Market leadership
Each of our divisions aims to hold a number one or two position in their market segment. We believe market leadership is critical, as it allows us to be cost effective in our markets and benefit from economies of scale. This, in turn, delivers strong profitability, which allows us to invest more in R&D to sustain our technological leadership. These investments in technology and manufacturing assets, as well as our deep application know-how, create customer value, allowing us to maintain our market-leading positions in electrification and automation. We are well invested, with our annual long-term CapEx of approximately $800 million, and we expect investments to remain fairly stable going forward.
Technology leadership
Our approach to R&D
Technology and innovation are essential to our long‑term success, and we follow a customer‑centric approach by placing R&D responsibility within our divisions as they are closest to our customers. Innovation is fueled by deep application expertise, built through decades of presence in our core end markets and close relationships with customers.
We invest a significant share of our annual revenues in R&D, aiming to maintain spending at 4.5 to 5 percent of revenues at the Group level. Since 2022, we have increased our absolute R&D investment by about 30 percent. Investment needs vary significantly across our divisions, with R&D spending ranging from 1 to 10 percent of revenues depending on the strategic priorities and technological requirements of each business. This tailored approach ensures resources are allocated effectively to support innovation, maintain market leadership, and drive growth across the group.
Digital solutions and AI
In line with our decentralized operating model, ABB’s digital strategy is customer-driven and business-led. We prioritize digital solutions that complement and / or are integrated into our products and control systems to help customers optimize energy use, asset performance, and workforce productivity.
Our products, services, and solutions increasingly feature embedded software, which is often the main source of differentiation and value. We continue to focus on software and AI development as an important part of our innovation strategy, supported by the fact that approximately half of our R&D employees work on digital and software development.
This digitally enabled offering is complemented by advanced software applications that are designed to unlock greater value from industrial data, enabling predictive maintenance, real-time optimization, and autonomous operations. Solutions like the Genix™ Industrial IoT and AI Suite integrate data across operational, engineering, and IT systems to deliver actionable insights, driving significant improvements in energy optimization across critical processes in energy-intensive industries, improving asset reliability, reducing unplanned downtime, and minimizing troubleshooting by shop floor engineers across critical assets and processes. These offerings have been developed primarily through organic innovation and are complemented by targeted technology venture investments and selective bolt-on acquisitions. We focus on software that creates clear synergies with our core strengths in electrification and automation.
Strategic partnerships, business ventures, and M&A
Our R&D teams collaborate with universities and research institutions worldwide, including ETH Zurich (Switzerland), Imperial College London (UK), Indian Institutes of Technology (India), and Karlsruhe Institute of Technology (Germany). These partnerships help to build research networks and foster innovative technologies which we potentially invest in and sometimes acquire. Our collaborations also include long-term strategic relationships that support recruitment and training of new talent.
To enhance innovation and gain speed, our divisions partner with other leading companies which have complementary competencies. We also invest in and collaborate with startups around the world through our venture capital arm, ABB Technology Ventures, and our startup collaboration hub, SynerLeap.
In 2025, we invested in five new ventures and made 12 follow-on investments totaling approximately $28 million. The investments were driven by ABB’s divisions and focused primarily on digital capabilities, including AI that will create synergies with our digitally enabled products and services. For example, ABB acquired a minority stake in Edgecom Energy, a Toronto-based startup which is pioneering generative AI-powered energy management solutions. The aim is to accelerate the development of scalable AI-enabled tools that help industrial customers optimize energy use, reduce costs, and support the energy transition.
M&A is another way we ensure our technology is market leading. Through the acquisition of Sensorfact, we expanded our digital energy management capabilities with AI-powered plug-and-play solutions that help industrial customers monitor and optimize machine-level energy consumption. The acquisition of BrightLoop added advanced, modular DC/DC power conversion technology to ABB’s portfolio, supporting electrification in off-highway vehicles, marine propulsion, and hydrogen mobility applications.
Embedding sustainability throughout our operations and value chain
Sustainability at ABB is embedded across all levels of the organization through the ABB Way operating model. In our decentralized structure, each division is accountable for integrating sustainability into its strategy, operations, and customer offerings. Governance is supported by a clear framework; strategic direction is set by the Sustainability Council, overseen by the Board of Directors and Executive Committee and implemented by the divisions with full ownership. This ensures that sustainability is a core part of how we create value – aligned with our purpose and linked to performance and reward. Our long-term performance plan requires each division to provide a five-year forecast for financial and sustainability targets simultaneously, ensuring the financing of the latter is secured. Executive compensation is linked to sustainability targets through our annual and long-term incentive plans. This integration of sustainability throughout our business enables ABB to drive progress on emissions reduction, resource efficiency, and social impact while remaining agile and customer centric.
With our Sustainability Agenda, we actively contribute to a more sustainable world, leading by example in our own operations and partnering with customers and suppliers to enable a low-carbon society, preserve resources, and promote social progress. These three pillars of our sustainability agenda are underpinned by our commitment to a culture of integrity and transparency across our value chain.
Based on our strategic priorities and decentralized operating model – and given our exposure to global megatrends – we are well positioned to capture rising demand for electrification and automation solutions. This strong growth profile is matched by our continued focus on improving operational and financial performance, which together serve as the foundation for our financial and sustainability targets to drive long-term value creation.
Active portfolio management
Active portfolio management remains a key part of our performance culture and is integrated into the responsibilities of division management teams. We conduct systematic portfolio reviews at the division and business-line level. These reviews guide decisions on where to grow organically – through CapEx and R&D – and where to grow inorganically. Additionally, the reviews help identify businesses from which to divest when they no longer align with our strategic or financial criteria.
Inorganic growth includes acquisitions that enhance scale, expand market access, or fill technology gaps. Only divisions with a growth mandate are active in acquisitions to outgrow the market, while all divisions may pursue smaller, technology-driven acquisitions. Each division is responsible for building its own pipeline of potential acquisitions, ensuring alignment with its strategic and financial goals. In addition to division-led inorganic growth, business areas and corporate strategy regularly evaluate larger M&A opportunities that cut across or beyond ABB’s current division structure.
Risk & Opportunities
| Top five enterprise risk categories 2025 | Examples of reported risks | Examples of risk responses |
|---|---|---|
| Cybersecurity incidents | Potential cyber incidents involving ABB or third parties due to global increase in sophisticated cyberattacks, AI-powered threats, high interconnectivity across the supply chain and increasing process digitalization. |
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| Geopolitical instability | Increased geopolitical tensions globally resulting in trade restrictions, protectionism, global technology decoupling, raw material price increases and regulatory compliance challenges. |
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| Market dynamics and competition | Market shifts and disruptive technologies reshaping value chains, new market players entering key segments, aggressive competitive strategies and concentration in specific segments. |
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| Talent and capabilities | Attraction and retention of skilled talent in highly competitive labor markets, demographic shifts in the workforce and keeping pace with demand for new competencies and skills to support evolving business models and technologies. |
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| Integrity behaviour | Potential breach of laws and regulations and ABB’s code of conduct resulting in reputational and brand value damage, trade sanctions, regulatory fines and penalties, backlisting and economic loss. |
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Value creation
Our business environment
ABB is well positioned to capitalize on key global megatrends that support our long-term growth ambitions....
Decentralized business model
ABB continues to evolve into a more agile and efficient company....
ABB raises margin and return targets
The company targets steady growth across the economic cycle, with 5%–7% average comparable growth excluding FX effects, acquisitions, and divestments....
We enable a low-carbon society
Supporting the development of a low-carbon society is one of the most significant ways that ABB can contribute to environmental sustainability....
We preserve resources
As our world becomes more resource constrained, ABB is committed to safeguarding natural resources throughout our value chain....
We promote social progress
ABB aims to deliver positive social impact, not only in our own business but in our value chain and communities, too....