FULLTEXT DEL 4 AV 6
Årsredovisning 2025
Sustainability strategy
Sustainability is an integral part of our company purpose: To provide
freedom to move in a personal, sustainable and safe way. It is
embedded throughout our corporate strategy and reflected in our
roadmap, which focuses on three key areas: Regionalisation, Electri -
fication and Profitability. Our strategy is designed to drive sustaina -
ble, profitable growth by delivering human-centric customer experi -
ence, fostering a high-performing and committed organisation, and
offering premium electrified products for a regionalised world.
Recognising and understanding the impacts, risks and opportuni -
ties inherent in our business environment is fundamental to how we
shape our sustainability strategy. These insights not only form the
foundation for our ambitions but also serve as the basis for the way
we conduct our operations. From how we incorporate a sustainable
mindset into the design of our cars, to the sourcing of materials, the
production and distribution of our products, and finally in the end-
of-life treatment. Adopting a complete life cycle and value chain
perspective of our impacts, risks and opportunities enables a holis -
tic perspective and informs our corporate strategy execution.
We are dedicated to ensuring that our commitment to sustainabil -
ity is aligned with the objective of long-term profitability. We adopt a
unified steering model that balances economic and sustainability
priorities. By embedding sustainability into our decision-making
processes, we build a business that is adaptive, forward-thinking
and able to thrive amidst evolving environmental and market condi -
tions. This continuous work strengthens the resilience of our strat -
egy and business model throughout our transformation towards
electrification.
Integrating sustainability ambitions with electrification
The future is electric and we are fully committed to executing on this
vision as the market transforms. Our plug-in hybrid models serve as
an important bridge to adapt to current market preferences.
Electrification, as one of our corporate strategy areas, is funda -
mental for our ability to reach our sustainability ambitions. Our cur -
rent and future portfolio of electrified cars does not only reduce our
environmental footprint compared with combustion engines; it also
leads to an increased focus on transparency within in our value
chain, supporting our work to address human rights risks. Further -
more, the transition to electrification also unlocks more circular
business models, helping decouple revenue growth from environ -
mental impact, by, for example, using remanufactured and refur -
bished components and batteries.
Positioned for growth in electrified cars, and backed by our premium
car portfolio, we aimed to achieve 50–60 per cent electrified sales
in 2025 and aim to reach 90–100 per cent by 2030. In alignment
with these ambitions, we have set robust climate ambitions to
reduce CO2 emissions per car by 30–35 per cent this year and 65–75
per cent by 2030, compared to a 2018 baseline.
Our long-term vision is clear: to transform towards full electrifica -
tion and reach net zero greenhouse gas emissions by 2040. In addi -
tion to our climate action strategy, this vision also aligns with our
strategic pillars for circular business and responsible business.
We are working towards these ambitions by taking active steps
to reduce the carbon footprint, increase resource efficiency,
and enabling transparency across the value chain.
Customer segments and geographical focus
With an almost 100-year-old presence in the automotive market,
Volvo Cars represents a strong brand for our customers. In key mar -
kets, such as Europe and the US, our electrification strategy has
resulted in a higher market share for electrified cars, compared to
cars equipped solely with combustion engines. We are facing head -
winds in the electrification segment in the Chinese market, which
remains a growing and important market. To address this, we are
introducing a stronger focus on regionalisation, enabling increased
agility to meet local customer demands.
We serve customers in over one hundred countries across the
world, with a global retail network of approximately 2,200 outlets. In
2025, we had approximately 710,000 retail sales and a total revenue
of approximately SEK 357 billion.
Regulatory landscapes and customer preferences are rapidly
evolving, placing greater emphasis on our shared responsibility
towards our planet and people. Our customers expect superior engi -
neering and design, while considering sustainability as a prerequisite
for a premium brand. To meet these expectations, we have inte -
grated our sustainability ambitions directly into our product devel -
opment, delivering premium electrified cars that uphold our sustain -
ability commitments and address the unique mobility requirements
of each market.
Our regionalisation strategy allows us to address region-specific
challenges and opportunities, supporting our electrified and
sustainable growth.
Responsible business throughout the value chain
With approximately 45,000 employees, along with a broad network
of suppliers and retailers, we recognise the impact we have across
our value chain and the responsibility to lead sustainability initia -
tives and drive positive change.
Our diverse value chain includes approximately 12,000 directly
contracted suppliers providing components, materials and services
to our global operations, including our production sites across three
continents.
Our operations rely on input from our value chain, both in terms of
raw material, resources and human resources. From responsible
sourcing of raw materials and ensuring ethical labour practices, to
minimising waste and water use, every stage of our business reflects
our dedication to sustainable and responsible business conduct.
We foster close collaboration with suppliers to drive sustainable
solutions and improve transparency, set ambitious standards, and
support continuous improvement.
In summary, our holistic approach helps to ensure that our prod -
ucts, customer focus and business practices align with our sustaina -
bility ambitions. By integrating these principles with our electrifica -
tion strategy and tailoring our efforts to each market, we aim to
protect and improve people’s lives across our value chain and in
wider society.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
135
===== SIDA 136 =====
Progress on our ambitions
Sustainability and business value are closely aligned. Our sustaina -
bility work protects value through compliance and risk mitigation
and creates value through resource efficiency, new business models
and as a differentiator for consumers. In 2025, we reached a mile -
stone year in our sustainability strategy and we have taken big steps
towards reaching our ambitions. However, we also acknowledge that
there are challenges in some areas that need extra attention moving
forward.
Climate action
We achieved a 31 per cent CO 2 reduction per car this year, mainly
driven by electrification and supported by the 37 per cent reduction
of operational emissions. Significant progress has been made with
low-emission and recycled materials. Work on reducing emissions
from materials continues to be a strategic focus, as we increase the
share of fully electric and plug-in hybrid electric vehicles.
We have made significant progress to source nearly 100 per cent
climate neutral energy in own operation, reaching 87 per cent, and
are committed to achieving our ambition in the near future. More
information on progress of our ambitions within our climate action
strategy pillar can be found on page 158.
Circular economy
In 2025, we launched two new electrified models, the ES90 and
XC70, with a combined average recycled material of 19 per cent. In
January 2026, we launched our new EX60 with 27 per cent recycled
material, aligning with our set ambition. This will significantly con -
tribute to our 2030 recycled and bio-based material ambition as
well as ambition to reduce CO 2 from materials. Although we did not
fully realise our 2025 circular business ambition, the work towards
the ambition has fostered a circular mindset and actions in the busi -
ness. For example, new closed loops have been established for steel,
which enabled us to secure a competitive source of recycled mate -
rial going forward. These learnings also inform us when setting
future ambitions. More information on progress of our ambitions
within our circular economy strategy pillar can be found on page 169
and 176.
Responsible business
As a result of organisational changes during the year, the share of
women in senior leadership slightly declined compared to last year.
Although the injury rate of 0.06 is slightly above our 2025 ambi -
tion it demonstrates a sustained positive long-term trend, reflecting
our historically strong efforts in this area. Processes and digital
capabilities within our corporate human rights due diligence were
enhanced although number of suppler audits decreased.
Key figures sustainability 1)
2030
ambition
2025
ambition 2025 2024
Climate Action
Reduction of CO 2 emissions per car, % 2) 65–75 30–35 31 32
Reduction of tailpipe emissions per car, % 2) 85–100 50 42 46
Reduction of emissions from materials per car, % 2) 30 25 3 1
Reduction of operational emissions per car, % 2) 30 25 37 25
Electrified car retail sales (BEVs and PHEVs), % 90–100 50–60 46 46
Energy consumption reduction per manufactured car in own operations, % 2) 40 — 10 4
Climate neutral energy in own operations, % — 100 87 78
SBTi Target: Reduction of Scope 1 and 2 emissions, % 3) 60 — 87 74
SBTi Target: Reduction of Scope 3 Use of sold products emissions, % per vehicle kilometre 3) 52 — 23 26
Circular Economy
Water withdrawal reduction per manufactured car in own operations, % 2) 50 — 29 20
Estimated impact on biodiversity from Volvo Cars’ value chain, species.year — — 166 177
Recycled and bio-based materials in the fleet, % 30 — 20 20
Recycled and bio-based materials in new car models, % 35 25 19 18
Recirculation rate, % >99 — 95 94
Additional circular business revenue and cost savings, SEKm 2) — 1,000 149 266
Responsible Business
Inclusion index, Score and Benchmark Score +3 Score +1 77 (+1) 77 (+1)
Women in senior leadership, % 34
YoY
improvement 29.1 29.7
Injury rate (Lost Time Case Rate, LTCR) employees =<0.02 =<0.04 0.06 0.05
Gender pay gap, % —
Pay equity
by 2027 1.7 1.5
High-risk sites in value chain assessed on responsible business conducts on site per year
YoY
improvement 88 97
Share of addressed RBA VAP audit improvement findings, % 85 92
EU Taxonomy CapEx alignment, % 70 50 28 23
Share of green debt, in accordance with our Green Financing Framework, or sustainability-linked format
as percentage of outstanding Debt, % 100 100 98 76
1) Definition and methodology for the figures presented are described in each section
2) Compared to the 2018 base year
3) Compared to the 2019 base year
The share of green debt, in accordance with our Green Financing
Framework, or sustainability-linked format as a percentage of out -
standing debt reached 98 per cent, close to our 2025 ambition of
100 per cent. This financing solution further strengthens our ability
to transform towards an electrified portfolio. Revised investment
allocation decisions have resulted in a reduced share of EU Taxono -
my-aligned investments, limiting our ability to achieve our ambition.
More information on progress of our ambitions within our responsi -
ble business strategy pillar can be found on page 151 and 183–186.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
136
===== SIDA 137 =====
CLIMATE
ACTION
CIRCULAR
ECONOMY
RESPONSIBLE
BUSINESS
• Requiring suppliers to
implement GHG emis-
sion reduction plans and
targets, aligned with the
Paris agreement
• Adopted biofuel for the
majority of our inbound
intercontinental ocean
container transports
• Increased share of
recycled material and
low-emission material
in our fleet
• Conducted water and
biodiversity risk assess-
ments for directly
contracted suppliers
for direct material
• Increased share of
r ecycled materials in
cars to manage
environmental impacts
• Collected data from
supplier sites to verify
targets and roadmaps in
upstream value chain
• Conducted due diligence
procedures to safeguard
human rights for workers
in the value chain
• Trained our suppliers
in human rights and our
Code of Conduct for
Business Partners
• Enhanced transparency
of material origins with
battery passports in
globally launched
models
CLIMATE
ACTION
CIRCULAR
ECONOMY
RESPONSIBLE
BUSINESS
• Collaborated with retail
partners to lower emis-
sions using renewables
electricity and effi-
ciency measures
• Introduced technologi-
cal updates to further
improve the efficiency
of existing models.
• Launched bi-directional
charging which will
support the energy
grid system
• Enhanced collaboration
with retail partners to
support resource effi-
ciency measures
• Expanded focus on
repair and refurbish-
ment of high value
c omponents
• Continued efforts to
phase out hazardous
substances from future
products and processes
• Launched innovative
technology in multi-
adaptive safety belt in
the EX60
• Trained our retailers in
human rights and our
Code of Conduct for
Business Partners
• Set an ambition to be
number one in customer
satisfaction by 2029
RAW MATERIAL
SUPPLIER
END OF LIFE
TREATMENT
TIER-N
SUPPLIERS
RETAIL
PARTNERSOWN OPERATIONS
DIRECTLY
CONTRACTED
SUPPLIERS
USAGE AND
MAINTENANCE
UPSTREAM
TRANSPORTATION
& DISTRIBUTION
DOWNSTREAM
TRANSPORTATION
& DISTRIBUTION
RETAIL
UPSTREAM DOWNSTREAM
CLIMATE
ACTION
CIRCULAR
ECONOMY
RESPONSIBLE
BUSINESS
• Integrated CO2 and
recycled materials in
future car programmes
with the Sustainability
Steering Process
• Converted four
additional plants to
climate-neutral energy
and improved energy
efficiencies
• Conducted physical cli-
mate risk assessments
• Increased the material
utilisation degree to
enhance material
efficiency and reduce
waste
• Implemented water-
efficiency and mitiga-
tion actions all plants
and sites in water risk
• Generated financial
value through circular
business initiatives
• Completed yearly train-
ing on employees in our
Code of Conduct and in
cybersecurity
• Conducted People
Policy Assessments to
screen labour rights
• Increased share of
green funding of our
sustainable investments
OWN OPERATIONS
Value chain
Key activities
Volvo Cars’ upstream value chain includes directly contracted sup -
pliers in multiple tiers, but also a vast chain of sub-suppliers, over
which Volvo Cars has no direct influence. The supply chain includes
sectors such as raw material extraction and component production.
In our materiality assessment, these sectors are considered to be
major impact drivers in our upstream value chain, due to the
resource intensity and potential human rights issues.
Our supply chain also includes sourcing for, and production of
certain Volvo-branded cars, produced by related parties.
The environmental impacts from the production of these cars are
not considered as own operation when preparing this statement.
However, these cars are accounted for in our indirect emissions of
greenhouse gases and are included in our data for sold cars.
Volvo Cars own operation is defined with the same organisational
boundaries as for the financial reporting and includes the activities
to develop, manufacture and sell Volvo cars. In addition, we produce
cars on behalf of Polestar as a contract manufacturer. The environ -
mental impact from the production of these cars is included as part
of own operation and Polestar cars are included in the number of
cars manufactured by Volvo Cars.
Downstream value chain includes distribution of our products, as
well as usage and maintenance, and the end-of-life treatment of
products. Certain retailers are subsidiaries and consolidated entities
in Volvo Cars and included in information related to own operation.
End-of-life treatment is considered as in the design of our products.
However, as Volvo Cars does not control the end-of-life treatment,
the environmental impacts from dismantling our products and
management of materials are considered as part of the downstream
value chain and not as own operation.
VOLVO CARS’ ACTIVITIES IN THE UPSTREAM VALUE CHAIN VOLVO CARS’ ACTIVITIES IN OWN OPERATIONS VOLVO CARS’ ACTIVITIES IN THE DOWNSTREAM VALUE CHAIN
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
137
===== SIDA 138 =====
Stakeholder engagement
Regular engagement with a range of stakeholders is
essential to delivering on our strategic objectives and
promoting our brand in a competitive industry.
Stakeholder dialogue
We engage stakeholders through meetings, conferences, interviews,
surveys, consultations and via our Tell Us reporting channel.
We collect the views and interests from our employees through
employee surveys and continuous dialogue as well as through trade
unions. Through our due diligence processes, we interact with work -
ers in the value chain, NGOs and communities affected by our activi -
ties. In addition, we collaborate with suppliers, competitors and
relevant organisations to continuously gather external perspectives.
The rightsholder’s perspective is of utmost importance and we
continuously consult workers in the value chain, NGOs and trade
unions to ensure this perspective is understood and considered
Customers are a key stakeholder and we actively seek their input
through continuous engagement, including customer surveys. Sus -
tainability matters are discussed with investors on a yearly basis.
Stakeholder dialogue helps us understand our impact and
dependency on our stakeholders, whether they are part of our value
chain, the business model or an independent organisation. It allows
us to validate our strategy, adjust it where needed, and keep up to
date with the latest developments. This also informs us of content in
our various sustainability frameworks, such as our position papers.
Stakeholder engagement also provides insight into sustainability
matters relevant to our double materiality assessment.
Public advocacy
We collaborate with like-minded companies, national and local
authorities, non-governmental organisations and academic institu-
tions to advance our sustainability journey and drive positive change
across our industry and society as a whole.
Through public advocacy and collaboration with our stakeholders,
we take an active role in supporting policy development and driving
positive change. More information on our public advocacy can be
found on page 205.
Key stakeholder groups
Topics of interest
(non-exhaustive)
Academia
• Climate change
• Resource efficiency
• Own workforce
Authority, Politicians,
Governments
• Climate change
• Resource efficiency
• Business conduct
Communities
• Climate change
• Workers in the value chain
• Business conduct
Customers
• Climate change
• Own workforce
• Safety
Employees and Union
Representatives
• Climate change
• Own workforce
• Business conduct
Industry Associations
• Climate change
• Workers in the value chain
• Resource efficiency
Investors and Banks
• Climate change
• Own workforce
• Workers in the value chain
Media
• Climate change
• Own workforce
• Workers in the value chain
NGOs
• Climate change
• Own workforce
• Workers in the value chain
Retailers
• Climate change
• Safety
• Workers in the value chain
Suppliers
• Climate change
• Workers in the value chain
• Resource efficiency
We participate in independent assessments and engage with
ESG rating institutes to monitor and evaluate the sustainability
performance of our organisation and our suppliers. We value
external opinion and benchmarking against our industry.
Sustainability ratings Interval Score
Latest
assessment
CDP Climate D– to A A Dec 2025
CDP Water D– to A B Dec 2025
CDP Forest D– to A C Dec 2025
EcoVadis 1–100 83 June 2025
ISS ESG Corporate
Rating D– to A+ B- Jan 2026
MSCI ESG Rating 1)
CCC to AAA AA Oct 2025
Sustainalytics ESG Risk
Rating overall score 2)
Severe (40+) to
Negligible (>10) 21.8 Dec 2025
1) The use by Volvo Cars of any MSCI Research LLC or its affiliates (“MSCI”) data, and the use
of MSCI logos, trademarks, service marks or index names herein, do not constitute a spon -
sorship, endorsement, recommendation, or promotion of Volvo Cars by MSCI. MSCI ser -
vices and data are the property of MSCI or its information providers, and are provided ‘as-is’
and without warranty. MSCI names and logos are trademarks or service marks of MSCI.
2) Copyright ©2025 Sustainalytics, a Morningstar company. All rights reserved. This section
includes information and data provided by Sustainalytics and/or its content providers.
Information provided by Sustainalytics is not directed to or intended for use or distribution
to India-based clients or users and its distribution to Indian resident individuals or entities
is not permitted. Morningstar/Sustainalytics accepts no responsibility or liability whatso -
ever for the actions of third-parties in this respect. Use of such data is subject to conditions
available at https://www.sustainalytics.com/legal-disclaimers/
Ratings
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
138
===== SIDA 139 =====
Organisation Topic Commitment Description Sustainability matter
Accelerating to Zero BEV transition Acceleration of the
transition to zero tail -
pipe emission cars
A broad coalition of stakeholders committed to enabling the transition to zero-emission mobility. It advocates manufacturing only
cars and vans with zero tailpipe emissions by 2040. As members, we aim to facilitate the automotive industry’s transition to full
electrification.
Climate change
Aluminium Forward 2030 Aluminium Membership An International Aluminium Institute gathering industry leaders to drive net zero emissions and other sustainability challenges. Climate change, Water,
Biodiversity, Circular economy,
Workers in the value chain
Better Mining Advocacy Sponsorship Better Mining aims to improve working conditions and strengthen mining communities in areas affected by artisanal and
small-scale mining of cobalt, copper, tantalum, tin and tungsten in the Democratic Republic of the Congo and Rwanda.
Workers in the value chain
CLG Europe Advocacy / Net zero Membership CISL ’s Corporate Leaders Groups unite business leaders committed to supporting the transformation to competitive, sustainable,
inclusive economies achieving net zero by 2050. Through evidence-based ideas and engagement with policymakers and peers,
they advocate for robust business and policy solutions for sustainability challenges.
Climate change
Copper Mark Copper Membership The Copper Mark is an independent assurance framework that verifies and certifies that copper production – from mining through
smelting and refining – meets strict sustainability standards. The objective is to provide credible, transparent and third-party veri -
fied confirmations that metals are produced responsibly.
Climate change, Water,
Biodiversity, Circular economy,
Workers in the value chain
Drive Sustainability Sustainability in the
auto motive supply chain
Membership Drive Sustainability is a network of companies that works to improve all aspects of social and environmental sustainability within
the automotive industry.
Workers in the value chain
Ellen MacArthur Foundation Circular economy Membership The Ellen MacArthur Foundation is a charity committed to creating a circular economy, designed to eliminate waste and pollution,
circulate products and materials and regenerate nature.
Pollution, Biodiversity, Circular
economy
Responsible Business Alliance Sustainability in global supply
chains
Membership The Responsible Business Alliance is an industry coalition dedicated to responsible business conduct in global supply chains. Workers in the value chain
Responsible Mica Initiative Responsibly sourced mica Membership The Responsible Mica Initiative is a coalition working to enable a responsible and sustainable supply chain for mica. Workers in the value chain
Responsible Minerals Initiative Responsible mineral sourcing Membership The Responsible Minerals Initiative is an organisation dedicated to responsible mineral sourcing in global supply chains. Workers in the value chain
Responsible Supply Chain
Initiative
Sustainability in the
automotive supply chain
Membership Supporting members, suppliers, and stakeholders within the automotive industry and affiliated industries to strive for more
responsible supply chains.
Workers in the value chain
ResponsibleSteel Steel Membership A global non-profit organisation aiming to maximising use of sustainable steel. We take an active role in setting sustainability
standards.
Climate change, Water,
Biodiversity, Circular economy,
Workers in the value chain
Science Based Targets
initiative
Climate action Business Ambition
for 1.5°C
Provides corporate frameworks for emission reduction targets. We commit to climate targets aligned with limiting global tempera -
ture increase to 1.5°C and reaching net zero emissions by 2050.
Climate change
SteelZero Steel 100% net zero steel
by 2050
The SteelZero Initiative is a global corporate initiative to speed up the transition to a net zero steel industry.
We commit to using only net zero steel by 2050. By 2030, we aim to achieve a 50 per cent rate by procuring:
• Steel produced by a steelmaking site where the steelmaker has a science-based emission target
• Lower emission steel (aligning with ResponsibleSteel Decarbonisation progress Level 2)
Climate change, Water,
Biodiversity, Circular economy,
Workers in the value chain
UN Global Compact Corporate sustainability Membership Volvo is a founding member of this voluntary UN initiative that seeks to get businesses and firms worldwide to adopt sustainable
and socially responsible policies, and to report on their implementation, advancing broader UN goals, such as the Sustainable
Development Goals (SDGs).
All sustainability matters
We Mean Business Coalition Advocacy Fossil to Clean
campaign
Directs business and policy action to halve emissions by 2030 and accelerate transition to a net zero economy. Climate change
WEF First Movers Coalition Aluminium 10% of primary
aluminium near-zero
emission by 2030
A global coalition leveraging purchasing power behind emerging clean technologies. We have committed that at least ten per cent
(by volume) of all our primary aluminium procured annually will be near-zero emissions primary aluminium by 2030 (as per the First
Movers Coalition definition). This voluntary commitment is subject to supply and prerequisites approved by Volvo Cars leadership.
Climate change, Water,
Biodiversity, Circular economy
Our sustainability work extends beyond our own operations. We participate in voluntary initiatives with other
industry leaders to drive systemic change. The table below outlines some of our voluntary commitments and
memberships and how they interact with the sustainability matters included in this statement.
Voluntary memberships and commitments OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
139
===== SIDA 140 =====
Sustainability governance
Sustainability is deeply integrated into our govern-
ance, in terms of both monitoring performance and
reporting. The general principle is that sustainability
matters are integrated into existing processes and
fora due to their cross-functional nature. This section
covers the integration of sustainability into our
governance model.
The Board of Directors
Volvo Cars is governed by the Board of Directors, which consists of
ten Board members elected by the shareholders, including the Chief
Executive Officer. 70 per cent of the Board consists of independent,
non-executive Board members. The share of women in the Board
amounts to 40 per cent. In addition, there are three union repre -
sentatives and two deputy union representatives in the Board.
Our complete Corporate Governance Report, describing corporate
governance within the Volvo Car Group, and how the Board of
Directors govern Volvo Cars with the support of committees and
other governance functions and forums, can be found on page 42 .
Candidates for the Board of Directors are proposed by the Nomina -
tion Committee to be appointed by the General Meeting of Volvo
Car AB (publ). The Nomination Committee considers candidates
based on sustainability credentials, automotive industry experience,
geographical knowledge relevant for Volvo Cars, and how their
background and experience might diversify and strengthen the
Board members, ensuring they meet the competence requirements
set by Volvo Cars. The current composition of the Board is consid -
ered to have an appropriate balance of business expertise and
competence in sustainability matters and reporting. In addition,
the Board has access to the skills and expertise of the EMT and
VOLVO CAR AB (PUBL.) BOARD OF DIRECTORS
BOARD OF DIRECTORS COMMITTEES
RESPONSIBLE FOR DAY–TO–DAY GOVERNANCE
AND DRIVING PERFORMANCE
RESPONSIBLE FOR REPORTING AND COMPLIANCE
WITH REPORTING REQUIREMENTS
RESPONSIBLE FOR SUSTAINABILITY PERFORMANCE
IN EACH FUNCTION
EMT/EMTe FORA
SUPPORTING GOVERNANCE FORUM
SUPPORTING GOVERNANCE
FUNCTIONS
COMPLIANCE COMMITTEESGLOBAL AUDIT OFFICE (GAO)
(Reports to Audit Committee)
ENTERPRISE RISK
MANAGEMENT
COMPLIANCE AND
ETHICS OFFICE
DISCLOSURE COMMITTEEINTERNAL CONTROL
PRODUCT BOARD
SUSTAINABILITY FINANCE
PEOPLE COMMITTEE
DIGITAL BOARD
SUSTAINABILITY – FUNCTIONAL AREAS
EXTENDED EXECUTIVE MANAGEMENT TEAM (EMTe)
AUDIT COMMITTEE
CORPORATE BOARD
GLOBAL SUSTAINABILITY TEAM (GST)
CEO AND EXECUTIVE MANAGEMENT TEAM (EMT)
SUSTAINABILITY MANAGEMENT TEAM (SMT)
Volvo Cars’ governance is described in the Corporate Governance Report. This chart provides an illustration of the governance and how sustainability functions and teams are integrated in the corporate governance.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
140
===== SIDA 141 =====
extended EMT (EMTe), the Head of Global Sustainability, as well as
external experts when deemed necessary. On a yearly basis, mem -
bers of the Board of Directors are required to perform the same
Compliance & Ethics training as is mandatory for all employees.
The Board of Directors oversees sustainability performance as an
integral part of the Group’s strategy. The Board approves sustaina -
bility ambitions within the company’s strategy, based on recommen -
dations from the CEO and management, and monitors efforts to
reach them. The identification of how sustainability matters affect
Volvo Cars and its risks and business opportunities as well as impact
on sustainability matters is the Board’s responsibility and is further
described in the Board’s rules of procedure. The Audit Committee is
assigned to oversee sustainability reporting, while overall responsi -
bility for sustainability matters in general remains with the Board.
Sustainability matters and the impact they may have on Volvo
Cars are considered by the Board, who monitors how impacts, risks
and opportunities are addressed by management.
The Board receives regular reports from management related to
sustainability topics and is continuously informed on performance,
relevant global sustainability matters, forthcoming sustainability
related regulations and the views and interest from external stake -
holders. The effect on sustainability is analysed and incorporated in
the Board’s strategic and decision-making processes.
A double materiality assessment providing information on topics
of material importance for Volvo Cars and guiding our strategy is
prepared. The assessment methodology is approved by the Audit
Committee, and the result and conclusions of the assessment are
approved by the Board. More information on the double materiality
assessment process can be found on page 145.
Role of the CEO and management
The President and Chief Executive Officer (CEO) is responsible for
the execution of the sustainability strategy and its integration into
business operations and the decision-making processes. The CEO’s
responsibilities include ensuring that the Board receives regular
information about the sustainability issues facing Volvo Cars and
information on how Volvo Cars’ strategy is implemented in relation
to established sustainability ambitions.
The CEO is supported by the EMT and the EMTe. The Chief Strat -
egy and Product Officer, member of EMT, is responsible for sustain -
ability. The EMT and EMTe regularly discuss and approve sustaina -
bility initiatives and investments. The Head of Global Sustainability
reports to EMT to ensure cross-functional alignment of sustainabil -
ity matters within the Group. The Sustainability Management Team
(SMT) ensures the integration and harmonisation of sustainability in
Volvo Cars’ strategic and operational work. SMT consists of sustain -
ability managers from each department and is led by the Head of
Global Sustainability.
Organisational responsibilities
The operational sustainability work at Volvo Cars is cross-func-
tional. Each business function is responsible for its own sustainabil -
ity development and ensures alignment with the corporate strategy.
Sustainability matters are integrated into existing processes and
fora due to their cross-functional nature. The Global Sustainability
Team is responsible for day-to-day governance, coordinating strat -
egy and ambitions and monitoring the progress of corporate sus -
tainability key performance indicators. The Sustainability Finance
function coordinates the reporting process and monitors compli -
ance with sustainability reporting regulatory requirements.
Governance support functions
Risk management and internal control processes are an integral part
of the sustainability reporting process. The Board of Directors is
responsible for ensuring that Volvo Cars maintains appropriate and
effective internal control and internal audit functions.
Enterprise Risk Management
Enterprise Risk Management (ERM) aims to improve decision-mak -
ing, proactively protect the fulfilment of strategies and plans, and
protect assets. The risk management process supports the identifi -
cation, management and monitoring of critical risks, including sus -
tainability risks. The risk assessment approach, including how risks
are prioritised and managed, is further described on page 36. The
double materiality assessment incorporates impact areas from our
risk management framework in the identification and assessment of
the sustainability-related financial risks. The material financial risks
identified in our double materiality assessment are included in
ERM’s scope for risk response. Each function is responsible for mini -
mising financial exposure of each identified sustainability risk. As a
part of the ERM process, the Global Sustainability Team oversees
how sustainability risks are identified within the process and how
response strategies are developed within each relevant function.
Twice per year, the company’s top risks are reported in an ERM
report to the Audit Committee and Board of Directors. The reported
top risks comprise a consolidated list aligned with the COSO-frame -
work and concurred by an ERM Core team of senior leaders repre -
senting cross-company functions.
Internal control
The Internal Control function is responsible for supporting the
organisation in defining effective and efficient internal controls for
sustainability reporting, and for maintaining the internal control
framework. Risks identified in the reporting process are continuously
evaluated and internal control activities are implemented to enhance
the quality and efficiency of reporting.
In the reporting process, implementation of internal controls is
based on the risk prioritisation methodology, considering risk factors
such as maturity of the process, complexity of data, degree of man -
ual input and historical misstatements. Accordingly, in 2025, the
internal control focus has been to assess existing internal controls
related to environmental activity data and workforce data to identify
design improvements of the implemented controls. The scope of
internal controls includes general IT controls on critical systems,
operational controls and entity level controls, covering environmen -
tal, social and governance topics with both quantitative and qualita -
tive data. The internal control scope also includes ensuring a sound
governance structure within sustainability.
The Internal Control function is responsible for training the organ -
isation about internal controls and monitoring the compliance
against the internal control framework. The Audit Committee is
informed on the status of the implementation of internal controls,
potential gaps and findings on a regular basis.
Other supporting functions
The Global Audit Office independently assesses the adequacy and
effectiveness of governance, internal controls and risk management
processes related to sustainability. It reports to the Audit Committee.
The Compliance & Ethics Office, supporting responsible and ethi -
cal operations, is further described on page 201.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
141
===== SIDA 142 =====
Sustainability frameworks
Code of Conduct and Corporate Policies
The Volvo Car Group’s Code of Conduct reflects our values, culture
and how we drive results in an ethical and responsible manner. The
Code of Conduct is based on international conventions and declara -
tions, such as the International Bill of Human Rights, the Fundamen -
tal Conventions of the International Labour Organization (ILO) and
the UN Global Compact’s Ten Principles. The Board of Directors has
adopted twelve Corporate Policies that are part of our Code of
Conduct which apply to employees within our operations. Corporate
Policies and Directives are continuously reviewed and updated
when there are changes in Volvo Cars’ business activity, legal
requirements, compliance best practices or identified weaknesses.
Reviews are performed at least once every two years. The People
Policy is further described on page 182. The Anti-Corruption Policy,
Conflict of Interest Policy, Data Protection Policy, Competition Law
Policy, Trade Sanctions and Export Control Policy and Internal
Reporting Policy are further described on page 201. The principles
stated in the Corporate Policies are further operationalised and
detailed in related Corporate Directives and guidelines.
Our Code of Conduct for Business Partners sets standards for
business conduct throughout our value chain. The Code of Conduct
for Business Partners is an integral part of any existing business
relationship with Volvo Cars and is incorporated by reference into
the different business partner agreements. It is approved by the
EMT. The Code of Conduct for Business Partners was updated in
2025 to reflect legal developments, evolving stakeholder expecta -
tions, and Volvo Cars’ sustainability strategy, providing clearer guid -
ance on key areas including:
• People and Human Rights – strengthening responsible sourcing
• Environmental Responsibility – elevating our commitment to
reducing environmental impact and protecting ecosystems
• Integrity and Compliance – reinforcing ethical decision-making
and business integrity
The CEO is accountable for the implementation and enforcement of
the Code of Conduct and Corporate Policies, and all employees
undergo mandatory annual Compliance & Ethics training to ensure
adherence.
Our Code of Conduct and Code of Conduct for Business Partners
are available on our website.
Statements and position papers
In Volvo Cars’ Commitment to Sustainability, we set out the direc -
tion to become a net zero, nature-positive and circular business
while safeguarding human rights across our value chain. By embed -
ding sustainability into all operations and working closely with busi -
ness partners, customers and other key stakeholders, we aim to lead
the transition to sustainable mobility and create long-term value for
society and our business.
VOLVO CARS’ ADOPTED CORPORATE POLICIES
Protection
of Company
Assets Policy
People
Policy
Communication
Policy
Conflict
of Interest
Policy
Confidentiality
Policy
Anti-
Corruption
Policy
Trade
Sanctions
and Export
Control
Policy
Data
Protection
Policy
Internal
Reporting
Policy
Intellectual
Property
Policy
Insider
Policy
Competition
Law
Policy
We issue position papers regarding environmental, social and gov -
ernance statements, including our Human Rights Statement. Our
position papers reflect Volvo Cars’ position on a specific topic, while
still considering stakeholders’ interest related to scope and content.
The position papers are approved by the Corporate Board, which is
established by the EMT. On a yearly basis, these are reviewed and
updated if there are significant changes.
Our Human Rights Statement, Commitment to sustainability and
position papers are available on our website.
Cross-topical position papers
Several of our published position papers address a wide range of sus-
tainability matters, highlighting how these topics are interconnected.
Our position paper on sustainable material addresses the sustain -
ability challenges of steel, plastics and other materials used in our
cars. Material-related sustainability matters include CO 2 emissions,
generation of pollution, water scarcity and biodiversity loss. We
define materials as sustainable if they meet requirements across our
three strategic pillars. Sustainable materials should, amongst other
things, be responsibly sourced and have a lower environmental
impact than those from corresponding primary sources.
The position papers for sustainable steel and plastics further
outline details of these materials and our position.
Our position paper on circular economy guides our resource flows
across our value chain. It includes the application of circular princi -
ples, use of secondary raw materials, avoidance of waste and pollu -
tion and resource efficiency.
Cross-topical position
paper Areas covered
Sustainable material
• Climate change
• Pollution
• Water
• Biodiversity and ecosystems
• Resource use and circular economy
Sustainable steel
• Climate change
• Water
• Biodiversity and ecosystems
• Resource use and circular economy
Sustainable plastics
• Climate change
• Biodiversity and ecosystems
• Resource use and circular economy
Circular economy
• Pollution
• Biodiversity and ecosystems
• Resource use and circular economy
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
142
===== SIDA 143 =====
Environmental management system
Volvo Cars maintains a comprehensive environmental management
system to ensure continuous improvement and to support us in
meeting compliance obligations and reducing negative environmen -
tal impact. Most of our operations and functions, including all our
manufacturing sites, are certified to the ISO 14001 environmental
management standard, providing a structured framework to monitor
performance, manage risks, and drive progress toward our sustaina -
bility ambitions. This certification underlines our commitment to
responsible operations, transparency, and accountability across our
global footprint.
Integration of sustainability-related performance in
incentive programmes
Sustainability-related conditions are part of the incentive pro -
grammes granted to executives and senior leaders. The remunera -
tion to the Board is not dependent on any sustainability-related
performance conditions.
The share-based incentive programme Performance Share Plan
(PSP) is a long-term programme issued to senior leaders in which
the participants are granted a conditional award of Performance
Shares, based on each PSP participants’ gross annual base salary.
The sustainability-related conditions refer to the fulfilment of the
ambitions related to reduction of CO 2 emission per car and the gen-
der diversity calculated as the share of women in senior leadership.
The proportion of the sustainability conditions varies between
programme years. For the programme adopted at the Annual Gen -
eral Meeting in 2025, gender diversity condition accounted to 10 per
cent and CO2 reduction for 20 per cent of the total target weighting.
More information on the performance conditions for the current
programmes can be found on page 80.
The conditions for new incentive programmes are proposed by
the People Committee, approved by the Board, and subject to
approval by the Annual General Meeting. The conditions for already
established programmes remain unchanged during the programme
period.
The guidelines for executive remuneration can be found on page
34 and more information of the programmes can be found in the
remuneration report.
Sustainability due diligence
We have a well-established history of due diligence activities and
continuously work to refine and enhance our processes. With the
forthcoming EU Corporate Sustainability Due Diligence Directive
(CSDDD), we have further improved our processes within both social
and environmental due diligence.
Due diligence process
Our due diligence process enables us to gain knowledge and under -
standing of our impacts, risks and opportunities. It also informs our
strategy and the actions we approve. Engaging with rightsholders
and other stakeholders is a vital part of due diligence. Our identified
key rightsholder groups include own workforce, workers in the value
chain and customers. In addition, affected communities are consid -
ered in our dialogues.
Our process, based on OECD Due Diligence Guidance for Respon -
sible Business Conduct, aims to identify, prevent and mitigate actual
and potential negative impact on the environment and people within
our value chain.
Our due diligence process is divided into the following stages:
1. Embed responsible business conduct into our policies, contracts
and management systems.
2. Identify and assess adverse impact directly linked to our
operations, products, services and business relationships,
or adverse impact to which we contribute.
3. Cease, prevent or mitigate potential and existing negative impact
and, where appropriate, provide, or cooperate to provide, remedi-
ation.
4. Track the effectiveness of due diligence processes and measures.
5. Communicate how identified potential and actual negative
impacts are addressed.
Our Statement on due diligence can be found on page 213 .
International commitments
At Volvo Cars, we are committed to adhering to internationally rec -
ognised human rights standards and guidelines. We are founding
members of the UN Global Compact and observe its Ten Principles.
We include the aims of the following conventions and guidelines in
our Code of Conduct, Code of Conduct for Business Partners and
our Human Rights Statement:
• The International Bill of Human Rights
• The UN Convention on the Rights of the Child
• The fundamental conventions as set out in the ILO Declaration on
Fundamental Principles and Rights at work
• The UN Guiding Principles on Business and Human Rights
• OECD Guidelines for Multinational Enterprises on Responsible
Business Conduct
• OECD Due Diligence Guidance for Responsible Business Conduct
• OECD Due Diligence Guidance for Responsible Supply Chains of
Minerals from Conflict-Affected and High-Risk Areas.
Several conventions and guidelines form the basis of human rights
due diligence legislation. These include for instance Modern Slavery
Acts in Australia and the UK, the Transparency Act in Norway, Cana -
da’s Bill S-211, the EU’s Taxonomy Minimum Safeguards criteria and
CSDDD. We support these developments and recognise the need to
expand the remit of legislation. Our UN Global Compact Communi -
cation of Progress report is published on the UNGC website.
SCHEMATIC OVERVIEW OF VOLVO CARS’ ENHANCED
DUE DILIGENCE PROCEDURES
5
4
2
3
1
Remediate
Embed
responsible
business
conduct
Communicate Identify and assess
Track effectiveness Cease, prevent, m
itigate
Rightsholder engagement
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
143
===== SIDA 144 =====
Salient Human Rights Issues
Volvo Cars has performed a saliency assessment in line with inter -
national guidelines to identify our most salient human rights issues
(SHRIs). The scope of the assessment covered actual and potential
adverse human rights impact that Volvo Cars may cause or contrib-
ute to through our own activities, or which may be directly linked to
our operations, products, or services via our business relationships.
The identified SHRIs are:
• People’s access to clean, healthy and sustainable environments
• People’s rights to health and safety
• Modern slavery (including forced labour)
• Child labour
• Threat or occurrence of abuse or violence
There are several other potential human rights risks in our value
chain, including but not limited to, adverse impact on decent work -
ing conditions, discrimination, privacy, and the rights of indigenous
and vulnerable people.
Human rights risk assessment of the value chain
We perform annual human rights risk assessments using geographi -
cal data about our value chain presence, external risk indices for our
identified SHRIs, previous due diligence results, and input from con -
sultations with experts and rightsholders. Based on these annual
assessments, we develop the human rights due diligence plan for
the following year that aims to cease, prevent, mitigate and remedy
potential or actual human rights infringements in our value chain.
The 2024 human right risk assessment identified people at higher
risk in our value chain in the following countries: Bolivia, Brazil,
China, Colombia, Democratic Republic of the Congo, India, Indone -
sia, Madagascar, Malaysia, Mexico, Myanmar, Peru, Philippines,
Sudan, Turkey, Uganda, Vietnam, United Arab Emirates and Zimba -
bwe. The risk assessment served as the basis for the 2025 human
rights due diligence across our value chain. The due diligence plan
for 2025 included enhanced due diligence in our supply chain,
People Policy Assessments in our operations, and human rights due
diligence processes for retailers and importers. More information on
our human rights due diligence activities can be found on page 186
and 191.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
144
===== SIDA 145 =====
Materiality assessment
Our double materiality assessment allows us to identify impacts,
risks and opportunities, and to develop our sustainability strategies
and operations.
In 2025, our assessment was prepared following the ESRS
requirements, whereas last year’s assessment was based on the GRI
Standards. There has been no significant change in the methodology
used to prepare the double materiality assessment as a result of this
change in reporting standard. We continuously develop our method -
ology to ensure accuracy and completeness, as well as its relevance
for internal and external stakeholders.
Methodology
Our process for identifying and assessing impacts, risks and oppor -
tunities includes several steps and is follows a top-down approach,
based on the ten topical standards described in ESRS. Each topical
standard is screened to identify potential and actual impacts, risks
and opportunities from a gross perspective. Each identified impact,
risk and opportunity is assessed for materiality based on the sever -
ity of the impact and the size of the financial risk and opportunity,
along with the likelihood of the occurrence. This creates a quantifia -
ble methodology for grading and determining the materiality of each
scenario and whether each impact, risk or opportunity is actual or
potential. Using internally developed thresholds, each impact, risk
and opportunity is evaluated for its materiality. The thresholds are
developed to determine a suitable level of disclosures considering
the views and interest of stakeholders. Whenever a sustainability
matter is above the threshold, it is deemed material and included in
the Sustainability Statement. Based on the outcomes of the materi -
ality assessment, a final evaluation is conducted to verify the com -
pleteness and reasonableness of the results. This includes reviewing
identified topics, validating their relevance, and ensuring that the
conclusions are consistent. The input used to identify and assess
our impacts, risks and opportunities is further described below.
The preliminary result of the assessment is validated with the
sustainability functions across the company and executive manage -
ment, before it is approved by the Board.
Time horizon and value chain considerations
Impact and financial materiality are evaluated and assessed based
on where in the value chain they occur. The full value chain, covering
the complete life cycle perspective, is considered in the identifica -
tion and assessment, with special focus on specific activities or geo -
graphical areas identified as areas of higher impact. An illustration
of the value chain is found on page 137.
Materiality assessments are evaluated across three time horizons:
Short-term (up to one year), medium-term (one to five years) and
long-term (more than five years)
Assessing impact materiality
We assess the severity and likelihood of impact in each sustainabil -
ity matter. Severity is defined by the scale, scope and capability to
remedy impact, which all are weighed equally in the severity assess -
ment. The materiality assessment identifies both positive and nega -
tive impacts, and the capability to remedy is not considered for pos -
itive impacts. Given the significant impact certain human rights
issues can have, it is essential to ensure that their severity is not
underestimated due to considerations of likelihood. As a result, the
severity of impacts related to human rights takes precedence over
likelihood in the overall assessment.
Assessing financial materiality
We assess our dependencies, related or unrelated to our impacts,
and scenarios that may result in financial risks and opportunities.
These are evaluated for potential financial effects and likelihood,
and the materiality is determined based on predetermined thresh -
olds in line with the ERM process. Identification and assessment of
financial risks are based on risk categories, such as direct financial
impact, strategic or operational impact, reputational effects, supply
chain disturbance or compliance-related concerns. The identified
material financial risks are included in the ERM process, in which all
risks are prioritised in accordance with the overall risk approach for
the Group. More information on the ERM process is found on page
36. Financial opportunities are addressed by the business function
to which the opportunity is related.
Input used to identify and assess impacts, risks and
opportunities
To conduct the double materiality assessment, we obtain and evalu -
ate input to identify our impact and dependency. This input is
obtained from sources including stakeholder dialogues, external
tools and reports and internal sustainability experts. The environ -
mental aspects evaluation, performed in accordance with ISO
14000, provides central input for the impact materiality assessment
on environmental topics. Stakeholder dialogue is important for us to
understand the impact we have on people and the environment.
Consultations are regularly conducted with the residents of areas
within close vicinity to our main production sites. The below summa -
rises the supporting data used to identify and analyse actual and
potential impacts, risks and opportunities across our value chain.
Climate change
We assess our impact of climate change using both the life cycle
analyses (LCA) of our products and calculated CO 2 emissions across
our value chain.
Financial risks and opportunities due to climate change are based
on scenario analyses. The transitional risk scenario analysis uses
three IEA scenarios: Stated Policies Scenario (STEPS), Announced
Pledges Scenario (APS) and Net Zero Emissions by 2050 Scenario
(NZE). Analyses are conducted to identify the potential risks and
opportunities throughout our value chain, assessing our geographi -
cal locations, our products, and the markets we conduct business in.
The assessment includes potential events that may have positive or
negative effect on Volvo Cars’ business, such as regulatory changes,
technological transition, raw materials prices and reputational risks.
Climate change increases the frequency of chronic or acute haz -
ards, such as flooding, storms and heat stress, that may disrupt our
operations and threaten the safety of our employees and people in
our value chain and local communities. Volvo Cars considers the
IPCC’s science for vulnerability and risk analysis by using an estab -
lished model to assess physical risks. IPCC’s RCP2.6, RCP4.5 and
RCP8.5 scenarios for the current year, as well as 2030, 2050 and
2100 are used to generate overall and specific risk scores. The geo -
graphical location of our sites is cross-referenced against the risk
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
145
===== SIDA 146 =====
factors in each scenario to identify site-specific climate-related
hazards. Major and critical sites, located in areas with high exposure
to physical risks, are further assessed to determine the materiality
of the physical climate risks on our operations. When identifying and
assessing physical risks, our defined time horizons are applied. The
expected lifetime of assets in the assessment for physical risks
exceeds five years while the strategic planning and capital allocation
plans are usually prepared on a time horizon of up to five years.
There are no significant assets or business activities that are incom -
patible with or need significant efforts to be compatible with a tran -
sition to a climate neutral economy.
Energy consumption is a significant source of emissions in our
value chain, especially from producing materials for cars and power -
ing them during their use. We identify and assess risks related to
energy by analysing variables that could influence both the availa -
bility of energy supply and energy prices. Major variables include
price volatility metrics, grid reliability indicators, the status of
underdeveloped energy systems in certain markets, geopolitical
trade wars, regulatory tariff structures, and local capital investment
decisions. The impacts of these variables compound the risks asso -
ciated with the energy transition.
Pollution
The International Material Data System (IMDS) is used to identify
Substances of Concern (SoC) and Substances of Very High Concern
(SVHC) in our products.
We apply the Locate, Evaluate, Assess and Prepare (LEAP)
approach for pollution to air, soil and water to analyse the emission
level of pollutants and compare them on a site-level against the
thresholds as defined in Annex II of the E-PRTR Regulation (Euro -
pean Pollutant Release and Transfer Register) to determine whether
our emissions are material. We apply a risk-based approach in
selecting sites to evaluate and different methodologies are used to
either directly measure or estimate the emissions.
The impact assessment in our value chain is based on LCA reports
with specific focus on ecotoxicity in aquatic and terrestrial ecosys -
tems, in which pollution is a direct impact driver on ecosystems. The
impact assessment methodology is further described in the biodi -
versity section below. Risks and opportunities are assessed from an
impact and dependency perspective. The ENCORE (Exploring, Natu -
ral Capital Opportunities, Risks and Exposure) database is used to
assess dependencies from our industry related to pollution.
Water
The LEAP approach is applied to assess the impact on water. We ana -
lyse the sites of our own operations and directly contracted supplier
for direct material to identify sites located in areas at water risk and
areas of high-water stress. Our analysis is based on recommendations
and guidelines in the Corporate Guide to Water Management from
WBCSD and UN Global Compact’s CEO Water Mandate. In the risk
assessment, internal and external risk management tools such as
World Resources Institute (WRI) Aqueduct Water Risk Atlas 4.0, and
the World Wildlife Fund (WWF) Water Risk Filter are used.
Our impacts and dependencies on water are analysed, especially in
water risk areas, to identify transitional and physical risks and oppor -
tunities in our business or in the value chain.
Biodiversity
We conduct several levels of impact assessment, guided by the
Science Based Targets Network (SBTN) and the LEAP approach, to
evaluate how economic activities in our value chain impact nature.
The specific assessments made on material, product and enterprise
level have been done with the LCA methodology ReCiPe2016. This
method assesses impacts on all pressure categories defined by SBTN
and in line with the Intergovernmental Science-Policy Platform on
Biodiversity and Ecosystem Services (IPBES) pressure framework.
The analysis is based on the material breakdown of our products, data
from running our operations, and data concerning the usage of our
products over a 20-year period. The output from the assessment
results in a metric called ‘species.year’, which provides the impacts on all
pressure categories separately. Scenarios representing different future
changes to our products, for example, a transition to fully electric cars
and higher degrees of recycled material, are analysed.
Using the Integrated Biodiversity Assessment Tool (IBAT) tool, we
assess the risk of physical impact to sensitive areas by conducting an
analysis of the location of our operational sites in relation to Key Biodi-
versity Areas (KBA). All operational sites are assessed, with extra focus
on the five production sites which lie within a 5km radius of KBA areas.
We use ENCORE and ISIC classes (manufacture of motor vehicles and
construction of buildings) to explore the potential physical impacts
from our main activities on the production sites and conduct sectori -
al-level screening of the natural capital assets on which economic
activity in our value chain depends. The impacts of these ISIC classes in
ENCORE depict higher impacts related to emission of toxic pollutants
to water and soil, emission of GHG and non-GHG pollutants and distur-
bances from noise and light pollution. This impact analysis guides our
deeper analysis of actual impacts on individual sites.
Resource use and circular economy
Our LCA reports, including material breakdown analyses of our prod -
ucts, in combination with the total volume of cars produced, packag -
ing material and waste in our operations, provide information on the
resources used throughout our operations. The supply chain
resource use is assessed using established estimations on raw mate -
rial extractions and production of components for key material in our
products. Financial risks are assessed using the ENCORE database to
analyse dependencies within certain sectors and resources which
are important to our operations.
Own workforce and workers in the value chain
We assess impacts, risks and opportunities related to workers in our
operation and across our value chain through due diligence proce -
dures, People Policy Assessments and risk workshops. Both employ -
ees and non-employees, covering white- and blue-collar roles, as
well as permanent and temporary employees, are considered in the
materiality assessment. For our own workforce, we conduct regular
employee surveys and maintain ongoing dialogue, either directly with
our employees or through trade unions. The due diligence scope is
determined by the identification and assessment of salient human
rights issues and our annual human rights risk assessments, which
also serve as input for the double materiality assessment. A gross list
of human rights issues was prepared and analysed across risk cate -
gories such as environmental, social and governance, place in value
chain, potential rightsholders, vulnerable groups, geographical
focus, and potential human rights impacts. The assessment was con -
ducted by identifying various factors that could potentially contrib -
ute to the risk of negative impact on human rights. The factors were
examined and analysed and further linked to the salient human rights
issues identified and extracted from the gross list. More information is
found on page 144. Reporting through our grievance channels provides
information on potential and actual impacts.
Consumers and end-users
All our consumers and end-users are considered in the materiality
assessment, including passengers and other vulnerable road users.
The assessment is based on data obtained from various surveys,
market analysis of customer trends and internal data obtained from
the products and services our customers use.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
146
===== SIDA 147 =====
Business conduct
The identification of impacts, risks and opportunities related to
business conduct is based on activity data (such as reporting made
in our grievance channels and reports from internal audits per -
formed on our governance and business conduct), risk assessments
(such as our yearly value chain risk assessment and entity specific
risk assessments), stakeholder input (such as adverse media, NGO
and industry association reports), and global risk indices and lists.
Volvo Cars conducts business on a global scale, including in the high-
risk countries identified in our assessment, which, together with
affected law and legislation and the business cultures in these coun-
tries, affects the scope and conclusions of our assessment.
Outcome of the double materiality assessment
The detailed result from the double materiality assessment is found
in each respective section. All material impacts, risks and opportu -
nities are covered by ESRS Disclosure Requirements.
Based on this year’s updated assessment, minor changes have
been made compared to last year’s result. For example, by finalising
our dam construction project in Olofström, we have eliminated the
financial risk related to flooding risk highlighted in previous years’
reports. Additionally, a new assessment of the valuation of existing
assets related to the production of cars with internal combustion
engines was performed, resulting in a very low risk for impairment.
Connectivity with the Financial Statements
Sustainability considerations, such as environmental changes, have
been factored into our Consolidated Financial Statements. This
includes how sustainability may impact critical accounting esti -
mates, which is used for asset valuation, provisions, contingent lia -
bilities. The climate-related scenarios used for the double material -
ity assessment are used for the critical climate-related assumptions
made in the Consolidated Financial Statements.
The accounting methodology for valuation of tangible and intan -
gible assets is found on page 89 and 91. Sustainability-related
financial risks are recognised as a provision or disclosed as a contin -
gent liability, if certain criteria are met. In preparing the Consoli -
dated Financial Statements for 2025, no sustainability-related
financial risks have been recognised as provision and no contingent
liabilities are disclosed. The accounting methodology for provisions
and contingent liabilities is found on page 111 and 112.
MATERIAL SUSTAINABILITY MATTERS ALONG
THE VALUE CHAIN
ENVIRONMENTAL
IMPACT
MATERIALITY
FINANCIAL
MATERIALITY PAGE
CLIMATE CHANGE 153
POLLUTION
164
WATER 167
BIODIVERSITY
170
RESOURCE USE AND
CIRCULAR ECONOMY 173
SOCIAL
OWN WORKFORCE
180
WORKERS IN THE
VALUE CHAIN 189
AFFECTED
COMMUNITIES
—
CONSUMERS AND
END-USERS
195
GOVERNANCE
BUSINESS CONDUCT 199
MATERIAL
NOT MATERIAL
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / GENERAL INFORMATION
147
===== SIDA 148 =====
Environmental information
EU Taxonomy Report
PAGE 149–152
Climate change
PAGE 153–163
Pollution
PAGE 164–166
Water
PAGE 167–169
Biodiversity and ecosystems
PAGE 170–172
Resource use and circular economy
PAGE 173–178
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
148
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 149 =====
Introduction
The EU Taxonomy Regulation (hereafter referred to as the Taxon -
omy) is a classification system for environmentally sustainable
activities, designed to support the EU’s climate and energy targets.
These are part of the objectives of the European Green Deal to scale
investments in sustainable projects and activities.
To comply with the Taxonomy, we must report on our taxono -
my-eligible and aligned activities for turnover, capital expenditure
(CapEx) and operational expenditure (OpEx). To be aligned with the
Taxonomy, we must fulfil the technical screening criteria for sub -
stantial contribution to one of the environmental objectives and
ensure compliance with the Do No Significant Harm (DNSH) criteria
for the remaining environmental objectives.
The environmental objectives are:
• Climate Change Mitigation (CCM)
• Climate Change Adaptation (CCA)
• Sustainable Use and Protection of Water and Marine Resources
(WTR)
• Transition to a Circular Economy (CE)
• Pollution Prevention and Control (PPC)
• Protection and Restoration of Biodiversity and Ecosystems (BIO)
To align with the Taxonomy, we must also meet certain minimum
safeguard criteria, ensuring compliance with standards related to
responsible business conduct, such as human rights, corruption,
taxation and fair competition.
For 2025, the report has been prepared considering the new
Delegated Regulation (EU) 2026/73.
Assessment of eligibility and materiality
Using the definitions of economic activities in the Taxonomy to iden -
tify eligible activities, and following the Delegated Regulation (EU)
2026/73, we assessed the materiality of each Taxonomy -eligible
economic activity against our total turnover, CapEx and OpEx.
EU Taxonomy Report
Economic activities that accounted for less than 10 per cent of the
relevant KPI denominator are treated as non -material and reported
separately, as not assessed activities considered non-material.
Activities CCM 3.18 Manufacture of automotive and mobility
components (Manufacturing sector) and CE 5.4 Sale of sec -
ond-hand goods (Services sector) were below 10 per cent individu -
ally for each KPI. For turnover the aggregated proportion of those
two activities however exceeded 10 per cent. Following this, and due
to its relevance to our business, activity CE 5.4 was assessed to be
material for turnover and subsequently CCM 3.18 was assessed to
be non-material for all KPIs and not further assessed for alignment.
Activity CCM 3.3 Manufacture of low carbon technologies for
transport, is eligible and material for all three KPIs. It covers the
development, manufacture and sale of Volvo-branded cars. We do
not include our contract manufacturing activities for third parties.
Activity CE 5.4 covers the sale of used cars.
Non-material activities were not removed from KPI denominators,
ensuring the use of materiality thresholds did not lead to the exclu -
sion of any portions of activities from our reported KPIs.
Assessment of alignment
For activity CCM 3.3, Volvo-branded cars co- developed with, or
contract-manufactured by, related parties are not considered
aligned in 2025 and are therefore excluded from further assess -
ments against the technical screening criteria.
Activity CE 5.4 has been assessed to not be aligned with the
technical screening criteria.
Substantial contribution
Climate change mitigation
Cars with tailpipe emissions of less than 50 grams of CO 2 per kilo-
metre meet the climate-mitigation technical screening criteria for
activity CCM 3.3. In 2025, all fully electric cars and the majority of
our plug-in hybrid cars met these criteria. As of 2026, the criteria
changes to 0 grams of CO 2 per kilometre, meaning that only fully
electric cars will comply.
Do No Significant Harm (DNSH)
Climate change adaptation
We continuously assess our compliance with the DNSH to climate
change adaptation criteria through our climate risk assessments of
our operational sites. Material physical climate risks have been iden -
tified, and a robust climate risk and vulnerability assessment has
been performed. This included assessment of adaptation solutions
for physical climate risk and considered IPCC pathways 2.6, 4.5 and
8.5, with the time horizons 2030, 2050 and 2100.
In our assessment, we fulfil the DNSH to climate change adapta -
tion criteria for activity CCM 3.3.
More information on our climate change adaptation activities can
be found on pages 145, 156 and 158.
Sustainable use and protection of water and marine
resources
We assess our compliance with the DNSH to water criteria for activ -
ity CCM 3.3 through gap analyses. The analyses are based on work
related to production permits, including Environmental Impact
Assessments (EIA), which have been conducted for all our manufac -
turing sites, and water risk assessments. All analyses are carried out
taking local legislation into account.
In our assessment, we fulfil the DNSH to water criteria for activity
CCM 3.3.
More information about our work with responsible water manage -
ment can be found on page 167.
Transition to a circular economy
We assess our compliance with the DNSH to circular economy crite -
ria for activity CCM 3.3 by evaluating the potential of implementing
techniques that support circular economy. These include the use of
recycled content and product design that considers durability, recy -
clability and reusability. We have also set ambitions to increase the
use of recycled content.
We also assess whether our waste management practices priori -
tise recycling over disposal and ensure traceability of substances of
concern (SoCs) and substances of very high concern (SVHCs) across
all products.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
149
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 150 =====
Within our SoCs and SVHCs policy we trace substances using the
International Material Data System (IMDS), an online platform used
within the automotive industry.
In our assessment, we fulfil the DNSH to circular economy criteria
for activities CCM 3.3.
More information on our circular economy activities can be found
on page 173.
Pollution prevention and control
We assess our compliance with the DNSH to pollution prevention
criteria for activity CCM 3.3 by evaluating whether we manufacture,
place on the market or use SVHCs referenced within Appendix C of
the Taxonomy. We do not manufacture or place SVHCs in their pure
form on the market. However, SVHCs on the EU REACH candidate
list are used in our manufacturing processes and as part of several
car components.
The DNSH criteria are considered met if it is assessed and docu -
mented by the operators that the substances are used under con -
trolled conditions and that no other suitable alternative substances
or technologies are available on the market.
We are using the substances under controlled conditions and are
currently evaluating the availability of suitable alternative sub -
stances or technologies as part of our CapEx plan, as further
described in the CapEx Plan section.
In our assessment, we do not fulfil the DNSH to pollution preven -
tion criteria for activities CCM 3.3, regarding currently produced
cars.
More information on our pollution related work can be found on
page 164.
Protection and restoration of biodiversity and ecosystems
We assess our compliance with the DNSH to biodiversity criteria for
activity CCM 3.3 through gap analyses. The analyses are based on
work related to production permits, including Environmental Impact
Assessments (EIA), which have been conducted for all our manufac -
turing sites, and key biodiversity area assessments. All analyses are
carried out taking local legislation into account.
In our assessment, we fulfil the DNSH to biodiversity criteria for
activity CCM 3.3.
More information on biodiversity can be found on page 170.
Minimum safeguards
To comply with the criteria for minimum safeguards, we must align
with OECD Guidelines for Multinational Enterprises and the UN Guid -
ing Principles on Business and Human Rights.
In accordance with the minimum safeguards on human rights, we
have conducted an assessment using the best available information.
Based on this, we assess that our operations comply with these mini -
mum safeguards. In our evaluation, we have:
• Established adequate human rights due diligence processes,
as outlined in the UN Guiding Principles and the OECD Guidelines
for Multinational Enterprises.
• Not been held liable or found to be in breach of labour law or
human rights in certain types of court cases on labour law or on
human rights.
• Not declined requests to engage with a National Contact Point
(NCP) or other relevant parties and have not been found to contra -
vene the OECD Guidelines by an NCP.
• Been the subject of allegations from the Business and Human
Rights Resource Centre (BHRRC) and have responded to those
allegations.
More information on our human rights policies and due diligence
processes can be found on page 143.
In accordance with the minimum safeguards on corruption, taxa -
tion and fair competition, we have conducted an assessment using
the best available information. Based on this, we assess that our
operations comply with these minimum safeguards. Our evaluation
considered:
• Anti-corruption processes and any convictions of corruption for
senior management (including senior management of subsidiaries).
• Treatment of governance and compliance as important elements
of oversight.
• Adequacy of tax risk management strategies and processes
(including subsidiaries) and violation of tax laws.
• Promotion of the importance of compliance with all applicable
laws and regulations amongst our employees.
• Convictions of violating competition laws for senior management
(including senior management of subsidiaries).
More information on our anti-corruption and fair competition proce -
dures can be found on page 200.
Accounting Policies and Key Performance
Indicators
Turnover
In the calculation of the proportion of eligible turnover, we have
used Volvo Cars’ total revenue as a denominator, see Note 2 – Reve -
nue on page 72, and allocated eligible turnover to activity CCM 3.3,
including turnover related to the sale and leasing of new cars, and CE
5.4, including the turnover related to the sale of used cars. The numer-
ator for turnover is the aligned proportion of each economic activity.
Capital Expenditure (CapEx)
In the calculation of the proportion of eligible CapEx, we use Volvo
Cars’ additions for tangible assets, including right-of-use assets and
assets acquired through business combinations, see Note 16 – Tan -
gible assets on page 91, and intangible assets, excluding trademark
and goodwill, see Note 15 – Intangible assets on page 89, as a denom-
inator. We allocated eligible CapEx to activity CCM 3.3, mainly relat-
ing to product development and investments in property, plant and
equipment. Some common investments are not allocated to eligible
activities.
Activities that are deemed taxonomy-aligned use a numerator
based on the CapEx plan.
Operational Expenditure (OpEx)
In the calculation of the proportion of eligible OpEx that forms the
denominator, we include Volvo Cars’ expenses related to research
and development, short-term leases, and our property, plant, and
equipment (such as maintenance and repair). Eligible OpEx is allo -
cated based on expenses related to activity CCM 3.3.
Activities that are deemed taxonomy-aligned use a numerator
based on the CapEx plan. Taxonomy reporting of OpEx is not com -
parable with other operating expenses in the Consolidated Income
Statements.
CapEx Plan
The Taxonomy requires a distinction between CapEx and OpEx for
activities that are currently aligned and CapEx and OpEx that
intend to expand aligned activities or upgrade activities for future
alignment.
In 2023, our executive management approved a CapEx plan with
the purpose of increasing our alignment with activity CCM 3.3 within
five years.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
150
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 151 =====
As described in the pollution prevention and control section on the
previous page, we do not currently fulfil the DNSH criteria for pollu -
tion prevention and control. As part of our CapEx plan and commit -
ment for future alignment, we have developed an operational action
plan to address the use of SVHCs in our products and manufacturing
processes. This includes collaboration with suppliers to reduce the
presence of SVHCs and investigate the availability of suitable, alter -
native substances or technologies. The CapEx plan outlines how we
aim to align current activities and includes investments that support
taxonomy-aligned products and manufacturing processes. This is
also applied to OpEx associated with these investments.
Projected CapEx and OpEx in the remaining period covered by the
CapEx plan is expected to stay at current levels in relation to total
investments.
Additional commentary
In 2025, taxonomy-aligned CapEx increased to 28 (23) per cent.
This was due to a maintained level of investments in assets covered
by the CapEx Plan in combination with a lower level of total invest -
ments. Compared with our ambition to reach 50 per cent CapEx
alignment by 2025, the lower actual outcome was mainly driven by
the prolonged bridge to full BEV transition resulting in a reconsider -
ation of related investments. We remain committed to full electrifi -
cation while continuing to offer plug-in hybrids to those customers
not yet ready for full electrification.
All turnover, CapEx and OpEx values in other currencies have been
converted to SEK. In calculating the key performance indicators,
we ensure no double counting of values occurs.
Proportion of turnover, CapEx, OpEx from products or services associated with Taxonomy-eligible or
Taxonomy-aligned economic activities – disclosure covering year 2025 (summary KPIs)
Breakdown by environmental objectives of
Taxonomy aligned activities
KPI Total
Proportion
of Taxonomy
eligible
activities
Taxonomy
aligned
activities
Proportion
of Taxonomy
aligned
activities
Climate
Change
Mitigation
Climate
Change
Adaptation Water
Circular
Economy Pollution Biodiversity
Proportion of
enabling
activities
Proportion of
transitional
activities
Not assessed
activities
considered
non-material
Taxonomy
aligned activities
in previous
financial year
2024
Proportion of
Taxonomy
aligned activities
in previous
financial year
2024
SEKm % SEKm % % % % % % % % % % SEKm %
Turnover 357,263 80 — — — — — — — — — — 8 — —
CapEx 54,672 94 15,090 28 28 — — — — — 28 — — 15,109 23
OpEx 8,561 97 173 2 2 — — — — — 2 — — 743 8
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
151
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 152 =====
Proportion of turnover, CapEx and OpEx from products or services associated with Taxonomy-eligible
or Taxonomy-aligned economic activities – disclosure covering year 2025 (activity breakdown)
Turnover
Environmental objective of Taxonomy aligned activities
Economic Activities Code
Taxonomy eligible KPI
(Proportion of Taxon-
omy eligible Turnover)
Taxonomy aligned KPI
(monetary value of
Turnover)
Taxonomy aligned KPI
(Proportion of Taxon-
omy aligned Turnover)
Climate
Change
Mitigation
Climate
Change
Adaptation Water
Circular
Economy Pollution Biodiversity
Enabling
activity
Transitional
activity
Proportion of
Taxonomy
aligned in Tax-
onomy eligible
% SEKm % % % % % % %
(E where
applicable)
(T where
applicable) %
Manufacture of low carbon
technologies for transport CCM 3.3 71 — — — — — — — — E — —
Sale of second-hand goods CE 5.4 9 — — — — — — — — — — —
Sum of alignment per objective — — — — — —
Total Turnover 80 — — — — — — — — — — —
CapEx
Environmental objective of Taxonomy aligned activities
Economic Activities Code
Taxonomy eligible KPI
(Proportion of Taxon-
omy eligible CapEx)
Taxonomy aligned KPI
(monetary value of
CapEx)
Taxonomy aligned KPI
(Proportion of Taxon-
omy aligned CapEx)
Climate
Change
Mitigation
Climate
Change
Adaptation Water
Circular
Economy Pollution Biodiversity
Enabling
activity
Transitional
activity
Proportion of
Taxonomy
aligned in Tax-
onomy eligible
% SEKm % % % % % % %
(E where
applicable)
(T where
applicable) %
Manufacture of low carbon
technologies for transport CCM 3.3 94 15,090 28 28 — — — — — E — 30
Sum of alignment per objective 28 — — — — —
Total CapEx 94 15,090 28 28 — — — — — 28 — 30
OpEx
Environmental objective of Taxonomy aligned activities
Economic Activities Code
Taxonomy eligible KPI
(Proportion of Taxon-
omy eligible OpEx)
Taxonomy aligned KPI
(monetary value of
OpEx)
Taxonomy aligned KPI
(Proportion of Taxon-
omy aligned OpEx)
Climate
Change
Mitigation
Climate
Change
Adaptation Water
Circular
Economy Pollution Biodiversity
Enabling
activity
Transitional
activity
Proportion of
Taxonomy
aligned in Tax-
onomy eligible
% SEKm % % % % % % %
(E where
applicable)
(T where
applicable) %
Manufacture of low carbon
technologies for transport CCM 3.3 97 173 2 2 — — — — — E — 2
Sum of alignment per objective 2 — — — — —
Total OpEx 97 173 2 2 — — — — — 2 — 2
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
152
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 153 =====
Climate change
Identified material impacts, risks and opportunities (IRO) Type of IRO Time horizon Value chain
CLIMATE CHANGE ADAPTATION
To adapt and to mitigate for future physical risks on assets, related to
climate change, investments are necessary and may have a potential
financial effect.
Risk
Climatic events in our own operations and the supply chain can affect
and disrupt our business.
Risk
CLIMATE CHANGE MITIGATION
Volvo Cars activities generate emissions both through our own operations
and throughout the value chain which negatively contribute to climate
change.
Actual
negative
impact
There may be a market risk from increases in raw material prices due to
higher demand within the sector.
Risk
Transitional risk connected to regulatory changes will directly and
indirectly affect supply chain costs.
Risk
ENERGY
Energy consumption in our operations and value chain activities
generates emissions and has a negative impact on the climate.
Actual
negative
impact
Volatility in energy price and supply could lead to loss of revenue and
challenges in achieving climate ambitions.
Risk
We both contribute to and are affected by climate change. Our operations
and value chain consume energy and generate emissions, while physical and
transitional climate change risks threaten business continuity. We combat
these combined challenges by driving the transition toward electrification,
making our operations more sustainable and operating a more resilient
business model.
UPSTREAM OWN OPERATIONS DOWNSTREAM
SH ORT-TERM
MID-TERM
LONG-TERM
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
153
===== SIDA 154 =====
Transition plan
We have adopted a climate transition plan aligned with the goal of
limiting global average temperature rise to 1.5°C above pre-indus -
trial levels, in accordance with the Paris Agreement. The plan is
embedded in our corporate strategy and supports our ambition to
become a fully electric car company and reach net zero greenhouse
gas emissions across our value chain by 2040.
Our Scope 1 and 2 emission reduction target has been validated
by the Science Based Targets initiative (SBTi) to meet the require -
ments of the 1.5°C pathway. Additionally, our Scope 3 target for the
Use of sold products has been validated by SBTi as well-below 2°C
aligned. In addition to our SBTi targets, our interim corporate emission
reduction ambitions guide us on our journey to reach net zero.
Together, these ambitions form the foundation for our climate change
mitigation actions and are embedded in our strategic planning.
Focus areas driving our decarbonisation journey
Our focus areas define how we reduce the emissions of our prod -
ucts, in the value chain and across our operations. Our climate tran -
sition plan is centred on these three areas.
The first focus area, Transform to pure electrification, drives our
ambition to become a fully electric car company. This transforma -
tion is powered by our investments in fully electric powertrains and
supported by our portfolio of plug-in hybrid models that help bridge
the transition to a decarbonised portfolio.
The second focus area, Minimise emissions from materials,
focuses on reducing the environmental impact of the parts we use
to build our cars, relating to both the ingoing raw materials and the
accompanying processing steps. We are increasing the share of
recycled and bio-based content in our cars and working closely with
suppliers to source low and near-zero emission materials, such as
aluminium ingot smelted using renewable energy. We are also
extending our commitment to climate neutral energy beyond our
own operations by supporting our value chain in transitioning to
renewable energy sources.
The third focus area, Minimise operational emissions, targets
emissions across our value chain and within our own operations,
including the production and transportation of our cars and
non-production related activities, such as emissions from our
retailer network. To minimise operational emissions, we are imple -
menting energy efficiency measures in our facilities, switching to
climate neutral energy sources, and driving actions to further
reduce waste.
Initiatives across these three areas are enabling sustainable oper -
ations and transforming our product portfolio. Together, these initi -
atives reflect a comprehensive and forward-looking approach to
climate change mitigation, ensuring that our climate transition plan
is actionable and integrated into ourlong-term business strategy.
For a detailed overview of our decarbonisation levers and key
actions more information can be found on page 156.
Embedding climate action in strategy
and financial planning
Our climate transition plan is fully embedded in our overall business
strategy and financial planning. The plan is part of our transforma -
tion toward becoming a fully electric car company and reaching net
zero; it’s not a standalone initiative. This alignment is reflected in
how we allocate capital, prioritise research and development, and
structure our operations. By integrating emissions data into our cost
performance steering model, we assess sustainability and economic
factors during our product development and sourcing processes.
More information about our product sustainability steering can be
found on page 158.
60
30
20
10
0
40
50
Minimise emissions from materials Transform to pure electrificationMinimise operational emissions
–31% –65–75% ~–90%
2018 2025 2030 2040 Removals
t CO2 per car
Actuals 2025 vs 2018 Ambition 2030 vs 2018 Net zero 2040
ROADMAP TO NET ZERO
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
154
===== SIDA 155 =====
Investments in electrification are central to our long-term finan -
cial planning and incorporated in our Green Financing Framework.
As part of our EU Taxonomy CapEx plan we aim to align our future
fully electric cars with the technical screening criteria outlined in the
regulation. Our OpEx and CapEx related to the CapEx plan support
our transformation to net zero.
Climate-related risks and opportunities are integrated in our
enterprise risk management and scenario analyses, ensuring that
our financial decisions are consistent with our decarbonisation
pathway. The transition plan embedded into our strategic and finan -
cial frameworks ensures that climate action is not only aligned with
our long-term vision but also supported by the resources and gov -
ernance needed to deliver on our ambitions.
Locked-in emissions
Our transition to electrification will require replacing some assets
currently used in production of internal combustion engine (ICE)
vehicles with equipment designed for new technologies. This will
inevitably generate additional emissions during the transition period.
However, the overall impact of updating equipment is limited and will
not have a material impact on our journey to net zero.
Alignment with EU Paris-aligned Benchmarks
Volvo Cars is included in the EU Paris-aligned Benchmarks. Our
climate strategy and emissions reduction ambitions are aligned with
the principles of the EU Benchmark Regulation, and we continue to
monitor our alignment with relevant sustainable finance frame -
works.
Governance and progress on transition plan
implementation
Our sustainability strategy, including the embedded climate transi -
tion plan, is approved by the company’s Executive Management
Team and the Board of Directors. These governing bodies are
actively involved in overseeing the development, implementation
and progress of the strategy, ensuring that it is fully aligned with our
strategic direction and long-term business objectives.
Our transition plan is reflected in our product development as we
continue to expand our fully electric product offering and invest in
future battery technology and low-emission materials. These devel -
opments, alongside efforts such as increasing the share of climate -
neutral energy in our operations and across the value chain, demon -
strate our commitment to delivering on our science-based targets
and advancing toward our net zero ambition. A more extensive over -
view of our progress can be found on page 160.
Assessing the resilience of our strategy
in a changing world
Our strategy and business model, along with our transformation
towards electrification, are informed by and aligned with the Inter -
national Energy Agency’s Net Zero Emissions by 2050 (NZE) Sce -
nario. At Volvo Cars, we recognise that climate change presents
both risks and opportunities that demand a proactive and adaptive
business strategy. To withstand and adapt to the evolving climate
landscape, we continuosly assess the resilience of our operations
and long-term strategy to become a fully electric car company.
We regularly conduct climate scenario analyses to evaluate
potential impacts on our business. The most recent analysis, com -
pleted this year, considered a range of plausible climate trajectories
and their implications on our operations, supply chain, regulatory
environment and customer preferences. IEA’s guidance for the auto -
motive industry was considered when assessing our resilience to
transitional risk. Given our highly integrated value chain, the full
value chain was considered in the transition risk assessment, while
the assessment on physical risks using climate scenarios was car -
ried out on our major sites. Factors considered in the climate sce -
nario analysis, including time horizon, are described on page 145.
Our electrification strategy is central to our resilience, accelerat -
ing the global shift towards sustainable mobility and reducing
greenhouse gas emissions. By phasing out internal combustion
engine cars and investing in electrified models, we are positioning
ourselves to thrive in the global transition towards a decarbonised
economy. Our plug-in hybrid models are a stepping stone towards a
fully electric portfolio, increasing business resilience and reducing
our vulnerability when markets transition slower than expected.
Investments needed to support our strategy are financed through
our Green Financing Framework and all investment decisions take
sustainability aspects into account, including climate change and
any identified uncertainties. Our assessment of the resilience of our
strategy and business model, including our transition toward elec -
trification, indicates that we operate in a market undergoing rapid
transformation and shifting customer demands. To respond to these
conditions, we are offering a balanced portfolio of fully electric and
hybrid cars to strengthen resilience and position the company for
long-term, profitable growth.
Our policies
Climate change mitigation
Our updated Code of Conduct for Business Partners encourages
emission reductions for actors across our value chain. In support of
our aim to reach net zero, our suppliers, sub-suppliers and retailers
are expected to perform activities to reduce greenhouse gas emis -
sions within their own operations and across their wider value chain,
for example by establishing greenhouse gas reduction plans and
setting science-based targets in line with the Paris Agreement.
In addition to the Code of Conduct for Business Partners, our
Position on climate action outlines how we address climate change
mitigation across our full value chain, with a particular focus on
transforming our product portfolio. As the use phase of our prod -
ucts represent the largest share of our carbon footprint, electrifica -
tion is a key lever for decarbonisation.
Our Position on chain of custody models describes our view on
using these models to achieve our sustainability ambitions. Today,
we accept the use of select chain of custody models and prefer
those that use identity preservation, segregation and mass balance
on batch level.
Our Position on carbon removal demonstrates that we prioritise
real emission reductions. Carbon removal or other types of carbon
offsetting will not be used to reach our 2025 and 2030 emission
reduction ambitions. We do not consider carbon insetting or mass
balance as carbon offsetting. However, the use of carbon insetting
and mass balance must follow requirements outlined in our Position
on chain of custody models. We intend to reach our net zero ambi -
tion by using carbon removal only as a last resort to neutralise una -
voidable emissions.
Our Sustainability Requirements are part of our terms and condi -
tions for direct materials suppliers. These suppliers are required to
develop company-specific ambitions for greenhouse gas emission
reductions, including a science-based CO 2 reduction target. As part
of these requirements, suppliers must also set targets and imple -
ment actions to improve energy efficiency and transition to climate
neutral energy sources, both within their own operations and across
their upstream supply chains. We are actively working with our sup -
pliers to reduce the carbon footprint of their products, both to
address climate impact and to minimise the risk of additional
charges as a result of regulatory changes.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
155
===== SIDA 156 =====
Energy efficiency and climate neutral energy
Improving energy efficiency reduces our dependency on energy
supply, making us less vulnerable to shortages and price fluctua -
tions, while deploying climate-neutral energy ensures sustainable
operations. Our operations are regulated by energy efficiency
standards and an Energy Directive, both aligned with the European
Commission’s Reference Document on Best Available Techniques
for Energy Efficiency.
Our Climate Neutral Management Directive outlines requirements
for energy use in our own operations, while our Position on Energy
Attribute Certificates (EACs) governs the procurement and
accounting of energy certificates across diverse markets.
Climate change adaptation
We continuously assess the physical risks on all our major sites to
identify and address potential risks with associated risk owners. We
have yet to adopt a formal policy on risks related to climate change
adaptation.
Our actions
We address climate change across our entire value chain, from
product development and production to supplier engagement and
retail operations. By integrating climate considerations into strate -
gic planning, vehicle engineering and operational practices, we are
building a more sustainable and resilient business. Our actions
underpin our corporate sustainability ambitions by reducing green -
house gas emissions and increasing our resilience to climate related
risks.
Our decarbonisation levers are tools and strategies we deploy to
reduce carbon emissions across our value chain, in order to achieve
our corporate CO 2 ambitions and align with the 1.5 degree pathway.
These levers are embedded in our sustainability strategy and cli -
mate transition plan, integrated with our overall business strategy
and financial planning. Our actions are outlined within each decar -
bonisation lever and structured by our three focus areas: electrifica -
tion, reducing emissions from materials, and reducing emissions
from our own operations.
Transform to pure electrification
Electrified car sales
The electrification of our fleet is our biggest lever to decarbonise.
In 2025, our electrified fleet, made up of fully electric and plug-in
hybrid cars, accounted for 46 per cent of total sales. During the year,
we expanded our product portfolio with the fully electric ES90 and
the XC70, a long-range plug-in hybrid, alongside updated versions of
several of our existing electric and plug-in hybrid models. In early
2026, we further strengthened our product offering with the launch
of the fully electric EX60, marking a crucial milestone in our electri -
fication journey.
Vehicle energy efficiency
The ES90 features the lowest official aerodynamic drag coefficient
in our fleet. Less air resistance results in less energy consumption
and a longer driving range. Technological updates have also been
introduced through model-year upgrades to further improve the
energy efficiency of existing models. For example, the implementa -
tion of an 800V (from 400V) propulsion system decreased the
weight of the fully electric EX90, increasing energy efficiency,
performance and battery range.
Electrified car retail sales (k units) 2025 2024
Fully electric cars (BEVs) 152 175
Plug-in hybrid electric cars (PHEVs) 171 178
Electrified car sales total 323 353
Electrified car retail sales (%) 2025 2024
Fully electric cars (BEVs) % of sales 21 23
Plug-in hybrid electric cars (PHEVs) % of sales 24 23
Electrified cars % of sales 46 46
Policy1) Objective Scope
Code of Conduct for Business Partners Climate change mitigation Upstream, downstream
Position on climate action Climate change mitigation Upstream, downstream
Position on sustainable materials Climate change mitigation Own operations, upstream
Position on sustainable steel Climate change mitigation Own operations, upstream
Position on sustainable plastics Climate change mitigation Own operations, upstream
Position on circular economy Climate change mitigation Own operations, upstream
Position on chain of custody models Climate change mitigation Own operations, upstream, downstream
Position on carbon removal Energy Upstream
Position on Energy Attribute Certificates for electricity Energy Upstream
Sustainability Requirements Climate change mitigation and energy Downstream
Climate neutral management directive Climate neutral and renewable energy
deployment
Own operations
Energy efficiency standard Energy efficiency Own operations
Energy directive Energy efficiency Own operations
1) More information regarding Volvo Cars´ position papers can be found on page 142.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
156
===== SIDA 157 =====
Regional efficiency metrics 2025 2024
Tailpipe CO2 efficiency Global g CO2/km WLTP 103 96
Tailpipe fuel efficiency EU-27 g CO2/km WLTP 60 58
Tailpipe fuel efficiency China L/100 km WLTP 5.78 6.29
Tailpipe fuel efficiency US mpg EPA 49 45
Electric energy
consumption BEV
Global Wh/km WLTP 177 172
Electric energy
consumption BEV
EU-27 Wh/km WLTP 176 172
Electric energy
consumption BEV
China Wh/km CLTC 163 146
Electric energy
consumption BEV
US Wh/miles EPA 352 345
Charging with integrated energy systems
We know that the electric car is a cornerstone of the future energy
ecosystem. That’s why Volvo Cars is contributing to an integrated
electric car ecosystem with products designed to enhance the user
experience and accelerate the transition to more sustainable and
resilient energy systems. Charging at optimal times and exporting
energy to the grid during periods of high demand strengthens our
energy systems. This bi-directional charging capability is available
in select new models, including the EX90 and EX60, and select
markets starting 2026.
Life Cycle Assessment reports
To provide transparency for our customers, employees, investors
and other stakeholders, we publish third-party-reviewed Life Cycle
Assessments (LCA) for our globally available new fully electric
models. This year, we released the LCA report for the ES90.
The ES90 is a strong proofpoint of the actions we have taken to
reduce the emissions associated with the materials of our cars. The
ES90 is built with approximately 30 per cent recycled aluminium, 20
per cent recycled steel as well as 15 per cent recycled polymers and
bio-based material. The EX60 LCA report released in early 2026
demonstrates that when using a European energy mix to charge the
car, the total lifetime carbon footprint amounts to 23 tonnes. When
charged with renewable energy, the footprint is reduced to only
18 tonnes.
Minimise emissions from materials
Low and near-zero emission primary materials and recycled
materials and climate neutral energy across the supply chain
Reducing emissions from materials is a critical part of our climate
strategy. Steel, aluminium and battery materials are the primary
contributors of CO 2 emissions, and together they account for the
largest combined share of material content in our cars.
We prioritise materials made with renewable energy and recycled
content, and we collaborate with our supply chain partners to inte -
grate sustainable materials into production. On average, our 2025
fleet consists of 20 per cent recycled materials. Increased use of
recycled content in our products drives down the carbon footprint,
reduces material waste, and supports a circular economy.
Steel
We have an agreement with SSAB for the supply of high-quality
recycled and near-zero emissions steel in select components in the
new EX60 and other cars utilizing our SPA3 architecture. Compared
with conventionally produced steel in Europe, SSAB’s recycled steel
reduces carbon emissions with more than 70 per cent and is made
with a recycled content of almost 100 per cent.
Aluminium
To directly reduce emissions from aluminium in our value chain, we
have worked with our suppliers to ensure that the aluminium in our
cars is produced using renewable electricity in the energy-intensive
smelting process, significantly reducing the carbon footprint of the
finished material compared with the global average. By sourcing
low-emission and recycled aluminium, we have reduced over
240,000 tonnes of CO2 in our fleet this year compared with using
primary aluminium manufactured using grid electricity. This achieve -
ment is a result of the strong collaboration with our supply chain
partners, paired with our product sustainability steering process,
which empowers cost-efficient, data-driven sustainability decisions
across our organisation. Together, we continue to accelerate the use
of low-emission and recycled materials in our industry.
Battery materials
Through our product sustainability steering process, we encourage
suppliers to utilise renewable energy and improve their energy effi -
ciency, strengthening sustainability across the supply chain. Due to
the growing demand for battery materials driven by electrification
ambitions, and the emissions intensive production of battery -grade
materials, we place strong strategic emphasis on further supporting
our battery suppliers in decarbonising their operations.
Minimise operational emissions
Electrification, fuel switch and climate neutral energy
In 2025, we implemented measures to replace fossil fuel consump -
tion with climate neutral energy in our own operations. This year,
four additional manufacturing plants have reached fully climate
neutral energy status. For example, the transition from gas boilers to
heatpumps and electrified boilers in our Olofström plant and the
transition from fossil-based heating sources to biomethane in Ghent
and Chengdu resulted in a reduction of 26,000 tonnes of CO 2 on an
annual basis. Through these actions, we are moving closer to our
ambition of achieving 100 per cent climate neutral energy in our own
operations.
Within our non-manufacturing facilities, such as warehouses and
office spaces, we have installed electric heat pumps which utilise
renewable electricity. Moving forward, we aim to take the final steps
needed to achieve fully climate neutral operations by advocating for
an increased supply of locally sourced energy, expanding power
purchase agreements for climate neutral energy, and continuing to
invest in on-site renewable energy.
Energy efficiency
This year, we have enhanced our energy monitoring systems to iden -
tify and perform process improvements to reduce energy consump -
tion in our facilities. To further reduce our energy consumption, we
will continue to reduce energy use while production is closed,
expand heat recovery initiatives where feasible, and pursue addi -
tional energy efficiency improvements at our sites.
Energy efficiency and renewable electricity at our retailers
We continue to collaborate closely with our retail partners to reduce
emissions by promoting the use of renewable electricity and sup -
porting energy efficiency measures. These efforts are reinforced
through targeted trainings and guidelines, as well as best practices
shared by our Sustainability Champions in each market and via our
global retail sustainability programme. For enhanced data transpar -
ency needed to drive action, we plan to enable retail-specific emis -
sion measurements and profiles to help inform the priority areas and
opportunities for each retailer’s operations.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
157
===== SIDA 158 =====
Logistics
We aim to further reduce emissions from the transportation and
distribution of our products by optimising freight routes, using
renewable fuels and streamlining our supply chains. We continue to
use biofuel in inbound intercontinental ocean container transports
in many of our routes between Europe and China. The biofuel
reduces fossil CO 2 emissions by 84 per cent per container, com -
pared to conventional bunkering. During 2025, the use of air freight
was signficantly reduced, directly contributing to the 25 per cent
reduction of CO 2 in transports compared to 2024.
Climate adaptation
During the year, we assessed physical climate risks relevant to our
activities and manufacturing sites. Material risks to Volvo Cars, such
as heat stress, flooding, storms, water stress and subsidence, are
well managed through reinforced buildings, drainage systems,
climate control and water efficiency measures. Residual risks such
as precipitation leading to flooding, municipal drainage limits and
localised ground sinking are being addressed locally. Local man -
agement demonstrates strong awareness of climate hazards, and
long-term adaptation projects such as water reuse systems, storm
protection and resilient design standards, further strengthen our
operational continuity. Through continuous monitoring and man -
agement, we can identify and adapt to physical climate risks that
might affect our economic activity in the future.
Site level action for climate adaptation
In 2025, we completed the construction of a protective floodgate in
Olofström, Sweden, to protect the city and our operational site from
climate related flood risk. We also applied for an environmental
permit to deconstruct an old intake channel to the decommissioned
hydroelectric power plant at our plant in Olofström to further elimi -
nate flood risks due to climate change.
Climate adaptation in the supply chain
Through our Code of Conduct for Business partners we require
business partners to implement and maintain appropriate due
diligence processes and systems to identify, prevent, mitigate and
monitor environmental risks. This approach helps ensure stronger
risk management across the value chain.
Capabilities for climate action
Product Sustainability steering
To accelerate decarbonisation across our value chain, we have
implemented a steering process that integrates sustainability
factors such as carbon emissions and recycled content as key deci -
sion-making factors in design, engineering and sourcing. In doing so,
targets on CO 2 emissions and recycled content are set on future car
programmes and cascaded down to individual components early in
the design process. This ensures that climate impact is considered
alongside cost, quality and performance when selecting suppliers
and materials.
During the year, we scaled up the steering process by expanding it
to one of our upcoming car models, embedding emissions data into
the quotation phase and supplier evaluations. To substantiate sus -
tainability performance, the steering process is supported by a Cost
and Sustainability Breakdown, enabling suppliers to report compo -
nent-level carbon footprints and allowing us to compare low-carbon
alternatives across components and systems. Looking ahead, we
plan to expand Product Sustainability steering to all future car pro -
grams enabling more consistent and data-driven decarbonisation
across the supply chain.
Improved data model for calculating
emissions from materials
As a software-driven company, robust digital and data platforms
are core to our operations, strategy and innovation. To enable more
precise calculations of carbon emissions, we have improved the data
depth of our model. Our data model now connects the detailed
material composition of the parts that make up every Volvo car to
more precise generic and supplier-specific data, making it possible
to attribute and substantiate verified emission reductions of our
actions.
Built to scale, the enhanced data model can integrate additional
environmental impact categories beyond CO 2 and recycled content,
such as water scarcity, resource depletion and biodiversity. The
strengthened model also captures the actions we are taking to
reduce emissions in our cars, further deepening the collaboration
with our supply chain partners and directly accelerating the use of
low-emission and recycled materials in our industry. This capability
empowers cost-efficient, data-driven sustainability decisions
across the organisation, helping us achieve our CO 2 reduction ambi-
tions on our cars.
Internal carbon pricing
In 2021, we introduced an internal carbon price to accelerate our
carbon footprint reduction. Using cost estimates from the emerging
direct air carbon capture (DACC) industry and IPCC’s 2018 guidance
on a 2030-aligned carbon price of approximately €135 per tonne of
CO2, we set an internal price of SEK 1,000 per tonne of CO 2 starting
in 2021. The price point was also high enough to motivate several
key initiatives and guide internal prioritisation. The internal carbon
pricing is applied throughout our operations, with a primary focus on
product-related decisions. The price is applied in different ways
based on the type of decision e.g. to right-size budgets or guide
decisions. This means we use both a shadow price, an implicit price
and a real price across fixed, variable and material costs.
Our ambitions
Progress on emission reduction ambitions
In 2025 we achieved our corporate ambition by reducing our CO 2
footprint per car by 31 per cent compared with our 2018 baseline.
Our emission reductions are a result of collaboration across our
operations to reduce emissions by decarbonising our manufacturing
footprint by switching to climate neutral energy, electrifying our
product portfolio and sourcing low-emission materials.
To achieve our 2030 ambition of 65-75 per cent CO 2 reduction
per car and our 2040 net zero ambition, we must continue to
strengthen sustainability across the supply chain, deliver on our
electrification ambitions, and localise production.
Our 2025 and 2030 emission reduction ambitions are gross
ambitions, meaning that we will not use carbon removal to achieve
these. In reaching our net zero ambition, we intend to use carbon
removal as a last resort to neutralise the final residual emissions
that cannot be eliminated due to technical, market or legal reasons.
The ambitions are science-based and aligned with limiting global
warming to 1.5°C. They rest on assumptions about market develop -
ments and our transition to electrification, which we continuously
monitor to stay aligned with our long-term ambitions. Dialogues with
NGOs and investors have also shaped these ambitions.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
158
===== SIDA 159 =====
Gross Scopes 1, 2, 3 and Total GHG emissions
Total greenhouse gas emissions amounted to 35 million tonnes of
CO2 in 2025, compared with 38 million tonnes in 2024, reflecting
changes in car volumes. Our emission reductions are also driven by
sourcing low-emission and near zero materials for our vehicles and
GREENHOUSE GAS INVENTORY, TONNES CO 2
1) Progress Base year
% YoY 2025 2024 2018
Scope 1 GHG emissions
Gross Scope 1 GHG emissions –45 32,000 59,000 111,000
Scope 1 GHG emissions from regulated emission trading schemes, % — 5 23 —
Scope 2 GHG emissions
Gross location-based Scope 2 GHG emissions –7 155,000 167,000 252,000
Gross market-based Scope 2 GHG emissions –71 2,000 6,000 131,000
Significant Scope 3 GHG emissions
Total gross indirect (Scope 3) GHG emissions –8 34,645,000 37,468,000 41,629,000
Purchased goods and services –11 9,854,000 11,019,000 9,793,000
Upstream transportation and distribution –25 849,000 1,129,000 947,000
Waste generated in operations –10 2,000 3,000 3,000
Business travel –47 32,000 61,000 100,000
Employee commuting –3 44,000 46,000 70,000
Use of sold products –5 23,184,000 24,387,000 29,583,000
End-of-life treatment of sold products –8 408,000 444,000 385,000
Franchises –29 270,000 379,000 748,000
Total GHG emissions
Total GHG emissions (location-based) –8 34,833,000 37,694,000 41,992,000
Total GHG emissions (market-based) –8 34,679,000 37,533,000 41,870,000
1) Our ambitions for milestone years 2025, 2030 and 2040 are described on page 160.
DISAGGREGATION OF USE OF SOLD PRODUCTS, TONNES CO 2 Progress Base year
% YoY 2025 2024 2018
Use of sold products –5 23,184,000 24,387,000 29,583,000
Production and distribution of fuel and electricity (well-to-tank) –10 8,828,000 9,857,000 5,868,000
Combustion of fuel (tank-to-wheel or tailpipe emissions) –1 14,356,000 14,530,000 23,715,000
GHG intensity per revenue, tonnes CO 2/SEKm 2025 2024
Total GHG emissions (location-based) per revenue 97 103
Total GHG emissions (market-based) per revenue 97 102
electrifying our portfolio, reducing absolute emissions from materi -
als and use phase by 11 and 5 per cent year over year respectively.
99.90 per cent of our total emissions are in Scope 3. Our emission
reductions within own operations are a result of decarbonising our
manufacturing footprint and transitioning to climate neutral energy,
cutting our Scope 1 and 2 emissions in half compared to 2024.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
159
===== SIDA 160 =====
CLIMATE RELATED AMBITIONS
Ambition Progress
Strategic focus area Ambition Type Unit Base year 2030 2025 2025 2024
Transform to pure
electrification
Electrified car sales (BEVs and
PHEVs)
Intensity Per cent — 90–100% 50–60% 46% 46%
Minimise operational
emissions
Climate neutral energy in own
operations
Absolute Per cent — — 100% 87% 78%
Energy consumption reduction
per car in own operations
Intensity Per cent per
manufactured car
2018 40% — 10% 4%
CO2 EMISSION REDUCTION AMBITIONS GHG emission scope coverage
(share of baseline) Ambition Progress
Strategic focus area Ambition Type Scope 1 Scope 2 Scope 3 External validation Unit
Base
year
Base year
(t CO2) 2040 2030 2025 2025 2024
Net Zero ambition Reduce CO 2 emissions across the
value chain
Absolute 100% 100%
Market -
based
100% — Per cent 2018 41,870,000 90% — — 17% 10%
Reduce CO 2 emissions per car Intensity 100% 100%
Market-
based
86% — Per cent per car 2018 36,002,000 — 65–75% 30–35% 31% 32%
Transform to pure
electrification
Reduce tailpipe emissions per
car
Intensity 0% 0% 57% — Per cent per car 2018 23,715,000 — 85–100% 50% 42% 46%
Minimise emissions from
materials
Reduce emissions from materials
per car
Intensity 0% 0% 24% — Per cent per car 2018 9,793,000 — 30% 25% 3% 1%
Minimise operational
emissions
Reduce operational emissions
per car
Intensity 100% 100%
Market-
based
5% — Per cent per car 2018 2,494,000 — 30% 25% 37% 25%
Science Based Targets
Initiative
Reduce absolute Scope 1 and 2
emissions
Absolute 100% 100%
Market-
based
0% Validated by SBTi as
1.5°C aligned
Per cent 2019 253,000 — 60% — 87% 74%
Reduce Scope 3 emissions from
Use of sold products
Intensity 0% 0% 71% Validated by SBTi as
well below 2°C
aligned
Per cent per vehicle
kilometre
2019 30,743,000 — 52% — 23% 26%
Climate related ambitions
Climate neutral energy
This year, 87 per cent of energy consumed in our operations was
climate neutral, an increase of nine percentage points compared to
2024 but falling short of our 100 per cent climate neutral energy
ambition. By the end of 2025, 100 per cent of our electricity used in
own operations was sourced using climate neutral energy sources.
We have accomplished full climate neutral energy status in seven of
our nine manufacturing plants. Despite these achievements and
actions taken to reduce emissions, some of our sites still rely on
fossil -based heating sources, which often depend on regional utili -
ties. Additionally, regulatory and policy delays in certain regions
have hindered access to renewable energy infrastructure, further
compounded by a lack of financially sustainable options to support
the transition.
We remain committed to our ambition of sourcing 100 per cent
climate neutral energy and continue to implement energy reduction
measures to reduce total energy use across our own operations.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
160
===== SIDA 161 =====
Energy consumption and mix in own operations (MWh) 2025 2024
Fuel consumption from coal and coal products — —
Fuel consumption from crude oil and petroleum products 9,000 12,000
Fuel consumption from natural gas 133,000 259,000
Fuel consumption from other fossil sources — —
Consumption of purchased or acquired electricity, heat, steam and cooling from fossil sources 145,000 187,000
Total fossil energy consumption 287,000 458,000
Share of fossil sources in total energy consumption, % 24 36
Consumption from nuclear sources 8,000 —
Share of nuclear sources in total energy consumption, % 1 —
Fuel consumption from renewable sources 161,000 77,000
Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources 753,000 744,000
Consumption of self-generated non-fuel renewable energy 2,000 2,000
Total renewable energy consumption 916,000 823,000
Share of renewable sources in total energy consumption, % 76 64
Total energy consumption 1,211,000 1,281,000
Energy production (MWh) 2025 2024
Non-renewable energy production — —
Renewable energy production 3,000 3,000
Contractual instruments Scope 2 2025 2024
Consumption of purchased or aquired electricity from renewable sources, MWh 740,000 —
Share of bundled purchased or aquired electricity from renewable sources, % 81 —
Share of unbundled purchased or aquired electricity from renewable sources, % 19 —
Energy intensity per revenue (MWh/SEKm) 2025 2024
Total energy consumption from activities in high climate impact sectors per revenue 3.4 3.2
Energy consumption and mix
Total energy consumption decreased 5 per cent year over year,
reflecting changes in car volumes as well as systematic energy effi -
ciency improvements impacting both running production and down-
time. Energy consumption per car in own operations also decreased
and remains 10 per cent lower than our 2018 baseline.
We continued our transition to climate neutral energy, doubling our
fuel consumption from renewable sources from 2024 levels and
cutting natural gas consumption in half by electrifying equipment
and switching to biogas. As a result, the share of renewable sources
in total energy consumption has increased by 11 percentage points
from last year.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
161
===== SIDA 162 =====
Definitions and methodology
CO2 emissions per car
Calculated with the total emissions (t CO 2) from Scope 1, market -
based Scope 2, and Scope 3, excluding upstream (well-to-tank)
emissions from Use of sold products, divided by the annual pro -
duced volumes of Volvo-branded cars. The metric shows progress
versus the base year.
Tailpipe emissions per car
Tailpipe emissions include the subcategory Combustion of fuel
within the Scope 3 category Use of sold products. Calculated with
total combustion (tank-to-wheel) emissions (t CO 2) from Use of sold
products divided by the annual produced volumes of Volvo Cars-
branded cars. The metric shows progress versus the base year.
Emissions from materials per car
Emissions from materials include the Scope 3 category Purchased
goods and services. Calculated with the total emissions (t CO 2) from
Purchased goods and services divided by the annual produced vol -
umes of Volvo-branded cars. The metric shows progress versus the
base year.
Operational emissions per car
Operational emissions include all Scope 1, 2 (market-based), and 3
categories in our greenhouse gas inventory except for the catego -
ries Purchased goods and services and Use of sold products. Calcu -
lated with the total market-based emissions (t CO 2) from Scopes 1,
2, and applicable scope 3 categories, divided by the annual pro -
duced volumes of Volvo-branded cars. The metric shows progress
versus the base year.
Net zero greenhouse gas emissions
Calculated with total market-based emissions (t CO 2) from Scopes 1,
2, and 3. The metric shows progress versus the base year.
Absolute Scope 1 and 2 GHG emissions (SBTi)
Calculated with total market-based emissions (t CO 2) from Scopes 1
and 2. The metric shows progress versus the base year.
Scope 3 emissions from use of sold products (SBTi)
Calculated with total emissions from Use of sold products divided by
200,000 lifetime kilometres and by the annual produced volumes of
Volvo-branded cars (t CO 2 per vehicle kilometre). The metric shows
progress versus the base year.
Energy consumption per car in own operations
Total energy consumption in own operations divided by annual
number of cars manufactured by Volvo Cars.
Emissions consolidation approach
We follow ESRS in consolidating emissions and apply the financial
control approach as well as the operational control where applicable.
Activity data
Unless otherwise stated, we apply emission factors prepared and
verified by internationally recognised agencies on activity data for
each respective emission source. Scope 1 and 2 are based on pri -
mary activity data. Scope 3 includes estimations and assumptions
further explained under each category.
Scope 1 emissions
These include direct emissions from facilities and cars that we own
or lease. Emissions are calculated using primary activity data multi -
plied by the emission factor for that specific activity from UK DEFRA
2024. Historical or normalised average data is used in place of miss -
ing data, where required. Operating leases are included in Scope 1
and 2 emission data, following the consolidation approach and prin -
ciples for financial reporting.
Scope 2 emissions
Emissions include market-based and location-based methods. The
location-based method reflects the average emissions intensity of
grids on which energy consumption occurs. The market-based
method reflects emissions from the utility company. Contractual
instruments, which allow for energy attributes such as GHG emis -
sions to be allocated, are accounted for in the market-based
approach.
Scope 3 category 1 Purchased goods and services
Each car’s unique material composition is used with generic emis -
sion factors from Ecoinvent v3.11 and supplier-specific emission
factors to calculate emissions.
Calculating emissions from non-vehicle purchased goods and
services is done through a spend-based approach. These emissions
comprise approximately two per cent of the emissions in this category.
Emissions from materials for spare parts are currently excluded
from Purchased goods and services.
Scope 3 category 4 Upstream transportation and
distribution
Emissions are calculated with activity data from inbound materials,
outbound finished vehicles, and parts supply logistics. A distance -
based method is applied together with emission factors from NTM
and supplier-specific emission factors. Biofuel is allocated accord -
ing to mass balance within the individual supplier networks.
Scope 3 category 5 Waste generated in operations
Waste generated in operations is calculated according to activity data
for weight, waste type and treatment method. Generic emission fac-
tors from UK DEFRA 2024 and supplier- specific emission factors are
applied. Transportation to waste treatment facilities is calculated with
an assumed distance of 1,500 kilometres.
Scope 3 category 6 Business travel
Emissions from air travel are calculated using a distance-based method
where flight distances are multiplied with emission factors from
DEFRA. Emissions from other forms of business travel are calculated
using a spend-based approach and market-specific emission factors.
Scope 3 category 7 Employee commuting
Emissions are calculated based on the average number of full time
employees of the period using an emission factor derived based on a
Swedish simulation study of 27,000 employees.
Scope 3 category 11 Use of sold products
Vehicle emissions are estimated over a lifetime driving distance of
200,000 kilometres. Data from the Worldwide Harmonized Light
Vehicle Test Procedure (WLTP) is used for vehicles sold in WLTP
markets. Vehicle models that are not WLTP certified are matched with
the closest certified model, using a rule-based, automated method.
Emissions from the production and distribution of electricity used
for vehicle charging and fuel used in internal combustion engines
are considered upstream emissions, well-to-tank.
Scope 3 category 12 End-of-life treatment of sold products
Calculated using emission factors from carbon footprint report of
the C40 Recharge. Material composition is calculated using the
average material composition per propulsion type and globally
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
162
===== SIDA 163 =====
manufactured Volvo cars. Future enhancement of internal data
models will enable us to assign specific EOL factor per material
applied to each car’s unique material composition.
Scope 3 category 14 Franchises
Include the emissions from our global retailer network, consisting of
2200 outlets. Primary activity data from the majority of our retailers
is collected and extrapolated to the rest of the network and
importer markets. Generic emission factors from UK DEFRA 2024
and the market-based method is applied for Scope 2 emissions.
Omitted emission categories
A screening of the Scope 3 categories was conducted using the
Greenhouse Gas Protocol Technical Guidance criteria to identify the
most relevant Scope 3 activities. The following Scope 3 emission
sources are not reported on due to either the emission source being
not applicable or not significant to Volvo Cars and/or not prioritised
yet due to the lack of data and cost of gathering data: Categories 2,
3, 9, 10, 13, and 15. Emissions have not yet been sufficiently esti -
mated for deprioritized Scope 3 categories.
Biogenic emissions in Scopes 1 and 2 have been assessed as
immaterial and are therefore excluded from this report. Currently,
Volvo Cars does not have sufficient data to determine the material -
ity of biogenic emissions within our Scope 3 categories.
Baseline of GHG reduction ambitions
The boundaries of our GHG emission reduction ambitions are con -
sistent with the organisational and operational boundaries estab -
lished in our greenhouse gas inventory. The base year is considered
representative because the number of produced cars is the main
driver of GHG emissions, and production volume fluctuated by less
than 10 per cent the three years following the baseline year.
GHG intensity per revenue
Total emissions (tonnes CO 2), divided by total revenue (SEKm), as
reported in the consolidated income statement. See Note 2 Revenue
in the consolidated statement for information on total revenue.
Energy intensity per revenue
Volvo Cars is classified as operating in high climate impact sectors,
including manufacturing, sale of motor vehicles, sale of spare parts
and accessories, as well as maintenance and repair of motor vehi -
cles. To calculate this metric, total energy consumption (MWh) is
divided with total revenue (MSEK). See Note 2 Revenue in the
consolidated statement for information on total revenue.
Climate neutral energy in own operations
The metric shows the share of climate neutral sources of total
energy consumption. Due to the lack of grid and residual mix disag -
gregation, all grid-sourced electricity has been categorised as fossil -
based unless accounted for by EACs. Energy is defined as climate
neutral if the electricity, heating, cooling, and compressed air it
consumes causes no net increase in emissions of greenhouse gases.
Energy production
Energy production is the sum of energy produced by equipment
owned by Volvo Cars. Volvo Cars defines self-generated non-fuel
renewable energy as energy produced by equipment owned by
Volvo Cars and consumed by Volvo Cars.
Contractual instruments for climate neutral electricity
Energy procurement can be either contractually bundled where the
EAC and underlying energy are traded in a single contract or unbun -
dled where the EAC and the underlying energy are traded in sepa -
rate contracts.
Vehicle energy efficiency
Calculating BEV energy consumption (EC) involves aggregating
vehicle sales data by classification parameters (vehicle type, engine
type, driveline type, and model year), then performing a lookup
operation to assign certified EC values based on the composite
vehicle index and model year identifiers. CO 2 emissions data is
sourced from region-specific regulatory authorities in the United
States, European Union, and China
CO2
CO2, carbon, and carbon dioxide refer to, and are used interchange -
ably with, CO 2 equivalent (CO 2 e), unless otherwise stated. In most
cases CO2 refers to all greenhouse gases.
Greenhouse gases
The gases listed in Part 2 of Annex V of Regulation (EU) 2018/1999
of the European Parliament and of the Council. These include
Carbon dioxide (CO 2), Methane (CH4), Nitrous Oxide (N 2O), Sulphur
hexafluoride (SF6), Nitrogen trifluoride (NF 3), Hydrofluorocarbons
(HFCs), Perfluorocarbons (PFCs).
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
163
===== SIDA 164 =====
Pollution
Our operations and value chain contribute to pollution through mainly air and soil
emissions, the use of hazardous substances and microplastic release from tyre
wear. These impacts raise environmental and health concerns, prompting us to
phase out hazardous substances, enhance emission controls and strengthen
sustainability standards across our value chain.
Identified material impacts, risks and opportunities (IRO) Type of IRO Time horizon Value chain
POLLUTION OF AIR
Activities in our own operations and throughout our value chain emit
pollutants into the air.
Actual
negative
impact
POLLUTION OF SOIL
Production of components and parts, as well as use of raw materials,
lead to pollution of soil.
Actual
negative
impact
SUBSTANCES OF CONCERN AND SUBSTANCES OF VERY HIGH
CONCERN
The sourcing and use of substances of concern, including substances of
very high concern, throughout production and end of life treatment can
have negative impacts on the environment and human health.
Potential
negative
impact
MICROPLASTICS
Microplastics from the tyres released during the use phase have a negative
impact on the environment and human health.
Actual
negative
impact
UPSTREAM OWN OPERATIONS DOWNSTREAM
SH ORT-TERM
MID-TERM
LONG-TERM
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
164
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 165 =====
Our policies
Our Code of Conduct for Business Partners sets clear expectations
for pollution prevention on actors in our value chain. Business part -
ners are expected to comply with environmental laws and implement
environmental management systems that address the risk of impacts
caused by pollution. They are expected to minimise pollution of air,
soil and water, and to apply science-based approaches to reduce their
environmental footprint. In particular, business partners should strive
to implement adequate procedures when handling potentially harm -
ful chemicals and substances to help ensure that they are managed
safely, with due consideration for employees, other stakeholders and
the environment. Business partners are also expected to actively
work to minimise and phase out the use of harmful chemicals and
substances where applicable, and to support Volvo Cars on our jour-
ney to eliminate such substances from our products and facilities.
To further control and limit the environmental impact of incidents
or emergency situations within the value chain, our requirements for
suppliers ensure they have established processes for identifying
potential emergency scenarios, preventing pollution during such
events, and responding effectively to mitigate environmental harm.
In our operations, we comply with applicable environmental legis -
lation and hold environmental permits for all manufacturing sites.
While our policies do not explicitly enumerate pollutants or Sub -
stances of Concern, we have internal procedures in place to ensure
the safe handling of chemical products, to minimise their use and to
substitute hazardous substances with safer alternatives where feasi -
ble. We work to identify and mitigate pollution-related impacts and
risks of leakage and are prepared to implement corrective actions
should a pollution incident occur.
We acknowledge the negative environmental impact of micro -
plastics generated through tyre abrasion during the use phase of cars
in our downstream value chain. While this is a relatively new area of
focus, and formal policies are not yet in place, we are actively working
to understand and mitigate these emissions.
Policy1) Scope
Position on Circular economy Own operations, upstream,
downstream
Position on Sustainable materials Own operations, upstream,
downstream
Code of Conduct for Business Partners Upstream, downstream
1) More information regarding Volvo Cars´ position papers can be found on page 142.
Our actions
Minimising pollution
We aim to continuously reduce our pollution footprint through a
focus on product development, procurement processes and retail
operations. By integrating environmental considerations into every
stage of our value chain we are building a more responsible and
resilient business.
In addition to meeting all permit requirements, we are working to
reduce pollution and towards our vision to eliminate waste and pol -
lution. Two of our sites exceed the emission to air threshold for vola -
tile organic compounds (VOC), as defined in Annex II of the E-PRTR
Regulation (European Pollutant Release and Transfer Register). VOC
emissions are closely linked to production volumes, when produc -
tion volumes increase, total VOC emissions tend to rise correspond -
ingly, while decreases in production typically lead to lower emis -
sions. We monitor VOC emissions from our paint shops and take
proactive measures such as the use of low-VOC content paints and
enhancement of VOC treatment systems.
Emissions to air, tonnes 2025 2024
Volatile organic compounds 490 550
Other recent actions have focused on mapping pollutants according
to current regulations to enable centralised tracking and improve
visibility across the organisation. Looking ahead, we will further
improve the efficiency of our processes for monitoring and docu -
mentation, ensuring consistency and compliance throughout opera -
tions. These efforts are expected to deliver benefits such as more
accurate identification of emission sources and enhanced mitigation
planning to reduce environmental impact.
To help reduce pollution and promote responsible practices in our
downstream value chain, we have provided our global retail network
with sustainability toolkits and guidelines focused on areas such as
chemical management, waste reduction and water treatment. These
resources are designed to support retailers in implementing safer
processes, minimising environmental impact and complying with
relevant standards, thereby lowering pollution risks.
Substituting hazardous substances
To address the negative impact that Substances of Concern (SoCs)
and Substances of Very High Concern (SVHCs) pose on the environ-
ment and human health, we have taken a collaborative approach
across our value chain. In alignment with EU REACH and EU Taxon-
omy criteria, as well as emerging PFAS regulations, we are working
closely with suppliers to phase out hazardous substances from future
products and production processes. Our efforts extend to ensuring
that such substances are only used when no viable alternatives exist
and under strictly controlled conditions. Through these efforts, we
aim to minimise negative impact throughout our value chain.
Amount of Substances of concern that leave
facilities as products by main hazard classes,
tonnes 2025 2024
Human health hazard 1,474 —
Environmental hazard 36,555 —
Human health and environmental hazard 34,892 —
Other 81 —
Total 73,002 —
Amount of Substances of very high concern
that leave facilities as products by main hazard
classes, tonnes 2025 2024
Human health hazard 31 —
Environmental hazard — —
Human health and environmental hazard 7,832 —
Other 81 —
Total 7,943 —
Monitoring microplastics
We are closely following the development of EURO 7 tyre abrasion
limits to guide future strategies and ensure alignment with regula -
tory and environmental goals.
During the year we have integrated EURO 7 compliance into
sourcing processes and initiated research collaborations focused on
tyre wear and particle toxicity. In parallel, we are studying the
impact of driving behaviour on abrasion and working with suppliers
to explore alternative materials that reduce microplastic generation.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
165
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 166 =====
Our ambitions
Volvo Cars has not yet established specific targets for pollution,
SoCs and SVHCs, or microplastics, due to the complexity of baseline
definition and the evolving regulatory landscape. Although specific
measurable outcome-oriented targets have not yet been adopted,
we actively monitor and collect data to ensure compliance with legal
requirements in the areas of pollution and chemical substances.
Pollutants are tracked and reported in line with the legal permits
for all our main sites. SoC and SVHC in our products are tracked in
the global OEM International Material Data System (IMDS), in which
the suppliers submit data. The IMDS data is continuously sent in and
reviewed against Volvo Cars´ requirements to fulfil legal compliance
and data quality. Chemical products for use within our operations
are tracked and reported through an internal chemical management
tool.
Definitions and methodology
Pollution of air
To calculate the amounts of Volatile Organic Compounds (VOC)
emitted to air, we use a mass balance based method that captures
relevant flows throughout the paint process and related operations.
Emissions are calculated by aggregating the VOCs present in
applied products and subtracting the amounts destroyed in abate -
ment systems and the portion retained in the final coating.
Periodic measurements are carried out at least once per year by
an external third party in accordance with the EN 12619 standard.
For our European sites monitoring is carried out in accordance with
EU BREF Standards.
The reported amounts are subject to a one-year time lag due to
delay in data availability.
Substances of concern and Substances of very high
concern
Are defined using the latest EU REACH Candidate List and hazard
classifications according to Globally Harmonized System of Classifi -
cation and Labelling of Chemicals (GHS) and Classification Labelling
and Packaging (CLP) along with Global Automotive Declarable
Substance List (GADSL).
To estimate the amounts of SoCs and SVHCs leaving facilities as
products, we use the Bill of Materials (BOM) for the most sold car for
each driveline type – BEV, PHEV and ICE – as a reference. Material
differences including substances between cars are primarily driven
by the driveline, as it introduces the most significant technical varia -
tions.
The chosen BoMs are matched with the latest material data -
sheets to calculate the amount of substances in our fleet. The sub -
stances are then grouped into four main hazard classes. With these
four main hazard classes, there is no overlap of weight or sub -
stances.
This is our first year reporting SoCs and SVHCs that leave our
facilities as products. As a result, no year-on-year comparison is
included. Due to limitations in data availability, we are currently able
to report only SoCs and SVHCs leaving our facilities as products. We
are monitoring possibilities to include the full scope of SoCs and
SVHCs that leave our facilities.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
166
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 167 =====
Water
We have an impact on freshwater through water withdrawal and consumption
from our operations and value chain. At the same time, as we continue our
transition to electrification, growing water dependency due to certain water
intensive production process exposes us to supply chain and production risks.
These impacts and risks are driving us to strengthen water stewardship and
resilience across the value chain.
Identified material impacts, risks and opportunities (IRO) Type of IRO Time horizon Value chain
WATER
Withdrawal and consumption of water contributing to water stress. Actual neg-
ative impact
Approximate 40 per cent of our directly contracted suppliers for direct
material are located in high water risk areas. Risks such as water shortage
or flooding could lead to supply chain disruption.
Risk
UPSTREAM OWN OPERATIONS DOWNSTREAM
SH ORT-TERM
MID-TERM
LONG-TERM
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
167
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 168 =====
Our policies
Our Code of Conduct for Business Partners sets clear expectations
for actors in our value chain to implement efficient and responsible
water management practices. Business partners are expected to set
measurable targets for reducing water withdrawal and consumption
and for improving water quality, taking into account the nature and
location of their operations. These expectations are particularly
important for partners operating in or near high water-stress areas.
Our position on water management outlines how we aim to
reduce our water withdrawal, improve efficiency, increase water
reuse and recycle and prevent pollution across our operations and
value chain. We recognise that water, pollution, biodiversity and
climate change are interconnected challenges that require a coordi -
nated response.
Policy1) Scope
Code of Conduct for Business Partners Upstream, downstream
Position on water management Own operations, upstream,
downstream
Position on sustainable steel Own operations, upstream,
downstream
Position on sustainable materials Own operations, upstream,
downstream
Water management directive Own operations
1) More information regarding Volvo Cars´ position papers can be found on page 142.
Our actions
We aim to advance water stewardship across our value chain, from
supplier engagement and operational practices to retail activities.
By integrating water risk considerations into our environmental
requirements, site-level planning and supplier processes, we are
building a more responsible and resilient business. These efforts
support our broader sustainability ambitions and contribute to safe -
guarding water resources in water-stressed areas.
Enhancing water management in our operations
During the year we strengthened water management in our own
operations by improving process and cooling water monitoring,
implementing leakage detection and maintenance and optimising
water reuse and recycling.
Looking ahead we aim to increase rainwater harvesting, water
reuse and recycling and optimise water usage during down-time. We
also plan to achieve LEED (Leadership in Energy and Environmental
Design) Gold or higher in all large construction projects including
those situated in water-stressed areas, leading to improved water
efficiency and lowered water withdrawal.
The total water consumption in own operations decreased between
2024 and 2025, partly due to our implemented measures and due to
lower production volumes. In 2025, 36 per cent of water withdrawal
comes from areas of high water stress.
Water 2025 2024
Total water withdrawal, m 3 1,800,000 2,024,000
Total water consumption, m 3 707,000 862,000
Total water discharges, m 3 1,093,000 1,162,000
Water withdrawal in areas at water risk 1), m3 656,000 687,000
Share of water withdrawal in areas at water
risk1), % 36 34
Water consumption in areas at water risk 1), m3 190,000 225,000
Share of water consumption in areas at water
risk1), % 27 26
Water reused and recycled, m 3 283,000 —
Water consumption per revenue, m 3/SEKm 2,0 2,2
1) Including areas of high water stress; methodology updated from water stress to
water risk areas, change to 2024 result is immaterial.
Water treatment
Water treatment across our sites is adapted to operational needs
and local infrastructure. To manage wastewater responsibly, manu -
facturing facilities rely on biological treatment systems, tertiary
treatment systems, or a combination of both. At most sites waste -
water is discharged to third-party providers for treatment, in line
with local regulations. These practices support our commitment to
minimising environmental impact and ensuring compliance with
legal demands.
Advancing water stewardship in the value chain
To further ensure compliance with the water-related requirements
outlined in our Code of Conduct for Business Partners, we updated
our supplier onboarding and follow-up processes. Throughout the
year, we collected water use data from supplier sites located in
water-stressed areas and gathered their roadmaps and reduction
targets for 2025 and 2030. Looking ahead, we will continue gather -
ing water-related data, set requirements for reduction targets and
evaluate suppliers to advance water stewardship across the supply
chain. These actions aim to reduce water use in the supply chain,
particularly in regions facing water risks, thus mitigating our identi -
fied water-related impact and risks in the supply chain.
At the same time, we supported our global retail network by pro -
viding sustainability toolkits and guidelines focused on reducing
water withdrawal and promoting efficient water use. Through these
efforts, we aim to lower water withdrawal per car across our global
retail operations, reinforcing our commitment to responsible water
management throughout the value chain.
Identifying water risks across the value chain
During the year we conducted water risk assessments for our
directly contracted suppliers for direct material, our own operations
sites and our retail partners, enabling us to identify the sites located
in water risk and water stressed areas. This has deepened our
understanding of water-related vulnerabilities across our value
chain, enabling us to take more targeted and effective actions.
These efforts are supported by continued data collection, supplier
evaluations and requirement setting to promote water stewardship.
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
168
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 169 =====
Our ambitions
Volvo Cars has set an ambition to reduce freshwater withdrawal per
manufactured car in our own operations by 50 per cent by 2030
from a 2018 baseline. The ambition is informed by the scientific
understanding of water balance and water cycle, as well as the
interconnection between biodiversity and climate, which is based
on recognized standards.
It is based on recognised standards and defined based on
recommendations and discussions with external stakeholders such
as NGOs and academic institutions.
The ambition supports the reduction of water consumption by
improving operational efficiency and increasing internal reuse and
recycling. These efforts are especially relevant in water-stressed
regions, where we aim to reduce pressure on local freshwater
sources. Progress toward the ambition is monitored through internal
water reporting systems and reviewed quarterly.
As of 2025, we have achieved a 29 per cent reduction in fresh -
water withdrawal in our own operations per manufactured car.
Definitions and methodology
Total water withdrawal
Includes sources from third party purchased water, direct self-
supply from surface water or groundwater, and harvested rainwater.
Today, around 98 per cent of water withdrawn comes from third-
party purchased water from the municipality. The amounts are
measured using direct methods. Less than one percent is estimated.
While harvested rainwater should be included as a source of water
withdrawal, the amount remains insignificant in 2025.
Total water discharged
Refers to water discharged back to water bodies. Approximately 98
per cent is directed to third-party water treatment systems. The
majority of discharged water is measured using direct methods
while indirect methods are used to estimate remaining sites based
on an assumption of water discharge- to -withdrawal ratio.
Total water consumption
Calculated as “water withdrawal – water discharge = water
consumption.”
Areas at water risk including water stress
The Aqueduct Water Risk Atlas 4.0, developed by the World
Resources Institute (WRI), was used to identify sites located in areas
exposed to high or very high water risk and/or high or very high
water stress. Sites were classified as being in areas of water risk if
they received an “Overall Water Risk” score of high (3–4) or
extremely high (4–5). Overall water risk includes indicators for water
scarcity such as baseline water stress. Similarly, sites were identified
as being in areas of high water stress if their “Baseline Water Stress”
score was high (3–4) or extremely high (4–5).
Total water reused and recycled
The majority of water recirculated at manufacturing sites is water
from paint shops. Recycling in manufacturing plants is directly
measured at the recycling processes. Only two plants are included
in the water reused and recycled figure due to data quality con -
straints. Zero water circulation is assumed for all other sites to be
conservative.
At non-manufacturing sites, recirculated water primarily comes
from car wash facilities at owned retailers. Estimations use a stand -
ardised amount of water recycled per car wash, multiplied by the
number of cars washed.
Water withdrawal reduction from own operations per
manufactured car
Defined as a percentage decrease in water withdrawal per car man -
ufactured, using 2018 as the baseline year. The metric is calculated
by dividing the total water withdrawal (excluding harvested rain -
water) by the number of cars manufactured and comparing this ratio
to the 2018 baseline.
Rainwater harvesting is excluded from total withdrawal figures
when calculating the KPI, as it is considered a sustainable practice
that reduces reliance on conventional water sources and mitigates
urban runoff and flooding risks.
Water consumption per revenue
Based on total water consumption (m 3), divided by total revenue
(MSEK), as reported in the consolidated income statement. See
Note 2 Revenue in the consolidated financial statement for informa -
tion on total revenue.
Water
In this chapter water refers to freshwater only ie. groundwater and
surface water with a mean salinity of <0,5 per cent.
WATER WITHDRAWAL REDUCTION AMBITION Ambition Progress
IRO Ambition Type Value chain Base year Base year unit 2030 2025 2025 2024
Withdrawal and consumption of water
contributing to water stress
To decrease freshwater withdrawal per
manufactured car in our own operations
Per cent Own operations 2018 3,8 m3/ car 50% — 29% 20%
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
169
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 170 =====
Biodiversity and ecosystems
We contribute to biodiversity loss through emissions throughout our value chain,
supply chain activities such as raw material extraction that degrade ecosystems
and harm species, as well as impacts from operations within our own facilities and
the use phase of our products. At the same time, we face risks due to our reliance
on ecosystem services – such as water availability and natural hazard regulation
– which are increasingly threatened. These impacts and risks motivate us to
contribute to a nature-positive ambition and more sustainable sourcing practices
to protect long-term operational stability.
Identified material impacts, risks and opportunities (IRO) Type of IRO Time horizon Value chain
DIRECT IMPACT DRIVERS OF BIODIVERSITY LOSS
Raw material extraction and production of components, manufacturing
of cars and fuel as well as tailpipe emissions have a negative impact on
climate change and pollution which drives biodiversity loss.
Actual neg-
ative impact
IMPACT ON THE STATE OF SPECIES
State of species are impacted from activities in our supply chain, from
the use phase of our products as well as from our sites in or near Key
Biodiversity Areas.
Actual neg-
ative impact
IMPACTS ON THE EXTENT AND CONDITION OF ECOSYSTEMS
Impact occurs upstream in activities such as construction of mines for raw
material extraction through land degradation and by our sites through
environmental disturbances such as light and noise pollution.
Actual neg-
ative impact
IMPACTS AND DEPENDENCIES ON ECOSYSTEM SERVICES
Our upstream supply chain has a negative impact and affects the proper
functioning of ecosystems.
Actual neg-
ative impact
Our upstream supply chain depends heavily on provisional service such
as water availability and regulating services from vegetation that helps
stabilize soil and prevent landslides.
Risk
UPSTREAM OWN OPERATIONS DOWNSTREAM
SH ORT-TERM
MID-TERM
LONG-TERM
OVERVIEW 3
MARKET 15
OUR STRATEGIC FRAMEWORK 18
DIRECTORS’ REPORT 29
RISK 36
CORPORATE GOVERNANCE 42
FINANCIALS 61
SUSTAINABILITY
GENERAL INFORMATION
ENVIRONMENTAL INFORMATION
EU Taxonomy Report
Climate change
Pollution
Water
Biodiversity and ecosystems
Resource use and circular economy
SOCIAL INFORMATION
Own workforce
Workers in the value chain
Consumers and end-users
GOVERNANCE INFORMATION
Business conduct
OTHER INFORMATION
THE SHARE 220
OUR HERITAGE 222
170
VOLVO CAR GROUP / SUSTAINABILITY / ENVIRONMENTAL INFORMATION
===== SIDA 171 =====