Good governance is about managing risks and building trust. To achieve this, we are weaving our corporate responsibility agenda into the company fabric through policy work, training and dialogue.

Through a robust Ericsson Group Management System (EGMS), including policies and directives, performance reviews and a commitment to operational excellence, we ensure transparent decision making and employee accountability.

Ericsson operates according to the Swedish Companies Act and complies with the Stockholm and London Stock Exchange listing requirements as well as NASDAQ listing agreement rules. The Corporate Governance Report published in the Ericsson Annual Report 2006 provides more information. Corporate responsibility related audits are conducted within the areas of trade compliance, security, health and safety, the environment and supply chain management. As an element of the financial controls, Ericsson has defined a set of entity-wide and financial process controls to ensure reliable financial reporting and compliance with Sarbanes-Oxley Act (SOX 404; Internal Controls). This includes the Code of Business Ethics and the Code of Conduct.

Good governance starts at the top. The Ericsson Board of Directors considers ethical, environmental and social aspects of governance in its decision-making. In 2006, it delved further into the corporate responsibility issues material to the company and the strategies to address them in a training session. This training is to be conducted annually.
Corporate responsibility must also filter down into the organization in order to have a real impact. Each employee was asked to acknowledge that they had read and understood the contents of the Code of Business Ethics. A periodic review process was conducted during 2006 and was completed by 99.9 percent of Ericsson’s employees. The Code of Business Ethics covers fundamental corporate principles such as treating employees with respect and safeguarding human rights and the environment; legal compliance on insider trading; protecting information and proper use of company assets and promoting fair disclosure, as well as instructions to report unethical or unlawful conduct. It also includes a whistle-blower procedure for raising concerns about questionable accounting and auditing matters. The Code of Business Ethics forbids political party contributions.

Since 2004 annual workshops on corporate governance, including anti-corruption, business ethics and related topics are held for senior Ericsson managers from around the world. More than 300 managers have participated to date. In 2006, the markets covered were Eastern Europe and North and South America and 84 managers took part. In 2007, there will be e-learning courses on security and anti-corruption for all employees.

We strive to be transparent and accountable towards individuals and organizations with a stake in our operations and with whom we share common concerns and goals. Our major stakeholder groups include employees, customers, suppliers, investors, non-governmental organizations, universities, government institutions and media. Institutional investors, including pension funds, represent more than 80 percent of our equity ownership, and are included among our key stakeholders.

We work through several industry organizations that address corporate responsibility issues, such as the GSM Association, and GeSI, the Global e-Sustainability Initiative. We cooperate with a number of government and non-government organizations as well as international initiatives such as the UN Global Compact. In addition, we have ongoing partnerships with UN agencies. During 2006, Ericsson initiated workshops with telecom regulators that included corporate responsibility related topics such as Ericsson’s engagement in bridging the digital divide.

Key issues raised by our stakeholders include energy efficiency, product disposal, management of hazardous substances, supply chain social and environmental performance, business ethics and anti-corruption, electromagnetic field exposure issues, bridging the digital divide, and community involvement.

In order to identify, prioritize and address stakeholder concerns, we carry out a number of activities. This includes conducting quarterly customer satisfaction surveys and setting targets for proactively engaging customers on corporate responsibility issues.

For suppliers, we have annual supplier days, regular supplier training and engagement activities on Code of Conduct compliance. For investors, we hold a number of meetings and a road show each year to address issues specific to corporate responsibility.

We involve employees in decisions affecting day-to-day operations. In accordance with Swedish law, three employee representatives are on the Board of Directors. An annual employee survey provides insight into how employees perceive their work environment more

Ericsson applies different methods to help us to assess the significance of issues material to the company and to prioritize among stake-holder concerns. Examples include our Life Cycle Assessment (LCA) studies and risk-based supply chain assessments.