Implementation of an up-dated ISO 14001

Implementation of an up-dated ISO 14001 Environmental management system at Grundfos Guidelines and Requirements

Aalborg University Environmental Management & Sustainability Science 3rd Semester Project Anders Clausen

Source: (ISO 14001)

Source: (Grundfos Intranet)

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Preface _______________________________________________________________________________________ Environmental Management & Sustainability Science Department of Planning Skibrogade 5, 9000 Aalborg http://www.environmentalmanagement.aau.dk/

Title: Implementation of an up-dated ISO 14001 environmental management system at Grundfos Theme: Professional development within environmental management systems Project Member: Anders Clausen

______________________ Supervisor: Arne Remmen

______________________ Company Contact: Nils Thorup

______________________

Synopsis: This report examines environmental management 14001, and its preparedness level for the management at Grundfos in regards to strategic planning and the product development activities. The case company Grundfos is presented, then the theory and contexts used for the questionnaire next. Hereafter the environmental management standard and its key parts in the new structure are introduced. Interviews conducted with directors at the Development & Engineering function were made to see their preparedness level and their requirements.

Nr. Of Copies: 4 Nr. Of Pages: 44 Appendix/Annex: 41 page(s) Due date: 18th of January 2016

Interviews with group vice president were also made, to see what ambition level top management had for the ISO management system. This is assessed and analyzed and the two management tiers opinions compared. Conclusions are finally made based on their answers and measurements and further challenges are identified, analyzed and reflected upon lastly.

The content of this report is freely accessible, but publication (with reference) requires permission from the author(s).

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Table of Contents Preface ....................................................................................................................................................................................................2 Acknowledgements .................................................................................................................................................................................3 Introduction .............................................................................................................................................................................................4 Problem Formulation ...............................................................................................................................................................................4 Methodology ...........................................................................................................................................................................................5 Research Design ......................................................................................................................................................................................6 1. Case Company Description ..................................................................................................................................................................7 2. Integrated Management and Change Management Theory .............................................................................................................15 3. Context for ISO and Innovation at Grundfos ......................................................................................................................................18 4. New Environmental Management System ISO/DIS 14001:2015 .......................................................................................................23 5. Analysis and Assessment of Interviews ..............................................................................................................................................28 6. Conclusions ........................................................................................................................................................................................41 7. Reflections .........................................................................................................................................................................................43 References .............................................................................................................................................................................................45 Appendix 1 .............................................................................................................................................................................................47 Appendix 2 .............................................................................................................................................................................................50 Appendix 3 .............................................................................................................................................................................................51 Interview Transcriptions ........................................................................................................................................................................52 DATA CD ................................................................................................................................................................................................87

Acknowledgements Acknowledgments and thanks go out to Nils Thorup; Chief Technical Advisor, for being my contact person at Grundfos and for helping me with keeping this project on the right track and his continued guidance. Furthermore thanks and credit goes to Arne Remmen; Professor at Aalborg University, for supervision and an accommodating attitude with supervisor meetings. Thanks goes also out to the entire Sustainable Product Solutions(SPS),Global Approvals and Packaging team; Anna Pattis; Lead Sustainable Product Specialist, Louise Bisgaard; Environmental Engineer, Tina Seeberg Hansen; Chemical Compliance Specialist, Jørn Buchard Tychsen; Standardization Specialist, Zsófia Réka Szélig; Packaging Engineer and Szilvia Eosoly; Drinking Water Specialist, for the help with adjusting and correcting the questionnaire for the semistructured interview with management. Finally thanks to all the interviewees in management and D&E, for taking the time to talk with me: Poul Madsen; Group Vice President Global Market Segment Emerging Water Technologies, Kenth Hvid Nielsen; Group Vice President, Global Market Segment Water & Utility, Thomas Hessellund; Group Vice President Global Market Segment Industry, Keld Fensten Madsen; Planning and Intelligence Director, Henrik Ørskov Pedersen; Director, Global R&T(Research & Technology) and Steen Tøffner-Clausen; Senior Director BS Program Management Circulators. Development and Engineering function: Katrina Sonne Einhorn; Department Head Global Approvals, Svend Aage Kaae; Director Maintenance for D&E, Jimm Feldborg; Director, PMO (Global Projects & Planning), Jan Strandgaard; Director for D&E Europe and Bjarne Fjeldsted, Director for the PCV (Product Compliance & Validation Stream). Last but not least my own father Carsten Clausen; Manager for IS (Information Services) PMO & Project execution at Grundfos, for final read-through and comments on this report. I could not have made this report without you.

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Introduction Since the board of Grundfos has decided to up-date to the new industry standard, latest by 2018, the subject of this report is to assess the management preparedness for ISO 14001 and highlight any potential issues in respect to this. This project collaboration is made with Grundfos, as the project manager put in charge for overseeing and implementing this standard, had a wish to map the ambition level for top management and some of the directors of Grundfos, to see if there were any gaps in what the new industry standard had of requirements and what management deemed important for successful implementation and certification. The person responsible for this certification process and hence the contact person at Grundfos is Nils Thorup of their Environmental Department & Sustainable Product Solutions Team.

Problem Formulation This report will therefore describe and analyze the updated ISO 14001 environmental management system (EMS) standard, and how this standard fits with managements view for Grundfos, by having it implemented in 2018, within the different business segments, these being pump applications for buildings & services, industry & manufacturing and water usage & utility plus emerging water technologies. Problem statement What are the organizational challenges faced at Grundfos within the Business Development department, when implementing the updated & revised 14001 environmental management standard?

There will be two main focus points to this:

1. Examines how the ISO 14001 management system functions today at Grundfos. 2. Examines how well prepared Grundfos are in order to meet the new requirements in ISO 14001:2015? Sub Questions The following three main parameters will be analyzed and assessed related to the problem statement: a) What are the major innovation & product development challenges at Grundfos within the up-dated ISO 14001? b) How does the environmental management system at Grundfos support the overall Business Development Strategy? c) What currently characterizes Grundfos’ management systems structure in relation to ISO 14001?

Next section will describe the methodology used to examine this problem statement and after that the report structure and research design.

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Methodology This section of the report will present the methodology used to examine the problem statement and subquestions. For this to be answered semi-structured interviews and their frameworks is used to conduct interviews. The people interviewed agreed to be recorded for later transcription, and the quotes themselves are written by the author according to their statements. Both open-ended questions and closed-ended with evaluation on a scale of 1-5 is used. Semi-structured or Semi-standardized Interview Methodology According to (Flick, 1998) Semi-structured interviews are best used, when you only get one chance to interview the person in question. It provides a formal structured “guide” of questions in relations to specific themes and topics to be run through not from one end to the other, but in a more sporadic manner, with some open-ended questions to get the essence of people’s opinions. This is to say that the interview can follow the guide, but when necessary stray away from the trajectory, when it is sought appropriate. As stated in (Flick, 1998): “A goal of interviewing in general is to reveal existing knowledge in a way that can be expressed in the form of answers and so become accessible to interpretation” (Flick, 1998). This knowledge is sought out with the semi-structured interviews of managers and Vice Presidents in the Business Development Department at Grundfos. To see what the current knowledge of the new ISO 14001 standards is, and what the general thoughts and trends for the future are for using the standard in a broader group perspective. Four main areas will be investigated; these being the personal’s own profile, their specific part of the organization, how they perceive the strategy and the structure of the organization in regards to ISO 14001 and finally the life cycle perspective for products and their opinions to these. The questions asked was grouped around themes, such as current environmental strategy, future aspects and the high level structure necessary for having the up-dated standard incorporated, within the mind sets of employees in a cross departmental manner. It will be approached in a bottom up manner, so that the SPS (Sustainable Product Development) team, in their environmental department, will run through the questionnaire to find any missing links or gaps within it. Then secondly the managers in the Global Development & Engineering (part of Business Development), segment will be interviewed. If any adjustments are required or any points need elaboration or extra focus and attention, this will be sought out. Then the six Vice Presidents from the Business Development department, within each individual business segment will be interviewed, to get their understanding of the two focus points from the problem statement. The differences between the two management tiers will also be compared to see if they have the same thoughts or nor not, on various aspects.

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Research Design The following figure shows how the structure of this report is setup.

The five steps are explained below: 1. For every company and organization, a common understanding of the structure is a vital aspect for its continued growth and stability. This report aims at mapping the managements need for an aligned structure in the international standards of organization (ISO), called “high level structure” in relation to the environmental management system(EMS) 14001, and how it is interrelated for the company in question; Grundfos. The first section describes the case company and its strategic elements along with company structure. 2. Relevant theory for the ISO management system is presented along with different contexts and understandings of the subjects. Integrated management systems theory and change management along with Sustainability-Oriented Innovation and ISO management principles are presented. Next what initial and radical changes there are in the up-dated management system from 2015 compared to 2004 is presented and where the focus and new inclusions lies. 3. Then to find the answers to how managers assess ISO 14001 implementation, interviews with management is made to make a needs -and gap-analysis, of where Grundfos are at the present within the Business Development department as an outset, but also where they ought to be headed. Managers at the initial stage of Development & Engineering department have been interviewed followed up by interviewing Vice Presidents and Directors in the Business Leader forum (See figure app 1 page 49 in App. 1). 4. Next an analysis and assessment of the needs sought by the management at Grundfos, their ambition level for the standard and future challenges followed. Short term and long term challenges for implementation will be analyzed to get a picture of what management sees as focal points and important issues, when implementing an up-dated EMS system. 5. The future steps, requirements and guidelines to the challenges, to answer the problem statement are then made in the conclusion. Reflections are made finally in order to sum up recommendations for how Grundfos should proceed with the implementation process in a change management perspective. The next chapter will start with introducing the case company description.

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1. Case Company Description The history of the case company Grundfos is presented in order to get an understanding of the milestones of Grundfos as a company. Special focus will be on how Grundfos has been working with sustainability in ISO in the past and how it is incorporated into current strategies. Next the organizational structure and strategies, along with Key Performance Indicators (KPI) that the company uses, are presented. 1.1 History of Grundfos Grundfos was established in 1944, by Poul Due Jensen as “Bjerringbro Støberi og Maskinfabrik” in English “Bjerringbro Foundry and Machine factory”. In 1945 the founder Poul Due Jensen received a pump request order he could not fulfill with any current pump, so this lead him to develop his first pump Foss 1, nicknamed ‘grisen” or ”the pig’ because of its design. In 1959 the first circulator pumps, which Grundfos, as of now are world renown for, was launched. In 1975 the Poul Due Jensen Foundation was established, which was given the majority of Grundfos shares. In November 1978 Poul Due Jensen died and the management of the company was taken over by his son Niels Due Jensen. Today Grundfos has 18,878 employees (2014 numbers) and the company’s Head Quarter (HQ) is still in the small Danish town of Bjerringbro, Mid Jutland. (Grundfos.com 2015b) 1.2 History of ISO Standards at Grundfos Grundfos has a 26 year history of using ISO (International Organization for Standardization) since 1989. Later on in 1995 Grundfos began to work with the Business Excellence (BE) model and in 1996 the environmental management department succeeded in getting the environmental management system by ISO 14001 implemented. In 2000 the Occupational Health & Safety Advisory Services (OHSAS 18001) was accredited to Grundfos, and in 2007 they received the prestigious European Environmental Management & Accounting System (EMAS) award. (Grundfos.com 2015b) 1.3 Milestones In 1989 Grundfos as one of the first pump manufacturers in the world is certified with the ISO 9001 standard for Quality Management; later in 1996 the company also receives certification within the ISO 14001 standard for Environmental Management. (Grundfos.com 2015b) In 2001 the BE, THINK, INNOVATE Brand is unveiled with the logic of being sustainable, thinking ahead and innovating for the future. Grundfos launches in 2005 the new energy efficient pumps ALPHA PRO which was the first low-energy pump based on a permanent magnetic rotor and built-in micro frequency converter, and later in 2006 Grundfos receives the European Foundation of Quality Management (EFQM) Excellence Award. In ’08 the Innovation intent is introduced which entails the common denominator to put sustainability first, to be there for a growing world, and to pioneer new technologies - in brief: Concern, Care, Create. (Grundfos.com 2015b)

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In 2009 LifeLink which ensures clean ground & drinking water for rural areas in the developing world is introduced and in 2010 yet again new energy saving motors (permanent magnetic motors) are introduced ensuring up to 70% energy savings compared to similar pumps. In 2012 the second generation of ALPHA PRO’s (ALPHA 2) is introduced and the new MAGNA 3 pumps become accessible on the market as well. Finally, in 2014 the current CEO Mads Snipper joins Grundfos as new Group President and CEO. (Grundfos.com 2015b) Grundfos estimates that 10% of the world’s energy consumption is by use of pumps, therefore it has been and is a current goal to reduce their own energy consumption in their pumps, thereby optimizing and lowering the consumption of energy worldwide. 1.4 Board of Directors The current acting Chief Executive Officer (CEO) is Mads Nipper and the board of directors consist of; their Operations & Production with Chief Group Executive Vice President Stephan Simonetta, their Business Development with Chief Group Executive Vice President Lars Aagard and for Marketing and Sales their Chief Group Executive Vice President; Poul Due Jensen Jr. the grandson of Poul Due Jensen Sr. son of Niels Due Jensen. Besides, the three main pillars presented on the next page, are supporting functions such as; Finance, IT and Legal Affairs (Mikkael Geday), Human Resources (Henrik Christiansen) and Communications and Public Affairs (Kim Nøhr Skibsted) (See figure 1.1 below) Figure 1.1 Board of Directors Source: [Grundfos.com 2015a]

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1.5 Grundfos Company structure The Ownership of Grundfos is based on the parent company “The Poul Due Jensen Foundation Group”, a family owned foundation. The overall organizational structure is shown in the figure 1.2 below in order to show the three core pillars and how Business Development is organized, as Business Development is the focus area.

Figure 1.2: Organization Structure

“The Poul Due Jensen Foundation owns 86.7 percent of the share capital in Grundfos Holding A/S, while the founder’s family owns 11.3 percent and the employees own 2.0 percent.” [Grundfos.com 2015a] Grundfos’ primary business is structured in 3+1 main business segments: Building Services, Water & Utility and Industry, plus a small “Emerging Water Technologies” unit (EWT). BioBooster and LifeLINK belong today to the EWT business unit. The focus of this project will be within all 3+1 main business segments. The official 2020 strategy for Grundfos is presented next to see what the focus points are. It is the customer-based version, so no sensitive data is presented in this report. 1.6 Grundfos’ 2020 Strategy: Five Must Win Battles Next is presented the five must-win-battles (MWB) for Grundfos. These are the core elements of the strategy. To understand why these are important is explained next (Info from Grundfos SharePoint): The first battle funding the journey is critical because Grundfos needs to understand where they make money in different markets and how to remain competitive in the different growth and strategic core markets in countries around the world, thereby increasing profitability. In order to achieve continual growth then the three must-win battles of supply chain, product leadership and service are seen as growth drivers.

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End-to-end supply chain, means ensuring a cross-organizational understanding with better sales and operations planning, in order to be able to reduce their stock ratio and inventory turnover time and at the same time improve the company’s overall delivery service freeing up capital. Product Leadership is seen as heightened innovation and increasing productivity in product development, ensuring a competitive product portfolio, always lowering the baseline costs. Service means maintaining a higher market share of the global pump market, whereas heightened service can and will generate new revenue streams and contribute to profitability while collecting new and maintaining the established customer base. Customer centric must-win-battle is the final enabler for success, and is all about starting every action taken with consideration of how it adds value to Grundfos’ customers both internally and externally. In order to do this, all needs to take accountability for coming up with solutions and take actions to ensure improvement. It does not make sense for Grundfos to remain reluctant to differentiate its performance ratings, but rather to start recognizing those who contribute significantly and address non-performance firmly. In Grundfos the five defined must-win-battles are described as follows (MWB) The color coding relates to the Must-win-battles for D&E presented on page 11.

Figure 1.3 Must win battles Source: (Core Strategy, 2020) grundfos.sharepoint.com/ 1. “Funding the journey, means to have a constant focus on costs, with simpler and more adaptable organization along with better processes for optimal decision making. The idea is that lowering material costs benefits the company, and must be prioritized everywhere, and example of this is the Design to Value initiative. This is done by a) Lowering the cost base in the entire company to remain competitive b) Create transparency in the value creation of the entire group and c) quicker and more effective decision processes.” (Strategy Passport, 2020) 2. “Supply Chain, ensuring further development of the end-to-end supply chain as a competitive advantage. This is done by aligning front end and back end, to ensure the requirements in all value chains and by using Grundfos’ considerable size within production, procurement and logistics. Also by supplying the customers with a world class delivery service, lowering costs and use Grundfos’ supply chain as an example of sustainable production”. (Strategy Passport, 2020) 3. “Product Leadership is the development of a leading and differentiated product portfolio, within all 4 major product applications (see section before) that Grundfos prioritizes. It means to regain product leadership for all the products, they have defined critical to achieve success. As a minimum requirement: to

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be on the same level as the competition for the products, deemed necessary for success, through technological innovation, design with an eye for exemplary customer value, system optimization, high quality and energy efficiency. It also means to be able to achieve quicker product development and attune sales, segments and production to achieve maximum commercial breakthrough. Last but not least is to make sustainability a platform for a business model”. (Strategy Passport, 2020) 4.” Service means to keep developing service as a commercial differentiator to create and support growth. This is done by adhering to more sales and increasing customer value by becoming a global spare parts supplier via dedicated regional service setups with global support. To be able to develop service within the water & utility segment as a strong differentiator at project sales and to continue to focus on Grundfos’ present structure to develop and deliver basis service within other business segments as well, like Buildings and services or Industry.” (Strategy Passport, 2020) 5.” Customer & Collaboration is to build a customer focused culture grounded in strong collaboration to be able to reinforce Grundfos’ customer focus and leadership responsibility, improve and attune the cross departmental collaboration within different functions, and to insist on freedom of choice and internal dependency – at the same time.” (Strategy Passport, 2020) 1.7 Five Key Performance Indicators (KPI’s) to take the “pulse” of the Strategy Next is, the group managements decided five KPI’s, defined as important for Grundfos. These five KPI’s reflect Grundfos’ focus on all stakeholders – not just shareholders. (Strategy Passport, 2020) 1. Sales growth (CAGR) 2. Customer loyalty 3. Employee Motivation & Satisfaction 4. Return of Sales (PBT) 5. Return of Capital Employed (ROCE) Detailed definitions of these KPI’s can be found in Appendix 2 on page 50) With the outset in the overall strategy’s must-win-battles, all areas of Grundfos have developed their own focus for these in order to make these more apparent on a tactical level. Development and Engineering (D&E) department has also done this, and these are presented next. 1.8 Global Development & Engineering: Five Must Win Battles

Figure 1.4: D&E Must win battles Source: (MWB, 2020) DE2020_MustWinBattles 01 07 2015.ppt 11

Must-win-battles for Development and Engineering are shown in the figure 1.4. The five must win battles (MWB’s) of the Product Development and Design (D&E) 2020 strategy are as follows, highlighting areas of sustainability: 1. “Performance culture; meaning to ensure accountability and empowerment as a general competence on all levels and living up to commitments in the market, which enhances full value chain collaboration to ensure alignment and increase customer interaction and knowledge.” (MWB, 2020) 2. “Design to value, entails having competitive already released products, minimizing standard unit cost and cut down costs activities. To do this means to utilize the tools throughout the entire product life cycle in order to make continuous improvements and costs reductions.” (MWB, 2020) 3. “Technical product leaderships, in other words is to deliver solutions which exceeds customer expectations, continuously improves performance, by using new developments in simulation tools to update best practices in the organization.” (MWB, 2020) 4. “Digitization and Connectivity, is offering built in intelligence and digital solutions, that ensures cost effectiveness and user friendliness. Optimization and surveillance part of this is to ensure a robust and secure supporting infrastructure to handle data between product and product updates.” (MWB, 2020) 5. “Fast & Agile, meaning agile manufacturing, to be in control of cost & capacity planning and to respect decisions already made to avoid re-planning and stop/go projects as to meet deadlines, as important for staff motivation point of view. Lastly to reduce project lead times (time from initial setup to finish meeting deadline).” (MWB, 2020) As shown in the five must-win battles for Grundfos and the D&E department there is less focus on sustainability. Sustainability at Grundfos is therefore vanishing and becoming less incorporated than it used to be in the last few years. Grundfos’ overall 2020 strategy and how D&E has decided to focus on their must-win-battles have now been described. Next will be a description of the Sustainable Product Solutions department and their projects and focus areas, in order to see how they accommodate the focus on sustainability. 1.9 Five Sustainability Initiatives from the Sustainable Product Solutions (SPS) The following table 1.1 shows all the key initiatives that the SPS team is engaged in.

Table 1.1 Project Outlook for SPS, Source: (BD initiatives, 2020) BDDrivenInitiatives2020.ppt

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As can be seen the “ISO 14001 BD product compliance” project is running from now till 2018.The final decision for external third party certification process is made in 2018. This project is just one of the five projects within this team. Circular economy as a business driver is another project; this means more than “sustainability as a business driver” alone, as they should focus on closing the material loop also. This project is aiming at making a go/no go decision in 2015. Finally energy and water in regards to the climate agenda is a running target. The last two projects for the department is legal product compliance in environmental terms and customers requests handling in the sense of environmentally friendly products and the concern from customers. The following section will describe Grundfos’ official environmental policy and focus areas as of today. 1.9 Grundfos Environmental policy profile & purpose Grundfos’ Environmental policy is at first glance, very strong as stated in the document Grundfos in brief: ‘Sustainability is a key part of Grundfos' business activities. We wish to create and strengthen sustainable relationships with our employees, business partners, and society around us, not only in terms of product and solutions, but also financially and socially’ (Grundfos in brief, 2015) Grundfos states, in the Sustainability Handbook from (2010) that they will achieve the following, standard environmental goals: • Reduce our own carbon footprint • Reduce carbon emissions throughout the lifecycle of Grundfos products and services • Reduce our own water consumption • Reduce energy consumption in our manufacturing processes • Reduce energy consumption in our buildings • Reduce CO2e emissions associated with supply of purchased goods • Use more renewable energy

Table 1.2 Environmental Measurements 2008-2014

1.10 Sustainability Reports 2008 – 2014 The following two quotes from Grundfos’ sustainability reports show Grundfos’ sustainable ambition:

‘Grundfos’ ambition is to never emit more C02 than in 2008 in absolute numbers (126,455 metric tons C02adjusted to 115,207 tons C02 in 2014). Overall the C02 emissions were in 2013 20% lower than the adjusted 2008 level” (Grundfos Sustainability report, 2013) “The C02 figures for 2014 have increased by 2% compared the 2013 levels. However overall Grundfos are 18.7 % lower than in 2008, while they have seen a 24% increase in turnover in the same period.” See the table 1.2 (Grundfos Annual report, 2014) The 2015 levels are not reported yet, as the annual report for the current financial year is not available. The table 1.2 shows only numbers for CO2, Energy and Water in this period to 2014, which are the primary parameters measured at Grundfos. Energy usage has fallen 12.3 % in the same period (’08-14) and water consumption has fallen 27.5 % at the same time period, with a constant drop.

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Summing up the description of Grundfos’ sustainability focus All this was presented to get the ‘big picture’ of Grundfos, and then to dive down in the subject matter of this report; i.e. the ISO 14001 implementation project. Seen from this it is concluded that the ISO 14001 is not a core strategic element, in either Grundfos’ or the D&E strategic must-win-battles. It’s a task to be concluded by 2018 and the responsibility is the SPS team. Hence it was more seen as tactical/operational initiative, than as part of the strategy. Sustainability is therefore not a central element to the strategy. Three of the projects and the focus for the ISO 14001implementation were mainly on “product compliance, and not the ISO management system’s use in itself. Finally as of today the people that should be responsible for these goals and reporting of them should be Group Sustainability, but this role of responsibility has become more unclear recently according to Nils Thorup, which is an issue up for discussion for this report. (Nils Thorup, 2015) Next to get a theoretical understanding of “how it should be?” the focus will be on integrated management systems, based on a theoretical article. This is in order to make the analysis for the needs and gap analysis later, of the current ambition level for the environmental management system at Grundfos.

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2. Integrated Management and Change Management Theory The next section based on the figure 2.1 shown below, tries to incorporate all the different management systems that a company uses, and looks at the three main sources of a successful integration effort. Why this article was chosen, and not others, was because it gives a great overview of all the different types of management systems. The integration aspect was also seen as beneficial for ISO 14001 and 9001 integration as well as both need recertifications by the end of 2018. 2.1 Integrated Management Systems – How does this affect the ISO 14001 standard?

Figure 2.1. Danish Standard’s model for an Integrated Management System (Jørgensen et Al, 2005) As with any management system standard, the necessity of having it integrated and used day-to-day is a vital part of any organization. Grundfos’ implementation of ISO 14001 is not different. As stated in an article by Tine Jørgensen and Arne Remmen et. Al “If the environmental management system is added by "cut and paste", it creates a risk of neglecting or underestimating the environmental issues compared to quality" (Jørgensen et Al, 2005) It is therefore recommended to classify Grundfos’ environmental hazards and prioritize these in a manner suiting the environmental issues they are facing in regards to sustainability’s triple bottom line of economic, social and environmental aspects elaborated later in section 4.1 on page 22. Three different levels of integration are recommended for any organization to succeed in their integration efforts according to the article on Integrated Management Systems (Jørgensen et Al, 2005) 1. “Integration as correspondence between different standards with cross-reference and common handbook, can give several administrative benefits to save time and resource plus secure alignment between the demands of the different standards.” (Just in ISO 14000 family there are: ISO 14062 on Eco-Design, ISO 14063 on Environmental Communication and ISO 14040 on Life Cycle Assessment) 2. “Integration as coordination which is based on a common understanding of the generic processes of policy, planning, implementation, checking and corrective action” 3. “Integration as a strategic and inherent approach is a solution to problems related to achieving ‘real’ continuous improvement such as improved competitive advantages and contributing to sustainable development”

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Finally organizational issues such as the “organization’s structure, size, market competition and regulatory demands” all have a decisive influence, when an organization decides whether to integrate or not, as well as for the level of integration as mentioned in the 3 different levels above." (Jørgensen et Al, 2005) In all this, “the senior managers in positions above quality and environmental managers [should] have a better understanding of the overlap and duplication of different management systems…“ (Jørgensen et Al, 2005) To be aware of these two core aspects of social and environmental responsibility is of importance, as if an organization has become socially and environmentally responsibly institutionalized “then it will also be reflected in the interaction with stakeholders, and will influence the way in which the organization engages in stakeholder relations and also how external challenges are interpreted" (Jørgensen et Al, 2005) Finally what is called the learning organization is a vital part to have a higher level of employee participation, "to support a continuing learning process, an educational policy and a high quality supply of information and internal communication are essential." (Jørgensen et Al, 2005) This is to say, that if the information and communication are ‘lost in translation’ the organization will suffer the consequences of this with more administrative struggles and less time for innovation efforts. As there is a major aspect of “change management” within the implementation of an integrated management system, the next section will present what the theory states is successful steps of how to transform organizations in regards to change management. Kotter was chosen as a source, as Grundfos teaches this management theory as one part of their change management course. This is in line with managers and VP’s understanding of these aspects too. 2.2 Change Management: Transforming Organizations There are many pitfalls occurring in respect to change management, but Kotter argues that the following eight step leads to a successful implementation: (Kotter, 2012) 1. Establish a sense of urgency 2. Creating the guiding coalition 3. Developing a vision and strategy 4. Communicating the change vision 5. Empowering broad-based action 6. Generating short-term wins 7. Consolidating gains and producing more change 8. Anchoring new approaches in the culture To help with establishing a first sense of urgency there is a need for examining the market you are in, in a competitor analysis e.g., but also to make a SWOT analysis of the strength and weaknesses plus opportunities and threats present. This should be done to help identifying and discussing potential crisis’s that may occur and also major change opportunities. Secondly for putting a strong coalition together, the first and foremost is establishing a group with enough power to lead the change in mention, and no less important than power, is teamwork, to get the group to work together as a team to highlight each individuals personal strengths. Thirdly it is a necessity to develop a CLEAR vision, i.e. written in paper, to be communicated to all throughout the organization, to help direct the change effort. (Kotter, 2012)

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Underlying this is then to develop the strategy to help achieve the vision. The fourth step means to use every option & vehicle constantly to keep communicating the change vision. An important aspect of this is to have the guiding coalition mimic or be a role model of the behavior expected of all employees to achieve the vision, i.e. ‘we are all on the same ship’. Fifthly is to get rid of all obstacles, be it personal or cultural aspects as the old saying goes “If it ain’t broken, don’t fix it” needs to be abolished, as this leads to more organizational inertia if top management never gets on board. (Kotter, 2012) In regards to this, organizational structure or systems that undermine the change vision need to be changed as well. Finally to encourage risk taking and embracing the future change through nontraditional ideas, activities and actions is a vital part of change leadership too (not just management). To the sixth step for generating short-term wins, this could be for example to plan those ‘visible’ wins and improvements in performance and then creating these ‘wins’. Also to achieve higher employee motivation and satisfaction the need for visibly recognizing and rewarding the people who made it possible for achieving these ‘wins’ is important as well. (Kotter, 2012) In the seventh step; the consolidation phase, the focus is here on creating increased credibility to change all structures, systems and policies that do not fit the transformational vision. A part of this could be to hire, promote or develop people who can implement the change vision and have not just the ‘know-how’ but also the ‘show-me-how’, done through reinvigorating the processes with new projects, themes and change agents. (Kotter, 2012) Lastly the 8th step is to anchor this vision firmly in corporate culture; focus should here be on creating better performance culture, through customer- and productivity-oriented behavior, more leadership and more effective management. To see the link between the better performance and organizational success, the connections must be articulated between the new behaviors and the organizational wins. To be able to continue the successful implementation process in the future depends on developing the means to ensure successful leadership as the last piece in the organizational puzzle. This leading to anchoring it in the employee culture (Kotter, 2012) The above eight elements will be included in the questionnaire regarding structure and strategic questions along with their common use of the system by managers and Vice presidents in order to see if they at Grundfos live up to what is considered sustainable development and growth, in their current standard systems. Investigations are made on the chosen managers within D&E and VP’s understanding of the industry standard, in order to uncover arguments to support or not support, their supposed better understanding of the overlap between different management systems as stated by (Jørgensen et. Al) . The contexts on establishing good “leadership” principles for Grundfos to use when implementing the updated ISO 14001 standards are elaborated next. The ISO 9000 management terms and principles have eight principles within successful management system. Environmental- or quality -assurance systems should use the same principles, since they focus on the same aspects within the company (environment goals and quality is linked together for products). The 8 principles for successful organizations according to ISO are shown in order to use them in pragmatic terms for implementation of ISO 14001:2015.

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3. Context for ISO and Innovation at Grundfos The next section will describe different contexts to ISO 14001 to be used later in the -analysis of where Grundfos is and where they should be according to these principles. 3.1 ISO Management System principles for successful Organizations In any management system the following eight principles are necessary to lead and operate organizations successfully. These eight principles are according to quality management in ISO 9001: but are also used here for the relevance in ISO 14001 Environmental Management as well (ISO 9000, 2005) 1. Customer focus 2. Leadership 3. Involvement of people 4. Process approach 5. System approach to management 6. Continuous improvement(s) 7. Factual approach to decision making 8. Mutually beneficial supplier relationships First the organization depends on their customers, and therefore they should understand current and future customer needs and meet customer requirements and strive to exceed customer expectations (ISO 9000, 2005). Secondly leaders need to establish unity or purpose and direction for the organization; hence they should create and maintain the culture, in which people can be involved in achieving the set objects by the organization. Here is where some organization lacks a clear objective in many management systems, as they have an “overall fluffy” management strategy, but no clear short term goals. Thirdly it requires involvement of people; meaning that people at all levels are the essence of an organization and their personals full involvement enables their abilities to be used optimally for the organizations benefits (ISO 9000, 2005). Fourth point is the process-based approach as shown in figure 3.1: Figure 3.1 ISO 9001 Source (IS0 9001, 2008) As stated in ISO ”a desired result is achieved more efficiently when activities and related resources are managed as a process” but not to be forgotten within the eight principles is also the fifth point, systems approach to management, which integrates these processes, as stated in ISO “identifying, understanding and managing interrelated process as a system contributes to the organization’s effectiveness and effieciency in ahceiving it’s objectives”(ISO 9000,2005)

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The figure 3.1 shows the interelated processes between customers and the different responsibiltities assuring the products continued optimal quality. The customers have some requirements and if these be met, generates a higher level of customer satisfaction. It is meant to show how the quality system continually improves. As with most organization doing good, is just not “good enough”. To have the sixth point in mind continual improvement of the organizations overall performance should be a permanent objective of the organization according to ISO 9001, this meaning that individual projects should look for ways to improve their economic, social and environmental aspects. The seventh point which is the need for having these management systems incorporated in the decision-making process, a so called factual approach, meaning based on facts, these effective decisions are better, as they are based on the feedback of the management system and used on the analysis of data and information (ISO 9000, 2005). Finally the last point eight having a great deal of impact on the organization is assuring mutual beneficial supplier relationships, meaning that an organization and its supplier are interdependent and that exactly this sort of relationship enhances the ability of both supplier and company to create a common shared value. The value adding activities in the supply chain should therefore be the focus for the 8th step in the ISO principles. All these eight princples form the standard for the quality management system within ISO 9000. These eight principles are just as relevant in any management system, and as ISO 9001 for quality assurance and ISO 14001 for environmental compliance both serves as integrated management systems in the entire corperation these management principles are presented in this report to support the requirements necessary for Grundfos’ in achiecing the ‘high level structure’ allignment within their own management systems. 3.2 Management’s needs for successful ISO 14001 Implementation According to ISO 14001 standards itself, it is stated that for the management system to be optimally implemented depends upon: “The success of an environmental management system depends on commitment from all levels and functions of the organization, led by top management. Organizations can leverage opportunities to prevent or mitigate adverse environmental impacts and enhance beneficial environmental impacts, particularly those with strategic and competitive implications.” (ISO 14 001: 2015) Why top management’s commitment for successful implementation is important is described below: “Top management can effectively address its risks and opportunities by integrating environmental management into the organization’s business processes, strategic direction and decision making, aligning them with other business priorities, and incorporating environmental governance into its overall management system. Demonstration of successful implementation of this International Standard can be used to assure interested parties that an effective environmental management system is in place” (ISO 14 001: 2015) Next section describe the maturity theory and apprach for moving towards more sustainable-oriented innovation, and its relation to a standardization request proposal as proposed by the EU.

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3.3 Sustainability-Oriented Innovation The figure 3.2 shows three different contexts of operational optimization, organizational transformation to systems building. Going from stand-alone measurements to more systemic and integrated ways of sustainable-oriented innovation is seen as the next step. This is shown to describe the theory behind more integrated ways of management.

Figure 3.2: Categories of Innovation Activity in the 3 contexts of SOI (Sustainability-Oriented Innovation) (NBS, Innovating for Sustainability, 2012) The figure 3.2 shows the evolution of sustainability-oriented innovation, to be sustainable you should move towards systems building. This in order to move up the ‘sustainability ladder’ to not just optimize in-house production, but also make systematic relations and process innovation to transform the organization, and to be able to build the integrated ‘management system’ which ISO 14001 is one part of in the new management system for all three institutional standards (9001, 18001 etc.) Sustainability-Oriented Innovation (SOI) is therefore seen as the future, as smart companies don’t just do ‘good enough’ but move from the minimum requirements to be able to use it as a competitive advantage and a means to do more on the sustainability agenda. The trend in Europe is moving from EEI (Energy Efficiency Index) towards the new RRRI (Reusability, Recyclability and Recoverability Index), as it is a directive being proposed by the EU commission. (A standardization request EU, 2014) It is the EU commissions plan to have this new requirements implemented for resource efficiency. Hence this will be a future EU directive if decided, and at some point in the future all companies, including Grundfos, will then be affected by it. The requirements on generic standards on reusability/ recyclability/recoverability (RRRI) indexes are thus firstly indexed by product mass and hence by environmental impacts for the product. (A standardization request EU, 2014)

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To calculate the environmental impacts the following is done: “Environmental-based indicators are calculated upon mass-based indicators including life cycle impacts of materials and components, and related to the overall product life cycle impacts. Based on existing life cycle assessment methodology in ISO 14040 and 14044, the relevant ESO (European Standardization Organization) should consider if it is necessary to define appropriate Life Cycle Impact Assessment Indicators and provide guidance for the identification of representative quality-assured Life Cycle Inventory data to be used for the calculations (A standardization request EU, 2014) Three following aspects are presented in the EU’s standardization request for resource efficiency from 2014: Aspects that should be covered by the requested standards: (A standardization request EU, 2014) 1. Develop standard methods for measuring / testing the durability of products and/or their ease of repair (and/or their critical components) (horizontally and/or product specific). 2. Identification of critical components within a product that influence its durability (this might require product-specific standards). 3. Definition of a method to define acceptable performances of durability of products (and/or their critical components), integrating technical, environmental, economic and consumer aspects. In order to get the context of the organization, the next section moves from theory to a description of the different segments and life cycles in Grundfos. The lifecycle perspective is presented as it is a mandatory aspect for product development, in the new standard which will be described in detail in the next chapter. 3.4 The Five Life Cycle Stages in the life cycle perspective & its significance for Grundfos The figure 3.3 shows the organizational context at Grundfos, and where the life cycles, described in ISO 14001 on page 25, could be of significance.

Figure 3.3 Grundfos Operations (made with input from Nils Thorup and Anna Pattis)

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The figure 3.3 incorporates the five life cycle stages in the product life cycle perspective. It shows initial proposed links between the different stages and the supply chain links. As this report has its outset in Business Development, it is the ‘black box’ that is being mapped for ISO 14001 and these five life cycle stages significance for management’s activities within Grundfos is analyzed in this report through use of the questionnaire. Next is presented the ISO organization and their family of standards along with what the revision from September 2015 entails for ISO 14001 and the difference to the old ISO 14001 standard from 2004. This is done to see the major additions and changes that Grundfos has to implement before 2018.

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4. New Environmental Management System ISO/DIS 14001:2015 The ISO history of standards and the old environmental management standard from 2004 is presented. Next the new updates in the 2015 version and difference are looked into. 4.1 ISO in Brief ISO has a membership of 160 national standards institutes from large and small countries, industrialized, developing countries and countries in transition in all the regions of the world. There are more than 18 000 standards in their portfolio. Some of these standards help promote sustainable development with practical tools within three dimensions: economic, environmental and societal (ISO family, 2009) ISO has taken a varied approach to meet the needs of stakeholders from business, industry, governmental authorities and non-governmental organization (NGO’s), as well as consumers in the environmental field. The ISO 9001 as well as ISO 14001 visions are, as stated by the ISO technical Committee, “to be recognized and respected worldwide, and used by organizations as an integral component of their sustainable development initiatives”. (Forging action from agreement, ISO family)

Figure 4.1: Three dimensions for sustainable development When ISO says “sustainable development initiatives”, what is meant by this? The figure 4.1 shows the triple bottom line of what sustainability means. Why it is important to focus on these three dimensions is described next in setup by ISO themselves, which are: 1. “Development of standards to take proactive approaches to managing environmental issues.” 2. “Helping to meet the challenge of climate change with standards for greenhouse gas accounting, verification and emissions trading and carbon footprint of products measurements.” 3. “Development of normative documents to facilitate the fusion of business and environmental goals by encouraging the inclusion of environmental aspects in product design” (Eco-design) 4. “Wide variety of standards for sampling and testing methods to deal with specific environmental problems. Developed some nearly 570 international standards for monitoring, in such aspects as; the quality of air, water and soil, as well as noise, radiation, and for controlling the transport of dangerous goods. Alongside serving as the technical basis for environmental regulations in some countries.” (ISO family, 2009)

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Now the ISO family has been described, next the ISO 14001 standard from 2004 will be looked into. 4.2 ISO 14001: 2004 – The old Environmental Management Standard The old standard for ISO 14001 focuses on the plan, do, check, act model. Follows shows two iterations.

Figure 4.2: Overall PDCA model and specific for ISO 14001 (Theiso14000family_2009.pdf) Firstly there is the matter of environmental planning of guidelines and goals, forming an environmental policy for the organization or business. Secondly the part of putting that plan in motion through innovative measures in the daily operations of the company comes in to play. Thirdly control and monitoring actions in the “checking” phase are vital for the company to take corrective action where necessary. Finally fourthly; Act where the problem fields identified are necessary to be dealt with through leadership action in a continuous improvement manner. The environmental policy can be changed accordingly to the problems identified. In the new standard there is more focus on the continuous improvement aspect, which has changed some parts within the standard. Performance evaluation and improvement are put as entirely new chapters with more detail in the 2015 ISO 14001 versions dealing with these aspects.

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4.3 ISO 14001: 2015 – Initial and Radical Changes in the standard As with the old standard the framework is still an iterative process to guide companies to achieve a continual improvement process. The same four steps are, as follows in figure 4.3: Figure 4.3: The “New” PDCA framework: Plan: establish environmental objectives and processes necessary to deliver results in accordance with the organization’s environmental policy. Do: implement the processes as planned. Check: monitor and measure processes against the environmental policy, including its commitments, environmental objectives and operating criteria, and report the results. Act: take actions to continually improve the processes. (ISO 14 001 : 2015)

The new high level structure for ISO 14001: 2015 can be seen in the Appendix 3, page 51 including the main content. It is seen as the common structure for all core elements across standards in the ISO family, so 9001 and 14001 are better aligned, making it easier for use. The common structure can be seen as the “x-mass” tree and the individual standards processes as ornaments (Nils Thorup). This was made by ISO to make it easier for cross implementation and to compare different standards as well. Next is described the different chapters 1-10 in ISO 14001:2015 with the last to new chapters described in detail. Chapter 1-8: Scope, Normative References, Terms and definitions, Context, Leadership, Planning & Support The new requirements are more focused on sustainability, with the addition of more focus on products & services under activities, to better suit a broader audience in the service sector. The systems is also more formal and systematically approached with more focus on the life cycle perspective of products (1.materials, 2.production, 3.distribution & packaging, 4.use & lifetime, 5. end-of-life), this should be used to strengthen the market position. It calls for more commitment on all levels and functions led by top management and entails that environment should be at least one of the business’ main priorities. (ISO 14001 new updates, 2015) Under scoping, you can no longer exclude certain activities, products or services and facilities that have or can have a significant environmental impact by the company. New terms and definitions added to the concept of supply chain, is the value chain, i.e. in what parts of the chain is the real value generated and not just transported from one link to another, also value chain control in operations is mentioned. Yet again the term of product life cycle is also mentioned, which entails a

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products life from introduction, growth, maturity and decline phases, all with different environmental aspects. (ISO 14001 new updates, 2015) In the organizational context the plan, do, check, act model is still highly relevant with the add-on of the integration into the business processes (this could be design and development, human resources, sales and marketing and procurement etc.). Leadership’s role is to clearly communicate these organizational roles, responsibilities and authorities. Planning to do so means addressing risks, but now focuses on the opportunities, as well to achieve environmental objectives. Support processes lies in allocating resources to be able to do so, developing the right competences and communicate this internally and externally with a demand for documentation of this lastly.(ISO 14 001: 2015) New Chapter 9 - Performance Evaluation Within this chapter that focuses on monitoring, measuring, analyzing and evaluating; the first step is to determine what are the vital key performance indicators (KPI’s) for the environmental policy to be strengthened and maintained, these not always having to be what are easiest to measure for example, employee safety hazards, if the cause is something else (poorly written employee handbook e.g.). In addition to this the progress on environmental objectives put forth by the organization should take into account the most significant environmental aspects of the organizations processes. (ISO 14 001: 2015) Finally compliance obligations and operational controls need to be analyzed and evaluated. Within this new chapter a section called “management review” is a part of the high-level management. This does not have to be on an exhaustive detailed information review, but the review should cover topics like the most relevant complaints reviewed for interested parties, in order to determine risks and opportunities for improvement – as elaborated further in chapter 10. (ISO 14 001: 2015) New Chapter 10 - Improvements The new improvement section is there to consider the results from the previous analysis and evaluation of the environmental performance, evaluation of compliance, internal audits and managements review when taking action to improve, by the management. The companies certified should always think in terms of; “can we do better”, instead of merely ”are we doing good enough”? Examples of improvements are the ”non conformity” & “corrective actions” to these taken, “continual improvement” (kaizen), “breakthrough radical change and innovation” plus “re-organization” through “change management” mentioned in the reflection. (ISO 14 001: 2015) As stated above the corrective action needs to be taken as one of the key purposes of an environmental management system (EMS). It should not act as an end-of-pipe reactive tool but rather as a proactive tool for decision-making processes. Henceforth the understanding of the organization i.e. their actions to address risk and opportunities are now captured in the new version of the standard. All this leads to the aspect of “continual improvement”, where the rate, extent and timescale of supportive actions to this are determined by the organization itself. The new standard can as such be seen holistically as a system, but also as an improvement of one or more of its individual core elements to improve the environmental performance of the organization. The way to incorporate managements understanding of the current and new ISO 14001 has been through open-ended questions to get their existing knowledge base.

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Grundfos them self needs to determine what the exact environmental goal(s) for implementation of the ISO 14 001 standard is/are, hence in terms of scope, design, policy, implementation, checking and managements review on performance evaluation and continual improvements. If Grundfos has the attitude that we don’t need to do better, and that not emitting more Co2 than the 2008 level is good enough, they don’t take their ‘own medicine’? The EMS system to be implemented through ISO 14001 needs therefore to be further elaborated; what purpose should it fulfill? This is going to be asked as an open-ended question to management. Questionnaire and Semi-structured interview The full questionnaire used to interview management in the D&E department and vice presidents of the entire Business Development can be seen on App. 1 on page 47. Both qualitative and quantitative questions are used in order to take the “environmental pulse” and understanding by management within the two management tiers. Investigations are made on; if this environmental management system needs to be better rooted in the company, and what purpose the old and new system should fulfill? To not become “some fancy certification, just hanging on the wall” - Nils Thorup. This is analyzed through the following sub-questions below: a) What are the major innovation & product development challenges at Grundfos within the up-dated ISO 14001? b) How does the environmental management system at Grundfos support the overall Business Development Strategy? c) What currently characterizes Grundfos’ management systems structure in relation to ISO 14001?

Next will be the outcome of the analysis and assessment of the semi-structured interviews digging into each sub-question, one at a time.

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5. Analysis and Assessment of Interviews The following section will look into answering sub-question a, b and c with sub-conclusions to each. There are both quantitative graphs and qualitative statements used from the interviews. Some statements and quotations are highlighted and argumentation presented, with others further discussed to get a better idea and overview of what the current ambition level is for the ISO 14001 standard at Grundfos. The full extent of these interviews can be seen in the Appendix: Interview Transcriptions on page 52. If there is any non-conformity with what the standard entails along with what is required for implementation is discussed. 5.1 What are the major innovation & product development challenges at Grundfos within the up-dated ISO 14001? As the new mandatory aspect of product life cycle must be incorporated in product development, as it is a part of the new standard the chart 5.1 investigates the prioritization of the different life cycle stages in product development, based on Vice Presidents rating of importance for the new standard’s implementation and the way they use the environment standard as of now. Legend: 1. Non-crit., 2. Less Crit., 3. Medium, 4. Somewhat crit. 5. Very crit. 5 4

Raw materials

3

Production

2

Transport

1 0

Use & life time Disposal

Chart 5.1: Prioritization of the five life cycle phases at Grundfos The chart 5.1 shows the five life cycle stages for any product; materials, production, transport, life time and disposal. “Use and life time” phase accounts for more than 90 % of the pumps energy consumption according to Grundfos, this is seen as the biggest influence on the life cycle. The pumps run in big water pumping stations and the better energy efficiency and longer run time the more power saved and less impact on the environment; however sometimes to do this, new electronics to monitor and control the power options, leaves it harder for the last stage in the life cycle phase; namely “disposal” to retrieve these electronics for reuse. The chart shows that less focus is on “disposal” phase and “raw materials”, this might be increased with the gained knowledge on circular economy and business models that Grundfos are in the process of considering. The phase with the second largest focus is “production”, as they still think in terms of energy and not resource efficiency. “Raw materials” are a bit varied as two VP’s states less critical and

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others somewhat critical, so this is placed on a third within the focus hierarchy. Fourth and fifth focus areas of Vice Presidents are lastly Disposal and Transport. There is a difference when asked to the importance of life cycle perspective when comparing the directors and managers opinions, as stated by manager for maintenance Svend Aage Kaae, who has the personal belief and opinion that not much can be done on the environmental aspect of the already finished products, as seen below in the quote; “Life cycle perspective (Life Cycle Analysis/Assessments) for products is not in my department but lies in development with Jan Strandgaard. Since my part of the organization does not have anything to add, the demands and responsibility would have to come from the group, with central controlled, because the impact on the society for maintenance of products is so very small” – Svend Aage Kaae Interview 1 However in spite of his opinion, more could be done on the matter, as maintenance of products with environmental reasoning could aspire to new idea generation for product development which is also indirectly his responsibility, leading to optimized product energy efficiency and environmental resource efficiency (RRRI index: reuse, recycle and recover as mentioned on page 20). Bjarne Fjeldsted, Director of the PCV, Product Compliance and Validation, mentions the preparedness level for ISO 14001 implementation in the following statement: “We are not anywhere near today, in product development (life cycle perspective), as it is not a part of the standard now, but will be. The DNA is energy efficiency, not resource efficiency but then again if we can make a structured process and show the argumentation for making the right calls according to the decision process; this is the most vital, but Grundfos has a long way to go for this to become a reality.” – Bjarne Fjeldsted Interview 4 As ISO 14001, is meant to be a planning and decision making guideline for companies environmental aspects, when asked if they used this standard as a way of thinking in their departments day to day operations one Vice President from Research and Technology said: “It is not a management system that drives these (decisions), but our group policies. In my part of the organization we think holistically, but the compliance part of the standard we have to live up to when making a new solution. We pioneered the integration of electronics in the products, thereby saving a lot of energy and costs, but how this affected the recyclability aspect of products was not measured” – Henrik Ørskov Pedersen - Interview 7 As stated above, the VP says they by principle have to incorporate compliance parts of the EMS standard, but as recyclability is not now a compliance requirement the opportunity to calculate the recyclability of pumps with newly installed electronics, was not made when designing the product. This could have in the long run saved Grundfos further costs and lead to less waste generation at disposal. Outcomes of these interviews and quotes from the managers and VP’s showed that the focus mainly is on energy efficiency, and that economy is the main driver, finally that there is not much knowledge of the environmental management standard in general.

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Finally in regards to the validity of data, in the life cycle assessments, Henrik, from R&T states that: “It is correct to have a sustainability index, but we need a balanced way of dealing with this, for the SPS tool kit, going from theory to practice: if the data supplied for the assessment, is not valid enough, like PE International own database, they only have one value for rare earth magnet materials: in China they use different mines than in the US, then data does not, as of now, have the granularity needed for these assessment” Henrik Ørskov Pedersen - Interview 7 The importance for life cycle perspective was different for managers and directors/VP, as when asked, they do not use the standard as a decision and management supporting system tool, they do not use it or refer to it for decision-making. It is seen as a ‘benchmarking system’ to see how they are performing internally and externally, for the customers to see the value of this management system it requires added value. The system can also be seen as too rigid, and as too bureaucratic, and therefore needs to be “smoothed out in the process” according to Jimm Feldborg – but it is used primarily as a common language between departments. The chart 5.2 below shows a short stakeholder analysis of; customers, employees, society and authorities importance for the company according to the only VP’s subjective points of view. The shareholders, while also a stake, was not analyzed here, because this was chosen not to be relevant as the way the company is owned with majority share being the Poul Due Jensen foundation. This was done to see what stakeholders the Vice Presidents prioritize when it comes to product development and innovation aspects. Chart 5.2: Stakeholder Analysis of four key stakes at Grundfos 7 6 5

Customers

4

Employees

3

Society

2

Authorities

1 0

1 to 10 points where 1 is of poor importance and 10 is of extreme importance The chart 5.2 on stakeholder analysis shows that the “authorities” (legal aspect) is seen as a number one priority for Grundfos, because if the pumps and processes are not within legal compliance they cannot be sold, or will have to be taken back, leaving a huge deficit. Secondly the “customers” are prioritized because,

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if they are not willing to pay higher extra costs for the more sustainable pumps they require, then Grundfos has no future business. Some customers for example demand documentation for certain standards. Next is an inclusion of a quote from managers and directors in regards to stakeholders and the customers’ demands. The quote arguments for the importance of customers need for the standard’s documentation as supported by The Head of Planning and Intelligence, when asked about the most important environmental demands from customers, suppliers, and authoritative stakeholders, he had this to say: “Everybody is conscious about energy; some have the economic approach, but also the environmental aspect, entailing both operations energy intensive saving and environmental impact as well. Some customers do not care about requirements to specific pumps; they do not need this knowledge. However EU directives are setting new standards for the energy consumption of devices incl. pumps in order to save energy and mitigate environmental challenges … Therefore some larger customers (OEM & B2B) require these environmental aspects of pumps … the larger customers wants the documentation, sustainability policy and ISO 14001 documents etc…” - Keld Fendsten Madsen - Interview 8 Here is stated that for some smaller customers these standards and certificates do not matter, but for larger OEM (original equipment manufacturers) these documents are becoming a necessity from EU law. Hence each time one of these large customers requires this documentation, there is currently no data base for these environmental product specifications, so each time an employee from SPS will have to recalculate these for the given materials. If it was more structured and setup for each individual part of the organization the Sustainable Solutions team could focus on long term energy and cost savings and support these processes instead. “Society” and “employees” are rated the lowest as can be seen in the chart 5.2, with the argumentation that the employees are part of the immediate society and that there are no mandatory ISO regulations for the society and social aspects as of now. As employee satisfaction is being measured as a KPI, this would be thought to be higher rated, but as shown they are mostly second to last in regards to the law and customers. How come this is and that the social aspect is of less importance will be reflected upon on page 41 later in this report. The project manager of Global Projects & Planning supports this employee aspect, with the following argumentation: “To be able to compete on price, the sustainability aspect of the environmental management standard must add some added value for customers, to add value for employees, to be able to compensate for the higher price of sustainability”. – Jimm Feldborg Interview 2 Here Jimm is referring to an alteration of the triple bottom line model as shown in figure 5.3, where the customers are the financial streams (economic), the employees (social) benefits and satisfaction rating the social dimension, leaving the environmental aspects to be less of importance, unless it adds something to the sustainability index of a product, i.e. how much better is it for the environment and the two others parameters (social and profit).

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Figure 5.3: Grundfos Business Case 1. Needs to be measureable in accountable terms in savings (Co2, and profit) made. 2. How can you transfer this to added value for customers? 3. What impacts does it have on employee motivation and satisfaction?

Jimm, would also very much like to see a measureable “sustainability index”; as he says; “In the product life cycle, we try to find the ‘correct’ sustainability index, as I lead the product development process; there are parameters for service- and re-useability along with the three others in the business case, as an add-on to the capacity degree and efficiency rate, which is also a requirement in the development process from customers.”- Jimm Feldborg Interview 2 Jimm finally mentions in the statement below, the concept of circular production, as well as there is a paradox present, according to him if you always need to increase the efficiency and capacity degree of pumps: “Cobber and other rarer metals are a necessity for pumps; the paradox is that if you want to increase the degree of capacity, you need more cobber, but it is a rare metal, therefore we also need recyclability in cobber and aluminum could also be considered. It is here sustainability becomes vital for us, at the disposal stage, to be re-introduced in the production” – Jimm Feldborg Interview 2 Sub-Conclusions The major challenge is to have life cycle perspective incorporated within Grundfos’ product development processes. This was analyzed and discovered that the environmental management system itself was not usually used to describe this in product development processes now, but rather group policies, and local department’s processes. Secondly in order to have more sustainability oriented innovation aspect incorporated within product development as well, Grundfos should move from the operational level, towards transforming the organizations to systems level, by benefiting from this move. This could be done through change management, along with the theory of integrating the management system in the organization. Many managers saw no value-adding activities of this current environmental management system, and hence did not really use it for decision-making. The VP’s prioritized the most important life stage to be “use and life time”, with the energy efficiency along with water and energy consumption as being primary environmental focus areas. The product development needs to incorporate the life cycle stages of “disposal” and “raw materials” which has a far way to go also, according to some managers. Finally the last two major challenges is getting the correct data on the transport stage and production optimizing, as this data was not available, the life cycle assessments have not been made by Grundfos yet.

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The next question to be analyzed is in regards to the strategy presented in the previous chapter. This subquestion was chosen to see if there was “a fit” between the environmental management system currently and the Business Development Strategy. This is presented next. 5.2 How does the environmental management system at Grundfos support the overall Business Development Strategy? The following charts are quantitatively based on the interviews. Managers and Vice Presidents have made their own subjective evaluation of the sustainability strategy. This was done in order to see individual person’s ambition level for what the new ISO standard should incorporate and fulfill, and also to see the difference, if any, between managers and directors/VP’s. Chart 5.4: Integrated management Chart 5.5: Incentives, Promotions, systems use of ISO 14001 as a support, recognition to support specific planning & management tool employee behavior Legend: 1. Poor, 2. less poor, 3. Medium, 4. Good, 5. Excellent 5 4 3 2 1 0

5 4 3 2 1 0

Economic Environmental

Economic Environmental Social

Social

Triple bottom line of sustainability at Grundfos according to Managers The above shows the three dimensions importance for managers rated from poor to excellent. The trend is economy as a basic driver, with the Design to Value project (see Appendix 3, page 51) mentioned to lower baseline costs. What is shown in the two bar graphs below is the top management vice presidents scores on the same three sustainability aspects. The difference shown here in comparison with the general managers is that the employee incentives for environmental and social behavior are less than what the managers in D&E stated. Is this because the hierarchy one level up does not pay as much attention to the employees because they have not as much employee contact as the managers? Chart 5.6: Integrated management systems use of ISO 14001 as a support, planning & management tool 5 4 3 2 1 0

Economic Environmental Social

Chart 5.7: Incentives, Promotions, recognition to support specific employee behavior 5 4 3 2 1 0

Triple bottom line of sustainability at Grundfos according to Vice Presidents

Economic Environmental Social

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One vice presidents sticks out in his answer on the economic scale stating that they do poorly and have none environmental and social considerations. Svend Aage, Director from the Maintenance function states why this is according to him; in regards to the standard: “No we have no specific environmental goals within my area of the organization, because we maintain the products. Here the focus is on less environmental hazardous materials and more energy efficiency in products, not very much social responsibility here. We get the already finished products and cannot change them, as it is described already (materials, processes) and this needs to be maintained, therefore hard to do anything in this area.” – Svend Aage Kaae Interview 1 In regards to the integration of management in the decision-making process, the standard is shown as in the above charts to be mostly seen as economic considerations, with environment coming second and social aspects falling last. In the day to day processes management does not consider the triple bottom line as much. Finally there are more varied answers by Vice Presidents when asked about the integration of the triple bottom line the current environmental management system at Grundfos, than compared to manager’s answers. Hence the system is not as of now as supportive as it could be for optimal decisionmaking for product development where product maintenance is also a vital aspect. In figure 5.9 below is shown how critical the assessment of Grundfos is according to managers, in case of losing their ISO certification in ’18. Split opinions are present on this matter. Firstly is shown a figure 5.8 of their own subjective rating of their personal understanding of ISO 14001. Managers Product Validation Fun.

Product Validation Fun. 5. excellent

Product Devlop. Fun.

4. Good

Projects and Appro. Fun. Maintencence Fun.

5. very crit.

Product Devlop. Fun. Projects and Appro. Fun.

4. somewhat

3. Medium 2. Bad

Maintencence Fun.

2. less crit.

3. medium

1. Poor

Global Apporvals Fun.

1. non-crit. Global Apporvals Fun.

0

1

2

3

4

5

Figure 5.8: Understanding of environmental management system (EMS) ISO 14001?

0

1

2

3

4

5

Figure 5.9: Criticality of loss of ISO 14001 certification in 2018

As can be speculated there might be a slight correlation with the managers, who are working more closely with the standard, and their assessment of the critically of losing the certification in 2018. Since you would naturally assume the more you know and see the importance of this, the more critical you would assess it for the company in general. The Vice Presidents rating of the criticality of loss is seen as higher than the managers in the figure 5.11.

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Vice Presidents Water & Utility Emerging Water…

5. very crit. 4. somewhat

Planning &… Research & Tech.

3. medium

Industry

2. less crit. 1. non-crit.

Buildings & Services 0

Figure 5.10: Understanding of environmental management system (EMS) ISO 14001?

1

2

3

4

5

Figure 5.11: Criticality of loss of ISO 14001 certification in 2018

The two above charts 5.8 and 5.10 shows first that there is a general poor understanding of ISO 14001 on both manager and the vice president level. They have all heard of the industry standard, but only one Vice president (VP) knew that there was an updated and revised version of the industry standard per September 2015. Since few are aware of the ISO 14001 implementation with the deadline of 2018, the chart in regards to criticality of loss showed that all but one VP sees it as medium to very critical to maintain the certification. Since the Board at Grundfos has put a target deadline on this re-certification in 2018, it is reality and should not be a discussion. Why one manager saw less significance will also be taken from the quote and transcriptions from the interview guide. An argumentation for the criticality of losing the industry standard at Grundfos, when asked what the general purpose for implementing an environmental management system such as ISO 14001, one Vice President for Buildings and Services stated: “The meaning with having such an EMS standard is that we can describe our management processes to show that this is the way we conduct management in our company: with management values and synergies to support this. This leads to having the possibility of certifying it as a standard, but that is the least of it, by having the managements philosophy described firstly is the most value adding, the description of what is ‘good leadership’ at Grundfos is vital”- Steen Tøffner Clausen - Interview 5

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The Vice present for their standalone business unit of Emerging Water Technologies, looked at it differently when he was asked how much he currently used the EMS system to support decision making, as in his part of the organization of water cleansing it was a major aspect. He stated in the first question to criticality of losing the certification that in the short term it was less critical. He had the following to say about their process optimization, when using the EMS: “(I use it) a lot absolutely, how we can optimize the processes, for example in our bio booster apparatus, where we have a certain flux (the rate of flow through a membrane) we have optimized this flux leading to better energy savings.” - Poul Madsen – Interview 9 “Our UV treatment in Italy, for cleansing waste water with UV, by killing the bacteria, uses now not the old quartz glass, because these are covered too fast with algae, instead they use Teflon tubes covering the UV glass. This leads to NO use of chemical baths to clean the algae, as it is easier to clean, less capacity required to clean with automatic sensors of how many UV lights was required to clean the water, in each rack of the UV light the heat hours was also measured, leading to a better estimation of when replacement is needed and the actual life time of UV bulbs”. - Poul Madsen – Interview 9 “All this adding up to the cleaning being of lesser negative impact to the environment ,with the electricity and man hours shortened leading to a win-win situation – So yes I use environmental systems guidance in the decision-making a lot.” – Poul Madsen – Interview 9 Sub-Conclusions The current environmental management system, is seen as not being used as a supportive decision-making and planning tool but more as a guideline for process requirements. Hence it is not directly supporting the strategy. The managers and vice presidents in general know little to less about the standard as the quantitative graphs showed. The overall use of the management system was less visible within environmental and social considerations, and economy was a main driver. As environment in the new standard should be one of the business core priorities, this is disturbing. The fact that some managers and VP’s saw the loss as less significant also goes against the board decisions. If this standard is to be implemented optimally there needs to be a common structure for handling this. In order to achieve successful implementation what the manager requires of the environmental management system must be in line with how the standard is setup, and their commitment is necessary as stated by ISO 14001 on page 20. Since the five-must-win battles had only few environmental strategic elements, the supportive action of the ISO 14001 standard is seen as of less importance for some managers and VP’s as well, compared to their ISO 9001 standard for quality for example. The quote above from Poul Madsen shows another example of some environmental considerations made in one project specifically. How this supports the processes for the management system and the business development strategy along with a common structure, is the last final sub-question, of how the management system is structured in relation to ISO 14001, presented in the section next.

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5.3 What currently characterizes Grundfos’ management systems structure in relation to ISO 14001? Following two chart shows the “state of preparation” assessed by managers and Vice Presidents, when asked the question: How well prepared are Grundfos, BD and your part of the organization to live up to the requirements in the new environmental management standard ISO 14001. The quantitative inputs are thus presented in the following. Chart 5.12: Managers State of Preparation for ISO 14001 Implementation 5 4 3 2 1 0

Grundfos Business Development Department

The chart 5.12 shows the management in D&E’s personal subjective evaluation of the state of “preparation” or “how well prepared” they feel to have ISO 14001 implemented and re-certified in 2018. Most managers say medium-good, with some poor, and even the honest answer: “Simply, don’t know. It is hard to say at the present”- Jimm Feldborg Interview 2

Legend: 0. Don’t know 1. Poor, 2. Less poor, 3. Medium, 4. Good, 5. Excellent Chart 5.13: Vice Presidents State of Preparation for ISO 14001 Implementation 5 4 3

Grundfos

2

Business Development Department

1 0

The VP’s, all except for the one outlier Thomas Hessellund all saw Grundfos in general being well prepared for the challenge of getting the new standard implemented. Only one VP said that their department and BD were medium ready. This gives the subjective picture that the company can just pull through with the certification. If the bare minimum is required than maybe so, but that looses the idea behind the new ‘high level structure’ and integration on all the ISO management systems.

A main observation from the two charts is that the Vice President, in general were surer of the preparedness level and state of preparation for ISO than the managers were. Contradictory to this the VP’s in general had poor to less understanding of the standard. Why this is so, is further elaborated by the following quote from, manager Bjarne Fjeldsted PVC:

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He mentions that Grundfos is not anyway near having this implemented today (2015) with the new standard as the need for “a structured process and to be able to show the argumentation for making the right calls according to the decision-making processes is the most vital”- Bjarne Fjeldsted Interview 4. To get another picture, of a Vice President, who was less sure of this “state of preparation”, Kenth Hvid Nielsen, Water and Utility VP, stated that he was very interested in the ISO 14001 standard’s implementation, and when asked about how he felt about the state of preparation for its implementation he said: “(We are) not as well prepared now, but if we could make it a “burning platform” then we can finish the implementation in time, but the question is how much time and effort is allocated and how hard we would have to work. Competences need to be utilized because they are definitely there. We need the sense of urgency to accommodate this implementation.” - Kenth Hvid Nielsen – Interview 10 The next four charts compare the structure for sustainable goals setup in the standard for managers and Vice Presidents. De-centralization versus centralization of responsibility is also shown in quotes later, to support these graphs qualitatively. The question asked to managers and Vice presidents was: Where do you see responsibility placed for overseeing the monitoring of the sustainability goals for your organization? Managers Product Validation…

Product Validation… 5. a lot

Product Devlop. Fun.

5. a lot

Product Devlop. Fun.

4. some Projects and Appro.…

3. medium

Maintencence Fun.

1. none

0

1

2

3

4

3. medium

Maintencence Fun.

2. less

Global Apporvals…

4. some Projects and Appro.…

2. less 1. none

Global Apporvals…

5

0

Chart 5.14: Structure of sustainability goals at Grundfos (Centralized)

1

2

3

4

5

Chart 5.15: Structure of sustainability goals at Departments (De-centralized) Vice Presidents

Water & Utility

Water & Utility Emerging Water…

5. a lot

Planning &…

4. some 3. medium

Research & Tech.

2. less

Industry

1. none

5. a lot

Planning &…

4. some 3. medium

Research & Tech.

2. less

Industry

1. none

Buildings & Services

Buildings & Services 0

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Emerging Water…

1

2

3

4

5

Chart 5.16: Structure of sustainability goals at Grundfos (Centralized)

0

1

2

3

4

5

Chart 5.17: Structure of sustainability goals at Departments (De-centralized)

The above four charts showed that both managers and vice presidents wanted more central structure and control in regards to sustainable goals within the standard. The vice presidents were more inclined to have more decentralized control within their overall departments, as it is the way it is handled today according to one VP, Thomas Hessellund from Industry, who had this to say: “I would assume that we today (operate) on a central structure level, do not have the complete focus on these sustainability goals and decisions which are usually made in a decentralized fashion… There is a need for more alignment and transparency with higher levels of empowerment to support the decision-making for local departments. If say the board (of directors) decides that sustainability is important for the group, the local departments should decide what this entails; moving these parameters to be reported in a central manner to the group directors, to give a better overview of the way we handle sustainability. The trend now is: UNITY of the processes” - Thomas Hessellund - Interview 6 The unity of processes is also a great part of the high level structure. Another manager, Bjarne Fjeldsted PCV, stated that this environmental framework should be a common structure of processes as well in the quote below as he says that: “A framework: is a given structure, you should not just have the standard for its own sake, but for using it as a framework, for all the processes within quality and environment etc. It should therefore be seen as a tool and not a goal in itself to have the certification, to make these decisions in product development along the way (within quality assurance, environmental performance and occupational health etc.).” – Bjarne Fjeldsted Interview 4 In terms of who, or which department has the responsibility for overseeing and controlling these goals along with reporting demands, more managers mentioned Group Sustainability, but one manager, Jan Strandgaard, Director for D&E Europe, mentioned that they at Grundfos, ‘back in time’ when he began in ’98 had more of an environmental focus and a sustainability index handled by program management, whether this was still is in place he could not say. Furthermore he adds: “The actors who would be most logical for handling these (sustainability goals) is the Quality function; as they look at Quality and Sustainability now. Things that are monitored now are employee motivation, customer loyalty. It would be genius to find a measurement for the environmental performance (like energy labeling A++ for instance) in place for the Circulation pumps already for example, it would be nice to have a sustainability index rating (again) for the products.” -Jan Strandgaard Interview 3 Another idea he mentioned in regards to this was as an add-on to the sustainability index, there could be a sustainability evaluation and assessment for the entire company, set as a requirement by law. As Jan says: “Furthermore it could be nice if you could make a sustainability assessment of an entire company (like an Elite smiley for food restaurants) and if this was a demand from law that a level of 2 e.g. was required this would really make a difference in the environmental aspects. It is hence centralized control that makes the difference, rather than grass root movements…” - Jan Strandgaard Interview 3

Hence this manager was a spokesperson for more centralized structure and control. As was described there was a common difference to wanting more decentralization from the Vice Presidents, compared to more

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centralization from the managers perspective. The common structure should be aligned for both of these parties to come to a common agreement of how to handle the ISO 14001 standard implementation before the target date in ’18. Sub-conclusions The current structure of the management system showed that there was a difference in the managers and VP’s expectation to the preparedness level, as the VP’s were in general more optimistic than the managers. The question of what characterizes the structure in a decentralized vs. centralized aspect showed that the managers called for more centralization of core common environmental goals, whilst the Vice Presidents wanted more decentralization with more decision-power in what to measure and report within such a management system. They all called for unity of processes, as it was discovered that confusion about official and unofficial documents were also apparent at Grundfos. This leading to a less structured why of decision-making and more documentation made than necessary. Many saw the idea of a common sustainability-index template as a good idea, if they could themselves choose, what was relevant to report to Group Sustainability for their functions. What follow next is the overall conclusions summing up all the sub-questions conclusions and answering the main problem statement: “What are the organizational challenges faced at Grundfos within the Business Development department, when implementing the up-dated & revised 14001 environmental management standard?”

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6. Conclusions In order to answer the problem statement one of the major challenges is to have life cycle perspective incorporated within Grundfos’ product development processes. Secondly in order to have a more sustainability oriented innovation incorporated within product development, Grundfos should move from the operational level, towards transforming the organizations to systems level, if they benefit from this. The VP’s prioritized life cycle stage “use and life time”, with the energy efficiency along with water and energy consumption to be primary environmental focus areas. Last two major challenges was then getting the correct data on the transport stage and production, as this was not available yet and the life cycle assessments were not yet made by Grundfos. The current environmental management system was seen as not being used as a supportive decisionmaking and planning tool, but more as a guideline for process requirements in ISO 14001. Through the interviews and assessments showed that the managers and vice presidents in general had little to less knowledge about the standard. The environment as a business driver should be seen as one of the business core priorities according to ISO. The fact that some managers and VP’s rated the loss of ISO 14001, as less significant, goes against ISO and the board decisions for implementation in ’18. If this standard is to be implemented optimally there needs to be a common structure for handling this. In order to achieve successful implementation, manager requirements to the EMS system must be in line with how the standard is going to be setup, as top commitment from their side is necessary as stated in ISO 14001. The current structure of the management system showed that there was a difference in the managers and VP’s expectation to preparedness level for implementation. Characterizing the structure in a decentralized vs. centralized aspect showed that the managers called for more centralization of core common environmental goals, with VP’s wanting more decentralization with more decision-power in terms of what to measure and report within an environmental management system. Lacking unity of processes and the confusion about the official and unofficial documents were apparent at Grundfos. This lead to a less structured why of decision-making and more documentation made than necessary. The idea of a sustainability index template was seen as a good idea, if the managers and VP’s could themselves choose what was relevant to report to Group Sustainability for their own functions. Summing up these three major aspects, of what the organizational challenges were at Grundfos at the moment in regards to ISO 14001 implementation in 2018: 





The need for having the life cycle perspective integrated within product development as a requirement, set by the new standard. The ”Use & lifetime phase” is the main focus now, the disposal and materials phases should be looked more into at Grundfos to see possible opportunities and threats Going from the operational perspective in measuring the sustainability-index aspects in the standard (water/energy and hazardous materials plus C02 output), to strategic level and systems thinking. This by using the standard as not mere guidelines for measurement, but also as a decision-making and planning tool. Structuralization challenges, in the sense of “where the responsibility was placed?” How should the goals be handled, either central or decentralist manner. Many wanted templates and goals set by

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Group sustainability, but wanted to have control of their own departments reporting initiatives. It was apparent this will become challenging, as confusion consisting of whether documents were official or not currently was an issue at Grundfos. These were the discovered organizational challenges within the Business Development Department in regard to ISO 14001 implementation, that they are currently facing at Grundfos, answering the problem statement. Next chapter will reflect upon the change management challenges and if these are occurring at Grundfos in regards to these aspects.

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7. Reflections Next employee behaviors and change management is reflected upon. Why were the employees rated last on the stakeholder analysis, since a KPI on employee satisfaction was measured at Grundfos? Since the employee and social focus has declined recently, could be due to the need of turning the financial tide and achieving higher growth rates at the company. The need for no more financial negative growth, in the past 4 years (SharePoint presentation at Grundfos) has shifted individual focus to overall focus. However employee behavior and good moral needs to be a part of the organization as Kotter says: “good employee behavior is rewarded and noticed” by creating the short term goals and wins. Next a reflection on aspects and hints to see if the eight steps for successful change implementation are present at Grundfos or lacking. Based on the interviews, some of the statements correlations to the eight change management steps are sought out in the text below. In a quote from Steen Tøffner-Clausen on page 35, two success factors from Kotter(2012) as presented on page 16, 1.Creating the guiding coalition and 2.Developing a vision and strategy. He mentions good “leadership”, as there should be a move from plain management to “leadership” focus with this management philosophy described. The purpose of the EMS certification should hence not be for its own sake but contribute to the overall management philosophy. (Steen Tøffner-Clausen – Interview 5) The critical success factor from Kotter(2012) 3. Anchoring new approaches in the corporate culture, is mentioned as vital in a quote from Thomas Hessellund on page 39, since the trend is unity of these decision-making processes it needs to be understood across all departments within the group. These goals and decisions are now handled in a central way and this is how Grundfos handles sustainability in the future. It should however be the local departments that decide in a decentralized manner what the new management standard entails as to use the system most optimally (Thomas Hessellund – Interview 6) Next the fourth factor from Kotter(2012) of 4.Consolidating gains and producing more change, is partially lacking at Grundfos as mentioned by Henrik Ørskov in a quote on page 29, because while they have made changes to the products they forgot to consolidate this change in electronics with environmental life cycle considerations, because the focus was mostly on short term energy cost savings and not long term material cost savings in terms of recyclability aspects. (Henrik Ørskov Pedersen – Interview 7) The critical success factor for 5. Communicating the change vision is partially lacking, as communicating why it is of important for some larger customer to have ISO 14001 certified for the company Grundfos, is not done yet and seen as important for Keld Fendsten on page 31 and I myself. (Keld Fendsten Madsen – Interview 8) The two project examples, of optimization of flux and UV water treatment as mentioned by Poul Madsen in quotes on page 36, the critical success factors for implementation of an environment management system as ISO 14001, is here seen as examples of these small successes using environmental considerations and decision making within individual projects. The two critical success factors from Kotter(2012) are to this to 6. Empower broad-based action in Grundfos and thereby leading to 7. Generating more short-term wins. This makes it much easier to see “what the fuzz is about” and why implementing such an environmental management system is a good idea. (Poul Madsen – Interview 9)

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Finally the last critical success factor for implementation is mentioned directly by Kenth Hvid Nielsen in a quote on page 38, who would like a common “burning platform” to create and, 8. Establish a sense of urgency. If this is not done from the very beginning, i.e. in 2016 and towards final certification in 2018, Grundfos will lose a valuable chance to get a clear structure of the up-dated ‘high level structure’ for both ISO 14001, but also ISO 9001: Quality, which incidentally needs recertification in 2017, with the 2018 target date as well. (Kenth Hvid Nielsen – Interview 10)

Grundfos at the moment encompass not all the factors for making this ISO 14001 management system implementation a success. Some factors were lacking as described by some mangers, as recyclability was not calculated for life cycle aspects now, and the sense of urgency is not established. Many Managers and VP’s did not see the value adding aspect of having this EMS system. The recommendation is the need for paying more attention to the change management aspect. The processes for the standard needs to be better “rooted” within the employee culture and mindsets, this requires that step eight gets special attention during and after the implementation. Grundfos should hence implement the standard themselves, when hiring consultants, because this leads to more rootedness in the company. This research question, on how to change their employee’s behavior towards using the standards’ processes more optimally, is a subject for another report. History shows that Grundfos in the past has been able to overcome many challenges, as many standards have already been implemented. If they meet the deadline for this certification in 2018 only time will show.

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References Websites (Grundfos.com 2015a) http://www.grundfos.com/about-us/group-management-and-structure.html (Grundfos.com 2015b) http://www.grundfos.com/about-us/grundfos-milestones.html (Strategy 2020, Grundfos) https://grundfos.sharepoint.com/sites/publish-9/PUB0200/Strategy%202020%20Initiative/Forms/All%20initiatives.aspx#InplviewHash5dbf5ec0-1aa5-45f5-8d4a8869d6f1acde=. (Core Strategy, 2020) https://grundfos.sharepoint.com/sites/publish-9/PUB-0200/Pages/NewSetupGroupOverview.aspx#InplviewHash206161c7-e4a9-4d5d-b447292ae99d89bd=SortField%3DPlan_x002f_Progress-SortDir%3DAsc (Grundfos in Brief, 2015) http://magazines.grundfos.com/Grundfos/SU/UK/Grundfosinbrief (Investopedia, 2015) http://www.investopedia.com/terms (Grundfos Sustainability Report, 2013) http://magazines.grundfos.com/Grundfos/SU/UK/GrundfosSustainabilityData2013/ (Grundfos Annual Report, 2014) http://magazines.grundfos.com/Grundfos/SU/COM/UK/AnnualReport2014/ (NBS: Innovating for Sustainability, 2012) http://nbs.net/wp-content/uploads/NBS-Systematic-Review-Innovation.pdf Innovating for Sustainability: A Systematic Review of the Body of Knowledge by Dr. Richard Adams et. Al, University of Exeter, 2012 Pdf’s (On Data CD) (ISO family, 2009a) Theiso14000family_2009.pdf (ISO family, 2009b) Forging action from agreement.pdf (ISO 9000, 2005) Quality Management Systems – Fundamentals and vocabulary.pdf (ISO 14 001: 2015) Environmental management systems — Requirements with guidance for use.pdf (Strategy Passport, 2020) Strategy_2020_passport_dk-final-low.pdf (GMT, 2015) Grundfos Management Team provided by Nils Thorup (A standardization request, EU) merged_draft mandate on material efficiency aspects of Ecodesign.pdf

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Articles (Flick, 1998) Semi-standardized Interview guide, 1998 (Jørgensen et Al, 2005) Integrated management systems: three different levels of integration by Tine H. Jørgensen, Arne Remmen, M. Dolores Mellado, April 2005 Books (Kotter, 2012) Leading Change by John P. Kotter, 2012 ISBN 978-1-4221-8643-5, Harvard Business Review Press. Boston, Massachusetts Presentations (MWB, 2020) DE2020_MustWinBattles 01 07 2015.ppt (BD initiatives, 2020) BDDrivenInitiatives2020.ppt (ISO 14001 new updates, 2015) ISO14001-2015_ final.ppt Personal (Nils Thorup, 2015) Talks and discussions Interviews files (attached on accompanying Data CD) Katrina Sonne Einhorn Interview 0 Stemme0005 – Katrina Sonne Einhorn.aac Svend Aage Kaae Interview 1

Stemme0006 - Svend Aage Kaage.aac

Jimm Feldborg Interview 2

Stemme0007 - Jimm Feldborg.aac

Jan Strandgaard Interview 3

Stemme0008 - Jan Strangaard.aac

Bjarne Fjeldsted Interview 4

Stemme0009 - Bjarne Fjeldsted.aac

Steen Tøffner Clausen Interview 5

Stemme0001- Steen Tøffner-Clausen.aac

Thomas Hessellund Interview 6

Stemme0002 -Thomas Hessellund.mp4

Henrik Ørskov Pedersen Interview 7

Stemme0003 - Henrik Ørskov Pedersen.aac

Keld Fendsten Madsen Interview 8

Stemme0004 - Keld Fensten Madsen.aac

Poul Madsen Interview 9

Stemme0005 - Poul Madsen.aac

Kenth Hvid Nielsen Interview 10

Stemme0006 - Kenth Hvid Nielsen.aac

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Appendix 1 Questionnaire Framework  General Profile Questions 1. What is your role at Grundfos & Responsibility area? a. Your own personal experiences with Grundfos’ sustainability policy 2. What are your thoughts about using certified management systems in your part of the organization as a management tool? 3. Have you heard about the environmental management system ISO 14001? i. (Rate yourself from 1.poor, 2. bad, 3. mediocre, 4. good, 5. excellent understanding) b. Do you use it in your organization? c. Do you measure your performance for it? 1. How? a. Can I see examples after this interview? 4. Do you know that there is a new ISO 14001 environmental management system (EMS) revision from September this year (2015)? If Yes A) Do you know what this revision entails, i.e. what do you think it means for Grundfos? And for your department? If No B) Present the ISO 14001 Power point presentation (11 slides) – Which supports the License to Operate – What is included in the new standard and requirements. (7-10 min)  Your specific organization 5. What is the key role of your organization within the group? a. Does your organization have any specific environmental goals 6. What are important environmental demands from customers or other stakeholders? 7. In terms of integrated managed systems a) Do you & you’re organization use it to make decisions to support the management? b) What goals do you intend the management system will fulfill? c) In what degree does the current management system meet your requirements to make an optimal decision? 1.Poor 2. Less poor 3. Medium 4. Good 5. Excellent In Economic terms: In Environmental terms: In Social terms:  Strategy in the organization 8. To what extent do you know the environmental policy of Grundfos(strategy & goals) a. Are there elements in the policy you think should be strengthened (show examples if yes)? b. Are there aspects that should have more attention in your department? (show examples if yes)?

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9. Do you use incentives, promotions, recognition to support a specific employee behavior 1.None 2. Few 3. Medium 4. Some 5. A lot In Economic terms: In Environmental terms: In Social terms: 10. How critical would your assessment be of Grundfos, if Grundfos looses their 2018 certification of ISO 14001? 1. non critical, 2.less critical 3. medium critical, 4.somewhat critical, 5. very critical 11. To what degree do you expect that collaboration between you and your customers/ or suppliers will have a bigger focus on sustainability within the next 2-3 years? 1. No collaboration, 2.less coll 3. Same as today, 4.More, 5. Vital for collaboration 12. In what degree do you expect a centralized control of sustainability goals? a. Within Grundfos? i. 1. none, 2.less 3. medium , 4.some, 5. a lot b. Within your organizational department? i. 1. none, 2.less 3. medium , 4.some, 5. a lot  Structure in the organization in the future ISO 14001 revision 13. Where do you see responsibility placed for overseeing the monitoring of the sustainability goals for your organization? (Central   Group) 14. What do you think should be monitored to achieve these sustainability goals 15. How well prepared does (Grundfos, BD) and your part of the organization live up to the requirements in the new environmental management standard ISO 14001? i. 1. Poor 2.Less poor 3. medium 4.good 5. excellent Grundfos (general) Business Development Your Department  Life Cycle Perspective for future ISO 14001 revision (Add-on questions after 1st stage) 16. Where do you and your organization have an influence on the product life cycle stages? 17. How would you prioritize the five life cycles phases? Within; Life Cycle 1. Non-critical 2.Less critical 3. Medium 4. Somewhat 5. Very Critical Stages critical 1. Raw Materials 2.Production 3. Transport 4. Use 5. Disposal 18. List after importance the following 4 stakeholders: Give out 10 points (from 0-10, and split these up on the four stakeholders) a. customers b. employees c. society d. authorities

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19. Your opinion on the new ‘high level structure’ in ISO 14001? 20. Your opinion on product development within a product life cycle perspective? 21. Your opinion on top management’s requirement on commitment for review of these new aspects?

Personal interviewed The Development & Engineering (D&E) Function at Grundfos, with: Jimm Feldborg Director, PMO (Project Management Officer) of Global Projects & Planning; Svend Aage, Director from the Maintenance at D&E, Jan Strandgaard Director for D&E Europe, part of the Global Development and, Bjarne Fjeldsted Director of PCV, Product Compliance and Validation. Six business leaders and vice presidents within each individual part of the organization were interviewed; these being; 1. Poul Madsen, Group Vice President ,Emerging Water Technologies; 2.Kenth Hvid Nielsen Group Vice President, Water & Utility; 3.Thomas Hessellund, Group Vice President , Industry; 4.Keld Fensten Madsen, Planning and Intelligence Director; 5. Henrik Ørskov Pedersen, Global Research & Technology Director; 6.Steen Tøffner-Clausen, Senior Director Building Services Program Management. This was to get their understanding and opinion on of how and why the standard for environmental management affects their part/ the entire corporation of Grundfos.

The next figure contains the personal that was interviewed for the final assessment.

Figure App 1: The Business Leader Forum context (Source: Grundfos Management Team provided by Nils Thorup) The above diagram shows the structure of the Business Management team to which some of the personal in question was interviewed.

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Appendix 2 Key Performance Indicator definitions: 1. Sales Growth; (compound annual growth rate ‘CAGR’) The Sales Growth is the ultimate measurement for Grundfos’ global breakthrough power, and this can only be strengthened, if the products and solutions reach more people and more parts of the world. CAGR is the mean or smoothed annual growth rate earned over your investment time horizon calculated by . (Investopedia, 2015) 2. Customer Loyalty; At Grundfos all stakeholders need to be taken into consideration, in collaboration with employees the customers are the most important stakeholder. 3. Employee Motivation & Satisfaction; Grundfos takes their social accountability very seriously and it is a goal by itself to create and attractive and motivating work place based on Grundfos’ purpose & values. 4. Return on Sales; (profit before taxes ‘PBT’) To secure the leading role on a long term basis, it requires continued economic independency and the ability to invest in products, people and capacity plus new markets. PBT is a profitability measure that looks at a company's profits before the company has to pay corporate income tax, measure deducts all expenses from revenue including interest expenses and operating expenses, but it leaves out the payment of tax, referred to as ‘earnings before taxes’ also. (Investopedia, 2015) 5. Return on Capital Employed; (‘ROCE’) Grundfos is an especially vertical integrated company. Their capital effectiveness is an important measurement of their ability to remain vertically integrated and independent in the long run. ROCE is the financial ratio that measures a company's profitability and the efficiency with which its capital is employed. ROCE is calculated by

,

where ‘EBIT’ is; Earnings Before Interests and Taxes, and Capital Employed is the denominator of the sum of shareholders' equity and debt liabilities; it can be simplified as (Total Assets – Current Liabilities). It is sometimes calculated by average capital, taking the average opening and closing capital employed over a specific time period. (Investopedia, 2015).

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Figure App 2: Balance between the five most important KPI’s (Source: Grundfos 2020 Strategy)

Appendix 3 App 2.1 New ‘High Level Structure’ contents in ISO 14001: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Foreword Scope Normative References Terms and Definitions Context of the Organization Leadership Planning Support Operation Performance Evaluation Continuous Improvement

App 2.2 Current Design to Value (DtV) Initiative Strategy The current economic savings project “Design to Value” in short DtV running from 1st September 2014 to 31st December 2016, has the common goal of saving 1 billion DKK by the end of 2016 assuring Grundfos as a sustainable growing company, according to the 2020 strategy initiatives website Strategy2020 Initiatives. This to be done by, as they claim: “We have to make our organization successfully collaborate across functions and succeed by: 1. Lower cost of our products through design changes 2. Buy our material and parts cheaper. 3. Ensuring that our products consist of features the customer need and is willing to pay for.” (Strategy 2020, Grundfos) Until now (August 2015 numbers) Grundfos has saved 207 MDKK with their target being 250 M DKK. Some savings cannot be realized immediately however, as the payback time is longer.

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Interview Transcriptions Managers Interview: Qualitative Data(Questions 3i , 7, 9, 10, 11, 12a), b), 15 Quantitative Data Excel) Svend Aage Kaae: 1. What is your role at Grundfos & Responsibility area? a. Your own personal experiences with Grundfos’ sustainability policy Director of a maintenance function in D&E Sustainability policy: Regulatory & Technical Affairs (RTA) to support Grundfos Sustainability goals via. Euro pumps and law, to support energy efficient pumps regarding law (low energy and high power). Less energy and more power: is a vital option. Pump union in Denmark and Euro pump in EU for standards in the EU commission to help with the laws and support this… 2. What are your thoughts about using certified management systems in your part of the organization as a management tool? Do not use directly within 14001 in his department, but they live up to the ISO 14001 standard requirements. In Audits they are needed to show that we do what we say. Not something we use in our daily day work life, but we do have a process map for engineering to have it implemented at the user. 3. Have you heard about the environmental management system ISO 14001? a. Do you use it in your organization? New updated known, but very little knowledge of it but necessary and enough... b. Do you measure your performance for it? How? Not directly measurement, but what we do in practical term with our work, process based not systems based. 4. Do you know that there is a new ISO 14001 environmental management system (EMS) revision from September this year (2015)? Yes If Yes A) Do you know what this revision entails, i.e. what do you think it means for Grundfos? And for your department? No 5. What is the key role of your organization within the group? a. Does your organization have any specific environmental goals? No we have no specific environmental goals within his area of the organization, because they maintain the products. Focus on less environmental hazardous materials and more energy efficiency, no social responsibility here. They get the all ready finished products and cannot change them, as it is described (materials, processes) and this needs to be maintained, therefore hard to do anything in this area. RTA has developed new projects (within D&E, the development with Jan Strandgaards area). Used lot of money of the development side and energy requirements, not an environmental demand but a support initiative to fund the journey, need for cost reduction for this to have a higher inco me rate. Cost reductions not set by themselves, but by the product variants (quality, support, standard and law where more important)  Design to value was focused on later, by top management.

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6. What are important environmental demands from customers or other stakeholders? Program management describes in projects what the demand from customer and stakeholders are and to what extent, it is under the development or the flow stream (mechanical and electrical flow streams) which is handed to the development function that then decides and influences the environmental demands, not directly customer requirements to them but through program management. Product Engineering Process (PeP) global to support ISO management’s demands, before it was in the production, and after in the development function was changed the responsibility was moved and ARIS (ERP) process management system What should such and Environmental Management standard fulfill? Economy, necessary to have the social side’s covers, the products need to be environmental friendly and the customer to pay value for money. Balanced between the three factors, social and environment not as coherent but economy as a set point. What degree is it used to make decisions; He cannot answer this put simply. Used to make sure that we do things right and are not a pair of bandits, look through our cards. 8. To what extent do you know the environmental policy of Grundfos? Cannot answer directly, when mentioned 2008, the levels of electricity, water and C02 should not be over this levels. a. Are there elements in the policy you think should be strengthened? If Grundfos want to grow, the 2008 demand is really serious, and hard to keep, if you want to grow: Also means that the C02 exchange of C02 quotes should not be done, as a scam. Should be banned. b. Are there aspects that should have more attention in your department? We don’t discuss this, because as said, what we do have marginal affect on this. But we chose components, if some are outdated that are not environmental hazardous, then if we change materials we think about his here. Economic, Environmental and Social terms: Cost incentives (DtV): Goes away from focus on product variants, and more on cost based reduced, because sometimes new product portfolio is a waste of time, and cost based matters. Engineering: Economic, and Environmental: only RTA laws terms, and Social: Pressure and stress is considered but takes it into consideration if someone is on a downward spiral and not treatment to prevent stress. HR strict rules for this. Is ISO 14001 necessary for private customers or is it just an ‘image’ to the outside world, that we have ISO, does not look for private customer in ISO, more bigger B2B customers. We decide the demands for customer collaboration upstream in the supply chain, when purchasing new customers, the focus on sustainability would be the same as today.

13. Where do you see responsibility placed for overseeing the monitoring of the sustainability goals for your organization? (Central   Group)

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Life cycle perspective for products, not in his department but for development. Life Cycle Analysis. Since his organization does not have any according to him, the demands and responsibility would have to come from the group, central controlled, because the impact on the society for maintenance of products is so small according to him. 14. What do you think should be monitored to achieve these sustainability goals? 5 KPI’s mentioned. And new KPI’s (maximum 5) according to Jan Strandgaard, need to be easy and accessible, these are :quality, cost reduction (dtv) and delivery time, product lead time and two others KPI’s for development, three for his department. The quicker you produce something and better quality the less waste you have, indirectly affects the environmental sustainability 15. Preparation state for ISO 14001? Means; that we are well prepared, since the things are handled elsewhere. For business development less prepared; since they have more influence on the product life cycle impact and the way it is designed, and Grundfos in general is medium prepared.

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Interview: Qualitative Data Jimm Feldborg: 1. What is your role at Grundfos & Responsibility area? Director for PMO (Global Projects and Planning) of developments projects and execution ref ers to him as director, to use the capacity. Owner of the product development model, which is a part of ISO certification in regards to documentation. a. Your own personal experiences with Grundfos’ sustainability policy Triple bottom line, product in regards to capacity degree, and now what happens at disposal. Primary focus on the degree of power capacity. Also want to look at environmental impacts in regards to Corporate Social Responsibility. They have not found the correct sustainability index yet, but try to “take their own medicine” to change the product in their products, to save water and power e.g. 2. What are your thoughts about using certified management systems in your part of the organization as a management tool? Is seen as a benchmarking system to see where they are internally and externally, for the customers to see the value of this management system. The system can also be seen as rigid, as it is too bureaucratic, and needs to be a smoothed out process – but is used primarily as a common language between departments. 3. Have you heard about the environmental management system ISO 14001? He does not work with the field, ISO 14001 himself, so he is not well known in the standard. a. Do you use it in your organization? He doesn’t use it in his organization b. Do you measure your performance for it? How? Has no environmental measurement 4. Do you know that there is a new ISO 14001 environmental management system (EMS) revision from September this year (2015)? No If Yes A) Do you know what this revision entails, i.e. what do you think it means for Grundfos? And for your department? No 5. What is the key role of your organization within the group? a. Does your organization have any specific environmental goals? In product life cycle, tries to find the sustainability index, as he leads the product development process, there are parameters for service and re-useability as an add-on to degree of capacity, which also is a requirement in the development process. 6. What are important environmental demands from customers or other stakeholders? (Virknings grad)Degree of capacity: as 20 % of world energy is used by pumps; this is a major driving force for making our pumps more energy efficient. With the electronic the future could be seen as optimizing this aspect as the mechanical aspect cannot be much more improved. As of now we have a take-make-dispose point of view, and this could be seen as a downfall, we need a balance between the re-useability and the aspect of components needed to be repaired for their electronics, so t hey have environmental stations like (Reva) can some of the appliances be used again in third world

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countries? Cobber and other rarer metals are a necessity for pumps; the paradox is that if you want to increase the degree of capacity, you need more cobber, but it is a rare metal, therefore we need recyclability in cobber and also could be aluminum: so here sustainability becomes vital for them at the disposal stage, to be re-introduced in the production. Cooperation between the district heating and Grundfos is also of importance. (Industrial symbioses) Social aspects are the small enterprises and shops: like the local taxi company working for Grundfos and the flower shop delivering new employees flowers. Small acts of sustainability should never be underest imated (rings in the water) Use of systems for decision making? Does not use the system for this… What should the management system fulfill? As it is an environmental management system, it needs to gains something for the environment, but also in regards to QMS (quality management system) and also financial systems to make sure that the company is making money. Simple example of flouriest, in Bjerringbro or Århus; it is financially cheaper to buy from Århus but they save C02 and support local community to o. Needs to be measureable. Also the system should not just be they for its own sake; the customer’s needs some value “bang for their buck”, you cannot be green peace and work on morals and ethics, needs to create shared value. 1. Needs to be measureable in accountable terms in saving (c02, profit) made, 2. How can you transfer this to added value for customers, 3. What impacts does it have on employee motivation and satisfaction? Added value for customer allows higher price of customers, to be able to hire the “best and brightest” – the right people the right solutions and this leads to taken their own medicine. Has a lot to learn in terms of sustainability index (of the business case with three parameters presented) 8. To what extent do you know the environmental policy of Grundfos? 2020 strategy has no environmental policy. Strategy is on top, but the policy lives longer, and strategy is a guideline for next five years towards 2020 – sustainability as a business driver mentioned. Knows also that 2008 was the year that they would not emit more C02 then this year and continued growth. a. Are there elements in the policy you think should be strengthened? Elements mentioned in the business case, should be strengthened, as project leader: the materials selected is chosen on the extra added-value for customers and the other two trades offs in the business case. b. Are there aspects that should have more attention in your department? Cost/benefit trade off analysis made for this, would people really care if we los t the certificate of ISO 14001 was lost: what does it give the customer Future Now award as a price for specific employee behavior. What is the most focus added to the three aspects? If we design something more expensive what is the added value for the p roduct? Social terms are highly regarded in the social chain to keep clean business practices. There is expected more focus on sustainability in the next 5 years. 13. Where do you see responsibility placed for overseeing the monitoring of the sustaina bility goals for your organization? (Central   Group)

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Degree of centralized control is medium, and for his organization non existent He sees it anchored in product management; it is a feature of the product to be seen as added value for the product to be sold at a higher price

14. What do you think should be monitored to achieve these sustainability goals? As of now, now currently sustainability measurements monitored at his department. He thinks that their needs to be a follow up on a significant environmental impact, does it provide extra sales (more loyal customers) and indirectly do you have more motivated employees (fair trade pumps – do you want to buy the higher priced socially accountable product) or the cheapest one? Need for added value. 15. State of readiness: When it is something Grundfos has decided, it needs to be done: then they have to do it by 2018: to have it recertified – What comes from Nils Thorup  Support license to operate (reason for company being in existence)

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Interview: Qualitative Data Jan Strandgaard: 1. What is your role at Grundfos & Responsibility area? He is the director for D&E Europe, part of the Global Development and Engineering. Have the responsibility of the development and the maintenance of product. Has a person i n Denmark, Germany, Hungary and china – part of the global D&E team a. Your own personal experiences with Grundfos’ sustainability policy Has heard about their sustainability policy updated through time. Back in time: it was mostly environmental, now healthy economic company and social aspects. Has seen the most change in the need for life cycle analyses of product, in ’98 in the stages gate 4 in a development product – they made an environmental assessment (in energy and material terms) – common things like chemical regulation also a aspect. 2. What are your thoughts about using certified management systems in your part of the organization as a management tool? Though are that it can contribute in life cycle assessment, but also in regards to the REACH directive in use of chemicals in products – it has to make sense that the environmental management system makes sense also in the environment demands. 3. Have you heard about the environmental management system ISO 14001? a. Do you use it in your organization? Low understanding of ISO 14001. Uses in the sense that the things they write about their processes – they need to fulfill. b. Do you measure your performance for it? Has no recollection of any performance measurement for it. Sees a gap for the Life Cycle Analysis of product as nonexistent now – There are mostly economic goals when developing a new product – sees an opportunity as having environmental goals here too. The model of how they calculate a sustainability index back in time – handled by program management – has gone to a standstill Need for check up on this, DO THEY HAVE IT STILL? 4. Do you know that there is a new ISO 14001 environmental management system (EMS) revision from September this year (2015)? No If Yes A) Do you know what this revision entails, i.e. what do you think it means for Grundfos? And for your department? No 5. What is the key role of your organization within the group? a. Does your organization have any specific environmental goals? No, does not encompass any at this point in time.

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6. What are important environmental demands from customers or other stakeholders? Customers: The ability to show the life cycle assessment; and that we live up to REACH and other directives, as customers demands these documents be fulfilled and lived up to. Use of the management system to support decision making? No What should the system fulfill? It should live up to the ambitions of the company, where exactly the sustainability aspect in the new 2020 strategy of Grundfos is hard to say; law and customer requirem ents a vital part of the environmental aspect. The most important to say as of now; is the economic aspect – which need to be strengthened right now. The environmental aspect is a medium importance, and social is medium as well- 3 medium; seen as a good tradition as Grundfos has a good employee culture he means. What is the system function now? The system is too invisible in the day to day as of now: to make it operational. The processes need to be build into the way we do things, until then it is just a fancy piece of paper with no value. 8. To what extent do you know the environmental policy of Grundfos? Not very spread out as of now in Grundfos according to him. a. Are there elements in the policy you think should be strengthened? Elements that need to be strengthened, life cycle assessment, before better at this, but today not a part of it any more. When they make objective and performance measurement, the sustainability index should be a part also (measurable) like they have in economic terms they m easure. b. Are there aspects that should have more attention in your department? They are small steps to be taken: Factories need to look at electricity, heat and water: could also be done in an office environment in small terms – but mostly it is the way products are designed to make the products more environmentally conscious. Right now the cost base reduction is in high focus level (look at where costs can be minimized financially) not right now seen as triple bottom line; they could make a project like DtV with environmental hazardous reduction (perhaps EhR project) Has bonus for specific employee behavior Critically seen as a vital part of compliance to ISO 14001- ISO 9001 Audit: there were no nonconformances – but doesn’t know what the minimum requirement to pass the audit was in September 2015 for ISO 14001:2004 and IS0 9001. 2008 Degree of further focus on sustainability: More or less the directives seen as the major drivers for the bigger focus on this. 13. Where do you see responsibility placed for overseeing the monitoring of the sustainability goals for your organization? (Central   Group) Has 3 economic goals (CAGR, PBT, ROCE,) and employee motivation and customer loyalty measured. Could also be interesting with a sustainable goal within the 3 KPI’s on the concern level, what can HR, procurement and development and engineering all contribute to this?

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14. What do you think should be monitored to achieve these sustainability goals?

The actors who would be most logical for this is the Quality function; also to look at Quality and Sustainability as of now – because it is there responsibility now. Else should be monitored (employee motivation, customer loyalty)  Could be genius to find a measurement for their environmental performance (like energy labeling A++) like the Circulation pumps for example, it could be nice to have a sustainability index rating for the products. Could be nice if you could make sustainability assessment of an entire company (like an Elite smiley for food producers) if it was a demand from law that a level of 2 was required this would really make a difference in the environmental aspects. It is centralized control that makes the difference, rather than grassroots movements… 15. Preparation state for ISO 14001? Grundfos: Not known the state of readiness Business Development: Not known also OWN department: Simply cannot say. Again as of now does not fill that much in his area.

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Interview: Qualitative Data Bjarne Fjeldsted: 1. What is your role at Grundfos & Responsibility area? Director of PCV, Product Compliance and Validation: covering BDM (Business Development & Management) TM (Tele marketing) and Product Approvals and Laboratory setup. Also including Quality Management within the QMS system. a. Your own personal experiences with Grundfos’ sustainability policy Have had the sustainability people in his division. Sustainability is a part of the DNA, as part of Katrina (in Approvals). Has been a part of making the critical to succeed factors for sustainability. Believes he has a very good point of view on where we are, and where we are going. 2. What are your thoughts about using certified management systems in your part of the organization as a management tool? Uses the QMS system himself as head, to also lead the environmental and work related social aspects. Iso 9001, quality, iso 14001, environment, and iso 18001 for occupational health and safety all part of the so called “Grundfos DNA”. These things are mandatory. Also means they all need to be in a specific Frame (the high level structure) to see what does this mean for the product development. The frame is: a given structure, you should not just have the standard for its own sake, but for having it to be a framework, for all the processes within quality and environment etc. It should therefore be a tool and not a goal in itself to have the certification, to make these decisions in product development (quality assurance, environmental performance and occupational health). 3. Have you heard about the environmental management system ISO 14001? a. Do you use it in your organization? In the central environmental department, more focus on this, New aspect in the updated standard that has to be accounted for. Have had environment and work performance for the last 10 years in his function. b. Do you measure your performance for it? We have a group of items for performance: their buildings and their own (carbon) foot print, Needs to strengthen our global footprint. If we change certain things e.g. within a given product requirements; what does it lead to for the overall product footprint. These things need to be taken into consideration. Not just carbon footprint, but also materials (a holistic view, also waste disposal). Very much on the facility, internally in-house production the main factor. But needs to be in a bigger frame. 4. Do you know that there is a new ISO 14001 environmental management system (EMS) revision from September this year (2015)? Yes If Yes A) Do you know what this revision entails, i.e. what do you think it means for Grundfos? And for your department? No, not in detail. But in know the main points: look at internal processes: what influences the decisions for these (outside-in perspective). In the processes of mapping these activities as of now.

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5. What is the key role of your organization within the group? a. Does your organization have any specific environmental goals? PCV environmental goals: Goals for re-use of energy (energy efficiency): Their tests are mainly focused in the energy efficiency spectrum. Also their water footprint is of essence for the watercirculation pumps, and chemical compliance is yet another vital aspect, although we don’t use a lot of hazardous chemicals this is still vital (many chemicals, and chemicals use – the chemical compliance project – Tina Seeborg). 6. What are important environmental demands from customers or other stakeholders? The most important environmental demands, before was a lot of focus on energy, now also on re use (look at the materials put into the product) and what can be disassem bled (modular products) in order to make a so called “take-back” arrangement program first of all. (Take-Back, leasing and material re-use for re-production) – In the take-back the WEEE directive is a part of this. But the leasing solution needs a set of new business models for Grundfos, not as much about environment, but change in setup for market position, for leasing products and new supply chain configuration. 7. Use of the management system to support decision making? We use integrated management system. There is an incorporated structure in regards to law requirements, these needs to be addressed, for our decisions and our documentation requirement. -What should the system fulfill? The management system should fulfill the requirement to support or most important processes. That our decision making processes are described in detail, our governance structure as well. The overall theme is that it is VALUE-Adding. If we have such a system, and it is not, have we put too much effort into it, our wrong parameters? -What is the system function now? Does it live up to these parameters? We are not anywhere near today, in product development (life cycle perspective), as it is not a part of the standard now, but will be. The DNA is energy efficiency, not resour ce efficiency but then again if we can make a structured process and show the argumentation for making the right calls according to the decision process; this is the most vital, but Grundfos has a long way to go for this to become a reality according to him. 8. To what extent do you know the environmental policy of Grundfos? Economy has the certain high runner. The environmental policy, not as structured, but yet still as important for Grundfos. Social aspects have not had any revolutionary steps in the recent years. Knows the sustainability strategy pretty well, as we have some license to operate strategies that in the 2020 strategy, it is one of our must win battles. There is a group of initiatives for these environmental aspects – in management level there is a good understanding of it, not as much on employee, but doesn’t know if there is a need for this. a. Are there elements in the policy you think should be strengthened? License to operate, our ability to show the environmental aspects of a product , and live up to the law requirements for different countries and regions. Need for “setting the bar” for this level of incorporation of the environment. Need for quantification of this, cannot compare objectively to others, and get a more realistic picture of our own setting (needs to be a starting point) very subjectively as of now the environmental aspects.

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b. Are there aspects that should have more attention in your department? Existing goals: energy and water – in his area we quantify these for product development. Here recyclability could also be supported by him, for the system, to make old component’s the same quality for re-use in production. Bonus for specific employee behavior (incentives)? Incentive arrangement: on the progress of products (NPSR: New Product Success Rate as the main KPI) when talking about our new product progress, measured in economic terms amongst also; warranty, call backs, and delivery product lead time (Quality, and if we reach the economic and quality goals). We have no bonus for environmental incentives for employees, we have our EMS (work environment, courses, and internal employee satisfaction and we have a goal specific for special needs for employee (part time etc.). Critically of loss of ISO 14001 certification Depends on why we would lose it, medium, depends on what we don’t live up to. No demands from law, but customers will look at this certificate loose and ask why we don’t have it. Business critical: NO, but if the laws is changed (directives) then it becomes critical (the resource efficiency directive to come later form EU) Rising levels of focus on sustainability (customers and supplier) will definitely be a business driver in the future. Centralized vs. departmental control of sustainability goals. I expect that the Group Organization will make overall sustainability goals that we all have to follow. Trickle down. Within my own organization these will be cascaded down into my department as well 13. Where do you see responsibility placed for overseeing the mo nitoring of the sustainability goals for your organization? (Central   Group) We need an adjacent level of administration with, iso 9001, 14001 and 18001 to have a common administrative level of integration in the group. This is the trend 14. What do you think should be monitored to achieve these sustainability goals? Structure

We are here to create the new products, when we therefore make forecasts on new sales levels for a product, we can calculate the energy, materials and quantify the effects of this in the market in the future already. 15. Preparation state for ISO 14001? Grundfos: We are very ready, it is something we want, and is anchored in the culture. very ready (guiding principle for new product development according to him) Business Development: less ready, harder to have it formalized, no gut feelings here. Need for quantifiable terms and documentation of this. Need to show people that what they have done so far is not good enough and there is a need for more Structure in the new standard (required). OWN department: PCV, we have been there where it is most visible, as it has been a facility focus so far on the environmental aspect.

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Vice Presidents Interview: Qualitative Data(Questions 3i , 7, 9, 10, 11, 12a), b), 15, 17, 18 Quantitative Excel Steen Tøffner-Clausen: 1. What is your role at Grundfos & Responsibility area? I have two roles, interim Segment Director until 1. March for Building Service (BS) . We deliver business development, application development and product management. Second r ole I have is Program Director for the 4 programs in the BS Segment, which I will return to in 1. March 2016. a. Your own personal experiences with Grundfos’ sustainability policy I have been in Grundfos for many years; we are running a project with our sustainab ility department with Katrina Sohnne Einhorn where I am in the steering group. 2. What are your thoughts about using certified management systems in your part of the organization as a management tool? 2004 ISO certified; where do we use it in day to day: The overall principles in the ISO certification are a part of all our processes and our management processes, but it is not something that you think a lot about in the daily life of work. But we have in the different roles of our segments defined our responsibility and mandate for our part of the organization, again not really a part of the daily work life. 3. Have you heard about the environmental management system ISO 14001? Yes a. Do you use it in your organization? Not really b. Do you measure your performance for it? How? Not specifically on ISO 14001, but in the segment we do use balanced scorecard, where our KPI’s are measured in this each month if they are not on target we need corrective action. KPI’s could be: NPSR (new product success rate), sales contra budget and warranty rate etc. 4. Do you know that there is a new ISO 14001 environmental management system (EMS) revision from September this year (2015)? NO If Yes A) Do you know what this revision entails, i.e. what do you think it means for Grundfos? And for your department? No, sent PowerPoint to him about it. 5. What is the key role of your organization within the group? We deliver business development, application development and product management. a. Does your organization have any specific environmental goals? No specific for our part of the segment. It is mostly on group sustainability level. In our product development side of it, sustainability is something we weight highly and is part of the demands requirements for new product. There is a section on energy efficiency and recyclability, and water consumption according to previous edition of products for future product reference. But that is what we mostly have. In our balanced scorecard there are no specific sustainability KPI for measuring performance. Mostly focus on-site factory specific. Ask any conductor and they will know the impact directly (shop floor level) and not business development indirectly affecting this.

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6. What are important environmental demands from customers or other stakeholders? Energy Efficiency; with the new EU law on the subject. Also high risk chemicals, chlorine free oil, and lead-free (ioning/ lod tin) and the RoHs (Restriction of Hazardous Substances Directive), directive etc. Recyclability of our product is also something we will meet more on more in the future. Special items like rare earth metals and other virgin materials. 3-R directive (recoverability, recyclability and re-usability) What degree is it used to make decisions for management? Again not consciously use of the industry standards, but it is implicitly in placed within many of our defined processes. Business Excellence model is also an integrated part of our processes from previously, but again not directly used by management, What should such and Environmental Management standard fulfill? The meaning with having such an EMS standard is that we can DESCRIBE our management processes to show that this is the way we conduct management in our company: with management values and synergies to support this. This leads to having the possibility of certifying it in a standard is the least of it, be having the managements philosophy described is the most value adding, the description of what is ‘good leadership’ at Grundfos. Could be a little more elaborated throughout the organization. Many people probably know this way of conducting management but do not use it. In the HR there is a categorization of the different management levels to focus on the exact need for support for each different level of management. There is a deve lopment potential. Everyone knows sustainability CSR and leadership roles, which runs through the organization, but need for more concrete need of action (the way people act and not just the way it say they should act). Most leaders act in the Grundfos spirit, we correspond to the company’s values, but the actions are not as well defined. 6 core values well defined, but more need for management action to be described. 8. To what extent do you know the environmental policy of Grundfos 2020 strategy? Relatively good understanding and in line with the 2020 strategy of Grundfos, the sustainable and environmental aspect are not a must-win-battle our KPI. The aspect has been challenged with the concern direction board, and this has been discussed if sustainability has been washed out. The answer was from the concern direction that it is extremely important (part of the 5 must -win battles (but no need for a specific must-win battle for sustainability) a. Are there elements in the policy you think should be strengthened? CSR (Corporate Social Responsibility) and Sustainability has been down prioritized in the 2020 strategy, so could be more focus on these two aspects. b. Are there aspects that should have more attention in your department? In regards to sustainable terms, again we are good at emphasizing this in our product development process for future products, and in our business development; on how we can help our customers with energy savings. Specific Employee behavior: Economic, Environmental and Social terms: On the economic side; To reward people if they have had a good impact on economy is the most used, where environmental and social are of medium importance.

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More focus on sustainability in the future: Simply because EU law is stricter but also that the customers require the sustainability to be documented for our products being sustainable. 13. Where do you see responsibility placed for overseeing the monitoring of the sustainability goals for your organization? (Group /Central   Decentral) The law/legal aspect and authorities side should be handled by Group Sustainability in the concern level monitoring this. And the local KPI’s should remain monitored by the individual departments and segments. 14. What do you think should be monitored to achieve these sustainability goals? In new product generation, already demands in place for reducing environmental impacts. We have the goal to still not emit more C02 than the 2008 level, more that could be done on the overall C02 level; the business development function harder to relate to, for our function it could be easier to related to the average environmental impact, We used to have a sustainability index for new product development, but it never really came into play. But this could be a good example to continue with. 15. Preparation state for ISO 14001? Grundfos is in good state for the new ISO 14001 implementation, where as the BD and own segment is medium ready for the implementation. 16. Where do you and your organization have an influence on the product life cycle stages? In the sense that we are responsible for the product for buildings and services: the focus is most on the Use and lifetime phase (90 % energy consumption) most influence and impact for product. 19. Your opinion on the new ‘high level structure’? Sensible, with integration across management standards. We have today a conjoined ISO certification at the same time (package solutions) by the auditor company SGS, to have it streamlined. 20. Your opinion on product development with a product life cycle perspective? Reasonable to look at product development yet again with the life cycle perspective. 21. Your opinion on top management’s requirement on commitment for review of these new aspects? Also reasonable, so management sees this, as it is within the other ISO standards, a really good idea.

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Interview: Qualitative Data(Questions 3i , 7, 9, 10, 11, 12a), b), 15, 17, 18 Quantitative Thomas Hessellund: 1. What is your role at Grundfos & Responsibility area? My background, I am segment director for the Industry department, in the Business Development. We have three segment directors, water & utility, buildings and service and me in industry. We are responsible for future business development and applications. I have been in this role for thr ee and a half years and that is the time I have been at Grundfos, before at Novo group. I AM NOT DIRECTLY sitting with management systems and ISO, my understanding of the present and the future implementation of ISO 14001 is not as clear. a. Your own personal experiences with Grundfos’ sustainability policy. --//-2. What are your thoughts about using certified management systems in your part of the organization as a management tool? Really essential for a company like Grundfos, big speaker for this, before Gru ndfos I was in Nova group working with quality management system, and saw this first hand. I mean this managements system add value, if you are using them correctly, not just there, but needs to be incorporated within the company as well, to add value for the processes. 3. Have you heard about the environmental management system ISO 14001? Yes a. Do you use it in your organization? Yes b. Do you measure your performance for it? How? Within ISO 14001, the entire terminology is not related to the KPI’s measured no w, now. But there might be some KPI’s overlapping within the fundamental quality apparatus related to my function. Where we use quality control is with our products. What we deliver to our customers and the delivery to this. Our product portfolio, and new product development is a part of my responsibility, that product lives up to the set standards set and the product requirements and process for new and existing products. Many things in the ISO standard are also related. The KPI’s used now is with PDP and the NPSR, which measure, if the goals for the target (sales, costs, and quality goals along with warranty rate and customer complaints live up to the set targets). Sometimes other goals also specific. In the NPSR, quality is within there. From Pernille (group sustainability) the warranty rate is also vital. 4. Did you know that there is a new ISO 14001 environmental management system (EMS) revision from September this year (2015)? No If Yes A) Do you know what this revision entails, i.e. what do you think it means for Grundfos? And for your department? Sent on email

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5. What is the key role of your organization within the group? a. Does your organization have any specific environmental goals? No, our department does not have any. We sit in the same management team with Pernille Blach Hansen, and the environmental demands our also in our projects. But again the September update of ISO 14001, not known. If I am thinking EMS systems I think: can we reduce our energy. As I sit in the “white collar worker” part of the organization, the goals are not in our office. But I do not have any factory specific goals in my area of expertise. 6. What are important environmental demands from customers or other stakeholders? The sustainability agenda, regardless of what the customers think; it is still yet important to be a good corporate citizen for our factories and employees. Other stakeholder under employee satisfaction is to be ahead of the competition, and to be proud of that we at Grundfos take responsibility for our company’s actions and take this seriously. More stakeholders to come in this area. Within customer aspect of this: I think that the customer have demands, to use less water, energy etc. for the industry customers, so we want to setup application for our industry c ustomers in the OEM section. Energy agenda much focus on before, but now also focus on disposal, what happens to the components and the pumps itself when the setup up no longer is running and needs to be shut down: can it be recycled or reused? Materials/chemicals: environmental impacts and limited resources, this can lead to new demands from customers, but also from the authorities’ side on product specification. The product dimension on energy impacts, is vital, and if we say to the customers that we can help you with, and be a front runner to set a good example, this is seen as good customer’s relations to achieve the future demands. What degree is it used to make decisions? Two comments: If we have measurements on the energy, water and resource consump tion. Do we then use these and be considerate to these goals on concern level when making decisions: No not directly, but indirectly. The factories have the product portfolio, so if we have an A and B solution where one is less environmental impacting, we do not get this at our desk, we look at we functions the product should achieve, and the production and entire costs of the product is also vital. People from operations and the environmental department are not as linked together as they should be. I have no myself been in a situation where these decisions making have been supported by environmental aspects in specific project so far. Thereby not to say that we are completely blind of the environmental aspects, we look at the materials choice and more on th e product development side. What goals should such and Environmental Management standard fulfill? The goals with the system, for me; is that there are coming new requirements from our quality QMS system; it is not fully integrated in Grundfos. Before in Novo, there was an entire joined quality function with an overall guideline for quality statements within these systems, with all the incentives for customers and stakeholders. I have not see the overall quality statements from top management (board of directives); compliance, quality and legal aspect. It is very important to KNOW what our quality systems should fulfill, I lack this at Grundfos.

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Economic aspect to be support by the system: We have parts of our QMS system that work, BUT I do not experience that the system is being used optimally within the organization. We have a roll of for using these better with all processes, but very much of the system is non-transparent. Not to say that the system is not used at all, in PD projects we use it in Business development, but not well functioning in my eyes. When we look at the important decisions; Do we have the quality and economic numbers to make optimal decisions from an economic perspective: No not in the degree that we could have, there is room for improvement. 8. To what extent do you know the environmental policy of Grundfos? To a reasonable extent, since I have been in the Sustainability committee; on how to role out the strategy and sustainable aspects, was in this in 2013, but since then have not b een in any major meetings. I have been in a big part of the 2020 strategy, we I was in the direction for developing this. There was a big discussion on how sustainability should be incorporated within this strategy as well. Lately not as much into the sustainability strategy. a. Are there elements in the policy you think should be strengthened? In the current sustainability strategy; three parts of it: Compliance, Sustainability as a business driver (future) and a third part that I myself cannot remember, the prioritizing of these goals not as clear. SO not as easy to answer. I have seen some of what Pernille presented, and what see presented on the management meeting, Nothing here that I have noticed should be different, but what parts of the strategy should be prioritized short term, now, and moved on later in the future. There have been complaints from customers on how we handle customer requests/complaints, and this should be up-prioritized… b. Are there aspects that should have more attention in your department? Nothing jumps to mind again, as not as clear. Promotions and Incentives for employees; in Economic, Environmental and Social terms: In a production unit, if someone saves costs and energy in their departments; then no not directly. But in our NPSR, and DtV projects we have more on overall costs reductions leading to also environmental impacts being mitigated. But not on specific employee behavior; No specific employee of the month programs for this... Critically of loss of ISO: Not an expert on the quality area, but if we look at the core certification and the basic way of certifying the way we conduct business; it would be critical, as it would show the market that we have quality issues. Would be hard to say the exact consequences of this for Grundfos though. More sustainability: In the short term, where in the parts of the world there are more focus on the sustainability agenda more focus on this; I would overall rate in a more collaborated favor for sustainability with customers and suppliers.

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13. Where do you see responsibility placed for overseeing the monitoring of the sustainability goals for your organization? I would assume that we today in a central level don’t have the complete focus on these sustainability goals and decisions are usually made decentralized fashion. It builds on decentral decisions making as-of-now: need for more alignment and transparency with higher levels of empowerment to support the decision making for local departments. If the board decides that sustainability is important for the concern, the local departments should decide what this entails; moving these parameters to be reported in central to the concern direction to give a better overview of the way we handle sustainability. The trend now is: UNITY of the processes. An example: “travel agency” if we now travel before it was decentral for booking these, before 50 suppliers NOW just ONE supplier for travel agency, it has been united globally this support function, but again where you travel and the purpose is a de-central decision within the concern level. Tendency more united structure… 14. What do you think should be monitored to achieve these sustainability goals and who has the responsibility for overseeing this? It depends on how it is structured, if you have local companies, they have decentral goals it is handled this way. Concern level then has to follow up on these goals, but as they are not close to these subsidiaries in the daily life parameters on water/energy and etc. needs to be handled by themselves. I think that: All that is measurable is not important. It is not everything that counts that can be counted. Are we measuring on the right parameters; water, material, energy efficiency: Other aspects that could count? I assume that we as today measure what matters, I recollect that we on concern level discussed if we should have a sustainability measurement on the agenda: it fell to the ground because we don’t JUST have ONE goal, but rather an index on the triple bottom line (economic, social and environment). Reparability, Recoverability, Recyclability: Not really measured, as we sell many pumps, some product that or more expensive (high runners) need more focus on repair for their installation to be successful. We have third party company’s who repair pumps, and the warranty for old pumps, with take back and sending of new updated products is also done, but what happens to the old pumps in terms of recycle, dismantling and reusing in the life cycle from cradle-to-cradle not known. 15. Preparation state for ISO 14001? State of it: SIMPLY don’t know, partly because I don’t know the requirements of the new standard and the time allocated for the future standard to be implemented cannot be evaluated by me. One department and BD and Grundfos in general: The QMS system and the active use of the system: IS important, not just that we have a system: the ISO certification does not mean that you have a good quality product, and the degrees of freedom are very high within these standards. I again come from a world where there is higher use of these systems in the way that you have a QMS system that covers the product, but also can cover other aspects of the business process in the sense that you have a differentiated way of handling products. I had my first quality case in Germany, a while back with a partner, where we branded the as high quality; however there was high non -compliance with this product. It was very hard to get it out of the quality people what EXCATLY the non -compliance of the product was, and to bring these issues further up the ladder. There was no clear explanation of

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where in the process description that this went wrong. With this unclear aspect of the description, we had to admit that there probably is somewhere in the processes that is not clear enough defined, and that the processes are not well known for the employees across the organization. I have in my role seen that the people that should have access to it, still simply can’t’ find the process description. Again there should be a new system in place for the future, but the level we are at as-ofnow I find subpar. 16. Where do you and your organization have an influence on the product life cycle stages? Raw materials, Production, Transport, Use, Disposal? The USE and lifetime phase: but another important is also the material selection, what we use, affects the production and end of product and of course the use and application phase also… DtV project: what can we save cost based for 2016, what is important for our product; not making them more environmentally friendly; second aspect when we choose cheaper product materials. It is not seen as the same intensity for product and materials chosen as-of-now on the management level, but this is a thing of the future. If one materials costs x and another costs y, the cheapest is usually chosen, and the environmental aspect not seen as just as important and prioritized in the life cycle. The product side and operations has a higher focus: look at higher efficiency rate, and this could have a domino effect on production, some new ways of producing costs more money at the product facility sight, but gives a better environmental friendly production. Transport I would asses as not a major focus, although there is a CO2 emission for the environmental agenda, we l ook at where the production setup costs are lower, and how to get the lowest delivery time to customers, other drivers are the primary focus for this. Use and life time: in energy efficiency; is already looked at very much, the energy agenda still very high focus on. IF we theoretically can make the energy savings come to life, by the products produced, but also the way in which it is used in the industrial segments (food, oils etc.) the smart intelligent pumps solutions shows that the pump in itself is not the essence but the way the system is designed can give valuable energy savings. Medium focus on the disposal but in the long term the focus of disposal would be of higher importance… 19. Your opinion on the new ‘high level structure’? Has not seen it, simply can’t say Stakeholder prioritizing: Authority’s side is a basic that we comply with this, because we have to. Cannot drive without motor, or wheel. So customer still highly relevant and society; good corporate citizen (CSR), customer comes right after the authorities. 20. Your opinion on product development with a product life cycle perspective? It is a good idea that the product life cycle is put into this new standard. Needs more focus.

21. Your opinion on top management’s requirement on commitment for review of these new aspects? No comment or time to answer

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Interview: Qualitative Data(Questions 3i , 7, 9, 10, 11, 12a), b), 15, 17, 18 Quantitative Excel Henrik Ørskov Pedersen: 1. What is your role at Grundfos & Responsibility area? I am Technology Director, which means I am responsible for the development and maturing of our product technology. It is not production technology, but product technology. We use roadmaps for technology innovation, and then we handover these to D&E, and some product development we have the responsibility for our sensors for example. a. Your own personal experiences with Grundfos’ sustainability policy It has been value driven through the years, our group values. The measurable terms on our own emissions, we can be affected by our operations part of the organization. Also in the statements in new product that they live up to better performance. Primary our values, in our Sustainable Product Toolkit, we tried to get it in measurable terms but very hard. Historically Grundfo s has been big on Energy Efficient products: Winning in Energy Efficiency (part of the Grundfos DNA) 2. What are your thoughts about using certified management systems in your part of the organization as a management tool? I must admit that I am not a big part of this, since the product development is not my part of the organization. In terms of materials recycling, and recyclability measurements as part of product development as long as this is not a business parameter/driver, it is hard to have this priorit ized. If one is recyclable and one is not, we choose the cheaper option. (Unless it comes as a value policy from Grundfos Management, it is hard to get these aspects to be a part of the process.) Primary driver should be business case based. 3. Have you heard about the environmental management system ISO 14001? a. Do you use it in your organization? No, as we are research and technology, and not product development. b. Do you measure your performance for it? How? We did the former year; we tried to incorporate the tool kit from SPS, in qualitative terms, in what spec we had to address it. Before product development will start using SPS, we do not see the value of it in early stage technology development. In individual projects there can be objectives and goals for environment, but not embedded in our core processes. 4. Do you know that there is a new ISO 14001 environmental management system (EMS) revision from September this year (2015)? I have heard it, but did not know what it entails specifically. Sent email ab out this to him. If Yes A) Do you know what this revision entails, i.e. what do you think it means for Grundfos? And for your department? No 5. What is the key role of your organization within the group? a. Does your organization have any specific environmental goals? No

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6. What are important environmental demands from customers or other stakeholders? The absolute dominating factor is energy consumption. We have been a major driver for this. We had some life cycle analyses years back, with Nils, and the dominant part was the Use/life time phase. We also see that materials with customers, like rare earth magnets etc. are now in focus also. We hear from the business segments, that e.g. the OEM’s (original equipment manufacturer) are having more focus and requirements around use of certain materials. We do not look at the management system. But we have smaller groups, like materials choose group: making informed decisions related to introduction of new materials (balancing pros and cons). What should such and Environmental Management standard fulfill? The goal must be to have a uniform internal guideline and also to build credibility outwards to the market, that we at Grundfos are following and living up to a well known acknowledged standard. (Outside View). Like the quality system ISO 9001, by some perceived to guarantee good quality, but in reality is documentation that you have standardized processes, well described processes etc. What degree is it used to make decisions as of now? It is not a management system that drives these, but out group policies. . In my part of the organization we think holistically, the compliance part of the standard we have to live up to. When it comes to making a new solution, we pioneered integration of electronics in th e products, we can save a lot of energy and costs, but how does this affect recyclability. We have asked third party recyclers, about two products; if they are managed it the same way with the same recycling result then it is not of our concern. WE have focus in our social aspects, but not incorporated in integrated management systems, but again part of our group policies. We demand that our suppliers need to live up to these standards. Hard to say how far to go out in the supply chain, in e.g. mining of m agnet raw materials we go all the way to the raw materials extracting point. 8. To what extent do you know the environmental policy of Grundfos? Well for 2012-2017 SPS a. Are there elements in the policy you think should be strengthened? Disposal, I think could be something that we should focus more on. With the energy profile we have as of now, we cannot just be driven by authorities, but go ahead and define our ambition levels on this aspect. b. Are there aspects that should have more attention in your department? Take the disposal part, and then it is important for Technology and RT to support this agenda on disposal and circularity. In worst case we could have a negative total environmental impact (built in recyclability but more expensive, and less ener gy efficient). Do we then give the customers value, so they buy the products still instead of changing supplier? Take-back service arrangements have been applied in some pilot projects also.

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Incentives for Economic, Environmental and Social terms in Employee behavior: No, not really. There are no specific bonus arrangements for the employees. This is what we pay our employees for all the time… Not really qualified: if we had parts of the ISO standard we did not live up to, it is hard to say if we would be punished buy the customers and to what extent. If you mean that we stopped following the ISO standard what would this mean? Hard to say. 2-3 years: More focus on sustainability 13. Where do you see responsibility placed for overseeing the monitoring of the sustainability goals for your organization? To what extent is there a central control of goals: expect more centralized in regards to C02 emissions. I expect no more control of the sustainability goals as of now: as we (in R&T) have no reporting of these goals today also, so less focuses in the local department too. I see the monitoring of goals primary as a group Sustainability initiative, with Pernille Blach Hansen, where there previous has been a sustainability committee on sustainability 2.3 years ago, where there was a significant focus on it from 2012 – 2017. SPS one of the six main drivers (not 3 cores aspects). It was very much discussed by Pernille if the sustainability should be part of one of the five must-win-battles. But it was not seen as an initiative in itself but to be embedded through the organization, and as one of the 7 core corporate values. We are leaders in energy efficiency (99% optimized, and A++), but need a way to go on resources so far… 14. What do you think should be monitored to achieve these sustainability goals? Ambition need to be mapped, and then linked to a business model (sustainable) if we cannot see there is any business potential then there is no incentive for it by Grundfos. More focus on these circular business models in the future. We need the coupling by not just doing good, but doing more sustainable business while making a profit. 15. Preparation state for ISO 14001? Hard to say; I think we are well prepared on the energy aspect, We do however need third part y’s to analyze the minimum requirements, which ends up being a compliance aspect - The primary thing is that we need enough allocated resources -because I feel the competences are there already- The easy answer for our department is that we not directly hit buy the standard, but product development is, we are fine tuned and geared for the technology that are capable of living up the requirements. 16. Where do you and your organization have an influence on the product life cycle stages? Use and life time is the absolute primary, but we have the materials side as well, with the potential to look at end of life to, both if it is a business priority and aspect that is prioritized.

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19. Your opinion on the new ‘high level structure’? Alignment: is a good concept in my eyes. I need to understand correctly: focus is that there is a need for stream lining the structure for all three standards. 20. Your opinion on product development with a product life cycle perspective? I think that there is more focus on the product life cycles, and justified that this is in focus. Although it sometimes gets ‘religious’, do not get one number of the life cycle assessment: we need weighting of the numbers, and what is signification level of these when normalized and weighted. In t he sense that people can die, then we need to fix the products, It is correct to have the sustainability index, but we need a balanced way of dealing with this, for the SPS tool kit, from theory to practice: if the data supplied for the assessment, is not valid enough, like PE International in their database they have one value for rare earth magnet materials: in China different mine than US, data does not as of now have the granularity needed for these assessment. We have asked different suppliers if they could deliver better data, but they do not use it as they don’t get requests for these today 21. Your opinion on top management’s requirement on commitment for review of these new aspects? For me it needs to be a management driven process, for it to be of importance.

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Interview: Qualitative Data(Questions 3i , 7, 9, 10, 11, 12a), b), 15, 17, 18 Quantitative Excel Keld Fensten Madsen: 1. What is your role at Grundfos & Responsibility area? I am the leader of Planning & Intelligence, which is part of the global business development function. We serve other parts of the organization as well. We secure market information and competitor analyses, in order to understand these. Planning: strategy communication and development. I am also part of the BDM (business development, leader ship body) a. Your own personal experiences with Grundfos’ sustainability policy We look at the market parts, rather than the footprint of the sustainability part of the products 2. What are your thoughts about using certified management systems in your part of the organization as a management tool? We are part of Grundfos organization, so all the onsite facility aspect of it is the primary function in environmental terms. That environmental aspects has a risen effect on the market, we analyze t his looking at customers to see if/how it matters to them. Indirectly some customers are getting into circular economy, not a requirement from them, but not a vital aspect of it. In Denmark we have a test phase with some project (recollection of defective small circulators from wholesalers) 3. Have you heard about the environmental management system ISO 14001? We have mostly heard about it linked to our product development function, so this has been the most vital part for using the standard. What it means and the function of the standard for us in e.g. P&I is not as clear. 4. a. Do you use it in your organization? No not really b. Do you measure your performance for it? How? Not at the moment 5. Do you know that there is a new ISO 14001 environmental management syst em (EMS) revision from September this year (2015)? Yes, I knew this through BDM that we are heading for the recertification in 2018 If Yes A) Do you know what this revision entails, i.e. what do you think it means for Grundfos? And for your department? No, did not read the memo. Showed him after the interview presented in power point after the interview. Is it a year since last presented so nice with a refreshment of memory? 6. What is the key role of your organization within the group? a. Does your organization have any specific environmental goals? No, again because we are a support function here. The most dangerous we deal with is a pen, and maybe paper clips. Grundfos sustainability targets are in general shared with the remaining organization and not function specific 7. What are important environmental demands from customers or other stakeholders? Everybody is conscious about energy now: some have the economic approach, but also the environmental side, both operations energy intensive saving both environment al impacts as well. Since some customers, like one family home; they have no requirements to or specific knowledge about pumps, and essentially do not care. EU directives on the other hand, set new standards for the energy consumption of devices incl. pumps in order to save energy and mitigate environmental

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challenges. Water suppliers, have a mandate on savings of water consumption, and C02 emissions, and how many chemicals they use for water treatment. Therefore some larger customers (B2B) require the environmental aspects of pumps, but no private end-consumer (B2C), the larger customers want the documentation, sustainability policy and ISO 14001 etc. Large OEM, and industries will be the most environmentally impacting, therefore the elements that make a difference will be of further importance. The environmental demands are 100% heading this way. What degree is it used to make decisions? No not really, since we are knowledge intensive driven part of the organization. Depending on what market analyses data there is required depends on what we look at, like; what does the next big thing after the energy agenda entail. We have a research brief which is a written document of what needs to be analyzed. We deliver experiences at customers Trans the energy efficiency number alone. What should such and Environmental Management standard fulfill? It should live up to multiple things. The roll out phases should be much more structured. The communicated knowledge about the goals is essential, calibration is key, seco nd is transparency that these goals are then clear across the organization to see the balance between the triple bottom line. There has to be a “balanced scorecard” or organ; used for example to see if we live up to goals, but also in bench marking analyses, so we can compare ourselves within the industry, to see if we in some goals if we have been too ambitious if we don’t live up to the goals already set. In our Business Excellence audit, we have 9 parameters to me scored on; this leads to better understa nding of who we at Grundfos can learn something from. Economic, Environmental and Social terms to support decision making: In economic terms; I mean medium, because as the linkage is less clear, when we adjust some numbers on what parameter is this based on, not clear. Environmental is the aspect where we have some very clear goals: C02, chemicals and water consumption. Social terms of this standard are also of importance 8. To what extent do you know the environmental policy of Grundfos? I know of some of the strategy, the stuff we follow; that we want to measure the life cycles aspects. To understand what data we need to provide customers for their analyses. We do not as of today provide the customers with insight to our databases, because we have not sufficient data ourselves. The sustainability index required by the complexity and variety of product is hard to relate to a sustainability index. The share distribution, and transport phase is really significant. a. Are there elements in the policy you think should be strengthened? I think that it is an expectation. There are two requirements: an authoritative demand and an expectation demand from customers. Difference between the importances of these two. b. Are there aspects that should have more attention in your department? We should do everything that is good for environment, but we need to be so sharp as to understand what this means for the end-customers, so they want to pay for the

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new business case. not to lose market share, to other competitors with less energy efficient pumps. No employee awards. (Future now is D&E stand alone): for sustainable (economic, environmental and social aspects) – Take my employees, they are spread across 4 buildings, hard to measure the individual impacts of each employee. Need for collective measurement if we wanted to put these incentives at the employee level. Criticality of loss of ISO 14001: I think it would be dire, in the short term somewhat critical. I think in some points the society can affect the company just as much. If you as a company do environmentally damaging activities or have bad employee work place, it can be quickly showcased in social media; leading to bad reputation in the end. Say if you have knowledge prior to making damaging pumps, and make the pumps anyway since it is cheaper; this info if it came to light would be much more damaging than anything else. 10 years time period in the future: vital collaboration of sustainability with suppliers. 13. Where do you see responsibility placed for overseeing the monitoring of the sustainability goals for your organization? (Central   Group) The ambition level; would have to come from the group level. The responsibility of the KPI’s measured in each department for the balanced scorecard, would have to have sustainability measured at this level, since you in each part of the organization would have your own goals. You would monitor on the local departmental level, but some of these KPI would have to be followed up on the central part of the organization. Pernille Blach Hansen should in principle have a Sustainability Score card with the triple bottom line being measured and followed up in Group Sustainability. Always taken these measurements to a higher level - (Picture of three levels) 14. What do you think should be monitored to achieve these sustainability goals? I would of course look at foot print. What else? In the world today o r the future? If the futures then I think that we if we could make a calculated balanced sheet of our entire product portf olio this would be a consequence of our structure; and does this mean that we should recalculate these values for the products in the future – if customers in the near future request these. Step 1: It has to be an approach in our sustainable materials selection, with design to sustainability, meaning higher rate of recyclability and lower materials nature break down time, and hence choosing the right materials then. It can be communicative but also cynical; Step 2: This balance means that your production processes would have to be changed, but in principle you could value or estimate this index number and how much of the product could be recycled would this would entail for all our products in our pump portfolio, electronics a rising aspect. The first step w e have an influence on (theoretically) – but the practical aspect of the recycling is hard to justify the take -back of the pumps from all parts of the world, this could result in higher costs, leading to even more environmental impacts with transport, therefore the up-front goal is hard to measure and calculate (so either it must be supported but law, like with packaging and others) Look at the renovation sites, what if you had take back of pumps at these, then there would be a bonus. Also for suppliers, lo wer

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taxes if they take back, this is secondary; but our goal is to make the best framework for applying these principles.

15. Preparation state for ISO 14001? Corporate foresight: Trans, Mega trans trends, what does affect the world in 10 years, we are a part of. Circular economy has been popping up here a lot. The frames, ambition and philosophy for achieving the goals need to be clear. The deployment of it is then a different aspect; Business development readiness, in the sense that D&E and R&T are so f ar ahead I think they are well prepared. In my organization I don’t know the state, since we will not be hit by the ISO standard by itself. 16. Where do you and your organization have an influence on the product life cycle stages? Our goal: Gain knowledge and see where it fits in it the market. Target not just the users or customers, but for legal aspects too. In Life Cycle this organization has the most influence on the logistics and transport phase, since we look at the market distribution sides with cu stomer perspective. The transport is not just distribution the product to the customers but also retrieving it (production in foreign countries, Hungary and Mexico etc. for production facilities) Small stakeholder analysis: I feel that legal aspect and society are important. Within customers it is a very differentiated point of view, because some will not have a stake in this, and are not regulated for it. Then there are also those because of large batches of products, and the share scale of products bough t. Customers are also a part of the society. In legal aspect: this will be of bigger importance. Years back Shell make a regulatory corporate foresight in the 10-15 years time period; the conclusion was that regulation and being monitored by legal authorities would rise. 19. Your opinion on the new ‘high level structure’? Standardization is the only way to go, no other way as of now. 20. Your opinion on product development with a product life cycle perspective? I think that it will be critical for us to have this focus too. 21. Your opinion on top management’s requirement on commitment for review of these new aspects? I believe also a must… To set ambition and clear goals top management needs to set these as well. Since not quantifiable terms it is not just an amount of numbers, but also an opinions based principle “Gut feeling” of management to say is important, but needs also to be based on key numbers. The escalation model: BD, will after the future balanced scorecard for sustainability, and then identify the prime “suspects” of these derives for sustainability, like design for life cycle optimization, reviewed for the BD function and the myriad of these measurements need to be taken up to the concern direction – leading to the five must win battles, being communicated and primarily focused on – the most importance sustainability KPI’s need to be tracked and then reviewed by top management in the corporate board of directors with Mads Nipper.

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Interview: Qualitative Data(Questions 3i , 7, 9, 10, 11, 12a), b), 15, 17, 18 Quantitative Excel Poul Madsen: 1. What is your role at Grundfos & Responsibility area? My role of responsibility is one of the most interesting areas of Grundfos: Emerging Water Technologies. This encompasses new startup companies, I have a company in the States and one in Italy, also Bio booster and Life Link are part of this segment, with the water credit system, we also have aqua pure and aqua tap, for water purification, all things water technology is collaboration with R&T is in this segment. a. Your own personal experiences with Grundfos’ sustainability policy We have also been sustainable, with a clearly defined value set for sustainability, working with sustainable, social and economically feasible solutions within water supply (for examp le with refugee camps), it means a great deal for me as a person for me to work with these sets of values. It can be sustainable, with high quality, and recyclability, not just social or environmental. 2. What are your thoughts about using certified management systems in your part of the organization as a management tool? I see an environmental system as important first and foremost for production companies. But of course the working environment and the clean product development with the facilities as well should also be part of it. The system should be “the back bone” of this, just as important as the employee handbook. All processes and systems need balance, of where it makes sense, and other place where it is overdone (over standardization), and is nonsense. We need therefore to balance the need for the description of all processes, it should not leave out common sense and logic, and therefore at least the processes are watered out and not used anymore. 3. Have you heard about the environmental management system ISO 14001? Mediocre a. Do you use it in your organization? Not really. b. Do you measure your performance for it? How? Not in this organization, but in my previous one, we looked at chemicals being induced in the system, last company was working with disinfection, and here we ditched some aspects, and centralized, and got rid of the hazardous chemicals, it is therefore important for the 3 -4 individual companies that I have within my segment as well. 4. Do you know that there is a new ISO 14001 environmental management system (EMS) revision from September this year (2015)? No, September this year? I have not noticed this or seen the new aspect of this. If Yes A) Do you know what this revision entails, i.e. what do you think it means for Grundfos? And for your department? 5. What is the key role of your organization within the group? a. Does your organization have any specific environmental goals? No, or yeah we have the same environmental goals that Grundfos has in the sense of Hazardous and water consumptions, heat, energy and chemicals and work place injuries which is all reported back to Grundfos. We all work for the main agenda (2008 C02 level not risen), example: we use cardboard cups, better environmentally for the ceramic cups in this example due to the dis posal phase.

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6. What are important environmental demands from customers or other stakeholders? The trend everywhere is to make more environmentally friendly solutions. I work within water, so I look at recyclability within water recovery. For example with our bio booster cleaner processes we can reuse water for a diary production company (rødkastbro) secondary processes, then it is really making an impact in not affecting the natural water balance, and also leading to higher economic gains. Within authorities and law; I could use more laws on this side of it in regards to water recovery for our technology. For example within a medical facility in Denmark, we clean the water in the medicinal water, and the law in DK just states that this is lead to a municipal cleaning facility and not absolutely cleaned by our technology that clean all the bacteria out. Also our pumps under EEI4 energy efficiency index are just under the law for motors and rotors and not pumps, where the EU directive states the optimal KwH that these pumps should run on in real time. What should such and Environmental Management standard fulfill? First of all it should encompass the framework for how the companies using the EMS system operates in environmental terms. Secondly it needs to be a guidebook for employees. So set the framework for production and also new product development, in all processes in the company (in circular economy terms) – so the processes for handling hazards and environmental dangerous chemicals – IT SHOULD not just be a certificate, it needs to be updated and maintained, so that the process about the system is also of importance in itself. What degree is it used to make decisions? A lot absolutely, how can we optimize the processes, for example in our bio booster app aratus, we have a flux (the rate of flow through a membrane) we have optimized the flux leading to better energy savings. Our UV treatment in Italy cleansing waste water with UV, killing the bacteria, uses now not quartz glass because these are covered too fast with algae, the new used Teflon tubes covering the UV glass uses NO chemical bath to clean the algae, it is easier to clean, less capacity required to clean capacity with sensoring of how many UV light required to clean, in each rack of the UV light the heat hours is also measured, leading to better estimating of when replacement is needed and the actual life time. The cleaning is less, the electricity and man hours is also less leading to a win-win situation – so yes I use environmental systems guidance in the decision making. 8. To what extent do you know the environmental policy of Grundfos? I don’t know if it is how I look at it, but since we in our new strategy don’t look at sustainability individually, but as part of our DNA according to Mads Nippers, the way the ambitions are set should be covered everywhere (in danger of taking it for granted in the responsibility for sustainability). I agree with Mads Nipper on this, I have been in Grundfos for 14 years, and there is no project that does not encompass environmental, social terms – again it is in my back bone as been here longer. But again if there are people that have been here less than 14 years, 2 -3 years they might not know this as good as the experienced personal of course. a. Are there elements in the policy you think should be strengthened? Funding the journey, accountability and product leadership – We have now. I would like more circular economy and recyclability aspects more in play. It is not my perspective that the new product development projects look at how to re-introduce the products in the product life cycle as of now. I was in Norway, looking at a energy creating office building in-itself, the ventilation was self sufficient and room dividers

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was made with all plastic bottles made into plastic plates, and all windows where made into better isolation windows to the outside of the building and the old windows were moved to the inside. We have green building in Grundfos, for example in Singapore also, but there is more to be done in this side technology. b. Are there aspects that should have more attention in your department? Within my department looking at now water and energy recovery for showers; estimated 17.000 DKK for annual showers for a 4 person family, we are looking at heat recovery – and 60-80 percent is estimated to be recoverable – recyclability of the water consumptions for family, and maybe hotels, and bigger cases – we are now mapping the economic cost benefit and looking at pay-back time for these facility with an estimated time of 5 years in payback – leading to less energy require and better water consumption rate – can use more water with less energy, or save even more using less energy. Economic, Environmental and Social terms: I mean that we think in environmental terms in everything we do, so also economy is affected positively. If the DNA still lives, then we as leaders have an extremely important role in overseeing that this DNA is carried that in individual projects; the energy consumption and economic savings are compared to other projects. Employees’ incentives: With the already established UV facility it cost first 70.000, and a team was put forward to look at economic and the operational costs (driven) and costs for back-flushing the filters, we now use chlorine to cleanse out filters, the pressures is therefore dropping – and the energy less required. BUT again my product manager does not get bonus for this, but meeting the deadline is the main incentives for meeting the target. But the economic aspect is really really focused on meeting the economic deadline as well. Critical loss of ISO 140001: Not short term: no customers would notice, in Europe don’t ask, it is in the sense of tender biding that you need ISO 14001 or 9001, if we bid on tenders we could not bid on we don’t live up to the conformity of these requirements. More focus on sustainability – has been this way the last 10 years, and the trend is rising. We have already started the journey and see this all around the industry. 13. Where do you see responsibility placed for overseeing the monitoring of the sustainability goals for your organization? (Central   Group) Is it a build-up or breakdown process? I think it should be a top down process: in the Grundfos Concern level we have rewarded and supported function with support with the top. The overall goals like saving 50% water consumption should come from the top – but the individual goals and monitoring for the individual water levels should be a buy -in from the different functions and not monitored centrally, wouldn’t make sense.

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14. What do you think should be monitored to achieve these sustainability goals? Outside the agenda: we as-of now monitor the C02 not to overstate the 2008 level, we don’t look at the transport as much as we should – how much do we fly, truck and ship? This is not mapped as of now – My point is that we do not have any processes and system to measure these now. It could be very interesting, to see where the C02 levels are the highest? Is it Transport or is it Pro duction phase that are the biggest culprits? I don’t know really how much a factory contra a transport by truck or plane is in C02? It could be registered by person instead of by facility, is it significance level high enough does it measure statistically in the broad scale? 15. Preparation state for ISO 14001? Grundfos is really good prepared, where BD is also meant to be good prepared and my own department is also well prepared. 16. Where do you and your organization have an influence on the product life cycle stages? Use & Life time phase: my department has not really any product developers, and production, and the packaging is more in the logistics department. It is more in Business Development. Not my responsibility the other life cycles, as not a key part of emerging water technologies. 19. Your opinion on the new ‘high level structure’? Perfect, should be more integrated, the more integrated system, instead of part of individual systems it should be for the holistic view and not just for BD=, for the entirety of Grundfos, in QMS (production and business development= should be encompassed within the standard) before the quality system was made ad-hoc and not in a holistic way, since it goes across the value chain  do NOT make the box system way of developing the system, what about the lines in between the boxes. 20. Your opinion on product development with a product life cycle perspective? It should be there, there is no doubt but other than product life cycle there should also be looked at recyclability within the quality, environmental and end-of-life phase (disposal). My gut feeling says that there is not a high focus on this again within product development but this to come, for example with the take-back agreements. 21. Your opinion on top management’s requirement on commitment for review of these new aspects? Review on the management perspective: when you say review, does it mean look over? It is more that the management should be a part of it. In review it should be some clear goals to look a t and compare, if the cycle is a year, you need to look at your systems and processes if it makes sense to update and improve these on a continuous improvement process. Is it a static environment (environmental law and demands) or a dynamic  if it is very stable environment ok to have the bigger time periods, and if it is static (non-changing) not as necessary for continuous review, again hard to pin-point the time scale.

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Interview: Qualitative Data(Questions 3i , 7, 9, 10, 11, 12a), b), 15, 17, 18 Quantitative Excel Kenth Hvid Nielsen: 1. What is your role at Grundfos & Responsibility area? I am vice president for Water & Utility. I am in the segment of water cleansing and usage. One of the three business segments at Grundfos. a. Your own personal experiences with Grundfos’ sustainability policy I have been here since 1996, and have seen the development in the last 20 years of sustainability. Going from something we brand ourselves, and then law and also part of our business development. I would say I am fairly in depth with the policy. 2. What are your thoughts about using certified management systems in your part of the organization as a management tool? About ISO 14001: I really don’t have the major thought about this. But I think we push ourselves to work more with processes structured around the certified management system. My part of this; how can we make this into a business case, like with the ISO 9001 system, looking at making the same standard and type of products, to market ourselves to better sell our products. Adding value to the customers for the business is key. 3. Have you heard about the environmental management system ISO 14001? Yes, as I was part of the discussion for the possibility for certifying the company a. Do you use it in your organization? I have been part of the dialog, to see and evaluate when we will be ready for a certification of ISO 14001. What it entails, have not been my major focus, but I have heard about life cycle and other parameters. b. Do you measure your performance for it? How? No, not really in my department. More on the production floor setting. Really basic setting up KPI’s on life cycle assessment, but this has been more a theoretical setting and discussion about what data is necessary for these. 4. Do you know that there is a new ISO 14001 environmental management system (EMS) revision from September this year (2015)? Yes, but don’t know what it entails exactly. If Yes A) Do you know what this revision entails, i.e. what do you think it means for Grundfos? And for your department? NO not really 5. What is the key role of your organization within the group? a. Does your organization have any specific environmental goals? No, as organization we don’t, but in the product portfolio, for energy efficiency we have through EU and lobbyism ourselves been a part of this and add the dimension of compliance for our pumps. This is we are immediate see goals for environment.

6. What are important environmental demands from customers or other stakeholders? Performance of our products: that they are energy efficient, that optimizes there operations run time. This is seen as lowering C02 and other energy saving. We also see that customers ask for a

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detailed analysis of what materials are in the pumps and also what hazardous materials is part of these. These are beginning to become a demand and specific requirements from customers and also there customer down the supply chain. Definitely will become part of legal requirement in the future What should such and Environmental Management standard fulfill? The system should make an overall framework, setting the ambition for management. Also the system should be supportive, with various KPI’s, and if it is environment and sustainability that is in focus, we should be able to set some goals, and also follow up on these to see if we live up to these goals on a continuous basis. What degree is it used to make decisions? How disciplined do we use the system, are they any deviations for ISO 14001? Take our ISO 9001, it is in the “back bone” of the company with more clear goals, I see ISO 4001 and the perception of it as guidelines and not goals, so as to be more supportive than streamlined with ISO 9001. I don’t know if this is the right way to go, but that is how I see it as of now. According to triple bottom line, the economic parameter will always win, we worked with this before, and found out that when there is a financial crisis they economic aspect again becomes a major player, and the social and environmental aspects becomes less apparent. 8. To what extent do you know the environmental policy of Grundfos? Our framework about sustainability is not a part of the strategy, but is seen as the foundation, the DNA of the company. We can discuss this as being too easy, as what sustainability is seen as differentiating for the strategy. a. Are there elements in the policy you think should be strengthened? When we say that it is merely the “foundation”, there is not any clear responsibility for this. Strategy is going from A to B, and if you have no steps to go f urther with sustainability, it has the possibility to be forgotten. b. Are there aspects that should have more attention in your department? I would like to see more aspects and requirements to what sustainability entails, I would like to see this. For example our pumps marked A++ in EU, is it really to be more sustainability , well yes, but if you squeeze me I would say to make a bigger profit. Again would like to see more top management for this. Employees: Economic, Environmental and Social terms: Our bonus system demonstrates what kind of behavior we would like to support. I also have the possibility to make own bonus arrangements. Like bonus for DtV targets, if the employees meet the deadline they will receive a bonus. For the social and environmental aspe cts there are currently no bonus arrangements. Criticality of loss of ISO 14001: PR-wise, would hurt a lot but also seen as a practical problem as there would be something we are doing wrong and need to fix.

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13. Where do you see responsibility placed for overseeing the monitoring of the sustainability goals for your organization? (Central   Group) If the customers demand these goals, we ourselves would also be more centralized. The group sustainability would be reported to, but the requirements should come from law, or the internal department with reviews to group sustainability, to support the concern board of directors with their goals. The responsibility for monitoring should lie with us, in our department. I could see a template arrangement coming from Group sustainability, to be used. So the measurement system in itself could come from them, but the goals chosen should be chosen by us, else the measurement would be for the sake of just measuring in itself and not to be used. 14. What do you think should be monitored to achieve these sustainability goals? Social goal could be employee goals, and working environment. The offerings for the products, could be part of the environmental/sustainability aspect, what does the product do better. The final economic aspect would then naturally come along by itself as it is always a big part of the company. 15. Preparation state for ISO 14001? Not as well prepared now, but if we could make the “burning platform” then we can finish the implementation, but the question is how much time and effort is allocated and how hard we would have to work. Competences need to be utilized because they are definitely there. We need the sense of urgency to accommodate this implementation. 16. Where do you and your organization have an influence on the product life cycle stages? 3 different life phases: 1. Materials, 2. Production and 3. Disposal (with recyclability in mind) . We are in the midst of looking at circular economy as well. If we focus then actually in production, as part of the scope, is not seen as a priority now with my department. 19. Your opinion on the new ‘high level structure’? I think it is the way forward, but with the mindset that it should not become too bureaucratic. It should be common guidelines for the common and make sense for the company to have this system in place 20. Your opinion on product development with a product life cycle perspective? I think it is good, and as of now I think we do not look at it enough. The talks and discussion we h ave had until now about circular economy has peaked interest in the company. 21. Your opinion on top management’s requirement on commitment for review of these new aspects? I think it is good, this will not be implemented it is bottom up (grass roots) by e mployee, but they should communicate clearly to the entirety of the organization that this re -certification is important and a clear deadline and commitments should already be in place for top management.

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DATA CD Sound file Contents:

Data Pdfs:

Stemme0005 - Katrina Sonne Einhorn.aac Theiso14000family_2009.pdf Stemme0006 - Svend Aage Kaage.aac

Forging action from agreement.pdf

Stemme0007 - Jimm Feldborg.aac

Quality Management Systems -fundamentals and vocabulary.pdf

Stemme0008 - Jan Strangaard.aac

Environmental management systems -requirements with guidance.pdf

Stemme0009 - Bjarne Fjeldsted.aac

Strategy_2020_passport_dk-final-low.pdf

Stemme0001- Steen Tøffner-Clausen.aac

Merged draft mandate on material efficiency aspects of Ecodesign.pdf

Stemme0002 -Thomas Hessellund.m4a Stemme0003 - Henrik Ørskov Pedersen.aac Stemme0004 - Keld Fensten Madsen.aac Stemme0005 - Poul Madsen.aac Stemme0006 – Kenth Hvid Nielsen.aac

CD:

o

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