: for example, in areas with insufficient charging infra-
structure. The fuel cell electric trucks will be available in the second
half of this decade. To speed up the development, Volvo Group has
joined forces with Daimler Truck to develop and produce fuel cell
systems that are tailor-made for heavy-duty vehicles.
Volvo Buses | Two orders
totaling 189 electric buses
for Stagecoach in the UK
In May, Volvo Buses secured two orders for a total of 189 new
electric buses from Stagecoach, one of the UK’s largest coach
and bus operators. One order for 170 electric buses was the
Volvo brand’s biggest electric bus order to date.
Nova Bus | Won two large
electric bus contracts
In May, Nova Bus, won two large electric bus contracts in Can-
ada. The first contract encompasses a base order of 339 LFSe+,
with 890 units in option, by the Société de transport de Montréal
acting as agent in collaboration with the Association du transport
urbain du Québec. The LFSe+ is the long-range battery electric
bus model of Nova Bus. The buses will be delivered over a 3-year
period starting in 2025. This represents one of the most signifi-
cant single orders of electric buses in history in North America.
Nova Bus was also awarded a base order of 124 LFSe+, with a
potential additional order of 12 buses and up to 405 units in option,
by the Toronto Transit Commission (TTC). The buses from the base
order will be delivered over a two-year period starting in 2024. This
was the first order of Nova Bus LFSe+ buses by the TTC. In addi-
tion, the order also includes an adoption process for other agencies
in Ontario to enter into their own agreements with Nova Bus for up
to 550 buses over four years.
43
VOLVO GROUP 2023
OUR BUSINESS
Volvo Trucks | Discontinued
acquisition of heavy-duty
truck manufacturing
operation in China
Volvo Trucks and Jiangling Motors Co., Ltd announced in May
that they would not pursue the previously announced transaction
involving Volvo Trucks acquisition of JMC Heavy Duty Vehicle Co.,
Ltd, and its manufacturing site in Taiyuan, Shanxi province, China.
Volvo Trucks will continue to export trucks to customers in China.
“Volvo Trucks has a long history of successful business activi-
ties in China. We have great opportunities on the Chinese market
and we will continue the efforts to develop our presence. Our
long-term ambition is to grow our business and continue deliver-
ing our high-quality trucks to customers in China, together with
our dealer partners in the country,” commented Roger Alm, Presi-
dent Volvo Trucks.
Volvo Group | Partnership
with Vattenfall to secure
renewable electricity
Amid increasing demand for clean energy, Volvo Group in May
signed a long-term agreement with Vattenfall, the largest pro-
ducer of renewable electricity in Sweden. Volvo Group commits
to buying 50% (~230GWh/year) of the renewable electricity
produced at Bruzaholm wind park in Sweden, over a 10-year
period starting in the last quarter of 2025.
This partnership with Vattenfall is a step forward in the Group’s
commitment to reach a net-zero greenhouse gas emissions (GHG)
value chain by 2040 and achieve the aims of the Paris Climate
Agreement. Containing 21 wind turbines with associated facili-
ties, the Bruzaholm wind park is scheduled to be ready for com-
mission by the autumn of 2025 when the agreement begins.
Volvo Trucks | Letter of Intent
with Holcim for up to 1,000
electric trucks
In May, Volvo Trucks signed a letter of intent to sell 1,000 electric
trucks until 2030 to Holcim, one of the world’s largest building
solution providers. The deal is the largest to date for Volvo electric
trucks, and the first 130 trucks will be delivered in 2023 and 2024.
The agreement is a result of a wider partnership between Holcim
and Volvo Group.
“Long-term collaboration and a strong commitment to really
make a difference are essential for making big CO
2
reductions a
reality. I’m very proud of the partnership we have developed with
Holcim, and the results we are achieving together,” said Martin
Lundstedt, President & CEO Volvo Group.
Both companies are committed to the Science Based Targets
initiative, which drives ambitious climate action in the private sec-
tor, and both are also founding members of First Movers Coalition.
FACTS
• Holcim is a global leader in innovative and
sustainable building solutions, headquartered
in Switzerland. It has a presence in more than
60 countries and around 60,000 employees.
• The First Movers Coalition is a coalition of com-
panies that use their purchasing power to create
early markets for innovative clean technologies
across eight hard-to-abate sectors.
• The Science Based Targets initiative (SBTi) drives
ambitious climate action in the private sector by
enabling organizations to set science- based emis-
sions reduction targets. Targets are considered sci-
ence-based if they are in line with what the latest
climate science says is necessary to meet the goals
of the Paris Agreement – limiting global warming to
1.5°C above pre- industrial levels.
44
VOLVO GROUP 2023
OUR BUSINESS
Volvo Penta | Modular
electric systems in FTMH
partnership
In May, Volvo Penta and Italian heavy equipment manufacturer
FTMH (Fantuzzi Team Material Handling) expanded their partner-
ship to include electric forklifts. This collaboration highlights the
trust in Volvo Penta’s modularized electric platform and its full
system supplier approach of the latest electromobility technology.
Volvo Autonomous
Solutions | Expansion
of footprint and start of
operations in Texas
In June, Volvo Autonomous Solutions
(V.A.S.) expanded its footprint in
North America.
V.A.S. opened an office in Fort
Worth, Texas dedicated to driving
activities to set up its first autonomous freight corri-
dors that will run from Dallas Forth Worth to El Paso
and from Dallas to Houston.
To prepare for commercial launch, V.A.S. also
started to haul loads with trucks using drivers for key
customers like DHL and Uber Freight to test aspects
of the transport solution and establish frameworks
and procedures for safe and reliable operations.
About Volvo Autonomous Solutions
The autonomous transport solution offered by Volvo
Autonomous Solutions is based on Transport as a
Service (TaaS) and includes a vehicle purpose-built
for autonomous driving, a virtual driver, required
infrastructure, operations and uptime support as well
as a cloud solution that controls the transport system
and manages logistics flows.
The solutions developed by Volvo Autonomous
Solutions are tailor-made for each customers’ needs
and intended to make their operations safer, produc-
tive and sustainable.
45
VOLVO GROUP 2023
OUR BUSINESS
Volvo Autonomous
Solutions at Brönnöy
Kalk in Norway
Volvo Autonomous Solutions (V.A.S.)
achieved an industry-first milestone with
the removal of the safety driver in an active
commercial mining operation at Brönnöy
Kalk’s mine in Velfjord, Norway.
For more information, please see
page 49.
46
VOLVO GROUP 2023
OUR BUSINESS
47
VOLVO GROUP 2023
OUR BUSINESS
Volvo Group | Investment in
Trucksters, manager of inno-
vative relay trucking in Europe
In June, Volvo Group Venture Capital invested in the Madrid-
based company Trucksters, a transport operator focused on pro-
viding long-distance transportation through an innovative truck
relay system based on big data and artificial intelligence. With a
growing need for freight transportation, relay systems can pro-
vide a solid structure for electrification of long-haul transporta-
tion as well as for autonomous solutions in the future.
Volvo Group | Partner-
ship with Heidelberg
Materials to reduce
emissions in the
construction industry
In June, Volvo Group signed an agreement to collab-
orate with Heidelberg Materials, one of the largest
building materials companies in the world. The aim
is to reduce carbon emissions in the construction
sector by jointly investigating and developing how
loading and hauling needs can be solved with the
help of electrified vehicles and related services.
The partnership will see several of Volvo Group’s
customized electric product and service solutions
put to work across much of Heidelberg Materials’
Northern European operations. The purpose is to
support the adoption of emission-free transport
and loading equipment solutions in the industry.
The cement and concrete industries account for
around 8% of the planet’s carbon emissions, accord-
ing to the International Energy Agency. Finding ways
to reduce its climate impact is vital for Heidelberg
Materials to reach net-zero carbon emissions across
its value chain.
48
VOLVO GROUP 2023
OUR BUSINESS
Nova Bus | Will exit bus
production in the US
In June, it was announced that Nova Bus will exit bus production
in the US market. Consequently, the company has decided to
close its Plattsburgh manufacturing and delivery facility by 2025.
Production in North America will be focused to its Canadian facili-
ties located in Saint-Eustache and Saint-François-du-Lac (Quebec)
and Nova Bus will continue its successful Canadian business,
where it is the market leader. A restructuring provision of SEK 1.3
billion negatively impacted the Volvo Group’s operating income in
the second quarter 2023.
Volvo Autonomous Solutions
| Removal of safety driver at
Brönnöy Kalk
In August, Volvo Autonomous Solutions (V.A.S.) achieved an
industry-first milestone with the removal of the safety driver in
an active commercial mining operation at Brönnöy Kalk mine in
Velfjord, Norway.
The autonomous transport solution developed for Brönnöy
Kalk consists of seven fully autonomous Volvo FH trucks and
V.A.S.’s in-house developed virtual driver. Operating in challenging
conditions that include steep inclination, extreme weather and
long stretches of dark tunnels, the trucks haul limestone from the
mine to the crusher.
“A long-held vision is now a reality. Removing the safety driver
in an active commercial transport operation in some of the world’s
most challenging conditions is a major leap for the industry,” said
Nils Jaeger, President of Volvo Autonomous Solutions. “With this
milestone we are underlining our leadership in autonomous driving
and paving the way for safer and more efficient future for the min-
ing and quarrying industries.”
Volvo Group | Joint venture
with Westport
In July, Volvo Group and Westport signed a letter of intent to
establish a joint venture for high-pressure gas injection fuel systems
(HPDI) with a 45/55 ownership split. Westport will contribute with
current HPDI assets, activities, including fixed assets, intellectual
property, and business into the joint venture. Volvo will acquire 45%
in the joint venture for approximately SEK 300 M (USD 28 M) plus
up to an additional approximately SEK 500 M (USD 45 M) depend-
ing on the performance of the joint venture.
Volvo Autonomous Solutions
| Long-term collaboration
with Boliden to deploy
autonomous solutions
In September, V.A.S. and Boliden entered into a long-term collab-
oration to implement autonomous transport solutions as a part of
Boliden’s operations. The collaboration will cover numerous proj-
ects, the first of which will be the implementation of an autono-
mous transport solution at Garpenberg, Sweden that will be used
to move rock fill from an on-site quarry.
49
VOLVO GROUP 2023
OUR BUSINESS
Volvo Group | Ensuring
increased volumes of near
zero emissions steel through
collaboration with H2 Green
Steel
In September, it was announced that the Volvo Group’s collabora-
tion with H2 Green Steel for near zero emission steel had taken
another step forward. Under the long-term agreement, Volvo
Group will purchase near zero emission steel from H2 Green Steel’s
new plant in Boden in Northern Sweden. Start of production is
planned for end of 2025 with deliveries to Volvo Group starting
mid-2026.
Volvo Trucks | Serial produc-
tion of electric trucks in Ghent,
Belgium started
In September, Volvo Trucks ramped up electric
truck volumes and started serial production of
heavy battery-electric trucks at the Ghent factory
in Belgium. This means that electric Volvo trucks
are now built in four factories – three in Europe
and one in the US.
Three different electric models are built in Ghent – the Volvo FH,
the Volvo FM and the Volvo FMX Electric. These trucks can oper-
ate at a total weight of 44 tonnes and can be adapted for a wide
range of transport needs.
Volvo Group, Renault Group
and CMA CGM Group | Join
forces to address the growing
needs of decarbonized and
efficient logistics with an all-
new generation of electric vans
In October, Volvo Group and Renault Group
announced that they will join forces to address the
growing needs of decarbonized and efficient logis-
tics by creating a new company managing the devel-
opment of an all-new generation of electrified vans.
• Climate change accelerates the need of electrification
transition, future CO
2
regulations on transport of
goods and access to cities are drastically transform-
ing the logistic ecosystem.
• The professional customers already face increasing
pressure on cost of usage, need for electrification, and
safer and fully connected vehicles in their business.
• According to some estimates, the European market for
electrified vans is expected to triple by 2030, promis-
ing an opportunity for a brand-new LCV offer, particu-
larly addressing e-commerce and rental businesses.
• Volvo Group and Renault Group has signed binding
agreements to launch a new company where they will
initially hold respective 50-50 equity stakes, are plan-
ning to invest EUR 300 M each over the course of the
next three years. CMA CGM Group signs a non-binding
letter of intent with Renault Group and Volvo Group to
join the new company, investing EUR 120 M through
PULSE, its Energy Fund dedicated to accelerating the
decarbonization of transport and logistics sectors.
• The creation of the new company is expected early
2024 and remains subject to the completion of all
regulatory approval processes. The future company is
planned to operate under its own corporate identity
and will be based in France.
50
VOLVO GROUP 2023
OUR BUSINESS
Volvo Trucks | Breakthrough
for fast charging of electric
trucks – launch of new service
In October, it was announced that a national network of public
fast chargers for heavy electric trucks is opening in Sweden.
The charging network is powered by renewable energy. A new
service from Volvo Trucks makes it easy for haulers to find and
access the charging stations.
A network for fast charging of electric trucks is a key part of
the transition to more sustainable heavy transportation. In Swe-
den, some 130 charging stations in total are planned to open in
2023 and 2024. The stations are operated by several different
companies, and Volvo Trucks is one of the partners involved.
Volvo Trucks also launched a new service that lets haulers find
and access the charging stations. The service will first be launched
in Sweden. The charging service will in the first wave provide
seamless access to the 29 charging stations that are operated by
OKQ8. The charging stations will be powered by green electricity.
Other markets in Europe and other parts of the world are to follow.
Renault Trucks |
Serial production of
heavy-duty electric
trucks
In November, Renault Trucks
started serial production of its
heavy-duty electric trucks in
Bourg-en-Bresse, France.
With the addition of the new
models of up to 44 tonnes, the Renault Trucks
T E-Tech for regional transport and the Renault
Trucks C E-Tech for the construction industry,
Renault Trucks offers a range from 3.1 to
44 tonnes and complete electrification solutions.
Along with the trucks, battery and charging
infrastructure solutions, high-level repair and
maintenance services, financing and insurance
are also offered.
51
VOLVO GROUP 2023
OUR BUSINESS
Volvo Group | Acquires bat-
tery business from Proterra
In November, Volvo Group was selected as the winning bidder in
an auction for the business and assets of the Proterra Powered
business unit at a price of USD 210 M. The assets to be acquired
include a development center for battery modules and packs in
California and an assembly factory in South Carolina. With this
acquisition, Volvo Group will complement the current, and accel-
erate its future, battery-electric road map. The transaction was
completed in February 2024.
Volvo Trucks | Updated
electric trucks for zero-
emission city transports
In November, Volvo Trucks presented updated electric medi-
um-duty trucks – the Volvo FL and FE Electric. With a range up
to 450 km, 50% shorter charging time and new active safety
features, the updated trucks are designed for the urban environ-
ment – enabling safe zero emission city transport and logistics.
With cities introducing clean city zones and companies stepping
up their sustainability ambitions, zero emission trucks that can
meet all needs for city transports and logistics are more relevant
than ever before.
Volvo Trucks | Volvo FH
Electric awarded International
Truck of the Year 2024
In November, Volvo Trucks scooped the prestigious industry
award International Truck of the Year 2024 for its Volvo FH Elec-
tric. It was the first time ever that an electric truck won the award.
In explaining their decision, the jury praised the electric truck’s
performance, seamless acceleration, quietness, and vibration-
free behavior.
This was the fourth time that Volvo’s iconic FH model was
named Truck of the Year. The Volvo FH is one of the industry’s
most successful models ever with a total of nearly 1.4 million
trucks sold all over the world.
Volvo Trucks started series production of electric trucks
already in 2019, and today it has a broad electric line-up with
a total of six electric trucks designed to handle a wide variety
of transport assignments. Production of the Volvo FH Electric
started in 2022 in Volvo’s assembly plant in Gothenburg, Sweden,
and production at the plant in Ghent, Belgium began in 2023.
Pictured above are Gianenrico Griffini, Chairman International
Truck of the Year, and Roger Alm, President Volvo Trucks.
Volvo Group | Partnership
with CRH to accelerate
decarbonization
In November, Volvo Group and CRH, the leader in building materi-
als solutions in Europe and North America, signed a Memoran-
dum of Understanding (MoU) to accelerate net-zero innovations
in the design and deployment of on-road vehicles and off-road
equipment used in construction with a focus on next generation
technology deployment, scaling cutting-edge technology, and
operational efficiency.
52
VOLVO GROUP 2023
OUR BUSINESS
Volvo Construction
Equipment | To divest
the ABG Paver business
In December, Volvo Construction Equipment (Volvo CE) and the
Ammann Group reached an agreement whereby Ammann will
acquire Volvo CE’s global ABG Paver business. As a result of the
planned transaction, the Volvo Group’s operating income was
negatively impacted by SEK 610 M in the fourth quarter of 2023.
Volvo Trucks | Unveils
all-new Volvo VNL in
North America
In January 2024, Volvo Trucks launched a completely new Volvo
VNL in North America to set new industry standards in heavy-
duty trucking. Optimized aerodynamics and new technologies
have improved fuel efficiency by up to 10%. This all-new truck
features the next generation of enhancements to improve cus-
tomer value, driver productivity, safety, and sustainability.
The new Volvo VNL is based on an all-new platform for all
upcoming technologies, including battery-electric, fuel cell and
internal combustion engines running on renewable fuels including
hydrogen. The first 24-volt electrical infrastructure in the North
American trucking industry and active safety features that are
introduced in this new generation of Volvo trucks will be the stan-
dard for the future commercialization of fully autonomous trucks.
Volvo Group | Option agree-
ment to divest Arquus
In January 2024, Volvo Group announced that it had signed an
option agreement with John Cockerill Defense which gives the
Volvo Group the right to sell Arquus after mandatory consultations
with staff representative bodies. The consultations are expected
to be finalized in Q1 2024. As a result of the option agreement, the
Volvo Group’s operating income was negatively impacted by SEK
880 M in Q4 2023.
The Volvo FH Aero is here |
A new benchmark for energy
efficient heavy-duty trucks
In January 2024, Volvo Trucks’ iconic FH truck range got a new fam-
ily member with the Volvo FH Aero. With aerodynamic design and
innovative features, the FH Aero offers energy efficiency at a new
level, available in four variants including biofuel and the award-
winning electric version. With its improved aerodynamics and new
technologies such as Volvo’s new Camera Monitor System, the new
FH Aero can cut up to 5% in energy consumption and emissions.
Regardless of which powertrain customers choose – electric,
gas or diesel – all variants of the new FH Aero will benefit from
lower energy consumption, longer range and a superior level of
safety and driving experience.
The front of the Volvo FH Aero cab has been extended by 24
centimeters versus the regular Volvo FH. This extension has been
instrumental in creating a more aerodynamic truck cab. Not only
does the better aerodynamics give lower fuel consumption – it
also provides better driving stability in windy conditions.
The new Aero truck models will be rolled out step by step to
markets during 2024 and 2025 in four versions – the FH Aero, FH
Aero Electric, gas-powered FH Aero and FH16 Aero. The Volvo FH
will continue to be offered also with a standard non-extended cab
depending on market needs.
53
VOLVO GROUP 2023
OUR BUSINESS
54
VOLVO GROUP 2023
OUR BUSINESS
Volvo FMX Electric –
fit for urban construction
Volvo FMX Electric can transport heavy material
and machines, with as little disturbance to the
surrounding city as possible. This picture was
taken during the construction of World of Volvo:
a one- of-a-kind experience hub with a unique
Scandinavian architecture. A joint venture
between Volvo Group and Volvo Cars, World
of Volvo aims to be a premier destination and
meeting place for people and ideas. World of
Volvo opens in April 2024.
Learn more at worldofvolvo.com
55
VOLVO GROUP 2023
OUR BUSINESS
BOARD OF DIRECTORS’ REPORT
Ownership and legal form
AB Volvo (publ) with corporate identity no 556012-
5790 is a limited company and its shares are listed
on Nasdaq Stockholm, Sweden . AB Volvo is the parent
company of the Volvo Group and is headquartered in
is AB Volvo with registered office at SE-405 08
Business activities
-
duction in 18 countries and sell its products in almost
190 markets. A significant part of the Group’s opera
Statutory sustainability report
The Volvo Group has prepared a sustain ability report
in accordance with the Global Reporting Initiative’s
guidelines (GRI Standards 2021) and the non-financial
disclosure requirements in the Swedish Annual Accounts
Act. The Volvo Group’s sustain ability report consists of
the Sustain ability Notes on pages 163–193 together with
all other relevant sustainability disclosures in this Annual
Report, see:
• Strategy and business model, pages 14–36
• Policies, assessments and results, pages 163–193
• Material risks and mitigation, pages 82–88 and
165–193
• Key performance indicators, pages 165–193
• Taxonomy regulation disclosures, pages 175–178.
Events after the balance sheet date
No material events have occurred after the end of the
financial year that are expected to have a material
effect on the Volvo Group’s financial statements.
56
VOLVO GROUP 2023
Financial performance
Higher sales and improved operating income
For the Volvo Group, 2023 was a year with a strong increase in net sales and an improved operating income,
despite challenges created by geopolitical turmoil, supply chain constraints and high inflationary pressure.
Mitigation of cost inflation was done successfully with price management.
CONSOLIDATED INCOME STATEMENT
Industrial Operations | Financial Services | Eliminations | Volvo Group | ||||||
SEK M | Note | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Net sales | 6, 7 | – | – | ||||||
Cost of sales | – | – | – | – | – | – | |||
Gross income | |||||||||
Research and development expenses | – | – | – | – | |||||
Selling expenses | – | – | – | – | – | – | |||
Administrative expenses | – | – | – | – | – | – | |||
Other operating income and expenses | 8 | – | – | – | – | – | – | ||
| Income/loss from investments in joint | |||||||||
ventures and associated companies | 5, 6 | – | – | – | – | ||||
Income/loss from other investments | – | – | – | ||||||
Operating income | |||||||||
Interest income and similar credits | – | – | |||||||
Interest expenses and similar charges | – | – | – | – | |||||
Other financial income and expenses | 9 | – | – | – | – | ||||
Income after financial items | |||||||||
Income taxes | 10 | – | – | – | – | – | – | ||
Income for the period | – | ||||||||
| Attributable to: | |||||||||
Owners of AB Volvo | |||||||||
Non-controlling interest | |||||||||
Basic earnings per share, SEK | 19 | ||||||||
Diluted earnings per share, SEK | 19 | ||||||||
| OTHER COMPREHENSIVE INCOME | |||
SEK M | Note | 2023 | 2022 |
Income for the period | |||
| Items that will not be reclassified to income statement: | |||
Remeasurements of defined benefit plans | 20 | – | |
Remeasurements of holding of shares at fair value | 19 | – | |
| Items that may be reclassified subsequently to income statement: | |||
Exchange rate changes on translation of foreign operations | – | ||
Share of other comprehensive income related to joint ventures and associated companies | – | ||
Accumulated exchange rate changes reversed to income | – | ||
Other comprehensive income for the period, net of income tax | – | ||
Total comprehensive income for the period | |||
| Attributable to: | |||
Owners of AB Volvo | |||
Non-controlling interest | – | ||
57
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Net sales
During 2023, net sales increased by 17% to SEK 553 billion (474).
Adjusted for currency movements, the sales increase was 11%, of
which vehicle sales increased by 12% due to successful price man-
agement, higher deliveries and reduction of the backlog that had
been extended since the pandemic, and service sales increased by
10%, as good utilization of vehicles and machines drove demand
for spare parts and services.
The Truck business’ net sales increased by 14% adjusted for
currency movements, driven by higher deliveries for both new and
used trucks as well as services combined with price realization in
most markets. For Construction Equipment, net sales increased
by 1%, adjusted for currency movements, overall lower volumes,
specifically in China, offset by a favorable brand and market mix
and price realization. Buses’ net sales increased by 15% adjusted
for currency movements, primarily driven by a recovery in demand
for coaches. Net sales for Volvo Penta increased by 10%, adjusted
for currency movements, as both the marine and industrial engine
market continued their positive development for most of the year.
The Volvo Group’s sales of defense material, as defined in the
Swedish Military Equipment Ordinance (1992:1303) section A,
amounted in 2023 to 0.70% (0.72) of net sales.
Operating income
In 2023, the Volvo Group’s adjusted operating income amounted
to SEK 77.6 billion (50.5), excluding a total negative effect of SEK
10.9 billion relating to items of a one-time character, not directly
linked to the underlying business operations. Adjusted operating
income in 2022 excluded a total negative impact of SEK 4.8 billion.
For information on adjustments, see Key Ratios on page 218. The
adjusted operating margin amounted to 14.0% (10.7).
Profitability was good in yet another challenging year with
geopolitical turmoil, supply chain constraints and high inflation
pressure. Compared with 2022, the increased adjusted operating
income is mainly due to successful mitigation of cost inflation with
price management and a favorable brand and product mix, partly
offset by higher material costs despite efficient handling of distur-
bances in the supply chain.
Reported operating income amounted to SEK 66.8 billion (45.7).
2019 2020 2021 20232022
432
338
473
553
372
Net sales SEK bn
2019 2020 2021 2022 2023
49.5
27.5
43.1
45.7
66.8
Operating income SEK bn
Net sales by operating segment,
SEK M
2023 2022 %
Trucks 373,048 310,536 20
Construction Equipment 104,981 100,261 5
Buses 22,423 18,583 21
Volvo Penta 21,006 18,102 16
Group Functions & Other 16,809 16,376 3
Eliminations –4,998 –4,155 –
Industrial Operations 533,269 459,703 16
Financial Services 24,012 17,355 38
Reclassifications and eliminations –4,518 –3,579 –
Volvo Group
1
522,764 473,479 17
1 Adjusted for changes in currency rates, net sales increased by 11%.
Net sales by geographical region,
SEK M
2023 2022 %
Europe 236,613 191,165 24
North America 164,825 137,154 20
South America 49,165 51,734 –5
Asia 66,105 64,392 3
Africa and Oceania 36,056 29,033 24
Volvo Group 552,764 473,479 17
Of which:
Vehicles 425,301 363,659 17
Services 127,463 109,820 16
Adjusted operating income by
operating segment, SEK M
2023 2022
Trucks 55,394 33,821
Construction Equipment 16,993 13,244
Buses 1,059 353
Volvo Penta 3,230 2,530
Group Functions & Other –2,950 –2,911
Eliminations 55 12
Industrial Operations 73,782 47,049
Financial Services 3,855 3,416
Reclassifications and eliminations 2 2
Volvo Group adjusted operating income 77,638 50,467
Adjustments¹ –10,854 –4,755
Volvo Group operating income 66,784 45,712
1 For more information on adjusted operating income, please see section for Key ratios
Adjusted operating margin, % 2023 2022
Trucks 14.8 10.9
Construction Equipment 16.2 13.2
Buses 4.7 1.9
Volvo Penta 15.4 14.0
Industrial Operations 13.8 10.2
Volvo Group adjusted operating margin 14.0 10.7
Volvo Group operating margin 12.1 9.7
58
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Net financial items
In 2023, interest income increased by SEK 1.7 billion as a conse-
quence of higher interest on financial assets and amounted to SEK
Key operating ratios, Industrial Operations, % 2023 2022
Gross margin 26.6 22.8
Research and development expenses
as % of net sales 5.0 4.9
Selling expenses as % of net sales 5.7 5.7
Administrative expenses as % of net sales 1.4 1.3
Operating margin 11.8 9.8
Expenses by nature, SEK M 2023 2022
Material cost (freight, distribution, warranty)
and purchased services 332,215 301,407
Personnel 75,364 65,480
Amortization/depreciation 21,227 20,729
Other 42,311 31,575
Total 471,118 419,191
Research and development expenses, Industrial Operations
202120202019 2022 2023
18.5
4.4
Research and development expenses, SEK bn
Research and development expenses,
% of Industrial Operations’ net sales
16.8
5.1
18.0
5.0
22.5
4.9
26.6
5.0
2.7 billion (1.0). Interest expenses were on par with the previous
year and amounted to SEK 1.2 billion (1.2). Other financial income
and expenses amounted to SEK –1.6 billion (–0.4). The change com-
pared with 2022 was primarily due to revaluation effects on financial
assets and liabilities.
Read more in Note 9 Other financial income and expenses.
Income taxes
The tax expense for the year amounted to SEK 16.8 billion (12.1)
corresponding to an effective tax rate of 25% (27).
Income for the period and earnings per share
In 2023, income for the period amounted to SEK 49.9 billion (33.0).
Earnings per share and diluted earnings per share amounted to SEK
24.50 (16.09).
59
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Financial position
Strengthened financial position
In 2023, the Volvo Group strengthened its financial position to continue to invest in transformational technologies
and also distributed SEK 28.5 billion to its shareholders.
CONSOLIDATED BALANCE SHEET – ASSETS
Industrial Operations | Financial Services | Eliminations | Volvo Group | ||||||
| Dec 31 | Dec 31 | Dec 31 | Dec 31 | Dec 31 | Dec 31 | Dec 31 | Dec 31 | ||
SEK M | Note | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| Non-current assets | |||||||||
Intangible assets | 12 | ||||||||
Tangible assets | 13 | ||||||||
Property, plant and equipment | |||||||||
Investment property | |||||||||
Assets under operating leases | – | – | |||||||
| Financial assets | |||||||||
| Investments in joint ventures | |||||||||
and associated companies | 5 | ||||||||
Other shares and participations | 5 | ||||||||
| Non-current customer-financing | |||||||||
receivables | 15 | – | – | ||||||
Net pension assets | 20 | ||||||||
| Non-current interest-bearing | |||||||||
receivables | 16 | – | – | ||||||
Other non-current receivables | 16 | – | – | ||||||
Deferred tax assets | 10 | ||||||||
Total non-current assets | – | – | |||||||
| Current assets | |||||||||
Inventories | 17 | ||||||||
| Current receivables | |||||||||
Customer-financing receivables | 15 | – | – | ||||||
Tax assets | 16 | ||||||||
Interest-bearing receivables | 16 | – | – | ||||||
| Internal funding | – | – | |||||||
Accounts receivables | 16 | ||||||||
Other receivables | 16 | – | – | ||||||
Marketable securities | 18 | ||||||||
Cash and cash equivalents | 18 | – | – | ||||||
Assets held for sale | 3 | ||||||||
Total current assets | – | – | |||||||
Total assets | – | – | |||||||
1
1 Internal funding is internal lending from Industrial Operations to Financial Services.
Balance sheet
In 2023, total assets in the Volvo Group increased by SEK 45.0 billion
compared with year-end 2022. Adjusted for currency movements
total assets increased by SEK 61.1 billion. The increase was mainly
in customer financing receivables and inventories.
Read more in Note 15 Customer-financing receivables.
Read more in Note 17 Inventories.
The net value of assets and liabilities held for sale amounted to
SEK 3.8 billion at year-end 2023 and relates to the planned
divestment of Arquus to John Cockerill Defense, Volvo Construc-
tion Equipment’s ABG paver business to Ammann Group, and
property divestments.
Read more in Note 3 Acquisitions and divestments of operations,
regarding assets and liabilities held for sale.
Investments in joint ventures and associated companies amounted
to SEK 19.2 billion as of December 31, 2023, a decrease of SEK
2.4 billion compared with year-end 2022.
Read more in Note 5 Investments in joint ventures, associated
companies and other shares and participations.
60
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
CONSOLIDATED BALANCE SHEET – EQUITY AND LIABILITIES
Industrial Operations | Financial Services | Eliminations | Volvo Group | ||||||
| Dec 31 | Dec 31 | Dec 31 | Dec 31 | Dec 31 | Dec 31 | Dec 31 | Dec 31 | ||
SEK M | Note | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| Equity | |||||||||
Equity attributable to owners of AB Volvo | 19 | ||||||||
Non-controlling interest | 11 | ||||||||
Total equity | |||||||||
| Non-current provisions | |||||||||
Provisions for post- employment benefits | 20 | ||||||||
Other provisions | 21 | ||||||||
Total non-current provisions | |||||||||
| Non-current liabilities | |||||||||
Bond loans | 22 | ||||||||
Other loans | 22 | – | – | ||||||
| Internal funding | – | – | – | ||||||
Deferred tax liabilities | 10 | ||||||||
Other liabilities | 22 | – | – | ||||||
Total non-current liabilities | – | ||||||||
Current provisions | 21 | ||||||||
| Current liabilities | |||||||||
Bond loans | 22 | ||||||||
Other loans | 22 | – | – | ||||||
| Internal funding | – | – | – | – | |||||
Trade payables | 22 | ||||||||
Tax liabilities | 22 | ||||||||
Other liabilities | 22 | – | – | ||||||
Liabilities held for sale | 3 | ||||||||
| Total current liabilities | – | – | |||||||
Total equity and liabilities | – | – | |||||||
1
1
1 Internal funding is internal lending from Industrial Operations to Financial Services.
The net value of assets and liabilities related to pensions and
similar obligations amounted to a liability of SEK 9.2 billion as
of December 31, 2023, an increase of SEK 3.2 billion compared
with year-end 2022.
Read more in Note 20 Provisions for post- employment benefits.
On December 31, 2023, total equity for the Volvo Group amounted
to SEK 180.7 billion compared with SEK 166.2 billion at year-end
2022. The equity ratio was 26.8% (26.4). On the same date the
equity ratio in the Industrial Operations amounted to 36.2% (34.1).
Return on capital employed in Industrial Operations amounted to
36.7% (27.4).
Return on capital employed, Industrial Operations %
2019 2020 2022 20232021
28.4
25.3
27.4
36.7
14.7
61
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Net financial position excl. post-employment benefits and
lease liabilities
Industrial Operations Volvo Group
SEK M Dec 31 2023 Dec 31 2022 Dec 31 2023 Dec 31 2022
Non-current interest-bearing assets
Non-current customer-financing receivables – – 121,638 105,064
Non-current interest-bearing receivables 3,405 7,227 3,405 1,803
Current interest-bearing assets
Customer-financing receivables – – 110,565 88,864
Interest-bearing receivables 2,784 5,690 2,765 5,663
Internal funding 10,680 7,991 – –
Marketable securities 89 93 89 93
Cash and cash equivalents 78,858 76,005 83,326 83,886
Assets held for sale 10 – 10 –
Total interest-bearing financial assets 95,825 97,006 321,798 285,372
Non-current interest-bearing liabilities
Bond loans –96,970 –102,887 –96,970 –102,887
Other loans –18,439 –20,611 –36,219 –30,878
Internal funding 109,059 110,254 – –
Current interest-bearing liabilities
Bond loans –46,641 –37,794 –46,641 –37,794
Other loans –38,920 –22,875 –49,771 –32,806
Internal funding 79,494 50,804 – –
Liabilities held for sale – – – –
Total interest-bearing financial liabilities excl. post-employment
benefits and lease liabilities –12,418 –23,109 –229,601 –204,365
Net financial position excl. post-employment benefits and
lease liabilities 83,407 73,897 92,197 81,008
Provisions for post-employment benefits and lease liabilities, net
Industrial Operations Volvo Group
SEK M Dec 31 2023 Dec 31 2022 Dec 31 2023 Dec 31 2022
Non-current lease liabilities –5,340 –4,835 –5,314 –4,806
Current lease liabilities –1,884 –1,792 –1,877 –1,777
Provisions for post-employment benefits, net –9,099 –5,968 –9,180 –6,018
Liabilities held for sale –397 – –397 –
Provisions for post-employment benefits and lease liabilities, net –16,720 –12,595 –16,768 –12,601
Net financial position incl. post-employment benefits and
lease liabilities
Industrial Operations Volvo Group
SEK M Dec 31 2023 Dec 31 2022 Dec 31 2023 Dec 31 2022
Net financial position excl. post-employment benefits and lease liabilities 83,407 73,897 92,197 81,008
Provisions for post-employment benefits and lease liabilities, net –16,720 –12,595 –16,768 –12,601
Net financial position incl. post-employment benefits and
lease liabilities 66,687 61,303 75,429 68,407
Net financial position
In 2023, net financial assets in Industrial Operations, excluding
provisions for post-employment benefits and lease liabilities,
increased by SEK 9.5 billion resulting in a net financial asset posi-
tion of SEK 83.4 billion on December 31, 2023. The change was
mainly explained by a positive operating cash flow of SEK 45.8 billion
offset by the dividend paid to AB Volvo shareholders of SEK 28.5
billion. Currency movements decreased net financial assets by SEK
1.2 billion.
Including provisions for post-employment benefits and lease lia-
bilities, the Industrial Operations net financial assets amounted to
SEK 66.7 billion on December 31, 2023. During 2023 provisions
for post-employment benefits and lease liabilities increased by
SEK 4.1 billion. This was mainly related to remeasurements of
post-employment benefits of SEK 3.2 billion, partly offset by posi-
tive currency movements of SEK 0.3 billion. The negative remea-
surements were primarily in Sweden and the US as an effect of
significantly lower discount rates, which were partly offset by
higher return on assets.
Read more in Note 20 Provisions for post-employment benefits.
62
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Changes in net financial position, Industrial Operations
SEK bn 2023 2022
Net financial position excl. post-employment benefits and lease liabilities at the end of previous period 73.9 66.2
Operating cash flow 45.8 35.3
Investments and divestments of shares, net –1.2 –0.9
Acquired and divested operations, net –1.4 –0.1
Capital injections to/from Financial Services –0.9 –2.1
Currency effect –1.2 1.6
Dividend to owners of AB Volvo –28.5 –26.4
Dividend to non-controlling interest –0.5 –
Other changes –2.7 0.3
Net financial position excl. post-employment benefits and lease liabilities at the end of period 83.4 73.9
Provisions for post-employment benefits and lease liabilities at the end of previous period –12.6 –15.9
Pension payments, included in operating cash flow 1.3 1.5
Remeasurements of defined post-employment benefits –3.2 4.8
Service costs and other pension costs –1.3 –1.6
Investments, remeasurements and amortizations of lease contracts –0.9 –
Currency effect 0.3 –1.2
Other changes –0.3 –0.2
Provisions for post-employment benefits and lease liabilities at the end of period –16.7 –12.6
Net financial position incl. post-employment benefits and lease liabilities at the end of period 66.7 61.3
The Volvo Group’s cash and cash equivalents amounted to SEK
83.3 billion on December 31, 2023 compared with SEK 83.9 billion
on December 31, 2022. In addition, granted but unutilized credit
facilities amounted to SEK 52.8 billion (45.5) on December 31,
2023. Cash and cash equivalents included SEK 2.2 (2.3) billion
that is not available to use by the Volvo Group and SEK 7.6 (14.5)
billion where other limitations exist, mainly liquid funds in countries
where exchange controls or other legal restrictions apply.
Read more in Note 18 Cash and cash equivalents.
Read more in Note 22 Liabilities, regarding the maturity structure on
credit facilities.
Net financial position, excl. provisions for post-employment
benefits and lease liabilities, Industrial Operations SEK bn
2019 2020 2022 20232021
62.6
66.2
73.9
83.4
74.7
63
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Cash flow statement
Increased operating cash flow
CONSOLIDATED CASH FLOW STATEMENT
Industrial Operations | Financial Services | Eliminations | Volvo Group | ||||||
SEK M | Note | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| Operating activities | |||||||||
Operating income | |||||||||
Amortization intangible assets | 12 | ||||||||
Depreciation tangible assets | 13 | ||||||||
Depreciation leasing vehicles | 13 | ||||||||
Other non-cash items | 29 | – | |||||||
Total change in working capital whereof | – | – | – | – | – | – | – | ||
Change in accounts receivables | – | – | – | – | |||||
Change in customer-financing receivables | – | – | – | – | – | – | |||
Change in inventories | – | – | – | – | – | – | |||
Change in trade payables | – | – | |||||||
Other changes in working capital | – | ||||||||
Dividends received from joint ventures and associated companies | |||||||||
| Interest and similar items received | – | ||||||||
Interest and similar items paid | – | – | – | – | |||||
Other financial items | – | – | – | – | |||||
Income taxes paid | – | – | – | – | – | – | |||
Cash flow from operating activities | – | – | – | ||||||
| Investing activities | |||||||||
| Investments in intangible assets | – | – | – | – | – | – | |||
| Investments in tangible assets | – | – | – | – | – | – | |||
| Investment in leasing vehicles | – | – | – | – | – | ||||
| Disposals of in-/tangible assets and leasing vehicles | – | – | |||||||
Operating cash flow | – | – | – | ||||||
Investments of shares | 5 | – | – | ||||||
Divestments of shares | 5 | ||||||||
Acquired operations | 3 | – | – | ||||||
Divested operations | 3 | – | |||||||
Interest-bearing receivables incl marketable securities | – | – | |||||||
Cash flow after net investments | – | ||||||||
| Financing activities | |||||||||
New borrowings 1 | 29 | ||||||||
Repayment of borrowings 1 | 29 | – | – | ||||||
Dividend to owners of AB Volvo | – | – | |||||||
Dividend to non-controlling interest | – | – | |||||||
Other Change in cash and cash equivalents | – | – | |||||||
excl. exchange rate changes | |||||||||
| Effect of exchange rate changes on cash and cash | |||||||||
equivalents | – | ||||||||
Change in cash and cash equivalents | – | ||||||||
Cash and cash equivalents, beginning of year | 18 | ||||||||
Cash and cash equivalents, end of year | 18 | ||||||||
1 The comparative figures are restated due to a reclassification between new borrowings and repayments of borrowings.
Industrial Operations generated a strong operating cash flow of SEK 45.8 billion,
an increase by SEK 10.5 billion compared with previous year.
64
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Operating cash flow
In 2023, operating cash flow in the Industrial Operations amounted
to SEK 45.8 billion (35.3). The higher operating cash flow compared
with 2022 is primarily an effect of higher operating income, partly
counterbalanced by higher increase in working capital and higher
income taxes paid. Operating income was impacted by several
expenses excluded from the adjusted operating income. Adjusted
items without cash flow impact are mainly included in other non-
cash items.
Operating cash flow in Financial Services was negative in an
amount of SEK 41.8 billion (–22.8). The change compared with
2022 was mainly due to a significantly higher increase of new
business volume in the credit portfolio.
Read more in Note 29 Cash flow regarding other non-cash items.
Investments and disposals
The Industrial Operations’ investments in tangible and intangible
assets during 2023 amounted to SEK 18.3 billion (16.6).
Trucks investments in tangible and intangible assets amounted
to SEK 14.5 billion (13.4). The major investments were related to
product upgrades such as the Volvo VNL in North America and the
development of battery-electric and fuel cell-electric trucks with
both product development activities and required adaptations in
the plants and test facilities. Investments were also related to
industrial replacements and efficiency measures such as the final-
ization of the casting process equipment in Skövde, Sweden, and
the ongoing optimization and extension at the plant in Köping,
Sweden. Investments in dealer networks and workshops were
primarily made in Europe, mainly for upgrades and optimization.
Investments in Construction Equipment amounted to SEK 1.7
billion (1.4). The major investments in the plants were mainly
related to industrial efficiency measures in Europe. The product-
related investments during the year were mainly related to product
upgrades and battery-electric machines with both product devel-
opment activities and investments in adaptations in the plants.
The investments in Buses were SEK 0.3 billion (0.4) and in
Volvo Penta SEK 1.0 billion (0.8).
The investment level for property, plant and equipment during
2023 increased by SEK 1.8 billion compared with previous year.
During 2024 investments in property, plant and equipment are
expected to continue to increase. Product-related investments,
replacements, and optimization of the industrial footprint, as well
as dealer investments will continue to be the main areas.
Investments and divestments of shares
In 2023, investments and divestments of shares had a negative
impact on cash flow of SEK 1.2 billion (–0.9), mainly due to capital
injections in joint ventures, partly offset by the divestment of shares
in WirelessCar Sweden AB.
Read more in Note 5 Investments in joint ventures, associated companies
and other shares and participations.
Acquired and divested operations
In 2023, acquired and divested operations had a negative impact on
cash flow of SEK 2.3 billion (–0.1), mainly due to the divestment of
the Russian entities. The amount also included a recovered advance
payment for the discontinued acquisition of a heavy-duty truck oper-
ation in China, and an advance payment for the acquisition of a battery
business unit from Proterra Inc. and Proterra Operating Company.
Read more in Note 3 Acquisitions and divestments of operations.
Financing and dividend
In 2023, net borrowings increased by SEK 30.8 billion, mainly due
to significantly higher new business volume in the credit portfolio.
During 2023, a decision was made to call the final tranche (EUR 0.6
billion) of the hybrid bond with payment date on March 10, 2023.
During 2023, dividends of in total SEK 28.5 billion (26.4) were
paid. These consisted of an ordinary dividend of SEK 7.00 per share,
and an extra dividend of SEK 7.00 per share.
Read more in Note 29 Cash flow regarding change in loans.
Change in cash and cash equivalents
In 2023, Cash and cash equivalents decreased by SEK 0.6 billion
and amounted to SEK 83.3 billion on December 31, 2023.
Read more in Note 18 Cash and cash equivalents regarding the
accounting policy.
Read more in Note 29 Cash flow regarding principles for preparing the
cash flow statement.
Operating cash flow, Industrial Operations SEK bn
2019 2020 2022 20232021
38.3
29.4
35.3
45.8
18.5
Investments in property, plant and equipment,
Industrial Operations
2019
2020 2021 2022 2023
Property, plant
and equipment,
% of net sales
Property, plant
and equipment,
SEK Bn
2.4
8.8
2.5
11.3
2.5
13.1
1.9
8.1
1.8
5.7
65
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Changes in consolidated equity
| Equity attributable to owners of AB Volvo | ||||||||
| Non- | ||||||||
| Share | Other | Translation | Retained | controlling | Total | |||
SEK M | Note | capital | reserves 1 | reserve | earnings | Total | interest | equity |
Equity December 31, 2021 | ||||||||
Income for the period | ||||||||
| Other comprehensive income | ||||||||
Remeasurements of defined benefit plans | 20 | |||||||
Remeasurements of holding of shares at fair value | 5, 19 | – | – | – | ||||
| Exchange rate changes on translation of foreign | ||||||||
operations | ||||||||
| Share of other comprehensive income related | ||||||||
to joint ventures and associated companies | ||||||||
| Accumulated exchange rate changes reversed | ||||||||
to income | ||||||||
Other comprehensive income for the period | – | |||||||
Total comprehensive income for the period | – | |||||||
| Transactions with shareholders | ||||||||
Dividend | – | – | – | – | ||||
Changes in non-controlling interests | ||||||||
Other changes | – | – | – | |||||
Transactions with shareholders | – | – | – | |||||
| Equity December 31, 2022 | – | |||||||
Income for the period | ||||||||
| Other comprehensive income | ||||||||
Remeasurements of defined benefit plans | 20 | – | – | – | ||||
Remeasurements of holding of shares at fair value | 5, 19 | |||||||
| Exchange rate changes on translation of foreign | ||||||||
operations | – | – | – | – | ||||
Share of other comprehensive income related to joint ventures and associated companies | – | – | – | |||||
| Accumulated exchange rate changes reversed | ||||||||
to income | – | – | – | |||||
Other comprehensive income for the period | – | – | – | – | – | |||
Total comprehensive income for the period | – | – | ||||||
| Transactions with shareholders | ||||||||
Dividend | – | – | – | – | ||||
Changes in non-controlling interests | – | – | ||||||
Other changes | – | – | – | |||||
Transactions with shareholders | – | – | – | – | ||||
Equity December 31, 2023 | – | |||||||
1
Read more in Note 19 Equity and number of shares regarding specification of other reserves.
66
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Financial management
Improved credit rating
The objectives of the financial management in the Volvo Group are
to assure shareholders long-term attractive total return and debt
providers the financial strength and flexibility to secure proceeds
and repayment. A long-term competitive business requires access
to capital to be able to invest. Financial management ensures that
the capital is used in the best possible way through well-defined
ratios and objectives for the Industrial Operations as well as for
the customer finance operations in Financial Services.
The objective on Group operating margin and return on equity for
Financial Services are intended to secure the return requirements
from shareholders. The target on no net financial indebtedness
under normal circumstances in the Industrial Operations and the
equity ratio for Financial Services are there to secure fi nancial stability.
Steering principles to ensure financial flexibility
To ensure financial stability and flexibility throughout the business
cycle the Volvo Group holds a strong liquidity position. Besides
cash and marketable securities, the liquidity position is built up of
revolving committed credit facilities. Funding and lending in Financial
Services are in local currency and the portfolio is matched both from
an interest and a liquidity risk perspective, in accordance with the
Volvo Group policy. For further information, please see Note 4 to
the Consolidated financial statements.
Diversified funding sources
The Volvo Group has centralized the portfolio man agement of
financial assets and liabilities, funding operations and cash manage -
ment through the internal bank, Volvo Treasury. The liability port-
folio is separated into two portfolios, one for Industrial Operations
and one for Financial Services, to correspond to the needs of the
different operations. Volvo Treasury works to assure the possibility
to access capital markets at all times through diversified funding
sources. To access capital markets around the world, the Group
uses different instruments, such as bilateral bank funding, corpor-
ate bonds and certificates, agency funding as well as securitization
of assets in Financial Services’ credit portfolio. An increasingly impor t-
ant part of the treasury work is to manage increased funding needs
in new growth markets.
Green Finance Framework
Volvo Group has a Green Finance Framework. The framework,
which is being updated, enables the Group to issue green bonds
and other green financial instruments and allows it to identify,
select, manage and report on eligible projects and assets in line with
International Capital Market Association Green Bond Principles.
The funds will be earmarked to projects in areas such as R&D and
manufacturing of electric vehicles, machines and engines with zero
tailpipe emissions. Funds will also be used by Volvo Financial Ser-
vices to offer green loans to customers who buy the Group’s elec-
tric products. The Green Finance Framework has been subject to
an independent external assessment by CICERO Shades of Green,
which has classified it as Dark Green – their highest level.
Credit rating, February 28, 2023
Short-term Long-term
Moody’s (Corporate Rating) P-1 A2, stable
S&P (Corporate Rating) A-2 A, stable
R&I (Japan) a-1 AA–, stable
Geographically diversified market programs
SEK
JPY
AUD
EUR
CAD
USD
Volvo Group liquidity position, December 31, 2023
0
20
80
40
140
120
100
60
Cash and
cash equivalents
Credit
facilities
136.1
SEK bn
52.8
83.3
A strong and stable credit rating is important
Being a large issuer of bonds, it is critical to have a strong and stable
credit rating. The level of the credit rating is not only important for
debt investors but also for a number of other stakeholders when it
comes to creating long-term relationships. A strong credit rating
has a positive effect on the ability to attract and finance customers’
purchases of the Group’s products and on the trust from suppliers.
It also gives access to more funding sources and lower cost of funds.
The Volvo Group has contractual relations with two global Credit
Rating Agencies for solicited credit ratings, Moody’s Investors
Service (Moody’s) and Standard & Poors’ Rating Services (S&P),
and one local agency, R&I (Rating & Investment Information) in
Japan. In 2023, S&P raised its rating from A-, positive to A, stable
while Moody’s maintained its long-term rating of A2, stable. R&I
raised its rating from A+, stable to AA-, stable.
67
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Trucks
Increased sales and
strong profitability
improvement
In 2023, currency-adjusted net sales in the truck business
increased by 14% to SEK 373,048 M. The increase was as a
consequence of an overall continued good demand for both trucks
and services in most markets around the world. The adjusted
operating income amounted to SEK 55,394 M (33,821), corre-
sponding to an adjusted operating margin of 14.8% (10.9).
Good demand in most markets
In 2023, demand normalized in both Europe and North America
on the back of transport volumes and freight rates coming down
from historically high levels. The pent-up demand situation which
characterized 2022 and the first half of 2023 was in the main
absorbed by the transport industry and lead times, particularly
in Europe, went back to more normal levels. Fleet utilization come
down somewhat compared with the previous year, but continued
to be on good levels.
In South America, the total market volume declined due to the
prebuy of Euro 5 trucks in 2022. However, after the Euro 6 intro-
duction on January 1, the market gradually recovered, primarily
driven by the agricultural and mining segments.
The Indian market continued to grow with the support of
increased economic activity and good consumer spending.
The truck market in China continued to rebound from low
levels, but growth was limited due to the overcapacity in the
Chinese transport industry.
Orders and deliveries
In 2023, net order intake to the Group’s wholly-owned truck
operations decreased by 6% to 204,897 (217,779) trucks.
Order intake increased in North America, whereas it decreased
in Europe, South America and Asia as well as in Africa and Oceania.
Customers in many markets continued to both replace old trucks
and expand their fleets. However, this was not fully reflected in the
order intake in the first half of the year, because the Group’s truck
brands were restrictive in slotting orders into production. This was
done to manage the large order books, long delivery times and cost
inflation. In the second half of the year, customers in many markets
became more cautious because of rising interest rates, lower eco-
nomic growth and somewhat lower freight activity.
During the year, a total of 246,272 trucks were delivered from
the Group’s wholly-owned operations, an increase of 6% compared
with 232,558 trucks in 2022. Deliveries were on a record level,
despite being hampered by continued supply chain disturbances.
Offering
Volvo Group is one of the world’s largest manufacturers of heavy-
duty trucks. The product offer stretches from heavy-duty trucks
for long-haulage and construction work to light-duty trucks for dis-
tribution. The offer also includes maintenance and repair services,
financing and leasing.
Brands
Volvo MackRenault Trucks Eicher Dongfeng Trucks
55,607 (54,046).
Number of employees
Vehicles, 81
Services, 19
202120202019 2022 2023
SEK bn
277
208
231
311
373
47
29
10
6
8
By market, %
Share of Group, %
By revenue type, %
67
Net sales
1 For information on adjusted
operating income, see Key
Ratios on page 218.
2021
2020
2019 2022 2023
%
SEK bn
11.4 8.3 11.1 10.9
31.6
17.3
25.6
33.8
14.8
55.4
14.8
Adjusted operating income
1
and adjusted operating margin
68
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
0
100
200
300
400
2019 2020 2021 2022 2023
Europe 30
North America
Brazil
India
China
321
231
277 298
310
98
230
672
342
331
82
268
635
336
75
194
1,174
235
67
87
1,619
270
98
154
1,395
Market development heavy-duty trucks, thousands
Deliveries by market
Number of trucks 2023 2022
Deliveries
Europe 129,016 113,245
North America 60,782 56,535
South America 22,036 31,958
Asia 21,991 19,066
Africa and Oceania 12,447 11,754
Total 246,272 232,558
Deliveries
Heavy duty (>16 tons) 198,383 197,249
Medium duty (7–16 tons) 18,863 15,475
Light duty (<7 tons) 29,026 19,834
Total 246,272 232,558
Volvo 145,395 145,195
Renault Trucks 69,859 58,967
Mack 29,830 26,801
Other brands 1,188 1,595
Total 246,272 232,558
Non-consolidated operations
VE Commercial Vehicles (Eicher) 67,509 61,119
Dongfeng Commercial Vehicle
Company (Dongfeng Trucks) 98,397 86,920
Strong positions globally
Market shares heavy-duty trucks, %
North America
Europe (EU29
)1
Battery-
electric
Volvo
Volvo Mack
Volvo
Volvo Mack
Volvo
Renault
Trucks
Volvo
Renault
Trucks
Dongfeng
2
Heavy Medium
Eicher
2
Heavy Medium
9.9 9.1
6.1 6.1
24.6 23.9
18.6 15.9
18.5 18.0
9.4 8.4
7.6
8.1
30.1
12.4 10.6
3.8 2.8
24.3 23.7
31.6
47.1
5.0 6.2
19.817.0
34.0
Volvo
Volvo Mack
Volvo
Volvo Mack
Volvo
Renault
Trucks
Volvo
Renault
Trucks
Dongfeng
2
Heavy Medium
Eicher
2
Heavy Medium
9.9 9.1
6.1 6.1
24.6 23.9
18.6 15.9
18.5 18.0
9.4 8.4
7.6
8.1
30.1
12.4 10.6
3.8 2.8
24.3 23.7
31.6
47.1
5.0 6.2
19.817.0
34.0
China
Volvo
Volvo Mack
Volvo
Volvo Mack
Volvo
Renault
Trucks
Volvo
Renault
Trucks
Dongfeng
2
Heavy Medium
Eicher
2
Heavy Medium
9.9 9.1
6.1 6.1
24.6 23.9
18.6 15.9
18.5 18.0
9.4 8.4
7.6
8.1
30.1
12.4
10.6
3.8 2.8
24.3 23.7
31.6
47.1
5.0 6.2
19.817.0
34.0
South Africa
Volvo
Volvo Mack
Volvo
Volvo Mack
Volvo
Renault
Trucks
Volvo
Renault
Trucks
Dongfeng
2
Heavy Medium
Eicher
2
Heavy Medium
9.9 9.1
6.1 6.1
24.6 23.9
18.6 15.9
18.5 18.0
9.4 8.4
7.6
8.1
30.1
12.4 10.6
3.8 2.8
24.3 23.7
31.6
47.1
5.0 6.2
19.817.0
34.0
India
Volvo
Volvo Mack
Volvo
Volvo Mack
Volvo
Renault
Trucks
Volvo
Renault
Trucks
Dongfeng
2
Heavy Medium
Eicher
2
Heavy Medium
9.9 9.1
6.1 6.1
24.6 23.9
18.6 15.9
18.5 18.0
9.4 8.4
7.6
8.1
30.1
12.4 10.6
3.8 2.8
24.3 23.7
31.6
47.1
5.0 6.2
19.817.0
34.0
Australia
Volvo
Volvo Mack
Volvo
Volvo Mack
Volvo
Renault
Trucks
Volvo
Renault
Trucks
Dongfeng
2
Heavy Medium
Eicher
2
Heavy Medium
9.9 9.1
6.1 6.1
24.6 23.9
18.6 15.9
18.5 18.0
9.4 8.4
7.6
8.1
30.1
12.4 10.6
3.8 2.8
24.3 23.7
31.6
47.1
5.0 6.2
19.817.0
34.0
Volvo
Volvo Mack
Volvo
Volvo Mack
Volvo
Renault
Trucks
Volvo
Renault
Trucks
Dongfeng
2
Heavy Medium
Eicher
2
Heavy Medium
9.9 9.1
6.1 6.1
24.6 23.9
18.6 15.9
18.5 18.0
9.4 8.4
7.6
8.1
30.1
12.4 10.6
3.8 2.8
24.3 23.7
31.6
47.1
5.0 6.2
19.817.0
34.0
1 The EU, Norway and Switzerland.
2 Volvo Group holds 45.6% in VECV, which
produces Eicher trucks, and 45.0% in
DFCV, which produces Dongfeng trucks.
2022 2023
Brazil
Volvo
Volvo Mack
Volvo
Volvo Mack
Volvo
Renault
Trucks
Volvo
Renault
Trucks
Dongfeng
2
Heavy Medium
Eicher
2
Heavy Medium
9.9 9.1
6.1 6.1
24.6 23.9
18.6 15.9
18.5 18.0
9.4 8.4
7.6
8.1
30.1
12.4 10.6
3.8 2.8
24.3 23.7
31.6
47.1
5.0 6.2
19.817.0
34.0
69
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
The Volvo Group is rapidly expanding its offer of fully-electric
light-, medium- and heavy-duty trucks. Total order intake for fully-
electric trucks increased by 2% to 3,698 (3,633) vehicles while
deliveries of fully-electric trucks increased by 191% to 3,523
(1,211) vehicles.
Strong performance
In 2023, net sales in the truck operations increased by 20% to
SEK 373,048 M (310,536). Adjusted for currency movements,
net sales increased by 14%, of which vehicle sales increased by
16% and service sales by 6%.
Adjusted operating income increased to SEK 55,394 M (33,821),
corresponding to an adjusted operating margin of 14.8% (10.9).
Adjusted operating income in 2023 excludes negative effects of
SEK 6,501 M (1,845), primarily from a SEK 640 M loss on the
divestment of the Russian entities and SEK 6,000 M relating to
costs for claims arising from the European Commission’s 2016
antitrust settlement decision. For more information on the latter,
please see Legal Proceedings in Note 24. For information on
adjustments, please see Key Ratios on page 218.
The higher earnings were mainly an effect of price realization
on both vehicles and services supported by increased deliveries.
This was partly offset by increased material costs and higher
manufacturing costs related to disturbances in the supply chain.
Reported operating income amounted to SEK 48,893 M
(31,976). Currency movements had a positive impact of SEK
3,204 M compared with 2022.
Important events
In the first quarter, Volvo Trucks started production of heavy-duty,
rigid electric trucks in the Tuve plant in Sweden. Volvo Trucks and
mining company Boliden started a collaboration project around
the usage of electric trucks for underground mining. Mack Trucks
launched fully electric medium-duty trucks for North America.
Also in the first quarter, the existing technology cooperation with
Isuzu Motors was extended to also include Isuzu branded vehicles.
In the second quarter, Volvo Trucks signed a letter of intent to sell
1,000 electric trucks until 2030 to Holcim, one of the world’s larg-
est building solution providers. The deal is the largest commercial
order to date for Volvo electric trucks. The first 130 trucks will
be delivered in 2023 and 2024. In the second quarter it was also
announced that Volvo Trucks and Jiangling Motors Co., Ltd would
not pursue the previously announced transaction which involved
the acquisition of JMC Heavy Duty Vehicle Co., Ltd, and its manu-
facturing site in Taiyuan, Shanxi province, China. Volvo Trucks con-
tinues to export trucks to customers in China.
In the third quarter, Renault Trucks started taking orders for
heavy-duty electric trucks and serial production will begin in
Bourg-en-Bresse, France in November. Volvo Autonomous Solu-
tions entered a long-term collaboration with Boliden to deploy
autonomous solutions in Boliden’s mining operations. Volvo
Defense entered a 7-year framework agreement for delivery and
service of logistics trucks to Estonia and Latvia. Also in the third
quarter, it was announced that Volvo Group, Renault Group and
CMA CGM Group will join forces to address the growing needs
of decarbonized and efficient logistics with an all-new generation
of fully electric vans. For this purpose, a new company is planned
to be established in the beginning of 2024 with a planned start
of production in 2026.
Fully electric trucks
Net order intake Deliveries
2023 2022 2023 2022
Volvo 2,057 1,846 1,863 554
Renault Trucks 1,517 1,743 1,636 647
Heavy- and medium-duty 821 804 624 379
Light-duty 696 939 1,012 268
Mack 124 44 24 10
Total 3,698 3,633 3,523 1,211
Net sales and operating income
SEK M 2023 2022
Net sales
Europe 175,203 137,177
North America 107,975 92,582
South America 36,897 38,254
Asia 30,617 23,988
Africa and Oceania 22,356 18,535
Total net sales 373,048 310,536
Of which
Vehicles 300,516 245,681
Services 72,532 64,855
Total net sales 373,048 310,536
Adjusted operating income
1
55,394 33,821
Adjustments
1
–6,501 –1,845
Operating income 48,893 31,976
Adjusted operating margin, % 14.8 10.9
Operating margin, % 13.1 10.3
1 For information on adjusted operating income, please see Key Ratios on page 218.
In the fourth quarter, Volvo FH Electric was awarded Interna-
tional Truck of the Year 2024. This was the fourth time that Volvo’s
iconic FH model won and the first time an electric truck was
awarded. The Volvo FH is one of the industry’s most successful
models ever with nearly 1.4 million trucks sold all over the world.
In the fourth quarter, Volvo Trucks delivered its first electric trucks
in South America to customers in Brazil, Chile and Uruguay.
Many haulers in South America have high ambitions regarding
zero-emission truck transport and Volvo Trucks support their electri-
fication journey.
In January 2024, Volvo Trucks launched an all-new heavy-duty
truck platform in North America for all coming technologies such as
battery-electric, fuel cell-electric and internal combustion engines
running on renewable fuels including hydrogen. First out is a new
version of the best-selling Volvo VNL, a long-haul truck with a
sleeper cab. This new VNL has class-leading fuel efficiency for
higher productivity and reduced carbon emissions, which drives
productivity and profitability for our customers.
In January 2024, Volvo Trucks’ iconic FH truck range got a new
family member with the Volvo FH Aero. With aerodynamic design
and innovative features, the FH Aero offers energy efficiency at
a new level, available in four variants including biofuel and the
award-winning electric version.
70
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
71
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Construction Equipment
Solid financial
performance in 2023
Volvo Construction Equipment (Volvo CE) enjoyed a strong start to
2023 with a boost in sales in the first quarter followed by record earn-
ings in the second. A solid sales performance was maintained as the
global market began to soften during the latter part of the year. Volvo
CE’s currency-adjusted net sales increased by 1% to SEK 104,981 M.
Adjusted operating income amounted to SEK 16,993 M (13,244),
corresponding to an adjusted operating margin of 16.2% (13.2).
Global markets produce steady earnings
Overall, demand outside of China remained stable during the first
half of 2023 but weakened towards the end of the year.
Rental fleet replacements supported the European market early
in the year, but demand weakened during the course of the year in
line with a weaker macroeconomic outlook, elevated inflation and
increasing interest rates.
The North American market was supported by continued execu-
tion of large infrastructure projects and good commercial con-
struction but softened in the fourth quarter, due to deferral of fleet
replacement because of high interest rates and inflation.
In South America, the market was impacted by investment lev-
els remaining low in Brazil due to low business confidence among
customers. The Chinese market continued to weaken (for more
information on the exposure to China, see Note 16). Later in the
year a slowdown in other Asian markets was also visible.
Continued good profitability
In 2023, net sales increased by 4% to SEK 104,981 M (100,261).
Adjusted for currency movements, net sales increased by 1%, of
which machine sales were flat and service sales increased by 4%.
Adjusted operating income amounted to SEK 16,993 M
(13,244), corresponding to an adjusted operating margin of 16.2%
(13.2). Adjusted operating income excludes negative effects of
SEK 610 M (–338) related to the planned divestment of the ABG
Paver Business. For information on adjustments, please see Key
Ratios on page 218.
Compared with 2022, the improved earnings is a result of price
realization and positive market and brand mix, which were partly
offset by increased material and production costs.
Reported operating income amounted to SEK 16,383 M
(12,907). Currency movements had a positive impact of SEK 866
M compared with 2022.
Continuing investment in sustainable change
While maintaining a solid sales performance during a challenging
economic environment, Volvo CE is continuing to make progress
in its transformation journey towards more sustainable solutions.
Volvo CE is one of the world leaders in the development of prod-
ucts and services for the construction, extraction, waste process-
ing and materials handling sectors. Volvo CE manufactures haulers,
wheel loaders, excavators, road construction machines and com-
pact equipment. The offering also includes services such as cus-
tomer support agreements, machine control systems, attach-
ments, financing and leasing.
Offering
Brands
Volvo RokbakSDLG
15,028 (14,797).
Number of employees
Share of Group, %
Construction
equipment, 85
Services, 15
19
20212020
2019
2022
2023
SEK bn
89
81
92
100
105
33
28
4
8
27
By market, %
Net sales
By revenue type, %
1 For information on adjusted
operating income, see Key
Ratios on page 218.
202120202019 2022 202 3
%
SEK Bn
13.4 12.4 13.3 13.2
11.9
10.1
12.2
13.2
16.2
17.0
16.2
Adjusted operating income
1
and adjusted operating margin
72
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
With ‘perform and transform’ at the center of its actions, it has
accelerated the global rollout of its wide portfolio of electric
machines and ramped up smart solutions for the benefit of cus-
tomers everywhere. At the same time, Volvo CE is investing in the
future with pioneering partnerships and milestone investments in
the sustainable and digital transformation.
Important events
Volvo CE continued the shift to electric with the introduction of
electric products of different sizes into new markets. Among these
were the unveiling of the 20-ton L120H Electric Conversion wheel
loader to Europe and the expansion of the 23-ton EC230 Electric
excavator to the Netherlands, Sweden, Germany, UK and France.
Meanwhile the fully electric EC55 excavator arrived in India and
the global rollout of other electric compact machines continued
in Singapore, China and Japan.
Volvo CE also launched a range of new service offerings in
North America, including Connected Map, Task Manager and
Global Load Out solutions, all designed to increase connectivity,
productivity and sustainability in work site operations. The Con-
Expo show marked the handover of the first articulated hauler
made with fossil-free steel in North America to a customer.
Volvo CE continued to roll out its Equipment as a Service (EaaS)
offering to customers around the world. The EaaS offering is a
model focusing on use rather than ownership of construction
equipment that helps Volvo customers to invest more capital in
growing their core business operations profitably, whilst boosting
Volvo CE’s ambition of increasing revenues from services.
Volvo CE also announced a SEK 80 M investment in battery
pack production at its excavator plant in Changwon, South Korea.
This was followed by the creation of a new dedicated business unit
for compact machines and solutions, with the aim of driving
growth and profitability in this important and growing segment.
Further signposting its dedication to the electromobility shift,
Volvo CE delivered its first electric power unit to a customer in
Sweden. It allows for high power charging of electric machines in
remote locations where access to stable power sources is limited.
In North America, Volvo CE inaugurated a new innovation cen-
ter to provide training for technicians on both diesel and electric
heavy equipment, machine control technology, connectivity and
productivity services.
In December, Volvo CE and the Ammann Group reached an agree-
ment whereby the Ammann Group will acquire Volvo CE’s global ABG
Paver Business including ABG in Hameln, Germany. The deal is sub-
ject to regulatory approval, which is expected in the first half of 2024.
2019 2020 2021 2022 2023
40
20
80
160
320
Africa & Oceania
156
129
17
151
317
28
138
117
21
146
411
29
171
141
35
177
393
42
172
150
39
187
239
51
170
161
30
193
150
47
Thousands
Europe
North America
South America
Asia (excl. China)
China
Year
Market development in Volvo CE's product ranges
Deliveries by market
Number of machines 2023 2022
Europe 16,278 16,767
North America 9,549 7,663
South America 2,271 4,875
Asia 28,073 48,153
Africa and Oceania 3,893 3,451
Total deliveries 60,064 80,909
Large and medium construction equipment
1
45,494 58,110
Compact construction equipment
2
14,570 22,799
Of which
Fully electric
895 598
Total deliveries 60,064 80,909
Of which
Volvo 38,287 39,327
SDLG 21,462 41,339
Of which in China 15,790 34,545
1 Excavators >10 tons, wheel loaders engine power >120 hp, articulated haulers,
rigid haulers and road machinery products.
2 Excavators <10 tons, wheel loaders engine power <120 hp, skid steer loaders
and backhoe loaders.
Net sales and operating income
SEK M 2023 2022
Europe 34,228 30,194
North America 29,590 22,294
South America 4,101 6,491
Asia 28,150 34,228
Africa and Oceania 8,912 7,054
Total net sales 104,981 100,261
Of which
Construction Equipment 89,009 85,465
Services 15,973 14,796
Adjusted operating income
1
16,993 13,244
Adjustments
1
–610 –338
Operating income 16,383 12,907
Adjusted operating margin, % 16.2 13.2
Operating margin, % 15.6 12.9
1 For information on adjusted operating income, see Key Ratios on page 218.
73
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Buses
Continued profitability
improvement
Demand for coaches remained strong in 2023, while the market
for city buses improved. Volvo Buses’ order intake increased by
11% while deliveries decreased by 1%, affected by disturbances in
the supply chain. Currency-adjusted net sales rose by 15% to SEK
22,423 M and the adjusted operating income improved to SEK
1,059 M (353), which corresponds to an adjusted operating margin
of 4.7% (1.9). The operating income and operating margin are
Volvo Buses’ highest since 2019.
Strong demand for coaches
Demand for coaches remained strong during the year, above all in
North America but also in Europe. Volvo Buses’ subsidiary Prevost
launched a brand new bus in the next generation of the H3-45
series in North America. The new long-distance bus has a number
of new features that provide increased fuel efficiency by up to
12%, a better driver experience and higher passenger comfort.
Within coaches, local launches of the Volvo B13R platform con-
tinued in Latin America, as well as in selected markets in Asia and
Europe. With the new platform launched in 2022, fuel consumption
is reduced by up to 9% and thus also the total emissions.
The city bus market was stable with an increase in requests for
electrified buses.
Volvo Buses’ total order intake increased by 11% to 7,156 units
(6,459) while deliveries decreased by 1% to 5,773 units (5,815).
Continued electrification
The strategic investment in accelerating the electrification of city
buses continued. Demand for fully electric buses remained strong
above all in Europe and South America. The fully electric chassis,
Volvo BZL Electric, which was launched globally in 2021, has
resulted in several orders, especially in the UK. An order for 170
electric buses for Stagecoach in the UK is Volvo Buses’ largest
order for electric buses to date. The UK market was strong and
overall customers there placed orders for 436 Volvo BZL Electric.
In South America, the first demo drive of the Volvo BZL Electric
began in Curitiba, Brazil. Further demonstrations of the Volvo BZL
Electric will be/were carried out in São Paulo, Bogotá in Colombia
and Santiago in Chile.
In Mexico, a fully electric city bus, LUMINUS, was launched.
With the new electric bus, Volvo Buses guarantees operation, best
total cost and support. In addition, Volvo Buses is the only bus man-
ufacturer in Mexico that has developed a circular model that allows
the bus batteries to be used for other purposes when they are no
longer useful in the buses.
Volvo Buses is one of the world’s largest manufacturers of premium
buses and coaches and a leader in the development of sustainable
people transport solutions. The offering includes premium city
and intercity buses, coaches, and chassis as well as services for
increased productivity, uptime and safety. Volvo Buses has sales
in 85 countries and a global service network with more than 1,500
dealerships and workshops. Production facilities are found in
Europe, North America and South America.
Offering
Prevost
Brands
Volvo
5,637 (5,325).
Number of employees
Net sales
Vehicles, 76
Services, 24
202120202019 2022 2023
31
15
14
19
22
SEK bn
Share of Group, %
By market, %
4
11
31
41
7
10
By revenue type, %
1 For information on adjusted
operating income, see Key
Ratios on page 218.
Adjusted operating income
1
and adjusted operating margin
202120202019 20232022
SEK M
%
4.3 0.4–3.1 1.9
1,337
59
–452
353
4.7
4.7
1,059
74
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
In the European market, Opérateur de Transport de Wallonie
(OTW), which operates public transport in Belgium, ordered 97
Volvo 7900 S-Charge. The order follows Volvo Buses’ previous
deliveries of hybrid buses that have been very operationally reliable.
Total order intake for fully electric buses increased by 101% to
611 units (304), while deliveries increased by 51% to 363 units (240).
New business model in Europe
During the year, Volvo Buses prepared a change of the business
model in Europe, which means that the company’s own produc-
tion is focused on chassis in order to offer customers in Europe
a complete range of city and intercity buses as well as coaches
together with external bodybuilders. The business model has
previously been successfully applied to other markets. As a result
of the introduction of the new business model, the decision was
made to close the bodybuilding factory in Poland during the first
quarter of 2024. The change is aimed at improving profitability
and securing the long-term competitiveness of Volvo Buses.
In order to be able to offer customers in Europe complete buses, an
agreement was signed with MCV for the license to manufacture bod-
ies for Volvo’s electric buses for the city and intercity segments and
with Sunsundegui for the license to manufacture bodies for the mod-
els in the coach segment. Volvo Buses will also use other bodybuilders
to have a customer- and market-tailored offer. Volvo Buses continues
to provide full service and support to the existing and future fleet of
Volvo buses as well as being the point of contact for new customers.
Continued improved profitability
Volvo Buses’ net sales increased by 21% to SEK 22,423 M
(18,583). Adjusted for currency movements, net sales increased
by 15%, of which vehicle sales increased by 14%. The focus on
service contributed to an improvement in service sales by 18%
to SEK 5,416 M (4,398).
The adjusted operating income was Volvo Buses’ best since
2019 and amounted to SEK 1,059 M (353), which corresponds
to an adjusted operating margin of 4.7% (1.9). Adjusted operating
income excludes negative effects of SEK 1,439 M (0), primarily
from restructuring costs in connection with the closure of the
bodybuilding factory in Poland. For information on adjustments,
please see Key Ratios on page 218.
The improved result was primarily an effect of increased vehicle
and service sales. Price realization largely offset increased material
and transport costs.
Reported operating income amounted to SEK
–380 M (353).
Currency movements had a positive impact of SEK 370 M com-
pared with 2022.
Sustainability. Everywhere
Volvo Buses’ ambition is to become the world’s most sustainable
supplier of buses. Both Volvo Buses’ factories in Borås and Udde-
valla, Sweden are entirely powered by renewable energy, and the
factory in Mexico is 60% powered by renewable energy. The fac-
tory in Uddevalla was also certified as “100% landfill free”
, which
means that all waste from the factory is recycled. The goal for
Volvo Buses is to reduce emissions from its own production by
50% by 2030 and to reduce emissions per vehicle kilometer from
its buses by 40% by 2030.
Net sales and operating income
1
SEK M 2023 2022
Europe 7,007 6,034
North America 9,200 6,521
South America 2,207 3,154
Asia 1,601 1,372
Africa and Oceania 2,408 1,502
Total net sales 22,423 18,583
Of which
Vehicles 17,007 14,185
Services 5,416 4,398
Adjusted operating income
1
1,059 353
Adjustments
2
–1,439 0
Operating income –380 353
Adjusted operating margin, % 4.7 1.9
Operating margin, % –1.7 1.9
1 For information on adjusted operating income, see Key Ratios on page 218.
Deliveries by market
Number of buses 2023 2022
Europe 1,476 1,424
North America 1,590 1,134
South America 1,043 1,957
Asia 875 819
Africa and Oceania 789 481
Total deliveries 5,773 5,815
Of which
Fully electric 363 240
Hybrids 165 127
75
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Volvo Penta
Solid financial
performance
In 2023, Volvo Penta’s currency-adjusted net sales increased by
10% to SEK 21,006 M driven by good market demand and
increased utilization of Volvo Penta products for most of the year.
However, demand in some segments weakened towards the end
of the year. Adjusted operating income amounted to SEK 3,230 M
(2,530), with an adjusted operating margin of 15.4% (14.0).
Customer success in focus
Volvo Penta operates in two key businesses: Marine (leisure and
commercial) and Industrial (off-highway and power generation,
including battery energy storage sub-systems). The strategy revolves
around ensuring customer success in each segment by providing
innovative power solutions and services that increase productivity
and efficiency. Volvo Penta is committed to achieving net-zero
greenhouse gas emissions in its value chain by 2040.
Volvo Penta is on a fast-track transformation journey, exploring
and introducing combustion engines with renewable fuels, and
electric drivelines including battery and fuel cell electric solutions.
Volvo Penta leverages Volvo Group solutions, in-house develop-
ment, and partnerships. The transformation also extends to ser-
vices and digital experiences.
A year of market fluctuations and uncertainty
In the marine leisure segment, Volvo Penta faced fluctuating
demand, with a notable decline in smaller boat sales throughout the
year. The commitment to innovation remained unwavering, with the
introduction of the award-winning Joystick Docking system and
enhancements to the boating experience. The marine commercial
segment demonstrated resilience, with sustained demand for supply
and patrol vessel propulsion, contributing to the overall positive per-
formance.
In the industrial segments, demand for power generation solu-
tions remained very high. The off-highway market cooled off
towards the end of the year, due to the general global economic
situation. Volvo Penta’s dedication to innovation, strategic part-
nerships and expanding the industrial product portfolio remained
at the forefront, positioning Volvo Penta for continued growth
and adaptation to changing market conditions, exemplified by the
market introduction of the battery energy storage sub-system.
Continued good performance
Volvo Penta’s net sales increased by 16% to SEK 21,006 M (18,102).
Adjusted for currency movements, net sales increased by 10%, of
which engine sales increased by 11% and service sales by 8%.
Volvo Penta is one of the world’s largest producers of power sys-
tems for leisure boats and a leading provider of power systems for
industrial off-highway and power generation segments. The aim is
to be the most forward-thinking and customer-focused supplier of
sustainable power solutions. The offering includes engines, power
solutions and services for leisure and commercial vessels, as well
as for power generation and industrial off-highway applications.
Offering
Core businesses
Industrial engines Battery energy
storage sub-systems
Marine engines
2,167 (2,022).
Number of employees
2022202120202019 2023
SEK M
%
1,876
1,448
2,092
14.1 12.2 14.5
2,530
14.0
3,230
15.4
15.4
1 For information on adjusted
operating income, see Key
Ratios on page 218.
Adjusted operating income
1
and adjusted operating margin
2022 202320212020
2019
SEK bn
13
12
14
18
21
Vehicles, 74
Services, 26
Net sales
Share of Group, %
4
By market, %
51
19
4
7
19
By revenue type, %
76
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Also in 2023, supply chain disturbances affected lead times
negatively and beginning in the second quarter, net order intake
decreased due to market uncertainty.
Adjusted operating income amounted to SEK 3,230 M (2,530),
corresponding to an adjusted operating margin of 15.4% (14.0).
There were no adjustments in 2023 (–3). For information on
adjustments, please see Key Ratios on page 218.
Earnings were positively influenced by price realization and a
favorable product mix. This was partly offset by increased material
and production costs.
Reported operating income amounted to SEK 3,230 M (2,527).
Currency movements had a positive impact of SEK 578 M com-
pared with 2022.
Pioneering innovation towards a fossil-free future
For its marine customers, Volvo Penta introduced the Innovation
Award-winning Joystick Docking and revealed the IPS professional
platform, expanding the successful Inboard Performance System
to larger vessels like super yachts and passenger ferries.
On the industrial side, Volvo Penta expanded its portfolio by
venturing into battery energy storage solutions, and expanded into
more OEM applications in the material handling and construction
segments. Volvo Penta also launched its first industrial pilot for
a dual fuel solution for diesel and hydrogen as well as revealed its
ambition to expand into productivity solutions for industrial off-
highway applications in a collaboration with Volvo Penta subsidi-
ary CPAC Systems.
Net sales and operating income
SEK M 2023 2022
Europe 10,787 9,417
North America 4,070 3,695
South America 783 635
Asia 3,950 3,302
Africa and Oceania 1,417 1,054
Total net sales 21,006 18,102
Of which
Engines 15,507 13,221
Services 5,499 4,881
Adjusted operating income
1
3,230 2,530
Adjustments
1
– –3
Operating income 3,230 2,527
Adjusted operating margin, % 15.4 14.0
Operating margin, % 15.4 14.0
1 For information on adjusted operating income, see Key Ratios on page 218.
Deliveries by segment
Number of units 2023 2022
Marine engines 16,858 17,924
Industrial engines 27,479 27,360
Total deliveries 44,337 45,284
Of which
Fully electric 104 24
77
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Financial Services
Good portfolio growth
and performance
Volvo Financial Services (VFS) continued to deliver good results in
2023, achieving record new financing volumes, continued growth
in managed assets and good portfolio performance, while also
continuing its transformation journey.
New business volume increased by 14% and adjusted operating
income increased to SEK 3,855 M (3,416). Return on equity, exclud-
ing operations in Russia and Belarus, amounted to 13.9% (15.4).
Good growth and portfolio performance
For 2023, VFS achieved new financing volumes of SEK 118.0 billion
(103.6), an increase of 14%. Adjusted for currency the volume
increase was 9%. The number of Volvo Group vehicles and
machines financed was 68,027 (68,658).
The volatile interest rate environment and strong competition
from banks continued to have an impact on penetration. Even with
these headwinds, VFS maintained stable penetration of 27% (28).
VFS increased its net credit portfolio by 21% to SEK 254,126 M
(216,053) on a currency-adjusted basis compared to 2022. The
funding of the credit portfolio is matched in terms of maturity,
interest rates and currencies in accordance with Group policy.
For further information, see Note 4.
Adjusted operating income increased to SEK 3,855 M (3,416),
excluding a loss on the divestment of the Russian entities of SEK
136 M. In 2022, adjustments amounted to SEK –2,568 M from
provisioning of assets related to Russia. For information on adjust-
ments, please see Key Ratios on page 218.
VFS reported operating income of SEK 3,719 M (848), while
currency movements had a positive impact of SEK 160 M com-
pared with 2022.
Return on shareholders’ equity amounted to 13.0% (–0.3). Exclud-
ing the results related to operations in Russia and Belarus, return on
shareholders’ equity stabilized during the year at 13.9% (15.4), while
the equity ratio was 8.0% (8.0) at the conclusion of the year.
Credit provision expenses, excluding the activity related to Russia
and Belarus, amounted to SEK 643 M (297), while write-offs of
SEK 406 M (96) were recorded. In 2023, the write-off ratio was
0.17% (0.05). Excluding Russia and Belarus, credit reserves were
1.37% (1.60) of the credit portfolio.
Transforming for today; innovating for the future
Thanks to good growth and financial performance, VFS is operat-
ing from a position of strength and stability, enabling VFS to con-
tinue to make investments in transformative offers aligned with its
Transforming Together strategy.
VFS works with Group brands, customers and dealers to provide
a broad range of services and financial solutions that promote long
term relationships, loyalty and customer success. Offering cus-
tomer financing in 47 markets around the world, VFS covers over
90% of all Group branded deliveries. VFS manages a retail portfo-
lio of more than 292,000 vehicles and machines.
Offering
1,599 (1,596).
Number of employees
Volvo Trucks, 55 (54)
Volvo CE, 20 (21)
Mack Trucks, 10 (11)
Renault Trucks, 11 (10)
Buses, 4 (4)
Europe, 40 (40)
North America, 36 (37)
South America, 14 (14)
Asia, 5 (5)
Africa and Oceania, 5 (4)
Distribution of credit portfolio %
1 Share of unit sales financed by Volvo Financial Services in
relation to total number of units sold by the Volvo Group in
markets where financial services are offered.
2022 2023
Buses
2542
Volvo
CE
3131
Volvo
Trucks
3132
Renault
Trucks
2122
Mack
Trucks
1719
Penetration rate
1
%
78
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
In the area of pay-per-use, VFS expanded its offer for Mack
Trucks customers by launching ElectriFi Subscription, an offer
that allows customers to pay as they go for miles driven in the
medium-duty Mack MD Electric model. ElectriFi Subscription
combines the cost of the truck and body, charging, applicable
incentives, physical damage insurance and maintenance into a
single monthly payment for simplification. This reduces the
upfront investment while providing the customer greater flexibility.
To further develop usage-based business models, accelerate the
adoption of EVs, and deliver peace-of-mind to customers, VFS
committed to adding more than 200 electric trucks to its portfolio
in 2023. These trucks will be made available to customers through
long-term rental and pay-per-use-related programs around the
world, giving VFS an opportunity to further enhance its compre-
hensive solutions offering to customers.
VFS is also forging partnerships inside and outside the Volvo
Group to find innovative new solutions. In collaboration with CampX
by Volvo Group, financial technology (fintech) was added to the
CampX innovation focus areas. This addition provides VFS with an
opportunity to cultivate new capabilities for services that will facili-
tate the transition to sustainable, fossil-free transport, creating value
for both customers and the Volvo Group.
The partnership also led to the launch of iLabX 2.0, a new gener-
ation of VFS’ accelerator program that provides startups with the
opportunity to develop and implement fintech and insurtech inno-
vations together with VFS. Running through 2023 and into 2024,
iLabX 2.0 is currently focused on creating an exceptional experi-
ence for Equipment-as-a-Service (EaaS) customers.
Key ratios, Financial Services
2023 2022
Number of financed units 68,027 68,658
Total penetration rate
1
, % 27 28
New financing volume, SEK billion 118.0 103.6
Credit portfolio net, SEK billion 254 216
Credit portfolio net excluding Russian
and Belarus operations, SEK billion 254 215
Credit provision expenses, SEK M 612 3,332
Credit provision expenses excluding
Russian and Belarus operations, SEK M 643 297
Adjusted operating income
2
3,855 3,416
Adjustments
2
–136 –2,568
Operating income, SEK M 3,719 848
Credit reserves, % of credit portfolio 1.37 3.00
Credit reserves, % of credit portfolio
excluding Russian and Belarus operations 1.37 1.60
Return on shareholders’ equity, % 13.0 –0.3
Return on shareholders’ equity excluding
Russian and Belarus operations, % 13.9 15.4
1 Share of unit sales financed by Volvo Financial Services in relation to the total num-
ber of units sold by the Volvo Group in markets where financial services are offered.
2 For information on adjusted operating income, please see Key Ratios on page 218.
Income statement Financial Service
SEK M 2023 2022
Finance and lease income 24,012 17,355
Finance and lease expenses –16,385 –10,641
Gross income 7,627 6,714
Selling and administrative expenses –3,309 –2,991
Credit provision expenses
1
–610 –3,355
Other operating income and expenses 10 479
Operating income 3,719 848
Interest income & similar credits 1 –
Income after financial items 3,720 848
Income taxes –1,024 –901
Income for the period 2,695 –53
1 Credit provisions for operating leases of SEK 2 M is included in finance and
lease expenses within gross income.
79
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
The share
Total shareholder return ahead of index in 2023
The Volvo share is listed on the stock exchange Nasdaq Stockholm,
Sweden. One A share carries one vote at General Meetings and
one B share carries one tenth of a vote. Dividends are the same for
both classes of shares. The Volvo share is included in many indices
compiled by Dow Jones, FTSE, S&P and Nasdaq Nordic.
The Volvo share development
On Nasdaq Stockholm the broad OMXSPI index rose by 15% after
having fallen by 25% in 2022. The share price for the Volvo A
share increased by 35%, and at year-end the price was SEK 267.00
(198.10). The lowest closing price was SEK 198.30 on April 5 and
the highest was SEK 267.00 on December 29. The share price for
the Volvo B share increased by 39% and at year-end the price was
SEK 261.70 (188.48). The lowest closing price was SEK 190.24
on April 5 and the highest was SEK 261.90 on December 27. Total
return was 42% for the A share and 46% for the B share compared
with 19% for the OMX Stockholm Benchmark GI index.
In 2023, a total of 0.9 billion (1.0) Volvo shares valued at SEK
187 billion (180) were traded on Nasdaq Stockholm, with a daily
average of 3.4 million shares (4.0). In terms of value, the Volvo
shares were the third most traded on Nasdaq Stockholm in 2023.
At year-end, Volvo’s market capitalization was SEK 534 billion (388).
Share conversion option
In accordance with a resolution at the Annual General Meeting
2011, the Articles of Association includes a conversion clause,
stipulating that series A shares may be converted into series B
shares, on the request of the shareholder. At the end of 2022,
there were 444,987,875 A shares outstanding. During 2023, a
total of 1,725 A shares were converted to B shares. Further infor-
mation on the conversion procedure is available on volvogroup.com
Dividend
The Board proposes an ordinary dividend of SEK 7.50 per share
and an extra dividend of SEK 10.50 per share for the financial year
2023. If the AGM approves the Board’s proposal, a total of SEK
36,602 M will be transferred to the shareholders. For the preced-
ing year a dividend of SEK 7.00 per share and an extra dividend of
SEK 7.00 per share were distributed, in total SEK 28,468 M.
Policy for remuneration to senior executives
See Note 27 on page 141 for the current policy for remuneration to
senior executives.
Communication with shareholders
Dialogue with the shareholders is important for Volvo. In addition
to the Annual General Meeting and a number of larger activities
aimed at professional investors, private shareholders and stock
market analysts, the relationship between Volvo and the stock
market is maintained through such events as press and telephone
conferences in conjunction with the publication of interim reports,
meetings with retail shareholders’ associations, investor meetings
and visits, as well as roadshows in Europe and North America.
On volvogroup.com it is possible to access financial reports and
Why invest in the Volvo share?
• Strong team of people making a difference
• Competitive products and services
• Ambition to lead the transformation of our
industry to more sustainable solutions
• Strong market positions globally
• Good profitability and return on capital employed
• Strong financial position
• Good returns to shareholders
Earnings and dividend per share,
dividend yield
2019 2020 2021 2022 2023
Diluted earnings per share, SEK
Dividend per share, SEK
Dividend yield, %
0
17.64
0
7.7
9.50
10.7
16.12
7.4
16.09
15.00
1
22.50
2
14.00
3
6.9
24.50
18.00
4
1 Ordinary dividend of
SEK 6.00 and an extra
dividend of SEK 9.00.
2 Ordinary dividend of SEK
6.50, an extra dividend
of SEK 6.50 and SEK
9.50 relating to the pro-
ceeds from the sale of
UD Trucks.
3 Ordinary dividend of
SEK 7.00 and an extra
dividend of SEK 7.00.
4 Ordinary dividend of SEK
7.50 and an extra dividend
of SEK 10.50 proposed by
the Board of Directors to
the AGM 2024.
search for information concerning the share and statistics for truck
deliveries. It is also possible to access information concerning
the Group’s governance, including information about the Annual
General Meeting, the Board of Directors, Group Management and
other areas that are regulated in the “Swedish Code of Corporate
Governance”. The website also offers the possibility to subscribe
to information from the company.
Volvo has decided to present its Corporate Governance Report
as a separate document to the Annual Report in accordance with
Chapter 6 § 8 of the Swedish Annual Accounts Act and the report
is available on pages 194–211.
Contractual conditions related to takeover bids
Provisions stipulating that an agreement can be changed or termi-
nated if the control of the company is changed, so called change
of control clauses, are included in some of the agreements whereby
Renault Trucks has been given the right to sell Renault s.a.s. and
Nissan Motor Co. Ltd’s light-duty trucks as well as in some of the
Group’s purchasing agreements.
Some of Volvo Group’s long-term loan agreements contain con-
ditions stipulating the right for a creditor to request repayment in
advance under certain conditions following a change of the control
of the company. These clauses are not unusual in loan agreements.
In AB Volvo’s opinion it has been necessary to accept those condi-
tions in order to receive financing on otherwise acceptable terms.
80
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
50
100
300
250
200
2019 2020 2021 2022 2023
150
OMX Stockholm PI Index
Volvo B
OMX Stockholm Industrial Goods & Services
Source:
Investis Digital
Price trend, Volvo B share, 2019–2023 SEK
Accumulated total return for the Volvo B share
Volvo B Total return (including reinvested dividends)
1990 1995 2000 2005 2010 20232015
Source: Investis Digital
1987
10,000
%
8,000
6,000
4,000
2,000
0
+10,171%
SIX Return Index (including reinvested dividends)
The graph shows that SEK 1,000 invested in the Volvo B share on January 2,
1987 had grown to SEK 102,710 at the end of 2023, under the condition that
all dividends have been reinvested in Volvo B shares.
Non-Swedish owners 40
Other Swedish institutions 32
Swedish mutual funds 15
Swedish private shareholders 13
More details on the Volvo
shares are provided in
Note 19 to the financial
statements and in the
Eleven-year summary.
Employee ownership of shares in Volvo through Group pension
foundations is insignificant.
Source: Euroclear
1 Share of capital
Ownership by category
1
, %
The shareholders with the
largest voting rights in AB Volvo,
December 31, 2023
Voting
rights, %
Capital,
%
Industrivärden 27.9 9.1
Geely Holding 15.5 6.8
AMF Insurance
& Funds 5.5 3.3
Alecta 4.0 2.7
AFA Insurance 2.3 0.8
BlackRock 2.1 3.2
Vanguard 2.1 3.2
Swedbank Robur
Funds 1.8 4.4
AP4 Fund 1.6 0.5
Norges Bank Invest-
ment Management 1.6 2.3
Source: Modular Finance.
Share capital, December 31, 2023
Number of shares 2,033,452,084
of which,
Series A shares
1
444,986,150
of which,
Series B shares
2
1,588,465,934
Share capital, SEK M 2,562
Quota value, SEK 1.26
Number of shareholders 382,200
Private persons 364,225
Legal entities 17,975
For further details on the Volvo share, see Note 19.
1 Series A shares carry one vote each.
2 Series B shares carry one tenth of a vote each.
Source: Euroclear
1 Share of capital
Sweden 60
USA 23
United Kingdom 5
Luxembourg 3
Belgium 2
Switzerland 1
Others 6
Ownership by country
1
, %
81
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
Risks and uncertainties
Managed risk-taking
Each of the Volvo Group’s Business Areas, Truck Divisions and
some Group Functions moni tor and manages risks in its opera-
tions. In addition, the Volvo Group utilizes a centralized Enterprise
Risk Management (ERM) reporting process, which is a systematic
and structured framework for reporting and reviewing risk assess-
ments and mitigations as well as for following up on identified risks.
Volvo Group Enterprise Risk Management Process
For the governance
model of the Volvo
Group, please see
page 195.
The Group Executive Board analyzes accuracy of reported risks and mitigation
activities as well as ensures alignment to strategic and operational agendas.
The Board of Directors monitors risks and mitigation
activities annually and the Audit Committee regularly
reviews the consolidated ERM report.
The ERM Committee reviews, analyzes and challenges compiled risks and mitiga-
tion activities, ensuring a first alignment with the Group’s operational agenda.
The committee consists of the Executive Vice President Group Finance, Executive
Vice President Legal & Compliance, Senior Vice President Group Treasury & Cor-
porate Finance, the Senior Vice President Group Financial Reporting and Business
Control, and the Senior Vice President Risk Management and Internal Audit.
Each Business Area and Truck Division and some Group Functions reports its
largest risks and mitigation activities to the ERM function, which reviews and
combines reported risks into the Group ERM report.
Business review meetings in each Business Area and Truck Division identify,
analyze, mitigate and monitor its largest risks. This forms the basis for the
ERM reporting.
Executive Management Teams in each Business Area and Truck Division and in
some Group Functions are fully responsible for risk and mitigation management
in their respective areas. Risks are identified, mitigation activities are established,
and monitoring and reporting of progress is part of daily operations.
Board of Directors
Audit Committee
Group Executive Board
Enterprise Risk
Management Committee
Enterprise Risk
Management Function
Business Review Meetings
Executive Management Teams
Risk categories
The ERM process classifies Volvo Group risks into five categories:
• Macro and market-related risks
• Operational risks
• Climate and people risks
• Compliance risks
• Financial risks.
The following pages present principal risks and uncertainties the
Volvo Group is facing within each risk category. These risks can,
separately or in combination, have a material adverse effect on
the Group’s business, strategy, financial performance, cash flow,
shareholder value or reputation.
For short-term risks, please also see the segment reporting
in the Board of Directors report, and Note 2 in the most recent
quarterly report.
82
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
MACRO AND MARKET-RELATED RISKS
Cyclical commercial vehicles industry
The Volvo Group’s customers operate all over the world, some
within a single country and others across borders. A multitude
of global and regional geopolitical, economic, regulatory, digital,
technological, resource availability, climate and energy resource-
efficiency factors contribute to a considerable volatility in demand
and risks in different markets.
Like many capital goods industries, the commercial vehicle indus-
try generally has been cyclical, impacted by e.g. developments of
GDP and corresponding changes in transport demand, the need to
replace aging vehicles and machines as well as changing laws and
regulations. Although there is a continued shift in focus in the com-
mercial vehicle industry from product to service, the cyclicality in
the industry remains. Fluctuating demand for the Group’s products
and services makes the financial result of the operations dependent
on the Group’s ability to react quickly to market changes. Inability
to adapt to changes in demand could lead to capacity constraints or
underutilization of resources, which could have a negative effect on
earnings, cash flows and financial position.
Competition
The Volvo Group operates in markets which are highly competi-
tive, and thus faces intense competition from global and local
industry peers. The Volvo Group also encounters competition from
new market entrants, seeking to offer e.g. sustainable transporta-
tion, increased logistics efficiency, new technologies and/or new
business models. In this market environment, there can be no
assurance that current or new competitors cannot be more suc-
cessful than the Group in bringing new products and service solu-
tions to the market, in implementing new technologies or collabo-
ration models or in offering more attractively priced products,
services or solutions. This could result in e.g. reduced profit mar-
gins, loss of market share or a need to accelerate research and
development investments and/or sales and marketing expenses,
which each could adversely affect the Group’s business, results
of operations, market share and financial position.
Regulations
The Volvo Group is subject to environmental, occupational health
and safety laws and regulations that affect the operations, facilities,
products and services in each of the jurisdictions in which the Volvo
Group operates. In particular, regulations regarding exhaust emis-
sions, noise, safety and pollutants from production plants and prod-
ucts are extensive and evolving. These laws and regulations result
in an often complex, uncertain and changing legal and regulatory
environment for Volvo Group’s global businesses and operations.
The Volvo Group works actively to ensure compliance with
applicable laws and regulations and endeavors to collaborate
and be transparent with all governing bodies in certification and
compliance processes, during development and throughout the
lifecycle of Group products as well as in investments in production
plants but can provide no assurance that it will at all times be fully
compliant. If the Volvo Group has failed or fails to comply with
these laws, regulations and requirements it could be subject to
costs of recalls and other remediation, significant penalties and
other sanctions and liability as well as reputation damage. A failure
to meet applicable laws and regulations in this area could also
imply a failure to assure a timely, updated and compliant product
and service range, which could have a material adverse effect on
the Volvo Group’s business, operating results, financial position
and brand equities.
In addition, safety regulations are becoming increasingly
important with autonomous vehicles in commercial applications.
If regulations are not set, or not clear enough, there is a risk of not
being able to scale up the autonomous offer, or not complying
with regulations. A safety incident could have a detrimental effect
on the images of the Group’s brands and possible earnings. An
incident in the industry could also lead to quickly adjusted or addi-
tional regulations.
Political and social uncertainty
The Volvo Group is active in almost 190 countries across the world.
Our business is subject to the political, economic and other risks
that are inherent in operating in a global environment, including,
• public health crises, including the spread of a contagious dis-
ease, such as COVID-19, and other disastrous events;
• security threats, including acts of war, terrorism, sabotage
and other criminal or malicious acts directed towards our or
our business partners’ people, information systems, products,
production systems or facilities;
• new or amended export controls, including licensing require-
ments, trade policies, taxes, treaties, government regulations
and tariffs in different parts of the world (including the Group’s
joint ventures); and
• changes in general economic or political conditions, including
political instability, conflicts, and decoupling economies.
There can be no assurance that the consequences of these and
other factors relating to our multinational operations will not mate-
rially adversely impact our competitive position, results of opera-
tions or financial position.
83
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
OPERATIONAL RISKS
Transformation and technology
The ongoing and accelerating transformation of the transport and
vehicle industry towards low-carbon and sustainable transportation
and infrastructure solutions entails various transitional risks for the
Volvo Group. The Volvo Group’s future business success depends
on its ability to develop new, attractive, competitive, energy-effi-
cient, and profitable products as well as to successfully position
itself in this industry shift. Failure to develop products in line with
demand and regulations, especially in view of digitalization, electro-
mobility (battery-electric and fuel cell-electric), new fuel technol-
ogies and autonomous solutions could adversely impact the
Group’s operations.
The driving factors of the transformation come from different
sources that may not always correlate. Extensive and continuously
evolving regulations and government actions set the legal frame-
work. Social attitudes and customer preferences relating to cli-
mate change and the transition to a lower carbon economy are
additional factors that the Volvo Group is impacted by. In addition,
investor preferences, capital allocation and sentiment are more
and more influenced by environmental, social and corporate gover-
nance (ESG) considerations. Material changes in these factors,
including the pace of change to any of these factors, as well as the
pace of the transition itself, could have an adverse impact on the
result of strategic business decisions and, in the end, on the overall
business of the Volvo Group. Changes in investor preferences and
sentiment could significantly affect the Volvo Group’s business
plans and financial performance.
Compliance with CO₂, fuel efficiency and emission control
requirements might lead to a need to accelerate introduction of
significant volumes of electric vehicles as well as implementing
additional new technologies for conventional diesel engines. There
can be no assurance that such new technologies and solutions can
be produced and sold profitably or that customers will purchase
those in the quantities needed to meet the regulatory require-
ments. Even if challenges in these areas are resolved and handled,
they could have a negative impact on the Group’s reputation, usage
of resources, cost of production or cost of product recalls, and may
result in adverse effects on earnings and financial position.
The transformation to electric solutions also depends on exter-
nal factors such as the availability of battery cells and technology
or existence of a functioning charging infrastructure and access
to renewable energy sources to power battery-electric and fuel
cell-electric products. If the expansion of charging infrastructure
or the availability and cost of renewable energy sources, alone or
in combination, are inadequate, customers’ investments into the
Volvo Group’s electrified products may happen at a slower pace
than anticipated, which could negatively impact the Group’s oper-
ating income and financial position and the Group’s sustainability
goals. Many of the new products and technologies are still in early
stages of development which – together with the lack of broadly
accepted standards – poses significant risks for the Volvo Group
as it is required to choose relevant technologies, quality of prod-
ucts and time their introduction wisely, while respecting the wide-
spread in readiness level among markets and segments across the
globe. If the Volvo Group miscalculates, delays recognition of, or
fails to adapt its products and services to trends, legal and cus-
tomer requirements in individual markets or other changes in
demand, it could have a material adverse impact on the Group’s
results of operations, financial position and cash flows. Last, if the
Volvo Group positions itself unsuccessfully in this technology shift
(timing and/or technology selection), earnings capacity and finan-
cial position could be severely affected.
New business models
The transport and vehicle industry is facing new technologies,
business models, competitors and global trends such as digital
transformation which combined create a highly disruptive environ-
ment. These factors are shifting the Volvo Group from a heavy
commercial vehicle manufacturer to more of a provider of trans-
port and logistics solutions. The Volvo Group has, during the last
couple of years, continuously invested in new business models and
new technologies to be able to offer safer, more sustainable and
more productive solutions to its customers. Going forward, a new
transport landscape is likely to continue to emerge and impact
large parts of the Volvo Group’s operations and way of working,
entailing risks related to the ability to respond to specific customer
needs with tailored services and the availability of technological
innovations that respond to the major trends of the industry (i.e.
digitalization, electromobility and autonomous solutions). If the
Volvo Group miscalculates, delays recognition of, or fails to adapt
its services to trends, legal and customer requirements or other
changes in demand, it could have a material adverse impact on the
Group’s results of operations, financial position and cash flows.
An additional level of risk relates to the need to evolve from a
vehicle/product focus towards an ecosystem-driven approach,
where vehicles and infrastructures are to be developed and imple-
mented simultaneously.
Industrial operations including supply chain
Our ability to deliver in accordance with market demand and prod-
uct quality expectations depends significantly on obtaining a
timely and adequate supply of materials, components and other
vital services, as well as on our ability to properly utilize the capac-
ity in the Group’s different production and service facilities. Our
industrial system and supply chain have continued to be strained
in many areas during 2023 due to e.g. shortages of materials and
components, shortages of transport services, etc. Further distur-
bances in the supply chain and industrial system can arise from a
variety of factors, including continued or additional shortages of
material, single sourcing, supplier insolvency, shortages of labor
and components, strikes, pandemics, cybersecurity breaches or
climate hazards such as extreme weather, which each or in combi-
nation could result in quality issues, stoppages and other interfer-
ences in production and deliveries, which may impair our ability to
meet our customers’ orders, and thus materially negatively affect
the Volvo Group’s business and results from operations.
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BOARD OF DIRECTORS’ REPORT
Suppliers and materials
The ongoing technology shift into electrification and other new
customer offerings, combined with required investments in tradi-
tional technologies, is likely to move the industry and the Volvo
Group towards reliance on new suppliers, new materials and on
materials being used in new applications and in different quanti-
ties compared to traditional technologies. Some of these materials
may pose a risk of supply due to scarcity or geopolitical, conflict
or human rights concerns. Non-adherence of new suppliers to the
Volvo Group’s code of conduct may pose a reputation risk. At the
same time the suppliers providing more traditional products might
lose business and risk closing, which could leave the Volvo Group
with a shortage of suppliers in a particular area and thereby a need
to make investments.
Cost inflation and price increases
During recent years the Group experienced higher input costs from
increased prices on e.g. purchased material, freight and energy as
well as higher labor costs. These inflationary trends could continue
with potential further impact from energy cost and occur for addi-
tional commodities and materials which the Group purchases on the
world market as well as on salaries and services. The ability to pass
on such higher costs into price increases for products and services
may be limited by competitive pressure or already committed prices
to customers in order books and other agreements. If the Group is
unable to compensate for the higher input costs through increased
prices on products and services sold, this could have a negative
impact on the Group’s financial performance.
Information security and digital infrastructure
The operation of many of the Volvo Group’s business processes
depends on reliable information technology (IT) systems and infra-
structure. This applies to e.g. research and development, produc-
tion, logistics and sales, as well as products and services using
connectivity and automation features, where the Group relies on
its ability to expand and update technologies and infrastructure to
meet the changing needs of the Group’s business. The Group also
relies on third parties where significant parts of maintenance and
operations of the IT systems has been outsourced. If the Group
experiences a problem with important digital technology, the
resulting disruptions could have adverse effects on operations.
Further, as the Group implement new digital technologies, they
may not perform as expected. The Group also face the challenge
of supporting its older digital technologies and implementing nec-
essary upgrades.
Threat actors seeking to exploit vulnerabilities in the Group’s and
its third-party service providers’ systems, processes or personnel
could result in security incidents that may impact the confidentiality,
availability or integrity of information assets, technology or products
and services. These cybersecurity incidents may include ransom-
ware or other malware attacks, intrusions, exploitation of system
vulnerabilities, data privacy infringements, leakage of confidential
or sensitive data and unauthorized usage or modification of data.
The Group’s systems and applications, and those of its third-
party service providers have been and are expected to be subject
to cybersecurity incidents. Such incidents could cause severe
harm to the Group and could adversely affect the Group’s busi-
ness, financial performance, business partner relationships, credit
rating and reputation, and may result in litigation or regulatory
investigations or actions, increased costs for remediation and
compliance.
Mergers and acquisitions, partnerships and divestments
In addition to the Volvo Group’s inhouse work and focus on organic
growth, the Volvo Group engages in acquisitions and divestments,
as well as in JVs, partnerships and other forms of cooperation.
These are essential parts in executing on our strategy. However,
there can be no assurance that these transactions and coopera-
tions become or remain successful, nor that they will deliver
expected benefits. Acquisitions could e.g. result in incurrence
of contingent liabilities and an increase in amortization expenses
and impairments related to goodwill and other intangible assets,
as well as unanticipated difficulties in integration of an acquired
entity. Divestments could present risks in e.g. the operational
separation or through contractual undertakings or legal liabilities
with respect to the business divested.
JVs and partnerships may fail to perform as expected for various
reasons, including our or our partner’s incorrect assessment of needs
and potential synergies, a failure to invest sufficient resources in the
cooperation or a change of strategic direction that the cooperation
fails to accommodate. Further, JVs and partnerships may restrict
e.g. our ability to run independent operations within the scope of
cooperation, and limitations in our or our partner’s operational and
financial resources may restrain the capabilities of the cooperation.
Residual value commitments
The Volvo Group sometimes offers customers to acquire Group
products with a residual value commitment, meaning that the cus-
tomer can return the asset at an agreed date and to an agreed price.
The committed prices are established within each Business Area,
which assumes the responsibility for maintaining a residual value
matrix aiming to reflect fair future market values. Volvo Group will
have a residual value risk if vehicles subject to residual value com-
mitments are repurchased and the fair market value of the vehicles
is below the committed residual value. A residual value commitment
can also become a future used vehicle inventory risk if vehicles are
not sold, affecting the cash flow negatively. For further information
on residual value commitments, see Note 13 Tangible assets.
85
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
CLIMATE AND PEOPLE RISKS
Climate
The scientific consensus indicates that emissions of greenhouse
gases continue to alter the composition of the earth’s atmosphere
in ways that are affecting, and are expected to continue to affect,
the global climate. The potential impacts of climate change on the
Volvo Group’s customers, product offerings, operations, facilities
and suppliers are key risks, as they will be particular to local and
customer specific circumstances.
The Volvo Group has identified a number of climate-related
transitional risks, which are incorporated into the Group’s Enter-
prise Risk Management process. These risks, including their poten-
tial financial impact, are assessed as part of macro and market
developments as found in the risk descriptions for “Regulations” ,
“Transformation and technology” , “New business models” and
“Suppliers and materials”. Physical climate hazards can potentially
also impact Volvo Group’s operations and supply chain as men-
tioned in the “Industrial operations” risk description.
People and culture
Volvo Group strongly believes that there is a high correlation
between the Group’s future success and its capability to recruit,
retain and develop qualified personnel. Furthermore, Volvo Group
strives to increase health and safety in its operations, and targets
to significantly reduce both the accident rate and the risks associ-
ated with our activities. The Volvo Group counts on leveraging the
full diversity of its workforce to fulfill customer demands. Manag-
ing the needed competence shift in the transformation in special-
ized areas is key to succeed. To meet expectations from employ-
ees and other stakeholders, a strong focus is required on areas
such as health and safety, leadership, empowerment, employee
engagement, working conditions, inclusive culture and values,
sharing of knowledge, and building diverse teams. Failure to do
the right things in these areas can cause a negative impact on
the health, safety and well-being of our personnel, on the Volvo
Group’s reputation, as well as on its image as an employer. More-
over, it can impair the Group’s ability to recruit, retain and develop
the knowledge and skills necessary to ensure customer success
and the transition to new technologies.
Human rights
The Volvo Group is committed to respecting internationally recog-
nized human rights and avoiding causing or contributing to adverse
human rights impacts in line with applicable legislation through-
out the world and relevant global frameworks such as the United
Nations Guiding Principles on Business and Human Rights
(UNGP).
The regulatory landscape addressing corporate conduct in rela-
tion to human rights is rapidly evolving. New legislation, imposing
more stringent due diligence and reporting requirements has
already been adopted, and further legislation is emerging. The
Volvo Group attempts to monitor its compliance with applicable
laws, policies and guidelines and strives for continuous improve-
ments, but there can be no assurances that future adverse human
rights impacts will not materialize in the Group’s own organization,
or in the Group’s business relationships or in the value chain. The
Group seeks to address adverse human rights impacts with which
it may be involved, however, such events may adversely affect the
Group, financially as well as reputationally.
86
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
COMPLIANCE RISKS
Data protection laws
Focus on Data Protection is increasing from authorities around the
globe resulting in new Data Protection laws entering into force
and increased activities by Data Protection Authorities in terms
of sanctions, audits, and court rulings. It becomes even more rele-
vant with Volvo Group operations and products being more data
driven (e.g. connected vehicles). The EU General Data Protection
Regulation (“GDPR”) introduced increased monetary penalties for
breaches of the regulation and sets a standard applied in several
other data protection laws throughout the jurisdictions in which
Volvo Group operates. Non-compliance with data protection laws
could expose the Group to fines and penalties and severe infringe-
ments may potentially cause authorities to issue instructions to
stop processing of personal data, which could disrupt operations.
The Group could also face litigations with persons allegedly
affected by data protection violations. Data protection law
infringements may hence involve severe negative impact for the
business operations, including reputation damage and adverse
effect on the Group’s earnings and financial position.
Intangible assets
The Volvo Group owns or otherwise has rights to patents, trade-
marks, designs and copyrights that relate to the products and
services that the Group manufactures and markets. These rights
have been developed or acquired over a number of years and are
valuable to the operations of the Volvo Group. Further, in order to
safeguard investments in R&D, the Volvo Group has an intellectual
property plan defining the creation and use of its intellectual prop-
erty rights.
The share of trade in counterfeit goods as a proportion of global
trade has grown significantly. Products infringing on Volvo Group’s
intellectual property rights are often of substandard quality and
poses risks to the Group regarding safety of customers, vehicle
performance, quality and emission levels that will affect public
health and the climate, as well as individual brand’s and corporate
reputation.
AB Volvo and Volvo Car Corporation jointly own the Volvo brand
and trademarks through Volvo Trademark Holding AB. AB Volvo
has the exclusive right to use the Volvo name and trademarks for
its products and services according to a license agreement. Simi-
larly, Volvo Car Corporation has the exclusive right to use the Volvo
name and trademarks for its products and services. The Volvo
Group’s rights to use the Renault brand and trademarks are related
to the truck operations only and are regulated by a license from
Renault s.a.s., which owns the Renault brand and trademarks. In
addition, the Volvo Group owns several other trademarks relating
to its business. More partnerships and JVs are established involv-
ing intellectual property arrangements.
Use in possible conflict with third-party intellectual property
rights, or third-parties’ unauthorized use of the Volvo Group’s pro-
prietary rights, may have significant business impact on the Group.
Legal proceedings
In the normal course of business, the Volvo Group is involved in
legal proceedings. These proceedings may relate to a number of
topics, including vehicle safety and other product related claims,
warranty claims, commercial disputes, intellectual property
claims, allegations concerning health, environmental or safety
issues, antitrust, tax or labor disputes and regulatory inquiries
and investigations. Further, AB Volvo and other companies in the
Group, as well as their officers, may be subject to claims alleging
failures to comply with stock market regulations, securities law
and other applicable rules and regulations. Legal proceedings can
be expensive, lengthy, take up resources that could be used for
other purposes and are often difficult to predict. There can be no
assurance that provisions, where recognized, for a particular legal
proceeding will cover the costs of an adverse outcome, nor that
unprovisioned proceedings will not give rise to any significant
additional expenditure. For information about certain legal pro-
ceedings involving entities within the Volvo Group, see Note 21
Other Provisions and in Note 24 Contingent Liabilities.
Corruption and competition law
Corruption risks are primarily linked to the Volvo Group’s sales and
supply chain activities but may also relate to administrative proce-
dures, such as licensing and permitting. This includes activities
of Volvo Group employees but may further extend to the activities
of the Volvo Group’s business partners and intermediaries. The
overall risk level therefore is affected by sales volumes, the way
of distribution and the fact that Volvo Group pursues business
operations also in markets that are considered high risk from a
corruption perspective.
Potential risks for non-compliance with competition law (e.g.
price fixing, market sharing, unlawful information exchange, abuse
of market power) are primarily linked to behavior of employees
when interacting with competitors and other external stakeholders
in various situations.
Corruption as well as competition law infringements may
involve severe negative impacts for the business operations,
including reputation damage, legal proceedings, fines and impris-
onment of employees. The Group could also be affected by claims
raised by persons or entities affected by allegedly non-compliant
practices.
87
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
FINANCIAL RISKS
Insurance
The Volvo Group generally takes out insurance coverage where it
is legally or contractually obligated to do so and otherwise against
such risks, in such amounts and on terms that it considers com-
mercially motivated from time to time. Where insurance coverage
cannot be procured on such terms, the Group can be exposed to
material uninsured losses, which could have a materially adverse
effect on Group operations and financial standing. For example,
the Group is not fully insured against effects from cybersecurity
incidents or flooding, earthquakes, and other natural disasters.
Credit risk
The Volvo Group is exposed to credit risk mainly through its sales
to customers in the Industrial Operations, and its long-term credit
receivables in its Financial Services operations. Total exposure as
of December 31, 2023 can be found in Note 15 Customer financ-
ing receivables and Note 16 Receivables. The Group is also
exposed to financial credit risk due to short-term deposits with
the Group’s core banks and unrealized results from derivatives
used for hedging purposes. For further information, please see
Note 4 Goals and policies in financial risk management and Note
15 Customer-financing receivables. If several larger customers,
dealers, or a core bank, fails to meet its undertakings the Group
could suffer significant losses.
Pension commitments
The Volvo Group has substantial pension commitments, some of
which are owed under defined benefit plans. Changes in assump-
tions of interest and inflation rates, mortality, retirement age and
pensionable remunerations could result in significant changes to
the present value of already accrued benefit obligations as well as
the cost of new benefit accruals, affecting funding level of such
plans. The investment performance of pension assets may also
substantially affect funding levels. Defined benefit plan assets are
managed independently from the Group, with a significant portion
of plan assets held in shares and other instruments that are exposed
to market risks which do not fully match the characteristics of
the pension obligation. Please see Note 20 Provisions for post
employment benefits for further information. If there is a shortfall
in benefit plans, the Volvo Group could be required to make sub-
stantial unexpected cash contributions, which would adversely
affect cash flow and the Group’s financial position.
Interest-rate risk
The Volvo Group is exposed to interest-rate risk mainly through
net financial items in the Industrial Operations and borrowing
and lending in the Financial Services operations. Interest-rate risk
refers to the risk that changed interest rates will affect the Volvo
Group’s net income and cash flow or the fair value of financial
assets and liabilities. Fluctuations in interest-rates may lead to
stronger competition and reduce demand for the Group’s prod-
ucts, increase borrowing costs and potentially reduce interest
margins. The Volvo Group’s efforts to match interest-rate fixings on
financial assets and liabilities and to reduce the effects of interest-
rate fluctuations through hedging activities may not always be
successful or sufficient, which could result in adverse impacts on
the Volvo Group’s net income, cash flow and the value of financial
assets and liabilities.
Currency risk
The Volvo Group’s global operations expose the Group to various
currency regions. Currency risks in the Volvo Group’s operations
are related to changes in the value of contracted and expected
future payment flows, changes in the value of loans and invest-
ments and changes in the value of assets and liabilities in foreign
subsidiaries. More than 95% of the Group’s revenues are gener-
ated in countries other than Sweden while a significant part of
the Group’s costs is generated in SEK. The Volvo Group presently
has a net revenue exposure in foreign currencies, which means
that a stronger SEK exchange rate would generally have a negative
effect on the Volvo Group’s reported results. To the extent the
Volvo Group is unable to match revenues and profits received in
one currency with costs and expenses paid in the same currency,
exchange rate fluctuations could have a negative impact on the
Volvo Group’s cash flow, profitability, and balance sheet. The Volvo
Group’s efforts to reduce the effects of exchange rate fluctuations
through hedging activities may not always be sufficient or suc-
cessful, which could result in an adverse impact on the Volvo
Group’s results and financial position.
Liquidity risk
It is of critical importance for the Volvo Group to assure a sufficient
payment capability over time, to continuously manage demands
and expectations from external stakeholders. Sudden changes in
the business cycle, unforeseen events within the financial markets
(in particular for the Financial Services operations), changes in the
Volvo Group’s access to financial markets, and changes in custom-
ers’ appetite for financing from the Group, may stress the Group’s
liquidity preparedness or involve fines and penalties. Failure to
properly manage the Group’s liquidity risks, may cause material
adverse impact on earnings capability and financial standing.
Impairment
The Volvo Group has substantial values in goodwill and other
intangible assets on its balance sheet. Goodwill and other intangi-
ble assets not yet in use are not amortized, hence there is a risk
for impairment if the calculated recoverable amount is lower than
the carrying amount. The calculated recoverable amounts differ
between the operating segments, and they are, to a varying degree,
sensitive to changes in the business environment. Instability in the
business performance and volatility in interest and currency rates
may indicate a need for impairment. Please see Note 12 Intangible
assets.
88
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
89
VOLVO GROUP 2023
BOARD OF DIRECTORS’ REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTE PAGE
1 Accounting policies 91
2 Key sources of estimation uncertainty,
critical judgments and climate-related
risks and opportunities
93
3 Acquisitions and divestments
of operations
94
4 Goals and policies in financial risk
management
96
5 Investments in joint ventures, associated
companies and other shares and
participations
102
6 Segment reporting 106
7 Revenue 108
8 Other operating income and expenses 110
9 Other financial income and expenses 111
10 Income taxes 111
11 Non-controlling interest 113
12 Intangible assets 114
13 Tangible assets 116
NOTE PAGE
14 Leasing 119
15 Customer-financing receivables 122
16 Receivables 124
17 Inventories 126
18 Cash and cash equivalents 127
19 Equity and number of shares 128
20 Provisions for post-employment benefits 129
21 Other provisions 135
22 Liabilities 137
23 Assets pledged 138
24 Contingent liabilities and financial
commitments
139
25 Transactions with related parties 140
26 Government grants 140
27 Personnel 141
28 Fees to the auditors 146
29 Cash flow 146
30 Financial instruments 147
Financial Statements
Financial performance
Page 57
Financial position
Page 60
Cash flow statement
Page 64
Changes in
consolidated equity
Page 66
90
VOLVO GROUP 2023
91
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
92
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
93
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
94
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
95
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
96
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
OTHER
16.4
CURRENCY RISKS
97
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
98
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
99
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
CREDIT RISKS
100
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
LIQUIDITY RISKS
101
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
102
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
103
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
104
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
105
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
106
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
107
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
108
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
109
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
110
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
111
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
112
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
113
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
12
Intangible assets
114
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
115
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
13
Tangible assets
116
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
117
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
118
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
14
Leasing
119
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
120
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
121
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
122
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
123
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
16
Receivables
Europe, 38.0
North America, 36.9
Asia, 5.4
South America, 15.1
Africa and Oceania, 4.6
124
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
125
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
126
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
127
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
128
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
129
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
130
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
131
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
132
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
133
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
134
135
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
136
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
137
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
138
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
139
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
140
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
141
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
142
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
143
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
144
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
145
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
146
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
147
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
148
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
149
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
150
VOLVO GROUP 2023
NOTES TO THE FINANCIAL STATEMENTS
NOTE PAGE
1 Accounting policies 156
2 Revenue and intra-group transactions 156
3 Administrative expenses 156
4 Other operating income and expenses 156
5 Income from investments
in group companies
157
6 Income from investments in joint
ventures and associated companies
157
7 Income from other investments 157
8 Interest expenses and similar charges 157
9 Other financial income and expenses 157
10 Appropriations 157
11 Income taxes 158
12 Investments in shares and participations 159
13 Other non-current receivables 161
14 Other receivables 161
15 Untaxed reserves 161
16 Provisions for post- employment benefits 161
17 Non-current liabilities 162
18 Other liabilities 162
19 Contingent liabilities 162
20 Cash flow 162
PARENT COMPANY AB VOLVO
151
VOLVO GROUP 2023
Parent company AB Volvo
Corporate registration number 556012-5790.
The amounts within parentheses refer to the preceding year.
Board of Directors’ report
AB Volvo is the parent company of the Volvo Group and is headquartered
in Gothenburg, Sweden. The operations comprise of the Volvo Group’s
headquarters with staff, together with some cor porate functions.
During the year the parent company has invoiced a higher share of group
common costs to group companies which has increased the net sales.
Income from investments in group companies include dividends
amounting to SEK 6,897 M (5,177).
The carrying value of shares and participations in group companies
amounted to SEK 71,885 M (70,987), of which SEK 70,872 M (70,022)
per tained to shares in wholly owned subsidiaries. The corresponding
shareholders’ equity in the subsidiaries (including equity in untaxed
reserves but excluding non-controlling interests) amounted to SEK
160,688 M (158,195).
Investments in joint ventures and associated companies amounted to
SEK 8,946 (8,946), whereof SEK 8,938 M (8,938) belongs to compa-
nies which are accounted for in accordance to the equity method in the
consolidated accounts. The equity portion of these companies amounted
to SEK 8,529 M (10,986).
Financial net debt amounted to SEK 34,147M (22,213).
AB Volvo’s risk capital (equity plus untaxed reserves) amounted to
SEK 89,748 M (76,903) corresponding to 69% (70) of total assets.
Income statement
SEK M Note 2023 2022
Net sales 2 1,260 258
Cost of sales 2 –1,260 –258
Gross income – –
Administrative expenses 2, 3 –1,016 –1,469
Other operating income and expenses 4 74 –132
Operating income –942 –1,601
Income from investments in group companies 5 5,617 5,177
Income from investments in joint ventures and associated companies 6 76 34
Income from other investments 7 –1 –
Interest income and similar credits 38 52
Interest expenses and similar charges 8 –1,250 –750
Other financial income and expenses 9 –134 107
Income after financial items 3,404 3,019
Appropriations 10 48,763 26,798
Income taxes 11 –7,353 –5,188
Income for the period 44,814 24,629
Other comprehensive income
Income for the period 44,814 24,629
Other comprehensive income, net of income taxes – –
Total comprehensive income for the period 44,814 24,629
152
VOLVO GROUP 2023
Parent company AB VOLVO
Balance sheet
SEK M Note Dec 31, 2023 Dec 31, 2022
Assets
Non-current assets
Tangible assets 7 7
Financial assets
Shares and participations in group companies 12 71,885 70,987
Investments in joint ventures and associated companies 12 8,946 8,946
Other shares and participations 12 2 2
Other non-current receivables 13 690 593
Deferred tax assets 11 205 217
Total non-current assets 81,735 80,752
Current assets
Current receivables
Receivables group companies 47,762 29,316
Other receivables 14 305 251
Total current assets 48,067 29,567
Total assets 129,802 110,319
Equity and liabilities
Equity
Restricted equity
Share capital 2,562 2,562
Statutory reserve 7,337 7,337
Unrestricted equity
Non-restricted reserves 390 390
Retained earnings 30,645 34,485
Income for the period 44,814 24,629
Total equity 85,748 69,403
Untaxed reserves 15 4,000 7,500
Provisions
Provisions for post-employment benefits 16 251 259
Other provisions – –
Total provisions 251 259
Non-current liabilities 17
Liabilities to group companies 690 400
Other liabilities 6 5
Total non-current liabilities 696 405
Current liabilities
Trade payables 201 195
Other liabilities to group companies 35,889 28,819
Tax liabilities 2,254 3,235
Other liabilities 18 763 503
Total current liabilities 39,107 32,752
Total equity and liabilities 129,802 110,319
153
VOLVO GROUP 2023
Parent company AB VOLVO
Cash flow statement
SEK M Note 2023 2022
Operating activities
Operating income –942 –1,601
Depreciation and amortization – –
Other non-cash items 20 –67 90
Total change in working capital whereof –2,057 1,093
Change in accounts receivables –14 –3
Change in trade payables 18 71
Other changes in working capital –2,061 1,025
Interest and similar items received 35 50
Interest and similar items paid –1,258 –749
Other financial items –120 –37
Dividends received from group companies 5 6,967 37,380
Dividends received from joint ventures and associated companies 6 76 34
Group contributions received 24,298 15,813
Income taxes paid –8,323 –3,764
Cash-flow from operating activities 18,609 48,309
Investing activities
Disposals of in-/tangible assets – –
Investments of shares in group companies 12 –2,230 –1,604
Divestments of shares in group companies 5, 12 53 –
Investments of shares in non-group companies 12 –1 –1
Interest-bearing receivables 13 –94 –105
Cash-flow after net investments 16,337 46,599
Financing activities
New borrowings 20 17,721 250
Repayment of borrowings 20 –5,589 –20,414
Dividends to owners AB Volvo –28,468 –26,435
Other –1 –
Change in cash and cash equivalents – –
Cash and cash equivalents, beginning of year – –
Cash and cash equivalents, end of year – –
154
VOLVO GROUP 2023
Parent company AB VOLVO
Changes in equity
Restricted equity Unrestricted equity
SEK M Share capital
Statutory
reserve
Share premium
reserve
Retained
earnings Total
Total
equity
Balance at December 31, 2021 2,562 7,337 390 60,921 61,311 71,210
Income for the period – – – 24,629 24,629 24,629
Other comprehensive income
Other comprehensive income for the period – – – – – –
Total comprehensive income for the period – – – 24,629 24,629 24,629
Transactions with shareholders
Dividends to owners of AB Volvo – – – –26,435 –26,435 –26,435
Share based payments – – – –1 –1 –1
Transactions with shareholders – – – –26,436 –26,436 –26,436
Balance at December 31, 2022 2,562 7,337 390 59,114 59,504 69,403
Income for the period – – – 44,814 44,814 44,814
Other comprehensive income
Other comprehensive income for the period – – – – – –
Total comprehensive income for the period – – – 44,814 44,814 44,814
Transactions with shareholders
Dividends to owners of AB Volvo – – – –28,468 –28,468 –28,468
Share based payments – – – –1 –1 –1
Transactions with shareholders – – – –28,469 –28,469 –28,469
Balance at December 31, 2023 2,562 7,337 390 75,459 75,849 85,748
Read more in Note 19 Equity and number of shares in the consolidated financial statements about the share capital of the parent company.
155
VOLVO GROUP 2023
Parent company AB VOLVO
Notes to financial statements
The amounts within parentheses refer to the preceding year.
1
Accounting policies
The parent company has prepared its financial statements in accordance
with the Swedish Annual Accounts Act (1995:1554) and RFR 2, Account-
ing for legal entities. According to RFR 2, the parent company shall apply
all the International Financial Reporting Standards endorsed by the EU as
far as this is possible within the framework of the Swedish Annual
Accounts Act.
As from January 1, 2023, the Volvo Group applies the amendments to
IAS 12 Income taxes related to the international tax reform - Pillar Two
Model Rules. The amendments include disclosure requirement of the tax
exposure and an exception to recognize and disclose deferred taxes related
to Pillar Two Model Rules.
There are no announced changes in RFR 2 applicable to the fiscal year
beginning January 1, 2024 or later.
The accounting policies applied by the Volvo Group are described in the
respective notes in the consolidated financial statements. The main devi-
ations between the accounting policies applied by the Volvo Group and
the parent company are described below.
Shares and participations in group companies and Investments in joint
ventures and associated companies are recognized at cost in the parent com-
pany and test for impairment is performed annually. In accordance with RFR
2, the parent company includes costs related to acquisition of a business in
the acquisition value. Dividend is recognized in the income statement. All
holding of shares are recognized as financial assets and the result is reported
in the income from financial items.
The parent company applies the exception in the application of IFRS 9
which concerns accounting and measurement of financial contracts of guar-
antee in favor of subsidiaries and associated companies. The parent company
recognizes the financial contracts of guarantee as contingent liabilities.
RFR 2 includes an exception in regard to IFRS 16, allowing all lease
contracts to be accounted for as operational lease contract when the
parent company is a lessee.
Group contributions are recognized in accordance with the alternative rule
in RFR 2 and are presented as appropriations.
According to RFR 2, application of the regulations in IAS 19 regarding
defined benefit plans is not mandatory for legal entities. However, IAS 19
shall be applied for supplementary disclosures when applicable. RFR 2
refers to the Swedish law on safeguarding of pension commitments
(“tryggandelagen”) related to recognition of provisions for post-employment
benefits in the balance sheet and of plan assets in pension foundations.
Volvo Group applies IAS 19 Employee Benefits in the consolidated
financial statements. This implies differences, which may be significant,
in the accounting of defined benefit pension plans as well as in the
accounting of plan assets invested in the Volvo Pension Foundation.
The accounting principles for defined benefit plans differ from IAS 19
mainly relating to:
• Pension liability calculated according to Swedish accounting
principles does not take into account future salary increases.
• The discount rate used in the calculations is set by PRI Pensions-
garanti and Finansinspektionen, respectively.
• Changes in the discount rate, actual return on plan assets and other
actuarial assumptions are recognized directly in the income statement
and in the balance sheet.
• Deficit must be either immediately settled in cash or recognized as
a liability in the balance sheet.
• Surplus cannot be recognized as an asset, but may in some cases
be refunded to the company to offset pension costs.
2
Revenue and intra-group transactions
The recognized net sales of SEK 1,260 M (258) pertain mainly to revenues
from sale of services to group companies SEK 1,246 M (242). Revenue is
recognized when the control of the service has been transferred to the
customer, which is when the parent company incurs the associated cost to
deliver the service and the customer can benefit from the use of the deliv-
ered services.
Purchases from group companies amounted to SEK 542 M (422).
3
Administrative expenses
Personnel
Wages, salaries and other remunerations amounted to SEK 597 M (488),
social costs to SEK 179 M (140) and pension costs to SEK 82 M (61).
Pension cost of SEK 8 M (12) pertained to Board Members and the Presi-
dent. The parent company has outstanding pension obligations of SEK 3 M
(7) to these individuals.
The number of employees at year-end was 321 (279).
Read more in Volvo Group Note 27 Personnel about the average number
of employees, wages, salaries and other remunerations including incentive
program as well as Board members and senior executives by gender.
3:1
Fees to the auditors 2023 2022
Deloitte AB
– Audit fees 29 27
– Audit-related fees 2 1
Total 31 28
Read more in Volvo Group Note 28 Fees to the Auditors for a description of the
different categories of fees.
4
Other operating income and expenses
4:1
Other operating income and expenses 2023 2022
Royalties received – 41
Write-offs of receivables – –184
Realized and unrealized exchange
rates gains and losses 94 30
Donations and grants –14 –17
Other income and expenses –6 –2
I/S
Total 74 –132
156
VOLVO GROUP 2023
PARENT COMPANY AB VOLVO
5
Income from investments in group companies
5:1
Income from investments in
group companies 2023 2022
Dividends received
VNA Holding Inc., USA 4,124 3,814
Volvo China Investment Co. Ltd, China 2,303 1,099
Volvo Automotive Finance
(China) Limited, China 120 –
Volvo Danmark A/S, Denmark 103 63
Volvo Group UK Ltd., Great Britain 92 70
Volvo Norge A/S, Norway 65 52
Volvo Malaysia Sdn Bhd, Malaysia 58 62
Volvo Group Italia Spa, Italy 32 –
VFS Servizi Finanziari Spa, Italy – 17
Subtotal 6,897 5,177
Impairment of shares
Volvo Investment AB, Sweden –1,380 –
Subtotal –1,380 –
Reversal impairment of shares
Volvo Group Italia Spa, Italy 225 –
Subtotal 225 –
Gains/losses from divestment of shares
UD Trucks Corporation, Japan 49 –
Stokov Machinery JSC, Russia –173 –
Subtotal –124 –
I/S
Income from investments
in group companies 5,617 5,177
6
Income from investments in joint
ventures and associated companies
Income from investments in joint ventures and associated companies
includes dividend from VE Commercial Vehicles, Ltd. by SEK
76 M (34).
7
Income from other investments
AB Volvo has not had any transactions from other investments which have
had a significant impact on the financial statements.
8
Interest expenses and similar charges
Interest expenses and similar charges totaling SEK 1,250 M (750) include
interest of SEK 1,250 M (750) to group companies.
9
Other financial income and expenses
Other financial income and expenses include exchange rate gains and
losses received by SEK 126 M (128) and costs for credit rating and stock
exchange listing cost by SEK 25 M (18).
10
Appropriations
Appropriations include a net of group contributions of SEK 45,263 M
(24,298) and reversal of tax allocation reserve of SEK 3,500 M (
2,500).
157
VOLVO GROUP 2023
PARENT COMPANY AB VOLVO
11
Income taxes
Income taxes were distributed as follow:
11:1
Income taxes 2023 2022
Current taxes relating to the period –9,778 –5,163
Adjustment of current taxes for prior period 2,437 –
Deferred taxes –12 –25
I/S
Total income taxes –7,353 –5,188
The main reasons for the difference between the corporate income tax of
20.6% and the income tax for the period are disclosed in table 11:2.
Deferred taxes relate to estimated tax on temporary differences. The
revaluation of deferred taxes is based on the tax rate that is expected for
the period when the asset is realized or when the liability is adjusted.
The Volvo Group is within the scope of OECD Pillar Two Model Rules, an
international tax reform. Pillar Two Legislation has been enacted in Sweden
and will start as from financial year 2024.
Read more in Volvo Group Note 10 Income taxes about Pillar Two.
11:2
Income taxes for the period 2023 2022
Income before taxes 52,167 29,817
Income tax according to applicable tax rate –10,746 –6,142
Capital gains/losses –25 –
Non-taxable dividends 1,436 1,073
Other non-deductible expenses –309 –29
Other non-taxable income 50 –
Withholding tax –128 –58
Adjustment of current taxes for prior period 2,437 –
Other taxable not recorded income –43 –31
Remeasurement of deferred tax assets 5 9
Current tax on standardized method –30 –10
Income taxes for the period –7,353 –5,188
11:3
Specification of deferred tax assets Dec 31,
2023
Dec 31,
2022
Provisions for post-employment benefits 205 217
B/S
Deferred tax assets 205 217
158
VOLVO GROUP 2023
PARENT COMPANY AB VOLVO
12
Investments in shares and participations
Shares and participations in group companies
During 2023 impairment of shares in Volvo Investment AB has been made
by SEK 1,380 M. The Russian entity has been divested, which decreased
the carrying value by SEK 177 M. Shareholder´s contribution has been pro-
vided to VFS Latvia SIA by SEK 90 M, to Volvo Autonomous Solutions AB
by SEK 1,100 M, to Volvo Group Mexico SA by SEK 543 M and to Volvo
Treasury AB by SEK 497 M.
During 2022 investment in VFS Renting Sociedade Unipessoal Lda.
was made by SEK 3 M and in Rental Business Solution S.R.L by SEK 2 M.
Shareholder´s contribution was provided to Volvo Treasury AB by SEK
1,700 M, to Volvo Autonomous Solutions AB by SEK 1,240 M, to Volvo
Group Venture Capital AB by SEK 350 M and to VFS Renting Sociedade
Unipessoal Lda. by SEK 9 M.
Investments in joint ventures and associated companies
No transactions have affected the value of investment in joint ventures and
associated companies during 2023 and 2022.
Other shares and participations
No significant transactions have affected the value of other shares and
participations during 2023 and 2022.
12:1
Changes in AB Volvo´s holding of
shares and participations
Group
companies
Joint ventures
and associated
companies
Other shares and
participations
2023 2022 2023 2022 2023 2022
Opening balance 70,987 67,683 8,946 8,946 2 1
Acquisitions/New issue of shares – 5 – – – –
Divestments/Redemption of shares –177 – – – – –
Shareholder’s contribution 2,230 3,299 – – 1 1
Impairment of shares and participations –1,380 – – – –1 –
Reversal impairment of shares and participations 225 – – – – –
B/S
Carrying value, Dec 31 71,885 70,987 8,946 8,946 2 2
12:2
Holding of shares in joint ventures, associated
companies and other shares and participations
Dec 31, 2023 Dec 31, 2023 Dec 31, 2022
Registration
number
Percentage
holding
1
Carrying
value
2
Carrying
value
2
Dongfeng Commercial Vehicles Co. Ltd., China – 45.0 7,197 7,197
VE Commercial Vehicles Ltd., India
3, 4
– 34.7 1,616 1,616
World of Volvo AB, Sweden
4
559233-9849 50.0 125 125
Other investments – 10 10
Total carrying value, joint ventures, associated companies
and other shares and participations 8,948 8,948
1 The percentage holding refers to the parent company AB Volvo’s holding.
2 Refers to AB Volvo’s carrying value of its holding.
3 The total holding by Volvo Lastvagnar AB and AB Volvo is 45.6%.
4 In Volvo Group the companies are reported as joint ventures, consolidated according to equity method.
159
VOLVO GROUP 2023
PARENT COMPANY AB VOLVO
AB Volvo owns, directly or indirectly, 289 (290) legal entities. The direct owned entities are listed in below table.
12:3
Holding of shares in group companies Dec 31, 2023 Dec 31, 2022
Registration
number
Percentage
holding
1
Carrying
value
2
Carrying
value
2
Volvo Lastvagnar AB, Sweden 556013-9700 100 8,711 8,711
Volvo Business Services International AB, Sweden 556539-9853 100 8,134 8,134
Volvo Bussar AB, Sweden 556197-3826 100 3,033 3,033
Volvo Construction Equipment AB, Sweden 556021-9338 100 8,076 8,076
AB Volvo Penta, Sweden 556034-1330 100 586 586
VNA Holding Inc., USA – 100 3,688 3,688
Volvo Financial Services AB, Sweden 556000-5406 100 2,667 2,667
Volvo Treasury AB, Sweden 556135-4449 100 15,241 14,744
Volvo Investment AB, Sweden 556519-4494 100 2,888 4,268
Volvo Lastvagnar Sverige AB, Sweden 556531-8572 100 2,355 2,355
Volvo Fuel Cell Holding AB, Sweden 559275-6729 100 3,000 3,000
Volvo China Investment Co Ltd., China – 100 1,302 1,302
Volvo Automotive Finance (China) Ltd., China – 100 491 491
Volvo Group UK Ltd., Great Britain
3
– 35 350 350
Volvo Group Mexico SA, Mexico – 100 1,086 543
Volvo Group Venture Capital AB, Sweden 556542-4370 100 719 719
Volvo Powertrain AB, Sweden 556000-0753 100 898 898
Volvo Information Technology AB, Sweden 556103-2698 100 1,511 1,511
Volvo Parts AB, Sweden 556365 -9746 100 200 200
Volvo Group Insurance Försäkrings AB, Sweden 516401-8037 100 182 182
Volvo Business Services AB, Sweden 556029-5197 100 118 118
Volvo Danmark A/S, Denmark – 100 157 157
VFS Servizi Financiari Spa, Italy
4
– 25 101 101
Kommersiella Fordon Europa AB, Sweden 556049-3388 100 2,693 2,693
Volvo Norge AS, Norway – 100 50 50
Volvo Malaysia Sdn Bhd., Malaysia – 100 48 48
Stokov Machinery JSC, Russia – – – 177
Volvo Group Italia Spa, Italy
5
– 65 559 335
Volvo Logistics AB, Sweden 556197-9732 100 385 385
VFS Latvia SIA, Latvia – 100 99 9
VFS Int Romania Leasing Operational, Romania – 100 2 2
Volvo Energy AB, Sweden 559285-4169 100 200 200
VFS Renting Sociedade Unipessoal Lda., Portugal – 100 12 12
Rental Business Solution S.R.L., Italy
4
– 49 2 2
Volvo Autonomous Solutions AB, Sweden 559285-4219 100 2,340 1,240
Other holdings – – –
Total carrying value group companies
6
71,885 70,987
1 The percentage holding refers to the parent company AB Volvo’s holding.
2 Refers to AB Volvo’s carrying value of its holding.
3 Total holding by Volvo Lastvagnar AB and AB Volvo is 100%.
4 Total holding by Volvo Group Italia Spa and AB Volvo is 100%.
5 Total holding by Renault Trucks (SAS), Volvo Lastvagnar AB, Volvo Bussar AB, AB Volvo Penta and AB Volvo is 100%.
6 AB Volvo´s share of shareholder´s equity in subsidiaries (including equity in untaxed reserves) was SEK 160,688 M (158,195).
160
VOLVO GROUP 2023
PARENT COMPANY AB VOLVO
13
Other non-current receivables
13:1
Dec 31,
2023
Dec 31,
2022
Other non-interest bearing receivables – 193
Other interest bearing receivables 690 400
B/S
Total non-current receivables 690 593
14
Other receivables
14:1
Dec 31,
2023
Dec 31,
2022
Accounts receivable 7 6
Prepaid expenses and accrued income 210 172
Other receivables 88 73
B/S
Total other receivables 305 251
Prepaid expenses and accrued income include an amount of SEK 176 M
(
144) and refers to an earnout connected to the divestment of UD Trucks
which was completed in 2021.
There is no valuation allowance for doubtful receivables at the end
of the year. Fair value is not considered to differ from carrying value.
15
Untaxed reserves
Untaxed reserves include tax allocation reserve of SEK 4,000 M (7,500).
16
Provisions for post-employment benefits
The parent company has two types of pension plans, defined contribution
plans and defined benefit plans.
Defined contribution plans: post-employment benefit plans where the
company makes regular payments to separate entities and has no legal or
constructive obligation to pay further contributions. The expenses for
defined contribution plans are recognized during the period when the
employee provides service.
Defined benefit plans: post-employment benefit plans where the compa-
ny’s undertaking is to provide predetermined benefits that the employee will
receive on or after retirement. These benefit plans are secured through
balance sheet provisions or pension fund contributions. Furthermore, a credit
insurance policy has been taken out for the value of the obligations. The main
defined benefit plan is the ITP2 plan which is based on final salary. The plan is
semi-closed, meaning that only new employees born before 1979 have the
possibility to choose the ITP2 solution. The ITP2 plan for the company is
funded in Volvo Pension Foundation. Pension obligations are calculated annu-
ally, on the balance sheet date, based on actuarial assumptions.
The defined benefit obligations are calculated based on the actual salary
levels at year-end and based on a discount rate of 2.85% (2.85) for the ITP2
plan and
1% (0.2) for other pension obligations. Assumptions for discount
rates and mortality rates are determined annually by PRI Pensionsgaranti for
ITP2 and Finansinspektionen for other pension obligations, respectively.
Provisions for post-employment benefits in the parent company’s
balance sheet correspond to the present value of obligations at year-end,
less fair value of plan assets.
16:1
Obligations in defined
benefit plans Funded Unfunded Total
Obligations opening balance 2022 759 275 1,034
Service costs 134 –4 130
Interest costs 24 1 25
Benefits paid –28 –13 –41
Obligations,
Dec 31, 2022 889 259 1,148
Service costs 107 2 109
Interest costs 28 3 31
Benefits paid –29 –14 –43
Obligations,
Dec 31, 2023 995 251 1,245
16:2
Fair value of plan assets in funded plans
Plan assets opening balance 2022 1,210
Actual return on plan assets –130
Contributions and compensation to/from the fund –
Plan assets, December 31, 2022 1,080
Actual return on plan assets 65
Contributions and compensation to/from the fund –
Plan assets, December 31, 2023 1,145
161
VOLVO GROUP 2023
PARENT COMPANY AB VOLVO
16:3
Provisions for post-employment
benefits
Dec 31,
2023
Dec 31,
2022
Obligations
1
–1,245 –1,148
Fair value of plan assets 1,145 1,080
Surplus (+) / deficit (–) –100 –68
Limitation on assets in accordance with
RFR2 (when plan assets exceed
corresponding obligations) –151 –191
B/S
Net provisions for
post-employment benefits
2
–251 –259
1 The ITP2 obligations amount to SEK –980 M (–874).
2 ITP2 obligations, net, amount to SEK – M (–).
16:4
Pension costs 2023 2022
Service costs 109 130
Interest costs
1
31 25
Interest income
1
–104 –132
Pension costs for defined benefit plans 36 23
Pension costs for defined contribution plans 22 32
Special payroll tax/yield tax
2
22 6
Cost for credit insurance FPG 2 –
Total costs for the period 82 61
1 Interest income, net of SEK 28 M (24) is included in financial items.
2 Special payroll tax/yield tax are calculated according to Swedish
Tax law and accrued for in current liabilities.
17
Non-current liabilities
17:1
Maturity
2025–2029 692
2030 or later 4
B/S
Total non-current liabilities 696
18
Other liabilities
18:1
Dec 31,
2023
Dec 31,
2022
VAT 84 –
Wages, salaries and withholding taxes 427 327
Accrued expenses and prepaid income 244 169
Other liabilities 8 7
B/S
Total other liabilities 763 503
No collateral is provided for current liabilities.
19
Contingent liabilities
Contingent liabilities as of December 31, 2023, amounted to SEK 365,193 M
(332,755) of which SEK 365,154 M (332,694) pertained to group com-
panies.
Credit guarantees are included to an amount corresponding to the
credit limits. Credit guarantees amounted to SEK 348,080 M (317,482).
The total amount pertained to group companies.
The utilized portion at year-end amounted to SEK 205,255 M (187,824), of
which SEK 205,236 M (187,807) pertained to group companies.
20
Cash flow
20:1
Other non-cash items 2023 2022
Transfer price adjustments 17 –35
Realized currency effect
related to dividends –70 152
Other changes –14 –27
Total other non-cash items –67 90
20:2
Change in loans Non-current
liabilities to
group companies
Loan
Volvo Treasury AB
Current
liabilities to
group companies
Loan/Cashpool
Volvo Treasury AB
December 31, 2021 5,739 37,013
Cash flows
new borrowings 250 –
Cash flows repay-
ments of borrowing – –20,414
Reclassification –5,589 5,589
Other – –144
December 31, 2022 400 22,044
Cash flows
new borrowings 290 17,432
Cash flows repay-
ments of borrowings – –5,589
Other – 13
December 31, 2023 690 33,900
162
VOLVO GROUP 2023
PARENT COMPANY AB VOLVO
SUSTAINABILITY NOTES
PAGE
Impacts, stakeholders and material topics 164
Business context 164
Report content 165
Climate 166
Strategy and governance 166
Risk management 168
R&D disclosures 169
Greenhouse gas emissions and energy 170
Science based targets 171
Environment 173
Policy, management system 173
Resource use, Substances of concern 173
Environmental compliance, Water, Biodiversity 174
EU Taxonomy regulation disclosures 175
Employees 179
Policy - Code of Conduct 179
Employee relations and dialogue 179
Workforce statistics 180
Diversity and equal opportunities 181
Occupational health and safety 183
PAGE
Customer and end-user safety 184
Product safety 184
Traffic safety 184
Human rights across the value chain 185
Governance, Policy commitment 185
Value chain due diligence 186
Awareness, Stakeholders 186
Grievance mechanism 187
Specific disclosures on salient risks 187
Responsible sales 188
Responsible purchasing and social impact 189
Business ethics and compliance 191
Compliance, Anti-corruption, Competition law 191
Whistle-blower reporting, Public policy 192
Complementary general disclosures 193
About the report
These Sustainability notes include the Volvo Group’s col-
lected sustainability disclosures. As sustainability topics
are top strategic issues and well integrated in the busi-
ness and operating model of the Volvo Group, additional
disclosures relevant for sustainability are found in other
parts of the Annual Report and included by reference.
Reporting standards used
This report has been prepared in accordance with the
Global Reporting Initiative’s (GRI) Standards 2021.
GRI is complemented by other relevant frameworks
where stated, including the recommendations from
the Task Force on Climate related Financial Disclo-
sures (TCFD).
Topics related to this report
Complementary information is available on
volvogroup.com/report2023. This includes:
• GRI index 2023
• TCFD index
• SASB index, Industrial Goods and Machinery
• Locations of major operations
• Membership in associations
• Code of Conduct and related policies
163
VOLVO GROUP 2023
Impacts, stakeholders and material topics
Business context
The Volvo Group is headquartered in Gothenburg, Sweden, employs
104,000 people and serves customers in almost 190 markets. In 2023,
net sales amounted to SEK 553 billion (EUR 48 billion).
Customers and end-users
The Volvo Group’s Business Areas support customers in the main seg-
ments of Trucks, Buses, Construction Equipment, Marine drive systems
and industrial motors. Customers and end users are active in a wide range
of industries. Direct customers are found in the key industries:
• Road freight transport: Typically operating smaller or larger transport
vehicles. Main customers are transport buyers and freight companies.
• Construction and infrastructure sectors: Operating for example
construction sites, quarries, and mining sites.
• Public transportation industry: Municipalities and passenger transport
companies and operating machinery fleets, public transportation, or
individual vehicles.
Products, services and markets
We provide a range of products and services to customer in almost 190
markets. Our product offering includes new trucks, buses, machines and
engines as well as sales of used trucks, buses, machines, trailers, super-
structures and special vehicles. Services include sale of spare parts,
maintenance services, repairs, extended coverage, connectivity solutions
and other aftermarket products. Services also include sales in Financial
Services related to finance lease, installment credits and operating leases.
An overview of products delivered over 11 years are available on page 226.
The Volvo Group’s main brands are Volvo, Volvo Penta, Rokbak, Renault
Trucks, Prevost, Nova Bus, Mack and Arquus. We also operate in joint
ventures and partnerships. Our main joint ventures with the SDLG,
Milence, Eicher, Dongfeng and cellcentric brands.
The Group’s main operating segments are presented on pages 7 and 68–79.
Further information and of these operating segments and distribution of
sales across markets are found on the following pages:
• Trucks, page 68
• Construction equipment, page 72
• Buses, page 74
• Volvo Penta, page 76
• Financial Services, page 78
The Group’s business model is further explained on page 32.
Operations and supply chain
Volvo Group operates manufacturing and assembly plants in 18 countries
on 5 continents. The most significant manufacturing operations are
located in Sweden, the US, Brazil, India, France and China. Our own oper-
ations consist of around 60 larger manufacturing plants across the world,
see further details on volvogroup.com. In addition, Volvo Group also oper-
ates logistics centers and R&D facilities and distribution hubs. In total, the
Volvo Group’s sites span over 500 individual addresses across the world.
The Group also relies on global and local supply chains to deliver com-
ponents, parts and complete services and systems. Approximately
12,000 supply partners support the Volvo Group’s series production and
in total the Group’s supply network is made up of more than 50,000
supplier locations globally. Important supply chains related to sustain-
ability impacts include materials such as steel, aluminum and polymers,
and components such as batteries and electronics.
The manufacturing operations also depend on assembly partners and
suppliers who sub-assemble parts and systems. In addition, the Volvo
Group utilize truck assembly partners and bus body builders to carry out
certain assembly processes for the final product.
Strategic framework for sustainable development
The Volvo Group’s framework to drive sustainability and performance
revolves around people, climate and resources, and is aligned with the
Sustainable Development Goals and Targets from the United Nations. Our
sustainability priorities have been established in dialogue with a network
of sustainability professionals and management of all Truck Divisions,
Business Areas as well as the Executive Management of the Volvo Group
and the Board of Directors.
As described in the CEO letter on pages 8–11 and further outlined in the
Group’s strategy section and explained in detail in these sustainability
statements, the Volvo Group is determined to drive the transition to sus-
tainable transport and infrastructure solutions.
Materiality
The Volvo Group’s strategy responds to a range of sustainability-related
issues. This means considering the impact on the world around us as an
integral part of the long-term success of our business. We continuously
assess impacts and associated risks and opportunities for each sustain-
ability topic in this report. As part of this, we have assessed scope and
scale for relevant sustainability impacts, and possibility to remediate neg-
ative impacts. The overall result of the materiality assessment has been
used to determine the report content. There are no significant changes in
the report content between 2022 and 2023.
Risks and mitigation
Risk are gathered from the Group’s Enterprise Risk process. The results
are used as an overall indicator of materiality.
The Volvo Group’s enterprise risk management process includes sus-
tainability-related risks. Principal risks, including several sustainability-
related risks, are reported in the overall Risks and uncertainties section,
see pages 82–88. These Sustainability notes include more details on mit-
igation activities and complementary information also where a specific
topic has not yet been qualified as a principal Group-wide risk, but have
been identified as material from other perspectives.
Stakeholder feedback
As input to the materiality review, we use internal and external knowledge
and experience from e.g. life-cycle assessments and GHG emissions
inventory, external risk mapping on environmental and social impacts,
human rights reviews, supplier self-assessment and audit finding.
Stakeholder input has been gathered from affected stakeholders as
well as users of the Volvo Group’s report.
The main affected stakeholders identified are direct employees, suppli-
ers and people working in the value chain. Employee input has been col-
lected from on-site audits and formal dialogues with employee represen-
tatives. An open survey focusing on sustainability topics was also made
available to some employees during the year to track anonymized feed-
back on material issues. Input from value chain workers is collected during
on-site audits at suppliers.
Affected stakeholder perspectives are considered in strategy updates.
The approach is to have an open dialogue with relevant stakeholders, prior
to e.g., organization changes or establishment of new sites, to ensure rele-
vant views are considered.
164
VOLVO GROUP 2023
SUSTAINABILITY NOTES
We also engage in dialogue with stakeholders using the information in
the Volvo Group’s sustainability report in their decision-making, such as
customers, investors and regulators.
Customer feedback has been gathered via the Volvo Group’s Business
Areas who respond to a range of sustainability-related matters. Business
Areas also follow up specific sustainability issues with selected accounts.
In addition, questionnaires from customers to Volvo Group via third par-
ties have become more widely used. This type of feedback is used as rel-
evant proxy for customer requirements in our main sectors.
Shareholder and investor feedback has been gathered from direct
dialogues, and events coordinated by the Group’s Investor Relations func-
tion. During the year, many dialogues have focused directly on
sustainability impacts. We have also reviewed external reports on the
Group’s and peers’ sustainability performance as a proxy for the expecta-
tions from the perspective of report users. Such reports include risk
assessments, comparison with industry peers and materiality heat maps.
Supply partners’ feedback is sought in direct contact via Volvo Group’s
procurement staff, this can include assessments of sustainability risks
conducted by Volvo Group, but also expectations from suppliers on Volvo
Group. Conferences and summits with supply partners are also organized
to formalize joint strategies and ways of working.
Other report-users and stakeholders in civil society are often repre-
sented by authorities and other organizations and to some extent media.
Topic-specific feedback from such stakeholders and individuals is also
gathered by functions within Group, Divisions and Business Areas to
inform a more detailed management approach to our material sustainabil-
ity topics, as explained in topic-specific disclosures on pages 166–192.
This includes input through projects, collaboration, memberships of asso-
ciations and surveillance of public policy development.
The most material matters are reported in accordance with the GRI
Standards, while some are more briefly described. See GRI-index on
volvogroup.com/report2023 for details.
Report content
The Volvo Group applies GRI’s reporting principles on stakeholder inclusiveness, sustainability context, materiality and completeness and works to
implement the recommendations of the TCFD. Sustainability topics have been structured in six main areas with a number of sub-topics – Climate,
Environment, Employees and workforce, Customer health and safety, Human rights across the value chain, and Business ethics and compliance,
reflecting our priorities and ways of working.
Area Comment on content, boundaries, and impacts
Climate Climate-related impacts, risks and opportunities are deemed to be the most important environ-
mental matter. The transition to a low carbon economy relies on reduced environmental impacts
from customer use phase, production and supply chain.
Environment We work to maintain high environmental performance in a range of areas. These include less mate-
rial or indirect impacts related to pollution, resource use, water and biodiversity.
Employees and workforce A number of employee-related topics are key to deliver on the Group’s strategy, mission and vision,
to create engaging work environments and to avoid negative impacts. This includes health and
safety, diversity and equal opportunities, social dialogue for better workplaces, and continued com-
petency development.
Customer health and safety Safety is a key matter also for customers and end-users. In our work we focus on product safety via
our quality management and traffic safety efforts seeking to further improve safety performance
during the use phase.
Human rights across the value chain We are committed to respecting internationally recognized human rights. Human rights impacts
may materialize not only within our own organization, but also through our business relationships
and in the value chain. This includes workers in the value chain and impacts in the use phase of our
products.
Business ethics and compliance We believe in treating others with respect and in fair competition, because in transparent markets with-
out corruption, the best solutions win and companies dare to invest for the future. This includes compli-
ance with laws and regulations, as well as the standards and ambitions that we set for our work.
165
VOLVO GROUP 2023
SUSTAINABILITY NOTES
Climate
GOVERNANCE AND STRATEGY
The Volvo Group supports the implementation of the recommendation of
the Task Force on Climate-Related Financial Disclosures (TCFD). This
report sets forth the Group’s disclosures on its overall governance, strat-
egy and management of climate-related risks and opportunities, including
relevant climate-related metrics and targets. The Volvo Group recognizes
that there continues to be more work to be done in developing the disclo-
sures to align with the recommendations of the TCFD and international
reporting standards being developed in this area. Activities are gradually
being initiated to further develop these disclosures.
Strategy
The Volvo Group supports the ambitions of the Paris Agreement – to keep
the increase of the global average temperature to well below 2 °C above
pre-industrial levels and to pursue efforts to limit the temperature increase
to 1.5 °C. To this end, the Group believes the most meaningful effort it can
make in the global climate transition is to drive decarbonization of the
transport- and other sectors of society where the Group is active.
The Group’s longer-term goal is to help customers reach net-zero green-
house gas (GHG) emissions by 2050. Given that the average lifetime of the
Group’s products is approximately ten years, the Group is targeting net-
zero value chain emissions by 2040. The Group has committed to the SBTi
Business Ambition for 1.5 °C and has set science-based targets in relation
to its emissions in pursuit of its net-zero targets. The Group has also set
milestone targets along the way. Please see pages 172–174 for details on
the 2030 GHG targets and other Group metrics applied.
The ambition to drive decarbonization affects all aspects of Group oper-
ations, including sourcing, logistics, research and product development,
production, sales and cooperations. A key driver for achieving targets is to
put electric trucks, buses, construction equipment and drivelines in use,
but the Group believes transition will also include different technologies
that can be powered by renewable energy. These solutions can be bat-
tery-electric, fuel cell-electric or vehicles propelled with energy sources
with low GHG intensity for combustion engine drivelines. The picture on
the next page illustrates a possible transition path for these driveline tech-
nologies.
The Group expects electrification and other transitional activities
towards decarbonization to happen segment by segment, market by mar-
ket and region by region. The possibility to successfully introduce transi-
tionary products and services will depend on the competitiveness of the
Group’s offer, but also on several external factors, such as customers’ cli-
mate ambitions, regulatory developments, public subsidies to different
sectors of the economy and availability of low-carbon energy. It is cur-
rently not possible to make reliable predictions of transition pace or tech-
nology preferences in the longer term in a particular market or region,
however, the Group aims to drive transformation in business segments
where it is active, regardless of whether it will happen at a faster or slower
pace than expected. Overall, significant effects on GHG emissions of fully
electric vehicles are expected during the second half of this decade.
As part of the Group’s science-based targets and business plan, we
advocate for a transition in line with the Paris Agreement, read more in the
section Public Policy on page 192.
Governance
The AB Volvo Board of Directors and the Executive Board are ultimately
responsible for the oversight of the Volvo Group’s climate-related risks and
opportunities and are responsible for setting the strategic direction of the
Group, as further detailed on page 197 in the Corporate Governance Report.
A number of cross-functional working groups consolidate and prepare
information for consideration in strategic decision-making at the Board of
Directors and Executive Board level. Groups with representation from
executive management meet regularly during the year, focusing on the
Group’s climate goals and on sustainability disclosures. The Volvo Group
follows up on revenues and investments related to fully electric vehicles
monthly, and every quarter the Executive Board reviews the Group’s prog-
ress on science-based targets. The Executive Board reports this progress
to the AB Volvo Board regularly.
Remuneration
A key driver for achieving our science-based targets is to put electric trucks,
buses, construction equipment and drivelines in use. Sales volume of fully
electric vehicles and machines has therefore been included in the Volvo
Group’s short-term incentive program to drive a rapid climate transition.
More information can be found in the Remuneration report, which is made
available on volvogroup.com for the Annual General Meeting each year.
Climate-related risks
The transition of the transport sector offers significant challenges for the
Volvo Group. Climate-related risks can be divided into two categories,
transitional climate risks and physical climate risks. Transitional climate
risks include for instance technology-related risks, policy- and legal-related
risks, market risks and reputational risks. Physical climate risks include
both acute physical risks, such as extreme weather events, and chronic
physical risks, for instance those arising due to changing weather patterns,
rising mean temperature and rising sea levels. The Volvo Group is exposed
to a number of climate-related risks, as set out below.
A normative scenario analysis was conducted in the establishment of the
Group’s science-based targets. As part of establishing strategies and plans
in line with the Group’s net-zero commitment, analyses have been per-
formed to understand the level of emission reductions needed to follow the
pathways aligned with the ambitions in the Paris Agreement. The analyses
provide input on important factors such as modelling customer demand,
regulatory requirements, infrastructure roll-out, access to renewable
energy and governmental incentives for clean technologies which in turn
are essential inputs to the respective Business Areas’ plans.
Transitional risks
A number of climate-related transitional risks have been identified, which
are incorporated in the Volvo Group Enterprise Risk Management process.
Transitional risks may be material for the Volvo Group in the short, medium
and long term. These risks, including their potential impact, are described
in more detail on page 82–88 under the following risk categories:
• Regulations, page 83
• Transformation and technology, page 84
• New business models, page 84
• Suppliers and materials, page 85
166
VOLVO GROUP 2023
SUSTAINABILITY NOTES
100%
0%
2030 2040 20502020
Fossil-based energy
Fossil-free energy
Share
of new
vehicles
Fuel cell
BioLNG
HVO, electrofuels, hydrogen etc.
Battery
Electric
Internal
Combustion
Engine
At least
35% electric
vehicles
2030
Volvo Group
net-zero value
chain GHG
emissions
Customers’
rolling fleets
net-zero
Our approach to decarbonizing the value
chain in line with the Paris Agreement
includes our customers’ use phase. This
is where approximately 95% of product
lifecycle emissions are accounted for.
Our roadmap includes battery-electric,
fuel cell-electric and internal combustion
engine technology running on fossil free
fuels. The black vertical arrows illustrate an
uncertainty in future preferences and viability
of propulsion alternatives. In addition to the
technology development and Volvo Group
offer, the needed decarbonization of the
energy system, which is one of the more
important dependencies for the transforma-
tion of our industries, is illustrated in the
background.
The Volvo Group’s path
to decarbonization
Metrics and targets
This section summarizes the main relevant climate related metrics and targets for the Volvo Group. More context and details are found in additional
parts of this reports according to GRI standards and reporting on the EU Taxonomy regulation.
Greenhouse gas emissions, scope 3
A key element to achieve the ambition of net-zero greenhouse gas emissions
by 2040, is to develop products that help reduce our customers’ emissions
– as over 95% of life-cycle emissions occur during the use of sold products.
Developing products and solutions that reduce the GHG footprint of our
customers is a significant priority in the Volvo Group's strategy, and science-
based targets have been set per operating segment.
Targets (relative to baseline 2019)
• Trucks: reduce emissions per vehicle-km by 40% by 2030
• Buses: reduce emissions per vehicle-km by 40% by 2030
• Construction equipment: reduce absolute emissions 30% by 2030
• Volvo Penta: reduce absolute emissions by 37.5% by 2034
Read more Targets and results 2023, page 171
Greenhouse gas emissions, Scope 1 and 2
Emissions from own operations and from purchased energy make up a rel-
atively low proportion of the total life-cycle emissions – less than 1% – yet
they are important due to the direct operational control. Targets are set to
increase energy efficiency in operations and to reduce the carbon intensity
of the energy used.
Targets (relative to baseline 2019)
• Own operations: reduce absolute GHG emission by 50% by 2030
Read more Targets and results 2023, page 171
Electric vehicle sales
The Volvo Group is introducing electric and other solutions helping to
decarbonize customers’ operations. The ambition is illustrated above.
Targets
• Increase fully electric sales to at least 35% by 2030
Read more Volvo Group strategy, page 24
Other climate and environmental metrics
A range of environmental and efficiency metrics are followed up as part of the Group’s operational performance. These include energy conservation,
waste and water.
Read more. Detailed environmental metrics, pages 172-174
Capital deployment
Share of research and development to low-carbon products and services.
Read more R&D metrics, page 169
Internal carbon pricing
The Volvo Group is exploring different application areas and approaches to internal carbon pricing with a number of pilot trials to determine how internal
carbon pricing can be used in a suitable way.
167
VOLVO GROUP 2023
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Physical risks
Physical risks, including climate risks, in relation to main sites where the
Group is operating are reviewed on a regular basis as part of the Group’s
property management and insurance programs. In addition, we have ana-
lyzed climate hazards and related risks for each of the Group’s significant
locations based on different representative concentration pathway (RCP)
scenarios* developed by the IPCC. In this work, RCP 2.6, RCP 4.5 and
RCP 8.5 were used.
Different physical risks are an inherent part of operations at all Group
sites. Some of the locations may also be subject to increased risks from
physical weather events in the longer term, depending e.g. on climate
developments. The Group intends to continue monitoring these risks, and
take actions to seek to mitigate them when considered to be appropriate.
Reporting on physical risks will also be expanded, if such risks were to
emerge as material from a Group perspective in the future.
* RCP Scenarios are a set of different scenarios developed by the Intergovern-
mental Panel on Climate Change to model possible development of the earth’s
climate based on greenhouse gas concentrations in the atmosphere. RCP 2.6 is
a lower emission scenario and RCP 8.5 the higher scenario. In our work to assess
transition risks and opportunities, we are seeking to fulfil the highest ambitions
of the Paris Climate agreement, which is approximately in line with RCP 1.9.
Climate-related opportunities
The Volvo Group strives to lead the development of new technologies and
is continuing to develop an extensive portfolio of products and services
using new technologies. We aim to continue to providing high quality
products and services to our customers, while at the same time enabling
our customers to reduce their environmental impact. To this end, the
Volvo Group is broadening its offer of products that can be powered by
renewable energy through the introduction of battery-electric vehicles as
described on page 24. The Group also invests in fuel cell technology with
the ambition to have a heavy-duty hydrogen offer available during the sec-
ond half of this decade and continues to offer products that can be pow-
ered by renewable liquid and gaseous fuels like HVO (hydrogenated vege-
table oil) and biogas. In addition to new technology products, the Volvo
Group has developed a range of service solutions that help to reduce the
number of transports needed by optimizing fill rates, consolidating trans-
ports and choosing the most effective routing.
Customer demand for products and solutions with lower environmen-
tal impact is increasing, although the transition pace differs between
business areas and regions. When using electricity as main power source
in transport operations, the operational costs are in general reduced. At
the same time, the capital cost increases. This rebalancing can represent
an increasingly more attractive use case for fully electric vehicles in sev-
eral segments. More and more companies, with transport emissions mak-
ing up a significant part of their total GHG emissions, are establishing
net-zero commitment and science-based targets. This presents an oppor-
tunity for the Volvo Group in providing solutions that enable the reduction
of such emissions (read more on page 23). The Volvo Group estimates
that there is a potential to increase revenues by over 50% over the lifecy-
cle when comparing an electric vehicle to a conventional version. This is
primarily based on the higher sales value of an electric vehicle but also on
increased revenues from autonomous solutions, new digital services and
services connected energy solutions. Other factors expected to drive
growth are increased service contract penetration and an increase in the
duration of the contracts.
These opportunities are associated with investment costs, both in R&D
as well as property, plant and equipment in the short to medium term.
Volvo Group also engages in partnerships and collaboration with other
companies, whose core competencies are needed to develop new tech-
nology for transport and infrastructure solutions.
In relation to suppliers and new materials, the Volvo Group’s approach
is to collaborate in strategic partnerships to secure deliveries and to be
able to use different types of materials and technologies. We have also
engaged in joint ventures and taken steps for scalable manufacturing of
components and solutions needed for the transition, most notably in bat-
tery assembly and manufacturing.
External dependencies and collaborations
The transition to net-zero emissions in the transport sector depends on a
variety of factors, but we believe the main long-term solutions are electrifi-
cation and development of other zero emission technologies. Electrification
depends not only on the product and service offering but also on external
factors such as the existence of a functioning charging infrastructure and
access to renewable energy sources to power battery electric and fuel cell
electric products. Customer demand in different markets is also dependent
on factors such as availability of the necessary infrastructure and energy,
governmental incentives for green technologies and the price of fossil fuel.
Recognizing the need for collaboration on a system-wide basis, the
Volvo Group has taken part in a number of multi-stakeholder initiatives.
One such initiative is the First Movers’ Coalition, which assembles
cross-industry purchasing commitments to drive development of low-
carbon technologies. The Volvo Group is also investing in joint ventures
and strategic partnerships in adjoining sectors, such as energy, steel,
charging infrastructure and energy storage, which seek to develop, or
facilitate the use of, transitionary technologies and products. Read more
about such partnerships on page 27.
Risk management
In accordance with the decentralized Volvo Group governance model, each
Business Area and Truck Division is accountable for its own risk manage-
ment. Once risks have been identified, Truck Divisions, Business Areas and
Group functions report them in the ERM process using an integrated
multi-disciplinary approach. The ERM process includes all types of risks
for the Volvo Group, including climate and other sustainability related risks.
The risks identified in the ERM process undergo a materiality analysis.
The Group recognizes that some externalities impact the business in sev-
eral ways and climate change is a good example of this as it poses both
long-term strategic risks, for instance as a result of technology shifts and
increasing government regulations, and short to medium term risks, for
example in relation to customer satisfaction, physical disruptions of the
production system and requirements of environmental regulation. The
materiality analysis is conducted with internal and external stakeholders,
and the risks that are classified as material are risks which can, separately
or in combination, have a material adverse effect on the Group’s business,
strategy, financial performance, cash flow, shareholder value or reputa-
tion. See page 82–88 for more information.
In addition to the ERM process, climate risks are also considered and
managed in other Group processes, such as the scenario analysis work
(see above) and in the business continuity and risk mitigation planning for
the Group’s operational sites.
Financial planning
The Volvo Group’s investment plan includes a technology roadmap to
increase zero-emission vehicles and low-emission vehicles that can
enable net-zero transport solutions. These include solutions based on
electric and renewable liquid and gaseous fuels.
Investments in property, plant and equipment will increase in connec-
tion with the Group building up capacity for the above activities. However,
thanks to the Group’s modular product architecture CAST (read more on
page 26) both electric trucks and trucks with combustion engines can be
produced on the same assembly lines, thus limiting the investments
needed for this transition of the industrial system.
Part of the investments in R&D, as well as in property plant and equip-
ment, is directly invested in the Group’s current industrial system and in
tools at suppliers. Beyond this, the Volvo Group is collaborating in joint
ventures and strategic partnerships where additional significant invest-
ments are made.
168
VOLVO GROUP 2023
SUSTAINABILITY NOTES
DISCLOSURES ON RESEARCH AND DEVELOPMENT INVESTMENTS
The Volvo Group’s total investments in R&D, excluding the effects from the
net of capitalized and amortized R&D, amounted to SEK 28.7 billion. The
Group’s R&D project portfolio has been categorized into four main catego-
ries to provide a more transparent overview of the Group’s R&D invest-
ments during the year. The classification of R&D expenses in this section is
based on a Group internal categorization of investments. Hence it does not
align directly with the EU Taxonomy or other external standard.
• Low- and zero-emission projects – directly associated with prod-
ucts with low or zero tailpipe emissions, following the definitions of
the substantial contribution criteria in the EU Taxonomy.
• Platform and enabler projects – associated with the development of
technology common to both conventional products as well as low or
zero emission vehicles based on the Group’s modular architecture (CAST).
This includes development of technologies such as common electrical
architecture, cabs, aerodynamics, connectivity and safety features.
• Fuel efficiency and other environmental improvement projects –
associated with the improvement of the environmental performance
of internal combustion engine vehicles, e.g. fuel efficiency, emissions
reduction, bio-LNG and other low-carbon fuel projects. These invest-
ments are important for the transition to lower GHG emissions in
addition to electrification.
• Neutral projects – all the remaining projects. Some of these invest-
ments may result in certain environmental benefits, but they have not
been assessed as significant, for example a quality update to an exist-
ing asset or product.
R&D expenses, %
Low/zero emission, 28
Platform/enabler, 27
Fuel efficiency/other environmental
improvement, 11
Neutral, 34
In 2023, approximately 28% of the Volvo Group’s gross R&D expenses¹
were considered low- and zero-emission, an additional 38% were related
to fuel efficiency and pollution prevention, or projects in shared technology
projects.
1 Excluding effects from capitalization and amortization.
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VOLVO GROUP 2023
SUSTAINABILITY NOTES
GREENHOUSE GAS EMISSIONS AND ENERGY
The Volvo Group’s emissions metrics, targets and disclosures are based
on the Greenhouse Gas (GHG) Protocol corporate standard. Emissions
from use of sold products – scope 3.11 of the GHG protocol – are identi-
fied as the main material category in the baseline GHG inventory, repre-
senting over 95% of the total emission footprint. When nothing else is
stated, GHG emissions are adjusted for acquisitions and divestments
according to the accounting principles of the GHG protocol. The Volvo
Group has reported climate- related information, targets and results since
the beginning of the 2000s. The approach of managing climate-related
risks has served the Volvo Group well, both in terms of reducing emissions
in line with targets set and in terms of developing new technologies and
business plans to meet the transition towards fossil-free transports.
In addition to product development and technology roadmaps that are
compatible with a low carbon economy, the Group has identified key
external factors described on page 168, on which we are dependent for
the fulfillment of our climate targets.
Science-based targets for Scope 1, 2 and 3 emissions
The Volvo Group committed to the Science-Based Targets initiative
(SBTi) “Business Ambition for 1.5 °C” in 2020 and validated its set tar-
gets in June 2021. The Volvo Group is targeting a net-zero value chain
offer by 2040. Given that the average life-time of the Group’s products is
approximately ten years, this should allow the Group’s customers to
achieve net-zero value chain greenhouse gas emissions by 2050.
The targets are set in different ways for the Group’s different segments.
What they have in common is that they are all contributing to the ambi-
tions of the Paris Agreement.
Methods and data collection
Scope 1 and 2 emissions method and data collection
Environmental impacts and greenhouse gas inventory are established
according to the Greenhouse Gas Protocol’s Corporate Accounting and
Reporting Standard, which is a standardized framework for quantifying
and reporting GHG emissions in CO₂-equivalents (CO₂e).
Less than 0.5% of the total emission inventory are connected to Scope
1 and 2, including production plants, engineering centers, offices and
dealerships. These are under the Volvo Group’s direct management and
higher level of control.
Scope 3 use phase emissions method and data collection
Scope 3 emission results are reported to indicate the progress toward the
net-zero SBTi targets for the Volvo Group products. The methodology for
calculating emissions from use of sold products has been designed to
meet the requirements provided in the relevant standards of the GHG
Protocol; namely the GHG Protocol Corporate Standard, the GHG Proto-
col Corporate Value Chain (Scope 3) Accounting and Reporting Standard,
and Technical Guidance for Calculating Scope 3 Emissions, which include
expected lifetime emissions from all applicable products sold in the
reporting period.
The target methodology and boundaries are following the SBTi Trans-
port Science Based Target setting guidance and the target setting
requirements and tools from the SBTi. The methodology is based on
activity data on product annual usage, years in service, energy consump-
tion and associated well to wheel GHG emission factors for the different
energy sources utilized (diesel, electricity etc.). For product annual usage,
data is in six months arrear for trucks and buses to due to a time lag in
obtaining logged usage data.
In absence of a standardized test procedure for trucks, as well as other
Volvo Group products, manufacturers are invited to present and justify
their own estimates or simulations based on fuel consumption and spe-
cific activity data. The applied expected activity data and other parame-
ters are associated with a level of uncertainty and may be subject to
change due to implementation of regulations or global, regional, or
national policy changes, or improved data quality. From a sensitivity analysis
perspective, changes in any of the parameters will impact outcome, but
changes of assumptions of products’ years in service currently have more
significant impact on calculated results.
Part of value
chain
Scope 1, 2 or 3 Approximate share based
on baseline GHG inventory
2019
Baseline
2023
Mton
Volvo Group’s Science Based Targets
are set to reach net-zero value chain
GHG emissions by mid-century at the
latest. The ambition is to reach this
already by 2040.
Production,
technical
centers,
warehouses
and dealerships
Scope 1
Direct emissions
<0.5% 0.255 0.228
Scope 2
Indirect emissions from
purchased energy
<0.5% 0.126 0.066
Use of sold
products
Scope 3.11 use phase
Indirect emissions
from use of sold
products
~95% 323 266
Other indirect
emissions
Other Scope 3
Approximately 4% of the greenhouse gas inventory are related to purchased
goods and services, transportation and distribution, waste generated in
operations business travel, employee commuting etc.
These other indirect emission are not yet
included in the report. However, internal
targets exists for certain areas such as
goods transportation.
170
VOLVO GROUP 2023
SUSTAINABILITY NOTES
Furthermore, the calculations do not take into account all aspects of
e.g. the efficiency improvements in increased load in metric tons per vehi-
cle km which is an important measure to increase the efficiency in the
transport sector and reduce emissions of GHG. Since the calculation
methodology is being developed, and e.g. different sources for emission
factors and methods may be used for determining the activity data (annual
usage, distance traveled etc.), the Volvo Group’s emission data may not be
fully comparable to that of other entities. We also expect that the Group’s
method to calculate the emission footprint may be developed further over
time, and this may well alter results and, to ensure proper comparison, the
baseline. If the calculation method is developed or assumptions used are
adjusted in any material way, we intend to report on that in a transparent
manner. As matters currently stand, the data is directionally useful but is
subject to the limitations expressed above.
Other scope 3 emissions
The remaining part of indirect emissions based on 2019 baseline inven-
tory account for approximately 4% of emissions in scope. These are
included in the work for net-zero value chain greenhouse gas emissions,
but they are not yet subject to validated science-based targets. Read
more on actions to reduce greenhouse gas intensity of purchased goods
and services on page 172.
Targets and results 2023
Own operations scope 1 and 2
The main ways to reduce these emissions are continuous work with
energy efficiency improvements and sourcing of more renewable energy
where possible. Initiatives to reduce energy use by 14 GWh were imple-
mented during 2023 and the target is to implement savings of up to 150
GWh between 2021 and 2025. From 2021 to 2023 energy saving result-
ing in 47 GWh per year have been implemented. Volvo Group’s operations
in Lehigh Valley, Hagerstown and New River Valley in the US have
obtained certification for energy management according to ISO 50001
and also been Superior Energy Performance (SEP) Certified by the US
Department of Energy.
SBTi approved targets, from baseline 2019
Scope 3 use phase
TRUCKS
Target 2030
–
40
%
emissions per vehicle-km
Scope 3 use phase
BUSES
Target 2030
–
40
%
emissions per vehicle-km
Scope 3use phase
CONSTRUCTION
EQUIPMENT
Target 2030
–
30
%
absolute emissions
Scope 3 use phase
VOLVO PENTA
Target 2034
–
37.5
%
absolute emissions
Scope 1–2
OWN
OPERATIONS
Target 2030
–
50
%
absolute emissions
Status 2023
–
6
%
Status 2023
–
5
%
Status 2023
–
40
%
Status 2023
+
11
%
Status 2023
–
23
%
The GHG emission from own operations were 23% lower 2023 com-
pared to 2019. Direct emissions (scope 1) have been reduced by approxi-
mately 10% compared to 2019, of which the most important contribution
comes from a higher proportion of renewable fuels used at sites with
direct combustion for testing and heating. The indirect emissions from
own operations (scope 2) were almost 50% lower 2023 compared to
2019, of which the most important factor is a higher share of energy from
renewable sources.
Use phase, scope 3
Calculated GHG emissions from use of sold products amounted to
approximately 266 million tons 2023 compared with 323 million tons in
2019. The calculated reduction in total GHG emissions is a combination of
impacts from energy efficiency measures, changes in sales volumes and
product mix. In addition, reduced GHG intensity for fuels and energy in
several markets have had a positive effect. For construction equipment,
lower sales volumes in China compared to baseline is the most important
factor to the significant lower emissions.
Trucks
The reduction in 2023 amounted to –6% vs 2019 baseline for the –40%
intensity target. In addition to the lower GHG intensity in fuels, the result
is explained by overall improved energy efficiency across several truck
models.
Buses
The result for buses in 2023 was –5% vs 2019 baseline for the –40%
intensity target. The reduction is mainly due to product mix effects with
more products with relatively low GHG intensity being placed on the market.
Construction equipment
For construction equipment, the result was –40% vs 2019 baseline on
the absolute emissions target. This significant reduction is mainly
explained by lower sales volumes of machines in China. In total, the Group
delivered just over 60,000 machines in 2023, compared to almost
87,000 in 2019. Emissions may increase with increased sales volumes
before a more sustainable reduction can be seen.
Volvo Penta
The result for Volvo Penta was +11% vs 2019 baseline on the absolute
emissions target. The result is mainly driven by product mix and volumes,
with increased volume demands particularly on engines and solutions
with higher displacement and power.
Overall, different regulatory requirements, availability of low GHG energy
sources and associated infrastructure impacts the market conditions and
customer demands. These market factors have significant impact on
average GHG intensity of products sold and used in different countries
and regions. At the same time, since the Volvo Group is operating in cycli-
cal industries which are linked to economic activity and GDP develop-
ment, sales volumes and mix can vary considerably from one year to the
next. Together, these factors can significantly impact the result in the total
calculated GHG emissions.
171
VOLVO GROUP 2023
SUSTAINABILITY NOTES
Detailed energy and emission performance
Historical data points related to energy and GHG have been restated for acquisitions and divestments in line with GHG protocol to include the same
scope over the years 2019-2023. These restatements are marked with an asterisk (*) for the years and tables where this apply. The baseline 2019 is
included in tables where relevant for tracking on established Group targets. Longer time series are found on page 226.
Calculated scope 3 emissions, category 11, use of sold products
Metric tons x1,000,000 CO₂e 2023 2022 2019
Trucks total 194 198 219
Buses total 8 6 14
Construction Equipment 42 62 70
Volvo Penta 22 21 20
Total, use of sold products 266 287 323
Scope 1 and 2 GHG emissions and sources of emissions
Metric tons x1,000 CO₂e 2023 2022* 2019*
Natural gas Scope 1 95 104 116
Diesel Scope 1 73 79 86
Other Scope 1 60 61 52
Total scope 1 Scope 1 228 244 255
Electricity Scope 2 57 70 108
District heating Scope 2 9 12 18
Total scope 2, market based Scope 2 66 79 126
Total scope 2, location based Scope 2 170 180 220
Total Scope 1 and 2 294 323 381
Scope 1 and 2 GHG emissions intensity
Scope 1 and 2 2023 2022 2019
Net sales, Industrial operations, SEK M 533 460 418
Products delivered, (x1,000) 312 319 329
CO₂ (scope 1 and 2) by net sales 0.55 0.70 0.90
CO₂ (scope 1 and 2) by products delivered 0.94 1.02 1.14
Out of scope CO₂ emissions
Metric tons x1,000 2023 2022 2019
Biogenic CO₂ 13 9 3
Energy use within the organization
(Connected to scope 1 and 2 emissions)
Energy GWh 2023 2022* 2019*
Natural gas Scope 1 469 515 566
Diesel Scope 1 277 309 328
Other Scope 1 244 223 197
Electricity Scope 2 1,103 1,098 1,100
District heating Scope 2 252 234 216
Total 2,345 2,379 2,406
Of which renewable energy % 53% 48% 35%
Relative energy use 2023 2022 2019
Net sales,
Industrial operations, SEK bn 533 460 418
Energy / net sales
MWh /
SEK M 4.4 5.1 5.7
Energy saving initiatives
The target is to implement energy saving initiatives 2021–2025 that
together save 150 GWh per year from 2025.
Energy savings 2023 2022 2021
Annual implemented initiatives GWh 14 18 15
GHG emissions embedded in purchased goods and services
The Volvo Group has a clear ambition for net-zero value chain and greenhouse
gas emissions by 2040. GHG emission from goods and services (scope 3.1) is
relatively low in our current greenhouse gas inventory compared to the use
phase. Over time this share is, however, expected to become increasingly
important and is addressed as part of our net-zero commitment. Metrics and
targets are not yet consolidated for the full Volvo Group GHG scope 3.1. We
have identified components and materials making up the majority of 3.1 emis-
sions in steel, aluminum, batteries, polymers, and electronics. The main levers
to decarbonize these supply chains have also been identified and include shift-
ing to fossil-free materials, increasing recycled input materials, and increasing
the share of renewable energy in the process and production of materials.
During 2023 we met with supply partners to our truck brands, Volvo Buses,
Volvo Penta, Volvo Construction Equipment, and Volvo Merchandise, to create
a common view and action plans. As part of this, we have updated and
expanded our Supply Partner Code of Conduct, hosted supplier events and
touchpoints to share the Group’s decarbonization targets, developed a decar-
bonization handbook and trained our teams on carbon accounting.
The First Movers Coalition
Climate transition needs systemic change of many aspects outside the scope
of our direct influence. One aspect is to build early market demand for low-
carbon technology technologies not yet available at scale. The First Movers
Coalition (FMC) is an alliance of companies formed under the World Economic
Forum using their combined purchasing power to create early markets for
innovative clean technologies across eight of the hard to abate sectors – alu-
minum, aviation, chemicals, carbon removal, concrete, shipping, steel and
trucking. These sectors are responsible for 30% of global emissions–a pro-
portion expected to rise to over 50% by mid-century without urgent progress
on clean technology innovation. The Volvo Group is one of the founding mem-
bers of the FMC, which by the end of 2023 consists of 90 companies. As a
member, Volvo Group has pledged, e.g., that by 2030 at least 10% of the pri-
mary aluminum purchases will have near-zero carbon emissions. A similar tar-
get is placed on steel. These pledges can only be achieved by purchasing
advanced technology that in many cases is not yet commercially available.
Commitments such as these will create a market tipping point that accelerates
the affordability of clean technologies and drives long-term transformation.
172
VOLVO GROUP 2023
SUSTAINABILITY NOTES
Environment
The Volvo Group’s Environmental Policy is the steering document for
managing risks in areas such as emissions, resource use, chemical use
and waste management.
The Volvo Group management system sets out our minimum require-
ments but also identifies our most important opportunities. Our ISO
14001 certified environmental management system covers approximately
95% of production facilities and 90% of distribution centers. The man-
agement system is used in a hierarchical way to deploy effective environ-
mental work in the Group’s divisions and business areas. This means that
the Business Areas and Truck Divisions are all responsible for their environ-
mental performance in the same way as for financial or other performance.
Lifecycle assessments are used to identify impacts over the lifecycle of
the products we develop and sell. This influences the strategic priorities of
the Group. In this work we have identified climate impact related to green-
house gas emissions as the most material environmental topic for the
Volvo Group. The Group’s work to manage climate related impacts, risks
and opportunities is reported on the previous section on pages 166–172.
A range of additional topics are also identified as important to manage and
control based on our environmental impact assessments, which are
described in this section.
Within our own operations, our local units and Truck Divisions and Busi-
ness Areas identify individual priorities based on their specific type of
activities. An annual assessment is carried out to review performance
against Volvo Group’s internal minimum requirements, which can lead to
improvement activities. Priorities in the upstream value chain are based on
supplier assessments and the use of proxy data on materials and commod-
ities with higher environmental impacts.
Resource use
Circularity includes a range of issues relating to product design, manufac-
turing and ways of doing business. It has been recognized that circularity
and moving upwards in the waste hierarchy is challenging. Where rele-
vant, environmental design tools are used that further outline ways to sup-
port the transition towards a circular economy. This includes evaluations
of design criteria for durability, recyclability and remanufacturing as well
as avoiding certain substances that would hinder reuse and recycling at
the end of the use phase. The environmental design tools used are further-
ing the Group’s environmental policy.
The calculated recyclability and recovery rates have been assessed for
our latest battery-electric medium and heavy trucks based on the ISO
standard 22628 used for calculating the recyclability and recoverability of
road vehicles. The rates presented below are theoretical based on the con-
tent in the vehicles, actual recycled rates depend on local prerequisites.
Volvo truck model
VNR
Electric
FE
Electric
FMX
Electric
FM
Electric
FL
Electric
FH
Electric
Recyclability rate 95% 92% 95% 95% 92% 93%
Recoverability rate 99% 97% 99% 99% 96% 98%
Although the recyclability rates are relatively high, and that the types of
products have a significant inherent value that facilitates recycling and
reuse of components at the end of their first life, we identify opportunities
to increase upgradability, durability, serviceability and other measures to
support the transition to a circular economy.
Waste and recycling
The Volvo Group owns and operates some 60 larger manufacturing and
assembly plants and we have established waste reduction strategies with
the long-term objective to become landfill free. Volvo Group’s sites either
have in place or are in the process of developing landfill-free objectives.
This work is supported by a directive and guidelines setting out the crite-
ria for when a Volvo Group site can be considered a landfill-free site. As
part of this the Group’s operating sites apply the waste hierarchy, which
prioritizes reuse and recycling over disposal, but also minimization and
prevention of waste.
Waste by type and disposal method
Metric tons 2023 2022 2021
Recycling, metal scrap from
operations 113,663 113,781 111,260
Recycling, other metal scrap 18,482 23,877 16,865
Recycling, non-metal 171,517 153,932 158,776
% recycling of total 86% 84% 86%
Composting 3,006 2,624 2,433
Incineration with energy recovery 25,668 27.398* 23,269
% recycled, composted or
energy recovery 94% 93% 94%
Incineration without energy recovery 1,680 1,774 2,027
Treatment by professional
waste contractor 10,880 11,493 11,116
Landfill 8,806 6,705 5,858
Landfill, only inert material 191 4,827 470
Total residuals 353,894 332.075* 332,075
Whereof hazardous wastes 39,076 36,800 53,314
* Incineration with energy recovery and Total residuals have been restated due to
double counting of 1,880 tons in 2022.
Supplier environmental assessments
Volvo Group conducts environmental risk assessments during on-site
audits at existing and potential new supply partners. In 2023, 221 such site
audits were conducted. Some audits identified risks and deviations related
to environmental management with the main risks related to hazardous
waste management and lack of a documented environmental management
system. Read more about the audit procedures and remediation in the
Responsible Purchasing and social impact section on page 189–190.
Substances and materials of concern
Volvo Group is working actively to phase out substances of concern from
materials, components and industrial operations. In our impact assess-
ment we have concluded that the volumes of substances of concern used
have low or limited impact. However, we are exposed to a range of exist-
ing and developing regulations related to materials and substances being
part of the components in the vehicles and machines we produce and sell.
In general, substances of concern have been used for reasons of securing
the products’ technical requirements, quality or safety and are therefore
sometimes challenging to phase out.
The Group works to reduce dependencies on such materials and sub-
stances with the aim to protect both people and the environment. In collab-
oration with partners, we evaluate alternatives in the design and supply
processes to minimize or if possible eliminate use of substances of concern.
173
VOLVO GROUP 2023
SUSTAINABILITY NOTES
Environmental compliance
No significant environmental incidents or spills were recorded during
2023. In 2023, the Volvo Group had 12 licensed facilities in Sweden. For
some facilities the environmental permits are under review due to planned
changes.
Water
Volvo Group uses certain amounts of water within its operations, although
our type of operations are not deemed water intensive. The water used in
our operations typically comes from municipal supply and is also released
back to municipal systems. At certain sites we use surface or ground
water for processes and cooling. In such cases the water is not consumed
but used and returned into the same recipient. The Volvo Group manage-
ment system sets certain minimum requirements related to water and
effluents. Risks of pollution are mitigated through active environmental
management and control in the Group’s operations. Water use has not
been deemed as a highly material topic in the Group’s materiality assess-
ment, however it is included in this report due to specific interest and
tracking from certain stakeholders.
Water consumption in production
2023 2022 2021
Total water withdrawal, megaliters 5,034 4,566 4,628
Relative water withdrawal,
Cubic meters/SEK M net sales 9.4 9.9 12.8
At Group level, only total water withdrawal is available, not by source.
Biodiversity
The Volvo Group strives to consider and manage both direct and indirect
environmental impacts. Regarding biodiversity, the value chain perspec-
tive can be divided in three main areas – our own operations, supplied
material and impact during use of sold products.
Within the own operations, risks are considered both for the establish-
ment of new operations as well as for the ongoing operation. The Group
has implemented minimum environmental requirements helping to pre-
vent negative environmental impact from material environmental aspects,
including biodiversity where relevant. The requirements are applicable for
all operations in absence of more stringent regulatory requirements. The
Group’s operating sites are typically located in since long-established
industrial areas. In the event of new establishments, procedures are fol-
lowed to mitigate potential negative impacts on protected areas and species.
Upstream in the value chain, Group supply chain partners are evaluated
with similar requirements.
It is also acknowledged that there are important connections between
biodiversity and other environmental impacts. This presents indirect risks
further upstream related to e.g. raw materials.
Downstream, we have identified a number of indirect impacts. One
such impact is greenhouse gas emissions emitted from products and
operations and related impacts on climate change, which can in turn
impact biodiversity. Climate change mitigation is addressed in other parts
of this report.
Another biodiversity aspect is related to energy demand for propulsion
of vehicles and machines in the use phase, which can present both risks
and opportunities related to the viability of the different technologies in
Volvo Group’s roadmap, illustrated on page 167.
Yet another aspect which could have a connection to biodiversity is
related to the use of Volvo Group’s products if they are used in activities
associated with potential adverse impact on biodiversity. This is addressed
in our process to evaluate sustainability in the sales process.
Read more Responsible sales, page 188
174
VOLVO GROUP 2023
SUSTAINABILITY NOTES
EU TAXONOMY REGULATION DISCLOSURES
The EU Taxonomy Regulation EU 2020/852 (‘the EU Taxonomy’) is a
classification system for sustainable economic activities in relation to the
European Union’s six environment objectives:
1. Climate change mitigation (CCM)
2. Climate change adaptation (CCA)
3. Sustainable use and protection of water and marine resources (WTR)
4. Transition to a circular economy (CE)
5. Pollution prevention and control (PPC)
6. Protection and restoration of biodiversity and ecosystems (BIO).
An activity is considered sustainable according to the EU Taxonomy when
it contributes substantially to one or several of the objectives, without
causing significant harm to the others, and at the same time meets certain
defined minimum safeguards.
In absence of regulatory guidance in many respects, the Volvo Group has
found that there is a large scope for interpretation in relation to several
aspects of the EU Taxonomy. We have therefore deemed it necessary to
develop our own internal considerations. Our disclosure is based on our cur-
rent understanding of the rules and may be amended in the future to align
with new regulatory guidance provided, as market practice develops and as
the general knowledge of the EU Taxonomy requirements matures.
In contrast with the Volvo Group taxonomy reporting in 2022, the Volvo
Group does not report any turnover, CapEx or OpEx as EU Taxonomy aligned
in 2023. This is due to revisions having been made to the EU Taxonomy cri-
teria during the course of 2023, in particular in relation to the so-called pol-
lution prevention and control criteria, read more on pages 177–178.
Methodology to identify eligible activities
The Volvo Group has identified that a proportion of its economic activities
qualify as eligible under the so called “Delegated Climate Act” and the
so-called “Amended Delegated Climate Act”.
• The Group develops and manufactures trucks and buses, which are
eligible pursuant to section 3.3 Manufacture of low-carbon technolo-
gies for transport of the Delegated Climate Act (CCM 3.3).
• The Group develops and manufactures construction machines and
engines, part of which are eligible pursuant to section 3.6 Manufacture of
other low-carbon technologies of the Delegated Climate Act (CCM 3.6).
• In 2023, the Volvo Group has allocated part of its activities to the new
category 3.18 Manufacture of automotive and mobility components of
the Amended Delegated Climate Act (CCM 3.18), which were included
in 3.3 in previous years’ reporting.
TURNOVER KPI Significant contribution Do no significant harm
Code
Turnover
SEK M
Proportion of
turnover 2023, %
Climate change
mitigation
Climate change
adaption
Water
Circular economy
Pollution
Biodiversity
Climate change
mitigation
Climate change
adaption
Water
Circular economy
Pollution
Biodiversity
Minimum
safeguards
Proportion of taxon-
omy-aligned or eligible
turnover, 2022, %
Enabling
Transitional
Economic activities
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (taxonomy-aligned)
Turnover of taxonomy- aligned (A.1) 0 0% - - - - - - - - - - - - - 1%
Of which Enabling - - - - - - - - - - - - - - - 1% E
Of which Transitional - - - - - - - - - - - - - - - T
A.2 Taxonomy-Eligible but not environmental sustainable activities (not Taxonomy-aligned activities)
Manufacture of low carbon
technology for transportation CCM 3.3 342,447 62% EL N/EL N/EL N/EL N/EL N/EL 70%
Manufacture of other
low carbon technology* CCM 3.6 1,240 0% EL N/EL N/EL N/EL N/EL N/EL 0%
Manufactur of automotive
parts and components CCM 3.18 62,573 11% EL N/EL N/EL N/EL N/EL N/EL –
Turnover of taxonomy-eligible (but not
taxonomy-aligned activities) (A.2) 406,224 73% 73% 0% 0% 0% 0% 0% 70%
A. Turnover of Taxonomy eligible
activities (A.1+A.2) 406,224 73% 73% 0% 0% 0% 0% 0% 71%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-
non-eligible activities (B) 146,540 27%
Qualitative information related to turnover
The total turnover reported covers the revenue recognized, as explained in Note 7, (page 108),
and includes revenues from the Volvo Group’s Industrial Operations as well as from financial and
operating leases. The Taxonomy disclosures on eligible turnover includes net sales from vehicles
and services, including repair, maintenance and spare parts. In 2023, eligible activities have been
identified in the new category CCM 3.18. These were reported under 3.3 in 2022. The eligible
activities under CCM 3.6 include net sales from low-carbon machines, i.e. only machines that
enable zero tailpipe emission operation.
* Voluntary information for comparability
Eligibility for CCM 3.3 and CCM 3.6 have significantly different definitions. For a full explanation,
please refer to page 178. If the activities under 3.6 would be defined similar to those of 3.3, the
proportion of total eligible turnover would be 96%.
Total (A + B) 552,764 100%
Proportion of turnover/Total turnover
Taxonomy-aligned
per objective, %
Taxonomy-eligible
per objective, %
CCM 0 73%
CCA 0 0
WTR 0 0
CE 0 0
PPC 0 0
BIO 0 0
CCM: Climate Change Mitigation - CCA: Climate Change Adaptation - WTR:
Water and Marine Resource - CE: Circular Economy - PPC: Pollution Preven-
tion and Control - BIO: Biodiversity and ecosystems
175
VOLVO GROUP 2023
SUSTAINABILITY NOTES
All three activities are defined as enabling activities in relation to the climate
change mitigation objective and are of strategic importance in the Volvo
Group’s transition towards a net-zero greenhouse gas emissions value chain.
Methodology to identify aligned activities
For an economic activity to be considered taxonomy-aligned – and hence
environmentally sustainable – it needs to substantially contribute to at
least one of the EU’s six environmental objectives and not significantly
harm any of the others. In addition, it needs to be carried out in adherence
with certain minimum safeguards as regards social and governance
aspects of sustainability.
Substantial contribution
The Volvo Group has identified a number of activities, by product, that fulfill
the technical screening criteria of substantially contributing to climate
change mitigation. These are referred to as potentially taxonomy-aligned
and consist of trucks and buses with zero tailpipe emissions (CCM 3.3),
machines and other zero tailpipe emission technology (CCM 3.6). Spare
parts and components for zero tailpipe emission vehicles (CCM 3.18) are
not yet assessed for taxonomy alignment but only assessed for eligibility in
2023.
Doing no significant harm
Potentially taxonomy-aligned products and relevant manufacturing sites
have been assessed against each of the do no significant harm (DNSH)
criteria, as further detailed below. As previously noted, in absence of reg-
ulatory guidance and market practice, we have found that there is a large
scope for interpretation of the DNSH criteria and have therefore deemed
it necessary to interpret and concretize the set-out criteria based on the
specific context of the Group, thereby creating our own detailed guid-
ance. The reporting of alignment with the DNSH criteria is thus, to a cer-
tain degree, based on an adopted interpretation of the DNSH criteria
applicable to Volvo Group eligible activities.
Overall, there are challenges related to the global scope of the Group’s
operations and variances in the regulatory landscape of different jurisdic-
tions. Activities within the EU have been prioritized when assessing align-
ment with the DNSH criteria. Activities outside the EU have been priori-
tized based on size of turnover and complexity in translating the demands
to a local context. The methodology to assess alignment will be evaluated
as regulatory guidance and general reporting practices evolve.
In conclusion, all potentially aligned activities in scope have been
assessed to meet all DNSH criteria, but for the pollution prevention criteria.
Consequently, no revenue or investments are reported aligned.
CAPEX KPI Significant contribution Do no significant harm
Code
CapEx
SEK M
Proportion of
CapEx 2023, %
Climate change
mitigation
Climate change
adaption
Water
Circular economy
Pollution
Biodiversity
Climate change
mitigation
Climate change
adaption
Water
Circular economy
Pollution
Biodiversity
Minimum
safeguards
Proportion of taxon-
omy-aligned or eligible
CapEx, 2022, %
Enabling
Transitional
Economic activities
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (taxonomy-aligned)
CapEx of taxonomy- aligned (A.1) 0 0% - - - - - - - - - - - - - 7%¹
Of which Enabling - - - - - - - - - - - - - - - 7%¹ E
Of which Transitional - - - - - - - - - - - - - - - T
A.2 Taxonomy-Eligible but not environmental sustainable activities (not Taxonomy-aligned activities)
Manufacture of low carbon
technology for transportation CCM 3.3 32,415 84% EL N/EL N/EL N/EL N/EL N/EL 79%
Manufacture of other
low carbon technology* CCM 3.6 357 1% EL N/EL N/EL N/EL N/EL N/EL 0%
Manufacture of automotive
parts and components CCM 3.18 323 1% EL N/EL N/EL N/EL N/EL N/EL –
CapEx of taxonomy-eligible (but not
taxonomy-aligned activities) (A.2) 33,095 86% 86% 0% 0% 0% 0% 0% 79%
A. CapEx of Taxonomy eligible
activities (A.1+A.2) 33,095 86% 86% 0% 0% 0% 0% 0% 86%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy-non-eligible activities (B) 5,490 14%
Qualitative information related to capital expenditures
The taxonomy disclosure on eligible capital expenditures (CapEx) for activities in CCM 3.3 and
CCM 3.18, includes additions to product and software development, additions to other intan-
gible assets, additions to property, plant and equipment and additions to operating leases. As
for CCM 3.6 the eligible CapEx only includes low-carbon machines. Capitalized product and
software development, other intangible assets, and investments in property, plant and equip-
ment are included in the information provided, see Note 12 and 13 (page 114-118 for details).
As a complement to this disclosure, we report the share of total R&D spend directed to low
carbon activities, based on the significant contribution criteria, on page 169. That disclosure
includes both capitalized and non-capitalized R&D, of which the latter is included in the OpEx
KPI in the Taxonomy report.
* Voluntary information for comparability
Eligibility for CCM 3.3 and CCM 3.6 have significantly different definitions. For a full explana-
tion, please refer to page 178. If the activities in 3.6 would be defined similar to those of 3.3,
the proportion of total eligible CapEx would be 96%.
1. Restated. The proportion of taxonomy aligned CapEx for 2022 has been restated from 14% to
7% due to a recalculation of the denominator. The reported denominator and eligibility indicator
KPI in 2022 did not include all additions to operating leases, which have now been added.
Total (A + B) 38,584 100%
Proportion of CapEx/Total CapEx
Taxonomy-aligned
per objective, %
Taxonomy-eligible
per objective, %
CCM 0 86%
CCA 0 0
WTR 0 0
CE 0 0
PPC 0 0
BIO 0 0
CCM: Climate Change Mitigation - CCA: Climate Change Adaptation - WTR:
Water and Marine Resource - CE: Circular Economy - PPC: Pollution Preven-
tion and Control - BIO: Biodiversity and ecosystems
176
VOLVO GROUP 2023
SUSTAINABILITY NOTES
Climate change adaptation
Physical risks are reviewed on a regular basis as part of the Group’s prop-
erty management and insurance programs. In our assessment of compli-
ance with the DNSH criteria, relevant sites have carried out local risk
assessments on relevant climate hazards. In addition, an overall inventory
of potential climate hazards has been performed based on the geograph-
ical location of relevant Volvo Group sites and potential development in
different climate scenarios as presented by the UN Intergovernmental
Panel on Climate Change.
Sustainable use and protection of water and marine resources
With respect to the criteria for water, the Volvo Group has identified a limited
number of activities with direct emissions of industrial wastewater or which
are being subject to water stress, which have been deemed relevant for the
alignment criteria. In such cases, environmental impact assessments and
water management plans have been reviewed with respect to relevant sites.
Transition to a circular economy
As it relates to transition to a circular economy, the assessments made
have identified several such practices implemented in the Group, where
feasible. This includes applying the waste hierarchy and establishing
waste reduction targets in manufacturing, as well as product design pro-
cesses where considerations have been made on durability, recyclability
and choice of materials and other strategies to facilitate transition to a
circular economy.
Pollution prevention and control
The pollution prevention and control criteria both refers to and builds upon
existing EU substance regulations. Further to referencing existing EU pro-
hibitions and limitations on the use of certain substances, the EU Taxon-
omy sets out that the use of certain additional substances (substances on
the EU REACH Candidate List and substances with similar characteris-
tics), which are not currently restricted in EU substance regulations, are
acceptable only if there are no suitable alternatives. During the course of
the year, the requirements relating to the pollution prevention and control
criteria have evolved (with the introduction of the Amended Delegated
Climate Act) and as a result has added an additional layer of complexity to
the EU Taxonomy.
Volvo Group has a phase-out plan for substances of concern and has
put in significant efforts to assess usage of such substances in operations
or that are included in parts and components.
OPEX KPI Significant contribution Do no significant harm
Code
OpEx
SEK M
Proportion of
OpEx 2023, %
Climate change
mitigation
Climate change
adaption
Water
Circular economy
Pollution
Biodiversity
Climate change
mitigation
Climate change
adaption
Water
Circular economy
Pollution
Biodiversity
Minimum
safeguards
Proportion of taxon-
omy-aligned or eligible
OpEx, 2022, %
Enabling
Transitional
Economic activities
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (taxonomy-aligned)
OpEx of taxonomy- aligned (A.1) 0 0% - - - - - - - - - - - - - 21%
Of which Enabling
- - - - - - - - - - - - - - - 21% E
Of which Transitional
- - - - - - - - - - - - - - - T
A.2 Taxonomy-Eligible but not environmental sustainable activities (not Taxonomy-aligned activities)
Manufacture of low carbon
technology for transportation CCM 3.3 21,683 77% EL N/EL N/EL N/EL N/EL N/EL 59%
Manufacture of other low
carbon technology* CCM 3.6 1,175 4% EL N/EL N/EL N/EL N/EL N/EL 0%
Manufacture of automotive
parts and components CCM 3.18 133 0% EL N/EL N/EL N/EL N/EL N/EL –
OpEx of taxonomy-eligible (but not
taxonomy-aligned activities) (A.2) 22,992 81% 81% 0% 0% 0% 0% 0% 59%
A. OpEx of Taxonomy eligible
activities (A.1+A.2) 22,992 81% 81% 0% 0% 0% 0% 0% 80%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-eligible activities (B) 5,224 19%
Qualitative information related to operational expenses
The disclosure on eligible operating expenses (OpEx) includes non-capitalized R&D expenses
for new product development, costs for the repair and maintenance of property, plant and
equipment and short-term leases. For activities in CCM 3.3 and CCM 3.18, all expenses related
to transport vehicles and components are included but for the activities eligible in CCM 3.6,
only expenses related to low-carbon machines are included.
In this KPI, R&D is the material part of relevant expenses. Operational expenses related to
R&D in 2023 amounted to almost SEK 24 billion. As a complement to this report, we disclose
the share of total R&D spend directed to low-carbon activities, based on the significant contri-
bution criteria, on page 169. The disclosure on page 169 includes both non-capitalized and
capitalized R&D, of which the latter is included in the CapEx KPI in the Taxonomy report. The
other part of OpEx, repair and maintenance related to the functioning of the plants and short-
term leases, amounted to approximately SEK 4 billion.
* Voluntary information for comparability
Eligibility for CCM 3.3 and CCM 3.6 have significantly different definitions. Please refer full
explanation in page 178. If the activities in 3.6 would be defined similar to that of 3.3, the
proportion of total eligible OpEx would be 99%.
Total (A + B) 28,216 100%
Proportion of OpEx/Total OpEx
Taxonomy-aligned
per objective, %
Taxonomy-eligible
per objective, %
CCM 0 81
CCA 0 0
WTR 0 0
CE 0 0
PPC 0 0
BIO 0 0
CCM: Climate Change Mitigation - CCA: Climate Change Adaptation - WTR:
Water and Marine Resource - CE: Circular Economy - PPC: Pollution Preven-
tion and Control - BIO: Biodiversity and ecosystems
177
VOLVO GROUP 2023
SUSTAINABILITY NOTES
Based on our current understanding of the pollution prevention and
control criteria and usages in parts and components, and whether suit-
able alternatives exist, we do not conclude alignment in 2023.
Protection and restoration of biodiversity and ecosystems
With respect to the criteria for biodiversity, the Volvo Group has screened
its activities at each relevant site based on the significance of impact on
biodiversity and protected areas or species. The Volvo Group’s manufac-
turing sites have not been deemed to have a significant direct impact and
hence the further assessment regarding biodiversity has been limited to
recently developed activities in exploration or activities located at such a
distance that they could impact protected areas.
Minimum safeguards
It is understood that the minimum safeguard criteria mean that proce-
dures are to be in place as regards anti-corruption, fair competition, taxa-
tion and human rights, and that the Group is not to be exposed to ‘contro-
versial weapons’, which refers to anti-personnel mines, cluster munitions,
chemical weapons and biological weapons.
The minimum safeguard criteria have been assessed at Group level, and
when doing so it has been concluded that all wholly-owned entities of the
Group, and thus all economic activities identified as potentially taxonomy-
aligned, are covered by our Group-wide policies and procedures. For more
information on relevant policies and procedures, see Human Rights on
page 185, Anti-Corruption on page 191, Competition Law on page 191.
Regarding tax, the Volvo Group shall comply with the tax laws and regu-
lations in all countries where it operates and seeks to ensure that taxes are
paid where value is created by adhering to applicable transfer pricing rules
and guide-lines as developed by the OECD and other standard setting
and regulatory bodies. The Group’s average corporate tax rate for the last
five years is 24% (23%). More information on the tax policy is available on
volvogroup.com.
We have furthermore concluded that the Volvo Group does not manu-
fature or sell any vehicles or attributes specifically designed to carry or oth-
erwise deal with controversial weapons (as defined above).
Reporting
None of the activities of or Volvo Group investments in joint ventures and
associated companies are included in this report, see Note 5 on page 102
for more information about joint ventures.
As the Volvo Group so far considers its eligible activities pursuant only to
the climate change mitigation objective, and as CCM 3.3, CCM 3.6 and CCM
3.18 Activities are separately reported in the Group’s financial consolidation
system the Group, no activities should have been double counted when calcu-
lating the Taxonomy KPIs presented.
Mandatory and voluntary information
In relation to activities in 3.3, the Commission notice sets forth that the
reference to “low carbon” should not be considered when determining
Taxonomy-eligibility. This interpretation therefore takes into account that
most of the Group’s transport vehicles are Taxonomy-eligible. For activi-
ties in 3.6 Activities, eligibility depends on the objective of the activity,
which should be aimed at substantial savings of life cycle greenhouse gas
emissions in other sectors of the economy. The implication of this is that a
truck or bus (3.3) with an internal combustion engine is in scope of eligi-
bility, but an excavator or hauler (3.6) with the same type of combustion
engine is not eligible. To enable a transparent view of all manufacturing
activities in the Volvo Group, we are including information on voluntary
basis indicating the share of eligible activities if activities in 3.6 and 3.3
would be eligible on the same basis. The voluntary information does not
impact the alignment reporting, only eligibility.
Investment plan (CapEx plan)
The Volvo Group has an overall ambition to reduce greenhouse gas emis-
sions in its value chain. Development of vehicles and machines with zero
tailpipe emissions is a key driver in this overall strategy (read more on
pages 166-169). A substantial part of investments is directed towards zero
tailpipe emissions technology, which is expected to increase over time.
Investment plans are subject to continuous evaluation, which may affect
the share of investments in zero tailpipe and other potentially aligned tech-
nology in the future. In identifying investments that could potentially be
aligned, all investments in R&D, property, plant and equipment made to
enable and develop vehicles and machines fulfilling the technical screening
are included. These are mainly related to vehicles and machines with zero
tailpipe emissions. The DNSH criteria are assessed on product level,
according to the technical screening criteria. As a complement to this
report, we disclose the share of total R&D spend directed to zero and low
emission activities, based on the significant contribution criteria on page
169. That disclosure includes both capitalized and non-capitalized R&D,
the latter is also included in the OpEx KPI.
Nuclear energy related activities
The undertaking carries out, funds or has exposures to research, develop-
ment, demonstration and deployment of innovative electricity generation
facilities that produce energy from nuclear processes with minimal waste
from the fuel cycle.
NO
The undertaking carries out, funds or has exposures to construction and
safe operation of new nuclear installations to produce electricity or pro-
cess heat, including for the purposes of district heating or industrial pro-
cesses such as hydrogen production, as well as their safety upgrades,
using best available technologies.
NO
The undertaking carries out, funds or has exposures to safe operation of
existing nuclear installations that produce electricity or process heat,
including for the purposes of district heating or industrial processes such as
hydrogen production from nuclear energy, as well as their safety upgrades.
NO
Fossil gas related activities
The undertaking carries out, funds or has exposures to construction or
operation of electricity generation facilities that produce electricity using
fossil gaseous fuels.
NO
The undertaking carries out, funds or has exposures to construction, refur-
bishment, and operation of combined heat/cool and power generation
facilities using fossil gaseous fuels.
NO
The undertaking carries out, funds or has exposures to construction, refur-
bishment and operation of heat generation facilities that produce heat/
cool using fossil gaseous fuels.
NO
Mandatory disclosure on nuclear and fossil gas related activities
178
VOLVO GROUP 2023
SUSTAINABILITY NOTES
Employees and workforce
The Volvo Group Code of Conduct is the foundation for responsible busi-
ness conduct that builds trust with stakeholders in societies where the
Group operates. The Code of Conduct includes policy objectives around
health and safety, mutual respect, non-discrimination, diversity, and
respect for human rights. As regards human rights, the policy includes a
range of work-related rights such as zero tolerance for modern slavery,
including forced, bonded or compulsory labor, and human trafficking. The
policy further explains how we respect children’s right to personal develop-
ment and education and that we prohibit the use of child labor. It outlines
our respect for employees’ right to freedom of association and collective
bargaining as well as any employee’s choice to refrain from joining a union.
Our commitment to human rights is further expressed in our human
rights report on page 185.
Employees are free to seek guidance and support in all employment-
related questions from several functions, including from recognized unions
and employee representative bodies. The Group also has a complaint han-
dling mechanism where any stakeholder can seek advice or report a con-
cern in an anonymous way. Our Whistleblower and Investigations policy is
externally available and describes who can report a concern, what kind of
concerns should be reported, and how concerns should be reported.
Read more volvogroup.com/code
As an integral part of daily operations, the leaders of Business Areas,
Truck Divisions and Group Functions are accountable for all areas of the
Code of Conduct. To do this effectively, they are supported by both local
and central HR professionals, experts and leaders. In addition to the top-
ics listed herein, different countries, regions and units may address spe-
cific areas in line with the local context and needs.
In our work, targets have been established in dialogue with employee
representatives in areas where we believe Volvo Group can contribute to
positive impacts and avoid negative impacts across global operations.
The main ones being:
• Health and safety – to reduce lost time accident rate by 50% by
2030 from 2019, see page 182 for details.
• Diversity – to have at least 35% female employees in general and
in leadership position by 2030, see page 181 for details.
EMPLOYEE RELATIONS AND DIALOGUE
Volvo Group bases the relation between the company and employees,
including employee representatives and unions, on honesty, transpar-
ency, fairness and creativity. These basic principles were jointly developed
with the Global Works Council members and guide how to act together
when maneuvering Volvo Group through necessary business changes.
For Volvo Group it is essential to secure a good dialogue with all employ-
ees. A fundamental element in this process is the yearly Volvo Global Dia-
logue in which about 50 employee representatives from over 20 different
countries meet with the CEO and Volvo Group Management members to
discuss the current business situation and strategic initiatives of the
Group, but also specific future opportunities in respect of new Business
Areas, digitalization and needed competence shifts.
In 2023, the Volvo Global Dialogue meeting was conducted as a face-to-
face meeting in Belgium, primary focusing on the ongoing Volvo Group
transformation, including its effects on business and employees.
In addition, three ordinary and three deputy members appointed by
employee organizations are part of the AB Volvo Board of Directors and
thus involved in the strategic direction of the Group.
Prior to major organizational changes, employee representatives and
relevant authorities are informed and consulted in accordance with legal
and contractual requirements. In 2023, the Group conducted ten infor-
mation meetings with the European Works Council as regards significant
changes effecting employees in at least two European countries. In addi-
tion, the Group conducted several meetings with local employee repre-
sentatives and unions in different countries to consult on proposed
changes at the local level.
Volvo Group works in close dialogue with unions and employee repre-
sentatives for the deployment of solutions that help to maintain and
strengthen the competence needed for the Group as well as reducing
negative social consequences of restructuring and reorganizations. This
can include utilizing time banks to reduce labor time, furlough, early retire-
ment, financial compensation, internal mobility programs and outplace-
ment via third parties.
Human rights disclosures related to employment and working conditions
The Volvo Group assesses potential gaps in employment and working
conditions in our due diligence activities in own operations and in the
supply chain.
In our own operations, we continue our work relating to fair living
wages and our assessment of our current level at Volvo Group, also moni-
toring how the developing European Sustainability Reporting Standards
will impact this work.
The Volvo Group respects the right of all employees to form and join an
association to represent their interests as employees, to organize, and to
bargain collectively or individually, as well as the right to refrain from join-
ing a union. Varying country legislation on union independence means
the approach to managing freedom of association and collective bargain-
ing may differ from one country to another. In our human rights due dili-
gence, we have identified potential risks in this area for a limited number
of countries. Examples of actions to mitigate risks include awareness
raising activities and developing alternative forms of representation, if in
line with local legislation.
An estimated 41% of regular employees around the world are mem-
bers of an independent trade union. Approximately 72% of employees
globally are covered by a collective bargaining agreement. This shows a
significantly higher union density rate and coverage of collective bargain-
ing than the average compared to the International Labor Organization
statistics, especially in the Group’s major markets like Sweden, the US,
Poland and Brazil.
Read more Human Rights across the value chain, page 185
179
VOLVO GROUP 2023
SUSTAINABILITY NOTES
WORKFORCE STATISTICS
Information on employees and other workers
Total number of employees by employment contract, by gender and region
Permanent Temporary Agency/consultants Total workforce
Total
employees
Of which
women, %
Total
employees
Of which
women, %
Europe 52,714 23% 1,630 36% 8,610 62,954
North America 18,624 22% 662 41% 773 20,059
South America 6,964 20% 58 34% 153 7175
Asia and Pacific 11,496 18% 686 33% 805 12,987
Africa 935 23% 30 40% 7 972
Group total 90,733 22% 3,066 36% 10,348 104,147
Total number of employees by employment type, by gender
Full time Part time Agency/consultants Total workforce
Total
employees
Of which
women, %
Total
employees
Of which
women, %
Group total 89,715 21% 4,084 44% 10,348 104,147
Employee turnover and new employee hires
Employee
turnover
1
, %
Per age, gender
and total
2023 2022
Total Women Men Total Women Men
<40 | 40+ | All <40 | 40+ | All <40 | 40+ | All <40 | 40+ | All <40 | 40+ | All <40 | 40+ | All
Europe 8 | 5 | 6 7 | 5 | 6 9 | 5 | 7 11 | 7 | 8 10 | 7 | 8 11 | 7 | 6
North America 16 | 8 | 11 16 | 8 | 11 16 | 8 | 11 20 | 11 | 14 20 | 12 | 15 20 | 10 | 14
South America 12 | 10 | 11 11 | 12 | 11 13 | 9 | 11 8 | 5 | 6 9 | 5 | 8 7 | 5 | 6
Asia/Pacific 10 | 7 | 6 10 | 8 | 8 9 | 7 | 5 14 | 8 | 8 16 | 8 | 11 13 | 8 | 7
Africa 11 | 7 | 9 6 | 10 | 7 13 | 7 | 10 9 | 6 | 8 4 | 8 | 6 10 | 6 | 8
Group total 10 | 6 | 8 9 | 6 | 8 11 | 6 | 8 13 | 8 | 9 13 | 8 | 9 12 | 8 | 10
1 The total employee turnover rate is the proportion of employees who left Volvo Group both voluntarily
(such as retirements and resignations) and involuntarily (including due to redundancy).
New hires per age, gender and total 2023
Age and total
2022
Age and total
<40 40+ All <40 40+ All
Europe 3,829 1,368 5,197 4,513 1,735 6,248
Of which women 32% 26% 30% 30% 28% 30%
North America 2,085 999 3,084 2,413 1,218 3,631
Of which women 26% 27% 26% 25% 28% 26%
South America 509 104 613 689 166 855
Of which women 25% 27% 25% 27% 25% 27%
Asia/Pacific 1,094 205 1,299 1,651 212 1,863
Of which women 31% 20% 30% 30% 22% 29%
Africa 85 23 108 33 20 53
Of which women 22% 22% 22% 36% 30% 34%
Group total 7,602 2,699 10,301 9,299 3,351 12,650
Of which women 29% 26% 28% 29% 27% 28%
180
VOLVO GROUP 2023
SUSTAINABILITY NOTES
DIVERSITY AND EQUAL OPPORTUNITIES
Volvo Group considers diversity and inclusion as critical to its ability to
perform in current operations and transform into a long-term sustainable
business. The Group’s work with diversity includes a wide range of
aspects, such as culture, generations, competence, background, gender
and sexuality. Recognizing that different regions and countries have indi-
vidual challenges, the ambition is to actively work with locally relevant and
authentic diversity vectors.
Globally, gender diversity has been identified as the main strategic vec-
tor. The Group’s operations and main sectors served have traditionally been
characterized by relatively low representation of women. This challenge has
also been recognized in technology and engineering professions and edu-
cation. Volvo Group has the target of reaching at least 35% women in the
workforce, both in general and in management positions by 2030.
Actions to become more inclusive and by doing so increase diversity are
integrated across our people processes and systems, including but not lim-
ited to in recruitment policies and principles, succession planning, and inte-
grated into trainings for organization and teams across our global operations.
To further evolve inclusion in aspects that may be more locally or
regionally important, the Group supports internal networks for, and best
practice sharing across the organization, on diversity vectors such as
women in engineering, LGBTQI+, diverse abilities, multiculturalism and
young professionals.
Non-discrimination and fair treatment
At the Volvo Group, we do not tolerate harassment and or discrimination
and aim to mitigate unconscious bias.
In 2023, 106 allegations perceived as related to discrimination or
harassment were reported via the Volvo Group Whistle, included in the
category Fair Workplace Management on page 192. All reports were
investigated, with 26 being in progress at year-end. 28 of the closed
reports were substantiated. Most cases resulted in corrective actions,
such as training, coaching or changes to processes or routines. Moreover,
15 cases alleging sexual harassment were reported in 2023 which are
included in the category Violations of privacy or private sphere. Of these,
five were substantiated and followed with disciplinary measures, one was
unsubstantiated with further corrective actions and six were in progress
at year-end.
The Volvo Group provides awareness trainings to prevent harassment
and discrimination. This is done with the Volvo Group Code of Conduct as
the core foundation. In addition, special courses on prevention of harass-
ment and discrimination are offered for managers in some jurisdictions,
for example the training Civil Treatment for Leaders in the US.
Diversity of governance bodies and employees
Age diversity of the
Volvo Group workforce, %
2023
<40/40+
2022
<40/40+
2021
<40/40+
Europe 38/62 37/63 36/64
North America 39/61 38/62 36/64
South America 57/43 60/40 61/39
Asia/Pacific 58/42 58/42 57/43
Africa 52/48 53/47 54/46
Group average 42/58 41/59 40/60
Gender diversity of the
Volvo Group workforce, %
2023
Women/
Men
2022
Women/
Men
2021
Women/
Men
Europe 23/77 23/77 22/78
North America 22/78 22/78 21/79
South America 20/80 19/81 18/82
Asia/Pacific 19/81 22/78 17/83
Africa 24/76 24/76 26/74
Group average 22/78 22/78 21/79
Gender diversity over time, share of women, %
2023 2022 2021 2020 2019
All employees 22 22 21 19 19
Manager (all levels) 25 24 23 20 20
Presidents and other
senior executives 29 28 27 26 26
AB Volvo Board
(Elected by the AGM) 36 45 45 36 40
TRAINING
Leadership, learning and development are vital contributors to the trans-
formation of the Group and to employees’ employability. Raised aware-
ness about lifelong learning in the teams and organization helps bring
forward both needs and tangible progress. Volvo Group University is
focused on providing high quality training across business areas, divisions
and functions. The ambition is to provide training and development oppor-
tunities for all employees in all locations, with a consistent and quality
assured learning portfolio. In addition, business operations drive develop-
ment of the competences specific to their needs and learning opportuni-
ties are made available on site.
The Volvo Group’s approach to competency development is based on
most of the learning being part of practice on the job. An important, but
less time-consuming part, is captured informally through other people –
in conversations, networking, and curiosity to learn. The final piece of the
learning comes from formal training and courses. As a rule of thumb, this
is referred to as 70:20:10 approach – 70 percent on the job, 20 percent
through conversation, 10 percent through formal training.
To ensure access to training, a large part of instructor led programs are
made available virtually. This allows employees outside the major sites to
join training activities and build networks across the Group.
181
VOLVO GROUP 2023
SUSTAINABILITY NOTES
OCCUPATIONAL HEALTH AND SAFETY
Understanding that the Volvo Group’s success depends on people moving
the company ahead, we strive for a workplace where all colleagues come
home safe – every day. The Volvo Group Health and Safety Policy gives
direction on how workplace safety, health and well-being shall be handled
within the Group. The policy covers both direct employees, consultants
and other people working on Volvo Group sites.
We continue our efforts to develop a safety culture that takes us towards
the Group’s safety objectives including both physical as well as psycho-
social health and safety.
Traditionally the Volvo Group’s global health and safety work has focused
on physical safety risks in our organization, tackling the highest risks, and
raising the overall safety awareness. In recent years, we have identified a
need to increase efforts in psychosocial risks at our workplaces. These
efforts include establishing common and science-based ways of working
across our global organization but adapt actions to local and unique needs
and contexts. Volvo Group’s approach to address mental health and
well-being is based on training and awareness for managers and employ-
ees, surveys to understand current state in teams and dialogues around
actions to be taken to progress further. Prior to roll-out in the global opera-
tions the approach has been tested in the Group’s research and develop-
ment organization with local teams in Sweden, the US and India.
Volvo Group also continues its efforts in physical health and safety. As
part of this work, we continue to roll out common metrics to increase
internal and external transparency on the most important safety aspects
of the Group. During the year, we have started to implement global follow
up and prevention of high-risks incidents.
The Volvo Group is in the process of defining the right metrics and tar-
gets to strengthen the health and safety culture. A key element is to
address risks as early as possible. This work includes both physical and
mental health and safety. This work is being adapted to align with interna-
tional and European standardization on metrics.
The right leadership is acknowledged and a key component in a success-
ful safety culture. Safety leadership is oriented towards learning and contin-
uous improvement, spending time in the field, and on dialogue. Leaders are
equipped to be on top of the health and safety matters in their teams.
The continuous development of our health and safety system and cul-
ture is supported by a global network of over 200 expert practitioners on
occupational health and safety – including doctors, nurses, safety engi-
neers, psychologists, and ergonomists who collaborate to find and share
best practices.
Occupational health and safety management system
Each business area, division and function is accountable and responsible
for managing health, safety and well-being. Volvo Buses and Volvo Con-
struction Equipment have continued to certify their parts of the manage-
ment systems according to ISO 45001. By December 2023, 60 sites
covering around 30% of Volvo Group’s employees have chosen to certify
their operations according to ISO 45001.
Other Business Areas have been developing internal safety management
systems with regular assessments and coaching as an integral part the Volvo
Group Management System (VGMS) and Volvo Performance System (VPS).
This helps to ensure that there are written procedures, internal controls, clear
ownership and management review, and that deviations are acted upon. The
scope of preventive work includes both physical and psychological health,
and workplace safety. It covers all employees working for Volvo Group on- or
off-site, as well as the time spent commuting to and from work.
The Volvo Group Management System includes health and safety man-
agement based on legal requirements and covers all employees and con-
sultants, and these are all included in the safety reporting presented in
these notes.
Hazard identification, risk assessment and incident investigation
Volvo Group and its subsidiaries apply tools and processes to manage risk
and create productive working environments. Risk assessments are car-
ried out on a regular basis at all levels from shop floor to office. Health and
safety professionals ensure the quality of risk assessments and involve
line management and union representatives in this work. Potential risks
are in focus during internal assessments and external audits, where typi-
cally a sample of risk assessments and corrective and preventative actions
are reviewed.
Managers and employees are reviewed in their knowledge of relevant
risks. Measures to mitigate or eliminate the identified risks are defined
and implemented, and risk assessments are reviewed and updated peri-
odically or after any incident has occurred. The Group is in the process of
developing a more systematic approach to serious incidents with focus on
the most significant risks.
Recordable accidents are reported and followed up at the unit level and
further up in the organization, continuing up to the Group level. Investiga-
tions resulting in corrective and preventive actions must be deployed after
each recordable accident. In cases where the issue is linked to risks that
may be relevant for other units – the causes of the accident and the cor-
rective and preventative measure to avoid a repeat are shared with other
relevant units within the global health and safety network. In certain
cases, directives are built to be deployed throughout the company as part
of a preventative measure.
Based on the risk assessment carried out for a specific machine, pro-
cess or work area, employees receive training, so they understand the
risks and how to manage them – through following defined procedures or
wearing personal protective equipment, for example.
When defining corrective or preventative actions in response to identi-
fied risk, the Volvo Group Health and Safety Policy requires that the hier-
archy of control measures principles are applied. The first option is hazard
elimination. If hazard elimination is not possible, substitution, engineering
controls, administrative controls and personal protective equipment are
applied. The policy is distributed and made visible on the walls of factories
and offices within the company.
Employees are asked to report accidents, incidents and unsafe acts
and conditions – as they are a vital source of improvements and highlight
opportunities to better control the associated risk. The Volvo Group’s
Code of Conduct and related processes make it clear that any manage-
ment reprisals against individuals making such reports in good faith are
not tolerated. If a manager or colleague acts against the Code of Conduct
– a whistleblower process can be used to escalate this.
Health and safety coordinators are employed to support team leaders
and managers in the organization. Periodic training is also organized on
health and safety procedures, as well as roles and responsibilities for
managers and health and safety coordinators.
182
VOLVO GROUP 2023
SUSTAINABILITY NOTES
Ergonomics in focus
Ergonomics is a prioritized area across the Volvo Group and individual
workstations are regularly assessed for improvements. Operators,
employees and consultants also receive training on occupational ergo-
nomics tailored to specific areas, whether manufacturing, administration
or when working from home. Training centers on many of the Group’s
sites also offer and promote training opportunities on focused themes
within ergonomics.
Ergonomics guidelines exist for specific roles. In manufacturing for
example, guidelines summarize the main ergonomics specifications and
provide general principles for an ergonomic-based approach to worksta-
tions design and layout.
Occupational health services
Occupational health services are provided to employees at most units and
vary from one country to another depending on the specific needs of the
unit, the level of health service provided and local legislation. In many
countries and locations, health services are supported by company doc-
tors and nurses, psychologists, physiotherapists and ergonomists.
In some countries/organizations such services can be supplied by third
parties. If so, they are required to ensure data privacy in accordance with
applicable regulations. Occupational health services play a major role in
health promotion. These service providers manage confidential data-
bases and can help to provide anonymized reports about relevant health
aspects – diabetes, cardiovascular disease, stress levels, etc. – to imple-
ment relevant preventive and corrective actions.
Participation, consultation and communication
Worker representatives are appointed to health and safety committees by
employees. Depending on the type of business area, health and safety
committees operate on the factory level, retail office level or unit level.
The main objective of the committees is to bring together workers and
management representatives, define actions and jointly agree on mea-
sures needed to improve health and safety performance. Committees
meet on a regular basis and decisions taken shall be communicated to the
workforce, acted upon and followed up. The committees could also be
involved in accident and incident investigations and support in additional
corrective or preventative measures.
Training on occupational health and safety
All employees and consultants are provided health and safety training as
well as other Code of Conduct training as part of their induction program.
More specific training is provided depending on the job responsibilities.
Specific training for potentially hazardous jobs – such as working with
electricity or hazardous substances, at heights and in high heat conditions
– is mandatory for employees working in these environments and needs
to be repeated on a regular basis. All trainings are provided during working
hours. The effectiveness of these trainings is assessed locally depending
on each organization and country.
Health promotion
The Volvo Group has for a long time provided various health promoting
activities beyond occupational safety. These programs are often provided
by external partners. Health promotion programs may cover topics such
as preventing communicable diseases, substance abuse, obesity, healthy
lifestyle, physical exercise, nutrition, sleep and stress management. The
psychological work environment is growing in focus, and many tools are
available to support in preventing issues and promoting good mental
health. There are various types of tools that can be used depending on
specific and individual needs. The confidentiality of individuals is pro-
tected in line with general data privacy laws. Throughout the year many
countries have used pulse surveys and engagement tools to understand
attitudes and feelings in general, and in particular to a shift where work-
life is affected by remote work and social distancing. This approach has
been useful and actions have been taken in response.
Accidents and accident rates
Volvo Group tracks the accidents and accident rates in all locations
including plants, workshops and offices in all countries of operations. In
2023 the accident rate was 1.08 per 200,000 worked hours.
Health and safety data is reported at operating unit level and consoli-
dated at Business Area/Truck Division and Group level. The data is col-
lected quarterly at the Group level and on a monthly basis by several Busi-
ness Areas and Truck Divisions. Work is ongoing to facilitate consolidation
of data across the Group. While many different KPIs are reported for dif-
ferent needs, lost time accidents and lost time accident rate are the out-
come oriented KPIs used on Group level. Work is ongoing to identify other
global KPIs.
Measurements of high-consequence or serious work-related injuries
and related hazards are used in many parts of the organization but without
common definitions and consolidation systems so far. As such, they are
not consolidated at Group level but are shared in health and safety net-
works for learning purposes and risk mitigation.
Health and safety impacts linked to business relationships
In accordance with the Volvo Group’s Supply Partner Code of Conduct,
on-site audits are performed at suppliers on a wide variety of sustainabil-
ity topics. Health and safety are central elements to this process.
Read more Responsible purchasing and social impact, page 189
Occupational safety, as well as road safety, are central elements in the
Group’s offer to end-users. Volvo Group provides customer solutions and
training to increase safe behavior and safe product use.
Read more Customer and end-user safety, page 184.
Rates of injury and number of work-related fatalities 2018-2023
Lost time accident rate
(LTAR) per 200,000
worked hours.
Number of accidents
with lost time
789 972 1,004 656 735 879
Number of fatalities
Employees 3 1 0 0 0 0
Number of fatalities
Contractors 0 2 0 0 0 0
2022 20232018 2019 20 20 2021
1.08
1.00
1.22
1.22
0.87
1.03
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VOLVO GROUP 2023
SUSTAINABILITY NOTES
Customer and end-user safety
Volvo Group has a value chain approach to customer health and safety
that considers the effects on customers, end users and indirect stake-
holders. The Group’s business and the products it offers target a wide
range of application areas and impact many categories of people, such as
drivers and operators, commuters, as well as other traffic system users
like cyclists and pedestrians. Our Safety Policy defines our key areas
related end user safety – product safety focusing to avoid negative impact
from potential product defects and traffic safety to maximize our positive
impact from safety systems, advocacy, communication and training.
Our vision is zero accidents with Volvo Group products and this work
includes product safety where we systematically evaluate risks and take
action to mitigate risks and implement improvements.
The most significant impacts, risks and opportunities are related to our
operating segments Trucks and Buses, as these products are used at high
speed or in areas occupied by vulnerable road users. In addition, there are
occupational health and safety risks in and around vehicles and machines,
both on the road and in construction and work sites.
The Volvo Group definition of safety not only includes the safety of the
immediate user of our products, but also understanding the entire scope
of potential impact of our products when in use.
The primary objective is to develop products that assist in preventing
accidents from occurring or, in the event accidents do occur, to minimize
the consequences for the drivers, operators and people around our vehi-
cles and machines.
Quality and safety management
Product safety is the foundation for the Group’s safety work. A safe product
is free of safety-related defects, compliant with relevant regulations and
industry standards, and safe to use during its normal life cycle. Our key
processes – from development, through procurement, manufacturing and
all the way to retail and service require systematic quality management. The
aim is to secure safety and quality of our products over its lifecycle.
Proactively, all product lines are assessed for health and safety impacts
with the purpose of securing that it is designed to be safe and to find qual-
ity improvements. Quality controls are established in all key development
and production processes according to applicable automotive standards.
Suppliers are required to adhere to the technical and safety demands we
define for different products and components. Volvo Group uses a techni-
cal audit to evaluate the Safety Management Systems of supply partners.
Safety assessments continue also after products are released to the
market including continuous audits in production as well as investigations
of real accidents. Issues that are identified in the assessments are further
investigated. Issues that after investigation are judged as safety-related
defects lead to a recall of the product so that the issue can be rectified.
Traffic safety
In the use-phase, Volvo Group work with in-depth accident research to
understand the context and challenges facing customers in their opera-
tions. This knowledge is then used in product development to achieve
continuous improvements.
Volvo Group also works with partners in academia and policy makers to
promote progress in road traffic safety and enable safer solutions to be
brought to the market. An example is the collision warning with emer-
gency brakes for pedestrians and other vulnerable road users. This type of
system will be a legal requirement in Europe toward the end of the decade
and Volvo Trucks introduced this feature during 2023. The knowledge
gained on safety is shared via communication and training programs in
many markets where the Group operates to raise awareness and promote
a safe driving behavior.
184
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Human rights across the value chain
The Volvo Group is committed to respecting internationally recognized
human rights. Negative human rights impacts may potentially materialize
not only within our own organization, but also through our business rela-
tionships and in the value chain. We also seek to address adverse human
rights impacts with which the Volvo Group is involved. We are continuing
to strengthen and align our human rights work with the following interna-
tional frameworks:
• UN International Bill of Human Rights.
• ILO’s fundamental conventions.
• UN Global Compact.
• UN Guiding Principles on Business and Human Rights.
• OECD Guidelines for Multinational Enterprises.
• Children’s Rights and Business Principles.
This is an ongoing journey and the Volvo Group has adopted a risk-based
approach where we prioritize and focus on the areas where we consider
that we have the highest risks for adverse human rights impacts. We also
recognize that a core tenet of many of these frameworks is tracking and
monitoring performance to drive continuous improvement and using our
experiences as a source of continuous learning. This report sets out our
progress to date, but we acknowledge there is more to be done.
The Volvo Group reports on its human rights related work under appli-
cable laws and regulations, including national laws under the EU’s non-fi-
nancial reporting directive, and the Modern Slavery legislation in Australia
and the United Kingdom. In 2023, we published Modern Slavery State-
ments for relevant companies within the Volvo Group in line with these
legal disclosure requirements.
Human Rights Policy commitment
The Volvo Group launched a standalone Human Rights Policy in 2021. This
policy sets the common threshold for our commitment to respect human
rights and applies to all Volvo Group entities, employees and others working
at our sites.
The Human Rights Policy is complemented by the Volvo Group’s Code of
Conduct, the Volvo Group Human Rights Program and specific policies,
directives and guidelines developed by our Truck Divisions and Business
Areas in several human rights-related areas. These include health and safety,
responsible purchasing through our Supply Partner Code of Conduct,
human resources, responsible sales, and whistleblowing.
Human rights governance and oversight
The Volvo Group’s human rights governance follows our allocation of busi-
ness accountability and includes several cross-functional governance
forums across the company. At Group level, the strategic direction on
human rights is overseen by the Volvo Group Human Rights Board com-
posed of relevant members of the Executive Board.
Implementation of the Human Rights agenda is supported by a cross
functional reference group and a working group with members from rele-
vant Group Functions, Truck Divisions and Business Areas.
Human Rights program
In 2022, the Volvo Group Executive Board adopted a Group-wide Human
Rights Program. The Volvo Group Human Rights Program describes how
we implement our commitment to respect human rights as set out in our
Human Rights Policy. The purpose of the Human Rights Program is to
ensure that Volvo Group can systematically identify, mitigate and address
human rights risks and ensure continuous improvement in our processes.
The program provides further clarity on the Volvo Group’s ambition on
human rights, applicable standards, salient human rights risks, human
rights due diligence strategy, and human rights governance across various
levels of the Volvo Group.
In the process of implementing the Human Rights Program, we initi-
ated during late 2023 a groupwide Human Rights Risk and Maturity
Assessment Project with the objectives to enable us (i) to deepen our
understanding of our human rights risks across Volvo Group’s value-chain,
(ii) to better understand the maturity of our existing management systems
to perform human rights due diligence, and (iii) to prepare the set-up and
continuous integration of a robust, systematic, and coherent approach to
the identification and management of human rights risks and impacts
across the Volvo Group. The project will run continuously also during 2024.
Salient human rights risks
The Human Rights Policy is based on the Group’s sustainability priorities
and highlights risks related to people, climate and resources. Human rights
risks may be associated with our activities and business relationships in all of
these areas. The Human Rights Policy describes the Volvo Group’s ten
salient human rights risks across these three areas. Descriptions of these
risks and references to specific disclosures are found on page 187.
Grievance and
remedy
Policies, standards
and governance
Reporting and
performance
Training and
awareness
Prevention and
mitigation
Risk analysis and
impact assessment
Meaningful
dialogue with
stakeholders
VOLVO GROUP HUMAN RIGHTS PROGRAM – MAIN ELEMENTS
185
VOLVO GROUP 2023
SUSTAINABILITY NOTES
The human rights due diligence and mitigation efforts adopt a risk-based
approach considering country-specific risk levels and our operational con-
text in the country, inherent risks in certain purchasing categories and sales
segments, and potential concerns brought to our attention by internal and
external stakeholders. The most important risks for our divisions and busi-
ness areas make up the Group’s salient issues.
Human rights due diligence across the value chain
Our human rights work aims to identify, prevent, and mitigate potential or
actual adverse human rights risks and impacts. The Volvo Group’s scope
of responsibility, influence, and leverage varies across different parts of
the value chain and operational contexts. Therefore, our human rights
related processes and activities should be adopted to reflect the context
of our role within the respective parts of our value chain including own
operations, the supply chain, business partners and sales deals.
Our own operations
At a Group level, one tool used by the Volvo Group when it comes to
implementing human rights due diligence across our organization is country-
by-country human rights reviews covering all operations, employees, and
other personnel at our sites in the reviewed country. These reviews are
conducted using a methodology developed in accordance with internationally
recognized practices and includes the following main elements:
• Desktop analyses based on internal data such as workforce data, local
policies, internal expert interviews, employee survey responses and
collective bargaining agreement, and external sources such as country
human rights reports and human and labor rights laws.
• Self-assessments by country management teams and local human
resources departments.
• On-site visits with country management and human resources, and
local internal subject matter experts, employees and third party person-
nel onsite. If appropriate also including external expert organizations.
• Corrective actions and follow-up after each review with agreed action
plans and accountability within the local management and communi-
cation to relevant members of the Executive Board.
Human rights reviews are often overlapping with several other internal
processes, such as those related to non-discrimination, health and safety,
employee relations, quality and environmental management. Findings
from reviews within the respective areas can highlight improvement areas
in other processes, including human rights work.
Reviews in own operations have been performed in India (2017), South
Africa (2018), and Mexico (2019). This type of review activities had to be
paused in 2020 and 2021 due to the covid-19 pandemic. Following a revision
of the process and methodology we restarted the review processes in 2022,
and performed reviews in United Arab Emirates and Algeria during 2023.
Human rights reviews as a due diligence tool, and a country prioritizing plan, is
to be included for analysis in the Human Rights Risk and Maturity Project
mentioned above.
Our supply network
Our supply network is vast, with some 50,000 unique entities in the first
tier, and is continuously evolving. Primary data is therefore limited to sup-
ply partners closer to Volvo Group. Due diligence activities is also sup-
ported by proxy data, research and secondary information from supply
partners to identify potential impacts in the value chain upstream. The
Volvo Group’s Supply Partner Code of Conduct sets minimum require-
ments, and aspirations for our suppliers in the areas of climate, resources
and people, including human and labor rights, health and safety, responsi-
ble sourcing of raw materials, environmental performance, and business
ethics. While issues differ across the supply chain depending on countries
and processes, a number of risks related to human rights has been identi-
fied, which are addressed through the Group’s responsible purchasing
program, read more on page 189.
The Volvo Group also collaborates with private business partners to
assemble trucks and build bus bodies on our chassis in line with customer
specific requirements. Some of these partners are located in countries with
elevated human rights risks. Ongoing activities to secure that business
partners operate in line with Group requirements include e.g. to implement
social and environmental requirements in contractual agreements, require-
ments on self-assessments, on-site reviews and training initiatives.
Our sales channels and the use of products
Certain sales deals are assessed for risks related to human rights, primarily
in connection with direct sales deals involving customer financing and sup-
port from export credit guarantees as well as sales to certain high-risk end
users such as the military and law enforcement. Certain sales deals are also
assessed in specific customer segments such as the fossil fuels sector,
mining, and sales to conflict-affected areas with particular human rights
risks. This sustainability assessment is further described in a separate sec-
tion on Responsible sales on page 188.
Risks further downstream in the value chain
Risks have also been identified related to employment conditions for truck
drivers in the road transport sector in Europe. Minimum requirements in
the Volvo Group Supply Partner Code of Conduct apply also for logistics
service providers. However, the varying regulations in Europe as regards
drivers’ employment conditions requires broader industry collaboration.
Consequently, the Volvo Group is involved in CSR Europe’s Responsible
Trucking Initiative, which aims to improve employment and working con-
ditions for truck drivers in the road transport sector across Europe. The
initiative has released social guidelines for common expectations towards
suppliers and sub-contractors on human rights, working conditions and
business ethics, read more at www.csreurope.org/.
Human rights awareness training
Training and raising awareness for our colleagues and relevant business
partners is a key element of our human rights work and an area where it is
recognized that continued improvement is needed. In addition to the
Group’s overall Code of Conduct training which includes certain aspects
of human rights, many parts of the organization have held human rights
awareness and update sessions during the year. In total, some 2,000 indi-
viduals, many of which in sales areas and market management, have been
trained in such human rights, including specific sessions directed to the
AB Volvo Board of Directors, the Executive Board, and Business Areas
and Truck Divisions management teams. In late 2023, a new introductory
online training focusing on business and human rights was also made
available in twelve languages to all Volvo Group employees and consul-
tants. These overall human rights awareness initiatives complement other
specific training on related topics such as diversity and inclusion, health
and safety, non-discrimination and anti-harassment, equal pay and living
wage, responsible purchasing and responsible sales.
Stakeholder engagement and consultation related to human rights
Our human rights work includes ongoing dialogues with unions, and
engagements with employees, customers and investors, as well as NGOs,
and other societal actors on our human rights approach and performance.
In 2023, our engagement with external stakeholders primarily related to
our overall human rights governance and policy, and supply chain due dili-
gence related to material sourcing. In addition, consultations have been
held with affected stakeholders as part of reviews at own operations and
due diligence activities at supply partners.
186
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SUSTAINABILITY NOTES
Grievance channels and access to remedy
Employees, representatives of the Volvo Group, and external stakeholders
can report any instances of breach of our Code of Conduct and other pol-
icies, including human rights violations, where the Volvo Group or any of
its representatives are believed to be involved. Grievances can be reported
through internal and publicly available grievance channels described in our
Code of Conduct, including the Volvo Group Whistle. Reports can be
made anonymously wherever permitted by local law.
The Volvo Group aims to provide for or cooperate in the remediation of
negative human rights impacts if our activities have caused or contributed to
them and seek to play a role in the remediation of negative human rights
impacts that we may be directly linked to in our operations, products, ser-
vices, or business relationships.
See page 192 for more information on our grievance channels and the
types of concerns reported in 2023.
Specific disclosures on salient human rights risks
Climate and environmental impacts
We recognize the importance of the transition to a low carbon economy envisaged by the Paris Agreement, and that a safe and clean environment
is essential for the full enjoyment of human rights. We are actively working to reduce climate and negative environmental impacts in our operations
and our value chain.
Read more Climate and Environment, pages 166-174
Hazardous materials and substances
The usage of substances of concern is managed as an environmental topic but its impact is also related to impacts on people. We have an objective
to phase out potentially hazardous materials and substances, where possible, and if there are no suitable alternatives, to secure their safe and
responsible handling throughout the value-chain.
Read more Environment - Substances of concern, page 173
Minerals and metals from conflict-affected and high-risk areas
We are aware of increased overall risk related to materials extraction. A dedicated Sustainable Minerals Program supports our efforts for supply
chain transparency and to promote responsible sourcing, extraction, and handling of such materials.
Read more Sustainable Minerals Program, page 190
Health and safety
Health and safety has been identified as a prioritized area at suppliers, in our own operations and for end-users. Read in more detail about the work
to mitigate health and safety risks in the following sections:
Read more Employees and workforce, page 182 Read more End-users, page 184
Read more Responsible purchasing and social impact, page 189-190
Fair employment and working conditions
We have identified some key areas with potential increased risks where we do deeper due diligence to prevent violations, for example identified con-
cerns relating to upstream value chain workers in locations near migration corridors and sourced services, especially in countries where these jobs
are generally low paid and performed by workers within vulnerable groups and/or workers with limited awareness on basic labor and human rights.
Read more Employees and workforce, page 179 Read more Responsible purchasing and social impact, page 189
Freedom of association and collective bargaining
Risks related to representation are by many stakeholders identified as a foundation for a range of other social impacts. We operate in countries
where there are limitations to these rights, but our Code of Conduct and Supply Partner Code of Conduct sets out employees’ rights to find ways
of representation to avoid negative impacts in this area and other related topics.
Read more Employees and workforce page 179
This is part of our supply chain due diligence and disclosures related to working conditions.
Read more Responsible purchasing and social impact,
page 189 Additional information on volvogroup.com/code
Non-discrimination and fair treatment
Fair treatment is a key area to feeling safe at work and our work related to diversity and inclusion. Volvo Group has a zero tolerance for harassment
and discrimination. Negative impacts on people in this area are mainly identified through our internal whistleblower grievance mechanism.
Read more Employees and workforce - Diversity and equal opportunities, page 181
Forced labor and modern slavery
We assess risks related to forced and compulsory labor as part of our overall human rights due diligence in our own operations and relevant parts
of the value chain. Elevated risks are identified for vulnerable groups in the supply chain such as migrant workers.
Read more Responsible purchasing and social impact, page 190
Child labor and children’s rights
The Volvo Group assesses risks related to child labor and children’s rights as part of our overall human rights due diligence in our own operations
and relevant parts of the value chain. Risks in this area is identified as potential based on risk maps where we identify higher exposure to potential
risks for certain markets and components with complex supply chains where traceability is virtually impossible. The most elevated risks in this area
are concentrated to minerals extraction.
Read more Sustainable Minerals Program, page 190
Sales to conflict-affected and high-risk areas
The sale and use of our products in conflict and other high-risk contexts could result in potential adverse human rights impacts. Therefore, we make
extended reviews of certain sales deals – involving customer financing and support from export credit guarantees, sales to certain high-risk end
users such as military and law enforcement end-users, and sales to conflict-affected areas.
Read more Responsible sales, next page
187
VOLVO GROUP 2023
SUSTAINABILITY NOTES
RESPONSIBLE SALES
The Volvo Group has processes and policies in place with the aim to
ensure that our business is conducted in compliance with applicable laws
and regulations, including sanctions and export control regimes. In addi-
tion, we assess certain sales deals for risks related to human rights, envi-
ronmental factors and business ethics as part of knowing the customer or
end-user processes. These assessments are primarily carried out in con-
nection with direct sales involving customer financing and support from
export credit guarantees, sales to certain high-risk end users, such as the
military, and sales to conflict-affected areas.
Assessment of commercial sales deals
When assessing sales deals, we use external risk databases and tools
such as Verisk Maplecroft and RepRisk for risk identification. The findings
are assessed, described, and escalated to relevant forums within our
Business Areas or Group Functions. Actions for identified findings
typically include engagement with our customers with the aim to support
them to mitigate identified risks. In some cases, we may also engage with
other external organizations such as embassies or NGOs. If the risks are
considered too high and difficult to mitigate, we may decide not to
proceed. In our assessments, we consider country risk levels, customer
segments, end-users and intended end-use of our products. Our Business
Areas have the responsibility to perform these assessments, with support
from Group Functions when needed.
In 2023, 265 such assessments were performed by the Group’s Busi-
ness areas, mainly related to customer financing and sales to certain high-
risk markets. Some of these assessments identified issues related to
potential adverse impacts on the environment and communities, lack of
respect for human and labor rights, poor employment conditions, occupa-
tional health and safety, and unethical business behavior.
Sales to military end-users
The Volvo Group’s Business Areas are required to escalate potential sales
to military end-users in certain countries for assessment by Group Func-
tions before submitting an offer. Military end-users include the armed
forces and other armed law enforcement agencies. Factors such as the
existence of arms embargoes, armed conflicts, political instability, and
human rights-related risks are considered in this assessment. This pro-
cess is governed by an internal directive on military sales and is on top of
any export license requirements from national authorities. The European
Union’s common rules governing control of exports of military technology
and equipment include several criteria on respect for human rights and
international humanitarian law, which member states are expected to
consider when granting such export licenses.
In 2023, Volvo Group assessed 26 potential transactions to selected
military and government end-users in various countries. Depending on
the country of end-use, sales deals either require a decision by the Volvo
Group’s Military Sales Committee (comprising relevant members of our
executive management) or a recommendation from Group Functions to
the Business Area for its own decision.
Governance and awareness
As part of the continuous improvement, the Volvo Group’s Business Areas
continued to strengthen their approach to responsible sales including
governance, screening procedures, and training and awareness. In 2023,
approximately 250 individuals have participated in online trainings and
awareness sessions focusing specifically on responsible sales.
188
VOLVO GROUP 2023
SUSTAINABILITY NOTES
RESPONSIBLE PURCHASING AND SOCIAL IMPACT
Volvo Group supply partners play an integral role in realizing our sustain-
ability strategy across the full value chain. Our supply base is built up by
more than 50,000 tier one supply partners, of which approximately
12,000 deliver goods and services to support the Volvo Group’s serial
production. Working with a global supply network presents a range of
impacts, risks and opportunities. Beyond the Group’s direct supply part-
ners, we also see opportunity for collective purchasing impact to influ-
ence the sustainability transformation throughout our extended supply
network.
To ensure that our supply partners adhere to the Volvo Group expecta-
tions and values, we implement due diligence procedures through our
Supply Partner Code of Conduct and our own risk assessments, incorpo-
rating international standards such as the OECD Due Diligence Guidance
for Responsible Business Conduct and the UN Guiding Principles on
Business and Human Rights.
Policy
The Volvo Group Supply Partner Code of Conduct is the policy and platform
for our collaboration with supply partners in building sustainable supply net-
works. It is based on the Volvo Group’s sustainability ambitions in the areas
of people, resources, climate, and business ethics and compliance. Updated
in 2023, it outlines how we do business in the Volvo Group and our manda-
tory sustainability requirements in each area. It also includes expectations to
guide supply partners as they evolve to further advance sustainable perfor-
mance and impact in the areas covered by the Code of Conduct.
The Supply Partner Code of Conduct defines the Volvo Group’s sustain-
ability commitments and gives guidance to Volvo Group supply partners
on meeting those commitments. Among the topics covered are achieving
a net-zero greenhouse gas emissions value chain by 2040, fulfilling the
needs of transportation and infrastructure within the limitations of plane-
tary boundaries, and investing in well-being, empowerment, business
ethics and compliance, and respect for human rights. The document is
guided by the Automotive Industry Guiding Principles of DRIVE Sustain-
ability as well as frameworks such as the Organization for Economic
Co-operation and Development (OECD) Guidelines for Multinational
Enterprises, the United Nations Guiding Principles of Business and
Human Rights and other international frameworks as explained in the sec-
tion on human rights on page 185.
This part of the report focuses on the social impacts, risks, and oppor-
tunities relating to the Volvo Group’s supply network. Read more on page
172 and 173 about climate and environmental assessments of the supply
network.
Assessment
Sustainability assessments focus primarily on tier one supply partners and
are conducted through supply partners’ self-assessments as well as tar-
geted in-depth on-site audits. We prioritize audits based on sustainability
risks by country, commodities, processes, or work areas. The risk assess-
ment is based on external tools, bringing a comprehensive view of risks
related to human and labor rights, environmental and business ethics
across the globe. As a complement, risks can be flagged during any type of
supplier audit, training, or visit as well as via Volvo Group’s grievance
mechanism.
The Volvo Group carries out most audits and reviews with internal
resources. Procurement staff and specialized auditors share responsibil-
ity for ensuring that proper actions are taken to resolve identified gaps.
Supply Partners and external stakeholders are encouraged to promptly
report concerns of misconduct, violations of the law, and other unethical
behaviors via a Volvo Group grievance mechanism.
Self-assessments
The Volvo Group uses a standardized questionnaire for the automotive
industry focused on sustainability in the supply network. The Self-Assessment
Questionnaire (SAQ), developed through the DRIVE Sustainability Automotive
Partnership, considers sustainability performance within human rights and
working conditions, as well as environmental and responsible supply chain
management. Potential supply partners are invited to conduct the SAQ, and
the result is used in the supply partner selection process. For a selected
partner, the self-assessment result will lead to a corrective action plan if the
supply partner falls below a risk threshold or if a selection of questions is not
fulfilled. To drive continuous improvement, the rating is valid for three years,
and thereafter a new assessment is required. The requirements for self-
assessment approval are increasing to ensure continuous improvement of due
diligence practices.
On-site audits
In the sourcing phase, we conduct additional risk analysis of potential
supply partners of direct materials in high-risk countries through on-site
audits. We audit potential indirect material supply partners located in high-
risk countries with a contract value that exceeds a pre-defined threshold.
The responsibility for improvements and corrective actions always lies
with the potential supply partners. Non-compliance cases are managed by
the responsible buyer, together with the auditor, until resolved. Auditing of
existing supply partners follows the same procedures.
Overall, the sustainability assessment of supply partners focuses on
developing a sustainable supply base and establishing a strong partner-
ship. The results are used in the sourcing decisions, and violations of the
requirements are expected to be resolved in a timely manner if the long-
term partnership is to remain. Those who fail to address critical issues risk
not being awarded a contract or having their contracts terminated.
As part of the due diligence program, the Volvo Group also invests in
capacity building in the form of training. For broad implementation, this is
done in collaboration with DRIVE Sustainability. In 2023, special focus
was set on China and Brazil.
Metrics on social impact in the supply network
The Volvo Group has identified certain metrics followed up annually to
assess the work deployed. So far we have not established any out-
come-oriented targets.
Result of self-assessments
Following an update of the self-assessment in 2022, which includes more
stringent demands in line with changing requirements, 2,020 sustainabil-
ity self-assessments were performed in 2023. From a total Volvo Group
direct material spend perspective, 93% of all supply partners have con-
ducted the assessment. Of those conducting the assessment, 90% had
a recorded approved rating. In high-risk areas, the corresponding result
was 89% completion, out of which 86% had a recorded approved rating.
Result of on-site audits
In 2023, 221 audits were carried out, with 119 deviations found. The
most common deviations were found within the areas of management
commitment, working hours, supply chain management, and environ-
mental management. In the area of management commitment, deviations
related mainly to supply partners having codes of conduct that do not
adequately address risk areas. In the area of working hours, the findings
were related to excessive working hours for employees. Within the area of
supply chain management, deviations were found when supply partners
either did not set adequate social, environmental, or business require-
189
VOLVO GROUP 2023
SUSTAINABILITY NOTES
ments for their supply network or did not cascade their requirements pro-
actively with their suppliers. In the area of environmental management,
the deviations related mainly to management of hazardous waste as well
as the lack of a documented environmental management system. The
findings from the audits are communicated to the supply partners, who
are expected to set up and implement a corrective action plan in a timely
manner. Such corrective actions are then monitored by the buyer respon-
sible in cooperation with the auditor.
Outsourced processes
In addition to our owned manufacturing operations, the Volvo Group
collaborates with private business partners to assemble trucks and build
bus bodies on our chassis in line with customer-specific requirements.
Some of these partners are located in countries with elevated human
rights risks. Ongoing activities to secure that business partners operate in
line with Group requirements include e.g., to implement social and
environmental requirements in contractual agreements, requirements on
self-assessments, on-site reviews and training initiatives.
In several markets we also source services such as security, facilities
management, and catering supporting our operations. While we have a
transparent view of the day-to-day work environment of the people per-
forming these services, we have identified potential risks related to fair
employment and living conditions in some markets.
Based on our assessments, these risks have become more relevant for
some workers with limited awareness of basic labor and human rights, in
combination with markets with higher risks related to adequate wages.
Migrant workers have been identified as such a vulnerable group also at
risk of different types of bonded labor and arbitrary recruitment fees.
When we source activities from external partners in relation to outsourced
processes, we aim to further assess employment terms and recruitment
practices for value chain workers.
Supply chain further upstream
Considering common supply network challenges in the Group’s sector,
we have identified some areas important to address in addition to the
above to support supply partners in securing sustainable supply net-
works. This is especially relevant for certain minerals associated with ele-
vated risks related to child labor, forced labor, and other human rights.
Sustainable Minerals Program
As part of the Supply Network Due Diligence program, the Volvo Group
has a specific focus on a range of selected minerals and materials. The
Sustainable Minerals Program is built on the five steps framework of the
OECD Due Diligence Guidance for Responsible Supply Chains of Minerals
from Conflict-Affected and High-Risk Areas, as well as on the tools of the
Responsible Minerals Initiative (RMI). The focus minerals of the Sustain-
able Minerals Program are tin, tantalum, tungsten, gold (3TG), and cobalt.
These materials are part of our global supply chain and used in many com-
ponents. We are continuously reviewing for additional critical raw materi-
als and minerals to be in scope for the program. As part of this work, the
Volvo Group is a member of RMI. See information on this organization below.
In 2023, 1,043 tier one supply partners were identified and included in
the Volvo Group’s Sustainable Minerals Program. With this as a base, 925
of them were identified as relevant for 3TG minerals, and 802 for cobalt.
Most of the invited companies already collaborate, and all have been
assessed on the parameters of (a) strength of their human rights due dili-
gence programs and (b) association with smelters or refiners of concern in
their supply network. As a result, 345 smelters or refiners (SORs) were
identified to be included in the Volvo Group’s supply network. Approxi-
mately 59% of them have been certified “conformant”, 65 % for 3TG and
37 % for cobalt respectively, by the Responsible Minerals Assurance Pro-
cess (RMAP), on behalf of the global organization RMI. The Volvo Group
finances the RMAP and co-funds independent third-party audits of SORs
due diligence practices through a partnership with RMI.
For 2023, the RMI audit program was adjusted and enhanced. Due to
the war between Russia and Ukraine and the subsequent European and
UK sanctions against Russia, all RMAP audits in Russia have been paused
and all Russian smelters have automatically been rated as non-confor-
mant compared to previous years. In addition, RMI has for the first time
started to conduct audits of cobalt smelters or refiners. The ambition of
the Volvo Group’s Sustainable Minerals Program is to drive full transpar-
ency by 2025, when all supply partners in scope are to be compliant with
our Responsible Purchasing standards and requirements.
Examples of industry collaborations for sustainable supply networks
The Responsible Minerals Initiative (RMI)
RMI is a collaborative platform addressing responsible mineral sourcing
issues in global supply networks. The Volvo Group is working with RMI
with the aim of ensuring responsible and sustainable sourcing of tin, tan-
talum, tungsten and gold (sometimes referred to as conflict minerals), as
well as cobalt. Through RMI, participants develop and gain access to
tools and resources to ensure regulatory compliance and support respon-
sible sourcing of minerals from conflict-affected and high-risk areas.
DRIVE Sustainability
DRIVE Sustainability is a network of 16 leading automotive companies
working toward enhancing sustainability throughout the automotive
industry by leveraging a common voice and by engaging with our supply
chain partners, stakeholders, and related sectors on impactful activities.
The Volvo Group is active in several working groups within the initiative
to leverage a circular and sustainable automotive value chain.
Global Battery Allicance
The Global Battery Alliance is a public-private collaboration platform
under the umbrella of the World Economic Forum. The vision is to create
a circular and sustainable battery value chain set on ten guiding princi-
ples covering issues from the circular recovery of battery materials and
ensuring transparency of greenhouse gas emissions and their progressive
reduction, to eliminating child and forced labor.
190
VOLVO GROUP 2023
SUSTAINABILITY NOTES
Business ethics and compliance
COMPLIANCE PROGRAMS
Our Code of Conduct states that we earn our business fairly and lawfully.
Conducting business in line with applicable laws and regulations is the
best basis for sustainable success and the best way to protect our reputa-
tion. A dedicated Group Compliance function oversees the implementa-
tion of a compliance management system approach for core compliance
areas, such as competition and anti-corruption laws, export control regu-
lations and data privacy. The different business areas have established
compliance functions to manage the implementation of the compliance
management system in their areas and cover additional compliance areas,
such as anti-money laundering or emission compliance, to the extent
needed. The Volvo Group’s compliance management system amongst
other things includes policies, guidelines and procedures, regular compli-
ance communication and training, as well as assurance activities such as
effectiveness testing and auditing. The Volvo Group has further imple-
mented group-wide Whistleblowing channels that can be used by internal
and external parties for all compliance areas. In 2023, no cases of
non-compliance with material effects on the Volvo Group were identified.
ANTI-CORRUPTION
The Volvo Group firmly condemns all forms of corruption, including brib-
ery. Not only is corruption illegal, it also distorts the market, disrupts fair
competition, and hinders social development. Volvo Group employees, at
all levels, are strictly forbidden from engaging in any form of corrupt prac-
tices, such as offering or accepting, directly or indirectly, bribes, inappro-
priate gifts or hospitality, or facilitation payments. The Volvo Group
expects its business partners to uphold similar anti-corruption standards.
Various risk factors expose the Volvo Group and its employees to corrup-
tion risks. For instance, the company has a global footprint with business
operations in many countries, including high-risk countries from a corrup-
tion perspective. Our businesses engage in high-value contracts and par-
ticipate directly and indirectly in private and public tender procedures.
Additionally, our interactions with a broad range of business partners and
other third parties, such as officials or representatives of government
bodies or institutions, expose us to third-party risks.
To reinforce its internal and public anti-corruption commitment, the
Volvo Group has expanded on its principles in the Code of Conduct with a
global anti-corruption compliance framework. This includes a global
anti-corruption policy, detailed instructions, and various procedures and
controls. Key components are a requirement of accurate and fair books
and records, a mandatory risk-based due diligence screening process for
third party intermediaries, a prohibition on facilitation payments, and
comprehensive rules and procedures regarding third party intermediary
remuneration, gifts and hospitality, sponsorships and charitable dona-
tions. Where deemed necessary, we have further documentation in adja-
cent areas, such as anti-money laundering and fraud reporting.
Group Compliance designs and develops the Volvo Group anti-corrup-
tion compliance program and monitors implementation across the Group.
The team works closely with a network of compliance officers in the busi-
ness areas and divisions to ensure the implementation in their respective
areas.
COMPETITION LAW
The Volvo Group strictly prohibits any conduct that would violate compe-
tition laws and regulations. The Volvo Group competes on the merit of its
products and services and trusts that its products and services will suc-
ceed in a fair and competitive marketplace. Employees at all levels are
prohibited from participating, or otherwise becoming involved, in any con-
duct that would violate competition laws, such as anti-competitive agree-
ments with competitors. The Volvo Group also expects its business part-
ners to adopt and enforce comparable competition law principles and
includes these requirements in contractual agreements.
The Group’s exposure to competition law risks stems from various fac-
tors. First, the Volvo Group has a global footprint with diverse business
operations in multiple countries, most of which have competition law
regimes in place. Second, Volvo Group employees interact with employ-
ees of competitors in a range of different contexts, including via trade
associations, industry gatherings, trade fairs, publicly funded projects,
benchmarking activities, M&A projects, etc. Each interaction carries
inherent competition law risk in the form of collusion with competitors, for
instance through exchange of commercially sensitive information. Third,
relationships with third party business partners can expose the Volvo
Group to competition law risk, e.g., in the form of anti-competitive agree-
ments with customers or suppliers (vertical and horizontal restraints).
The Volvo Group has supplemented the principles of fair competition in
the Code of Conduct with a dedicated competition law policy, as well as
detailed instructions and best practice guidelines. These include guide-
lines on commercially sensitive information, trade associations, bench-
marking, document creation and retention, private dealers, suppliers and
body builders, and employment information, as well as a comprehensive
handbook on collaborations with competitors.
Group Compliance is responsible for designing and developing the Volvo
Group competition law compliance program and monitors the implementa-
tion across the Group. A network of compliance officers in the business
areas and divisions work closely with Group Compliance to ensure the
implementation in their respective area.
Compliance communication and training
Volvo Group’s top management, Group Compliance and other internal
stakeholders regularly communicate the importance of compliance with
all applicable laws in various forms. To ensure that all employees have the
required knowledge, the Volvo Group has developed a compliance train-
ing strategy that tailors training to individual training needs in a risk-based
manner. This includes e-Learning courses for competition law, anti-
corruption, export control and data privacy for a broad basis of employees
as well as targeted instructor-led training in these compliance areas for
employees working in roles with elevated risk levels.
Until end of 2023, 59,951 Volvo Group employees have completed the
annual Code of Conduct e-learning and more than 30,000 white collar
employees have completed the compliance awareness curriculum consist-
ing of e-learning courses on anti-corruption, competition law, export con-
trol and sanctions, and data privacy. In addition, Volvo Group further pro-
vided in-depth instructor-led training to white collar employees based on
identified risk exposure. By end of 2023, 5,639 employees have completed
the most recent in-depth anti-corruption training and 4,726 employees
have completed the most recent in-depth competition law training.
191
VOLVO GROUP 2023
SUSTAINABILITY NOTES
WHISTLEBLOWER REPORTING
In Volvo Group, we believe that a vivid speak-up culture is a crucial element
for the company’s success, can help uncover misconduct, and prevent vio-
lations of the law. We also believe in the open-door policy and encourage
employees to report their concerns to their local organization first. We
offer group-wide reporting channels, including the Volvo Group Whistle,
hosted by a third party and open to anyone within or outside the company
to ask a question or report a concern related to the Volvo Group Code of
Conduct. We regularly communicate about our whistleblowing channels
internally and provide detailed information about our whistle blowing
channels on our public website.
The Whistleblowing and Global Investigations function is an indepen-
dent unit within Group Compliance. In 2023, Group Compliance received
332 concerns through several available reporting channels. All reports were
investigated. Of the 36 reports related to Business conduct offences, 24
were categorized as suspected corruption or conflict of interest. Eight of
these were closed substantiated, with appropriate disciplinary and reme-
diation actions taken. Six investigations were in progress at year-end.
Matters related to discrimination and harassments are identified in Fair
workplace violation and Violations or Privacy or private sphere. These are
separately commented upon on page 181.
Whistleblower concerns escalated to Group Compliance
2023 2022
Type of concerns reported No. % No. %
Fair workplace violations 168 50 79 46
Offences against company assets 42 13 31 18
Business conduct offences 36 11 24 14
Offenses endangering the environ-
ment or health and safety 20 6 11 7
Violations of privacy or private sphere 16 5 9 5
Offenses against financial integrity 1 <1 1 1
Inquiries 49 15 16 9
332 100 171 100
PUBLIC POLICY
The Volvo Group has a continuous dialogue with authorities, regulators
and policymakers on issues relevant for us and our customers’ business
and operations. The dialogue is guided by yearly priorities approved by the
Executive Board. The Volvo Group is engaged in direct and indirect advo-
cacy related to public policy, mainly in the EU and the US. Associated
costs are reported to lobby registers. In 2023, the cost reported for lob-
bying in the EU and the US was approximately SEK 15 M.
The Volvo Group observes neutrality with regards to political parties
and their representatives. The Volvo Group Code of Conduct and related
policies serve as the foundation for our positions on public policies.
The Volvo Group’s advocacy efforts are based on the following guiding
principles and yearly priorities, set by the Executive Board.
Guiding principles:
• In line with the Paris Climate Agreement
• Based on level playing field via fair and free trade
• Supporting technology neutrality and global standards
• With long term prerequisites for clarity and predictability
Yearly priorities are divided into three main areas - Geopolitical, Competi-
tiveness and Decarbonization.
In the geopolitical area, the purpose was to provide our business areas
and markets with guidance on e.g. security, defense, energy and energy
infrastructure, critical raw materials and components.
As regards competitiveness, the ambition has been to promote a level
playing field with harmonized regulatory and policy frameworks on mat-
ters related to vehicle standards, innovation and business development,
and predictable state aid rules.
Within decarbonization we have promoted policies for Volvo Group’s
strategy by advocating for sustainable energy systems, energy supply and
deployment of infrastructure for fuels and electricity.
Volvo Group holds a vast number of memberships in trade associations,
other organizations and sponsorships providing possibilities to evaluate
and provide input on proposed regulations and policies. The Group does
not consider a membership being equal to aligning with all positions, but
cares to secure that the views do not oppose the Volvo Group’s ambition
or hinder its development. Volvo Group continuously reviews and evalu-
ates our memberships. A non-exhaustive list of memberships is available
on volvogroup.com/report2023.
192
VOLVO GROUP 2023
SUSTAINABILITY NOTES
Complementary disclosures
Organizational details
Name of the organization
The name of the company issuing this report is AB Volvo (publ). The com-
pany is the parent company of the Volvo Group.
Ownership and legal form
AB Volvo (publ) is a publicly held company, and its shares are listed on the
stock exchange Nasdaq Stockholm, Sweden.
Reporting
Entities included in the report
See pages 160, in the financial statements. The Volvo Group used the same
scope for the sustainability reporting as for the audited consolidated finan-
cial statements. No specific entities categorically excluded. Some smaller
sites may be excluded in emissions reporting due to materiality.
Reporting cycle and frequency
The reporting cycle is annual. No significant restatements have been
made. The reporting period is January 1, 2023 to December 31, 2023.
The date of the most recent report was February 28, 2023.
Contacts
See page 229.
Restatements
On page 172 the metrics for scope 1 and 2 GHG emissions have been
restated due to changes in entities included in the organization.
On page 173 Incineration with energy recovery and Total residuals have
been restated for 2022.
On page 176 in the taxonomy report, the KPI on aligned CapEx for
2022 was restated from 14% to 7%. The reason is that the denominator
in 2022 did not include all additions to operating lease.
External assurance
The Volvo Group’s sustainability disclosures has been subject to limited
assurance in accordance with ISAE 3000. Refer to the Auditor’s state-
ment of the Limited assurance on page 217. The Group’s auditors also
issue a statutory opinion in accordance with the audit standard RevR 12.
Significant changes to the organization and its supply chain
In 2023, there were no significant changes.
Precautionary principle or approach
A precautionary principle is applied. This is exemplified by the life-cycle man-
agement approach taken when developing trucks, buses, construction equip-
ment and other vehicles and machinery. Applying life- cycle approach provides
insights for decision making on environmental gains and potential trade-offs.
This approach is the foundation for the Volvo Group Environmental Policy.
Data collection
Quantitative data for the sustainability disclosures are consolidated in dif-
ferent systems.
Environmental data is reported at site level following the setup of the
environmental management system. The data is controlled internally by
an environmental coordination network and consolidated at Business
Area, Truck Division and Group level.
Health and safety data is reported at operating unit level and consoli-
dated at Business Area, Truck Division and Group level.
Other employee-related data is reported and quality assured at legal
entity level, which is consolidated and quality assured at a shared service
center and controlled and reviewed at Group level.
Compliance-related information is gathered using a case management
system from the Code of Conduct help and whistleblower reporting line
provided by a third party.
Qualitative data is collected from a range of functions responsible for
driving each material sustainability topic.
Governance
Policies and commitments
The Volvo Group Code of Conduct is a Group-wide policy that sets the
standards on how we conduct business – ethically and in compliance with
applicable laws and regulations. It applies everywhere we operate, for our
employees and everyone else who works on our behalf. In addition to the
Code of Conduct, the Volvo Group’s policies on competition, human
rights, data privacy, anti-corruption and export control, tax and environ-
ment are complemented with compliance programs and management
systems for effective policy deployment. Policies are further supported by
programs including due diligence procedures. In line with our decentral-
ized model each business area is responsible for ensuring compliance
with the Volvo Group’s minimum requirements and standards for sustain-
able and responsible business conduct. Business areas are also free to
complement existing policies and compliance programs with more strin-
gent requirements.
Corporate governance disclosures
The Volvo Group’s reporting approach is to include disclosures related to
governance in the Corporate Governance Report, which is based on the
reporting requirements from the The Swedish Corporate Governance
Code. Governance disclosures related to sustainability is mainly found on
page 197 and 207.
Annual total compensation ratio
Thie disclosure on compentation ratio cannot be reported fully according
to the definition in the GRI standard. The Group is in the process of updat-
ing systems to collect the data in a more effective way and the metric will
be included in future reports. Until then, average annual compensation is
used as an indicator for compensation ratio.
2023 2022 2021
Wages, salaries & other
remunerations, SEK M 62,473 54,798 47,518
Average number of
employees 89,282 86,316 83,958
Average cost per
employee, SEK 699,727 634,853 565,968
Total cost CEO, SEK M 68.5 58.1 49.3
Ratio of CEO to average
employee 98 92 87
193
VOLVO GROUP 2023
SUSTAINABILITY NOTES
The Volvo Group appreciates sound corporate governance as
a fundamental base in promoting its long-term strategic objec-
tives and in achieving a trustful relationship with shareholders
and other key stakeholders. High standards when it comes to
transparency, reliability and ethical values are guiding princi-
ples within the Volvo Group’s operations.
AB Volvo, the parent company of the Volvo Group, is a Swedish
limited liability company, with its shares admitted to trading on
Nasdaq Stockholm, and follows the Swedish Corporate Gover-
nance Code (the Code). The Code is published on www.corporate-
governanceboard.se, where a description of the Swedish Corpo-
rate Governance model can be found.
This Corporate Governance Report has been prepared in accor-
dance with the Swedish Annual Accounts Act and the Code and is
separate from the Annual Report. The Corporate Governance
Report has been reviewed by Volvo's auditor.
CORPORATE GOVERNANCE REPORT
194
VOLVO GROUP 2023
Shareholders
1
Audit Committee
Election Committee
Auditor
AB VOLVO
Business Areas/
Truck Divisions
Vote at the General Meetings
Elects Board
Prepare
part of the
Board’s work
Elects Auditor
Appoints
Election
Committee
The auditors review
the interim report for
the period January 1
to June 30 and audit
the annual report
and consolidated
financial statements
Appoints President/CEO
General Meeting
2
5
Remuneration Committee
6
3
8
President/CEO
Operations
Board of Directors
Submits proposals concerning election of Board
members, auditors and Election Committee for
the upcoming Annual General Meeting
4
10
11
Group Executive Board
11
Group Internal Audit
9
Internal Control over
Financial Reporting
12
Volvo CE Transformation
Committee
7
195
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
SHARES AND SHAREHOLDERS
1
Volvo has issued two classes of shares: series A and series B. At a General
Meeting, series A shares carry one vote and series B shares one-tenth of
a vote. The two share classes carry equal rights in the assets and earnings
of the company. According to a special share conversion clause in the Arti-
cles of Association, holders of series A shares are entitled to request that
their series A shares be converted to series B shares. Implementation of
such conversions, which occurs on a regular basis, entail that the total
number of votes in AB Volvo decreases.
At year-end 2023, Volvo had 381,666 shareholders according to the
share register maintained by Euroclear. Shareholdings in Volvo represent-
ing at least one tenth of the votes of all shares in the company are AB
Industrivärden with 27.9 percent of the votes and Geely Holding with
15.5 percent of the votes.
For more information about the Volvo share and its shareholders,
please refer to the Board of Directors’ Report on pages 80–81 of the
Annual Report.
GENERAL MEETING
2
Shareholders may exercise their voting rights at the General Meetings of
AB Volvo. The General Meeting is Volvo’s highest decision-making body.
Volvo’s Annual General Meeting will be held on March 27, 2024 at Kon-
serthuset, Gothenburg, Sweden, with the opportunity for shareholders to
also exercise their voting rights by voting in advance, so called postal voting.
In addition to applicable laws on shareholders’ right to participate at
General Meetings, the Articles of Association of AB Volvo stipulates that
shareholders must (i) give notice of their attendance (within the time
stated in the convening notice) and (ii) notify the company of any intention
to bring assistants. The documents from the General Meetings are pub-
lished on Volvo’s website.
ELECTION COMMITTEE
3
The Election Committee is elected by the General Meeting. The Election
Committee shall perform the tasks that are incumbent upon the Election
Committee according to its instructions from the General Meeting and
the Code.
In accordance with the instructions for Volvo’s Election Committee
(adopted by the Annual General Meeting 2019), the Annual General Meet-
ing shall elect five members to serve on the Election Committee, of whom
four shall represent the largest shareholders in the company in terms of
votes, who have expressed their willingness to participate in the Election
Committee. In addition, one of the members shall be the Chairman of the
AB Volvo Board.
The following individuals are members of the Election Committee which
should submit proposals to the Annual General Meeting 2024:
• Fredrik Persson, AB Industrivärden
1
• Anders Oscarsson, AMF and AMF Funds
• Carina Silberg, Alecta
2
• Anders Algotsson, AFA Insurance
• Carl-Henric Svanberg, Chairman of the Board
The Election Committee appointed Fredrik Persson
1
as Chairman of the
Election Committee.
1 The Annual General Meeting 2023 elected Pär Boman as a member of the Elec-
tion Committee. Following Pär Boman’s resignation from this assignment, AB
Industrivärden has appointed Fredrik Persson as new member.
2 The Annual General Meeting 2023 elected Magnus Billing as a member of the
Election Committee. Since Magnus Billing’s employment at Alecta has ended,
Alecta appointed Carina Silberg as a new member.
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VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
BOARD OF DIRECTORS
4
The Board is ultimately responsible for Volvo’s organization and manage-
ment of the company’s operations. The Board is responsible for the
Group’s long-term development and strategy, for regularly controlling and
evaluating the Group’s operations and for the other duties set forth in the
Swedish Companies Act and the Code.
Composition
In 2023, AB Volvo’s Board consisted of eleven members elected by the
Annual General Meeting and three members and three deputy members
appointed by employee organizations.
Hanne de Mora left the Board in connection with the Annual General
Meeting 2023 and Bo Annvik was elected as a new Board member. Mats
Henning also left the Board in connection with the Annual General Meet-
ing 2023 and the employee organizations have appointed Mari Larsson
and Urban Spännar as new Board members. A detailed presentation of
each Board member is set out in the “Board of Directors” section on pages
202–203.
Prior to the Annual General Meeting 2023, the Election Committee
announced that it had applied the provisions of rule 4.1 of the Code as diver-
sity policy. The aim is that the Board as a collective should possess the
required mix in terms of background and knowledge, whereby an even gen-
der distribution is taken into particular account. The result of the Election
Committee’s application of the diversity policy is a Board that represents a
mix of both professional experience and knowledge as well as geographical
and cultural backgrounds. 36 percent (four out of eleven) of the Board
members elected by the Annual General Meeting are women.
Independence requirements
The Board of Directors of AB Volvo is subject to the independence require-
ments prescribed in the Code.
Prior to the Annual General Meeting 2023, the Election Committee
presented the following assessment of the independence of Board mem-
bers elected at the Annual General Meeting 2023.
Carl-Henric Svanberg, Matti Alahuhta, Jan Carlson, Eric Elzvik, Martha
Finn Brooks, Kurt Jofs, Kathryn V. Marinello, Martina Merz and Bo Annvik
were all considered independent of the company and company manage-
ment, as well as the company’s major shareholders.
Martin Lundstedt, as President of AB Volvo and CEO of the Volvo
Group, was considered independent of the company’s major shareholders
but not of the company and company management.
Helena Stjernholm was considered independent of the company and
company management but not in relation to one of the major sharehold-
ers, due to her capacity as President and CEO of AB Industrivärden.
The Board´s work in 2023
Every year, the Board adopts work procedures for the Board’s work.
The work procedures outline how the Board’s duties should be distributed,
including the specific role and duties of the Chairman, instructions for the divi-
sion of duties between the Board and the President and for the reporting of
financial information, sustainability matters and other items to the Board. The
Board has also adopted specific instructions for the Board’s respective com-
mittees, which are linked to the work procedures.
The Board’s work is mainly performed within the framework of formal
Board meetings and through meetings in the committees of the Board. In
addition, regular contact is maintained between the Chairman of the
Board and the CEO in order to discuss ongoing business and to ensure
that the Board’s decisions are executed.
In 2023, there were eleven ordinary Board meetings, one extraordinary
Board meeting and one statutory Board meeting. The attendance of the
Board members at the Board meetings during 2023 is presented in the
table on page 200. The company’s auditor attended one Board meeting
during the year.
During 2023, the Board’s main focus has been transformation, espe-
cially in the realm of electrification. The industry is evolving rapidly, and
Volvo remains committed to driving innovation and investments needed
to lead this transformation. Hence, the Board has devoted considerable
time to strategic considerations concerning electrification, digitalization
and new productivity services. As a part of the ongoing technology shift,
the Volvo Group continues to develop the strategic partnerships previ-
ously entered into with focus on autonomous solutions, electrification and
charging infrastructure, in parallel to exploring new ventures and growth
opportunities, such as the cooperation between the Volvo Group, Renault
Group, and CMA CGM Group on electric vans announced in October
2023 and the acquisition of the battery business from Proterra Inc. and
Proterra Operating Company, announced in November 2023.
The Board’s ambition is to stay close to the business and the Board
receives continuous up-dates on the development of the Group’s perfor-
mance as well as the work with the transformation and strategies in rela-
tion thereto. The Board has further discussed the changes in the Group’s
Bus footprint including the exit of Nova Bus production in the US market
and the closure of Volvo Bus bodybuilding factory in Wroclaw, Poland. In
addition the Board has decided to divest Volvo Construction Equipment’s
ABG Paver Business and, in January, it was announced that an option
agreement with John Cockerill Defense had been entered into that gives the
Volvo Group the right to sell the French defense business Arquus. In 2023,
the Board also gave significant attention to several key areas and issues:
• Sustainability: The Volvo Group’s sustainability work and objectives
are an integrated part of the Board’s work and the Group’s climate tar-
gets under the Science Based Targets initiative (for further informa-
tion, see pages 170–172) are followed-up regularly by the Board.
• Talent Review and Succession Planning: The Board carefully evaluates
talent and succession planning within the organization.
• Quality oversight: Thorough review and follow-up of Volvo’s quality work.
• External factors: The Board has been actively monitoring external fac-
tors, with a particular emphasis on the continuing impact of the war in
Ukraine and other macroeconomic and geopolitical developments,
ongoing supply chain challenges, the effects of higher inflation and
rising interest rates on profitability, and proactive measures to address
these issues.
The Board´s focus on decarbonization and the corresponding align-
ment of the product portfolio of the Volvo Group has continued during
2023, with a particular focus on strategic decisions for electromobility
and acceleration of the sale of battery electric heavy-duty vehicles and
machines. As part of this work, the Volvo Group has continued the pro-
cesses to establish a large-scale production plant for battery cells in Mari-
estad, Sweden, and to produce battery modules in the Volvo Group’s
truck plant in Ghent, Belgium. At the Board meeting in December 2023,
the Board spent time on the Group’s work with human rights and sustain-
ability, with particular focus on the ongoing work to implement the EU
Taxonomy, the EU Corporate Sustainability Reporting Directive (CSRD)
and other relevant legislation.
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VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
The Board usually makes regular visits to the company’s operations
throughout the world to meet with local management, customers and
suppliers and learn more about the specific market conditions in the vis-
ited region. In 2023 the Board visited France and South Korea.
In 2023, the Board resolved on an overall financial plan and investment
framework for the Group’s operations. In addition, the Board regularly
monitors the Group’s earnings and financial position and maintains con-
tinuous focus on risk related issues such as overall risk management and
ongoing legal disputes and investigations. The Board proposed a distribu-
tion of an ordinary dividend of SEK 7 per share and an extraordinary divi-
dend of SEK 7 per share, which was resolved by the Annual General Meet-
ing 2023. Furthermore, the Board regularly reviews the management’s
short and long-term incentive programs to ensure that they fulfill their
purpose and drive the right behavior in the current business environment.
During 2023, the Board proposed, and the Annual General Meeting
2023 adopted, a new long-term incentive plan with a three-year perfor-
mance period and a one-year lock-in period instead of an annual perfor-
mance period and a three-year lock-in period.
Evaluation of the Board
In 2024, the Board performed its yearly evaluation of the Board’s work
during the previous year. The purpose of the evaluation is to further
develop the Board’s efficiency and working procedures and to determine
the main focus of the Board’s coming work. In addition, the evaluation
serves as a tool for determining the competence required by the Board
and for analyzing the competence that already exists in the current Board.
Further, the evaluation serves as input for the Election Committee’s work
with proposing Board members to the Annual General Meeting.
As part of the yearly evaluation, Board members were asked to complete
a questionnaire and assess various areas related to the Board’s work from
their own perspective. The areas evaluated for 2023 included the Board’s
composition, the management and focus of Board meetings, Board sup-
port and committees and how the Board addresses issues related to strat-
egy and strategic priorities, potential risks, succession planning and people
oversight. The areas covered by the evaluation reflect the development of
the Board’s work and the Volvo Group and the priorities going forward.
Separate evaluations were conducted of the Board as a collective, the
Audit Committee, the Remuneration Committee and the Volvo CE Trans-
formation Committee. The result of the evaluation of the Board as a col-
lective will be discussed by the Board. The results of the evaluations of the
committees will be discussed by the relevant committee. In addition, the
result of the evaluation of the Board as a collective is shared with the Elec-
tion Committee.
Remuneration of Board members
The Annual General Meeting resolves on fees to be paid to the Board mem-
bers elected by the Annual General Meeting. For further information about
Board remuneration adopted by the Annual General Meeting 2023, please
refer to Note 27 "Personnel" in the Group’s notes in the Annual Report.
Remuneration of Board members, 2023
(from AGM on April 4, 2023) SEK
Chairman of the Board 3,925,000
Board member
1
1,175,000
Chairman of the Audit Committee 445,000
Member of the Audit Committee 250,000
Chairman of the Remuneration Committee 175,000
Member of the Remuneration Committee 130,000
Chairman of the Volvo CE Transformation Committee 300,000
Member of the Volvo CE Transformation Committee 200,000
1 With the exception of the President.
198
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
BOARD COMMITTES
The Board has formed Committees and the Board Committees are the
Audit Committee, the Remuneration Committee and the Volvo CE Trans-
formation Committee. The Election Committee’s assessment of indepen-
Duties
The Board has an Audit Committee primarily for the purpose of supervis-
ing the accounting and financial reporting processes and the audit of the
annual financial statements.
The Audit Committee’s duties include, among other things, preparing
the Board’s work to assure the quality of the Group’s financial reporting by
reviewing interim reports, the Annual Report and the consolidated
accounts. The Audit Committee also has the task of reviewing and
over-seeing the Group’s legal and taxation matters including compliance
with laws and regulations that may have a material impact on financial
reporting. Furthermore, the Audit Committee has the task of reviewing
and overseeing the impartiality and independence of the company’s audi-
tors. The Audit Committee is also responsible for evaluating both internal
and external auditors’ work and, when applicable, handling the tender
process for audit services. In addition, it is the Audit Committee’s task to
preapprove what other services, beyond auditing, the company may pro-
cure from the auditors. The Audit Committee also adopts guidelines for
transactions with companies and persons closely associated with Volvo.
Further, the Audit Committee evaluates the quality, relevance and effec-
tiveness of the Group’s system for internal control over financial reporting,
as well as with respect to the internal audit and risk management, and
discharge any other duties of an audit committee according to law or its
instructions. Finally, the Audit Committee oversees regulatory and other
developments of sustainability standards, and the Group’s reporting in
these areas.
Composition and work in 2023
At the statutory Board meeting following the Annual General Meeting
2023, the following Board members were appointed members of the
Audit Committee:
• Eric Elzvik, Chairman of the Audit Committee
• Martha Finn Brooks
• Helena Stjernholm
The Audit Committee met with the external auditors without the presence
of management on two occasions in 2023 in connection with Audit Com-
mittee meetings. The Audit Committee regularly met with the Head of
Group Internal Audit in connection with Audit Committee meetings.
The Audit Committee and the external auditors, among other areas,
discussed the external audit plan and the view of risk management. The
Audit Committee held nine ordinary meetings and two extraordinary
meetings during 2023. The attendance of Board members at the commit-
tee meetings is presented in the table on page 200.
6
REMUNERATION COMMITTEE
Duties
The Board has a Remuneration Committee for the purpose of preparing
and resolving on issues relating to the remuneration of senior executives in
the Group. The duties of the Committee include making recommendations
to the Board on the Board’s decisions regarding terms of employment and
remuneration of the CEO of AB Volvo, principles for the remuneration,
including pensions and severance payments, of other members of the
Group Executive Board and principles for variable salary systems, share
based incentive programs and for pension and severance payment struc-
tures for other senior executives in the Group.
The Remuneration Committee shall also monitor and evaluate ongoing
programs and programs concluded during the year for the variable remu-
neration of senior executives, application of the guidelines for remunera-
tion to the Volvo Group Executive Board, and the current remuneration
structures and levels in the Group.
The Board shall prepare a remuneration report for each financial year
detailing the remuneration that is covered under the guidelines. The remu-
neration report shall include the total remuneration, i.e. both compensa-
tion that has been and remains to be paid out, and outline how such remu-
neration correlates to the guidelines. The remuneration report also provides
details on the remuneration of AB Volvo’s President and CEO. The remunera-
tion report shall be submitted to the Annual General Meeting for approval.
Composition and work in 2023
At the statutory Board meeting following the Annual General Meeting
2023, the following Board members were appointed members of the
Remuneration Committee:
• Carl-Henric Svanberg, Chairman of the Remuneration Committee
• Matti Alahuhta
• Kurt Jofs
The Remuneration Committee held four ordinary meetings during 2023.
The attendance of Board members at committee meetings is presented in
the table on page 200.
5
AUDIT COMMITTEE
dence of the Committee’ members is presented above under the “Inde-
pendence requirements” section. The Committees’ report the outcome of
its work to all members of the Board on a regular basis.
199
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
7
VOLVO CE TRANSFORMATION COMMITTEE
Duties
The Board has a Volvo CE Transformation Committee that focuses on the
strategic direction and transformation of the Volvo Construction Equip-
ment business area. The main purpose of the Committee is to ensure that
Volvo Construction Equipment is successful in the transformation.
Composition and work in 2023
At the statutory Board meeting following the Annual General Meeting
2023, the following Board members were appointed members of the
Volvo CE Transformation Committee:
• Kurt Jofs, Chairman of the Volvo CE Transformation Committee
• Matti Alahuhta
• Lars Ask
• Mari Larsson
• Helena Stjernholm
The Volvo CE Transformation Committee held four ordinary meetings and one
extraordinary meeting during 2023. The attendance of Board members at
committee meetings is presented in the table below.
1 Whereof extraordinary meetings: one for the Board, two for the Audit Committee and one for the Volvo CE Transformation Committee.
2 Matti Alahuhta partly attended the ordinary Board meeting in December 2023.
3 Bo Annvik, Urban Spännar, Danny Bilger and Erik Svensson joined the Board in April 2023 and have since attended all Board meetings during 2023.
4 Martha Finn Brooks partly attended the ordinary Board meeting in December 2023.
5
Kathryn V. Marinello partly attended the ordinary Board meeting in September 2023.
6
Martina Merz partly attended the ordinary Board meeting in December 2023.
7
Hanne de Mora and Mats Henning resigned from the Board in April 2023 and had, prior thereto, attended all Board meetings during 2023.
Member
Board
meetings
(13 incl.
statu-
tory)
1
Audit
Com-
mittee
(11)
1
Remu-
neration
Commit-
tee (4)
Volvo CE
Transfor-
mation
Committee
(5)
1
Carl-Henric Svanberg 13 4
Martin Lundstedt 13
Matti Alahuhta
2
13 4 5
Bo Annvik
3
9
Jan Carlson
13
Eric Elzvik 13 11
Martha Finn Brooks
4
13 11
Kurt Jofs 13 4 5
Kathryn V. Marinello
5
12
Martina Merz
6
13
Hanne de Mora
7
4 1
Helena Stjernholm 13 11 5
Total number of meetings 13 11 4 5
Member
Board
meetings
(13 incl.
statu-
tory)
1
Audit
Com-
mittee
(11)
1
Remu-
neration
Commit-
tee (4)
Volvo CE
Transfor-
mation
Committee
(5)
1
Lars Ask, employee
representative 13 4
Mats Henning, employee
representative
7
4
Mari Larsson, employee
representative 12 5
Urban Spännar, employee
representative
3
9
Danny Bilger, employee
representative
3
9
Camilla Johansson,
employee representative 13
Erik Svensson, employee
representative
3
9
Total number of meetings 13 11 4 5
The Board’s composition and attendance at meetings January 1, 2023 – December 31, 2023
200
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
President and CEO Martin
Lundstedt in a Volvo excavator
during a tour of Volvo Con-
struction Equipment’s plant in
Changwon, South Korea.
201
Board of Directors
Board members elected by the Annual General Meeting
Board members elected by the Annual General Meeting
Carl-Henric Svanberg
Chairman of the Board
Chairman of the Remuneration
Committee
Matti Alahuhta
Member of the Remuneration
Committee
Member of the Volvo CE
Transformation Committee
Bo Annvik Jan Carlson Eric Elzvik
Chairman of the Audit
Committee
Martha Finn Brooks
Member of the Audit
Committee
Kurt Jofs
Chairman of the Volvo CE
Transformation Committee
Member of the Remuneration
Committee
Martin Lundstedt
President and CEO
Kathryn V. Marinello Martina Merz Helena Stjernholm
Member of the Audit Committee
Member of the Volvo CE
Transformation Committee
Elected
Elected
2012 2014 2023 2022 2018 2021 2020 2016 2014 2015 2016
Year of birth Year of birth
1952 1952 1965 1960 1960 1959 1958 1967 1956 1963 1970
Education Education
MSc in Applied Physics,
Linköping Institute of Tech-
nology, BSc Business Admin-
istration, University of Uppsala
MSc, Dr Sc.
Doctor of Science, Helsinki
University of Technology
MSc in Business Administra-
tion and Economics, School
of Business, Economics and
Law at the University of
Gothenburg
MSc in Physics and Electrical
Engineering from University
of Linköping
MSc Business Administra-
tion, Stockholm School of
Economics
BA Economics and Political
Science, Yale University.
MBA International Business
from Yale School of Manage-
ment, Yale University
MSc, KTH Royal Institute of Technol-
ogy, Stockholm
MSc, Chalmers University of
Technology
BA from State University of
New York at Albany, MBA & Doctor-
ate from Hofstra University
BS from University of Cooperative
Education, Stuttgart
MSc Business Administration,
Stockholm School of Economics
Current assignments Current assignments
Chairman: Swedish Corpo-
rate Governance Board
Member: Royal Swedish
Academy of Engineering Sci-
ences (IVA) and the European
Round Table of Industry (ERT)
Chairman: DevCo Partners
Board member: Kone Corpo-
ration
Supervisory Board member:
Finnish Cultural Foundation
President and CEO:
Indutrade AB
Board member: Indutrade AB
Chairman: Autoliv Inc. and
Telefonaktiebolaget LM Erics-
son
Chairman: Global Connect
Group and Deutsche Glas-
faser Group
Board member: Telefonaktie-
bolaget LM Ericsson and
Landis+Gyr Group AG
Other: Senior industrial advi-
sor to EQT
Board member: Constellium,
CARE USA, CARE Enterprise
Inc. and RMI
Board member: Feal AB and Arjeplog
Hotel Silverhatten AB
Chairman: Permobil AB
Board member: Autoliv Inc., the
Confederation of Swedish Enter-
prise, the International Chamber of
Commerce (ICC), Sweden and the
European Automobile Manufactur-
ers’ Association (ACEA CV BOD)
Member: European Round Table
of Industry (ERT) and the Royal
Swedish Academy of Engineering
Sciences (IVA)
Chairperson: Concentrix
President and CEO: PODS
Board member: Siemens AG and
Rio Tinto
President and CEO: AB Indus-
trivärden
Board member: AB Industrivärden,
Sandvik AB, Telefonaktiebolaget
LM Ericsson and the Confederation
of Swedish Enterprise
Member: The Royal Swedish Acad-
emy of Engineering Sciences (IVA)
Principal work experience and other information Principal work experience and other information
Chairman: BP plc, the Royal
Swedish Academy of Engi-
neering Sciences (IVA) and
the European Round Table of
Industry (ERT)
President and CEO: Assa
Abloy AB and Telefonaktiebo-
laget LM Ericsson
Member: External Advisory
Board of the Earth Institute at
Columbia University and the
Advisory Board of Harvard
Kennedy School
Other: Various management
positions at Asea Brown
Boveri (ABB) and Securitas
AB
Chairman: Aalto University,
IMD, Confederation of Finnish
Industries and Technology
Industries of Finland
Vice chairman: Metso Outo-
tec
Board member: ABB Ltd.,
UPM and British Telecom
President and CEO: Kone
Corporation
President: Nokia Telecommu-
nications and Nokia Mobile
Phones
Other: Various management
positions within the Nokia
Group, including Chief Strat-
egy Officer
President and CEO: Haldex
Board member: SSAB
Other: Various management
positions within Volvo Car
Corporation, SKF and Outo-
kumpu
Chairman: Veoneer Inc.
President and CEO: Autoliv
Inc and Veoneer Inc.
President: Autoliv Europe,
Autoliv Electronics, Saab
Combitech and Swedish
Gate Array
Other: Various management
positions within the Autoliv
Group, including Vice Presi-
dent Engineering, and Hon-
orary Doctor at the Techni-
cal faculty of Linköping
University
Board member: Fenix Marine
Services and VFS Global
Other: Several management
positions in the Finance func-
tion at ABB including Group
CFO, CFO for the Divisions
Discrete Automation &
Motion and Automation Prod-
ucts, Head of M&A and New
Ventures and Head of Corpo-
rate Development
President and CEO: Rolled
Products and SVP in Alcan
Inc.
President and COO: Novelis
Inc.
Board member: Harley-Da-
vidson, International Paper,
Bombardier, Jabil and pri-
vately held Algeco Scotsman
Other: Various management
positions in Cummins truck
and bus businesses, including
Global VP of Truck and Bus
business
Chairman: Tieto, Vesper Holding AB
and Höganäs AB
Board member: Telefonaktiebolaget
LM Ericsson
President: Segerström & Svensson
and Linjebuss
Other: Various management posi-
tions within Telefonaktiebolaget LM
Ericsson, including Executive Vice
President (with responsibility for
Telefonaktiebolaget LM Ericsson’s
Networks business), and ABB
Co-chairman: UN Secretary-Gener-
al’s High-Level Advisory Group on
Sustainable Transport
President and CEO: Scania AB
Board member: Concentric AB
Other: Various management posi-
tions within Scania
Chairperson: Ceridian Corporation
and Stream Global Services, Inc.
Board member: Nielsen, Real-
Page, General Motors Co., Mas-
terCard US and Ares Acquisition
Corporation
President and CEO: Ceridian Corpo-
ration, Stream Global Services, Inc.
and Hertz Global Holdings
Other: Several management posi-
tions at Citibank, Chemical Bank
New York (now JP Morgan Chase),
First Bank Systems, First Data
Corporation, General Electric
(including Division President Gen-
eral Electric Financial Assurance
Partnership Marketing and Divi-
sion President General Electric
Fleet Services) and Senior Advisor
for Ares Management, LLC
President and CEO: thyssenkrupp
AG
CEO: Chassis Brakes International
President: Bosch Closure Systems
Other: Various management posi-
tions at Robert Bosch GmbH,
including Executive Vice President
Sales and Marketing in the Chassis
System Brakes division combined
with responsibility for regions China
and Brazil, and member of the
Board of Management of Brose
Fahrzeugteile GmbH & Co.
Partner within the private equity
firm IK Partners (former Industri
Kapital), consultant for Bain & Com-
pany and various board seats in
non-listed companies
Holdings in AB Volvo, own and related parties Holdings in AB Volvo, own and related parties
2,000,000 Series B shares 146,100 Series B shares 45 Series A shares 10,000 Series B shares 7,475 Series B shares 25,500 American depositary
receipts representing Volvo B
shares (ADRs)
50,741 Series B shares 290,301 Series B shares and
300,000 call options in Series B
shares
10,000 American depositary
receipts representing Volvo B
shares (ADRs)
6,500 Series B shares 8,000 Series B shares
Board members appointed by the employee organizations
Lars Ask
Employee representative,
ordinary member
Member of the Volvo CE
Transformation Committee
Elected
2016 (Deputy member
2009-2016)
Year of birth
1959
Principal work experience
and other information
With Volvo since 1982
Holdings in AB Volvo,
own and related parties
116 Series B shares
Mari Larsson
Employee representative,
ordinary member
Member of the Volvo CE
Transformation Committee
Elected
2023 (Deputy member
2015-2023)
Year of birth
1978
Principal work experience
and other information
With Volvo since 2004
Holdings in AB Volvo,
own and related parties
605 Series A shares and
343 Series B shares
Urban Spännar
Employee representative,
ordinary member
Elected
2023
Year of birth
1967
Principal work experience
and other information
With Volvo since 1997
Holdings in AB Volvo, own
and related parties
1,007 Series A shares and
1,725 Series B shares
202
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
Board members elected by the Annual General Meeting
Board members elected by the Annual General Meeting
Carl-Henric Svanberg
Chairman of the Board
Chairman of the Remuneration
Committee
Matti Alahuhta
Member of the Remuneration
Committee
Member of the Volvo CE
Transformation Committee
Bo Annvik Jan Carlson Eric Elzvik
Chairman of the Audit
Committee
Martha Finn Brooks
Member of the Audit
Committee
Kurt Jofs
Chairman of the Volvo CE
Transformation Committee
Member of the Remuneration
Committee
Martin Lundstedt
President and CEO
Kathryn V. Marinello Martina Merz Helena Stjernholm
Member of the Audit Committee
Member of the Volvo CE
Transformation Committee
Elected
Elected
2012 2014 2023 2022 2018 2021 2020 2016 2014 2015 2016
Year of birth Year of birth
1952 1952 1965 1960 1960 1959 1958 1967 1956 1963 1970
Education Education
MSc in Applied Physics,
Linköping Institute of Tech-
nology, BSc Business Admin-
istration, University of Uppsala
MSc, Dr Sc.
Doctor of Science, Helsinki
University of Technology
MSc in Business Administra-
tion and Economics, School
of Business, Economics and
Law at the University of
Gothenburg
MSc in Physics and Electrical
Engineering from University
of Linköping
MSc Business Administra-
tion, Stockholm School of
Economics
BA Economics and Political
Science, Yale University.
MBA International Business
from Yale School of Manage-
ment, Yale University
MSc, KTH Royal Institute of Technol-
ogy, Stockholm
MSc, Chalmers University of
Technology
BA from State University of
New York at Albany, MBA & Doctor-
ate from Hofstra University
BS from University of Cooperative
Education, Stuttgart
MSc Business Administration,
Stockholm School of Economics
Current assignments Current assignments
Chairman: Swedish Corpo-
rate Governance Board
Member: Royal Swedish
Academy of Engineering Sci-
ences (IVA) and the European
Round Table of Industry (ERT)
Chairman: DevCo Partners
Board member: Kone Corpo-
ration
Supervisory Board member:
Finnish Cultural Foundation
President and CEO:
Indutrade AB
Board member: Indutrade AB
Chairman: Autoliv Inc. and
Telefonaktiebolaget LM Erics-
son
Chairman: Global Connect
Group and Deutsche Glas-
faser Group
Board member: Telefonaktie-
bolaget LM Ericsson and
Landis+Gyr Group AG
Other: Senior industrial advi-
sor to EQT
Board member: Constellium,
CARE USA, CARE Enterprise
Inc. and RMI
Board member: Feal AB and Arjeplog
Hotel Silverhatten AB
Chairman: Permobil AB
Board member: Autoliv Inc., the
Confederation of Swedish Enter-
prise, the International Chamber of
Commerce (ICC), Sweden and the
European Automobile Manufactur-
ers’ Association (ACEA CV BOD)
Member: European Round Table
of Industry (ERT) and the Royal
Swedish Academy of Engineering
Sciences (IVA)
Chairperson: Concentrix
President and CEO: PODS
Board member: Siemens AG and
Rio Tinto
President and CEO: AB Indus-
trivärden
Board member: AB Industrivärden,
Sandvik AB, Telefonaktiebolaget
LM Ericsson and the Confederation
of Swedish Enterprise
Member: The Royal Swedish Acad-
emy of Engineering Sciences (IVA)
Principal work experience and other information Principal work experience and other information
Chairman: BP plc, the Royal
Swedish Academy of Engi-
neering Sciences (IVA) and
the European Round Table of
Industry (ERT)
President and CEO: Assa
Abloy AB and Telefonaktiebo-
laget LM Ericsson
Member: External Advisory
Board of the Earth Institute at
Columbia University and the
Advisory Board of Harvard
Kennedy School
Other: Various management
positions at Asea Brown
Boveri (ABB) and Securitas
AB
Chairman: Aalto University,
IMD, Confederation of Finnish
Industries and Technology
Industries of Finland
Vice chairman: Metso Outo-
tec
Board member: ABB Ltd.,
UPM and British Telecom
President and CEO: Kone
Corporation
President: Nokia Telecommu-
nications and Nokia Mobile
Phones
Other: Various management
positions within the Nokia
Group, including Chief Strat-
egy Officer
President and CEO: Haldex
Board member: SSAB
Other: Various management
positions within Volvo Car
Corporation, SKF and Outo-
kumpu
Chairman: Veoneer Inc.
President and CEO: Autoliv
Inc and Veoneer Inc.
President: Autoliv Europe,
Autoliv Electronics, Saab
Combitech and Swedish
Gate Array
Other: Various management
positions within the Autoliv
Group, including Vice Presi-
dent Engineering, and Hon-
orary Doctor at the Techni-
cal faculty of Linköping
University
Board member: Fenix Marine
Services and VFS Global
Other: Several management
positions in the Finance func-
tion at ABB including Group
CFO, CFO for the Divisions
Discrete Automation &
Motion and Automation Prod-
ucts, Head of M&A and New
Ventures and Head of Corpo-
rate Development
President and CEO: Rolled
Products and SVP in Alcan
Inc.
President and COO: Novelis
Inc.
Board member: Harley-Da-
vidson, International Paper,
Bombardier, Jabil and pri-
vately held Algeco Scotsman
Other: Various management
positions in Cummins truck
and bus businesses, including
Global VP of Truck and Bus
business
Chairman: Tieto, Vesper Holding AB
and Höganäs AB
Board member: Telefonaktiebolaget
LM Ericsson
President: Segerström & Svensson
and Linjebuss
Other: Various management posi-
tions within Telefonaktiebolaget LM
Ericsson, including Executive Vice
President (with responsibility for
Telefonaktiebolaget LM Ericsson’s
Networks business), and ABB
Co-chairman: UN Secretary-Gener-
al’s High-Level Advisory Group on
Sustainable Transport
President and CEO: Scania AB
Board member: Concentric AB
Other: Various management posi-
tions within Scania
Chairperson: Ceridian Corporation
and Stream Global Services, Inc.
Board member: Nielsen, Real-
Page, General Motors Co., Mas-
terCard US and Ares Acquisition
Corporation
President and CEO: Ceridian Corpo-
ration, Stream Global Services, Inc.
and Hertz Global Holdings
Other: Several management posi-
tions at Citibank, Chemical Bank
New York (now JP Morgan Chase),
First Bank Systems, First Data
Corporation, General Electric
(including Division President Gen-
eral Electric Financial Assurance
Partnership Marketing and Divi-
sion President General Electric
Fleet Services) and Senior Advisor
for Ares Management, LLC
President and CEO: thyssenkrupp
AG
CEO: Chassis Brakes International
President: Bosch Closure Systems
Other: Various management posi-
tions at Robert Bosch GmbH,
including Executive Vice President
Sales and Marketing in the Chassis
System Brakes division combined
with responsibility for regions China
and Brazil, and member of the
Board of Management of Brose
Fahrzeugteile GmbH & Co.
Partner within the private equity
firm IK Partners (former Industri
Kapital), consultant for Bain & Com-
pany and various board seats in
non-listed companies
Holdings in AB Volvo, own and related parties Holdings in AB Volvo, own and related parties
2,000,000 Series B shares 146,100 Series B shares 45 Series A shares 10,000 Series B shares 7,475 Series B shares 25,500 American depositary
receipts representing Volvo B
shares (ADRs)
50,741 Series B shares 290,301 Series B shares and
300,000 call options in Series B
shares
10,000 American depositary
receipts representing Volvo B
shares (ADRs)
6,500 Series B shares 8,000 Series B shares
Deputies appointed by the employee organizations Secretary to the board
Camilla Johansson
Employee representa-
tive, deputy member
Elected
2016
Year of birth
1966
Principal work
experience and other
information
With Volvo since 1997
Holdings in AB Volvo,
own and related
parties
643 Series A shares
and 508 Series B
shares
Erik Svensson
Employee representa-
tive, deputy member
Elected
2023
Year of birth
1989
Principal work
experience and other
information
With Volvo since 2016
Holdings in AB Volvo,
own and related
parties
None
Nina Aresund
Secretary to the Board
Master of Laws
Elected
2023
Year of birth
1974
Principal work experience
and other information
Head of Legal and Compliance
Volvo Construction Equipment,
Head of Corporate Legal AB
Volvo and Corporate Legal
Counsel AB Volvo
Holdings in AB Volvo, own
and related parties
13,484 Series B shares
Danny Bilger
Employee representa-
tive, deputy member
Elected
2023
Year of birth
1965
Principal work
experience and other
information
With Volvo 1983–1999
and since 2007
Holdings in AB Volvo,
own and related
parties
736 Series A shares
and 593 Series B
shares
203
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
AUDITOR
8
Volvo’s auditors are elected by the Annual General Meeting. The auditors
review the interim report for the period January 1 to June 30 and audit the
annual financial statements and consolidated accounts. Further, the audi-
tors review the Corporate Governance Report and confirms whether the
Group has presented a Sustainability Report. The auditors report the
results of their audit in the Audit Report and in an opinion on the Corpo-
rate Governance Report and provides an opinion on whether the guide-
lines for remuneration to the Volvo Group Executive Board have been
complied with, which they present to the Annual General Meeting.
At the Annual General Meeting 2023, the registered auditing company
Deloitte AB was re-elected as auditor for the period until the end of the
Annual General Meeting 2024. The Authorized Public Accountant Jan
Nilsson is the auditor in charge.
For information about Volvo’s remuneration of the auditors, please refer
to Note 28 “Fees to the auditors” in the Group’s notes in the Annual Report.
GROUP INTERNAL AUDIT
9
Volvo’s internal audit function, Group Internal Audit, provides the Board
and the Group Executive Board with an independent, risk based and
objective assurance on the effectiveness and the efficiency of the gover-
nance, risk management and control systems of the Volvo Group. Group
Internal Audit performs advisory work as well, from time to time. Group
Internal Audit helps the organization to accomplish its objectives by bring-
ing a systematic, disciplined approach to evaluate and to improve the
effectiveness of risk management, control and governance processes.
Group Internal Audit performs internal audits in selected focus areas,
identified through an independent risk assessment process involving key
stakeholders, input from past audits and from the other assurance func-
tions including the external auditors. This audit plan is approved by the
Audit Committee. In addition, special assignments requested by manage-
ment and the Audit Committee can be performed. The audits cover,
among other things, assessments on the adequacy and effectiveness of
the Volvo Group’s processes for controlling its activities and managing its
risks and evaluation of compliance with policies and directives.
The head of Group Internal Audit reports to the CEO, the Group’s Gen-
eral Counsel and the Audit Committee.
For additional information on internal control over financial reporting,
see pages 210–211.
204
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
GOVERNANCE PRINCIPLES AND ORGANIZATIONAL STRUCTURE
10
Governance documents
A key part of the Group’s governance is its policies and directives, includ-
ing the Code of Conduct and policies relating to investments, financial
risks, accounting, financial control and internal audit. These documents
establish unified operating and financial rules for the Group’s operations,
as well as responsibility and authority structures.
Organizational structure
The Volvo Group operates through six Group Functions, three Truck Divi-
sions and ten Business Areas. The six Group Functions (Group Finance,
Group Legal & Compliance, Group People & Culture, Group Communica-
tion, Group Strategic Initiatives and CDO¹ Organization) are tasked with
supporting the entire organization with expertise within each Group
Function area, developing standards through policies, directives and
guidelines as well as providing services and/or products for the entire
Group. The Volvo Group’s truck business, and in some areas also other
Business Areas, are supported by the three Truck Divisions: Group Trucks
Technology (GTT), Group Trucks Purchasing (GTP) and Group Trucks
Operations (GTO). The business of the Volvo Group is organized in ten
Business Areas: Volvo Trucks, Renault Trucks, Mack Trucks, Volvo Con-
struction Equipment, Volvo Energy, Volvo Buses, Volvo Penta, Volvo
Financial Services (VFS), Volvo Autonomous Solution (VAS) and Arquus.
In addition, Nova Bus is a separate legal and operational entity within the
Volvo Group.
Each Business Area and Truck Division holds regular Business Review
Meetings, (BRM) to support strategic development and business perfor-
mance, where key decisions are made. In addition, cross-functional deci-
sion forums like the People Board, Digital Product & Services Board,
Product Board, Quality Board and Sales and Operational Planning ensure
collaboration and alignment.
This governance model allows Volvo to leverage on global capabilities
in product development, purchasing, and manufacturing while maintain-
ing distinct leadership and responsibility in each Business Area. The aim is
consistent business principles, optimizing earnings performance and
cash flow generation in the short and long term across all Business Areas.
Volvo Group organization
Group Communication
Group People & Culture
CDO
1)
Organization
Group Finance
Group Strategic Initiatives
Group Legal & Compliance
Group CEO
BUSINESS AREAS
TRUCK DIVISIONS
Renault
Trucks
Volvo
Trucks
Volvo
CE
Volvo
Energy
Volvo
Buses
Volvo
Penta
Volvo
Financial
Services
Volvo
Autonomous
Solutions
Mack
Trucks
Arquus
Group Trucks Technology
Group Trucks Purchasing
Group Trucks Operations
Valid as per December 31, 2023
Executive Assistant &
Head of CEO Office
Group Management members
Group Executive Board members
1 Chief Digital Office
205
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
GROUP EXECUTIVE BOARD AND GROUP MANAGEMENT
11
The CEO is responsible for managing the day-to-day operations of the
Volvo Group and is authorized to make decisions on matters that do not
require AB Volvo Board approval. The CEO leads the operations of the
Volvo Group, e.g. through the Group Executive Board, the extended
Group Management and the cross-functional forums.
The Group Executive Board is the highest operational decision forum
and is chaired by the President and CEO of the Volvo Group, Martin Lund-
stedt. During 2023, the members of the Group Executive Board are the
Executive Vice Presidents of the Group Functions, Executive Vice Presi-
dents and Presidents of Volvo Trucks, Renault Trucks, Mack Trucks, Volvo
Construction Equipment and Volvo Energy as well as the Executive Vice
Presidents of the Truck Divisions.
The members of the extended Group Management include, in addition
to the Group Executive Board members, the Presidents of Volvo Buses,
Volvo Penta, Volvo Autonomous Solutions (VAS), Volvo Financial Services
(VFS) and Arquus and report directly to the CEO respectively. The Group
Executive Board and Group Management meet regularly to align on Group
matters.
Remuneration of the Group Executive Board
AB Volvo’s Annual General Meeting shall, at least every fourth year,
resolve on guidelines for remuneration to the members of the Group Exec-
utive Board, based on a proposal from the Board. For information about
the guidelines adopted by the Annual General Meeting 2023, please refer
to Note 27 “Personnel” in the Group’s notes in the Annual Report.
Changes to the Group Executive Board and Group Management
On June 1, 2023, Stephen Roy replaced Martin Weissburg as President of
Mack Trucks and joined the Volvo Group Executive Board. On October 1,
2023, Mats Backman replaced Jan Ytterberg, then in the role as acting
Chief Financial Officer, as Chief Financial Officer and joined the Volvo
Group Executive Board. Jan Ytterberg continued as a senior advisor. On
December 1, 2023, Anna Müller replaced Heléne Mellquist as President
of Volvo Penta and joined the Volvo Group Management.
Sustainability matters
Sustainability is an intrinsic part of Volvo Group strategy and operations, and
the Group relies on integrated approach to ensure that environmental, social
and governance topics are considered in all relevant decision-making.
Responsibilities for sustainability related matters largely follows the gen-
eral management structure of the Group.
The Board of Directors’ visit to
Volvo Construction Equipment’s
plant in Changwon, South Korea.
206
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
GROUP EXECUTIVE BOARD AND GROUP MANAGEMENT
On Group level, sustainability work is coordinated by cross-functional
forums and working groups with representatives from the relevant Truck
Divisions and Business Areas. These forums are assigned to specific top-
ics and include:
• The Product Board, headed by the Chief Technology Officer, where
climate related opportunities and risks are managed primarily as part
of the transition towards fossil-free transportation.
• The People Board, headed by the Executive Vice President and Head
of People & Culture, which focuses on all significant employee related
matters such as training, health and safety, diversity, inclusion and
talent management.
• The Environmental Committee, where Group Functions, Truck Divi-
sions and Business Areas representatives coordinate environmental
management with the mission to secure the effective work of the
Volvo Group’s Environmental Policy and management system.
• The Human Rights Board, chaired by the Executive Vice President
Group Communication and the Senior Vice President, Corporate
Responsibility with Group Executive Board members who coordinate
the implementation of the Group’s Human Rights policy and work.
In addition to the above, top sustainability related targets, risks and
opportunities are managed by the Group Executive Board. One example is
the Volvo Group’s science-based climate targets which are regularly fol-
lowed up in the Group Executive Board.
For more information on implementation of the Group’s sustainability
strategy and management of sustainability risks and opportunities see
the Sustainability Notes, pages 163–193.
President and CEO Martin Lundstedt together with the Chairman of the Board Carl-Henric
Svanberg, the Board and parts of the Group Executive Board in front of two Volvo EC550E
excavators during a visit to Volvo Construction Equipment’s plant in Changwon, South Korea.
207
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
Group Executive Board
Martin Lundstedt
President and CEO
Roger Alm
Executive Vice President
Volvo Group and
President Volvo Trucks
Nina Aresund
Executive Vice President
Group Legal &
Compliance and
General Counsel
Mats Backman
Executive Vice President
Group Finance and CFO
Bruno Blin
Executive Vice President
Volvo Group and
President Renault
Trucks
Andrea Fuder
Executive Vice President
Volvo Group Trucks
Purchasing and Chief
Purchasing Officer for
Volvo Group
Jens Holtinger
Executive Vice President
Group Trucks Operations
Melker Jernberg
Executive Vice President
Volvo Group and
President Volvo
Construction Equipment
Diana Niu
Executive Vice President
Group People & Culture
Scott Rafkin
Executive Vice
President and Chief
Digital Officer for
Volvo Group
Joachim Rosenberg
Executive Vice President
Volvo Group Strategic
Initiatives and President
Volvo Energy
Stephen Roy
Executive Vice President
Volvo Group and Presi-
dent Mack Trucks
Lars Stenqvist
Executive Vice President
Group Trucks
Technology and Volvo
Group Chief
Technology Officer
Kina Wileke
Executive Vice President
Group Communication
Employed since Employed since
2015 1989 2007 2023 1999 2017 1995 2018 2005 2001 2005 1996 2016 2008
Member of Group Executive Board since Member of Group Executive Board since
2015 2019 2023 2023 2016 2017 2020 2018 2019 2020 2012 2023 2016 2018
Year of birth Year of birth
1967 1962 1974 1968 1963 1967 1970 1968 1966 1969 1970 1963 1967 1974
Education Education
MSc, Chalmers
University of Technology
Master of Laws BSc in Business
Administration
MBA MSc and MBA MSc in Mechanical
Engineering
MSc in Mechanical
Engineering
MBA and BA in
Economics
BBA (Bachelors in Busi-
ness Administration)
MSc Industrial Engi-
neering and Manage-
ment, MSc Financial
Economics, MSc Busi-
ness and Economics
BSA (Bachelor of
Science in Agriculture)
MBA Wake Forest
University
MSc Industrial
Engineering
MA in journalism
Current assignments Current assignments
Chairman: Permobil AB
Board member: Autoliv
Inc., the Confederation of
Swedish Enterprise, the
International Chamber of
Commerce (ICC), Swe-
den and the European
Automobile Manufactur-
ers’ Association (ACEA
CV BOD)
Member: European
Round Table of Industry
(ERT) and the Royal
Swedish Academy of
Engineering Sciences
(IVA)
Secretary to the AB
Volvo Board
Board member:
Gränges AB
Board member: The
German-Swedish
Chamber of Commerce
Board member:
Concentric AB
Member: Royal Swed-
ish Academy of Engi-
neering Sciences (IVA)
Board member: Interna-
tional Chamber of Com-
merce (ICC), Sweden
Principal work experience and other information Principal work experience and other information
Co-chairman: UN Sec-
retary-General’s High-
Level Advisory Group
on Sustainable Trans-
port
President and CEO:
Scania AB
Board member:
Concentric AB
Other: Various manage-
ment positions within
Scania
Senior Vice President
Volvo Trucks Europe,
Senior Vice President
Volvo Group Trucks
Northern Europe,
President Volvo Group
Trucks Latin America,
President Volvo Trucks
Latin America and
Managing Director
Volvo Trucks, Region
East
Head of Legal and
Compliance Volvo
Construction Equip-
ment, Head of Corpo-
rate Legal AB Volvo
and Corporate Legal
Counsel AB Volvo
Operating Partner in
Triton, CFO in Autoliv
Inc. and, subsequently,
Veoneer Inc., various
management positions
within Sandvik Group
(including as CFO),
Outokumpu, Nordea
and Boliden
Senior Vice President
Group Truck Sales
South Europe, Senior
Vice President Volvo
Group Purchasing and,
prior thereto, several
senior positions within
Renault Trucks Pur-
chasing
Head of Purchasing
at Scania and, prior
thereto, various senior
positions within Volks-
wagen’s Purchasing
organization
Senior Vice President
Europe & Brazil Manu-
facturing Group Trucks
Operations, Vice Presi-
dent Powertrain Pro-
duction Skövde Plant
and, prior thereto,
several management
positions within the
Volvo Group
President and CEO:
Höganäs AB
Other: Executive Vice
President, Business
Area EMEA at SSAB,
Senior Vice President
Buses and Coaches at
Scania AB and, prior
thereto, various posi-
tions at Scania AB
Senior Vice President
HR Trucks Asia Pacific,
Senior Vice President
HR Volvo Construction
Equipment and, prior
thereto, various man-
agement positions
within Telefonaktie-
bolaget LM Ericsson
President Volvo Finan-
cial Services, CFO
Chief Volvo Financial
Services, Senior Vice
President Global Oper-
ations Volvo Financial
Services, Senior Vice
President Risk Volvo
Financial Services,
several senior positions
within Volvo Car
Finance North America
and, prior thereto,
Business Assurance
and Capital Markets
Manager Coopers &
Lybrand LLC
Executive Vice Presi-
dent Volvo Group and
Chairman UD Trucks,
Executive Vice Presi-
dent Group Trucks
Sales, Executive Vice
President Group Trucks
Sales & Marketing
APAC, President Volvo
Group Asia Truck Oper-
ations, Vice President
Volvo Group Alliance
Office, Vice President
Volvo Powertrain and,
prior thereto, consul-
tant with McKinsey &
Company
Chairman: Association
of Equipment Manufac-
tures, CE Sector
Other: Head of Region
North America, Volvo
Construction Equip-
ment and, prior thereto,
various senior positions
within the Volvo Group,
including within Mack
Trucks and the Group’s
North American truck
organization
Head of R&D and CTO
at Volkswagen Truck &
Bus, Senior Vice Presi-
dent Vehicle Definition
R&D at Scania and,
prior thereto, various
senior positions at
Scania
Senior Vice President
Brand, Communication
& Marketing Volvo
Penta, Senior Vice Pres-
ident External Corporate
Communication Volvo
Group, CEO Communi-
cation Volvo Group and,
prior thereto, various
positions within TV4
Group
Holdings in AB Volvo, own and related parties Holdings in AB Volvo, own and related parties
290,301 Series B shares
and 300,000 call
options in Series B
shares
398 Series A shares
and 42,433 Series B
shares
13,484 Series B shares None 49,844 Series B shares 1,600 Series A shares
and 77,559 Series B
shares
30,220 Series B shares
53,281 Series B shares 76,312 Series B shares 36,646 Series
B-shares
87 Series A shares and
283,587 Series B
shares
29,352 Series B shares 52,710 Series B shares 344 Series A shares and
28,663 Series B shares
208
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
Group Executive Board
Martin Lundstedt
President and CEO
Roger Alm
Executive Vice President
Volvo Group and
President Volvo Trucks
Nina Aresund
Executive Vice President
Group Legal &
Compliance and
General Counsel
Mats Backman
Executive Vice President
Group Finance and CFO
Bruno Blin
Executive Vice President
Volvo Group and
President Renault
Trucks
Andrea Fuder
Executive Vice President
Volvo Group Trucks
Purchasing and Chief
Purchasing Officer for
Volvo Group
Jens Holtinger
Executive Vice President
Group Trucks Operations
Melker Jernberg
Executive Vice President
Volvo Group and
President Volvo
Construction Equipment
Diana Niu
Executive Vice President
Group People & Culture
Scott Rafkin
Executive Vice
President and Chief
Digital Officer for
Volvo Group
Joachim Rosenberg
Executive Vice President
Volvo Group Strategic
Initiatives and President
Volvo Energy
Stephen Roy
Executive Vice President
Volvo Group and Presi-
dent Mack Trucks
Lars Stenqvist
Executive Vice President
Group Trucks
Technology and Volvo
Group Chief
Technology Officer
Kina Wileke
Executive Vice President
Group Communication
Employed since Employed since
2015 1989 2007 2023 1999 2017 1995 2018 2005 2001 2005 1996 2016 2008
Member of Group Executive Board since Member of Group Executive Board since
2015 2019 2023 2023 2016 2017 2020 2018 2019 2020 2012 2023 2016 2018
Year of birth Year of birth
1967 1962 1974 1968 1963 1967 1970 1968 1966 1969 1970 1963 1967 1974
Education Education
MSc, Chalmers
University of Technology
Master of Laws BSc in Business
Administration
MBA MSc and MBA MSc in Mechanical
Engineering
MSc in Mechanical
Engineering
MBA and BA in
Economics
BBA (Bachelors in Busi-
ness Administration)
MSc Industrial Engi-
neering and Manage-
ment, MSc Financial
Economics, MSc Busi-
ness and Economics
BSA (Bachelor of
Science in Agriculture)
MBA Wake Forest
University
MSc Industrial
Engineering
MA in journalism
Current assignments Current assignments
Chairman: Permobil AB
Board member: Autoliv
Inc., the Confederation of
Swedish Enterprise, the
International Chamber of
Commerce (ICC), Swe-
den and the European
Automobile Manufactur-
ers’ Association (ACEA
CV BOD)
Member: European
Round Table of Industry
(ERT) and the Royal
Swedish Academy of
Engineering Sciences
(IVA)
Secretary to the AB
Volvo Board
Board member:
Gränges AB
Board member: The
German-Swedish
Chamber of Commerce
Board member:
Concentric AB
Member: Royal Swed-
ish Academy of Engi-
neering Sciences (IVA)
Board member: Interna-
tional Chamber of Com-
merce (ICC), Sweden
Principal work experience and other information Principal work experience and other information
Co-chairman: UN Sec-
retary-General’s High-
Level Advisory Group
on Sustainable Trans-
port
President and CEO:
Scania AB
Board member:
Concentric AB
Other: Various manage-
ment positions within
Scania
Senior Vice President
Volvo Trucks Europe,
Senior Vice President
Volvo Group Trucks
Northern Europe,
President Volvo Group
Trucks Latin America,
President Volvo Trucks
Latin America and
Managing Director
Volvo Trucks, Region
East
Head of Legal and
Compliance Volvo
Construction Equip-
ment, Head of Corpo-
rate Legal AB Volvo
and Corporate Legal
Counsel AB Volvo
Operating Partner in
Triton, CFO in Autoliv
Inc. and, subsequently,
Veoneer Inc., various
management positions
within Sandvik Group
(including as CFO),
Outokumpu, Nordea
and Boliden
Senior Vice President
Group Truck Sales
South Europe, Senior
Vice President Volvo
Group Purchasing and,
prior thereto, several
senior positions within
Renault Trucks Pur-
chasing
Head of Purchasing
at Scania and, prior
thereto, various senior
positions within Volks-
wagen’s Purchasing
organization
Senior Vice President
Europe & Brazil Manu-
facturing Group Trucks
Operations, Vice Presi-
dent Powertrain Pro-
duction Skövde Plant
and, prior thereto,
several management
positions within the
Volvo Group
President and CEO:
Höganäs AB
Other: Executive Vice
President, Business
Area EMEA at SSAB,
Senior Vice President
Buses and Coaches at
Scania AB and, prior
thereto, various posi-
tions at Scania AB
Senior Vice President
HR Trucks Asia Pacific,
Senior Vice President
HR Volvo Construction
Equipment and, prior
thereto, various man-
agement positions
within Telefonaktie-
bolaget LM Ericsson
President Volvo Finan-
cial Services, CFO
Chief Volvo Financial
Services, Senior Vice
President Global Oper-
ations Volvo Financial
Services, Senior Vice
President Risk Volvo
Financial Services,
several senior positions
within Volvo Car
Finance North America
and, prior thereto,
Business Assurance
and Capital Markets
Manager Coopers &
Lybrand LLC
Executive Vice Presi-
dent Volvo Group and
Chairman UD Trucks,
Executive Vice Presi-
dent Group Trucks
Sales, Executive Vice
President Group Trucks
Sales & Marketing
APAC, President Volvo
Group Asia Truck Oper-
ations, Vice President
Volvo Group Alliance
Office, Vice President
Volvo Powertrain and,
prior thereto, consul-
tant with McKinsey &
Company
Chairman: Association
of Equipment Manufac-
tures, CE Sector
Other: Head of Region
North America, Volvo
Construction Equip-
ment and, prior thereto,
various senior positions
within the Volvo Group,
including within Mack
Trucks and the Group’s
North American truck
organization
Head of R&D and CTO
at Volkswagen Truck &
Bus, Senior Vice Presi-
dent Vehicle Definition
R&D at Scania and,
prior thereto, various
senior positions at
Scania
Senior Vice President
Brand, Communication
& Marketing Volvo
Penta, Senior Vice Pres-
ident External Corporate
Communication Volvo
Group, CEO Communi-
cation Volvo Group and,
prior thereto, various
positions within TV4
Group
Holdings in AB Volvo, own and related parties Holdings in AB Volvo, own and related parties
290,301 Series B shares
and 300,000 call
options in Series B
shares
398 Series A shares
and 42,433 Series B
shares
13,484 Series B shares None 49,844 Series B shares 1,600 Series A shares
and 77,559 Series B
shares
30,220 Series B shares
53,281 Series B shares 76,312 Series B shares 36,646 Series
B-shares
87 Series A shares and
283,587 Series B
shares
29,352 Series B shares 52,710 Series B shares 344 Series A shares and
28,663 Series B shares
209
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
Extended Group Management
Nils Jaeger
President Volvo Autonomous
Solutions
Emmanuel Levacher
President and CEO Arquus
Anna Müller
President Volvo Penta
Marcio Pedroso
President Volvo Financial
Services
Anna Westerberg
President Volvo Buses
Member of the extended Group Management since
2020 2015 2023 2020 2021
Year of birth
1969 1962 1967 1968 1975
Principal work experience and other information
President of Volvo Financial Ser-
vices EMEA and, prior thereto,
several management positions
within Deere & Company
International Director VECV, Sales
& marketing Director Asia & Africa
Renault SA. and, prior thereto, var-
ious management positions within
Renault Trucks and Volvo
Senior Vice President Europe
North & Central Volvo Trucks,
several senior positions at Volvo
Trucks and, prior thereto,
Managing Director Ford Motor
Company AB
Several management positions
within Volvo Financial Services,
including Senior Vice President,
Americas, Managing Director, Bra-
zil and Chile, and Vice President,
Latin America Markets; additional
senior positions and special assign-
ments across Americas and Europe
within the Volvo Group, as well as
various management positions out-
side of Volvo within the insurance
and corporate finance industries
Senior Vice President Volvo Group
Connected Solutions, and prior
thereto, President for Volvo Group
Venture Capital and Vice Presi-
dent, Product Management
Industrial, Volvo Penta
The Board is responsible for the internal controls according to the Swedish
Companies Act and the Code. The purpose of this report is to provide
shareholders and other stakeholders with an understanding of the Group’s
internal control with regards to financial reporting.
Introduction
Volvo has a function for internal control with the objective to provide sup-
port for management, allowing them to continuously provide solid internal
controls relating to financial reporting. Work that is conducted through
this function is primarily based to ensure compliance with directives and
policies, and to create effective conditions for specific control activities in
key processes related to financial reporting. The Audit Committee is reg-
ularly informed of the results of the work performed by the Internal Con-
trol function within Volvo with regard to risks, control activities and fol-
low-up on the financial reporting.
As further described above, Volvo also has an internal audit function,
Group Internal Audit.
Control environment
Fundamental to Volvo’s control environment is the business culture that is
established within the Group and in which managers and employees
operate. Volvo works actively on communication and training regarding
the company’s basic values included in the Code of Conduct, to ensure
that the business conducted by the organization is characterized by good
ethics, integrity and is in compliance with legislation.
The foundation of the internal control process relating to the financial
reporting is based on the Group’s directives, policies and instructions, as
well as the organization’s responsibility and authority structure. The princi-
ples for Volvo’s internal controls and directives and policies for the financial
reporting are contained in the Volvo Group Management System, a group
wide management system comprising, among other things, instructions,
rules and principles.
Risk assessment
Risks relating to financial reporting are evaluated and monitored by the
Group Executive Board and Group Management as well as the Board
through the Audit Committee, based on assessments by management,
inter alia through identifying risks that could be considered as material,
and through the mitigating generic controls. The risk assessment is based
on a number of criteria, such as the complexity of the accounting princi-
ples, revaluation principles of assets or liabilities, complex and/or chang-
ing business circumstances, etc. The risks together with mitigating
generic controls are collected in a framework for internal control over
financial reporting, Volvo Internal Control Standard (VICS).
Control activities
In addition to the Board and its Audit Committee, the management
groups and other decision-making bodies in the Group constitute overall
supervisory bodies. Business processes are designed to ensure that
potential errors or deviations in the financial reporting are prevented, dis-
covered and corrected by implementing control activities that correspond
to the generic controls defined in the VICS framework. Control activities
range from review of outcome results against earlier forecasts and esti-
mates in management group meetings to specific reconciliation of accounts
and analyzes of the ongoing processes for financial reporting.
INTERNAL CONTROL OVER FINANCIAL REPORTING
12
210
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
Information and communication
Policies and instructions relating to the financial reporting are updated
and communicated on a regular basis from management to all affected
employees. The Group’s financial reporting function has direct operating
responsibility for the daily financial reporting and works to ensure a uniform
application of the Group’s policies, principles and instructions for the financial
reporting and to identify and communicate shortcomings and areas of
improvement in the processes for financial reporting.
Follow-up
Ongoing responsibility for follow-up rests with the Group’s financial
reporting function. In addition, the Group Internal Audit and the Internal
Control function conduct review and follow-up activities in accordance
with what is described in the introduction of this report. More specifically,
the Internal Control function runs and coordinates evaluation activities
through the “Volvo Group Internal Control Program”, with the purpose of
systematically evaluating the quality of the internal control over financial
reporting on an annual basis. An annual evaluation plan is established and
presented to the Audit Committee. This evaluation program comprises
three main areas:
1. Group-wide controls: Self-assessment procedure carried out by man-
agement teams at business area, Group Function and company levels.
The main areas evaluated are compliance with the Group’s critical direc-
tives and policies, primarily the Code of Conduct.
2. Process controls at transaction level: Processes related to the financial
reporting are evaluated by testing procedures/controls based on the
framework for internal control over financial reporting, Volvo Internal
Control Standards (VICS).
3. General IT controls: Processes for maintenance, development and
access management of financial applications are evaluated by testing
procedures and controls.
The results of the evaluation activities are reported to the Group Executive
Board, the Group Management and the Audit Committee. During 2023,
the Internal Control function
reported two times to the Audit Committee
regarding the annual evaluation plan, status on outstanding issues and
final assessment of the control environment.
Göteborg, February 28, 2024
AB Volvo (publ)
The Board of Directors
To the general meeting of the shareholders in AB Volvo corporate identity
number 556012-5790
Engagement and responsibility
It is the board of directors who is responsible for the corporate gover-
nance statement for the financial year 2023-01-01–2023-12-31 on
pages 194-211 and that it has been prepared in accordance with the
Annual Accounts Act.
The scope of the audit
Our examination has been conducted in accordance with FAR’s standard
RevU 16 The auditor’s examination of the corporate governance statement.
This means that our examination of the corporate governance statement
is different and substantially less in scope than an audit conducted in
accordance with International Standards on Auditing and generally
accepted auditing standards in Sweden. We believe that the examination
has provided us with sufficient basis for our opinions.
Opinions
A corporate governance statement has been prepared. Disclosures in
accordance with chapter 6 section 6 the second paragraph points 2-6 the
Annual Accounts Act and chapter 7 section 31 the second paragraph the
same law are consistent with the annual accounts and the consolidated
accounts and are in accordance with the Annual Accounts Act.
Göteborg, February 28, 2024
Deloitte AB
Signature on Swedish original
Jan Nilsson
Authorized Public Accountant
This is a translation of the Swedish language original.
In the event of any differences between this translation and the
Swedish language original, the latter shall prevail.
AUDITOR’S REPORT ON THE CORPORATE GOVERNANCE STATEMENT
211
VOLVO GROUP 2023
CORPORATE GOVERNANCE REPORT
Proposed disposition of unappropriated earnings
AB Volvo SEK
Retained earnings 31,034,973,781.14
Income for the period 2023 44,813,512,671.69
Total retained earnings 75,848,486,452.83
The Board of Directors proposes that the
above sum be disposed of as follows:
SEK
To the shareholders, an ordinary dividend
of SEK 7.50 per share and an extraordinary
dividend of SEK 10.50 per share, for a total of 36,602,137,512.00
To be carried forward 39,246,348,940.83
Total 75,848,486,452.83
The record date for determining who is entitled to receive dividends is
proposed to be Tuesday April 2, 2024.
In view of the Board of Directors’ proposal to the Annual General Meet-
ing to be held March 27, 2024 to decide on the distribution of an ordinary
dividend of SEK 7.50 per share and an extraordinary dividend of SEK 10.50
per share, the Board of Directors hereby makes the following statement in
accordance with Chapter 18, Section 4 of the Swedish Companies Act.
The Board of Directors concludes that the Company’s restricted equity is
fully covered after the proposed dividend. The Board of Directors further
concludes that the proposed dividend is justifiable in view of the parameters
set out in Chapter 17, Section 3, second and third paragraphs of the Swedish
Companies Act. In connection herewith, the Board of Directors wishes to
point out the following:
The proposed dividend reduces the Company’s solvency from 66.1% to
52.7% and the Group’s solvency from 26.8% to 22.6%, calculated as
per year end 2023. The Board of Directors considers this solvency to be
satisfactory with regard to the business in which the Group is active.
According to the Board of Directors’ opinion, the proposed dividend
will not affect the Company’s or the Group’s ability to fulfill their payment
obligations and the Company and the Group are well prepared to handle
both changes in the liquidity and unexpected events.
The Board of Directors is of the opinion that the Company and the Group
have capacity to assume future business risks as well as to bear contingent
losses. The proposed dividend is not expected to adversely affect the
Company’s and the Group’s ability to make further commercially justified
investments in accordance with the Board of Directors’ plans.
In addition to what has been stated above, the Board of Directors has
considered other known circumstances which may be of importance for
the Company’s and the Group’s financial position. In doing so, no circum-
stance has appeared that does not justify the proposed dividend.
If the Annual General Meeting resolves in accordance with the Board of
Directors’ proposal, SEK 39,246,348,940.83 will remain of the Compa-
ny’s non-restricted equity, calculated as per year end 2023.
The Board of Directors has the view that the Company’s and the Group’s
shareholders’ equity will, after the proposed dividend, be sufficient in rela-
tion to the nature, scope and risks of the business.
The Board of Directors and the President certify that the annual finan-
cial report has been prepared in accordance with generally accepted
accounting principles and that the consolidated accounts have been pre-
pared in accordance with the international set of accounting standards
referred to in Regulation (EC) No 1606/2002 of the European Parliament
and of the Council of 19 July 2002 on the application of international
accounting standards, and give a true and fair view of the position and
profit or loss of the Company and the Group, and that the management
report for the Company and for the Group gives a fair review of the devel-
opment and performance of the business, position and profit or loss of the
Company and the Group, and describes the principal risks and uncertain-
ties that the Company and the companies in the Group face.
Göteborg, February 28, 2024
Carl-Henric Svanberg
Board Chairman
Matti Alahuhta
Board member
Bo Annvik
Board member
Jan Carlson
Board member
Eric Elzvik
Board member
Martha Finn Brooks
Board member
Kurt Jofs
Board member
Martin Lundstedt
President, CEO and Board member
Kathryn V. Marinello
Board member
Martina Merz
Board member
Helena Stjernholm
Board member
Lars Ask
Board member
Mari Larsson
Board member
Urban Spännar
Board member
Our audit report was issued on February 28, 2024
Deloitte AB
Jan Nilsson
Authorized Public Accountant
212
OTHER INFORMATION
VOLVO GROUP 2023
Audit report
To the general meeting of the shareholders of AB Volvo (publ)
corporate identity number 556012-5790
REPORT ON THE ANNUAL ACCOUNTS AND
CONSOLIDATED ACCOUNTS
Opinions
We have audited the annual accounts and consolidated accounts of AB
Volvo (publ) for the financial year 2023-01-01 - 2023-12-31. The annual
accounts and consolidated accounts of the company are included on
pages 56-162, 212 and 218-220 in this document.
In our opinion, the annual accounts have been prepared in accordance
with the Annual Accounts Act and present fairly, in all material respects,
the financial position of the parent company as of December 31, 2023
and its financial performance and cash flow for the year then ended in
accordance with the Annual Accounts Act. The consolidated accounts
have been prepared in accordance with the Annual Accounts Act and
present fairly, in all material respects, the financial position of the group as
of 31 December 2023 and their financial performance and cash flow for
the year then ended in accordance with International Financial Reporting
Standards (IFRS), as adopted by the EU, and the Annual Accounts Act.
The statutory administration report is consistent with the other parts of
the annual accounts and consolidated accounts.
We therefore recommend that the general meeting of shareholders
adopts the income statement and balance sheet for the parent company
and the group.
Our opinions in this report on the annual accounts and consolidated
accounts are consistent with the content of the additional report that has
been submitted to the parent company’s audit committee in accordance
with the Audit Regulation (537/2014) Article 11.
Basis for Opinions
We conducted our audit in accordance with International Standards on
Auditing (ISA) and generally accepted auditing standards in Sweden. Our
responsibilities under those standards are further described in the Audi-
tor’s Responsibilities section. We are independent of the parent company
and the group in accordance with professional ethics for accountants in
Sweden and have otherwise fulfilled our ethical responsibilities in accor-
dance with these requirements. This includes that, based on the best of
our knowledge and belief, no prohibited services referred to in the Audit
Regulation (537/2014) Article 5.1 have been provided to the audited com-
pany or, where applicable, its parent company or its controlled companies
within the EU.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinions.
Key Audit Matters
Key audit matters of the audit are those matters that, in our professional
judgment, were of most significance in our audit of the annual accounts
and consolidated accounts of the current period. These matters were
addressed in the context of our audit of, and in forming our opinion
thereon, the annual accounts and consolidated accounts as a whole, but
we do not provide a separate opinion on these matters.
Allowance for Expected Credit Losses for Receivables in China
Risk description
The downturn in the Chinese construction equipment market is impacting
customers’ and dealers’ profitability negatively. A substantial part of the
Volvo Group’s accounts receivable is related to customers in this market,
and the determination of allowance for expected credit losses for receiv-
ables require management to make significant qualitative judgments,
including assumptions regarding current and forecasted market condi-
tions and individual assessment of the largest customers financial perfor-
mance. There is a high degree of uncertainty and subjectivity in determin-
ing the severity and duration of the decreased market activity, and the
potential impact on the recoverability of the Group’s receivables.
The Volvo Group applies a simplified expected credit loss model for
accounts receivables, under which the loss allowance is measured at an
amount equal to lifetime expected credit losses. The allowance is recorded
at initial recognition and is reassessed during the contract period. The
accounting principles for expected credit losses and management’s sig-
nificant judgments applied in relation thereto are further described in
Note 16 “Receivables” to the annual report.
Our Audit Approach
Our audit procedures included, but were not limited to:
• Evaluating the design and implementation of relevant internal controls.
• Assessing the reasonableness of the expected credit loss methodol-
ogy, including reviewing management’s policies, procedures, and
accounting position papers.
• Obtaining third-party confirmations from a selection of customers
validating the existence and valuation of receivables.
• Performing audit procedures to test the completeness and accuracy of
the underlying data and information used in managements estimation
of the allowance for expected credit losses.
• Assessing the reasonableness of management’s assumptions in relation
to credit risk on a portfolio level as well as at customer-by-customer
level through inspection of documentation supporting key assump-
tions, as well as by evaluating the financial position of a selection of
customers.
• Assessing the adequacy of the disclosures related to the allowance
for expected credit losses.
213
VOLVO GROUP 2023
OTHER INFORMATION
Provisions for losses from claims from customers and other third parties
– EC Antitrust Settlement
Risk description
In July 2016, the European Commission and Volvo Group reached a set-
tlement with regards to antitrust allegations made by the European Com-
mission against Volvo Group and other companies in the truck manufac-
turing industry. Following the adoption of the European Commission’s
settlement decision, the company has received and may continue to
receive a significant number of third-party damage claims from custom-
ers and other third parties alleging that they suffered loss, directly or indi-
rectly, by reason of the conduct covered in the decision.
The accounting principles and management’s significant judgements
applied for legal disputes is further described in Note 21 “Other Provisions”
and Note 24 “Contingent Liabilities” to the annual report. The recognition
and measurement of any provisions recorded or quantification of contin-
gent liabilities to be disclosed for such legal disputes is complicated,
requires expert legal input, and involves consideration of potential future
outcomes of the claims which at this stage are uncertain. Due to these
complexities, the valuation of any such provisions or contingent liabilities is
significantly impacted by management’s ultimate judgments and best
estimates. On December 31, 2023, the company has not been able to
make a reliable estimate of the total amount of provision or contingent lia-
bility that could arise from these claims, except for the amount reflected in
the provisions recorded which have been described by Volvo.
Our Audit Approach
Our audit procedures included, but were not limited to:
• Evaluating the design and implementation of relevant internal controls.
• Holding discussions with management and audit the relevant docu-
mentation to conclude how management and the board assessed
the claims and other matters relevant to the claims.
• Holding discussions with internal legal department and with Volvo
Group’s external legal advisors in order to obtain an understanding
of facts, development and assessment.
• Reviewing court rulings in relevant jurisdictions
• Reviewing internal minutes and relevant assessments prepared for
management and Board to corroborate the consistency of information
received.
• Assessing the appropriateness of the company’s provision.
• Assessing the adequacy of the disclosures around the legal proceedings.
Other information than the annual accounts and consolidated accounts
This document also contains other information than the annual accounts
and consolidated accounts and is found on pages 1-55, 163-193 and
221-229. The other information comprises also of the remuneration
report which we obtained prior to the date of this auditor’s report. The
Board of Directors and the Managing Director are responsible for this
other information.
Our opinion on the annual accounts and consolidated accounts does not
cover this other information and we do not express any form of assurance
conclusion regarding this other information.
In connection with our audit of the annual accounts and consolidated
accounts, our responsibility is to read the information identified above and
consider whether the information is materially inconsistent with the annual
accounts and consolidated accounts. In this procedure we also take into
account our knowledge otherwise obtained in the audit and assess whether
the information otherwise appears to be materially misstated.
If we, based on the work performed concerning this information, conclude
that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors and the President
The Board of Directors and the Managing Director are responsible for the
preparation of the annual accounts and consolidated accounts and that
they give a fair presentation in accordance with the Annual Accounts Act
and, concerning the consolidated accounts, in accordance with IFRS as
adopted by the EU. The Board of Directors and the Managing Director are
also responsible for such internal control as they determine is necessary
to enable the preparation of annual accounts and consolidated accounts
that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts and consolidated accounts, The
Board of Directors and the Managing Director are responsible for the
assessment of the company’s and the group’s ability to continue as a
going concern. They disclose, as applicable, matters related to going con-
cern and using the going concern basis of accounting. The going concern
basis of accounting is however not applied if the Board of Directors and
the Managing Director intends to liquidate the company, to cease opera-
tions, or has no realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board of Director’s
responsibilities and tasks in general, among other things oversee the
company’s financial reporting process.
Auditor’s responsibility
Our objectives are to obtain reasonable assurance about whether the
annual accounts and consolidated accounts as a whole are free from
material misstatement, whether due to fraud or error, and to issue an audi-
tor’s report that includes our opinions. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accor-
dance with ISAs and generally accepted auditing standards in Sweden
will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the eco-
nomic decisions of users taken on the basis of these annual accounts and
consolidated accounts.
A further description of our responsibilities for the audit of the annual
accounts and consolidated accounts is located at the Swedish Inspectorate
of Auditors website: www.revisorsinspektionen.se/revisornsansvar. This
description forms part of the auditor´s report.
214
VOLVO GROUP 2023
OTHER INFORMATION
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Opinions
In addition to our audit of the annual accounts and consolidated accounts, we
have also audited the administration of the Board of Directors and the Man-
aging Director of AB Volvo (publ) for the financial year 2023-01-01–2023-
12-31 and the proposed appropriations of the company’s profit or loss.
We recommend to the general meeting of shareholders that the profit
to be appropriated in accordance with the proposal in the statutory
administration report and that the members of the Board of Directors and
the Managing Director be discharged from liability for the financial year.
Basis for Opinions
We conducted the audit in accordance with generally accepted auditing
standards in Sweden. Our responsibilities under those standards are fur-
ther described in the Auditor’s Responsibilities section. We are indepen-
dent of the parent company and the group in accordance with profes-
sional ethics for accountants in Sweden and have otherwise fulfilled our
ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinions.
Responsibilities of the Board of Directors and the President
The Board of Directors and President are responsible for the proposal for
appropriations of the company’s profit or loss. At the proposal of a dividend,
this includes an assessment of whether the dividend is justifiable consider-
ing the requirements which the company’s and the group’s type of opera-
tions, size and risks place on the size of the parent company’s and the
group’s equity, consolidation requirements, liquidity and position in general.
The Board of Directors is responsible for the company’s organization and
the administration of the company’s affairs. This includes among other
things continuous assessment of the company’s and the group’s financial
situation and ensuring that the company’s organization is designed so that
the accounting, management of assets and the company’s financial affairs
otherwise are controlled in a reassuring manner. The Managing Director
shall manage the ongoing administration according to the Board of Direc-
tors’ guidelines and instructions and among other matters take measures
that are necessary to fulfill the company’s accounting in accordance with
law and handle the management of assets in a reassuring manner.
Auditor’s responsibility
Our objective concerning the audit of the administration, and thereby our
opinion about discharge from liability, is to obtain audit evidence to assess
with a reasonable degree of assurance whether any member of the Board
of Directors or the Managing Director in any material respect:
• has undertaken any action or been guilty of any omission which can
give rise to liability to the company, or
• in any other way has acted in contravention of the Companies Act,
the Annual Accounts Act or the Articles of Association.
Our objective concerning the audit of the proposed appropriations of
the company’s profit or loss, and thereby our opinion about this, is to
assess with reasonable degree of assurance whether the proposal is in
accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with generally accepted auditing
standards in Sweden will always detect actions or omissions that can give
rise to liability to the company, or that the proposed appropriations of the
company’s profit or loss are not in accordance with the Companies Act.
A further description of our responsibilities for the audit of the manage-
ment’s administration is located at the Swedish Inspectorate of Auditors
website: www.revisorsinspektionen.se/revisornsansvar. This description
forms part of the auditor´s report.
THE AUDITOR’S EXAMINATION OF THE ESEF REPORT
Opinion
In addition to our audit of the annual accounts and consolidated accounts,
we have also examined that the Board of Directors and the Managing Direc-
tor have prepared the annual accounts and consolidated accounts in a for-
mat that enables uniform electronic reporting (the Esef report) pursuant to
Chapter 16, Section 4 a of the Swedish Securities Market Act (2007:528)
for AB Volvo (publ) for the financial year 2023-01-01–2023-12-31.
Our examination and our opinion relate only to the statutory requirements.
In our opinion, the Esef report has been prepared in a format that, in all
material respects, enables uniform electronic reporting.
Basis for opinion
We have performed the examination in accordance with FAR’s recommen-
dation RevR 18 Examination of the Esef report. Our responsibility under
this recommendation is described in more detail in the Auditors’ responsi-
bility section. We are independent of AB Volvo (publ) in accordance with
professional ethics for accountants in Sweden and have otherwise fulfilled
our ethical responsibilities in accordance with these requirements.
We believe that the evidence we have obtained is sufficient and appro-
priate to provide a basis for our opinion.
Responsibilities of the Board of Directors and the President
The Board of Directors and the Managing Director are responsible for the
preparation of the Esef report in accordance with the Chapter 16, Section
4 a of the Swedish Securities Market Act (2007:528), and for such inter-
nal control that the Board of Directors and the Managing Director deter-
mine is necessary to prepare the Esef report without material misstate-
ments, whether due to fraud or error.
215
VOLVO GROUP 2023
OTHER INFORMATION
Auditor’s responsibility
Our responsibility is to obtain reasonable assurance whether the Esef
report is in all material respects prepared in a format that meets the
requirements of Chapter 16, Section 4(a) of the Swedish Securities Mar-
ket Act (2007:528), based on the procedures performed.
RevR 18 requires us to plan and execute procedures to achieve reason-
able assurance that the Esef report is prepared in a format that meets
these requirements.
Reasonable assurance is a high level of assurance, but it is not a guar-
antee that an engagement carried out according to RevR 18 and generally
accepted auditing standards in Sweden will always detect a material mis-
statement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could reason-
ably be expected to influence the economic decisions of users taken on
the basis of the Esef report.
The firm applies International Standard on Quality Management 1,
which requires the firm to design, implement and operate a system of
quality management including policies or procedures regarding compli-
ance with ethical requirements, professional standards and applicable
legal and regulatory requirements.
The examination involves obtaining evidence, through various proce-
dures, that the Esef report has been prepared in a format that enables uni-
form electronic reporting of the annual accounts and consolidated accounts.
The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement in the report, whether
due to fraud or error. In carrying out this risk assessment, and in order to
design audit procedures that are appropriate in the circumstances, the
auditor considers those elements of internal control that are relevant to
the preparation of the Esef report by the Board of Directors and the Man-
aging Director, but not for the purpose of expressing an opinion on the
effectiveness of those internal controls. The examination also includes an
evaluation of the appropriateness and reasonableness of assumptions
made by the Board of Directors and the Managing Director.
The procedures mainly include a validation that the Esef report has
been prepared in a valid XHMTL format and a reconciliation of the Esef
report with the audited annual accounts and consolidated accounts.
Furthermore, the procedures also include an assessment of whether the
consolidated statement of financial performance, financial position, changes
in equity, cash flow and disclosures in the Esef report have been marked
with iXBRL in accordance with what follows from the Esef regulation.
Deloitte AB, was appointed auditor of AB Volvo by the general meeting
of the shareholders on April 4, 2023 and has been the company’s auditor
since April 5, 2018.
Göteborg, February 28, 2024
Signature on Swedish original
Jan Nilsson
Authorized Public Accountant
This is a translation of the Swedish language original. In the event of any differences
between this translation and the Swedish language original, the latter shall prevail.
216
VOLVO GROUP 2023
OTHER INFORMATION
AUDITOR’S LIMITED ASSURANCE REPORT ON SUSTAINABILITY
REPORT AND STATEMENT REGARDING THE STATUTORY
SUSTAINABILITY REPORT
To AB Volvo (publ.), corporate identity number 556012-5790
Introduction
We have been engaged by the Board of Directors and Executive Manage-
ment of AB Volvo to undertake a limited assurance engagement of the AB
Volvo Sustainability Report for the year 2023. The Company has defined
the scope of the Sustainability Report in connection to the table of content
in the Annual Report and the Statutory Sustainability Report on page 56.
Responsibilities of the Board of Directors and
the Executive Management
The Board of Directors and the Executive Management are responsible for
the preparation of the Sustainability Report including the Statutory Sus-
tainability Report in accordance with the applicable criteria and the Annual
Accounts Act respectively. The criteria are defined on page 163 in the
Annual Report, and are part of the Sustainability Reporting Guidelines
published by GRI (Global Reporting Initiative), which are applicable to the
Sustainability Report, as well as the accounting and calculation principles
that the Company has developed. This responsibility also includes the
internal control relevant to the preparation of a Sustainability Report that is
free from material misstatements, whether due to fraud or error.
Responsibilities of the auditor
Our responsibility is to express a conclusion on the Sustainability Report
based on the limited assurance procedures we have performed and to
express an opinion regarding the Statutory Sustainability Report. Our
engagement is limited to historical information presented and does there-
fore not cover future-oriented information.
We conducted our limited assurance engagement in accordance with
ISAE 3000 (revised) Assurance Engagements Other than Audits or
Reviews of Historical Financial Information. A limited assurance engage-
ment consists of making inquiries, primarily of persons responsible for the
preparation of the Sustainability Report, and applying analytical and other
limited assurance procedures. Our examination regarding the Statutory
Sustainability Report has been conducted in accordance with FAR’s
accounting standard RevR 12 The auditor’s opinion regarding the Statu-
tory Sustainability Report. A limited assurance engagement and an exam-
ination according to RevR 12 is different and substantially less in scope
than an audit conducted in accordance with International Standards on
Auditing and generally accepted auditing standards in Sweden.
The firm applies International Standard on Quality Management 1,
which requires the firm to design, implement and operate a system of
quality management including policies or procedures regarding compli-
ance with ethical requirements, professional standards and applicable
legal and regulatory requirements. We are independent of AB Volvo in
accordance with professional ethics for accountants in Sweden and have
otherwise fulfilled our ethical responsibilities in accordance with these
requirements.
The limited assurance procedures performed and the examination
according to RevR 12 do not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an
audit. The conclusion based on a limited assurance engagement and an
examination according to RevR 12 does not provide the same level of
assurance as a conclusion based on an audit.
Our procedures are based on the criteria defined by the Board of Direc-
tors and the Executive Management as described above. We consider
these criteria suitable for the preparation of the Sustainability Report.
We believe that the evidence we have obtained is sufficient and appro-
priate to provide a basis for our conclusion below.
Conclusion
Based on the limited assurance procedures we have performed, nothing
has come to our attention that causes us to believe that the Sustainability
Report, is not prepared, in all material respects, in accordance with the
criteria defined by the Board of Directors and Executive Management.
A Statutory Sustainability Report has been prepared.
Göteborg, February 28, 2024
Deloitte AB
Jan Nilsson Lennart Nordqvist
Authorized Public Accountant Expert Member of FAR
This is a translation of the Swedish language original. In the event of any differences
between this translation and the Swedish language original, the latter shall prevail.
217
VOLVO GROUP 2023
OTHER INFORMATION
Key Ratios
The Volvo Group uses key ratios with the aim to provide valuable informa-
tion to management, investors and analysts when analyzing trends and
financial performance of the Group. The key ratios are not defined by
IFRS, unless otherwise stated, and may differ from similar measures used
by other companies and are therefore not always comparable. The mea-
sures should be considered as a complement to, and not a substitute for,
the financial information presented in compliance with IFRS. Definitions
and reconciliations of significant key ratios are presented in the annual
report. If the reconciliation is not directly reflected in the financial state-
ments, a separate reconciliation is presented below.
Basic earnings per share (defined by IFRS)
Definition: Income for the period attributable to shareholders of AB Volvo
divided by the weighted average number of shares outstanding during the
period. For reconciliation see note 19 Equity and number of shares.
Operating cash flow
Definition: The operating cash flow is a measure of the amount of cash
generated by the Volvo Group’s regular business operations. The operating
cash flow also includes investments and disposals of intangible and tangible
assets, which are part of the investing activities. For reconciliation see
Consolidated cash flow statement.
Diluted earnings per share (defined by IFRS)
Definition: Income for the period attributable to the shareholders of AB
Volvo divided by the average number of shares outstanding plus the aver-
age number of shares that would be issued as an effect of ongoing share-
based incentive programs. For reconciliation see note 19 Equity and num-
ber of shares.
EBITDA and EBITDA margin
Definition: EBITDA is the operating income before depreciation and
amortization of tangible and intangible assets. The key figure EBITDA
margin is calculated as operating income adjusted with depreciation and
amortization, in relation to net sales.
Industrial Operations
SEK M 2023 2022
Net sales 533,269 459,703
Operating income 63,063 44,862
Amortization product and software development 2,890 2,799
Amortization other intangible assets 161 119
Depreciation tangible assets 13,123 13,010
Total depreciation and amortization 16,173 15,928
Operating income before depreciation and
amortization (EBITDA) 79,237 60,790
EBITDA margin, % 14.9 13.2
Equity ratio
Definition: Total equity divided by total assets.
Industrial Operations Volvo Group
SEK M 2023 2022 2023 2022
Total equity 159,119 147,439 180,739 166,236
Total assets 439,807 431,771 674,068 629,064
Equity ratio, % 36.2 34.1 26.8 26.4
Gross margin
Definition: Gross income divided by net sales.
Industrial Operations Volvo Group
SEK M 2023 2022 2023 2022
Net sales 533,269 459,703 552,764 473,479
Gross income 141,693 105,021 149,321 111,737
Gross margin, % 26.6 22.8 27.0 23.6
Net capitalization of research and development cost
Definition: Capitalized research and development cost reduced by amor-
tizations.
Volvo Group
SEK M 2023 2022
Capitalization 4,710 4,707
Amortization –2,688 –2,635
Net capitalization of research
and development cost 2,021 2,072
Net financial position
Definition: Cash and cash equivalents, marketable securities and inter-
est-bearing receivables reduced by interest-bearing liabili ties, lease liabil-
ities and provisions for post-employment benefits. For reconciliation see
table Net financial position, which is presented after the balance sheet for
the Volvo Group. Net financial position is also presented excluding provi-
sions for post-employment benefits and lease liabilities, net.
218
VOLVO GROUP 2023
OTHER INFORMATION
Operating income, operating margin, adjusted operating
income and adjusted operating margin
Definition operating income: Operating income is profit before interest
and tax, also known as EBIT (Earnings before interest and tax) and is a
measure of profit from the ordinary business operations. For reconciliation
see the Income statement Volvo Group.
Definition operating margin: Operating income divided by net sales.
Definition adjusted operating income: Adjusted operating income is
profit before interest and tax as well as significant expenses or income of a
one-time character. Items of a one-time character means they are not
directly related to the underlying business operations, they occur infre-
quently and with limited predictive value. Examples of significant one-time
items can be results from divestments of operations or restructuring costs.
Definition adjusted operating margin: Adjusted operating income divided
by net sales.
2023
Quarter Trucks
Construction
Equipment Buses
Volvo
Penta
Group
Functions
& Other
incl. elim
Industrial
Opera-
tions
Financial
Services
Elimi-
nations
Volvo
GroupSEK M
Net sales 373,048 104,981 22,423 21,006 11,811 533,269 24,012 –4,518 552,764
Operating income 48,893 16,383 –380 3,230 –5,062 63,063 3,719 2 66,784
Previously announced provision for pre-
mature degradation of an emission con-
trol component 1 139 – –139 – – – – – –
Restructuring charges relating to the
European bus operation 1 – – –1,300 – – –1,300 – – –1,300
Restructuring charges relating to the
US bus production for Nova Bus 2 – – – – –1,270 –1,270 – – –1,270
Costs relating to claims arising from the
European Commission’s 2016 antitrust
settlement decision 2 –6,000 – – – – –6,000 – – –6,000
Financial impact related to Russia 3 –640 – – – –18 –658 –136 – –794
Financial impact related to the planned
divestment of the ABG paver business 4 – –610 – – – –610 – – –610
Financial impact related to the planned
divestment of Arquus 4 – – – – –880 –880 – – –880
Year –6,501 –610 –1,439 – –2,168 –10,718 –136 – –10,854
Adjusted operating income 55,394 16,993 1,059 3,320 –2,895 73,782 3,855 2 77,638
Operating margin, % 13.1 15.6 –1.7 15.4 – 11.8 – – 12.1
Adjusted operating margin, % 14.8 16.2 4.7 15.4 – 13.8 – – 14.0
2022
Quarter Trucks
Construction
Equipment Buses
Volvo
Penta
Group
Functions
& Other
incl. elim
Industrial
Opera-
tions
Financial
Services
Elimi-
nations
Volvo
GroupSEK M
Net sales 310,536 100,261 18,583 18,102 12,221 459,703 17,355 –3,579 473,479
Operating income 31,976 12,907 353 2,527 –2,900 44,862 848 2 45,712
Financial impact related to Russia 1 –1,447 –106 – –3 –1 –1,557 –2,568 – –4,125
Financial impact related to Russia 3 232 –232 – – – – – – –
Costs relating to claims arising from the
European Commission’s 2016 antitrust
settlement decision 4 –630 – – – – –630 – – –630
Year –1,845 –338 – –3 –1 –2,187 –2,568 – –4,755
Adjusted operating income 33,821 13,244 353 2,530 –2,899 47,049 3,416 2 50,467
Operating margin, % 10.3 12.9 1.9 14.0 – 9.8 – – 9.7
Adjusted operating margin, % 10.9 13.2 1.9 14.0 – 10.2 – – 10.7
219
VOLVO GROUP 2023
OTHER INFORMATION
Penetration rate
Definition: Share of unit sales financed by Financial Services in relation to
total number units sold by the Volvo Group in markets where financial
services are offered.
Financial Services
Number of units 2023 2022
Number of financed units 68,027 68,658
Number of units sold where
financial services are offered 251,751 241,117
Penetration rate, % 27 28
Return on capital employed
Definition: Operating income plus interest income and similar credits
divided by weighted average capital employed.
Industrial Operations
SEK M 2023 2022
Operating income 63,063 44,862
Interest income and similar credits 3,207 1,315
Operating income and interest income
and similar credits 66,270 46,177
Weighted average capital employed 180,434 168,703
Return on capital employed, % 36.7 27.4
Return on operating capital
Definition: Operating income divided by weighted average operating capital.
Industrial Operations
SEK M 2023 2022
Operating income 63,063 44,862
Weighted average operating capital 88,397 88,367
Return on operating capital, % 71.3 50.8
Return on equity
Definition: Income for the period divided by weighted average equity.
Financial Services Volvo Group
SEK M 2023 2022 2023 2022
Income for the period 2,695 –53 49,932 32,969
Weighted average equity 20,730 16,766 173,780 159,232
Return on equity, % 13.0 –0.3 28.7 20.7
Sales growth adjusted for currency and acquired and divested operations
Definition: Sales growth adjusted for currency and acquired and divested operations, divided by net sales for the prior year.
Industrial Operations Volvo Group
SEK M 2023 2022 2023 2022
Net sales 533,269 459,703 552,764 473,479
Increase/decrease of net sales for the year 73,567 98,642 79,285 101,263
Currency rates –24,866 –42,087 –26,030 –44,031
Acquired and divested units – 5,438 – 5,438
Adjusted Increase/decrease of net sales for the year 48,700 61,993 53,255 62,669
Sales growth adjusted for currency and acquired and divested units, % 10.6 17.2 11.2 16.8
Self-financing ratio
Definition: Cash flow from operating activities divided by net investments in tangible assets, intangible assets and leasing vehicles as defined in the
Consolidated cash flow statement.
Industrial Operations Volvo Group
SEK M 2023 2022 2023 2022
Cash flow from operating activities 63,430 51,423 26,675 33,244
Investments in in-/tangible assets and leasing vehicles, net 17,609 16,096 22,985 20,288
Self-financing ratio, % 360 319 116 164
220
VOLVO GROUP 2023
OTHER INFORMATION
Eleven-year Summary
The reporting in the eleven-year summary is based on IFRS. Respective year is presented in accordance with the Generally
Accepted Accounting Practice (GAAP) for that year. Earlier years are not restated when new accounting standards are applied.
Consolidated income statement
SEK M 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Net sales 552,764 473,479 372,216 338,446 431,980 390,834 334,748 301,914 312,515 282,948 272,622
Cost of sales –403,443 –361,741 –282,463 –259,319 –326,895 –303,478 –254,581 –231,602 –240,653 –220,012 –212,504
Gross income 149,321 111,737 89,753 79,127 105,085 87,357 80,167 70,312 71,862 62,937 60,118
Research and development
expenses –26,645 –22,526 –18,027 –16,798 –18,539 –15,899 –16,098 –14,631 –15,368 –16,656 –15,124
Selling expenses –33,675 –29,044 –23,959 –26,510 –33,037 –30,890 –28,582 –26,867 –27,694 –27,448 –28,506
Administrative expenses –7,356 –5,880 –4,870 –4,621 –5,901 –5,798 –5,642 –5,121 –5,769 –5,408 –5,862
Other operating income
and expenses –12,280 –7,374 246 –5,459 –221 –2,273 –1,061 –3,135 –4,179 –7,697 –3,554
Income from investments in
joint ventures and associated
companies –2,568 –1,333 –54 1,749 1,859 1,948 1,407 156 –143 46 96
Income from other investments –14 132 –15 –3 285 33 135 112 4,609 50 –30
Operating income 66,784 45,712 43,074 27,484 49,531 34,478 30,327 20,826 23,318 5,824 7,138
Interest income and
similar credits 2,690 1,008 358 299 320 199 164 240 257 328 381
Interest expenses
and similar charges –1,167 –1,205 –1,167 –1,349 –1,674 –1,658 –1,852 –1,847 –2,366 –1,994 –2,810
Other financial income
and expenses –1,581 –437 926 –518 –1,345 –870 –385 11 –792 931 11
Income after financial items 66,726 45,077 43,190 25,917 46,832 32,148 28,254 19,230 20,418 5,089 4,721
Income taxes –16,794 –12,108 –9,947 –5,843 –10,337 –6,785 –6,971 –6,008 –5,320 –2,854 –919
Income for the period 49,932 32,969 33,243 20,074 36,495 25,363 21,283 13,223 15,099 2,235 3,802
Attributable to:
Owners of AB Volvo 49,825 32,722 32,787 19,318 35,861 24,897 20,981 13,147 15,058 2,099 3,583
Non-controlling interest 107 247 456 755 635 466 302 75 41 136 219
Income statement Industrial Operations
SEK M 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Net sales 533,269 459,703 361,062 326,472 418,361 378,320 323,809 291,459 303,582 275,999 265,420
Cost of sales –391,576 –354,682 –277,048 –252,933 –319,055 –296,109 –248,382 –225,797 –236,311 –217,251 –209,307
Gross income 141,693 105,021 84,013 73,539 99,306 82,210 75,428 65,662 67,271 58,748 56,113
Research and
development expenses –26,645 –22,526 –18,027 –16,798 –18,539 –15,899 –16,098 –14,631 –15,368 –16,656 –15,124
Selling expenses –30,380 –26,066 –21,575 –24,284 –30,483 –28,642 –26,495 –24,946 –25,857 –25,778 –26,904
Administrative expenses –7,342 –5,867 –4,859 –4,611 –5,887 –5,756 –5,602 –5,081 –5,728 –5,367 –5,824
Other operating income
and expenses –11,687 –4,498 300 –3,673 230 –1,828 –640 –2,531 –3,473 –6,931 –2,710
Income/loss from investments
in joint ventures and
associated companies –2,568 –1,333 –54 1,749 1,859 1,948 1,407 156 –143 46 96
Income from other investments –9 132 –15 –4 285 33 135 112 4,610 49 –31
Operating income 63,063 44,862 39,783 25,919 46,771 32,067 28,135 18,740 21,312 4,111 5,616
221
VOLVO GROUP 2023
OTHER INFORMATION
Consolidated balance sheets
SEK M 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Intangible assets 42,512 41,544 37,070 34,577 36,668 38,104 35,893 37,916 36,416 37,115 36,588
Property, plant and equipment 68,449 63,162 54,405 49,113 53,496 55,673 53,348 55,875 53,618 55,181 52,233
Assets under operating leases 41,910 43,518 39,969 37,962 43,326 43,103 37,166 34,693 32,531 31,218 25,672
Shares and participations 20,039 22,188 21,225 13,436 13,113 11,875 11,225 12,420 12,050 9,839 6,327
Inventories 76,863 75,689 63,916 47,625 56,644 65,783 52,701 48,287 44,390 45,533 41,153
Customer-financing receivables 232,203 193,928 151,504 128,531 142,982 126,927 109,378 110,821 102,583 99,166 83,861
Interest-bearing receivables 6,170 7,466 3,702 5,880 2,743 3,393 3,501 2,393 2,938 2,555 1,389
Other receivables 90,548 97,590 81,772 73,982 81,432 82,509 72,961 70,814 61,932 68,448 59,943
Cash and cash equivalents 83,415 83,979 62,293 85,419 61,660 47,093 36,270 25,172 24,393 33,554 29,559
Assets held for sale 11,960 – – 34,296 32,773 203 51 525 3,314 288 8,104
Assets 674,068 629,064 515,856 510,821 524,837 474,663 412,494 398,916 374,165 382,896 344,829
Total equity
1
180,739 166,236 144,118 148,142 141,678 125,831 109,011 97,764 85,610 80,048 77,365
Provision for post-employment
benefits 11,219 8,745 12,177 18,430 19,988 16,482 14,476 14,669 13,673 16,683 12,322
Other provisions 32,602 30,987 28,095 27,335 30,835 32,165 25,477 26,408 27,207 28,010 19,900
Interest-bearing liabilities 236,791 210,948 153,624 153,424 157,752 135,857 127,676 141,048 132,607 147,985 135,001
Other liabilities 204,559 212,148 177,842 152,204 164,171 164,328 135,854 118,879 114,495 110,042 99,891
Liabilities held for sale 8,157 – – 11,286 10,413 – – 148 573 130 350
Total equity and liabilities 674,068 629,064 515,856 510,821 524,837 474,663 412,494 398,916 374,165 382,896 344,829
1
of which non-controlling
interests 2,948 3,519 3,073 2,847 3,083 2,452 1,941 1,703 1,801 1,723 1,333
Assets pledged 7,924 3,582 6,742 14,960 21,220 15,988 12,791 10,592 9,428 7,680 5,078
Contingent liabilities 15,907 18,201 17,971 13,832 13,732 14,247 15,242 16,056 15,580 15,940 17,290
Balance sheets Industrial Operations
SEK M 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Intangible assets 42,378 41,471 36,971 34,423 36,467 37,889 35,716 37,768 36,314 37,010 36,479
Property, plant and equipment 68,393 63,112 54,356 49,045 53,411 55,631 53,308 55,812 53,554 55,087 52,146
Assets under operating leases 35,154 34,109 32,150 29,460 33,794 32,700 24,051 22,752 20,616 19,484 17,013
Shares and participations 20,020 22,169 21,209 13,421 13,095 11,866 11,215 12,409 12,042 9,825 6,321
Inventories 75,958 75,382 63,715 47,273 56,080 65,366 52,231 48,080 44,194 45,364 40,964
Customer-financing receivables 2,632 3,031 2,537 1,695 1,570 1,560 1,358 1,698 11 1,828 1,406
Interest-bearing receivables 6,189 12,918 3,723 6,301 4,916 3,882 4,966 4,415 3,738 2,777 2,195
Other receivables 98,176 103,481 96,758 84,413 99,082 101,347 85,822 75,759 68,223 70,413 60,679
Cash and cash equivalents 78,947 76,098 59,603 82,186 57,675 43,907 32,447 20,875 21,210 31,105 28,230
Assets held for sale 11,960 – – 29,362 28,427 203 51 525 3,314 288 8,104
Assets 439,807 431,771 371,022 377,579 384,517 354,351 301,165 280,093 263,216 273,181 253,537
Total equity 159,119 147,439 129,619 135,127 127,150 113,144 97,790 86,579 75,151 70,105 68,467
Provision for post-employment
benefits 11,138 8,690 12,095 18,282 19,850 16,374 14,391 14,608 13,621 16,580 12,249
Other provisions 32,511 28,485 24,918 23,794 27,055 28,476 22,680 22,545 23,936 25,054 17,575
Interest-bearing liabilities 19,641 29,735 19,919 35,017 32,326 25,328 27,001 33,944 32,562 48,180 52,491
Other liabilities 209,239 217,422 184,471 158,721 172,209 171,029 139,303 122,269 117,374 113,131 102,405
Liabilities held for sale 8,157 – – 6,638 5,927 – – 148 573 130 350
Total equity and liabilities 439,807 431,771 371,022 377,579 384,517 354,351 301,165 280,093 263,216 273,181 253,537
222
VOLVO GROUP 2023
OTHER INFORMATION
Consolidated cash flow statements
SEK bn 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Operating income 66.8 45.7 43.1 27.5 49.5 34.5 30.3 20.8 23.3 5.8 7.1
Depreciation and amortization 21.2 20.7 18.7 20.6 20.6 18.4 16.9 16.7 16.8 15.9 17.4
Other non-cash items 13.8 7.0 –1.0 1.2 –2.8 9.7 1.4 –0.4 –0.5 6.1 2.4
Change in working capital –55.8 –28.7 –17.5 –13.7 –18.2 –23.7 –4.7 –13.9 –9.0 –14.1 –10.8
Dividends received from joint ventures
and associated companies 0.1 0.1 0.8 1.1 0.5 – – – – – –
Financial items and income tax –19.5 –11.6 –10.4 –5.0 –10.1 –7.7 –6.3 –5.7 –4.6 –5.0 –5.1
Cash flow from operating activities 26.7 33.2 33.6 30.6 39.0 31.2 37.6 17.5 25.9 8.7 11.0
Investments in in-/tangible assets –18.4 –16.7 –12.5 –8.8 –12.0 –10.7 –7.7 –9.5 –8.8 –8.6 –12.2
Investments in leasing assets –10.3 –9.2 –9.3 –8.6 –10.0 –10.1 –11.5 –10.8 –10.5 –10.1 –8.2
Disposals of in-/tangible assets
and leasing assets 5.7 5.6 5.8 6.3 7.4 6.2 5.4 9.0 6.0 5.0 3.4
Investments and divestments of shares, net –1.2 –0.9 –7.4 –0.5 0.1 1.0 2.2 0.2 –2.0 0.1 0.0
Acquired and divested operations, net –2.4 –0.1 22.0 0.4 1.3 –0.2 0.9 1.4 0.4 7.4 0.9
Interest-bearing receivables including
marketable securities –0.3 –0.2 –0.1 1.1 –1.0 0.1 1.6 2.5 3.6 –4.8 0.5
Cash flow after net investments –0.2 11.8 32.2 20.7 24.9 17.4 28.5 10.4 14.5 –2.3 –4.6
Change in loans, net 31.0 34.0 –7.0 7.3 9.3 1.9 –9.0 –2.2 –13.2 6.7 13.0
Dividend to AB Volvo’s shareholders –28.5 –26.4 –49.8 – –20.3 –8.6 –6.6 –6.1 –6.1 –6.1 –6.1
Dividend to non-controlling interests –0.5 – –0.6 –0.8 – – – –0.2 – – –0.2
Other –0.1 – –0.1 –0.1 0.2 – – – – –0.1 0.1
Change in cash and cash equivalents
excluding exchange rate changes 1.7 19.2 –25.4 27.1 14.0 10.7 12.8 1.9 –4.8 –1.8 2.2
Effect of exchange rate changes
on cash and cash equivalents –2.2 2.5 2.3 –3.4 0.5 0.1 –0.7 1.0 –0.4 1.1 –0.5
Change in cash and cash equivalents –0.6 21.8 –23.1 23.7 14.5 10.8 12.1 2.9 –5.2 –0.7 1.7
Operating cash flow Industrial Operations
SEK bn 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Operating income 63.0 44.9 39.8 25.9 46.8 32.1 28.1 18.7 21.3 4.1 5.6
Depreciation and amortization 16.2 15.9 14.3 15.9 15.8 13.8 12.6 12.6 12.6 12.7 14.5
Other non-cash items 12.7 3.4 –1.4 –0.8 –3.6 8.9 0.9 –1.1 –1.1 5.3 1.5
Change in working capital –10.2 –2.5 –2.3 –11.0 –0.5 –11.0 –0.2 –14.7 –1.9 –3.3 –2.0
Dividends received from joint ventures
and associated companies 0.1 0.1 0.8 1.1 0.5 – – – – – –
Financial items and income taxes –18.3 –10.3 –9.5 –4.2 –9.5 –7.5 –5.6 –5.6 –4.0 –4.5 –4.9
Cash flow from operating activities 63.4 51.4 41.7 25.9 49.0 36.4 35.8 9.9 26.7 14.3 14.7
Investments in in-/tangible assets –18.3 –16.6 –12.5 –8.7 –11.9 –10.7 –7.7 –9.4 –8.8 –8.6 –12.2
Investments in leasing assets – – – – –0.1 – –0.1 –0.1 –0.3 –0.5 –1.5
Disposals of in-/tangible assets
and leasing assets 0.7 0.6 0.4 1.4 1.4 0.9 0.4 3.2 0.7 1.1 0.5
Operating cash flow 45.8 35.3 29.4 18.5 38.3 26.6 28.4 3.5 18.3 6.4 1.5
223
VOLVO GROUP 2023
OTHER INFORMATION
Exports from Sweden
SEK M 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Volvo Group, total 139,026 132,092 108,538 92,746 118,543
117,887 107,958 91,962 86,731 78,174 88,560
Key ratios
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Gross margin, %
1
26.6 22.8 23.3 22.5 23.7 21.7 23.3 22.5 22.2 21.3 21.1
Research and development expenses
as % of net sales
1
5.0 4.9 5.0 5.1 4.4 4.2 5.0 5.0 5.1 6.0 5.7
Selling expenses as %
of net sales
1
5.7 5.7 6.0 7.4 7.3 7.6 8.2 8.6 8.5 9.3 10.1
Administration expenses as
% of net sales
1
1.4 1.3 1.3 1.4 1.4 1.5 1.7 1.7 1.9 1.9 2.2
Operating income before depreciation
and amortization (EBITDA), SEK M
1
79,237 60,790 54,080 41,847 62,568 45,858 40,732 31,373 33,886 16,784 20,089
EBITDA margin, %
1
14.9 13.2 15.0 12.8 15.0 12.1 12.6 10.8 11.2 6.1 7.6
Net capitalization of research
and development, SEK M 2,021 2,072 552 –385 1,006 791 –876 90 –550 –1,441 787
Return on capital employed in
Industrial Operations, % 36.7 27.4 25.3 14.7 28.4 22.4 – – – – –
Return on operating capital in
Industrial Operations, % 71.3 50.8 51.9 29.4 52.3 39.0 32.5 21.5 25.0 4.5 5.9
Return on total equity, % 28.7 20.7 23.4 13.8 27.0 21.3 20.8 14.9 18.4 2.8 5.0
Self-financing ratio, % 116 164 210 279 268 213 272 155 194 64 84
Self-financing ratio
Industrial Operations, % 360 319 341 353 458 373 483 155 316 180 112
Net Financial position excl.
post -employment benefits
and lease liabilities SEK M
1
83,407 73,897 66,227 74,691 62,596 43,926 26,339 –1,151 349 –9,924 –19,828
Net Financial position incl.
post -employment benefits
and lease liabilities SEK M
1
66,687 61,303 50,356 50,959 37,267 29,101 12,200 –15,679 –13,237 –26,378 –32,066
Equity ratio 26.8 26.4 27.9 29.0 27.0 26.5 26.4 24.5 22.9 20.9 22.4
Equity ratio, Industrial Operations 36.2 34.1 34.9 35.8 33.1 31.9 32.5 30.9 28.6 25.7 27.0
1 Pertains to the Industrial Operations.
Regular employees at year-end
Number 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Sweden 24,361 22,964 21,022 20,598 21,094 20,887 19,965 19,235 20,412 21,384 22,588
Europe, excluding Sweden 28,205 28,056 27,378 27,678 29,033 28,807 27,596 26,955 27,662 29,449 29,746
North America 18,624 17,815 16,956 15,559 17,750 17,845 15,882 14,245 15,534 15,217 16,397
South America 6,964 6,665 5,860 5,448 5,466 5,228 4,774 4,762 5,380 6,353 6,275
Asia 10,318 9,990 9,305 16,121 16,863 16,888 16,526 16,469 17,046 17,793 17,953
Africa and Oceania 2,263 2,196 2,019 2,088 2,369 2,474 2,361 2,373 2,430 2,626 2,574
Volvo Group total 90,735 87,686 82,540 87,492 92,575 92,129 87,104 84,039 88,464 92,822 95,533
224
VOLVO GROUP 2023
OTHER INFORMATION
Operating segment statistics
Net sales
SEK M 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Trucks Europe 175,203 137,177 107,798 92,127 112,125 111,237 99,642 91,468 83,767 72,757 73,640
North America 107,975 92,582 65,308 52,038 85,731 70,233 52,405 51,849 73,017 53,696 40,314
South America 36,897 38,254 23,569 15,830 23,753 16,021 12,789 10,613 11,624 19,669 23,318
Asia 30,617 23,988 21,359 35,441 37,610 36,664 36,998 33,464 31,589 29,264 26,740
Africa and Oceania 22,356 18,535 12,846 12,826 17,427 16,203 14,646 13,256 13,982 15,518 14,462
Total 373,048 310,536 230,881 208,262 276,647 250,358 216,480 200,650 213,978 190,904 178,474
Construction
Equipment
Europe 34,228 30,194 29,524 23,191 30,300 27,291 22,977 19,739 17,732 17,215 16,356
North America 29,590 22,294 16,583 13,020 17,404 15,575 12,234 10,724 11,843 10,784 8,319
South America 4,101 6,491 3,951 2,245 2,532 2,304 1,760 1,414 2,207 3,234 3,314
Asia 28,150 34,228 36,427 39,095 33,932 33,781 25,058 15,765 16,424 18,458 21,911
Africa and Oceania 8,912 7,054 5,546 3,902 4,437 5,287 4,468 3,088 2,802 3,164 3,539
Total 104,981 100,261 92,031 81,453 88,606 84,238 66,497 50,731 51,008 52,855 53,437
Buses Europe 7,007 6,034 5,886 5,765 7,369 7,036 7,753 7,861 7,284 6,139 5,429
North America 9,200 6,521 4,089 8,302 15,543 13,244 12,512 11,345 10,635 6,721 5,929
South America 2,207 3,154 882 1,793 3,281 1,393 1,148 1,363 1,425 2,559 1,836
Asia 1,601 1,372 1,371 2,397 2,617 2,094 3,135 3,067 2,557 1,892 2,055
Africa and Oceania 2,408 1,502 1,423 1,535 2,209 2,060 1,530 1,749 1,678 1,334 1,457
Total 22,423 18,583 13,652 19,791 31,019 25,826 26,078 25,386 23,580 18,645 16,707
Volvo Penta Europe 10,787 9,417 7,464 6,064 6,671 7,487 5,727 4,973 4,462 3,779 3,714
North America 4,070 3,695 2,949 2,532 3,180 2,912 2,456 2,191 2,161 1,584 1,491
South America 783 635 474 345 319 299 289 291 365 386 297
Asia 3,950 3,302 2,698 2,228 2,439 2,443 2,082 1,891 1,855 1,615 1,692
Africa and Oceania 1,417 1,054 851 691 679 599 566 546 562 425 356
Total 21,006 18,102 14,437 11,891 13,287 13,741 11,119 9,893 9,406 7,790 7,550
Group functions &
Other incl. eliminations 11,811 12,221 10,061 5,074 8,802 4,157 3,635 4,799 5,610 5,806 9,252
Net sales Industrial Operations 533,269 459,703 361,062 326,472 418,361 378,320 323,809 291,459 303,582 275,999 265,420
Financial
Services
Europe 8,727 6,705 5,929 6,116 6,279 6,063 5,431 5,116 5,278 5,120 4,686
North America 7,775 5,752 4,519 4,907 5,534 4,600 4,234 4,202 4,033 2,999 2,900
South America 5,374 3,338 1,618 1,380 1,555 1,276 1,368 1,235 1,116 1,122 1,009
Asia 1,027 788 843 1,022 1,010 800 543
476 548 638 707
Africa and Oceania 1,108 772 528 535 492 332 235 213 224 232 237
Total 24,012 17,355 13,437 13,960 14,870 13,070 11,812 11,242 11,199 10,111 9,539
Eliminations –4,518 –3,579 –2,283 –1,987 –1,252 –555 –873 –787 –2,265 –3,162 –2,336
Volvo Group total 552,764 473,479 372,216 338,446 431,980 390,834 334,748 301,914 312,515 282,948 272,622
Of which:
1
Vehicles
2
425,301 367,234 282,666 247,397 332,558 299,356 252,063 223,996 237,430
Services 127,463 92,469 78,396 79,075 85,804 78,963 71,747 67,463 66,152
Financial Services – 17,355 13,437 13,960 14,870 13,070 11,812 11,242 11,199
Eliminations – –3,579 –2,283 –1,987 –1,252 –555 –873 –787 –2,265
1 As from 2023, net sales for Financial Services are included in Services.
2 Including construction equipment and Volvo Penta engines.
225
VOLVO GROUP 2023
OTHER INFORMATION
Operating income
SEK M 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Trucks 48,893 31,976 27,349 15,764 31,552 19,541 20,383 15,020 19,517 4,157 6,145
Construction Equipment 16,383 12,907 12,228 9,583 11,910 12,125 7,917 2,246 2,044 652 2,592
Buses –380 353 78 –522 1,337 575 928 911 860 92 –190
Volvo Penta 3,230 2,527 2,092 1,402 1,876 2,341 1,439 1,269 1,086 724 626
Financial Services 3,719 848 3,289 1,564 2,766 2,411 2,192 2,086 2,006 1,712 1,522
Group functions & and Other incl.
eliminations –5,060 –2,899 –1,962 –308 91 –2,515 –2,532 –707 –2,195 –1,514 –3,557
Operating income
Volvo Group 66,784 45,712 43,074 27,484 49,531 34,478 30,327 20,826 23,318 5,824 7,138
Operating margin
% 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Trucks 13.1 10.3 11.8 7.6 11.4 7.8 9.4 7.5 9.1 2.2 3.4
Construction Equipment 15.6 12.9 13.3 11.8 13.4 14.4 11.9 4.4 4.0 1.2 4.9
Buses –1.7 1.9 0.6 –2.6 4.3 2.2 3.6 3.6 3.6 0.5 –1.1
Volvo Penta 15.4 14.0 14.5 11.8 14.1 17.0 12.9 12.8 11.5 9.3 8.3
Industrial Operations 11.8 9.8 11.0 7.9 11.2 8.5 8.7 6.4 7.0 1.5 2.1
Volvo Group 12.1 9.7 11.6 8.1 11.5 8.8 9.1 6.9 7.5 2.1 2.6
Regular employees at year-end
Number 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Trucks 55,607 54,046 50,974 56,483 59,142 58,891 55,026 52,154 54,668 58,067 58,542
Construction Equipment 15,028 14,797 13,847 13,404 13,756 13,419 12,788 13,397 13,889 14,901 14,663
Buses 5,637 5,325 5,117 6,608 8,324 8,178 7,943 7,353 7,270 6,900 6,648
Volvo Penta 2,167 2,022 1,832 1,798 1,800 1,713 1,622 1,530 1,470 1,422 1,412
Financial Services 1,599 1,596 1,546 1,511 1,538 1,401 1,363 1,328 1,340 1,339 1,355
Other 10,697 9,900 9,224 7,688 8,015 8,527 8,362 8,277 9,827 10,193 12,913
Volvo Group, total 90,735 87,686 82,540 87,492 92,575 92,129 87,104 84,039 88,464 92,822 95,533
Environmental and social metrics
More detailed information and management approach are further described in Sustainability Notes on page 163–193.
Absolute values; and related to net sales where applicable 2023 2022 2021 2020
2019 2018 2017 2016 2015 2014 2013
Energy usage (GWh; MWh/SEK M)¹ 2,345; 4.4 2,367; 5.1 2,437; 6.8 2,158; 6.6 2,372; 5.7 2,196; 5.8 2,068; 6.4 2,076; 7.1 2,077; 6.8 2,168; 7.9 2,320; 8.7
Direct GHG emissions, CO₂e, scope 1 (1,000 tons; tons /SEK M)¹ 288; 0.4 243; 0.5 252; 0.7 211; 0.6 250; 0.6 223; 0.6 207; 0.6 211; 0.7 220; 0.7 231; 0.8 255; 1.0
Indirect GHG emissions, CO₂e scope 2 (1,000 tons; tons/SEK M)¹ 66; 0.1 81; 0.2 115; 0.3 121; 0.4 125; 0.3 198; 0.5 192; 0.6 196; 0.7 192; 0.6 218; 0.8 243; 0.9
Indirect GHG emissions, CO₂e scope 3 use of sold products (Mton) 266 287 286 241 323
Water withdrawal (1,000 m
3
; m
3
/SEK M) 5,034; 9.4 4,566; 9.9 4,628; 12.8 4,865; 14.9 5,389; 12.9 4,870; 12.9 4,817; 14.9 4,430; 15.2 4,919; 16.2 4,982; 18.1 5,815; 21.9
Hazardous waste (tons; kilos/SEK M) 39,076; 73 36,800; 80 53,314; 148 51,712; 159 50,909; 122 38,601; 102 31,941; 99 27,649; 95 27,824; 92 24,944; 90 28,395; 107
Net sales, Industrial operations (SEK bn) 533.3 459.7 361.1 326.5 418.4 378.3 323.8 291.5 303.6 276.0 265.4
Accident rates (Lost time accidents per 200,000 hours) 1.08 1.00 1.03 0.87 1.22 1.22 1.00 1.06 1.38 1.59
Gender representation in total workforce, (% Men/Women) 78/22 78/22 79/21 81/19 81/19 81/18 81/19 82/18
Gender representation among leaders (% Men/Women) 75/25 76/24 77/23 80/20 80/20 81/19 81/19 82/18
1. In this 11 year summary, data points only summarize historical reported metric in the Annual Report each year but is not restated.
On page 172 data is restated from 2019 due to changing reporting scope affecting the baseline to the Group’s climate targets.
226
VOLVO GROUP 2023
OTHER INFORMATION
Environmental and social metrics
More detailed information and management approach are further described in Sustainability Notes on page 163–193.
Absolute values; and related to net sales where applicable 2023 2022 2021 2020
2019 2018 2017 2016 2015 2014 2013
Energy usage (GWh; MWh/SEK M)¹ 2,345; 4.4 2,367; 5.1 2,437; 6.8 2,158; 6.6 2,372; 5.7 2,196; 5.8 2,068; 6.4 2,076; 7.1 2,077; 6.8 2,168; 7.9 2,320; 8.7
Direct GHG emissions, CO₂e, scope 1 (1,000 tons; tons /SEK M)¹ 288; 0.4 243; 0.5 252; 0.7 211; 0.6 250; 0.6 223; 0.6 207; 0.6 211; 0.7 220; 0.7 231; 0.8 255; 1.0
Indirect GHG emissions, CO₂e scope 2 (1,000 tons; tons/SEK M)¹ 66; 0.1 81; 0.2 115; 0.3 121; 0.4 125; 0.3 198; 0.5 192; 0.6 196; 0.7 192; 0.6 218; 0.8 243; 0.9
Indirect GHG emissions, CO₂e scope 3 use of sold products (Mton) 266 287 286 241 323
Water withdrawal (1,000 m
3
; m
3
/SEK M) 5,034; 9.4 4,566; 9.9 4,628; 12.8 4,865; 14.9 5,389; 12.9 4,870; 12.9 4,817; 14.9 4,430; 15.2 4,919; 16.2 4,982; 18.1 5,815; 21.9
Hazardous waste (tons; kilos/SEK M) 39,076; 73 36,800; 80 53,314; 148 51,712; 159 50,909; 122 38,601; 102 31,941; 99 27,649; 95 27,824; 92 24,944; 90 28,395; 107
Net sales, Industrial operations (SEK bn) 533.3 459.7 361.1 326.5 418.4 378.3 323.8 291.5 303.6 276.0 265.4
Accident rates (Lost time accidents per 200,000 hours) 1.08 1.00 1.03 0.87 1.22 1.22 1.00 1.06 1.38 1.59
Gender representation in total workforce, (% Men/Women) 78/22 78/22 79/21 81/19 81/19 81/18 81/19 82/18
Gender representation among leaders (% Men/Women) 75/25 76/24 77/23 80/20 80/20 81/19 81/19 82/18
1. In this 11 year summary, data points only summarize historical reported metric in the Annual Report each year but is not restated.
On page 172 data is restated from 2019 due to changing reporting scope affecting the baseline to the Group’s climate targets.
Delivered units
Number 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Heavy-duty trucks (>16 tons) 198,383 197,249 170,295 140,652 201,092 193,886 171,963 158,025 176,589 173,650 170,307
Medium-duty trucks (7–16 tons) 18,863 15,475 13,907 10,736 12,700 14,065 14,331 15,691 14,749 15,114 16,779
Light trucks (<7 tons) 29,026 19,834 18,256 15,453 18,977 18,539 16,108 16,708 16,137 14,360 13,188
Total trucks 246,272 232,558 202,458 166,841 232,769 226,490 202,402 190,424 207,475 203,124 200,274
Number 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Trucks Europe 129,016 113,245 98,600 79,814 104,145 110,349 105,432 97,909 86,448 72,458 82,088
North America 60,782 56,535 47,629 32,056 62,308 53,877 37,941 39,193 64,507 57,714 44,755
South America 22,036 31,958 28,718 17,684 23,729 16,146 11,073 9,442 11,069 23,741 29,137
Asia 21,991 19,066 17,842 27,009 29,435 32,276 35,476 31,502 31,979 32,399 28,692
Africa and Oceania 12,447 11,754 9,669 10,278 13,152 13,842 12,480 12,378 13,472 16,812 15,602
Total 246,272 232,558 202,458 166,841 232,769 226,490 202,402 190,424 207,475 203,124 200,274
Of which fully electric 3,523 1,211 371 67 – – – – – – –
Construction
Equipment
Europe 16,278 16,767 20,453 15,762 21,420 19,567 17,519 14,700 12,539 14,174 13,522
North America 9,549 7,663 6,217 5,025 7,278 7,218 5,685 5,105 5,710 7,127 5,240
South America 2,271 4,875 4,263 2,335 2,004 2,023 1,372 1,175 2,036 3,669 3,568
Asia 28,073 48,153 65,635 68,232 53,664 50,716 36,254 21,072 22,339 33,648 44,892
Africa and Oceania 3,893 3,451 3,303 2,406 2,519 3,130 3,297 2,254 2,094 2,699 3,564
Total 60,064 80,909 99,871 93,760 86,885 82,654 64,127 44,306 44,718 61,317 70,786
Of which fully electric 895 598 321 12 – – – – – – –
Buses Europe 1,476 1,424 1,388 1,565 2,350 2,142 2,645 2,676 2,431 2,221 2,146
North America 1,590 1,134 1,118 1,644 3,084 2,796 2,973 2,659 2,398 1,590 1,752
South America 1,043 1,957 726 1,152 1,917 973 784 1,149 1,415 2,985 2,434
Asia 875 819 585 1,097 1,465 1,451 2,186 1,849 1,656 1,242 1,822
Africa and Oceania 789 481 705 797 915 1,064 805 1,220 925 721 756
Total 5,773 5,815 4,522 6,215 9,731 8,426 9,393 9,553 8,825 8,759 8,910
Of which fully electric 363 240 211 223 – – – – – – –
Of which hybrids 165 127 232 83 – – – – – – –
227
VOLVO GROUP 2023
OTHER INFORMATION
Volvo share statistics
Data per share
1
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Basic earnings, SEK
1
24.50 16.09 16.12 9.50 17.64 12.25 10.08 6.47 7.42 1.03 1.77
Ordinary dividend, SEK 7.50
8
7.00 6.50 6.00 0 5.00 4.25 3.25 3.00 3.00 3.00
Extraordinary dividend, SEK 10.50
8
7.00 16.00
9
9.00 0 5.00 0 0 0 0 0
Share price at year end (B share), SEK 261.70 188.48 209.65 193.80 156.90 115.95 152.70 106.40 79.10 84.70 84.45
Dividend yield (B share), %
2
6.9 7.4 10.7 7.7 0 8.6 2.8 3.1 3.8 3.5 3.6
Effective return (B share), %
3
48 1 16 24 44 –21 47 38 –3 4 –2
Price/earnings ratio (B share)
4
10.7 11.7 13.0 20.4 8.9 9.5 14.8 16.4 10.7 82.2 47.7
EBIT multiple
5
6.7 7.2 8.3 12.5 6.1 6.5 9.9 11.7 7.7 26.3 19.6
Payout ratio, %
6
73 87 140 158 0 82 41 50 40 291 169
Total equity, SEK
7
87 80 69 72 68 61 52 47 41 39 38
Return on total equity, % 28.7 20.7 23.4 13.8 27.0 21.3 20.5 14.9 18.4 2.8 5.0
1 Basic earnings per share is calculated as income for the period divided
by average number of shares outstanding.
2 Proposed dividend in SEK per share divided by share price at year end.
3 Share price at year end, including dividend during the year,
divided by share price at beginning of the year.
4 Share price at year end divided by basic earnings per share.
5 Market value at year end less net financial position and non-controlling
interests divided by operating income.
6 Cash dividend divided by basic earnings per share.
7 Total equity for shareholders in AB Volvo divided by number of shares
out stand ing at year end.
8 Proposed by the Board of Directors to the Annual General Meeting 2024.
9 Of which SEK 6.50 per share for 2021 and SEK 9.50 per share relating to the
distribution of the proceeds from the sale of UD Trucks paid out in July 2021.
Other share data
2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Number of shareholders at year end 382,200 374,185 362,144 283,731 250,798 245,663 240,521 237,654 234,989 237,871 246,265
Number of Series A shares
outstanding at year end, million 445 445 445 448 456 457 459 472 485 492 499
Number of Series B shares
outstanding at year end, million 1,588 1,588 1,588 1,585 1,577 1,576 1,573 1,560 1,546 1,537 1,530
Average number of shares
outstanding, million 2,033 2,033 2,033 2,033 2,033 2,032 2,032 2,031 2,030 2,028 2,028
Number of Series A shares traded
in Stockholm during the year, million 36.7 41.1 88.1 65.7 43.8 51.8 46.7 67.2 51.7 86.3 53.0
Number of Series B shares traded
in Stockholm during the year, million 820.2 967.5 1,065.9 1,407.6 1,146.1 1,293.8 1,341.3 1,667.9 2,052.1 2,068.7 1,878.5
The largest shareholders in
AB Volvo, December 31, 2023
Number
of shares
Share of
votes, %
Share of
capital, %
Industrivärden 185,000,000 27.9 9.1
Geely Holding 137,940,474 15.5 6.8
AMF Insurance & Funds 67,873,315 5.5 3.3
Alecta 54,961,010 4.0 2.7
AFA Insurance 15,903,854 2.3 0.8
BlackRock 65,921,685 2.1 3.2
Vanguard 64,596,031 2.1 3.2
Swedbank Robur Funds 89,860,590 1.8 4.4
AP4 Fund 10,960,288 1.6 0.5
Norges Bank Investment
Management 46,362,708 1.6 2.3
Total 739,379,955 64.4 36.3
Source: Modular Finance
Distribution of shares,
December 31, 2023
Number of
shareholders
% of
total votes
Share of
capital, %
1–1,000 shares 326,260 2.8 3.2
1,001–10,000 shares 51,301 5.9 6.9
10,001–100,000 shares 4,071 3.3 4.8
100,001– 568 88.0 85.1
Total 382,200 100.0 100.0
Source: Euroclear
228
VOLVO GROUP 2023
OTHER INFORMATION
Annual General Meeting, March 27, 2024
The Annual General Meeting of AB Volvo will be held on Wednesday,
March 27, 2024. For further information about the Annual General Meet-
ing 2024, please refer to Volvo’s website, www.volvogroup.com.
Volvo’s Election Committee
The following persons are members of Volvo’s Election Committee:
Fredrik Persson Chairman of the Election Committee,
AB Industrivärden
1
Anders Oscarsson AMF and AMF Fonder, appointed
by the Annual General Meeting
Carina Silberg Alecta
2
Anders Algotsson AFA Försäkring, appointed by
the Annual General Meeting
Carl-Henric Svanberg Chairman of the Board, appointed
by the Annual General Meeting
Among other duties, the Election Committee is responsible for submitting
to the Annual General Meeting proposals for candidates to serve as members
of the Board of Directors, Chairman of the Board and proposal for auditors if
applicable. The Election Committee also proposes the amount of the fees
to be paid to the Board of Directors.
1 The Annual General Meeting elected Pär Boman as member of the Election
Committee. Following Pär Boman’s resignation from this assignment, AB
Industrivärden has appointed Fredrik Persson as new member.
2 The Annual General Meeting elected Magnus Billing as member of the Election
Committee. Since Magnus Billing’s employment at Alecta has ended, Alecta
appointed Carina Silberg as a new member.
Preliminary financial calendar
Annual General Meeting 2024 March 27, 2024
Report on the first quarter 2024 April 17, 2024
Report on the second quarter 2024 July 18, 2024
Report on the third quarter 2024 October 18, 2024
Capital Markets Day November 14, 2024
The reports are available on www.volvogroup.com and www.volvogroup.se
on date of publication and are also sent electronically to shareholders who
have advised Volvo that they wish to receive financial information.
Historical and current time series reflecting the Volvo Group’s market
information are published regularly on www.volvogroup.com and on
www.volvogroup.se.
Contacts
Investor Relations:
Johan Bartler +46 739 02 21 93
Anders Christensson +46 765 53 59 66
E-mail: investorrelations@volvo.com
Corporate Responsibility:
Jonas André +46 739 02 63 80
E-mail: csr@volvo.com
Aktiebolaget Volvo (publ) 556012-5790
Investor Relations, VGHQ
SE-405 08 Göteborg
Sweden
Tel +46 31 66 00 00
www.volvogroup.com
229
VOLVO GROUP 2023
OTHER INFORMATION
AB Volvo (publ) • SE-40508 Göteborg, Sweden • Telephone +46 31 66 00 00 • www.volvogroup.com
AB Volvo, Investor Relations and Group Accounting
Volvo FH Electric
– International Truck
of the Year 2024
For more information, please see page 52.