Revenue and cash flow driven by growth targets
Tianyi said: “We hope that higher growth will also lead to higher margins and cash flow. In order to achieve our new financial targets, we are on a path to further improve the quality of our revenues, capital efficiency and productivity. At the same time, our capital allocation focus remains unchanged.”
ABB will also continue to invest in digitization to create synergies with the company’s products and solutions. By 2022, about 57% of ABB’s orders are related to software and digital products. About 60% of ABB’s R&D resources are focused on digital solutions, and the company will continue to strengthen this area through bolt-on acquisitions. Between 2020 and 2023, ABB has made a total of 26 venture investments in technology and digitalization.
ABB reiterated its aim to maintain a strong investment grade rating. ABB’s capital allocation principles remain unchanged: to fund the company’s organic growth through investment in research and development, channels and capital expenditures; Pay dividends per share that grow sustainably over the long term; Implement value-creating acquisitions; And, where appropriate, return additional cash to shareholders through share buybacks. Over the past 10 years, ABB has returned more than $28 billion to shareholders through dividends or share repurchases.
Sustainable Development: Net Zero science targets 2030 and 2050
ABB’s technology is supporting all relevant industries to optimise, electrify and decarbonise, driving the energy transition towards a net-zero future. With this mission in mind, ABB today announced new goals and plans to strengthen and accelerate its sustainability efforts.
Mr Robion said: “For more than 140 years, ABB has been committed to energy efficiency and electrification. Today, we are leveraging our leading technologies in electrification, automation and digitalization to accelerate the energy transition. Our sustainability agenda is fully aligned with this mission, working with our customers, suppliers and partners to empower a low-carbon society, conserve resources and drive social progress.”
ABB is adopting a rigorous science-based approach to the net zero target, in line with the Science-based Carbon Target Initiative’s (SBTi) net zero standards. The company has submitted new targets to the SBTi and expects to be validated in 2024. These include Scope 1 and Scope 2 targets consistent with the 1.5°C temperature control target of an 80% reduction in CO2 emissions equivalent by 2030 and a 100% reduction by 2050 compared to the 2019 baseline. On a 12-month rolling average, ABB has reduced its current Range 1 and Range 2 CO2 emissions equivalent by 72% compared to 2019. In addition, the company has set new Scope 3 CO2 reduction targets of 25% and 90% by 2030 and 2050, respectively, compared to the 2022 baseline.
With this more rigorous approach, ABB has replaced its previous goal of achieving carbon neutrality using methods such as carbon offsets.
In line with the World Business Council for Sustainable Development’s latest Emissions Avoidance Guidelines, ABB has also updated its target in this area to help customers avoid 600 million tonnes of CO2 equivalent emissions through products sold between 2022 and 2030. In 2022 alone, ABB helped customers in industry, transportation, buildings, data centers and other sectors avoid 70 million tons of CO2 equivalent emissions.