Hello all, welcome to Follow Konecranes' Sustainability Webcast. My name is Linda Häkkilä. I'm the Head of Investor Relations here at Konecranes, and I'm today with our main speaker, Anniina Virta-Toikka, who is the VP of Sustainability. Today, we will first start with our presentation, and after that, we're happy to answer your questions. Please note that you may provide and send your questions through the chat functions throughout the event. Please also note that the focus of this event is on sustainability. Before we start with the presentation, I would like to remind you about the disclaimer, as we might be making forward-looking statements. Now, without any further comments, I would like to hand over to Anniina.
Thank you, Linda. Warmly welcome from my behalf as well. Today, we will be focusing on how sustainability creates long-term value. The focus will be a lot on environmental issues, but we will cover the whole ESG agenda, of course. Let's start from the big picture. Sustainability has been and is still one of the key mega trends that is driving businesses. The same thing for Konecranes as well. We have identified sustainability being one of the key enablers on doing our strategy, and it's integrated heavily. We create value for our customers by supporting them with their environmental targets. We fulfill their supplier ESG-related requirements, and on the other hand, our strong investments to build inclusive culture to create fair employer practices is an engaging factor for our current people and for the future talent.
Our sustainability agenda is built, or aligned with the United Nations' Sustainable Development Goals, and for these nine goals, we can create some positive value. When it comes to sustainability agenda of Konecranes, it's built around four sustainability commitments. We are committed to deliver safe and secure material handling solutions. We are targeting for the mega trend of decarbonization by ensuring that we support our customers in reaching their targets, as well as we have the most extensive service offering that extends the lifetime of the equipment. We are also focusing, of course, on our own operations. On the other side of the social responsibility side, we're committed to create fair, inclusive, and diverse, and engaging working environment, ensuring that we respect human rights in the whole value chain. As an overlying foundation of everything that we do is the fourth commitment.
We expect the high ethical standards from ourselves and also from our business partners. This includes, for example, strong governance model that we have in place. So far, in recent years, we have been celebrating our success on numbers, and last year was not any different. The biggest highlight from last year was our upgraded climate targets introduction, so we reached the SBTi target for our own operations eight years ahead and now upgraded the target. More on that in the later slides. When we talk about the Total Recordable Incident Rate, the number was 5.2. It decreased from last year, but on long term, the target is to reach lower than three by 2030, so there is still some room for improvement, but we are in a positive track currently.
From the emissions perspective, since baseline year 2019, the emissions from own operations, being the Scope 1 and 2 emissions, have decreased already by 54%. From the value chain Scope 3, the emission reduction is -20%. If we compare 2024 and 2025, both of these decreased by 1%. Last year was not equally good as the previous ones. The main reasons are the increased gas consumption in our manufacturing sites due to the really cold winter in Germany, as well as from the value chain, this is so dependent on the annual sales mix. On a really positive note is the Inclusion Index result that indicates a really strong inclusion among our employees. We have again been recognized a lot.
One of my favorites is a recognition in the Financial Times Europe's Climate Leaders, where we were fifth time last year. Continuing about the ratings, from the CDP, we received last year our second A rating, which is the best rating. On MSCI, we continued in a triple A class, and from EcoVadis, we upgraded our results to the platinum level and currently are among the top 1% of the companies answering to that supplier sustainability questionnaire. Sustainalytics, which is measuring the ESG risk, the risk level remained low, and we were among the top 3% on our industry, so brilliant results from that perspective. We continuously utilize these ratings as a benchmark to see how these external ratings are recognizing and valuing our policies, processes, and progress, and so far it has been really good.
We continuously continue to improve. Jumping to the environmental side for a while. First, starting from our climate action. In 2025, Konecranes' total climate impact was a bit over 3 million tons of CO2. From that, a bit more than 1% of the emissions is generated by our own operations, Scope 1 and 2. This includes the energy consumed in our manufacturing and the fuel consumed by our fleet. Nearly 99% of the impact comes from the value chain, which is quite equal to many of our peers. The biggest emission category on our side is the so-called Use of Sold Products. This includes basically the emissions from the sold equipment that was sold during 2025 and how much energy they are utilizing during their whole long lifetime. That converts to one-year emissions. The sales mix is here really relevant.
The second biggest category is called Purchased Goods and Services, and their one individual most important category is the steel-related raw material purchases. These two shares from this chart are within our target setting boundary. In 2020, Konecranes committed to science-based targets, and as mentioned last year, those were revalidated. Our current targets are from the value chain to cut half the emissions before the end of 2030, from own operations to reach -60% absolute reductions, and on top of that, we have additional target to reach carbon neutral manufacturing by 2030. We have also committed to set the long-term science-based targets. How to reach that, we of course have our transition plan, which is divided to two sides, for the external market transformation and the activities that are more on our hands.
The most significant or most sizable thing in the transition plan is the customer industries decarbonization. As our offering in the industrial side has been fully electrified already for decades, now we are more talking about the ports and terminals environments. We're still at the. It's largely operated by diesel-powered equipment. To reach our targets, we need to ensure that these customer industries are decarbonizing, which means basically continuously electrifying their operations. The trend so far has been really positive globally. To reach the targets, it needs further acceleration. We strongly believe that happens, and our numbers, at least so far, looks good. The other industry where we expect some decarbonization is, of course, the steel-related industry or steel manufacturing industry.
If that doesn't move forward so quickly, it doesn't put our target setting to a risk due to the fact that there is already low emission steel available, and this is the steel that is manufactured from scrap material in a manufacturing site that utilizes renewable energy sources. Last year, 1.4% of the steel raw material that Konecranes purchased was validated to be from these kind of sources. Third industry where we expect the change to happen is, of course, the energy market and especially the electricity market. When this happens, it helps us to lower the emissions from the use of sold products and for also the emissions from our own operations. Our own actions I will cover in the next slide. The biggest thing of course is our offering.
We do have offering that supports our customers in reaching their low carbon targets, and for this we are talking mostly about the electric and hybrid equipment offering. Not only that, we are also ensuring to utilize in the product design, so-called Design for Environment principles, where we continuously want to improve the energy efficiency of the products, as well as focus on the smart material selection, for example. Here also the megatrend of automation is supporting the electrification, as we need electrified equipment to be able to automate the operations. The other thing where we create value and helps us to reach the targets is maximizing the life cycle value of the customer's equipment with our circular solutions.
Our service offering is the most extensive in the market, and the whole idea is, of course, to extend the equipment lifetime, improve the productivity, safety, and security also at the same time. We as a company have a unique position because we are the ones who are designing the equipment, manufacturing or subcontracting it, and then servicing it. It means that our work is to maximize the whole life cycle value. The third category is decarbonizing our own operations, which is so far moving nicely forward, so the result is already on minus 54%. There, the biggest share of the emissions are coming actually from our global vehicle fleet, and there, the biggest emission reduction action is electrifying the fleet.
That's moving as planned. Currently, we are still some perhaps some delays in the U.S. market, where, for example, the infrastructure has not improved heavily on the charging side, as well as the offering of the vehicles that we particularly need for our operations is not where we thought it could be already at this moment. We have been able to compensate that in other regions and moving nicely. One thing to share from our manufacturing side is our special case. Our manufacturing site in Sweden, in Markaryd, is currently operated completely fossil-free. Their emission reduction since 2019 has been already 99%. This is clearly creating value, and this represents the value in numbers.
Forty percent of group net sales in 2025 consisted of solutions that were extending the product life cycles. This included the basic maintenance, modernizations, retrofits, and spare parts sales. Forty percent of the group net sales. Then when we talk about our Ecolifting on the equipment side, we cover fully electrified and hybrid equipment. As mentioned already earlier, the offering in the industrial equipment side has been for decades fully electrified, so that's why we cover 100%. The focus on that on those equipments is then more to ensure that we continuously improve the energy efficiency and seek for low-emission materials. For example, last year, we launched a first crane girder box that was manufactured from low-emission steel.
On the Port Solutions side, 62% of the equipment sales was fully electrified and hybrid offering. There, we also had new product launches of fully electrified offering that going forward will enable us to reach our target. 62% represents a longer-term trend, where the share of sales of Ecolifting clearly increases. Moving to other topics in the ESG field. Now we're talking about safety and security. Safety and security are super important topics for all of our customers due to the industry where we operate in. In material handling industry, we are talking about equipment that are carrying loads, or we talk about working at heights. It's a severe thing to take into consideration.
Konecranes has some technologically advanced equipment innovations, like our Smart Features, that are not only increasing the safety of the customer operations, but also securing productive and uninterrupted operations. We do have a systematic management of the product security and cybersecurity as we are more and more connecting data to equipment and people together. We want to ensure that every single one gets to go home safe every day. For that, we do have standardized procedures for our own employees. We take this seriously. We ensure that the safety culture is there. We need to ensure that there is never a job so urgent that it can't be done safely. We need to stop and pause and think and do it safely. Other side of the social side.
We have the responsibilities to our 16,500 employees globally. Based on their voice, based on our voice, we see the inclusive culture being at the company, which makes me especially proud that the company that operates in 50 countries has been able to create such an inclusive culture. One highlight from last year is that by the end of last year, we were paying a living wage for all of our employees. Living wage is a voluntary standard that in many areas is a bit higher compared to standard minimum wage. This measures per location a minimum amount of money that enables a good living for a person.
We were rewarded with a first position in the Nordic Business Diversity Index for large cap by Impactly last year. By the end of last year, 20.3% of our top management were females. Last but not least, the high ethical standards. We are following a strong governance on sustainability. We are also of course following strong governance on compliance and ethics topics in general. We do have a governance model that we follow on the decision-making and with basic communication and ensuring that responsibilities are kept. Since 2023 onwards, Konecranes have had ESG-linked incentives for the top management.
Currently, we have these in place for both short-term and long-term incentive systems. We are embedding sustainability, compliance, and ethical requirements to our business processes, so we do have integrated these topics directly to our policies and to multiple processes. One big thing that has been a focus area for past few years is the collaboration with suppliers. There has been multiple reasons why this has been the focus point, one being that there has been a lot of emerging regulation on this topic globally, as well as there are the most significant risks lie within the supply chain. One great tool that we have for the managing of suppliers is our Supplier Code of Conduct that was launched 2018 for the first time and updated last year. Currently, the coverage of fulfilling that is 78%.
From our total supply chain, which covers more than 20,000 suppliers, 78% has signed or are committed to follow our Supplier Code of Conduct. Of course, this is only part of our sustainability due diligence that includes the questionnaires and audits, et cetera, as well. We are coming to an end. To conclude, how does Konecranes create long-term value through our sustainability work? Of course, the key thing is our offering. We continuously are meeting the customers' decarbonization needs with our equipment offering. We have the most extensive life cycle services that are extending the equipment lifetime of our customers' operations as well as improving operations. We are progressing with our own emission reductions.
We are moving from fossil power to renewables, bringing more resilience to our operations as well, and we are extending the high sustainability standards to our value chain where, for example, the work that we do with the suppliers is an excellent example. That was my presentation. Thank you so much.
Thank you, Anniina, for your presentation. Now we will start the Q&A session. Maybe we'll start the discussion by discussing about Carbon Border Adjustment Mechanism, CBAM. There has been a lot of discussion around CBAM. How do you expect it to affect Konecranes?
Well, CBAM was introduced some years ago, starting to focus on the focus is, the aim is to tax the carbon-intensive raw materials, and it first focused on certain steel and aluminum raw materials. It has been impacting us slightly-
Mm
In the past years because we had the obligation to report how much we import. We have a global supply chain, meaning that we are not so dependent on the imports to the EU on this matter, so the impact so far has been really limited. Now, the EU made a draft proposal to extend the regulation quite significantly. It would mean that not only raw materials are included, but certain components.
Mm
... some ready-made products as well will be there. Let's see how it proceeds, but so far, based on our analysis, the impact toward us would be quite neutral. Of course, we expect that it would perhaps increase the prices, and then the question is that how evenly we can offset that.
Mm
Going forward.
Thank you. A question about inclusion and diversity. What kind of activities Konecranes is doing to improve inclusion and diversity across the different levels of the organization?
Brilliant question. Our inclusion and diversity action plan is really extensive. I think that the biggest thing that we do is to, we are localizing these programs. We focus on the gender balance. We focus on offering more opportunities for females, like having the female mentorship we had in our history. We have a coffee and culture coffee sessions where we are opening the topic. We don't only talk about, of course, the gender. We talk about the other aspects as well. The inclusive culture is a big thing. In the recruiting we are taking it really seriously. We need to ensure that the recruitment processes are being equal to all.
The local activities are making the biggest change currently.
Okay. Thank you very much. Next question about emissions. Konecranes recently upgraded the near-term Scope 1 and 2 emissions targets for the end of 2025. What are the main levers enabling this acceleration, and what progress have you seen so far?
Good. We upgraded the emission targets for our own operations due to the fact that the old target was already set. At the same time, as we are actually targeting for carbon-neutral manufacturing, it didn't make any more sense to have that target that was set. Currently, we are on -54% of the absolute emission reductions targeting for -60%. As mentioned already, the biggest impact comes from our vehicle fleet, so there, of course, we are more locally doing the electrification actions where feasible. We have progressed really well in downsizing the cars at certain levels. On our manufacturing sites, the biggest impact has been moving to fully renewable electricity in all of our manufacturing sites.
Now we have continued with substituting other energy sources like district heating or utilizing the HVO with the diesel-driven lift trucks that we have. These things will continue. As always, the low-hanging fruits have been collected.
Mm.
Now the biggest thing is the electrification of the fleet.
Great. Moving to the next theme about Scope 3 emission reduction.
Mm-hmm.
Given that we are only four years away from 2030, how confident are you to achieve your Scope 3 emissions?
One commitment that we have done is that we have committed that by the end of this year we would have a full electric offering, meaning that from every single product type, we would have the electric offering available. We're confident that that will happen. There are only a few versions that are not globally yet available. Then the question is how attractive these are for the markets. As mentioned so far, the electrification of these important industries has progressed positively forward, and we do believe that it continues. With our own actions, we will not reach the target. We need the markets to transform.
Thank you, Anniina. This concludes our session today, so I want to thank you, everyone, for following our event and wish you, everyone, a lovely day. Thank you.