Our value creation model
Creating value, the ABB Way
Our value creation model provides a comprehensive summary of the holistic value we generate for all stakeholders across ABB’s entire value chain. It outlines the inputs that ABB needs to create value and illustrates how we transform these inputs into outputs and outcomes through our decentralized operating model, the ABB Way.
Our model consists of:
Key megatrends - Inputs - The ABB Way - Outputs and outcomes - Stakeholders
Key megatrends
We take a broad view of external developments including economic and geopolitical shifts. By relentlessly focusing on our purpose and continuing to deliver a leading offering in electrification and automation, we believe we are well positioned to capitalize on key megatrends and deliver superior value for our stakeholders in the long-term.
Energy transition
Investment in electrical infrastructure | Decarbonization of industries | Energy efficiencyDemographics
Shrinking labor force | Increasing global consumptionGeopolitical fragmentation
Local-for-local manufacturing | Moving production closer to the customerDigitalization & AI
Accelerating automation | Higher data processing needsOur inputs for value creation
ABB’s main inputs for creating long-term value for our stakeholders can be categorized into the six main groups below. To drive sustainable value creation at ABB, we need to ensure that our inputs are not only balanced, but also complementary: we leverage our market leading position and access to financial inputs to continuously invest in research and development (R&D), our people, acquisitions and partnerships, and our manufacturing footprint and capabilities, including more sustainable and resource-efficient operations.
Financial
Total stockholders’ equity: $15,060 mn | Total liabilities: $25,297 mnIntellectual
Percentage of R&D employees in software development: >55% | R&D spend: 4.5% of revenues | Number of new venture-capital investments: 9 and 8 follow-on investmentsNatural
Energy consumption: 1,292 GWh in (95% of which come from renewable energy sources) | Water withdrawal: 283,123 m3Manufactured
Book value of property, plants and equipment: $4,177 mn | Number of manufacturing sites: >170 (number of countries with manufacturing sites: >40) | Share of local-for-local production: ~95% Europe, ~85% China & ~75% USAHuman
Diverse workforce: 112,769 employees representing 174 nationalities as of December 31, 2024 | Average hours of training per year and employee [1]: 8.4 Safety observation tours rate: 5.4Social and relationship
Customer base evenly distributed among the three regions | Numerous partnerships with universities and research institutions[1] Includes tools such as My learning, Harvard Spark, Harvard Manager Mentor and LinkedIn Learning and covers both leadership and functional/technical learnings, for internal employees.
Outputs and outcomes
We understand value creation as the positive transformation of our financial and non-financial inputs into outputs and outcomes that fulfill our purpose of enabling a more sustainable and resource-efficient future. By focusing on holistic value creation, we deliver meaningful progress for our stakeholders, the environment and our organization. In everything we do, we reflect on how ABB impacts and is impacted by our society and the environment.
We deliver leading financial performance
Comparable revenue growth: 5-7% | Operational EBITA margin: 16-19% | ROCE: >18% | FCF conversion to net income: ~100% | EPS: At least high single-digit growthWe create value through world-class technology
Invest to maintain market-leading technology in electrification and automation through organic and inorganic investmentsWe enable a low-carbon society
Reduce scope 1+2 GHG emissions by at least 80% by 2030 vs 2019 | Reduce scope 3 GHG emissions by 25% by 2030 vs 2022 | Ambition to help our customers avoid emissions throughout the lifetime of products sold between 2022 and 2030We preserve resources
Send zero waste to landfill while reducing waste generation by 2030 | Cover at least 80% of products and solutions with our Circularity Approach by 2030 [8]We promote social progress
Achieve a top-tier employee engagement score | Increase proportion of women in senior management roles [4] to 25% by 2030 | Expand programs for community engagement Gradual reduction in LTIFR [10]We embed a culture of integrity and transparency
We aim to embed a culture of integrity and transparency across the value chain[4] At ABB, senior managers are defined as employees in Hay grades 1–7.
[8] Based on revenues from hardware-based products and solutions, where granularity of financial systems allows. Service revenues are excluded.
[10] Zero harm to our people and contractors – we aim for a gradual reduction in lost time from incidents.
Our operating model – the ABB Way
With our company purpose at its core, the ABB Way empowers our divisions with full ownership and accountability for their strategies, performance and resources, while serving as the “glue” that holds our Group together. The ABB Way consists of two parts: “how” we will operate and create superior value in the future, namely with our business model; people and culture; brand and governance; and our purpose, “why” our company exists. The ABB Way provides standardized policies, processes and systems, including portfolio, performance and risk management, as well as internal control and compliance.
In everything we do, we reflect on how ABB impacts and is impacted by our society and the environment.
Stakeholders
Engaging with our stakeholders plays a foundational role in defining ABB’s strategic direction and driving our business. We are committed to consistent, transparent communication with our key stakeholder groups and aim to build trust and foster long-term responsible business practices.
- Customers
- Employees
- Governments and civil society including NGOs
- Investment community
- Partnerhips
- Suppliers