Q&A With Volvo Group’s Karin Svensson

This interview has been edited for length and clarity. 

WSJ Pro: Where were you in December 2015 when the Paris accord was agreed?

Svensson: I was in group strategy and we had our new CEO coming in. We were setting the new strategy for the Volvo group. That was really the time when I realized that, from a business perspective, this so very much goes hand-in-hand. We felt that as one of the major manufacturers of trucks and buses it was crucial for us to be able to contribute to the goals of the Paris agreement.  

WSJ Pro: What is your favorite sustainable product that isn’t from your company?

Svensson: We got solar panels on our roof and that has really increased the whole family’s understanding of how much electricity we’re using, how we can be much more efficient. And I, of course, drive an electric car—I love doing that, too. 

WSJ Pro: What is the most carbon-heavy habit that you can’t kick, aside from flying?

Svensson: In the summer, we spent time in a small place in Sweden and we have a boat. We only use it for a couple of weeks a year. It’s quite difficult still to get an electric boat, but when that’s possible, I think we should really get that because that’s something we enjoy as a family to do. 

WSJ Pro: What have been the most important sustainability developments in the past year? 

Svensson: Electrification coming on a broad scale. The numbers of electric trucks we sell are still quite small, but it’s a huge increase. Our customers are really eager to buy electric trucks and to change to something more environmentally friendly. We have a full range in production for a couple of years.

WSJ Pro: What do you see as the most important sustainability themes for the coming year?

Svensson: The “S” in “ESG” is one of the topics that will increase in importance. The social impact goes throughout the value chain. From the mine through to all of our suppliers, we have something like 50,000 Tier 1 suppliers [Ed.’s note: Tier 1 suppliers are those with which a company does business directly]. It’s a huge task to get transparency throughout the value chain. It’s also our own workforce where we are ensuring that we have the right training and competence—it’s important for us to make sure that we can keep people. And then when we sell our products, we want to ensure that we don’t have a lot of negative impact on people, so traffic safety, for example.

WSJ Pro: What part can your company play in building a sustainable future?

Svensson: The need for transportation has grown quite a lot and it has to be done in a more sustainable way than it’s being done today. The transport sector is one of the major emitters—that’s just a fact. We want to both minimize the negative effects and maximize the positive effects, like to provide public transport. 

Decarbonization is one of the main things. We have set science-based targets to be net zero by 2040. It’s really really important that we really decrease our emissions by 2030, so we have set interim targets for all our business areas. To be successful, the key is electrification. By 2030, our ambition is that 35% of everything we sell should be electric, globally—which will be a huge challenge and a lot of things need to come into place, not only from us, but also with different types of enablers. It’s also about the materials that go into our products—so to work with our suppliers as partners to develop different types of new materials, for example, fossil-free steels or green batteries. 

WSJ Pro: A lot of people talk about hydrogen as a possible transport solution. How does that fit into your thinking?

Svensson: We have a three-pronged approach to decarbonizing our products. First of all, it’s battery-electric; the second is fuel-cell electric vehicles, and the third is the internal combustion engine run on something different than diesel, such as biofuels or hydrogen. 

We are now [testing] fuel-cell electric trucks and expect to have an offer ready toward the second half of this decade. Different types of trucking missions or markets have different prerequisites and possibilities for different types of solutions and that’s why we are not betting everything on battery-electric. But, the two main tracks are really going electric by battery-electric or fuel-cell electric.

WSJ Pro: What are the biggest challenges you face?

Svensson: The complexity and dependency on other stakeholders. Years ago, we could develop the world’s best truck, put it on the road and that was it. But today, we have been developing electric trucks for quite some years, so the vehicles are ready, they can be sold, but they are still a bit more expensive. So there will be a need for incentives to get them out into the market. There is very, very little public charging infrastructure and we lack renewable energy in many areas.  

Another challenge is our supply chain. We need a lot more transparency to understand, for example, emissions in the value chain. Also we lack certain materials that we are dependent on to do the transition and there are geopolitical issues also in the supply chain. 

And the last thing is legislation and reporting. Legislation is many times driving for us, so it’s often quite good, but we also see a lack of harmonization both between continents, but also within the EU. Reporting requirements are giving more transparency—it’s mainly a good thing. It will help us, making it possible to compare different companies and making it more obvious who is actually doing the right thing or not, but it also puts a lot of administrative burden on us.

Sustainability Snapshot

Selected Volvo Group Climate Goals for 2030

• 35% Sales of electric vehicles and machines
• -50% Emissions across operations and energy used (Scope 1 & 2) from 2019 level
• -40% Emissions per vehicle kilometer for trucks and buses from 2019 level
• -30% Total emissions from construction equipment from 2019 level
• 35% Female employees in all positions

Volvo Group’s 2022 Performance 

• 102,000 Employees 
• $3 billion Net income (33 billion Swedish krona)
•  287 million metric tons CO

  2

  equivalent in total carbon footprint

• 0 million metric tons Emissions offset by carbon credits

Sources: AB Volvo’s 2022 annual report

Write to Rochelle Toplensky at rochelle.toplensky@wsj.com