Lower risk – better business

As one of the world’s leading suppliers of construction equipment for infrastructure and mines, Volvo CE impacts local environment and communities across the globe. Recognising its responsibilities, the company has taken steps to ensure that ’responsible sales’ remains a cornerstone in every aspect.

”To us responsible business means to leverage our influence across the entire value chain, from raw material suppliers to our own production and finally how and where the end customers intend to make use of our products,” says Tora Leifland, Head of Public Affairs at Volvo CE.

To secure a thorough risk assessment, Volvo CE has initiated a cooperation with EKN that aims to synchronise the processes required to ensure top-notch risk assessment. Collection, analysis and follow-up of data required for in-depth risk assessment is a considerable undertaking, particularly when involving business partners across several jurisdictions.

“Even if we have established solid competence required for a systematic risk assessment internally, we are more than happy to cooperate with EKN to secure a comprehensive and transparent handling of risks in different projects. It reduces our workload and builds confidence between us as exporters and EKN,” she says and goes on, “By coordinating our assessments with EKN as well as other partners such as suppliers, creditors and contractors, we are able to arrive at a shared standpoint, which builds trust and creates predictability. Everyone involved knows the bottom line and we are also able to learn from one another.”

To be sure, responsible sales and sustainable business isn’t only about mitigating risks to the people and places that are affected. Responsible sales also makes for better business, Leifland points out: “There is a real business value in identifying and collaborating with the best. Companies that are lacking in risk management often have other weak spots and are less well managed. A poor track record on sustainability frequently goes hand in hand with poor governance.”

Strengthens competitiveness

Stringent risk assessment also serves to strengthen a company’s competitiveness and its reputation, according to Leifland. “More and more customers are demanding that their suppliers have sustainability risk assessment procedures and verified results in place.”

Volvo CE has fully integrated responsible sales into its risk management process and due diligence routines across the value chain. “It’s about walking the talk,” says Leifland and points out an added benefit. “In addition, risk assessment and screening offers the means to identify new and interesting customers and to navigate so-called difficult markets, which may still harbour good business opportunities even if you have to devote more time to risk assessment.”

In addition to comprehensive risk management, cooperating with EKN also strengthens competitiveness in areas such as customer finance. More than 90 percent of Volvo CE’s sales is done by local dealerships across the world. A new tripartite agreement between Volvo CE, local dealerships and customers guaranteed by EKN, help dealers offer more attractive financing of new sales and from existing inventory, with the help of a Supplier Credit Guarantee.

“This setup makes us more competitive since we are able to support the dealer in offering the end customer a better deal and the opportunity to offer package solutions under a single contract and one guarantee,” says Greger Svanström, Head of Trade & Customer Finance at Volvo CE. “The dealer can build up inventory and still count on export credit support in future sales, and for more complex deals.”

In the new agreement, the dealership accounts for the equipment in its own books, which better reflects the situation compared with the standard Supplier Credit Guarantee in which Volvo CE conduct the sales of the equipment and the dealer receives a commission on sales.