Ericsson
Annual Report
2023
ericsson.com
Contents
Financial report
Corporate Governance report
This is Ericsson
CEO comment
Business strategy
Letter from the Chair of the Board
Board of Directors’ report
Consolidated financial statements with notes
1
2
5
14
16
32
Parent Company financial statements with notes 86
Risk factors
Auditor’s report
Five-year summaries
Alternative performance measures
The Ericsson share
105
120
126
128
133
Introduction and Key 2023 Governance Updates
Regulation
Governance Structure and Core Values
Ethics & Compliance
Risk Management
General Meetings of shareholders
Nomination Committee
Board of Directors
Committees of the Board of Directors
Remuneration to Board members
Members of the Board of Directors
Management
Cybersecurity
Members of the Executive Team
Auditor
Internal control over financial reporting
Auditor’s report on the Corporate Governance report
Remuneration report
Sustainability and Corporate Responsibility report
Statement from the Chair of the
Remuneration Committee
Introduction
Remuneration 2023 at a glance
Total remuneration to the President
and CEO and Executive Vice President
Variable remuneration
1
2
3
5
6
Comparative information on changes in
remuneration and the Company’s performance
11
Introduction
Strategy and targets
2023 highlights
Environment
Social
Governance
Notes to the Sustainability and Corporate
Responsibility report
Environment
Social
Governance
Other
Assurance report
Glossary
2
3
3
5
6
8
8
9
11
13
14
18
19
20
25
25
28
1
2
4
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25
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Ericsson Annual Report 2023
Our legal Annual Report consists of four parts published as one pdf. The four parts can also be downloaded separately:
• The Financial report, including Board of Directors’ report and the financial statements and notes
• The Corporate Governance report
• The Remuneration report
• The Sustainability and Corporate Responsibility report
Ericsson’s annual accounts and consolidated accounts are included on pages 16–119 in the Financial report and are reported on
by Deloitte in the auditor’s report. The Corporate Governance report, the Remuneration report and the Sustainability and Corporate
Responsibility report have also been subject to assurance procedures by Deloitte. We also file an Annual Report on Form 20-F with the
U.S. Securities and Exchange Commission (SEC). All parts of the legal Annual Report are available on Ericsson’s website.
Financial
report
Part of
Ericsson
Annual Report
2023
Annual Report 2023
Financial
report
Corporate
Governance
report
Remuneration
report
Sustainability
and Corporate
Responsibility
report
ericsson.com
Contents
Financial report 2023
This is Ericsson
CEO comment
Business strategy – Creating long-term value
Letter from the Chair of the Board
Board of Directors’ report
Board Assurance
Consolidated financial statements
Notes to the consolidated financial statements
Parent Company financial statements
Notes to the Parent Company financial statements
Risk factors
Auditor’s report
Forward-looking statements
Five-year summary – Financial information
Five-year summary – Non-financial information
Alternative performance measures
The Ericsson share
Shareholder information
Financial terminology
Glossary
1
2
5
14
16
31
32
39
86
92
105
120
124
126
127
128
133
137
138
139
Financial report 2023
1
This is Ericsson
Ericsson is a leading provider of mobile connectivity solutions to telecom operators as well as enterprises in
various sectors. Together with our customers and partners in the ecosystem, we are leading the next wave
of digitalization in society. We provide high-performance, differentiated and programmable networks and
make advanced network capabilities available to developers around the world. Through world-leading
research, we drive new standards and are instrumental in the development of the next-generation mobile
communications infrastructure, software, and services.
We are executing on a strategy to achieve
a higher growth trajectory, making Ericsson
a more profitable company. We do this by
leveraging leadership in mobile networks,
growing the enterprise business, and driving
lasting cultural transformation.
Our broad portfolio spans the follow-
ing areas: Networks, Cloud Software and
Services, Enterprise Wireless Solutions, Global
Communications Platform and Intellectual
Property Rights (IPR) licensing. By creating
high-performance networks, game-changing
technology and services that are easy to adopt,
use and scale, we are enabling the full value of
connectivity, making our customers successful
in a fully connected world – a world where
limitless connectivity improves lives, redefines
business and pioneers a sustainable future.
Our solutions for Communications Service
Providers (CSP) are sold and distributed
through five geographical market areas: North
America; Europe and Latin America; Middle
East and Africa; South East Asia, Oceania and
India; and North East Asia.
The Company has almost 100,000 emp-
loyees, customers in more than 180 countries
and is headquartered in Stockholm, Sweden.
The Company’s shares are listed on Nasdaq
Stockholm and the Company’s American
Depositary Shares (ADS) are listed on Nasdaq
New York.
Purpose
Vision
Culture
Sustainability
To create connections that
make the unimaginable
possible.
A world where limitless
connectivity improves
lives, redefines business
and pioneers a sustainable
future.
A culture of ethics and
integrity to make us a
stronger and even more
resilient company.
Sustainability and respon-
sible business practices to
drive business transfor-
mation and create value for
stakeholders.
Core values
Professionalism, respect, perseverance, and integrity at the heart of everything we do.
2
CEO comment
Financial report 2023
Mobile networks to drive
future value creation
Our ambition is to lead in an open world. We continue to execute against our three key
priorities: strengthening our leadership in mobile networks, growing our enterprise business
and driving cultural transformation. Our performance in 2023 is a testament to the strength
of our team, our strategy and our ability to execute. Ericsson is well positioned to capture
value from the next wave of digitalization.
In 2023, we navigated a difficult mobile
networks market characterized by negative
volume development and an unprecedented
slowdown in the North American market. In
parallel, we saw a dramatic change in business
mix with rapid growth in India. Despite these
challenges, we concluded 2023 with EBITA1)
of SEK 21.4 billion and gross margins1) of
nearly 40% – a testament to our increased
resilience.
Mobile networks are fundamental in society
– from basic communication needs, to driving
advanced digitalization in industries – with
continued high growth of traffic in the net-
works. However, many operators fight to earn
cost of capital and are in need of new revenue
streams to invest further in their networks.
We are working to reshape the industry by
transforming the network into an innovation
platform and leveraging cellular connectivity in
new areas. Our strategy aims at changing the
way networks are consumed and monetized.
While not reaching the peak levels of 2022,
we do anticipate the mobile network market
to recover from today’s low levels based on
the rapid growth of data traffic. However, we
cannot predict the timing as the cadence of
investments are in the hands of our customers.
Until the recovery comes, we remain laser
focused on managing what we can control
such as investments in technology leadership
and costs. This makes us well positioned to
fully benefit from operational leverage when
the market recovers.
Our industry vision
Over the past decade, as the consumer digital-
ized, best-effort connectivity, provided through
4G and WiFi, was enough. But to digitalize
enterprises and society, best effort is no longer
sufficient. What’s needed now are faster
speeds, higher capacity, reduced latency and
improved quality of service. 5G is designed
1) Excluding restructuring charges.
with these capabilities and is significantly
more powerful than previous generations.
In the coming 5–10 years, we will see an
acceleration of trends such as the transition
to renewable energy sources and increased
automation leveraging cloud and AI. The
flexibility of mobile connectivity is founda-
tional. This future will require ubiquitous
high-performance and differentiated mobile
networks, combined with new ways to access,
and consume advanced network capabilities.
Cloud-native architecture is a key require-
ment for delivering high-performance,
programmable and differentiated networks.
By horizontalizing their architecture, CSPs can
prioritize investments in different parts of the
network at different times. In addition, they
can also lower their total cost of ownership,
leveraging automation and AI, while opening
new ways to monetize the networks.
Our vision for the industry is based on open
and programmable networks with capabilities
Financial report 2023
CEO comment
3
that are exposed through network APIs and
leveraged by an ecosystem of developers –
driving rapid innovation and growth.
Strategy execution
Making this vision a reality begins with our
strategy to extend leadership in mobile
networks, expand into enterprises and trans-
form our culture. Technology leadership is a
foundation for our strategy. It is essential for
our competitiveness but also for generating
attractive gross margins.
In mobile networks, our ambition is to
provide the best networks in the industry, with
the highest performance and the lowest total
cost of ownership. During 2023, we strength-
ened our RAN portfolio with a new range of
radios that are more than 20% more energy
efficient than comparable products. We also
increased our investments in the automation
of networks through AI.
Our leading technology empowers our cus-
tomers to build high-performance, differentiated
and programmable networks while also lead-
ing the shift to open, cloud-native networks.
These types of networks provide our customers
with a path to monetize the network in new
ways through network APIs, network slicing
and advanced charging platforms. We already
have a commercially available CloudRAN
portfolio and are one of the leading contri-
butors to an open standard. In fact, we have
already delivered around 1 million radios in the
field that are enabled for the open standard.
An additional proof point came at the end
of 2023, when we signed an industry shaping
5-year deal with AT&T to modernize and trans-
form their network to a programmable, open
network. Through this contract, AT&T can lower
their spending in non-revenue generating solu-
tions generating value for both our customer
and us.
In Cloud Software and Services, we
executed on the turnaround and reached our
target by delivering an EBITA1) of SEK 1.7
billion for the full year through a fantastic effort
by the team. But we are not satisfied. We will
continue to increase commercial discipline,
automation and delivery efficiency, focusing
on long-term profitability.
Our licensing business is another important
element of our strategy. Our more than 60,000
1) Excluding restructuring charges.
granted patents help to strengthen our leading
position in 5G. We are confident of growing
IPR revenues, through further agreements and
by expanding into additional licensing areas.
During 2023 we signed significant licensing
agreements and will continue to optimize the
value of the portfolio.
Enterprise expansion
Our expansion into enterprises builds on creat-
ing new uses for cellular technology as well as
new revenue sources for operators. Simply put,
our ambition is to expand beyond just consum-
ers by addressing enterprises and developers
through two distinctive approaches.
First, we are providing wireless solutions
for businesses. This includes the Cradlepoint
offering, which provides secure and reliable 4G
and 5G connectivity to vehicles and industrial
environments along with Private Networks
which is based on our strong radio portfolio.
We continue to invest in an enterprise go-to-
market channel as well as broadening the
portfolio. In 2023, we acquired Ericom, which
expands our offering in zero trust and cloud-
based security solutions.
Secondly, we are accelerating enterprise
digitalization by creating an ecosystem to
expose, consume and monetize advanced
network features – through network APIs. This
is why we acquired Vonage, which provides us
with the platform technology and a substantial
developer community. Developers represent
a growing user group of network resources
and are crucial for driving the development of
new applications that leverage the advanced
capabilities of network. Through network APIs,
we are putting advanced network capabilities
at the fingertips of developers.
Historically, the developer ecosystem has
attracted limited attention from the telco
industry, but in our vision, developers will play
a central role in the future use of networks. For
this reason they are a new target market for us.
In 2023, we took an important step by
launching the Global Network Platform
together with Deutsche Telecom – marking
a world-first in the commercialization of
network APIs. This platform makes it easy to
expose, consume and pay for advanced net-
work capabilities, such as location and device
status. Network APIs, and their potential for
the industry, is something we’re currently
discussing with our CSP customers.
Through high-performance, differentiated
networks and open network APIs, we are
redefining how the network capabilities are
consumed and how the industry can capture
and deliver value. This is the first step towards
creating a network effect of exponential growth
and innovation, which will drive further usage
of the network and create a need for more
network investments. With a network effect,
the value of the whole platform increases with
each new CSP, developer or API.
Leading with integrity
To be an industry leader, market and technol-
ogy leadership alone are not enough – we also
need to run our business responsibly including,
being an ethical, social and environmental
leader. We are committed to our culture trans-
formation, and we continue to implement
stringent controls and improved governance,
ethics and compliance across our company,
with corresponding enhancements to our risk
management approach.
While we are a very different company
today then just few years ago, our journey to
build a culture of integrity and compliance
continues. Our ambition is to protect Ericsson
and our assets, and to create a stronger and
improved business. We are convinced that a
focus on ethics and integrity will lead to better
decisions – and is therefore a competitive
advantage for us.
We have continued to strengthen and
enhance our Ethics and Compliance program
and further embed integrity into our ways of
working. We are now preparing to conclude
the term of our DOJ resolution, and the related
monitorship, in June of this year.
A critical part of strengthening our culture
is building high-performing, inclusive teams
based on merit. While our industry suffers from
a lack of gender diversity it was encouraging
that 2023 saw an increase in the percentage
of women hired at Ericsson. To reach our ambi-
tion of being one of the best places to work, we
will continue to improve our talent acquisition
capabilities while investing in the development
of future critical skills.
Running our business responsibly also
includes our commitment to have zero
4
CEO comment
Financial report 2023
fatalities and lost workday incidents by 2025.
However, the outcome in 2023 was not good
enough and we will need to increase our
efforts.
We have also set an ambition to be Net
Zero across our value chain by 2040. The most
significant impact towards this target comes
from delivering an energy efficient portfolio
that helps break the energy curve of mobile
networks and reduce customer energy use,
energy costs and carbon emissions.
Business performance
As expected, 2023 was a choppy year for the
mobile networks market. Group net sales
declined by −3% YoY to SEK 263.4 billion.
Sales declined organically1) by −10%. Gross
margins, excluding restructuring, were
39.6% and free cash flow, before M&A was
SEK –1.1 billion due to the business mix shift
towards big roll-out projects with a longer
order-to-cash cycle.
In 2023, we recorded a non-cash impair-
ment charge of SEK 32 billion attributed to
the acquisition of Vonage – a consequence of
macroeconomic headwinds, including rising
interest rates and changing demand trends.
These trends have also significantly impacted
the market capitalization of Vonage’s publicly
traded peers. However, this does not alter our
enterprise strategy or our positive outlook on
the potential of the Global Network Platform.
In the current market environment, we
are laser focused on managing what is in our
control, such as costs. We started reducing
costs already in 2022 and at the end of 2023
we achieved a gross run-rate of SEK 12 billion
in cost savings – in line with our target. We
expect to continue to take out costs during 2024.
Looking ahead
During 2023, the world saw renewed conflict
in multiple regions around the world, often
with terrible human costs as a result. Increased
geopolitical tensions significantly impacts the
global business environment. Our first priority
is always on the safety and well-being of our
team but also on building resilience to effec-
tively manage these increased tensions.
The RAN market remained challenged in
2023 and we expect further volume declines.
We are focused on managing what is in our
control and relentlessly driving operational
efficiency, while keeping intact investments
that are critical to our future competitiveness.
Short-term these investments will put pressure
on our profitability, but they will also position
us for when the market comes back. Our his-
toric contract with AT&T will start to contribute
during the second half of 2024.
As we have seen in past slowdowns, we
expect the market to recover at some point.
The key driver for the recovery is the continued
high pace of mobile data growth. In itself,
growing data traffic will not create growth in
the mobile networks market. Instead, new uses
cases, as well as new monetization opportuni-
ties, will be important drivers of growth. This
will take some time to be meaningful.
Our strategy to capture the new opportuni-
ties is built on our deep expertise in telecom
networks. We are confident that extending
leadership in mobile networks, expanding into
enterprises, and driving a culture transforma-
tion with ethics and integrity at the heart of
every decision, will enable us to capture signi-
ficant future value for all stakeholders.
AI and automation continue to be key
investment areas for us. We began investing
in AI more than a decade ago and over the
next 2–3 years, AI will increasingly be part of
our solutions. Recently, we developed our own
generative AI framework, leveraging Large
Language Models (LLM) that are fine-tuned
and optimized for the telecom domain. AI is
also shaping the way we operate our company
and we will continue to leverage this tech-
nology for internal productivity.
Through strong strategy execution we have
strengthened our competitive position through
R&D leadership. On the horizon is the target
to make Ericsson a more profitable company
by capturing the next major wave of networks
innovation with a substantial platform
1) Net sales adjusted for comparable units and currency.
2) Excluding restructuring charges.
business. We remain committed to our long-
term targets on 15–18% EBITA2) and 9–12%
free cash flow target as the market recovers.
We are driving a paradigm shift, putting
high-performance networks and differentiated
models at the heart of the digital future. This
is a once-in-a-lifetime opportunity to create
long-lasting value and drive positive change
in both our industry and society as a whole.
The ongoing discussions with a broad range of
ecosystem partners strengthen our conviction
we are on the right path.
I want to extend my deepest gratitude to
the entire team for their hard work and perse-
verance. Their relentless effort and unwavering
commitment have made the achievements of
the past year possible.
Together, we are going to shape the
future by leading the next wave of network
innovation.
Börje Ekholm
President and CEO
Financial report 2023
Strategy
Creating long-term value
Business strategy
5
Through our business strategy we aim to put high-performance, differentiated and
programmable networks at the center of the next wave of digitalization. We do this
by extending our leadership in mobile networks and through a focused expansion into
enterprises. In addition, we are reshaping the industry by creating a Global Network
Platform – leveraging the innovation power of 5G in close cooperation with developers,
Communications Service Providers (CSPs) and partners across the ecosystem.
Digitalization and society
Over the past three decades, mobile connectivity
has fundamentally transformed our world –
driving advanced digitalization in industries and
society. Today, we have near-ubiquitous connec-
tivity globally, with 8.5 billion mobile phone sub-
scriptions. And over the last 30 years, data speeds
have increased at a rate faster than Moore's Law.
During this time, 4G networks gave rise to the
app economy and digitalized consumer life. Today
digitalization is a key tool for solving some of
society’s biggest challenges, including the climate
crisis and social inclusion. But to take the next
step in digitalization, “best effort” connectivity for
consumers will not be enough. What is needed
are faster speeds, reduced latency and improved
quality of service to achieve complete digitalization
in both enterprises and the public sector. Satisfying
those demands will require higher-performance
networks that are significantly more powerful than
previous generations.
Enabling the future with high-performance networks
In the coming 5–10 years, we will see an
acceleration of major trends such as energy
transition, the green transition, resilient supply
chains, and industrial automation for increased
efficiency and productivity. These trends,
however, will not progress to their full potential
unless they leverage a mobile-first, Artificial
Intelligence (AI) and cloud-based world.
Mobile infrastructure, powered by cloud
and AI automation, is the enabling technology,
but without mobile connectivity, AI and cloud
cannot be deployed at scale. A mobile-first
world requires ubiquitous high-performance,
differentiated and programmable networks
– with capabilities such as higher speed,
bounded latency, location, and authentication
– that are available everywhere and easily
accessible to a broad ecosystem of businesses
and developers.
Open network interfaces, known as network
APIs (Application Programming Interfaces),
give developers easy access to advanced
network capabilities. Combining these with
high-performance and programmable net-
works, it becomes possible to satisfy much
more demanding new use cases such as:
• Quality of Service and time-bound latency
for real-time cloud interactions including
digital twins and Extended Reality (XR)
• Improved outdoor and indoor coverage for
autonomous vehicles in industrial settings
• Advanced location and positioning, for
drones and 3D-mapping
• Improved security and authentication
Ericsson is repositioning the industry by
redefining how people can access and utilize
network capabilities, as well as how networks
can be monetized. The combination of
high-performance and programmable net-
works, with network APIs and an ecosystem
of developers, will result in a network effect of
accelerated growth and innovation.
A network effect gains momentum with
the creation of network APIs that are made
broadly available on a global platform. As more
and more developers join the platform and
create new applications, traffic on the network
increases generating more revenue for CSPs.
This in turn prompts further network invest-
ments, accelerating the cycle and increasing
the value of the platform with each new devel-
oper, enterprise and CSP that joins.
We are well positioned to deliver on this
future potential through our business strategy,
which focuses on creating long-term business
value through leadership in mobile networks
and a focused expansion into enterprise.
6
Business strategy
Financial report 2023
Market environment
Historically, the RAN market has been
largely flat over time but with cyclicality.
We are currently in the lower end of the
latest investment phase. Over time however,
we expect the market to normalize with
traffic growth representing the underlying
driver of mobile network investments.
In 2023, the RAN market continued to
be choppy with sharp contrasts between
the market decline in North America and
the substantial growth in India – which saw
a record-paced rollout of 5G.
During the year, the number of 5G sub-
scriptions grew to 1.6 billion, making 5G the
fastest scaling mobile generation; the num-
ber of 5G subscriptions already accounts for
19% of total mobile subscriptions. At the end
of 2023, Ericsson’s technology was used in
158 out of the approximately 300 live 5G
networks globally.
In the medium term, 2025–2026, the
mobile infrastructure market is expected to
see moderate growth outside of China. CSP
revenues will remain predictable as consum-
ers increase their use of mobile devices and
prioritize telecom services as a basic need.
Mobile data traffic is expected to continue
to grow at an estimated compound annual
growth rate (CAGR) of 22% until 2029. 5G
is expected to grow with a CAGR of 50% for
the same period. Around 50% of all mobile
traffic, outside of China, is carried over net-
works provided by Ericsson.
The 5G cycle is in its early stages and we
expect the migration to 5G standalone to
continue in order to deliver on this technol-
ogy’s full potential. Furthermore, about
70% of all LTE nodes globally are yet to be
upgraded to 5G mid-band.
5G is also spurring new use cases that
will drive future traffic. Examples include
Fixed Wireless Access (FWA) – which is
seeing significant growth – and Mission
Critical Networks which is driving new use
cases for public safety, rail and utilities.
Other emerging growth areas include 5G for
indoor, satellites and airspace and in some
advanced 5G countries, a combination
of high-performance networks and cloud
services is powering enterprises with secure
and cost-efficient IT and communications
infrastructure.
Financial report 2023
Business strategy
7
Ericsson strategy
Through our strategy we will create long-term value for all stakeholders, by leading in our mobile networks business and capitalizing on the rapidly
digitalizing enterprise market. In addition, we will expand the mobile infrastructure market by helping CSPs address new monetization opportunities
– together with developers and ecosystem partners. This is what we are driving through the Global Network Platform.
Superior experience for consumers
Reliable & easy-to-use solutions for businesses
Capabilities for developers
Customer success
Businesses
Best performance for differentiated networks, relentless efficiency and growth in an open world
Leadership in mobile networks
Focused expansion into enterprise
• Technology leadership for performance, security, and
sustainability at lowest TCO across RAN, Core & OSS/BSS
• Lead industry shift to programmable, automated cloud-native
networks and operations, and advanced network services
Wireless networks
• Pre-packaged solutions
• Leading reliability, security,
and operations
Communication platform
• Accelerate the world’s
ability to connect
• Global network platform
Be first in critical innovations, and capture strategic business opportunities
Foundation
Technology leadership
Cost efficiency
Data-driven operations
Global skill & scale
Delivering on end-user requirements
Customer success
Creating value through our strategy is closely linked with our commit-
ment to fulfill the diverse needs of consumers, enterprises and
developers.
For consumers, this means delivering on their demand for an
unparalleled experience with seamless connectivity and high-quality
communications services. Enterprises require reliable and easy-to-
use solutions in order to consistently improve their operations, drive
innovation in an agile and sustainable way, and enhance interactions
with customers and employees. And developers, looking to create new
enterprise and consumer applications, require easy access to globally
available, advanced network capabilities so they can create innovative
new use cases. Our steadfast commitment to addressing these needs
is a cornerstone of our strategy.
Through our products and solutions, we drive relentless efficiency in
order to minimize our customer’s total cost of ownership (TCO) while
accelerating their revenue growth in an increasingly open world. This
includes addressing the need for spectrum, greater energy efficiency
and superior performance. We are also ensuring that our customers
are well prepared for future opportunities by embracing open and
programmable networks.
8
Business strategy
Financial report 2023
Leadership in mobile networks
We have industry-leading solutions for mobile
networks that encompass radio, core, transport
and antennas along with OSS-BSS, network
deployment and support services. We are
consistently ranked as a leader in third-party
assessments in areas such as performance and
sustainability.
In business area Networks we are
constantly evolving networks with the best
performance, security, and energy efficiency at
the lowest total cost of ownership (TCO). This
includes delivering a sustainability-focused
portfolio that will help break the energy curve
of mobile networks and reduce customers’
energy use, costs and carbon emissions.
We are also leading the shift to open, cloud-
native networks, which is an opportunity for us
to increase our footprint. Our strategic priorities
in this area include building high-performance
programmable networks, industrializing Open
RAN, pursuing cloud-native migration and
bringing competitive hardware and software
products, supported by advanced engineering
services to the market.
Ericsson is playing an active role in shaping
the industry landscape by providing a credible
and realistic path to Open RAN, at scale. This
will increase the value of connectivity, fostering
new service growth which in turn will drive
investments into network infrastructure.
At the end of 2023, we signed a historic deal
with AT&T to modernize and transform their
network into a programmable open network
– driving a strategic shift in the industry. In
business area Cloud Software and Services,
our solutions equip CSPs to excel in business
agility, service experience, and operational
efficiency while helping them transform to, and
reap the benefits of cloud operations. Ericsson
continues to invest in the network abstraction
layer so that advanced network capabilities
are easy to expose to developers and other
third parties. This is a key enabler of the Global
Network Platform.
Ericsson has a strong position and is a
market leader in 5G Core, network manage-
ment, network design and optimization and
managed network services. In 2023, our focus
was on reaching at least EBITA1) break-even.
Having delivered on our commitment to the
market, we continue to increase commercial
discipline, automation and delivery efficiency,
focusing on long-term sustainable profitability.
Be first in critical innovation and capture strategic business opportunities
Our strategy is to invest in technology leadership and to be the first to develop leading capabilities and innovations that create new business oppor-
tunities. Proof of our strategy execution includes our agreement with AT&T to lead the commercial deployment of Open RAN in the United States and
the collaboration with Deutsche Telecom on the world-first commercialization of network APIs. Our technology leadership builds upon proven and
industry-leading research from Ericsson Research, as well as development and innovation occurring across all business areas.
Focused expansion
into enterprise
Enterprise
Wireless Solutions
Global Communications
Platform
With 5G, we are in the early stages of wide-
spread enterprise digitalization – creating
significant additional value for industrial
applications such as mining, airports, and
manufacturing.
We continue to build an enterprise busi-
ness with a strategy that is organized around
two pillars. The first, Enterprise Wireless
Solutions, is where we are driving business
transformation through seamless and secure
network solutions. The second, Global
Communications Platform, is where we will
help customers monetize 5G in new ways
by transforming how network capabilities
– such as high speed and low latency – are
globally exposed, consumed and paid for.
1) Excluding restructuring charges.
We are developing wireless solutions for
businesses with leading reliability, security
and easy-to-manage operations.
Through business area Enterprise
Wireless Solutions – which includes
Cradlepoint and Private Networks – we are
accelerating the digital transformation of
businesses, industries, communities and
governments. The portfolio for this area
includes Private Cellular Networks (PCN),
Wireless-WAN (WWAN) and Cloud Security
(Security Services Edge – or SSE) solutions.
These solutions are primarily delivered via
a unified management, policy, and security
framework to enterprises, Managed Service
Providers (MSPs) and CSPs.
The business area continues to expand its
portfolio. In April 2023, Cradlepoint acquired
Ericom Software including their advanced
enterprise cloud security platform to solidify
its Secure Access Service Edge (SASE) and
zero-trust offerings for hybrid 5G and wire-
line environments.
The second pillar of our enterprise strategy
is powered by our acquisition of Vonage
and the formation of business area Global
Communications Platform.
Our ambition is to accelerate the
world’s ability to connect and we do this
by maintaining a strong position in the
market for Communications Platform as a
Service (CPaaS) with deep enterprise and
developer engagements. In addition, 5G
offers programmable and differentiated
network performance and capabilities
which in turn enables CSPs to provide new
revenue-driving uses cases on top of their
current subscription offerings. The key to this
lies in making network capabilities broadly
available – through network APIs – to
developers and enterprises.
By combining the Vonage platform
and developer ecosystem with open and
programmable networks, we now have
the building blocks to launch a Global
Network Platform – making it easy to
expose, consume and pay for network
APIs. In September 2023, we reached an
important milestone together with Deutsche
Telecom, announcing a world-first in the
commercialization of network APIs.
Financial report 2023
Foundation
Business strategy
9
Technology leadership
A key foundation that we will not waver from
is technology leadership. This is critical as the
industry is currently in the middle of a major
transformation. Our substantial investments in
R&D position us to further extend our technol-
ogy leadership for cost and energy performance.
As part of this, we create, secure, protect,
and license a portfolio of patents and have a
strong patent portfolio that comprises more
than 60,000 granted patents in support
our long-term targets. Through substantial
contributions to the development of standards
and cutting-edge technologies, we will further
capitalize on our R&D investments through
patent licensing. The IPR portfolio gives us
great opportunities to grow our licensing rev-
enue, with a continued emphasis on ensuring
that the full value is recognized in all contracts.
Cost efficiency
A focus on performance and cost leadership
enables us to provide the lowest network
cost per gigabit. We also continue to improve
productivity and capital efficiency across our
supply chain. At the end of 2023, we achieved
a gross run rate of SEK 12 billion in cost-
savings and we continue to prudently manage
our costs, investments and balance sheet while
investing responsibly to preserve and enhance
our technology leadership, market share and
profitability.
Data-driven operations
A continued focus on digitalization is crucial to
our long-term competitiveness. Digitalization
plays a pivotal role in expediting workflows and
minimizing lead times. By leveraging digital
tools, we can achieve significant lead-time
reductions across sales, software management
and service delivery.
Another key area is our investments in auto-
mation and AI for telecom. The investments
have resulted in significant gains in product
enhancements in the areas of power consump-
tion, network orchestration and operations and
have also contributed towards streamlining of
software development lead times and other
internal processes.
Global skill and scale
Our global presence, the skills and expertise of
our people, and close interaction with our
customers, creates opportunities for us to grow
with discipline – leading to increased market
footprint and economies of scale.
10
Business strategy
Financial report 2023
Ethical, social and environmental leadership
our operations and managerial decisions.
This further remediated the business process
issues that were, in the past, a contributing
factor in incidents of misconduct. The Business
Critical Transformation initiative deployed
cross-functional teams, which were led by us
and supported by compliance and internal
controls functions, to ensure compliance was
fully embedded in the business, was accessible
to everyone, and worked effectively in practice.
Corporate responsibility extends beyond legal
compliance through proactive mitigation and
management of risks to people. From a health
and safety perspective, Ericsson puts a strong
focus on risk controls over project hazards,
safety training and supplier management
related to field operations. Driving, climbing
and working at heights, as well as working
with electricity, are high-risk activities which
account for almost all fatalities and a signifi-
cant portion of major incidents, most of which
occur in the supply chain.
The focus on people also includes identify-
ing and managing human rights risks in our
own operations and throughout our value
chain, especially in certain high-risk geogra-
phies. Ericsson also made significant efforts
into improving traceability and visibility in the
supply chain, with a focus on high-risk supplier
categories beyond the first tier. A governance
mechanism for managing findings related to
risks of modern slavery in the supply chain was
also established.
In relation to downstream due diligence,
Ericsson has continued to improve the
Sensitive Business process (Ericsson’s sales
due diligence process) by introducing updated
risk indicators to cover human rights aspects
tailored to different types of business engage-
ments, such as public networks for CSPs as
well as private networks for government
agencies and enterprises. Additionally, as part
of a long-term human rights training plan, an
e-learning course was made available to all
employees and workshops with the Allegation
Management Office were conducted, to
heighten awareness of when reported compli-
ance concerns should be treated as human
rights-related.
Sustainability and resilience
Ericsson has set an ambitious target to have
Net Zero greenhouse gas emissions across
our value chain by 2040. Our most important
contribution to climate change mitigation is
delivering an energy efficient portfolio that will
help break the energy curve of mobile networks
and reduce customer energy use, energy costs
and carbon emissions.
Ericsson’s research also shows a substantial
potential for information and communication
technology (ICT) solutions to support other
industries to decarbonize. The development of
technologies such as 5G and platforms for data
and API management will only increase this
decarbonization potential.
Ericsson’s mobile networks and other solu-
tions also support digital inclusion around the
world. We deliver digital skills programs that,
so far, have benefited 485,000 students, aid-
ing their employability in the digital economy.
Ericsson is also supporting access to education
by working in public-private partnership with
UN agencies, governments and the mobile
industry ecosystem to connect every school to
the internet by 2030.
Within our supply chain, Ericsson strives to
have dual supply sources to strengthen supply
chain resilience wherever possible. We also
invest in strategic buffers to further reduce the
risk of disruptions. In addition, Ericsson has
a process to monitor disruptive events in real
time, which also covers our suppliers.
To be an industry leader, market and technol-
ogy leadership alone are not enough. Ericsson
also needs to be an ethical, social and environ-
mental leader. Our focus is on managing our
most material impacts on people, communities
and the planet, as well as taking a holistic
approach to risk management, encompassing
environmental social and governance risks in
our supply chain, own operations and down-
stream value chain.
We are continuing to transform our culture
and operationalize enhanced governance to
enable us to operate responsibly, safely and
with integrity. Embedding ethics, compliance
and sustainability programs and practices
across Ericsson supports resilience in the
operations and supply chain, paving the way
for long-term value creation.
Integrity, ethics and compliance
Corporate responsibility and business integrity
are embedded in Ericsson’s business and
culture, no matter where in the world we oper-
ate. Throughout 2023, focus has remained
on strengthening Ericsson’s Ethics and
Compliance (E&C) program through significant
testing of the E&C program’s effectiveness,
simplification of policies, procedures and tools,
an improved understanding of managing risks
in business interactions, and digitalization.
With a zero-tolerance policy regarding
corruption and financial irregularity, the Code
of Business Ethics (CoBE) is consistent with all
internationally recognized human rights princi-
ples as well as applicable laws and regulations
where Ericsson operates and is available in
over 40 languages. The refreshed and clarified
CoBE sets out our expectations, principles and
requirements for employees as they conduct
business. It provides the framework for ethical
decision-making, and guides employees in
making decisions and managing risk as they
engage with colleagues, customers, partners,
owners, and other stakeholders. Full adherence
to the letter and spirit of the CoBE framework
is expected from all employees to ensure that
Ericsson’s decisions and actions are ethical, and
that Ericsson is acting as a positive global force.
The CoBE further promotes and supports
Ericsson’s Speak-Up Culture and prohibits
retaliation for speaking up in any form. In
instances where it was determined that indi-
viduals breached the CoBE, we implemented
corrective and disciplinary actions, including
terminations, written warnings, verbal warn-
ings, and other appropriate corrective actions.
Through an initiative referred to as the
Business Critical Transformation, discussed
in greater detail in the Ethics & Compliance
section of the Corporate Governance Report,
Ericsson embedded improved controls into
Financial report 2023
Targets
Business strategy
11
Long-term targets
By executing on our strategy leveraging on
our global scale and achieving our long-term
financial targets, we generate healthy returns
to our shareholders.
The financial targets are expressed in
terms of sales growth, EBITA margin1) and
Free cash flow before mergers & acquisitions
(M&A). Important drivers of value creation and
competitiveness are efficiency improvements,
investments in R&D and sustainable growth.
Sales target to outgrow the market
Our sales target is to grow faster than the
market. The RAN market is expected to be flat
in the coming years, and for Networks, RAN
market share gains and industrializing Open
RAN at scale are key. In Cloud Software and
Services, 5G cloud operation technology shifts,
are key. In Enterprise, we grow our business
by executing on the Global Communications
Platform business plan and accelerating
growth in Enterprise Wireless Solutions and
establishing the network API market.
balance sheet strength and to secure financial
resilience. Financial discipline and strong focus
on profitability are key factors in all decisions.
We are committed to deploying capital wisely,
supporting the business strategy and value
creation.
EBITA margin1) target of 15–18%
Our goal is to make Ericsson a more profitable
company based on a leading position in mobile
infrastructure and a high-growth Enterprise
business. We aim to reach the EBITA margin
target as soon as possible, subject to market
mix recovery.
Free cash flow (before M&A) of 9–12% of sales
The target for Free cash flow before M&A is
9–12% of sales. Our ambition is to safeguard
Sustainability and Corporate Responsibility
targets
We remain fully committed to our sustain-
ability targets: achieving Net Zero carbon
emissions across the value chain by 2040, to
have zero fatalities and lost workday incidents
by 2025, as well as to achieve 30% female
representation among employees and manag-
ers by 2030.
Long-term targets
Financial and sustainability targets
EBITA-margin1)
15–18% of sales
Important drivers
• Increased IPR revenues
• Market mix recovery
• Operational leverage
Free cash flow
(before M&A)
9–12% of sales
• Focus on delivering high cash conversion
from EBITA
Sustainability and
Corporate Responsibility
• Net Zero carbon emissions across
value chain by 2040 2)
• Zero fatalities and lost workday
incidents by 2025
• 30% female representation among
employees and managers by 2030
Free cash flow generation
Bridge from EBITA to Free cash flow (illustrative)
EBITA excl. restructuring charges
−
+
+
Financial net, tax and other
Add back depreciation and amortization
Add back depreciation of leased assets
+/− Changes in working capital 3)
−
−
−
Capex
Leasing payments
Restructuring 4)
Free cash flow (before M&A), % of net sales
All numbers are in relation to net sales.
1) Excluding restructuring charges.
2) Validated by the Science Based Targets initiative (SBTi).
3) Defined as changes in operating net assets.
4) Restructuring charges as reported in the income statement for each year.
2022
11%
−3%
2%
1%
0%
−2%
−1%
0%
8%
2023
Long-term target
8%
−2%
2%
1%
−5%
−2%
−1%
−2%
0%
15–18%
−4– -5%
2–3%
1%
−1%
−2%
−1%
−1%
9–12%
12
Business strategy
Financial report 2023
Segments and market areas
Ericsson uses the following operating segments and market areas for financial reporting.
Segments
Mobile
Networks
– Networks
Offering
Business model
Networks offers multi-technology-capable Radio Access
Network (RAN) solutions for all network spectrum bands,
including purpose-built and Open RAN-prepared high-
performance hardware and software. The offerings also
include a Cloud RAN portfolio, a transport portfolio, pas-
sive and active antenna solutions and a complete service
portfolio, covering network deployment and support.
Networks is primarily based on a business model where
Ericsson develops, sells, licenses and delivers hardware,
software and services. Networks business also includes
recurring revenue streams such as customer support and
software revenues.
Mobile
Networks
– Cloud
Software
and Services
Offering
Business model
Cloud Software and Services provides solutions for core
networks, business and operational support systems,
network design and optimization, and managed network
services. Focus is to enable communications service
providers (CSPs) to succeed in their transition to cloud
operations, intelligent and automated networks.
Cloud Software and Services develops, sells, and delivers
solutions, and operate customer networks. The software
solutions typically include services for deployment
projects as well as recurring revenues from software,
support and lifecycle management. The Managed
Network Services contracts are typically multi-year
outsourcing agreements.
Enterprise
Offering
Business model
The segment comprises three business areas offering
solutions primarily to enterprises:
• Enterprise Wireless Solutions, including private
wireless networks and wireless WAN (Cradlepoint)
pre-packaged solutions.
• Global Communications Platform (Vonage), including
cloud-based Unified Communications as a Service
(UCaaS), Contact Center as a Service (CCaaS) and
Communications Platform as a Service (CPaaS).
• Technologies and New Businesses, including mobile
financial services, security solutions and advertising
services.
The Enterprise Wireless Solutions portfolio (including
Cradlepoint) is sold through a term-based subscription
contract, typically a three-year contract with subsequent
yearly renewal periods. These subscriptions have up-front
payments at the beginning of the contract and at each
renewal period.
The business model for API services in the Global
Communications Platform is transaction based. In this
model, Application Service Providers (ASPs) pay a trans-
action fee to Ericsson each time an API is used, while the
CSPs get paid from Ericsson for providing network capa-
bility/capacity. CSPs also benefit from increased revenues
from additional traffic going over their network. As the
market for Network APIs is still being developed, multiple
commercial models may emerge.
Other contracts in segment Enterprise such as UCaaS,
CCaaS, Private Network etc. are typically as a Service
(aaS) or license based, with recurring revenue from soft-
ware licenses, services, subscriptions and support.
Other
Offering
Business model
Segment Other comprises media businesses as well as
other non-allocated business, including Redbee Media,
which prepares and distributes live and on-demand video
services for broadcasters, sports leagues and CSPs. The
segment also includes other non-allocated business.
Outsourced broadcast service contracts are generally
multi-year agreements while other media contracts are
typically aaS or license based with recurring revenue from
services, subscriptions and support.
Financial report 2023
Business strategy
13
Market areas
North America
Europe and Latin America
Middle East and Africa
North East Asia
South East Asia, Oceania and India
Geographical market areas
• North America
• Europe and Latin America
• Middle East and Africa
• North East Asia
• South East Asia, Oceania and India
Sales in segments Networks and Cloud Software and Services
are divided into five geographical market areas. Market areas are
responsible for selling and delivering products and solutions that are
developed in these business segments, mainly to CSP customers.
In line with our strategy, the market areas have the responsibility to
ensure that we stay close to our customers while maintaining Group
guidelines and governance structures.
Market area Other
The majority of sales in segment Enterprise is reported in market
area Other. To reach the enterprise market with businesses of all
sizes, Ericsson has a multi-channel approach, which builds on the
enterprise channel from Cradlepoint. This is a global program with
access to tens of thousands of reseller partners in Enterprise Wireless
Solutions.
In order to provide communication APIs and build a Global Net-
work Platform, the go-to-market model to reach enterprises, ASPs as
well as developers is crucial. The Global Communications Platform
(Vonage) has a go-to-market channel with more than 120,000 busi-
nesses and a large developer community.
IPR licensing revenues from Ericsson’s patents are also reported
in Market Area Other. Patents are licensed globally on fair, reason-
able, and nondiscriminatory terms (FRAND) to companies that use
our technology. The key cellular market segments for our patents are
smartphones, Internet of Things (IoT) devices, consumer electronics
and automotive. Beyond cellular, other licensed technologies include
media technologies and other connectivity standards. Ericsson
licenses its patents bilaterally as well as by participating in patent
pools covering certain market segments.
14
Letter from the Chair of the Board
Financial report 2023
Letter from the Chair of the Board
Dear shareholders,
The evolving macroeconomic environment
and continuing geopolitical disruption is
increasing the challenge for global business.
We saw tensions rising throughout the Middle
East and global transports are being rerouted
as attacks by militants are making passage
through the Red Sea too dangerous. Russia’s
war against Ukraine is showing no sign of
ending. Against this backdrop, and with
the evolving postures of the world’s largest
economies, global business needs to continue
adapting to the realities of increasing conflict
and geopolitical uncertainties. Ericsson has
skilfully minimized the impact of these forces
and shown great adaptability to this global
volatility. We will continue to diligently execute
on our strategic priorities while remaining
focused on, and being prepared for, further
geopolitical developments.
For the Ericsson Board, 2023 was an inten-
sive year during which we took many impor-
tant actions. To increase efficiency in the Board
work and in response to shareholder feedback,
we refreshed the board committees, rotated
committee members, and reduced the Deputy
Board Chair from two to one. I took on the role
as Chair in the Remuneration Committee and
as Chair in the Finance Committee. To enhance
the oversight of the Enterprise business, we
expanded and broadened the scope of the
former Technology Committee, renaming
it the Enterprise Business and Technology
Committee. Together with the Chair of the
Audit & Compliance Committee we have
increased the dialogue with our major Swedish
and international shareholders.
Strategy
It is the Board’s belief that the key to Ericsson’s
success is technology leadership and continu-
ous innovation. Throughout Ericsson’s history,
the expertise and skill of its engineers have
formed the cornerstone of the strategy and the
foundation for success – driving technology
leadership and continuous innovation and
shaping the world of communications. Today,
Ericsson’s technology leadership is no less
important – and perhaps even more important
– to its future success as it was when Ericsson
was founded. Ericsson’s continued success
depends on maintaining our technology lead-
ership, and remaining true to its purpose, vision
and values.
Technology leadership alone is not enough
to navigate an uncertain and challenging
global environment. Ericsson needs to combine
technology and innovation with operational
excellence, the best talent and a strong culture.
As we face the many complexities of a global
technology company – geopolitical change,
conflicts, competition, and macroeconomic
conditions – Ericsson will define its long-term
success through world-leading technology
and innovation paired with the right talent,
an ethical culture and operational excellence
underpinned by world-class governance.
Ericsson continues to make substantial
contributions to cutting-edge standards and
technologies and the Company’s leadership
position in 5G is strengthened by its patent
portfolio which includes more than 60,000
granted patents. Ericsson is also one of the
leading contributors to open, networks stand-
ards. This technology leadership is the ultimate
competitive advantage as it enables customers
to protect their business and drive innovation
in the networks.
The core of Ericsson continues to be its
highly successful mobile infrastructure busi-
ness. While focus will continue on our strength
in this area, offering high performance, dif-
ferentiated networks at the lowest total cost of
ownership, critical steps are also being taken to
lead the shift to open, cloud-native networks.
Open RAN plays an important role in achieving
this vision, and Ericsson is leading the industri-
alization of Open RAN. In November, Ericsson
took an important step in this strategy by exe-
cuting a five-year industry-defining agreement
with AT&T. This agreement will lead the way in
creating an open and programmable network
and is anticipated to generate approximately
USD 14 billion in revenue.
Building on its core business, Ericsson is
also expanding into the enterprise space.
The enterprise market presents considerable
opportunity for Ericsson and its intense focus
on this area is an important and long-term
strategic step with the potential to reposition
the industry. Over the last 30 years, the RAN
market has been largely flat, with built-in
cyclicality. To find new growth, CSPs need new
ways to monetize network investments and
APIs are an example of a new area to make
this possible while delivering innovative tech-
nologies through 5G networks. The acquisition
of Vonage, with its platform technology and
substantial developer community, plays a
key role in the building of this global network
platform
Capital Structure
The Board oversees resource allocation
and monitors Ericsson’s capital structure
with the aim of safeguarding balance sheet
strength. The recent green bond, which is a
Euro-denominated, EUR 500 million, 4.5-
year bond under its Euro Medium Term Note
(EMTN) program, extends the Company’s
well- diversified debt maturity profile and
reflects the Company’s ambition to integrate
sustainability into its funding strategy. The
proceeds from this bond will be used to support
R&D investments in energy efficiency and will
strengthen Ericsson’s competitiveness further.
In late 2023, Ericsson recorded a non-cash
impairment charge of SEK 32 billion attributed
to Vonage, representing 50% of the total
amount of goodwill and other intangible
assets. The impairment was a consequence of
macroeconomic headwinds, including rising
interest rates and changing demand trends.
These trends have also significantly impacted
the market capitalization of Vonage’s publicly
traded peers.
For the full year of 2023, Ericsson reported
net sales of SEK 263 billion and an EBITA
margin excluding restructuring charges of 8.1%.
Financial report 2023
Letter from the Chair of the Board
15
After a challenging start of the year, free cash
flow recovered during the fourth quarter partly
driven by seasonality but also strong cash
collection and released working capital from
conclusion of large roll-out projects. The Board
continues to closely monitor cash flow genera-
tion with the Company target to generate free
cash flow before M&A over net sales of 9–12%,
as a critical benchmark.
The Board aims for a dividend that is stable
to progressive and based on earnings, the
financial position and business outlook. For
the fiscal year of 2023, the Board of Directors
proposes to the Annual General Meeting an
ordinary dividend of SEK 2.70 (2.70) per share.
Sustainability and corporate responsibility
The Board is actively engaged in Ericsson’s
ongoing transformation. Strong corporate
governance, with the Board’s strategic and
independent oversight, enables Ericsson to
execute effectively and responsibly on its
strategy while promoting transparency and
maintaining high ethical standards. Ericsson’s
culture continues to be enhanced while imple-
menting improved governance and embedding
integrity throughout the organization.
In March 2023, the Company reached a
resolution (Plea Agreement) with the U.S.
Department of Justice (DOJ) regarding
non-criminal breaches of its 2019 Deferred
Prosecution Agreement (DPA). During the
year, Nasdaq Stockholm concluded its review
of Ericsson’s public disclosure obligations
concerning its 2019 internal Iraq investigation
report and dismissed the matter, stating that
Nasdaq could not conclude that a reasonable
investor would have used the content of the
report as part of an investment decision.
After having reviewed Nasdaq Stockholm’s
investigation and conclusion, in June 2023,
the Swedish Financial Supervisory Authority
also decided to formally close its review of
Ericsson’s prior disclosures relating to the
2019 internal Iraq investigation report. In
addition, in May of this year, shareholder
litigation brought in the U.S. District Court for
the Eastern District of New York was dismissed
with prejudice, concluding that Ericsson did not
violate any disclosure obligation to investors.
This shareholder suit is being appealed and
will continue to be vigorously defended.
In 2023, Ericsson continued to strengthen
and enhance its ethics and compliance
program and further embed integrity in its
ways of working. Preparations are underway
to conclude the term of its DOJ resolution
and the related monitorship, in June of this
year. The Board has been actively involved
in overseeing this process. The management
team has established an effective compliance
program and enhanced internal controls,
which have been integrated in the business
operations and are subject to rigorous self-
monitoring and testing. In parallel, Ericsson
has achieved major enhancements in its
approach to enterprise risk management and
internal accounting controls. A compliance
culture is embedded with a keen focus on
ethics and integrity that is built to last. We take
pride in Ericsson’s long history and believe
that it should lead as a positive force in every
society in which it operates.
In addition to regularly meeting in full,
the Board further exercises its oversight
responsibilities through its different commit-
tees. The Audit and Compliance Committee
oversees the Ethics and Compliance (E&C)
program and whistleblower procedures, and
reviews the Group’s handling of information
and cybersecurity, data privacy and its ESG
reporting practices. The Finance Committee
oversees the promotion of the S&CR strategy
into external funding through the application
of the Green Financing Framework. As part
of its role to prepare and propose rewards
and compensation policies that attract and
motivate the Company’s executives and align
with the Company’s long-term interests,
the Remuneration Committee considers
the inclusion of E&C criteria in variable
compensation plans and monitors the perfor-
mance of such criteria. Part of the Enterprise
Business and Technology Committee’s role
of monitoring the Company’s technology
ecosystem, relationships and partnerships
involves reviewing matters related to energy
and sustainability.
The Board is of the unanimous view that
Ericsson’s actions in 2023 have strengthened
the Company and delivered meaningful value
for Ericsson’s customers and all its stakehold-
ers. We are confident that the strong ethical
culture, continued commitment to robust gov-
ernance and risk management, and increased
focus on operational excellence will enhance
Ericsson’s competitive advantage and
strengthen both its performance and global
position, creating connections that make the
unimaginable possible.
People and talent attraction
People define success and Ericsson focuses on
attracting and retaining the best talent glob-
ally. Ericsson sets and maintains high expecta-
tions for all employees, continuously reviewing
and developing performance management
efforts. The competition for talent remains
intense. Implementing the Company’s strategy
requires the Company to attract, retain, and
motivate the right talent and offer competi-
tive remuneration. The Board’s remuneration
philosophy and principles focus on long-term
shareholder value creation in line with strategic
goals. At the AGM for 2022, new guidelines
for remuneration to group management
were resolved, clarifying the mandate, for us
as a Board, to define meaningful short-term
variable compensation STV targets linked to
the business plan. Our goal is to encourage
behavior consistent with Ericsson’s culture and
core values and allow the Company to have a
competitive total compensation mix of fixed
and variable pay and benefits.
Concluding remarks
This year has been a very busy year for
Ericsson, and for me, as I now close my first
year as Chair of the Board. While it has been a
challenging year on many fronts, I am pleased
by the way Ericsson has managed the head-
winds and a difficult market situation.
Looking ahead, we still see an uncertain
environment. The mobile infrastructure market
continues to be challenged and the macro
environment continues to be volatile. However,
the Board has full confidence in Ericsson’s
ability to execute on its strategy and drive
technology leadership.
On behalf of the Board, I want to conclude
by offering my sincere thanks to Börje Ekholm,
the management team and all employees for
all their efforts and contributions throughout
2023.
Jan Carlson
Chair of the Board
16
Board of Directors’ report
Financial report 2023
Board of Directors’ report
Contents
16 Business in 2023
17 Financial highlights
20 Business results – Segments
22 Business results – Market areas
23 Corporate governance
24 Material contracts
24 Risk management
24 Sourcing and supply
25 Sustainability and Corporate Responsibility
25 Legal proceedings
26 Group structure
26 Parent Company
26 Share information
26 Proposed disposition of earnings
27 Guidelines for
Remuneration to Group Management
30 Events after the reporting period
31 Board assurance
2023 highlights
– Net sales decreased by −3% to SEK 263.4 (271.5) billion. Sales adjusted for comparable units
and currency declined by −10%.
– Gross income decreased to SEK 101.6 (113.3) billion due to sales and margin decline in
Networks.
– EBIT (loss) amounted to SEK −20.3 (27.0) billion, impacted by a non-cash goodwill impair-
ment charge of SEK −31.9 billion attributed to Vonage. EBIT margin was −7.7% (10.0%).
EBIT margin excluding restructuring charges was −5.2% (10.1%).
– Net income (loss) was SEK −26.1 (19.1) billion. Earnings per share (EPS) diluted was SEK −7.94
(5.62).
– EBITA amounted to SEK 14.9 (29.1) billion with an EBITA margin of 5.7% (10.7%). EBITA
margin excluding restructuring charges was 8.1% (10.9%).
– Cash flow from operating activities was SEK 7.2 (30.9) billion. Free cash flow before M&A
amounted to SEK −1.1 (22.2) billion. Cash and cash equivalents was SEK 35.2 (38.3) billion on
December 31, 2023. Net cash was SEK 7.8 (23.3) billion on December 31, 2023.
– The Board of Directors proposes a dividend for 2023 of SEK 2.70 (2.70) per share to the AGM.
Net sales
SEK billion
300
250
200
150
100
50
0
271.5
263.4
232.3
2021
2022
2023
Net sales
EBIT (loss) and EBIT margin
SEK billion
35
30
25
20
15
10
5
0
-5
−10
−15
−20
−25
13.7%
31.8
27.0
10.0%
−7.7%
−20.3
2023
2021
2022
EBIT (loss)
EBIT margin
%
14
12
10
8
6
4
2
0
−2
−4
−6
−8
−10
Business in 2023
Net sales decreased by −3% to SEK 263.4
(271.5) billion. Sales adjusted for comparable
units and currency declined by −10%.
Networks sales declined by −11% to
SEK 171.4 billion, primarily due to reduced
capex investments in North America after
record-high investments in 2021 and 2022.
Sales adjusted for comparable units and
currency decreased by −15%.
Cloud Software and Services sales increased
by 5% to SEK 63.6 billion, driven by 5G
momentum. This increase was, however, partly
offset by sales decline in Managed Network
Services business as a result of descoping and
contract exits. Sales adjusted for comparable
units and currency increased by 1%.
Enterprise sales increased by 76% to
SEK 25.7 (14.6) billion, driven by the acquired
Vonage business. Sales adjusted for compa-
rable units and currency increased by 11%,
driven mainly by Enterprise Wireless Solutions.
Gross income decreased to SEK 101.6
(113.3) billion, due to a decline in Networks,
while gross income increased in Cloud
Software and Services, and in Enterprise. Gross
income was impacted by SEK −2.8 (−0.2)
billion of restructuring charges. Gross margin
decreased to 38.6% (41.7%), driven by the
business mix shift in Networks in 2023.
Operating expenses increased to SEK −90.2
(−83.0) billion, including restructuring charges
of SEK −3.7 (−0.2) billion and a currency effect
of SEK −1.6 billion. Research and development
(R&D) expenses increased by SEK −3.4 billion
to SEK−50.7 billion, including restructuring
charges of SEK −2.4 (−0.1) billion and a cur-
rency effect of SEK −0.9 billion. R&D expenses
increased in segment Enterprise. Selling and
administrative (SG&A) expenses increased by
SEK −3.6 billion to SEK −39.3 billion, including
restructuring charges of SEK−1.3 (−0.2) billion
and a currency effect of SEK −0.7 billion. The
increase is related to investments in Enterprise
Wireless Solutions as well as the impact of the
full-year consolidation of Vonage.
Other operating income and expenses
decreased by SEK −28.6 billion to SEK −31.9
billion driven by a non-cash goodwill impair-
ment charge of SEK −31.9 billion, attributed
to Vonage.
EBIT (loss) was SEK −20.3 (27.0) billion,
primarily due to the decline in Other operating
income and expenses, as well as the lower
operating income.
The number of employees decreased to
99,952 (105,529). The decrease was mainly
related to cost-reduction activities.
Cash flow from operating activities was
SEK 7.2 (30.9) billion. Free cash flow before
M&A amounted to SEK −1.1 (22.2) billion. Free
cash flow was impacted by lower business
volumes and lower EBIT coupled with a nega-
tive cash flow impact from working capital
due to market mix changes towards contracts
with longer order-to-cash cycles. Net cash on
December 31, 2023 was SEK 7.8 (23.3) billion.
Financial report 2023
Board of Directors’ report
17
IPR licensing revenues
SEK billion
12
10
8
6
4
2
0
11.1
10.4
8.1
2021
2022
2023
IPR revenues
Software, hardware and
services: share of Group sales
%
100
80
60
40
20
0
20%
20%
22%
46%
44%
38%
34%
36%
40%
2021
2022
2023
Software
Hardware
Services
Gross margin and restructuring
charges
SEK billion
10
43.5%
43.4%
41.8%
41.7%
0.3
2021
0.2
2022
8
6
4
2
0
%
50
40
30
20
10
0
39.6%
38.6%
2.8
2023
Restructuring charges in cost of sales
Gross margin
Gross margin excluding restructuring charges
Financial highlights
Net sales
Sales decreased by −3% to SEK 263.4 (271.5)
billion. Networks sales decreased by SEK −22.0
billion to SEK 171.4 billion. Cloud Software
and Services sales increased by SEK 3.1 billion
to SEK 63.6 billion. Enterprise sales increased
by SEK 11.1 billion to SEK 25.7 billion. Sales in
segment Other decreased by SEK −0.4 billion
to SEK 2.5 billion. Sales adjusted for compara-
ble units and currency decreased by −10%.
IPR licensing revenues increased to
SEK 11.1 (10.4) billion, primarily as a result of
5G license renewals, partly offset by expiring
license agreements.
Networks sales declined by −11% and
accounted for 65% (71%) of Group sales. Sales
in market area South East Asia, Oceania and
India grew by 82%, primarily as a result of 5G
contracts in India, while segment sales in mar-
ket area Middle East and Africa grew by 10%.
Sales declined in the other three market areas,
most notably in North America where sales
declined by −46% YoY, as operators reduced
capex investments after record-high spending
in previous years. Networks sales adjusted for
comparable units and currency decreased by
−15% YoY.
Segment Cloud Software and Services sales
grew by 5% and accounted for 24% (22%)
of Group sales. Sales grew in four of the five
market areas. Cloud Software and Services
sales adjusted for comparable units and cur-
rency increased by 1% YoY.
Segment Enterprise sales grew by 76%
and accounted for 10% (5%) of Group sales.
Sales were primarily driven by the full-year
consolidation of the acquired Vonage business.
Enterprise sales adjusted for comparable units
and currency grew by 11% YoY.
Segment Other sales decreased by −14%,
mainly due to the divestment of IoT in 2022.
The share of hardware in the Group sales
mix was 38% (44%), software 22% (20%) and
services 40% (36%).
Gross income
Gross income decreased to SEK 101.6 (113.3)
billion with a gross margin of 38.6% (41.7%).
Gross income and gross margin were impacted
by lower sales and gross margin in Networks,
as a result of reduction in capex spend by
several operators and a business mix shift
from front-runner markets to large deploy-
ments in other geographies. Gross income
and gross margin improved in Cloud Software
and Services, while gross income improved in
Enterprise. Gross income excluding restructur-
ing charges declined to SEK 104.4 (113.5)
billion, resulting in a gross margin of 39.6%
(41.8%).
Research and Development (R&D) expenses
R&D expenses increased to SEK −50.7 (−47.3)
billion, including restructuring charges of
SEK −2.4 (−0.1) billion and a negative cur-
rency effect of SEK −0.9 billion. R&D expenses
increased in segment Enterprise, as a result of
continued investments in Enterprise Wireless
Solutions, as well as the impact of the full-year
consolidation of Vonage.
Selling and Administrative (SG&A) expenses
SG&A expenses increased to SEK −39.3
(−35.7) billion, including restructuring charges
of SEK −1.3 (−0.2) billion and a negative cur-
rency effect of SEK −0.7 billion. SG&A expenses
increased in segment Enterprise through
continued investments in the go-to-market
activities in Enterprise Wireless Solutions as
well as the impact of the full-year consolida-
tion of Vonage.
Other operating income and expenses
Other operating income and expenses was
SEK −31.9 (−3.3) billion. In 2023, a non-cash
goodwill impairment charge of SEK −31.9
billion attributed to Vonage, was recognized.
The impairment did not impact EBITA. 2022
was impacted by a provision of SEK −2.3 billion
related to the DPA breach resolution with the
U.S. Department of Justice, including expenses
for the extended monitorship, and by SEK −1.0
billion due to charges related to the divestment
of IoT and other portfolio adjustments.
Restructuring charges
Restructuring charges increased to SEK −6.5
(−0.4) billion as a result of cost-reduction
activities.
Earnings before financial items and income
tax (EBIT) (loss)
EBIT decreased to SEK –20.3 (27.0) billion,
mainly due to the goodwill impairment attrib-
uted to Vonage, as well as the lower operating
income. EBIT margin was –7.7% (10.0%).
EBIT was positively impacted by lower vari-
able incentive accruals YoY, resulting in lower
cost of sales and operating expenses. EBIT in
2022 was impacted by charges of SEK −5.5
billion, primarily associated with provisions
related to the DPA breach resolution with the
U.S. Department of Justice and market exits
as well as charges related to the divestment of
IoT and exit of subscale agreements and prod-
uct offerings in Cloud Software and Services.
EBIT excluding impairment of goodwill and
restructuring charges decreased to SEK 18.1
(27.4) billion YoY with an EBIT margin of 6.9%
(10.1%).
18
Board of Directors’ report
Financial report 2023
Net income (loss) and EPS diluted
SEK
SEK billion
10
8
6
4
2
0
−2
−4
−6
−8
−10
−12
%
16
14
12
10
8
6
4
2
0
25
20
15
10
5
0
−5
−10
−15
−20
−25
−30
23.0
19.1
6.81
5.62
−7.94
−26.1
2023
2021
2022
Net income (loss)
EPS diluted
EBITA and EBITA margin
SEK billion
40
35
30
25
20
15
10
5
0
14.3%
33.3
10.7%
29.1
5.7%
14.9
2021
2022
2023
EBITA
EBITA margin
Free cash flow
SEK billion
40
30
20
10
0
−10
−20
−30
−40
−50
−60
32.1
22.2
0.1
−1.1
−2.1
2021
−51.7
2022
2023
Free cash flow before M&A
M&A
Working capital days
Days
100
90
80
70
60
50
94
88
71
65
93
85
69
61
92
80
75
63
2021
2022
2023
Working capital days
Days sales outstanding
Inventory days
Payable days
Financial income and expenses, net
Financial income and expenses, net declined
to SEK −3.0 (−2.4) billion, mainly due to the
impact from increased market interest rates.
The currency hedge effect impacted financial
income and expenses, net by SEK −0.2 (−0.9)
billion. The USD weakened against the SEK
between December 31, 2022 (SEK/USD rate
10.38) and December 31, 2023 (SEK/USD rate
10.01).
Taxes
Taxes were SEK −2.8 (−5.5) billion. The effec-
tive tax rate for the full year, excluding the
impairment of goodwill related to Vonage,
was 32%. The tax rate in 2023 was negatively
impacted by lower Group income compared
with prior years, reducing the ability to utilize
previously impaired withholding tax assets.
The tax rate in 2022 was 22%, positively
impacted by utilization of previously impaired
withholding tax assets in Sweden.
Net income (loss)
Net income declined to SEK −26.1 (19.1)
billion, impacted by impairment of goodwill
of SEK −31.9 billion, lower gross income of
SEK −9.1 billion, restructuring charges of
SEK −6.5 billion and by higher operating
expenses related to segment Enterprise. The
negative impact was partly offset by lower tax
of SEK 2.7 billion YoY. EPS diluted decreased to
SEK −7.94 (5.62).
Earnings before interest, income tax and
amortizations (EBITA)
As a result of lower operating income, EBITA
declined to SEK 14.9 (29.1) billion with an
EBITA margin of 5.7% (10.7%). EBITA was
positively impacted by lower variable incentive
accruals YoY, resulting in lower cost of sales
and operating expenses. EBITA in 2022 was
impacted by charges of SEK −5.5 billion. EBITA
excluding restructuring charges declined to
SEK 21.4 (29.5) billion with an EBITA margin
of 8.1% (10.9%).
Employees
The number of employees on December 31,
2023, was 99,952 (105,529), a total decrease
of −5,577 employees in 2023. The decrease
was mainly related to cost-reduction activities.
Cash flow
Cash flow from operating activities
Cash flow from operating activities decreased
to SEK 7.2 (30.9) billion as a result of lower
business volumes and lower EBIT, coupled
with a negative cash flow impact from working
capital due to market mix changes towards
contracts with longer order-to-cash-cycles,
partly offset by a reduction in inventories.
The change in business mix resulted in an
increase in working capital days to 80 (69)
days with increased accounts receivable days
of sales outstanding to 63 (61) days, slightly
decreased inventory turnover days to 92 (93)
days and decreased payable days to 75 (85)
days. Cash flow in the year was impacted by
cash outlays of SEK −2.9 billion related to
restructuring.
Free cash flow
Free cash flow before M&A declined to SEK
−1.1 (22.2) billion, mainly due to lower cash
flow from operating activities. Free cash flow
before M&A as a percentage of sales was
−0.4% (8.2%). Capex net and other invest-
ing activities was SEK −5.4 (−6.1) billion.
Repayment of lease liabilities was SEK −2.9
(−2.6) billion.
Cash flow from investing activities
Cash flow from investing activities was
SEK −8.7 (−34.4) billion, of which M&A activi-
ties were SEK −2.1 (−51.7) billion, including the
divestment of IoT and acquisition of Ericom. In
2022, Ericsson acquired Vonage with a pur-
chase price paid of SEK 51.3 billion. Free cash
flow after M&A was SEK −3.2 (−29.5) billion.
Cash flow from financing activities
Cash flow from financing activities was
SEK 1.0 (−15.9) billion, including repayment
of lease liabilities. The net impact on cash flow
from issuance and repayment of borrowings
was SEK 11.8 billion. During the year, divi-
dends of SEK −9.1 (−8.4) billion were paid to
shareholders.
Financial position
Gross cash was stable YoY at SEK 54.7 (56.2)
billion with increased borrowings compensat-
ing for negative free cash flow after M&A. Net
cash was SEK 7.8 (23.3) billion. Liabilities
for post-employment benefits decreased to
SEK 26.2 (27.4) billion. The Swedish defined
benefit obligation (DBO) was calculated using
a discount rate based on the yields of Swedish
Government bonds. If the discount rate had
been based on Swedish covered mortgage
bonds, the liabilities for post-employment
benefits would have been approximately
SEK 14.1 billion, which is SEK 12.1 billion lower
than the reported liabilities.
The average maturity of long-term borrow-
ings was 3.7 years as of December 31, 2023,
a decrease from 3.8 years 12 months earlier.
In 2023, Ericsson established a new revolving
credit facility of USD 1.0 billion, of which USD
0.4 billion was utilized as of year-end. During
the year, Ericsson also increased the borrow-
ings by SEK 2.0 billion under the commercial
paper program. Furthermore, Ericsson signed
Financial report 2023
Board of Directors’ report
19
Off-balance sheet arrangements
There are currently no material off-balance
sheet arrangements that have, or would
be reasonably likely to have, a current or
anticipated material effect on the Company’s
financial condition, revenues, expenses, result
of operations, liquidity, capital expenditures or
capital resources.
Capital expenditures
For 2023, capital expenditure was SEK 3.3
(4.5) billion, representing 1.3% of sales.
Expenditures are largely related to test sites
and equipment for R&D, network opera-
tions centers and manufacturing and repair
operations.
Annual capital expenditures are normally
around 2% of sales. This corresponds to the
need for keeping and maintaining the current
capacity level. The Board of Directors reviews
the Company’s investment plans and propos-
als. As of December 31, 2023, no material
land, buildings, machinery or equipment
were pledged as collateral for outstanding
indebtedness.
Capital expenditures 2021–2023
SEK billion
Capital expenditures
Of which in Sweden
Share of annual sales
2023
3.3
1.2
1.3%
2022
4.5
1.7
1.6%
2021
3.7
1.5
1.6%
Capitalized development expenses
Capitalized development expenses increased
to SEK −2.2 (−1.7) billion, primarily due to
5G development projects and development
projects in Global Communications Platform
(Vonage).
Return on Capital Employed
SEK billion
250
200
150
100
50
0
−50
−100
−150
18.4%
184.3
202.9
14.0%
178.0
−10.7%
2021
2022
2023
%
20
16
12
8
4
0
−4
−8
−12
Capital employed end of period
Return on Capital Employed
Cash position
SEK billion
100
80
60
40
20
0
−20
−40
97.6
65.8
56.2
54.7
23.3
7.8
−27.4
−26.2
−36.1
2021
2022
2023
Gross cash
Net cash
Liability for post employment benefits
Long-term debt maturity,
Parent Company 1)
SEK billion
10
8
6
4
2
0
2.8
3.1
8.3
2.0
5.5
2.7
1.5
5.5
1.5
0.0
5.5
1.1
2024
2025
2026
2027
2028
2029
2030
Notes and bonds
Nordic Investment Bank
European Investment Bank
Swedish Export Credit Corporation
1) Nominal amounts using FX rates per year end 2023.
two 7-year loan agreements, one with the
European Investment Bank of USD 273 million
and one with the Nordic Investment Bank of
USD 107 million. In addition, Ericsson issued a
EUR 500 million green bond maturing in May
2028. The bond was issued under Ericsson’s
Green Financing Framework. The proceeds
from the bond and the two bilateral loans
will be used to finance parts of Ericsson’s
R&D investments in wireless technology
between 2023 and 2025 and are linked to the
Company’s long-term sustainability targets.
Ericsson has an unutilized revolving credit
facility of USD 2.0 billion, linked to long-term
sustainability targets.
Credit ratings and outlooks have been
unchanged during the year. Standard & Poor’s
(S&P) and Fitch both have a long-term BBB–
rating on Ericsson with developing outlook
from S&P and a stable outlook with Fitch.
Moody’s has a Ba1 rating with stable outlook.
The capital turnover remained stable at 1.4
(1.4) times with decreased net sales offset by
lower capital employed due to goodwill impair-
ment related to Vonage. Return on Capital
Employed (ROCE) decreased to −10.7%
(14.0%) as a result of negative EBIT.
Research and Development, patents and
licensing
In 2023, R&D expenses amounted to
SEK −50.7 (−47.3) billion. R&D expenses
were impacted by SEK −2.4 (−0.1) billion
of restructuring charges and by a currency
effect of SEK −0.9 billion. The number of R&D
employees was 28,219 (29,304) and the
number of granted patents amounted to more
than 60,000.
Seasonality
Group sales, income and cash flow from opera-
tions vary between quarters and are generally
lowest in the first quarter of the year and
highest in the fourth quarter. This is mainly a
result of the seasonal purchase patterns of the
Company’s customers.
Most recent three-year average seasonality
Share of annual
Group sales
Sequential change,
Networks sales
Sequential change,
Cloud Software
and Service sales
First
quarter
Second
quarter
Third
quarter
Fourth
quarter
22%
24%
25%
30%
−25%
8%
1%
19%
−34%
13%
3%
33%
20
Board of Directors’ report
Financial report 2023
Sales split per segment
Business results – Segments
Networks
65%
Cloud Software and Services 24%
10%
Enterprise
1%
Other
Networks
SEK billion
200
150
100
50
0
193.5
167.8
171.4
22.2%
19.9%
37.3
38.5
11.3%
19.4
2021
2022
2023
%
32
24
16
8
0
Net sales
EBIT
EBIT margin
Cloud Software and Services
SEK billion
70
60
50
40
30
20
10
0
−10
−20
60.5
63.6
56.2
−2.2
−1.7
−4.0%
−2.8%
−0.2
−0.3%
2021
2022
2023
Net sales
EBIT (loss)
EBIT margin
%
35
30
25
20
15
10
5
0
−5
−10
Cloud Software and Services
Cloud Software and Services represented
24% (22%) of Group net sales in 2023. Cloud
Software and Services provides solutions for
core networks, business and operational sup-
port systems, network design and optimiza-
tion, and managed network services. The focus
is to enable CSPs to succeed in their transition
to cloud operations, intelligent and automated
networks.
Net sales
Sales increased by 5% to SEK 63.6 (60.5)
billion in 2023. Sales growth in market areas
North East Asia, South East Asia, Oceania and
India as well as in North America was driven
by 5G momentum but was partly offset by
sales decline in the Managed Network Services
business as a result of descoping and contract
exits. Sales adjusted for comparable units and
currency increased by 1%.
Gross income
Gross income increased by SEK 2.0 billion
to SEK 22.1 billion, with a gross margin of
34.7% (33.2%). Gross margin was positively
impacted by improved delivery performance.
Gross income excluding restructuring charges
increased by SEK 2.7 billion to SEK 22.9 billion,
with a gross margin of 36.0% (33.3%).
EBIT (loss) and EBITA (loss)
EBIT was SEK −0.2 (−1.7) billion with an EBIT
margin of −0.3% (−2.8%), while EBITA was
SEK −0.2 (−1.6) billion with an EBITA margin
of −0.3% (−2.6%). EBIT and EBITA were
negatively impacted by restructuring charges
of SEK −1.9 (−0.1) billion. EBIT and EBITA
were positively impacted by sales growth,
gross margin improvement and reductions in
operating expenses. EBIT and EBITA in 2022
were impacted by SEK −0.8 billion of charges
for exit of subscale agreements and product
offerings. EBIT excluding restructuring charges
was SEK 1.7 (−1.6) billion with an EBIT margin
of 2.7% (−2.6%). EBITA excluding restructur-
ing charges was SEK 1.7 (−1.5) billion with
an EBITA margin of 2.7% (−2.4%). Strategy
execution continues, avoiding subscale busi-
ness, accelerating automation capabilities and
continuing the focus on commercial discipline.
Results will vary between quarters.
Networks
Networks represented 65% (71%) of Group
net sales in 2023. Networks offers multi-
technology-capable Radio Access Network
(RAN) solutions for all network spectrum
bands, including purpose-built and Open
RAN-prepared high-performance hardware
and software. The offerings also include a
Cloud RAN portfolio, a transport portfolio,
passive and active antenna solutions and a
complete service portfolio, covering network
deployment and support.
Net sales
Sales decreased by −11% in 2023 to
SEK 171.4 (193.5) billion, primarily due to a
sales decline in market area North America of
−46% as operators reduced capex investments
after record-high investments in 2021 and
2022. The decline was partly offset by sales
growth of 82% in South East Asia, Oceania and
India, driven by 5G contracts in India. Sales
adjusted for comparable units and currency
decreased by −15%.
Gross income
Gross income decreased by −21% to SEK 68.0
(86.4) billion while gross margin decreased
to 39.6% (44.6%). Gross margin was nega-
tively impacted by the business mix shift in
2023. This shift was caused by a slowdown
in investments in 5G front-runner markets,
predominately North America, combined with
large deployments with an initial dilutive effect
on margins in other geographies. Gross income
was further impacted by restructuring charges.
Gross income excluding restructuring charges
decreased by −19% to SEK 69.9 (86.5) billion
with a gross margin of 40.8% (44.7%).
EBIT and EBITA
EBIT decreased to SEK 19.4 (38.5) billion with
an EBIT margin of 11.3% (19.9%). EBITA
decreased to SEK 19.5 (38.7) billion with an
EBITA margin of 11.4% (20.0%) as a result of
lower gross income due to lower sales and the
business mix shift. The decline in gross income
was partly offset by cost-reduction activities as
well as lower variable incentive accruals YoY,
positively impacting cost of sales and operat-
ing expenses. EBIT and EBITA were impacted
by restructuring charges of SEK −4.4 (−0.1)
billion. EBIT excluding restructuring charges
decreased to SEK 23.8 (38.7) billion with an
EBIT margin of 13.9% (20.0%), while EBITA
excluding restructuring charges declined to
SEK 23.9 (38.8) billion with an EBITA margin
of 14.0% (20.1%).
Financial report 2023
Board of Directors’ report
21
Enterprise
SEK billion
30
20
10
0
−10
−20
−30
−40
25.7
14.6
5.5
−1.8
−4.5
−32.2%
−30.6%
−38.3
−148.9%
20211)
20221)
2023
%
120
80
40
0
−40
−80
−120
−160
Net sales
EBIT (loss)
EBIT margin
1) Financial information has been restated for
2021 and 2022, due to the divestment of the
IoT business that was moved from segment
Enterprise to segment Other in 2023.
Other
SEK billion
4
2
0
−2
−4
−6
−8
2.7
3.0
2.5
−1.5
−5.3
−1.2
−45.5%
−54.0%
−180.3%
20211)
20221)
2023
Net sales
EBIT (loss)
EBIT margin
%
100
50
0
−50
−100
−150
−200
1) Financial information has been restated for
2021 and 2022 due to the divestment of the
IoT business that was moved from segment
Enterprise to segment Other in 2023.
Other
Segment Other represented 1% (1%) of Group
net sales in 2023. Segment Other includes
the media business and other non-allocated
business.
Net sales
Sales decreased by −14% to SEK 2.5 (3.0)
billion. Sales declined mainly due to the
divestment of IoT. Sales in the media business
remained stable.
Gross income
Gross income decreased YoY by SEK −0.2
billion to SEK −0.5 (−0.3) billion. The decrease
is a result of impairment of fixed assets in
the media business of SEK −0.4 billion. Gross
income excluding restructuring charges
decreased to SEK −0.5 (−0.2) billion.
EBIT (loss) and EBITA (loss)
EBIT and EBITA were SEK −1.2 (−5.3) billion.
The loss improved YoY, due to a provision
taken in 2022 of SEK −2.3 billion related
to the DPA breach resolution with the U.S.
Department of Justice, including expenses for
the extended monitorship, and due to charges
of SEK −1.0 billion related to the divestment
of IoT and other portfolio adjustments.
Furthermore, there was an impact of SEK −0.9
billion for a provision in 2022, related to an exit
from operations in Russia and a market exit
cost of SEK −0.2 billion. The EBIT and EBITA
losses in 2023 are a result of the impairment
in the media business, the divestment of IoT
and revaluation of Ericsson Ventures portfolio.
EBIT and EBITA excluding restructuring
charges were SEK −1.2 (−5.2) billion.
Enterprise
Segment Enterprise represented 10% (5%)
of Group net sales in 2023. The segment
comprises three business areas offering solu-
tions primarily to enterprise customers: Global
Communications Platform (Vonage), including
cloud-based Unified Communications as a
Service (UCaaS), Contact Center as a Service
(CCaaS) and Communications Platform as a
Service (CPaaS); Enterprise Wireless Solutions,
including private wireless networks and wire-
less WAN (Cradlepoint) pre-packaged solu-
tions; and Technologies and New Businesses
including mobile financial services, security
solutions and advertising services.
Net sales
Sales increased by 76% to SEK 25.7 (14.6)
billion, driven by the acquired Vonage busi-
ness. Sales adjusted for comparable units and
currency increased by 11% YoY, driven mainly
by Enterprise Wireless Solutions.
Gross income
Gross income increased to SEK 12.0 (7.1)
billion, driven mainly by the Vonage acquisi-
tion as well as growth in Enterprise Wireless
Solutions and in Technologies and New
Businesses. Gross margin decreased to 46.7%
(48.6%), mainly due to the dilutive effect of
Vonage. Gross income excluding restructuring
charges was SEK 12.0 (7.1) billion, with a gross
margin of 46.7% (48.6%).
EBITA (loss)
EBITA was SEK −3.3 (−2.7) billion. The decline
is due to increased growth investments in
Enterprise Wireless Solutions, partly offset by
the Global Communications Platform contri-
bution. EBITA (loss) excluding restructuring
charges was SEK −3.1 (−2.7) billion.
EBIT (loss)
EBIT was SEK −38.3 (−4.5) billion. EBIT
excluding impairment of goodwill and restruc-
turing charges was SEK −6.3 (−4.4) billion.
22
Board of Directors’ report
Financial report 2023
Sales split per market area
Business results – Market areas
25%
Europe and Latin America
North America
22%
South East Asia, Oceania and India 20%
9%
North East Asia
9%
Middle East and Africa
15%
Other
Middle East and Africa
Sales increased by 5% to SEK 23.7 billion, pri-
marily driven by new 5G investments in some
Middle East countries and market share gains
in certain markets. Sales adjusted for compara-
ble units and currency increased by 1%.
Other
Market area Other primarily includes IPR
licensing revenues and a major part of
segment Enterprise. Sales grew by 41% to
SEK 38.2 billion, primarily as a result of the full-
year consolidation of Vonage, as well as higher
sales in Enterprise Wireless Solutions and
higher IPR licensing revenues. Sales adjusted
for comparable units and currency in market
area Other increased by 3%.
Europe and Latin America
Sales decreased by −3% to SEK 64.9 billion,
with declines in both Europe and Latin America
following high investment levels in 2022. The
sales decline in Europe was partly offset by
market share gains. Sales adjusted for compa-
rable units and currency decreased by −9%.
North America
Sales decreased by −38% to SEK 59.2 billion as
a result of reduced capex spend and inventory
levels following high investment levels in 2021
and 2022. Sales adjusted for comparable units
and currency decreased by −41%.
South East Asia, Oceania and India
Sales increased by 62% to SEK 53.3 billion,
driven by sales increases in India on the back
of substantial market share gains. The market
grew significantly in India in 2023. Sales
adjusted for comparable units and currency
increased by 61%.
North East Asia
Sales decreased by −10% to SEK 23.9 billion
as operators in several markets have finalized
the first build-out phase of 5G. Sales adjusted
for comparable units and currency decreased
by −9%.
Reported sales per market area – 2023 compared with 2022
SEK
271.5
billion
−38%
SEK
263.4
billion
+41%
+62%
−10%
−3%
+5%
2022
North
America
North
East Asia
Europe and
Latin America
Middle East
and Africa
Other1)
2023
South
East Asia,
Oceania
and India
–41%
–9%
–9%
+1%
+61%
+3%
Sales adjusted for
comparable units
and currency,
growth/decline
1) Market area Other primarily includes IPR licensing revenues and principally all sales from segment Enterprise.
Financial report 2023
Board of Directors’ report
23
Corporate governance
In accordance with the Swedish Annual Accounts
Act and the Swedish Corporate Governance Code
(the Code), a separate Corporate Governance
Report, including an internal control section, has
been prepared and appended to this Financial
Report.
Ericsson’s Corporate Governance
Ericsson is committed to maintaining the highest
standards of corporate governance and has estab-
lished a corporate governance framework that:
– Empowers the business, enabling strategic
execution and operational excellence;
– Promotes and facilitates effective oversight
across the organization by the Board of Direc-
tors (Board), the President and CEO, the Execu-
tive Team and at all levels of the organization;
– Ensures high-quality decision-making with
clear accountabilities at all levels; and
– Instills a robust approach to risk management
to effectively identify, manage and mitigate
risks and capture opportunities.
Ericsson prioritizes an integrity-led culture and
compliance with law in everything it does, driv-
ing integrity into and across the organization.
Ericsson’s governance framework guides its people
while building on their strengths – fostering a
culture of transparency, collaboration and open
dialogue, and ethical business decisions, strong risk
management, and cross-functional coordination.
Ericsson has implemented practices and
procedures that establish clear rules of govern-
ance, ranging from matters requiring approval of
the Company’s shareholders and members of its
Board, to conflicts of interest policies and director
and management duties and obligations. More
information can be found at https://www.ericsson.
com/en/about-us/corporate-governance.
Key Corporate Governance Actions in 2023
Ericsson’s intensive work on strengthening and
simplifying its corporate governance practices
continued throughout 2023, and was pursued in
concert with further improvements to its ethics and
compliance (E&C) program. In 2023, Ericsson:
– Fully embedded the Material Group Risk Pro-
tocol and Business Risk Committee (BRC) into
the Group’s governance and risk management
frameworks, as described further below.
– Introduced clarified Group governance and
operating principles, to be rolled out in early
2024.
– Refreshed and clarified the Company’s Code
of Business Ethics (CoBE), which is being
re-launched in early 2024.
– Updated, streamlined and clarified the Group’s
key policies and other guidance documents,
including those on contracting, compliance,
allegation assessment, investigations and
remediation, and human rights. This work will
continue into 2024.
– Continued to embed various aspects of its
compliance program into business operations,
through a close partnership with the compli-
ance function and stakeholders across the
entire organization (as described further below
in the Ethics & Compliance section).
– Continued to strengthen performance-
management at all levels of the organization
while also implementing strong remediation
measures where misconduct has occurred.
Throughout 2023, the BRC, comprising senior
executives and chaired by the CLO and CFO, has
provided an important forum for escalating and
analyzing material risks across the Group, provid-
ing appropriate oversight and driving mitigation
and accountability by senior executives. The BRC
has been particularly impactful in strengthening
Ericsson’s approach to managing high levels of risk
associated with certain jurisdictions. The heads of
each market area have been conducting holistic,
ongoing risk assessments of the countries in their
purview, and material risks that exist or arise are
regularly reviewed and monitored. The BRC applies
a “heightened scrutiny” approach in evaluating and
mitigating these types of risks, and the organiza-
tion has implemented various actions to address
these risks, ranging from enhanced contractual
protections, changes to the scope or nature of
operations, or a decision to responsibly exit the
relevant jurisdiction or customer relationship.
Ericsson believes that driving integrity into day-
to-day decision-making requires constant focus
to ensure that compliance processes and related
controls are fit for purpose and that they are con-
tinuously tested and refined. Through an initiative
referred to as the Business Critical Transformation,
discussed in greater detail in the Ethics & Compli-
ance section of the Corporate Governance report,
Ericsson embedded improved anti-corruption
controls into its operations and managerial deci-
sions, and further remediated the business process
issues that were, in the past, a contributing factor
in incidents of misconduct. Ericsson combined this
work with rigorous testing of the E&C program’s
effectiveness, which includes clear expectations for
management to understand and address testing
results and process adherence within the areas
of their responsibility. This approach positions
Ericsson to conclude its monitorship related to the
DOJ resolution in June 2024, but more importantly,
creates a foundation for a well embedded, self-
sustaining ethics and compliance program.
Continued compliance with the Swedish
Corporate Governance Code
The Swedish Corporate Governance Code is based
on the principle of “comply or explain” and is
published on the website of the Swedish Corporate
Governance Board, which administers the Code:
www.corporategovernanceboard.se. Ericsson
is committed to complying with best-practice
corporate governance standards on a global level.
Ericsson does not report any deviations from the
rules of the Code in 2023.
Business integrity
A key step taken in 2023 to enhance the E&C
program was to clarify and enhance the Company
CoBE, a core governance pillar. The updated CoBE
sets out the Company’s expectations, principles
and requirements for employees as they conduct
business. It provides the framework for ethical
decision-making, and guides employees in making
decisions and managing risk as they engage with
colleagues, customers, partners, owners, and other
stakeholders. It further promotes and supports
Ericsson’s Speak-Up Culture and prohibits retali-
ation for speaking up in any form. All employees
are required to confirm their understanding of the
CoBE on a regular basis. Full adherence to the
letter and spirit of the CoBE framework is expected
from all employees to ensure that the Company’s
decisions and actions are ethical, and that Ericsson
is acting as a positive global force.
Board of Directors
At the Annual General Meeting (AGM), held on
March 29, 2023, Jan Carlson was elected new
Chair of the Board, and Jon Fredrik Baksaas, Jan
Carlson, Carolina Dybeck Happe, Börje Ekholm,
Eric A. Elzvik, Kristin S. Rinne, Helena Stjernholm
and Jacob Wallenberg were re-elected as mem-
bers of the Board. Jonas Synnergren and Christy
Wyatt were elected as new Board members.
Ulf Rosberg (replacing Anders Ripa on July 4,
2023), Kjell-Åke Soting and Annika Salomonsson
(replacing Torbjörn Nyman on July 31, 2023) were
appointed as employee representatives by the
unions, with Loredana Roslund, Frans Frejdestedt
and Stefan Wänstedt as deputies.
Management
Börje Ekholm has been President and CEO of the
Group since 2017. The President and CEO is sup-
ported by the Executive Team.
Ericsson has a global management system,
the Ericsson Group Management System (EGMS).
EGMS aims to ensure that Ericsson’s business
is well-managed and has the ability to fulfil the
objectives of major stakeholders within established
risk limits and with reliable internal control. EGMS
also aims to promote compliance with applicable
laws, listing requirements, governance codes and
corporate responsibilities.
Discharge from liability vote at the Annual
General Meeting 2023
Under the Swedish Companies Act, the AGM of
Swedish limited liability companies should include
a vote on whether to discharge each individual
member of the Board and the President and CEO
from legal liability for the previous financial year. If
shareholders representing at least 10% of the Com-
pany’s share capital vote against this discharge
from liability, an action for damages on behalf of
the Company may be brought within one year.
A vote against the discharge from liability does
not predicate or in itself lead to legal action.
At Ericsson’s AGM on March 29, 2023, Ericsson
shareholders resolved to discharge Carolina
Dybeck Happe and Annika Salomonsson from
liability for the financial year 2022. Shareholders
representing more than 85% of the Company’s
share capital also voted for discharging from liabil-
ity each of the other members of the Board and
the Company’s President and CEO for the financial
year 2022 and more than 10% voted against such
discharging. At the same AGM, Ericsson’s share-
holders voted in favor of re-electing the individuals
nominated for Board (including the President and
CEO). The Company’s external auditor, Deloitte,
recommended that shareholders vote in favor of
discharging liability.
24
Board of Directors’ report
Financial report 2023
Shareholder engagement
As part of Ericsson’s ongoing investor engagement,
and in addition to the ordinary course communica-
tion between investors and Ericsson’s Investor
Relations and management team throughout the
year, during the second half of 2023, the Chair of
Ericsson’s Board, Jan Carlson, and the Chair of the
Audit and Compliance Committee, Eric Elzvik, had
dialogues with shareholders and held Company-
initiated substantive discussions, with share-
holders representing more than 55% of shares
outstanding. These have been focused on a broad
range of governance topics with the objective to
understand and receive shareholder feedback and
respond to questions. These discussions centered
on the thoughtful, multi-year transformation
of the Company’s governance, culture and E&C
program alongside sustainability and remunera-
tion programs, among other topics. The Audit and
Compliance Committee’s (ACC) strong oversight
of the compliance function, and the frequent and
in depth reporting on the effectiveness of the E&C
program to the ACC, was also highlighted during
these discussions.
Feedback from these discussions has been
positive with shareholders appreciating the infor-
mation and noting the transformation of the E&C
program.
Other key topics included:
– significant improvements made to Ericsson’s
governance framework which has included
enhanced Board and management oversight
and strong, proactive risk management;
– the effective integration of enhanced controls
into Ericsson’s operations and decision-
making;
– emphasis on driving continuous cultural
change with a focus on embedding integrity
into Ericsson’s ways of working, fostering a
culture of transparency, collaboration and open
dialogue, sound and ethical business decisions,
strong risk management;
– implementation of employee training programs
and providing Speak-Up resources to drive an
integrity-led culture; and
– significant testing of the E&C program’s effec-
tiveness, simplification of policies, procedures
and tools, an improved understanding of
managing risks in business interactions,
and digitalization.
Shareholders also expressed the desire for more
frequent disclosure of these E&C improvements,
which the Company has strived to meet through
periodic updates, presentations and dialogue with
investors and other stakeholders. Shareholders
also communicated support for Ericsson’s overall
executive remuneration philosophy (which now
includes an integrity based component; more
information on this can be found in the second
paragraph of “Integrating Compliance into the
Business and Testing Effectiveness” in the Corpo-
rate Governance report).
The feedback gathered during these conversa-
tions helped inform the Board’s discussions on
remuneration and other topics for 2024. In direct
response to shareholder feedback, the 2024 remu-
neration package for the President and CEO will
now include a Short-Term Variable (STV) incentive
component which aligns with the Company’s
Remuneration Guidelines and is described in
further detail in the Remuneration Report.
Remuneration
Remuneration to the members of the Board of
Directors and to Group management are reported
in note G2, “Information regarding members of the
Board of Directors and the Group management.”
Further information about remuneration to the
President and CEO and the Executive Vice President
is included in the “Remuneration report” appended
to this Financial Report.
Guidelines for remuneration to Group
management
The current Guidelines for remuneration to Group
management were adopted by the AGM 2023,
included on pages 27–29.
Long-Term Variable Compensation Program I
2023 (LTV 2023) for the Executive Team
Ericsson has share-based Long-Term Variable
Compensation Programs in place for the Executive
Team. LTV I 2023 for the Executive Team was appro-
ved by the AGM 2023. Details of LTV I 2023 are
explained in note G3, “Share-based compensation.”
Material contracts
Material contractual obligations are outlined in
note D4, “Contractual obligations.” These are
primarily related to leases of office and produc-
tion facilities, purchase contracts for outsourced
manufacturing, R&D and IT operations as well as
the purchase of components for Ericsson’s own
manufacturing.
Ericsson is party to certain agreements, which
include provisions that may take effect or be
altered or invalidated by a change in control of
the Company as a result of a public takeover offer.
Such provisions are not unusual for certain types
of agreements, such as financing agreements and
certain license agreements. However, considering,
among other things, Ericsson’s strong financial
position, the Company believes that none of the
agreements currently in effect would in and of itself
entail any material consequence for Ericsson due
to a change in control of the Company
Risk management
Ericsson maintains a robust approach to risk
management. The Company has made significant
strides in 2022 and 2023 toward ensuring that
strategic, external and internal risks are properly
identified, assessed, internally reported, escalated,
and effectively addressed. Ensuring accountability
for risk management at all levels of the organiza-
tion is a key priority. Recent enhancements include
the adoption of the Material Group Risk Protocol
(MGRP), which governs the analysis and escala-
tion of material risks across the Group, and the
establishment of the BRC. Ericsson’s Enterprise
Risk Management (ERM) framework aims to
strengthen the Group’s governance by integrating
risk management with strategy-setting and execu-
tion. The MGRP, the BRC and Ericsson’s Enterprise
Risk Management (ERM) framework operate in a
complementary manner to provide the Board and
management with a consolidated view of Group
risk.
The ERM framework is designed to promote
bottom-up identification and management of
risks that present uncertainty in Ericsson’s ability
to achieve its long- and short-term objectives.
The framework applies across Ericsson’s opera-
tions, covering business areas, market areas and
group functions. The framework establishes an
enterprise-level baseline for transparency and
risk oversight. Each manager is charged with
addressing risks within their respective area of
responsibility.
If the identified risk is judged to be material
from a group perspective, MGRP sets out clear
requirements for how material risks should be
escalated to the Ericsson Business Risk committee
(BRC). The BRC is responsible for the oversight of
the material risks on group level, and to support
the responsible manager with risk assessment,
treatment, and escalation as appropriate. The BRC
also performs oversight of the overall risk profile of
the Ericsson group.
The Group Risk Management function (GRM)
drives the ERM strategy execution and the ERM
operations at the Group level. The head of each
group function, market area and business area
oversee risk management of the respective unit
and establish and maintain processes to identify,
assess and escalate risks with one or more enter-
prise risk managers within the unit. The Chief Legal
Officer (CLO) and the Chief Financial Officer (CFO)
are co-chairs of the BRC, and also oversee Group-
level ERM activities.
The BRC permanently comprises of the CLO,
CFO, and Head of Group Risk management. In
addition, the BRC comprises of an additional
2–4 members of the Executive Management of
the Company, to be agreed and appointed by the
co-chairs. In 2023, these members consisted of
the Chief Technology Officer, Chief Security Officer,
Chief Marketing and Communications Officer and
Chief Operating Officer. The CEO, Chief Compli-
ance Officer and Head of Corporate and Govern-
ment Investigations are invited to the Committee
on an as-needed basis.
The Board of Directors and the Audit and
Compliance Committee have oversight responsi-
bility for the Company’s risk management, its ERM
framework and the MGRP. For information on risks
that could impact the fulfilment of objectives, and
form the basis for mitigating activities, see the
other sections of the Board of Directors’ report,
notes A2 “Critical accounting estimates and judg-
ments,” F1 “Financial risk management,” F4 “Inter-
est bearing liabilities” and the chapter Risk factors.
Sourcing and supply
Ericsson’s hardware largely consists of electronics.
For manufacturing, Ericsson purchases customized
and standardized components and services from
global, regional and local suppliers.
Ericsson negotiates global supply agreements
with its primary suppliers and endeavors to have
alternative supply sources to avoid single source
Financial report 2023
Board of Directors’ report
25
supply situations, as a means to build resilience in
the supply chain.
Ericsson made or was responsible for any pay-
ments to any terrorist organization.
The production of electronic modules and sub-
assemblies is mostly outsourced to manufacturing
services companies. Ericsson is focusing internal
manufacturing on new product introductions and
new technologies. The majority of the matured
portfolio is outsourced through production part-
ners. Ericsson has internal production sites in USA,
Estonia, China, Brazil, Romania and Mexico.
Ericsson requires its suppliers to comply with
principles set forth in the Ericsson Code of Conduct
for Business Partners (CoC). This is enforced
through agreements, regular risk assessments,
auditing and related actions. The CoC sets forth
standards on environmental management, human
and labor rights, occupational health and safety,
business ethics and anti-corruption as fundamen-
tal parts of Ericsson’s responsible business.
Business Partners are required to have an
environmental management system and to be
aware of and comply with applicable environmen-
tal legislation, permits and reporting requirements.
Where the requirements in the CoC are higher than
local standards and laws, the requirements of the
CoC should be applied.
Ericsson works to reduce environmental
impacts and emissions in the supply chain and
has set a target that the 350 high emitting and
strategic suppliers should set emission reduction
targets that align with the Paris Agreement’s goal
of limiting global warming to 1.5 °C.
Sustainability and Corporate
Responsibility
Sustainability and corporate responsibility are
integral parts of Ericsson’s strategy and culture
and are embedded across its operations to drive
business transformation and create value for the
Company’s stakeholders.
Ericsson is committed to creating positive
impacts for and reducing risks to the Company
and its stakeholders throughout its operations and
value chain through its technology, solutions and
the expertise of its employees.
Ericsson strives to minimize the negative
impacts of its operations and extended value
chain, through circular approaches and by continu-
ously working to improve the environmental and
energy performance of its products.
In accordance with the Swedish Annual
Accounts Act, Ericsson has prepared a separate
sustainability report titled “Sustainability and
Corporate Responsibility Report 2023”, which is
appended to the Annual Report.
Legal proceedings involving
governmental authorities
In February 2022, Ericsson publicly disclosed that
an internal investigation in 2019 included a review
of the conduct of Ericsson employees, vendors and
suppliers in Iraq during the period between 2011
to 2019. The investigators could not determine
the ultimate recipients of any payments, nor
identify that any Ericsson employee was directly
involved in financing terrorist organizations. This
2019 internal investigation did not conclude that
In March 2022, the DOJ informed Ericsson it
had determined that, before entering into the DPA,
the Company provided insufficient information
to the DOJ about the Company’s 2019 internal
investigation into conduct in Iraq. The DOJ also
determined that the Company breached the DPA
by failing to inform the DOJ about the investigation
after entering into the DPA.
In June 2022, the SEC informed Ericsson that
it opened an investigation concerning matters
described in the Company’s 2019 internal Iraq
investigation report. Under Ericsson’s consent
judgment with the SEC, Ericsson is permanently
enjoined from violating the anti-bribery, books
and records and internal controls provisions in the
Foreign Corrupt Practices Act (FCPA). Violations of
the injunction, consent judgment or securities law
could subject the Company to new civil and crimi-
nal penalties as well as new enforcement actions.
On March 2, 2023, the Company reached a
resolution (Plea Agreement) with the DOJ regard-
ing the non-criminal breaches of the DPA. Under
the Plea Agreement, Ericsson pleaded guilty to
previously deferred charges relating to conduct
that occurred prior to 2017. In addition, Ericsson
agreed to pay a fine of USD 206.7 million. The
entry of the Plea Agreement brought the DPA to
an end. The Company’s internal investigation and
its cooperation with authorities in relation to the
matters discussed in the 2019 internal Iraq inves-
tigation report remain open and ongoing and are
not covered by the Plea Agreement.
On May 24, 2023, Nasdaq Stockholm con-
cluded its review of Ericsson’s public disclosure
obligations concerning its 2019 internal Iraq
investigation report and dismissed the matter,
stating that Nasdaq could not conclude that a
reasonable investor would have used the content
of the report as part of an investment decision.
After having reviewed Nasdaq Stockholm’s
investigation and conclusion, on June 8, 2023,
the Swedish Financial Supervisory Authority also
decided to formally close its review of Ericsson’s
prior disclosures relating to the 2019 internal Iraq
investigation report.
With respect to the matters discussed in the
2019 internal Iraq investigation report, the Com-
pany continues to investigate these matters and
related matters in full cooperation with the DOJ
and the SEC. As additional information continues
to be identified and evaluated during the ongoing
investigation in continued cooperation with the
DOJ and the SEC, it is expected that there will not
be any conclusive determinations on the outcome
of any such investigation until the process is com-
pleted. The scope and duration of the remaining
process remain uncertain.
As part of its defense to a now settled patent
infringement lawsuit filed by Ericsson in 2013
in the Delhi High Court against Indian handset
company Micromax, Micromax filed a complaint
against Ericsson with the Competition Commission
of India (CCI). The CCI decided to refer the case to
the Director General’s Office for an in-depth inves-
tigation. The CCI opened similar investigations
against Ericsson in January 2014 based on claims
made by Intex Technologies (India) Limited and,
in 2015, based on a now settled claim from iBall.
Ericsson has challenged CCI’s jurisdiction in these
cases before the Delhi High Court. On July 13,
2023, the Division Bench of the Delhi High Court
found that in this instance the CCI has no power
to conduct the pending investigations against
Ericsson. The CCI has appealed this order to the
Supreme Court of India.
In April 2019, Ericsson was informed by China’s
State Administration for Market Regulations
(SAMR) Anti-monopoly bureau that SAMR has
initiated an investigation into Ericsson’s patent
licensing practices in China. Ericsson is cooperating
with the investigation, which is still in a fact-finding
phase. The next steps include continued fact-
finding and meetings with SAMR in order to facili-
tate the authority’s assessment and conclusions. In
case of adverse findings, SAMR has the power to
impose behavioral and financial remedies.
Legal proceedings not involving
governmental authorities
On March 3, 2022, Telefonaktiebolaget LM Ericsson
and certain officers of Ericsson were named
as defendants in a putative class action filed
on behalf of purchasers of Ericsson ADS in the
United States, in the United States District Court
for the Eastern District of New York. An amended
complaint was filed on September 9, 2022, which
added a former Ericsson officer as a defendant.
The amended complaint alleged violations of
United States securities laws, in connection with
allegedly false and misleading statements princi-
pally concerning the Company’s adherence with
its compliance and anti-corruption policies and
obligations and the conduct of its business in Iraq.
On May 24, 2023, the court granted Ericsson’s
motion to dismiss and dismissed the case with
prejudice, concluding that Ericsson did not violate
any disclosure obligation to investors. On June 23,
2023, plaintiff filed a notice of appeal to the United
States Court of Appeals for the Second Circuit.
Oral argument is scheduled for March 22, 2024.
All briefing has been submitted, and the matter is
pending with the Second Circuit court. Ericsson will
continue to vigorously defend this matter.
In August 2022, a civil lawsuit was filed in
the United States District Court for the District of
Columbia against Telefonaktiebolaget LM Ericsson
and Ericsson Inc. (collectively, “Ericsson”). The
lawsuit was brought by US military service mem-
bers, employees of US government contractors and
other civilians who were killed or injured in terrorist
attacks in Iraq, Afghanistan and Syria from 2005
to 2021, as well as by their family members. The
lawsuit asserts claims against Ericsson under
the US Anti-Terrorism Act alleging that Ericsson
made payments that ultimately aided the terrorist
organizations that committed, planned or author-
ized the attacks. In November 2022, Ericsson filed
a motion to dismiss the complaint. On December
20, 2022, plaintiffs filed an amended complaint,
which added additional plaintiffs, including a
plaintiff injured in Turkey, and also named Ericsson
AB (collectively with Ericsson, the “Ericsson corpo-
rate defendants”), CEO Börje Ekholm and a former
employee (who has not been served with process)
as additional defendants and also asserted
26
Board of Directors’ report
Financial report 2023
additional allegations and claims. In March 2023,
the Ericsson corporate defendants and Mr. Ekholm
filed motions to dismiss the amended complaint.
Plaintiffs filed their oppositions to defendants’
motions to dismiss the amended complaint in June
2023, and defendants filed reply briefs in support
of their motions to dismiss in July 2023. All briefing
has been submitted, and the matter is pending with
the District Court. All defendants will continue to
vigorously defend this matter.
In February 2024, a second civil lawsuit alleg-
ing violations of the US Anti-Terrorism Act was
filed in the United States District Court for the
District of Columbia. The lawsuit was filed by the
same law firm and involves substantially similar
factual allegations and claims as those made in the
Anti-Terrorism Act lawsuit originally filed in August
2022, and similarly names the same Ericsson
corporate defendants, CEO Börje Ekholm and a
former employee as defendants. The new lawsuit
was brought by additional US military service
members, employees of US government contrac-
tors and other civilians who were killed or injured in
terrorist attacks in Iraq, Afghanistan, Syria, Turkey,
Niger, and France from 2005 to 2021, as well as
by their family members. None of the defendants
have been served. The defendants will vigorously
defend this matter.
Beginning on August 4, 2023, a number of civil
lawsuits have been filed against Telefonaktiebola-
get LM Ericsson in Solna District Court, Sweden. As
of February 27, 2024, 90 claimants have filed suit,
which are coordinated and financed by a UK-based
litigation funder. The claimants consist of a group
of non-Swedish funds and financial institutions
that allegedly are or have been shareholders of
the Company. Their damages claims are primarily
based on alleged inadequate disclosure of the
contents of the Company’s 2019 internal Iraq
investigation report. Ericsson intends to file its
statement of defense on March 8, 2024 and intends
to vigorously defend itself against the claims.
On October 11, 2023, Ericsson commenced
patent infringement proceedings against Lenovo
(Beijing) Limited (“Lenovo”) in the Eastern District
of North Carolina (EDNC). In the course of the pro-
ceedings, Ericsson seeks declarations that Lenovo
has lost its right to enforce Ericsson’s FRAND
contracts as third-party beneficiaries and that
Ericsson has complied with its FRAND commit-
ments and with the ETSI IPR Policy. Ericsson has
also commenced patent infringement proceedings
against Lenovo at the United States International
Trade Commission and in other jurisdictions (Brazil
and Colombia). In return, Lenovo has filed lawsuits
against Ericsson in the High Court of Justice in the
UK, at the Unified Patent Court, and has applied for
an anti-suit injunction in the EDNC. On 14 February
2024, the EDNC denied the anti-suit injunction.
This decision has been appealed.
In addition to the proceedings discussed above,
the Company is, and in the future may be, involved
in various other regulatory investigations, lawsuits,
claims and proceedings incidental to the ordinary
course of business.
Group structure
The Ericsson group is comprised of more than
200 legal entities, and approximately 100 branch
offices, with representation in approximately
140 countries.
Parent Company
Telefonaktiebolaget LM Ericsson´s (the Parent
Company) business consists mainly of corporate
management, holding company functions,
internal banking activities and customer credit
management. As of December 31, 2023, the Parent
Company had 3 (3) branch offices.
Financial information
Income after financial items was SEK –0.7 (18.4)
billion. The Parent Company had no sales in
2023 or 2022 to subsidiaries, while 31% (29%) of
total purchases of goods and services were from
subsidiaries.
Major changes in the Parent Company’s finan-
cial position for the year included:
– Current and non-current liabilities to subsidiar-
ies decreased by SEK 46.8 billion to SEK 47.6
billion.
– Current and non-current receivables from
subsidiaries decreased by SEK 6.3 billion
to SEK 17.8 billion.
– Shareholder contributions to subsidiaries
of SEK 11.9 billion.
– Impairment of investments in subsidiaries and
associates of SEK 32.8 billion.
– Dividends from subsidiaries and associated
companies of SEK 32.5 billion.
– Gross cash decreased by SEK 6.5 billion
to SEK 34.9 billion.
At the end of the year, gross cash: cash and cash
equivalents plus interest-bearing securities (current
and non-current), amounted to SEK 34.9 (41.4)
billion.
At the end of the year, non-restricted equity
amounted to SEK 27.6 (37.8) billion, and total
equity amounted to SEK 75.8 (85.9) billion.
Share information
As of December 31, 2023, the total number of
shares issued was 3,344,151,735, of which
261,755,983 were Class A shares, each carrying
one vote, and 3,082,395,752 were Class B shares,
each carrying one tenth of one vote. Both classes of
shares have the same rights of participation in the
net assets and earnings. The largest shareholders of
the Parent Company at year-end were Investor AB
with approximately 23.75% of the votes (7.98% of
the shares), AB Industrivärden with approximately
15.11% of the votes (2.6% of the shares) and AMF
Tjänstepension and AMF Fonder AB with approxi-
mately 4.52% of the votes (2.14% of the shares).
No treasury shares were distributed to emp-
loyees or sold in 2023.
The holding of treasury stock on December 31,
2023 was 14,009,306 Class B shares. The quotient
value of these shares is SEK 5.00, totaling SEK 70.0
million, representing 0.4% of capital stock, and the
purchase price amounts to SEK 70.0 million.
The Annual General Meeting (AGM) 2023
resolved to issue 10 million Class C shares for the
Long-Term Variable Compensation Program (LTV)
II 2023, 2022 and 2021 for Ericsson’s executive
team and other executives. In accordance with an
authorization from the AGM, in the second quarter
2023, the Board of Directors resolved to repurchase
the new issued shares, which were subsequently
converted into Class B shares. The quotient value
of the repurchased shares was SEK 5.00, totaling
SEK 50.0 million, representing less than 0.3% of
capital stock, and the acquisition cost was SEK 50.2
million.
Proposed disposition of earnings
The Board of Directors proposes a dividend of SEK
2.70 (2.70) per share, and that the Parent Company
shall retain the remaining part of non-restricted
equity. The dividend is proposed to be paid in two
equal installments, SEK 1.35 per share with the
record date April 5, 2024 (payment date April 10,
2024), and SEK 1.35 per share with the record date
October 2, 2024 (payment date October 7, 2024).
For the Parent Company’s treasury shares of Class
B, no dividend will be distributed.
The Board of Directors proposes that earnings
be distributed as follows (assuming that no treas-
ury shares are held on the record date):
Amount to be paid to
the shareholders
Amount to be retained by
the Parent Company
Total non-restricted equity
of the Parent Company
SEK 9,029,209,684
SEK 18,555,216,849
SEK 27,584,426,533
As a basis for its dividend proposal, the Board of
Directors has made an assessment in accordance
with Chapter 18, Section 4 of the Swedish Compa-
nies Act of the Parent Company’s and the Group’s
need for financial resources as well as the Parent
Company’s and the Group’s liquidity, financial posi-
tion in other respects and long-term ability to meet
their commitments. The Group reports an equity
ratio of 32.8% (38.1%) and a net cash amount of
SEK 7.8 (23.3) billion.
The Parent Company’s non-restricted equity
would have been SEK 2.91 billion lower if assets
and liabilities had not been valued at fair value
pursuant to Chapter 4, Section 14a of the Swedish
Annual Accounts Act.
The Board of Directors has also considered the
Parent Company’s results and financial position
and the Group’s position in general. In this respect,
the Board of Directors has taken into account
known commitments that may have an impact on
the financial positions of the Parent Company and
its subsidiaries.
The proposed dividend does not limit the
Group’s ability to make investments or raise funds,
and it is the Board of Directors’ assessment that the
proposed dividend is well balanced considering the
nature, scope and risks of the business activities,
as well as the capital requirements for the Parent
Company and the Group, in addition to coming
years’ business plans and economic development.
Financial report 2023
Board of Directors’ report
27
Guidelines for Remuneration
to Group Management approved
by the Annual General Meeting of
shareholders 2023
Introduction
These Guidelines for Remuneration to Group Man-
agement (the “Guidelines”) apply to the Executive
Team of Telefonaktiebolaget LM Ericsson (the
“Company” or “Ericsson”), including the President
and Chief Executive Officer (the “President and
CEO”) (“Group Management”). These Guidelines
apply to remuneration agreed and changes to
previously agreed remuneration after the date
of approval of the Guidelines and are intended
to remain in place for four years until the Annual
General Meeting of shareholders 2027. For
employments outside of Sweden, due adaptations
may be made to comply with mandatory local rules
or established local practices. In such cases, the
overall purpose of these Guidelines shall be accom-
modated to the largest extent possible. These
Guidelines do not cover remuneration resolved by
the general meeting of shareholders, such as long-
term variable compensation programs (“LTV”).
Objective
These Guidelines aim to ensure alignment with
the current remuneration philosophy and practices
applicable for the Company’s employees based on
the principles of competitiveness, fairness, trans-
parency, and performance. In particular to:
– attract and retain highly competent, perform-
ing, and motivated people that have the ability,
experience, and skill to deliver on the Ericsson
strategy;
– encourage behavior consistent with Ericsson’s
culture and core values;
– ensure fairness in reward by delivering total
remuneration that is appropriate but not
excessive, and clearly explained;
– have a total compensation mix of fixed pay,
variable pay and benefits that is competitive
where Ericsson competes for talent; and
– encourage variable remuneration which aligns
employees with clear and relevant targets,
reinforces their performance and enables
flexible remuneration costs for Ericsson.
To conduct its responsibilities, the Committee
considers trends in remuneration, legislative
changes, disclosure rules and the general global
executive remuneration environment. Before
preparing salary adjustment recommendations for
the President and CEO for resolution by the Board
and approving any salary adjustments for the other
members of Group Management the Committee
reviews salary survey data, Company results and
individual performance. No employee is present at
the Committee’s meetings when issues relating to
their own remuneration are being discussed. Simi-
larly, the President and CEO is not present at Board
meetings when issues relating to the President
and CEO’s own remuneration are being discussed.
The Committee may appoint independent expert
advisors to assist and advise in its work.
The Chair of the Remuneration Committee
along with the Chair of the Board work together
with Ericsson’s Investor Relations team, striving
to ensure that healthy contact is maintained as
necessary and appropriate with shareholders
regarding remuneration to Group Management.
Overview of remuneration package covered
by these Guidelines
For Group Management the remuneration pack-
age may consist of fixed salary, short-term and
long-term variable compensation (STV and LTV),
pension and other benefits.
Below are the key components of remuneration
of Group Management covered by these Guidelines,
including why they are used, their operation, oppor-
tunity levels and related performance measures.
In addition, the AGM has resolved and may in the
future decide to implement LTV for Group Manage-
ment. The ongoing share-based LTV programs
resolved by the AGM have been designed to provide
long-term incentives for the members of Group
Management and to incentivize the Company’s
performance creating long-term value. The aim is to
attract, retain and motivate executives in a com-
petitive market through performance-based share
related incentives and to encourage the build-up
of significant equity holdings to align the interests
of the members of Group Management with
those of shareholders. The vesting period under
the ongoing share-based LTV programs resolved
by the shareholders is three years and vesting is
subject to the satisfaction of identified performance
criteria. Although LTV is an important component
of the remuneration of Group Management, it is
not covered by these Guidelines, because these
programs are resolved separately by the AGM.
The Guidelines and the Company’s strategy
and sustainable long-term interest
A successful implementation of the Company’s
strategy and sustainable long-term interests
requires that the Company can attract, retain, and
motivate the right talent and can offer competi-
tive remuneration. These Guidelines aim to allow
the Company to offer the members of the Group
Management attractive and competitive total
remuneration. Variable compensation covered by
these guidelines shall be awarded against specific
pre-defined and measurable business targets
derived from the short and long-term business plan
approved by the Board of Directors. Targets will
include financial targets at Group, Business Area
and/or Market Area level. In addition, strategic tar-
gets, operational targets, employee engagement
targets, customer satisfaction targets, sustain-
ability and corporate responsibility targets or other
lead indicator targets will be applied as deemed
appropriate by the Remuneration Committee.
The Company operates long-term variable
compensation programs for the Group Manage-
ment as approved by the Annual General Meeting
(“AGM”). Such decisions are not covered by these
Guidelines. Details of Ericsson’s current remunera-
tion policy and how we deliver on our policy and
guidelines and information on previously decided
long-term variable compensation programs that
have not yet become due for payment, including
applicable performance criteria, can be found
in the Remuneration Report and in Note G2,
“Information regarding members of the Board of
Directors, the Group management” and Note G3,
“Share-based compensation” in the annual report.
Governance of remuneration to
Group Management
The Board has established a Remuneration
Committee (the “Committee”) to handle com-
pensation policies and principles and matters
concerning remuneration to Group Management.
The Board has authorized the Committee to
determine and handle certain issues in specific
areas. The Board may also on occasion provide
extended authorization for the Committee to
determine specific matters.
The Committee is authorized to review and
prepare for resolution by the Board salary
and other remuneration for the President and
CEO. Further, the Committee shall prepare for
resolution by the Board proposals to the AGM on
Guidelines for Remuneration to Group Manage-
ment at least every fourth year and on Long-term
Variable compensation programs and similar
equity arrangements.
The Committee has the mandate to resolve
salary and other remuneration for the other
members of Group Management except for the
President and CEO, including targets for short-
term variable compensation (“STV”), and payout
of STV based on achievements and performance.
28
Board of Directors’ report
Financial report 2023
Element and purpose
Description
Fixed salary
Fixed compensation paid at set times.
Purpose:
– attract and retain the executive talent required to
implement Ericsson’s strategy
– deliver part of the annual compensation in a
predictable format
Short-term variable compensation (STV)
STV is a variable compensation plan that shall be
measured against targets derived from the business
plan and paid over a single year.
Purpose:
– align members of Group Management with clear
and relevant targets to Ericsson’s strategy and
sustainable long-term interests,
– provide individuals an earning opportunity for
performance at flexible cost to the Company.
Pension
Contributions paid towards retirement fund.
Purpose:
– attract and retain the executive talent required to
implement Ericsson’s strategy,
– facilitate planning for retirement by way of
providing competitive retirement arrangements
in line with local market practices.
Other benefits
Additional tangible or intangible compensation
paid annually which do not fall under fixed salary,
short-term and long-term variable compensation,
or pension.
Purpose:
– attract and retain the executive talent required to
implement Ericsson’s strategy,
– deliver part of the annual compensation in a
predictable format.
Salaries shall be set taking into account:
– Ericsson’s overall business performance
– business performance of the Unit that the individual leads
– year-on-year performance of the individual
– external economic environment
– size and complexity of the position
– external market data
– pay and conditions for other employees based in locations considered to be relevant to the role.
When setting fixed salaries, the impact on total remuneration, including pensions and associated costs, shall be taken
into consideration.
The STV shall be paid in cash every year after the Committee and, as applicable, the Board have reviewed and
approved performance against targets which are normally determined at the start of each year for each member of
Group Management.
Target pay-out opportunity for any financial year may be up to 150% of annual fixed salary of the individual. This shall
normally be determined in line with the external market practices of the country of employment. Maximum pay-out
shall be up to two times the target pay-out opportunity (i.e., no more than 300% of annual fixed salary). Any existing
long-term variable pay-opportunity should be taken into account when determining target opportunity for STV (and
vice versa).
The STV shall be based on measures linked to the annual business plan and to Ericsson’s long-term strategy and
sustainability. Measures will include financial targets at Group, Business Area and/or Market Area level (for relevant
members of Group Management). Other potential measures may include strategic targets, operational targets,
employee engagement targets, customer satisfaction targets, sustainability and corporate responsibility targets or
other lead indicator targets.
At the end of the performance period for each STV cycle, the Board and the Committee shall assess performance versus
the measures and determine the formula-based outcome using the financial information made public by the Company
for the financial targets when applicable.
The Board and the Committee reserve the right to:
– revise any or all of the STV targets at any time,
– adjust the STV targets retroactively under extraordinary circumstances,
– reduce or cancel STV if Ericsson faces severe economic difficulties, for instance in circumstances as serious as no
dividend being paid,
– adjust STV in the event that the results of the STV targets are not a true reflection of business performance,
– reduce or cancel STV for individuals either whose performance evaluation or whose documented performance
feedback is below an acceptable level or who are on performance counselling.
The Board and the Committee shall have the right in their discretion to:
– deny, in whole or in part, the entitlement of an individual to the STV payout in case an individual has acted in breach
of Ericsson’s Code of Business Ethics,
– claim repayment in whole or in part the STV paid in case an individual has acted in breach of Ericsson’s Code of
Business Ethics,
– reclaim STV paid to an individual on incorrect grounds such as restatement of financial results due to incorrect
financial reporting, non-compliance with a financial reporting requirement etc.
The operation of the pension plan shall follow competitive practice in the individual’s home country and may contain
various supplementary plans in addition to any national system for social security.
Pension plans should be defined contribution plans unless the individual concerned is subject to defined benefit
pension plan under mandatory collective bargaining agreement provisions or mandatory local regulations.
For Group Management members in Sweden:
– pension benefits shall be granted based on a defined contribution plan except where law or collective bargaining
agreement require a defined benefit pension. The pensionable salary shall include fixed salary and, where required
by law or collective bargaining agreement, any variable salary.
– a supplementary pension contribution can be paid amounting to a maximum of 35% of the fixed annual salary that
exceeds any cap in collective pension plans, unless a higher percentage is obliged by law or collective bargaining
agreement.
– the supplementary pension contribution can, as an alternative to a pension contribution, be exchanged for a cash
payment provided that it is done in a way that is cost-neutral for the Company.
Members of Group Management employed outside of Sweden may participate in the local market competitive pension
arrangements that apply in their home countries in line with what is offered to other employees in the same country.
In some special circumstances where individuals cannot participate in the local pension plans of their home countries
of employment:
– cash equivalent to pension may be provided as a taxable benefit, or
– contributions may be made to an international pension fund on behalf of the individual on a costneutral basis
In all cases the annual pension contributions shall be capped at 70% of annual fixed salary.
Benefits offered shall consider the competitive practices in the individual’s country of employment and should be in line
with what is offered to other senior employees in the same country and may evolve year on year.
Benefits may for example include Company phones, Company cars, wellbeing assistance, medical and other insurance
benefits, tax support, travel, Company gifts and any international relocation and/or commuting benefits if the indi-
vidual is required to relocate and/or commute internationally to execute the requirements of the role.
Benefit opportunities shall be set in line with competitive market practices and shall reflect what is offered to other
senior employees in the individual’s country of employment.
The levels of benefits provided may vary year on year depending on the cost of the provision of benefits to the Company.
Other benefits shall be capped at 10% of annual fixed salary for members of Group Management located in Sweden.
Additional benefits and allowances for members of Group Management who are commuters into Sweden or who are
on long-term assignment (“LTA”) in countries other than their home countries of employment, shall be determined in
line with the Company’s international mobility policy which may include (but is not limited to) commuting or relocation
costs; cost of living adjustment, housing, home travel or education allowance; tax and social security equalization
assistance.
Financial report 2023
Board of Directors’ report
29
Consideration of remuneration offered
to the Company’s employees
When developing these Guidelines, the Board
and the Committee have considered the total
remuneration and employment conditions of
the Company’s employees by reviewing the
application of Ericsson’s remuneration policy
for the wider employee population to ensure
consistency.
There is clear alignment in the remunera-
tion components for the members of Group
Management and the Company’s employees
in the way that remuneration policy is applied
as well as the methods followed in determin-
ing fixed salaries, short-term and long-term
variable compensation, pension, and benefits,
which are to be applied broadly and consistently
throughout the Company. The targets under
short-term variable compensation are similar
and the performance measures under long-
term variable compensation program are the
same for the members of Group Management
and other eligible employees of the Company.
However, the proportion of pay that is linked to
performance is typically higher for Group Man-
agement in line with market practice and the
higher levels of total compensation applicable
at that level.
Employment contracts and termination
of employment
The members of Group Management are
employed on permanent rolling contracts.
The maximum mutual notice period is no
more than 12 months. In case of termination
by the employee, the employee has no right
to severance pay.
In any case, the fixed salary paid during the
notice period plus any severance pay payable
will not together exceed an amount equivalent
to the individual’s 24 months fixed salary unless
otherwise determined by local legislation or
collective bargaining agreements.
The employee may be entitled to severance
pay up until the agreed retirement age or, if a
retirement age has not been agreed, until the
month when the employee turns 65. In a case
where the employee is entitled to severance
pay from a date later than 12 months prior to
retirement, the severance pay shall be reduced
in proportion to the time remaining and calcu-
lated only for the time as of the date when the
employee’s employment ceases (i.e., the end
of the period of notice) and until the time of
retirement.
Severance pay shall be reduced by 50% of
the remuneration or equivalent compensation
the employee receives, or has become entitled
to, from any other employer or from his/her own
or other activities during the period that sever-
ance is paid to the employee by the Company.
The Company shall have the right to ter-
minate the employment contract and dismiss
the employee with immediate effect, without
giving any advance notice and entitlement
to severance pay, if the employee commits a
serious breach of his/her obligations towards
the Company.
Normally disputes regarding employment
agreements or any other agreements concern-
ing the employment of the members of Group
Management, the way such agreements have
been arrived at, interpreted, or applied, as well
as any other litigation proceedings from legal
relations based on such agreements, shall be
settled by arbitration by three arbitrators in
accordance with the Rules of the Arbitration
Institute of the Stockholm Chamber of Com-
merce. Irrespective of the outcome of any arbi-
tral award, the Company may, in the relation
between the parties, carry all fees and expenses
charged by the arbitrators and all of its own
litigation costs (including attorney’s fees),
except in the event the arbitration proceedings
were initiated by the employee without reason-
able cause.
Recruitment policy for new members
of Group Management
In determining the remuneration of a new
member of Group Management, the Board and
the Committee shall take into consideration all
relevant factors to ensure that arrangements
are in the best interests of the Company and its
shareholders. These factors include:
– the role being taken on,
– the skills, experience and caliber of the
candidate,
– the level and type of remuneration opportu-
nity received at a previous employer,
– the geography in which the candidate is
being recruited from and whether any reloca-
tion allowance is required,
– the circumstances of the candidate,
– the current external market and salary
practice,
– internal relativities.
component and can be renewed, but each such
arrangement shall be limited in time and shall
not exceed a period of 36 months and twice the
annual fixed salary that the individual would
have received if no additional arrangements
were made. In addition, if appropriate, different
measures and targets may be applied to the
new appointment’s incentives in the first year.
In addition, it may on a case-by-case basis
be decided by the Board and the Committee
respectively to compensate an individual
for remuneration forfeited from a previous
employer during recruitment. The Board and
the Committee will consider on a case-by-case
basis if all or some of the remuneration includ-
ing incentives forfeited need to be ‘bought-out’.
If there is a buy-out of forfeited incentives, this
will take into account relevant factors including
the form they were granted (cash vs. shares),
performance conditions attached to these
awards and the time they would have vested/
paid. Generally, buy-out awards will be made on
a comparable basis to those forfeited.
In the event of an internal candidate being
promoted to Group Management, legacy terms
and conditions may be honored, including pen-
sion and benefit entitlements and any outstand-
ing incentive awards. If a Group Management
member is appointed following a merger or
acquisition with/of another company, legacy
terms and conditions may also be honored for a
maximum period of 36 months.
Board of Directors’ discretions
The Board upon recommendation from the
Committee may in a specific case decide to
temporarily deviate from these Guidelines in
whole or in part based on its full discretion in
unusual circumstances such as:
– upon change of the President and CEO,
– upon material changes in the Company struc-
ture, organization, ownership, and business
(for example takeover, acquisition, merger,
demerger etc.) which may require adjust-
ments in STV and LTV or other elements to
ensure continuity of Group Management, and
– in any other circumstances, provided that the
deviation is required to serve the long-term
interests and sustainability of the Company
or to assure its financial viability.
Additional arrangements
By way of exception, additional arrangements
can be made when deemed appropriate and
necessary to recruit or retain an individual. Such
arrangement could be in the form of short-term
or long-term variable compensation or fixed
The Committee is responsible for preparing
matters for resolution by the Board, and this
includes matters relating to deviations from
these Guidelines. Any such deviation will be
disclosed in the Remuneration Report for the
relevant year.
30
Board of Directors’ report
Financial report 2023
Ericsson appoints Chafic Nassif Head of Market
Area North East Asia
On January 29, 2024, Ericsson announced that
Chafic Nassif has been appointed as Head of
Market Area North East Asia and Senior Vice
President, effective February 26, 2024. Effective
the same date, he will become a member of the
Executive Team, reporting to the President and
CEO. Chafic Nassif succeeds Chris Houghton who
was appointed Chief Operating Officer of Ericsson
in November 2023.
Chafic Nassif has held several executive and
management positions within Ericsson across
various business segments and geographies world-
wide. Most recently, he was the Head of Ericsson’s
Customer Unit Latin America North within Market
Area Europe & Latin America. Before joining
Ericsson, Mr. Nassif was active in tech start-ups, as
well as IT and business consulting leadership roles
in Europe.
Ericsson to utilize mandate
to transfer shares
Ericsson’s (NASDAQ:ERIC) annual general meet-
ing on March 29, 2023 authorized the Company’s
board of directors to resolve on the transfer of
the Company’s own shares. Under the authoriza-
tion the Company may, in conjunction with the
delivery of vested shares under the long-term
variable compensation programs 2019 and 2020
(“LTV 2019” and “LTV 2020”), prior to the annual
general meeting in 2024, decide to retain and sell
no more than 60% of the vested shares of series
B in the Company in order to cover for the costs
for withholding and paying tax and social security
liabilities on behalf of the participants in relation
to the performance share awards for remittance to
revenue authorities. Ericsson decided, on February
16, 2024, to utilize the authorization to transfer
shares for these purposes.
The transfer of own shares may take place on
Nasdaq Stockholm during the period from and
including February 16, 2024 up to the annual
general meeting 2024 at a price within the price
interval registered from time to time.
Ericsson currently holds 12,932,223 shares of
series B in the Company and the maximum number
of shares that may be transferred on Nasdaq
Stockholm pursuant to the decision to utilize the
authorization amounts to 774,889 shares of series
B in the Company.
Events after the reporting period
Ericsson appoints Lars Sandström as Chief
Financial Officer
On January 23, 2024, Ericsson announced the
appointment of Lars Sandström as its new Chief
Financial Officer, Senior Vice President, and Head
of Group Function Finance. Mr. Sandström will
replace Carl Mellander, whose departure Ericsson
announced in April 2023. Mr. Sandström will join
Ericsson on April 1, 2024, and will be based in
Sweden.
Lars Sandström is currently Chief Financial
Officer and member of the executive team at
Getinge, a listed global leader within Medtech.
Mr. Sandström has been with Getinge since 2017
and holds a Master of Science in Business Adminis-
tration. Mr. Sandström has previously held several
senior positions at AB Volvo, Scania and Swedish
Orphan Biovitrum AB.
Ericsson announces changes to the Executive
Team
On January 24, 2024, Ericsson announced that
Senior Vice president Niklas Heuveldop had been
appointed as new Head of Business Area Global
Communications Platform and CEO of Vonage
as of February 1, 2024. Mr. Heuveldop, who has
been a member of the Executive Team and headed
Market Area North America since 2017, succeeds
Rory Read, who will leave Ericsson at the end of the
first quarter 2024.
Yossi Cohen replaces Mr. Heuveldop as Head
of Market Area North America, effective February
1, 2024. Effective the same date, he will become
a member of the Executive Team, reporting to
the President and CEO. Mr. Cohen previously has
been Head of Strategy, Technology, Marketing and
Business Development within Market Area North
America.
Financial report 2023
Board of Directors’ report
31
Board assurance
The Board of Directors and the President and CEO
declare that the consolidated financial statements
have been prepared in accordance with IFRS, as
issued by the IASB, and as adopted by the EU, and
give a fair view of the Group’s financial position
and results of operations. The financial statements
of the Parent Company have been prepared in
accordance with generally accepted accounting
principles in Sweden and give a fair view of the
Parent Company’s financial position and results
of operations. The Board of Directors’ Report for
the Group and the Parent Company provides a fair
view of the development of the Group’s and the
Parent Company’s operations, financial position
and results of operations and describes material
risks and uncertainties facing the Parent Company
and the companies included in the Group.
Stockholm, March 5, 2024
Telefonaktiebolaget LM Ericsson (publ)
Org. no. 556016-0680
Jan Carlson
Chair of the Board
Jacob Wallenberg
Deputy Chair of the Board
Jon Fredrik Baksaas
Member of the Board
Carolina Dybeck Happe
Member of the Board
Kristin S. Rinne
Member of the Board
Börje Ekholm
President, CEO and
Member of the Board
Eric A. Elzvik
Member of the Board
Helena Stjernholm
Member of the Board
Jonas Synnergren
Member of the Board
Christy Wyatt
Member of the Board
Ulf Rosberg
Member of the Board
Annika Salomonsson
Member of the Board
Kjell-Åke Soting
Member of the Board
Our audit report has been submitted on March 5, 2024
Deloitte AB
Thomas Strömberg
Authorized Public Accountant
32
Consolidated financial statements with notes
Financial report 2023
Consolidated financial statements with notes
Contents
Consolidated financial statements
33
33
34
35
36
Consolidated income statement
Consolidated statement of comprehensive
income (loss)
Consolidated balance sheet
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated financial statements
39
39
45
47
47
50
50
50
A
Basis of presentation
A1 Material accounting policies
A2
B
B1
B2
B3
B4
Critical accounting estimates
and judgments
Business and operations
Segment information
Net sales
Expenses by nature
Other operating income and
expenses
50
51
51
51
51
52
52
54
55
56
56
58
58
58
59
59
60
61
B5
B6
B7
B8
B9
C
C1
C2
C3
D
D1
D2
D3
D4
E
E1
E2
E3
Inventories
Customer contract related
balances
Other current receivables
Trade payables
Other current liabilities
Long-term assets
Intangible assets
Property, plant and equipment
Leases
Obligations
Provisions
Contingent liabilities
Assets pledged as collateral
Contractual obligations
Group structure
Equity
Business combinations
Associated companies
62
62
67
67
68
69
69
73
75
81
82
82
83
84
84
85
85
F
F1
F2
F3
F4
G
G1
G2
G3
G4
H
H1
H2
H3
H4
H5
H6
Financial instruments
Financial risk management
Financial income and expenses
Financial assets, non-current
Interest-bearing liabilities
Employee related
Post-employment benefits
Information regarding members
of the Board of Directors and
Group management
Share-based compensation
Employee information
Other
Taxes
Earnings per share
Statement of cash flows
Related party transactions
Fees to auditors
Events after the reporting period
Financial report 2023
Consolidated financial statements
33
Consolidated financial statements
Notes
B1, B2
F1
B4
B4
B1, E3
B1
F2
F2
F2
H1
H2
H2
H2
Consolidated income statement
January–December, SEK million
Net sales
Cost of sales
Gross income
Research and development expenses
Selling and administrative expenses
Impairment losses on trade receivables
Operating expenses
Other operating income
Other operating expenses
Share in earnings of joint ventures and associated companies
Earnings (loss) before financial items and income tax (EBIT)
Financial income
Financial expenses
Net foreign exchange gains/losses
Income (loss) after financial items
Income tax
Net income (loss)
Net income (loss) attributable to:
Owners of the Parent Company
Non-controlling interests
Other information
Average number of shares, basic (million)
Earnings (loss) per share attributable to owners of the Parent Company, basic (SEK)
Earnings (loss) per share attributable to owners of the Parent Company, diluted (SEK)
Consolidated statement of comprehensive income (loss)
January–December, SEK million
Net income (loss)
Other comprehensive income (loss)
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension plans including asset ceiling
Revaluation of borrowings due to change in credit risk
Cash flow hedge reserve
Gains/losses arising during the period
Transfer to goodwill
Tax on items that will not be reclassified to profit or loss
Items that have been or may be reclassified to profit or loss
Cash flow hedge reserve
Gains/losses arising during the period
Reclassification adjustments on gains/losses included in profit or loss
Translation reserves
Changes in translation reserves
Reclassification to profit and loss
Share of other comprehensive income of JV and associated companies
Tax on items that have been or may be reclassified to profit or loss
Other comprehensive income (loss), net of tax
Total comprehensive income (loss)
Total comprehensive income (loss) attributable to:
Owners of the Parent Company
Non-controlling interests
2023
263,351
–161,749
101,602
–50,664
–39,255
–268
–90,187
994
–32,859
124
–20,326
2,145
–4,118
–1,020
–23,319
–2,785
–26,104
–26,446
342
3,330
–7.94
–7.94
2022
271,546
–158,251
113,295
–47,298
–35,692
–40
–83,030
1,231
–4,493
17
27,020
778
–1,930
–1,259
24,609
–5,497
19,112
18,724
388
3,330
5.62
5.62
2021
232,314
–131,565
100,749
–42,074
–26,957
–40
–69,071
1,526
–1,164
–260
31,780
691
–1,674
–1,547
29,250
–6,270
22,980
22,694
286
3,329
6.82
6.81
2023
–26,104
2022
19,112
2021
22,980
905
–667
–
–
–114
754
1,090
–2,375
59
–10
–380
–738
–26,842
–27,233
391
10,669
1,030
3,703
–3,677
–3,067
–701
280
7,130
–85
49
87
15,418
34,530
34,274
256
3,537
31
–
–
–682
–542
–96
3,342
46
28
126
5,790
28,770
28,694
76
34
Consolidated financial statements
Financial report 2023
Consolidated balance sheet
SEK million
Assets
Non-current assets
Intangible assets
Capitalized development expenses
Goodwill
Customer relationships, IPRs and other intangible assets
Property, plant and equipment
Right-of-use assets
Financial assets
Equity in joint ventures and associated companies
Other investments in shares and participations
Customer finance, non-current
Interest-bearing securities, non-current
Other financial assets, non-current
Deferred tax assets
Current assets
Inventories
Contract assets
Trade receivables
Customer finance, current
Current tax assets
Other current receivables
Interest-bearing securities, current
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Capital stock
Additional paid in capital
Other reserves
Retained earnings
Equity attributable to owners of the Parent Company
Non-controlling interests
Non-current liabilities
Post-employment benefits
Provisions, non-current
Deferred tax liabilities
Borrowings, non-current
Lease liabilities, non-current
Other non-current liabilities
Current liabilities
Provisions, current
Borrowings, current
Lease liabilities, current
Contract liabilities
Trade payables
Current tax liabilities
Other current liabilities
Total equity and liabilities
Notes
C1
C2
C3
E3
F3
B6, F1
F1, F3
F3
H1
B5
B6, F1
B6, F1
B6, F1
B7
F1
H3
E1
E1
E1
E1
E1
E1
G1
D1
H1
F4
C3
D1
F4
C3
B6
B8
B9
Dec 31
2023
Dec 31
2022
4,678
52,944
22,667
12,195
6,320
1,150
2,091
1,347
9,931
6,350
22,375
3,705
84,570
26,340
14,236
7,870
1,127
2,074
415
9,164
6,839
19,394
142,048
175,734
36,073
7,999
42,215
5,570
6,395
11,962
9,584
35,190
154,988
297,036
16,722
24,731
6,759
50,461
98,673
–1,265
97,408
26,229
4,927
3,880
29,218
5,220
755
70,229
6,779
17,655
2,235
34,416
27,768
3,561
36,985
129,399
297,036
45,846
9,843
48,413
4,955
7,973
9,688
8,736
38,349
173,803
349,537
16,672
24,731
8,201
85,210
134,814
–1,510
133,304
27,361
3,959
4,784
26,946
6,818
745
70,613
7,629
5,984
2,486
42,251
38,437
2,640
46,193
145,620
349,537
Financial report 2023
Consolidated financial statements
35
Consolidated statement of cash flows
January–December, SEK million
Operating activities
Net income (loss)
Adjustments to reconcile net income to cash
Changes in operating net assets
Inventories
Customer finance, current and non-current
Trade receivables and contract assets
Trade payables
Provisions and post-employment benefits
Contract liabilities
Other operating assets and liabilities, net
Interest received
Interest paid
Taxes paid
Cash flow from operating activities
Investing activities
Investments in property, plant and equipment
Sales of property, plant and equipment
Acquisitions of subsidiaries and other operations
Divestments of subsidiaries and other operations
Product development
Purchase of interest-bearing securities
Sale of interest-bearing securities
Other investing activities
Cash flow from investing activities
Financing activities
Proceeds from issuance of borrowings
Repayment of borrowings
Sale of own shares
Dividends paid
Repayment of lease liabilities
Other financing activities
Cash flow from financing activities
Effect of exchange rate changes on cash
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Notes
2023
2022
2021
H3
C2
H3, E2
H3, E2
C1
F4
F4
F4
H3
–26,104
51,710
25,606
9,304
–1,708
6,333
–10,037
1,308
–7,088
–10,111
–11,999
1,218
–2,280
–5,368
7,177
–3,297
163
–1,515
–625
–2,173
–15,304
11,739
2,299
–8,713
19,728
–7,884
–
–9,104
–2,857
1,124
1,007
–2,630
–3,159
38,349
35,190
19,112
17,638
36,750
–7,740
–1,732
4,766
–1,995
2,339
5,794
–813
619
344
–1,250
–5,600
30,863
–4,477
249
–51,995
307
–1,720
–13,582
40,541
–3,720
–34,397
10,755
–16,029
–
–8,415
–2,593
352
–15,930
3,763
–15,701
54,050
38,349
22,980
17,143
40,123
–5,565
34
1,551
1,385
–118
4,014
2,701
4,002
8
–974
–4,094
39,065
–3,663
115
–389
448
–962
–35,415
20,114
–131
–19,883
7,882
–5,791
42
–6,889
–2,368
–2,183
–9,307
563
10,438
43,612
54,050
36
Consolidated financial statements
Financial report 2023
Consolidated statement of changes in equity
Equity and Other comprehensive income (loss) 2023
SEK million
January 1, 2023
Net income (loss)
Other comprehensive income (loss)
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension plans
including asset ceiling
Revaluation of borrowings due to change in credit risk
Tax on items that will not be reclassified to profit or loss
Items that have been or may be reclassified
to profit or loss
Cash flow hedge reserve
Gains/losses arising during the period
Reclassification to profit and loss
Translation reserves 1)
Changes in translation reserves
Reclassification to profit and loss
Share of other comprehensive income of JV
and associated companies
Tax on items that have been or may be reclassified
to profit or loss
Other comprehensive income (loss), net of tax
Total comprehensive income (loss)
Transactions with owners
Share issue, net
Repurchase of own shares
Long-term variable compensation plans
Dividends paid 2)
Transactions with non-controlling interest
December 31, 2023
Capital
stock
16,672
–
Additional
paid in
capital
24,731
–
Other
reserves
8,201
–
Retained
earnings
85,210
–26,446
Stockholders’
equity
Non-controlling
interests
134,814
–26,446
–1,510
342
Total equity
133,304
–26,104
–
–
–
–
–
–
–
–
–
–
–
50
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–667
137
754
1,090
–2,425
59
–10
–380
–1,442
–1,442
–
–
–
–
–
16,722
24,731
6,759
906
–
–251
–
–
–
–
–
–
655
906
–667
–114
754
1,090
–2,425
59
–10
–380
–787
–25,791
–27,233
–1
–
–
–
–
50
–
–
–
49
391
–
–50
82
–8,991
1
50,461
50
–50
82
–8,991
1
98,673
–
–
–
–113
–33
–1,265
905
–667
–114
754
1,090
–2,375
59
–10
–380
–738
–26,842
50
–50
82
–9,104
–32
97,408
1) Changes in translation reserves include changes regarding translation of goodwill in local currency of SEK –77 million (SEK 5,070 million in 2022 and SEK 2,646 million in 2021), and realized gains/losses net
from divested/liquidated companies, SEK 59 million (SEK –85 million in 2022 and SEK 46 million in 2021).
2) Dividends paid per share amounted to SEK 2.70 (SEK 2.50 in 2022 and SEK 2.00 in 2021).
Financial report 2023
Consolidated financial statements
37
Equity and Other comprehensive income (loss) 2022
SEK million
January 1, 2022
Net income
Other comprehensive income (loss)
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension plans
including asset ceiling
Revaluation of borrowings due to change in credit risk
Cash flow hedge reserve
Gains/losses arising during the period
Transfer to goodwill
Tax on items that will not be reclassified to profit or loss
Items that have been or may be reclassified
to profit or loss
Cash flow hedge reserve
Gains/losses arising during the period
Reclassification to profit and loss
Translation reserves
Changes in translation reserves
Reclassification to profit and loss
Share of other comprehensive income of JV
and associated companies
Tax on items that have been or may be reclassified
to profit or loss
Other comprehensive income (loss), net of tax
Total comprehensive income
Transfer to retained earnings
Transactions with owners
Long-term variable compensation plans
Dividends paid
Transactions with non-controlling interest
December 31, 2022
Capital
stock
16,672
–
Additional
paid in
capital
24,731
–
Other
reserves
454
–
Retained
earnings
66,918
18,724
Stockholders’
equity
Non-controlling
interests
108,775
18,724
–1,676
388
Total equity
107,099
19,112
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,030
3,703
–3,677
–970
–701
280
7,273
–85
49
87
6,989
6,989
758
–
–
–
16,672
24,731
8,201
10,654
–
–
–
–2,093
–
–
–
–
–
–
8,561
27,285
–758
89
–8,325
1
85,210
10,654
1,030
3,703
–3,677
–3,063
–701
280
7,273
–85
49
87
15,550
34,274
–
89
–8,325
1
134,814
15
–
–
–
–4
–
–
–143
–
–
–
–132
256
–
–
–90
–
10,669
1,030
3,703
–3,677
–3,067
–701
280
7,130
–85
49
87
15,418
34,530
–
89
–8,415
1
–1,510
133,304
38
Consolidated financial statements
Financial report 2023
Equity and Other comprehensive income (loss) 2021
SEK million
January 1, 2021
Net income
Other comprehensive income (loss)
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit pension plans
including asset ceiling
Revaluation of borrowings due to change in credit risk
Tax on items that will not be reclassified to profit or loss
Items that have been or may be reclassified
to profit or loss
Cash flow hedge reserve
Gains/losses arising during the period
Reclassification to profit and loss
Translation reserves
Changes in translation reserves
Reclassification to profit and loss
Share of other comprehensive income of JV
and associated companies
Tax on items that have been or may be reclassified
to profit or loss
Other comprehensive income (loss), net of tax
Total comprehensive income
Transactions with owners
Sale of own shares
Long-term variable compensation plans
Dividends paid
Transactions with non-controlling interest
December 31, 2021
Capital
stock
16,672
–
Additional
paid in
capital
Other
reserves
Retained
earnings
Stockholders’
equity
Non-controlling
interests
24,731
–2,689
–
–
47,960
22,694
86,674
22,694
–1,497
286
Total equity
85,177
22,980
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
31
–6
3,532
–
–675
3,532
31
–681
5
–
–1
3,537
31
–682
–542
–96
3,556
46
28
126
3,143
3,143
–
–
–
–
–
–
–
–
–
–
2,857
25,551
42
93
–6,658
–70
66,918
–542
–96
3,556
46
28
126
6,000
28,694
42
93
–6,658
–70
–
–
–214
–
–
–
–210
76
–
–
–231
–24
–542
–96
3,342
46
28
126
5,790
28,770
42
93
–6,889
–94
108,775
–1,676
107,099
16,672
24,731
454
Financial report 2023
Notes to the consolidated financial statements
39
Notes to the consolidated financial statements
Section A – Basis of presentation
A1 Material accounting policies
Basis of presentation
Introduction
The consolidated financial statements comprise Telefonaktiebolaget LM
Ericsson, the Parent Company, and its subsidiaries (“the Company”) and
the Company’s interests in joint ventures and associated companies.
The Parent Company is domiciled in Sweden at Torshamnsgatan 21,
SE-164 83 Stockholm. Ericsson provides mobile connectivity solutions to
telecom operators and to enterprise customers in various sectors.
The consolidated financial statements for the year ended December
31, 2023, have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB), and as endorsed by the EU and RFR 1 “Additional
rules for Group Accounting,” related interpretations issued by the Swedish
Financial Reporting Board (Rådet för finansiell rapportering), and the Swedish
Annual Accounts Act. For the financial reporting of 2023, the Company has
applied IFRS as issued by the IASB (IFRS effective as per December 31, 2023).
There is no difference between IFRS effective as per December 31, 2023, and
IFRS as endorsed by the EU, nor is RFR 1 related interpretations issued by the
Swedish Financial Reporting Board (Rådet för finansiell rapportering) or the
Swedish Annual Accounts Act in conflict with IFRS, for all periods presented.
The financial statements were approved by the Board of Directors on
March 5, 2024. The financial statements are subject to approval by the Annual
General Meeting of shareholders.
Disclosure about new standards and amendments applied as from January
1, 2023, and the preparations for the adoption of new standards and interpre-
tations not adopted in 2023 are disclosed at the end of this note, see heading
Other.
Basis of presentation
The financial statements are presented in millions of Swedish Krona (SEK).
They are prepared on a going concern and historical cost basis, except for
certain financial assets and liabilities that are stated at fair value: financial
instruments classified as fair value through profit or loss (FVTPL), financial
instruments classified as fair value through other comprehensive income
(FVOCI) and plan assets related to defined benefit pension plans. Financial
information in the consolidated income statement, the consolidated statement
of comprehensive income, the consolidated statement of cash flows and the
consolidated statement of changes in equity with related notes are presented
with two comparison years. For the consolidated balance sheet, financial
information with related notes is presented with one comparison year.
Basis of consolidation and composition of the Group
Subsidiaries are all companies for which Telefonaktiebolaget LM Ericsson,
directly or indirectly, is the parent. To be classified as a parent, Telefonaktie-
bolaget LM Ericsson, directly or indirectly, must control another company
which requires that the Parent Company has power over that other company,
is exposed to variable returns from its involvement and has the ability to use its
power over that other company. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control
commences until the date that such control ceases.
The Company is comprised of the parent company, Telefonaktiebolaget
LM Ericsson, with generally fully-owned subsidiaries in many countries of the
world. The largest operating subsidiaries are the fully-owned telecom vendor
companies Ericsson AB, incorporated in Sweden and Ericsson Inc., incorpo-
rated in the US.
Foreign currency remeasurement and translation
Items included in the financial statements of each entity of the Company are
measured using the currency of the primary economic environment in which
the entity operates (“the functional currency”). The consolidated financial
statements are presented in Swedish Krona (SEK), which is the Parent
Company’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of each respective transaction. For
practical reason, the Company uses the closing rate of the previous month end
as approximation of the prevailing rate at the date of transaction, although
spot rate is used for material one-off transaction where appropriate.
Foreign currency exchange effect is presented as a net item within Financial
income and expenses, reported separately from other financial income and
expenses items as this reflects the way the Company manages its foreign
exchange risks on a net basis.
Translations of Group companies
The results and financial position of all the group entities that have a func-
tional currency different from the presentation currency are translated into the
presentation currency as follows:
Assets and liabilities for each balance sheet presented are translated at the
closing rate at the date of that balance sheet. This includes goodwill arising on
the acquisition of a foreign entity.
Period income and expenses for each income statement are translated at
period average exchange rates. For practical reason, the Company uses the
closing rate of the previous month end as approximation of the period average
exchange rates.
All resulting net exchange differences are recognized as a separate compo-
nent of Other comprehensive income (OCI), i.e. changes in translation reserves.
The Company is continuously monitoring the economies with high inflation,
the risk of hyperinflation and their potential impact on the Company. There is
no significant impact due to any currency translation of a hyper-inflationary
economy.
Business and operations
For further disclosure, see the notes under section B.
Revenue recognition
The following paragraphs describe the types of contracts, when performance
obligations are satisfied, and the timing of revenue recognition. They also
describe the normal payment terms associated with such contracts and the
resulting impact on the balance sheet over the duration of the contracts.
Standard products and services
Products and services are classified as standard solutions as they do not
require significant installation and integration services to be delivered.
Installation and integration services are generally completed within a short
period of time, from the delivery of the related products. These products and
services are viewed as separate distinct performance obligations. This type of
customer contract is usually signed as a frame agreement and the customer
issues individual purchase orders to commit to purchases of products and
services over the duration of the agreement.
For hardware sales, transfer of control and revenue recognition, is usually
deemed to occur when the equipment arrives at the customer site.
Standard product software is sold as an on-premises software license that
provides a right to use the software as it exists when made available to the
40
Notes to the consolidated financial statements
Financial report 2023
Note A1, cont’d.
customer. Control is transferred when software licenses are provided to the
customer at a point in time and already activated, or as a released software
version, ready to be activated by the customer at a later stage. Revenue is
recognized when control of the software is transferred and unconditional right
to payment exists.
Software licenses are also sold on a when-and-if available basis or delivered
to the customer network over a period of time. In such cases, the customer is
billed on a subscription basis, and revenue is recognized over time. For soft-
ware revenue based on usage the revenue is recognized upon usage measure-
ment and right to invoice. Revenue for installation and integration services is
recognized upon completion of the service.
Revenue for recurring services such as customer support and managed
services is recognized as the services are delivered, pro-rata over time.
Transaction price for managed services contracts may include variable consid-
eration that is estimated based on performance and prior experience with the
customer. Contracts for standard products and services apply to all segments.
Enterprise solutions
Enterprise solutions comprise mainly of software platform solutions, delivered
as-a-service through a cloud delivery model. These are generally sold as sub-
scription contracts with revenue recognized pro-rata over time or on a usage
basis.
Cloud services allow the customer to use hosted software over the contract
period without taking possession of the software. Cloud services are highly
integrated with the software and the individual components are not consid-
ered distinct, hence all revenue is recognized in the period these services are
provided. Contract duration ranges from one month to 5 years.
Revenue for fixed fee arrangement is recognized on a pro-rata basis over
the contract duration. Revenue for fees based on usage is recognized when
usage occurs.
Services sold through wholesalers or distributors are assessed for principal
or agent relationship. Wholesalers are treated as agents for services that are
activated upon delivery of equipment to the end users since the Company
still has the primary responsibility to the customers for providing the services,
hence revenue (in the gross amount) is recognized rateably from activation
until the end of the contract.
Intellectual Property Rights (IPR)
This type of contract relates to the patent and licensing business. The
Company has assessed that the nature of its IPR contracts is such that they
provide customers a license with the right to access the Company’s intellectual
properties over time, therefore revenue shall be recognized over the duration of
the contract. Royalty revenue based on sales or usage is recognized when the
sales and usage occur.
Customer contract related balances
Trade receivables include amounts that are billed in accordance with customer
contract terms and amounts that the Company has an unconditional right to,
with only passage of time before the amounts can be billed in accordance with
the customer contract terms.
Prices on standard products and services contracts are usually fixed, and
mostly billed upon delivery of the hardware or software, or completion of
installation services. A proportion of the transaction price may be billed upon
formal acceptance of the related installation services, which will result in a
contract asset for the proportion of the transaction price that is not yet billed.
Amounts billed are normally subject to payments terms within 60 days from
invoice date.
Standard recurring services contracts are billed over time, often on a quar-
terly basis. Amounts billed are normally subject to payments terms within 60
days from invoice date. Contract liabilities or receivables may arise depending
on whether the quarterly billing is in advance or in arrears.
For Enterprise solution fixed fee contracts, billing is typically in advance,
resulting in contract liability. For usage-based contracts, billing is in arrears,
resulting in a receivable. Typical credit term is 30 to 45 days.
IPR contracts are usually structured as a royalty fee based on sales or usage
over the period, measured on a quarterly basis. This results in a receivable
balance if the billing is performed the following quarter after measurement.
Some contracts include lump sum amounts, payable either upfront at com-
mencement or on an annual basis. This results in a contract liability balance
if payment is in advance of revenue, as revenue is recognized over time.
Amounts billed are normally subject to payments terms within 60 days from
invoice date.
Customer finance credits arise from credit terms exceeding 179 days in
the customer contract or a separate financing agreement signed with the
customer. Customer finance is a class of financial assets that is managed
separately from receivables. See note F1 “Financial risk management,” for
further information on credit risk management of trade receivables and cus-
tomer finance credits. Where financing is provided to the customer, revenue is
adjusted to reflect the impact of the financing transaction. These transactions
could arise from the customer finance credits above if the contracted interest
rate is below the market rate over the duration of the financing period.
Deferred sales commissions
The Company has various incremental commission costs for internal sales
personnel and channel partners that relate to the acquisition of customer
contracts in the Enterprise segment. These costs are capitalized as deferred
contract acquisition costs (within Other non-current assets and Other current
assets) and amortized on a straight-line basis to selling and administrative
expenses over the contract period. The average contract period is 3 years.
The Company expenses sales commissions for commission plans related to
customer arrangements with a duration of one year or less. The Company
periodically assesses for changes in its business or market conditions which
would indicate that its amortization period shall be changed or if there are
potential indicators of impairment.
Segment reporting
The segment presentation, as per each segment, is based on the Company’s
accounting policies as disclosed in this note. An operating segment is a com-
ponent of a company whose operating results are regularly reviewed by the
Company’s chief operating decision maker (CODM), to make decisions about
resources to be allocated to the segment and assess its performance. The
President and the CEO is defined as the CODM function in the Company.
The Company’s segment disclosure about geographical areas is based on
the country in which transfer of control of products and services occur. For
further information, see note B1 “Segment information.”
Inventories
Inventories are measured at the lower of cost or net realizable value and using
cost formula first-in, first-out (FIFO) related to the Company’s owned produc-
tion and weighted average cost formula for externally purchased components
within the Company’s production units. The cost of inventories related to work
in progress is measured at its individual costs.
Risks of obsolescence have been measured by estimating market value
based on future customer demand and changes in technology and customer
acceptance of new products. An inventory obsolescence provision is recog-
nized as cost of sales in the income statement when identified.
In note A2, “Critical accounting estimates and judgments,” further disclosure
is presented in relation to (i) key sources of estimation uncertainty and (ii) the
decision made in relation to accounting policies applied.
Long-term assets
For further disclosure, see the notes under section C.
Goodwill
As from the acquisition date, goodwill acquired in a business combination is
allocated to each cash-generating unit (CGU) expected to benefit from the
future synergies of the combination.
An annual impairment test for the CGUs to which goodwill has been
allocated is performed in the fourth quarter, or when there is an indication of
impairment. An impairment loss is recognized if the carrying amount of an
asset or its cash-generating unit exceeds its recoverable amount. The recover-
able amount is the higher of the value in use and the fair value less costs of
disposal. In assessing the value in use, the estimated future cash flows after
tax are discounted to their present value using an after-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset. The after-tax amounts, both in relation to cash flows
and discount rate, are applied to the calculation because available models for
Financial report 2023
Note A1, cont’d.
calculating the discount rate include a tax component. The effect of after-tax
discount rates applied by the Company is not materially different from a
discounting based on before-tax future cash flows and before-tax discount
rates, as required by IFRS. Write-downs of goodwill are reported under Other
operating expenses in the income statement.
Additional disclosure is required in relation to goodwill impairment test-
ing: see note A2 “Critical accounting estimates and judgments” and note C1
“Intangible assets.”
Intangible assets other than goodwill
Intangible assets other than goodwill comprise intangible assets acquired
through business combination such as customer relationships, technology
(patents), and trademarks. In addition, there are capitalized development
expenses and separately acquired intangible assets, mainly consisting of
software. At initial recognition, acquired intangible assets relating to busi-
ness combinations are stated at fair value, and capitalized development
expenses and software are stated at cost. Subsequent to initial recognition,
these intangible assets are stated at the initially recognized amounts less
accumulated amortization and any impairment losses. Research and develop-
ment expenses include amortization and impairment losses mainly relating to
capitalized development expenses and technology. Selling and administrative
expenses include amortization and impairment losses mainly relating to
customer relationships and brands.
Amortization is charged to the income statement, on a straight-line basis,
over the estimated useful life of each intangible asset. Estimated useful lives
for customer relationships acquired through the Vonage acquisition are 6 to
9 years. For other acquired intangible assets, such as patents, other customer
relationships, trademarks, and software estimated useful lives do not exceed
10 years, and capitalized development expenses usually have a useful life of
3 years.
Impairment tests are performed when there is an indication of impairment.
Tests are performed in the same way as for goodwill but on an asset level, see
above. However, intangible assets not yet available for use are tested annually
for impairment.
In note A2, “Critical accounting estimates and judgments,” further disclosure
is presented in relation to (i) key sources of estimation uncertainty and (ii) the
decision made in relation to accounting policies applied.
Property, plant, and equipment
Property, plant, and equipment consist of real estate, machinery and other
technical assets, other equipment, tools and installations, and construction
in progress. They are stated at cost less accumulated depreciation and any
impairment losses.
Depreciation is charged to the income statement on a straight-line basis
over the estimated useful life of each component of an item of property, plant,
and equipment, including buildings. Estimated useful lives are, generally,
25–50 years for real estate and 3–10 years for machinery and equipment.
Depreciation and any impairment charges are included in Cost of sales,
Research and development, or Selling and administrative expenses.
Gains and losses on disposals are reported within Other operating income
and expenses in the income statement.
Leases
The main types of assets leased by the Company are, in order of materiality,
real estate, vehicles and IT-equipment. Vehicles are mainly used under service
contracts.
Leases when the Company is the lessee
The Company recognizes right-of-use assets and lease liabilities arising from
all leases in the balance sheet, with some exceptions. In the assessment of a
lease contract the lease components are separated from non-lease compo-
nents. The lease term is defined based on the contract lease term and when
reasonably certain estimated extension or termination options are included.
The average remaining lease term for real estate contracts is around three
years. For lease extensions not included in the lease liability there can be
multiple options for different periods (overlapping) and they can have different
stipulations for how the various options can be applied to be valid (limitations
on size/scope) that must be maintained for extension. As a result, the future
payments for these lease extensions are not known.
Notes to the consolidated financial statements
41
At commencement date the lease liabilities are measured at the present
value of the lease payments not paid at the commencement date, discounted
using the Company’s incremental borrowing rate. The Group estimates its
incremental borrowing rate to measure lease liabilities at the present value of
lease payments as the interest rate implicit in the lease is not readily determi-
nable. The incremental borrowing rate is calculated considering interest swap
rates, the creditworthiness of the entity that signs the lease and an adjustment
for the asset being collateralized. Lease payments included in the liability are
fixed payments, variable payments depending on an index or rate and penal-
ties for termination of contracts.
The right-of-use asset is depreciated over the lease term on a straight-line
basis. Depreciation and any impairment charges are included in Cost of sales,
Research and development expenses or Selling and administrative expenses.
The Company applies the recognition exemption for short-term leases and
leases for which the underlying asset is of low value and recognizes the lease
payments for those leases as an expense on a straight-line basis over the lease
term.
When the Company acts as a lessor, it is mainly in relation to real estate
sublease, financing and operating. For more information regarding leases, see
note C3 “Leases.”
Obligations
For further disclosure, see the notes under section D.
Provisions and Contingent Liabilities
Provisions are made when there are legal or constructive obligations as a result
of past events and when it is probable that an outflow of resources will be
required to settle the obligations and the amounts can be reliably estimated.
When the effect of the time value of money is material, the estimated cash
flows are discounted to present value. However, the actual outflows as a result
of the obligations may differ from such estimates. Provisions mainly relate to
restructuring, customer and supplier-related provisions, warranty commit-
ments, cash-settled share-based payments, claims or obligations as a result of
patent infringement, and other litigations.
A restructuring obligation is considered to have arisen when the Company
has a detailed formal plan for the restructuring (approved by management),
which has been communicated in such a way that a valid expectation has been
raised among those affected. Curtailment gains and losses on defined benefit
plans are reported as part of the net restructuring costs when the restructuring
provision is raised for the underlying program.
Customer-related provisions mainly consist of estimated losses on onerous
contracts. For losses on customer contracts, a provision equal to the total
estimated loss is recorded immediately when a loss from a contract is probable
and can be estimated reliably. The loss is calculated based on the lower of the
unavoidable costs to fulfill a contract and the exit penalty. The unavoidable
cost includes both the incremental and allocated costs to fulfill the contract.
Supplier-related provisions relate to contractual commitments mostly
relating to inventories. The provision is based on a risk assessment compar-
ing the forecasted sales volumes with the committed inventory levels. If the
contractually committed inventory is assessed to be at risk of not being met, a
provision is raised equal to the best estimate of the expected obsolescence or
the contractual fee.
Product warranty commitments consider probabilities of all material quality
issues based on historical performance for established products and expected
performance for new products, estimates of repair cost per unit, and volumes
sold still under warranty up to the reporting date.
Share-based payment provision relates to cash-settled share-based pro-
grams. Refer to the accounting policy under “Cash-settled plans.”
Other provisions relate mainly to patent infringements, litigations, and
other provisions which do not fall within the defined categories. The Company
provides for estimated future settlements related to patent infringements
based on the probable outcome of each infringement. The actual outcome
or actual cost of settling an individual infringement may vary from the
Company’s estimate. The Company estimates the outcome of any potential
patent infringement made known to the Company through assertion and the
Company’s monitoring of patent-related cases in the relevant legal systems.
In the ordinary course of business, the Company is subject to proceedings,
lawsuits, and other unresolved claims. These matters are often resolved over
42
Notes to the consolidated financial statements
Financial report 2023
Note A1, cont’d.
a long period of time. The Company regularly assesses the likelihood of any
adverse judgments in or outcomes of these matters, as well as potential ranges
of possible losses.
Present or possible obligations that do not meet the provision recognition
criteria are reported as contingent liabilities. For further detailed information,
see note D2 “Contingent liabilities.” In note A2 “Critical accounting estimates
and judgments,” further disclosure is presented in relation to (i) key sources
of estimation uncertainty and (ii) the decision made in relation to accounting
policies applied.
Group structure
For further disclosure, see the notes under section E.
Business combinations
At the acquisition of a business, the cost of the acquisition, being the purchase
price, is measured as the fair value of the assets acquired, and liabilities
incurred or assumed at the date of exchange, including any cost related to
contingent consideration. Transaction costs attributable to the acquisition
are expensed as incurred. The acquisition cost is allocated to acquired assets,
liabilities, and contingent liabilities based upon appraisals made, including
assets and liabilities that were not recognized on the acquired entity’s balance
sheet, for example, intangible assets such as customer relationships, brands,
patents, and financial liabilities. The Company, on an acquisition-by-acqui-
sition basis, chooses to measure any non-controlling interest in the acquiree
either at fair value or at the non-controlling interest’s proportionate share of
the acquiree’s net assets.
The acquired entity is consolidated into the Group results from the date of
acquisition. Accordingly, the consolidated stockholders’ equity includes equity
in subsidiaries, joint ventures, and associated companies earned only after
their acquisition.
Associated companies
Investments in associated companies is when the Company has significant
influence and the ability to participate in the financial and operating policy
decisions of the associated company but is not in control or joint control over
those policies. Normally, this is the case in voting stock interest, including
effective potential voting rights, which stand at least at 20% but not more than
50%. Associated companies are accounted for in accordance with the equity
method. Any change in other comprehensive income of the associated com-
panies is presented as part of other comprehensive income. If the Company’s
interest in an associated company is nil, the Company does not recognize its
part of any future losses. Provisions related to obligations for such an interest
are recognized.
Financial instruments and risk management
For further disclosure, see the notes under section F. Plan assets under IAS 19
are excluded from the financial risk management policy and financial instru-
ments disclosures in section F.
for implied volatility, foreign exchange and interest rates. Where there are no
observable market data, fair values are calculated using other inputs such
as data from transactions, external evidence on exit price or other analytical
techniques.
Financial assets at amortized cost
Interest bearing assets, including cash equivalents, held with the objective to
collect contractual cash flows, are classified as amortized cost assets. These
include securities and deposits not managed on a fair value basis and loans
to associates.
Financial assets at fair value through other comprehensive income
(FVOCI)
Trade receivables are classified as FVOCI because the business model is
primarily to collect, with occasional sales. Sale of trade receivables are made
when the liquidity need arises and competitive prices are available for such
a sale.
Financial assets at fair value through profit or loss (FVTPL)
All financial assets that are not classified as either amortized cost or FVOCI are
classified as FVTPL. Derivatives are classified as FVTPL, unless they are desig-
nated as hedging instruments for the purpose of hedge accounting. Derivatives
assets and liabilities are offset where there is legally enforceable right to offset,
and the Company settles on a net basis with the counterparties. Derivatives
assets and liabilities (after offset) are classified as current and non-current
based on the maturity of the contract, unless they are intended and expected
to be settled within 12 months.
Interest-bearing assets including investment in securities and money
market funds are classified as FVTPL where they are either held in a portfolio
managed on a fair value basis or held for short-term liquidity purposes.
Customer finance receivables are classified as FVTPL because they are
primarily held for sale. These assets are presented on the balance sheet based
on their maturity date (i.e., those with a maturity longer than one year are
presented as non-current). Investments in shares and participations are classi-
fied as FVTPL and presented as non-current financial assets.
Gains or losses arising from changes in the fair values of investment in
shares and participations are presented in the income statement within other
operating income.
Gains and losses on derivatives are presented in the income statement as
follows: Gains and losses on derivatives used to hedge foreign exchange risks
are presented within net foreign exchange gains and losses. Gains and losses
on interest rate derivatives used to hedge financial assets and liabilities are
presented in financial income and financial expense, respectively.
Gains and losses on revaluation of customer financing receivables are
presented in the income statement as selling expenses. Gains and losses
arising from changes in the fair values of all other assets in the FVTPL category
are presented in the income statement within financial income.
Dividends on equity instruments are recognized in the income statement
as part of financial income when the Company’s right to receive payments is
established.
Financial assets
Financial assets are recognized when the Company becomes a party to the
contractual provisions of the instrument. Regular purchases and sales of
financial securities are recognized on the settlement date. Financial assets
are derecognized when the rights to receive cash flows from the assets have
expired or have been transferred and the Company has transferred substan-
tially all risks and rewards of ownership. The Company sells its receivables
with the expectation that all derecognition criteria are fully satisfied thereby
no material asset or liability is retained. The Company classifies its financial
assets in the following categories: at amortized cost, at fair value through
other comprehensive income (FVOCI), and at fair value through profit or loss
(FVTPL). The classification depends on the cash flow characteristics of the
asset and the business model in which it is held.
The fair values of quoted financial investments and derivatives are based
on quoted market prices or rates. If official rates or market prices are not avail-
able, fair values are calculated using observable inputs such as market prices
Impairment in relation to financial assets
At each balance sheet date, financial assets classified as either amortized
cost or FVOCI and contract assets are assessed for impairment based on
Expected Credit Losses (ECL). The Company adopts a simplified approach for
trade receivables and contract assets whereby allowances are always equal
to lifetime ECL. The Company has established a provision matrix based on
historical credit loss experience, which has been adjusted for current conditions
and expectations of future economic conditions. The losses are recognized on
a separate line in the income statement. When there is no reasonable expecta-
tion of collection, the asset is written off.
Other amortized costs assets are mainly investment grade assets deemed
to be low risk hence credit risk is assumed not to have increased significantly
since initial recognition. If the Company identifies evidence of significant
change in credit risk on the assets, lifetime ECL is used to calculate allowance
on the asset. Default is deemed if the asset is more than 90 days past due, after
which lifetime ECL is also used to calculate allowance on the asset.
Financial report 2023
Note A1, cont’d.
Notes to the consolidated financial statements
43
Financial liabilities
Financial liabilities are recognized when the Company becomes bound to the
contractual obligations of the instrument.
Financial liabilities are derecognized when they are extinguished, i.e., when
the obligation specified in the contract is discharged, cancelled or expired.
Trade payables
Trade payables are recognized as amortized cost liabilities. Some suppliers
sell their Ericsson receivables to banks and the Company can if requested
introduce a bank interested in purchasing such receivables. The Company does
not pay or receive a fee, nor provide additional security under the program. This
arrangement does not lead to any significant change in the nature or function
of the Company’s liabilities because the supplier invoices are considered part of
working capital used in the Company’s normal operating cycle. The maximum
credit period agreed with any supplier does not exceed six months. Therefore,
these liabilities remain classified as trade payables with separate disclosure in
the notes, see note B8 “Trade payables.”
Borrowings
Borrowings issued by the Parent Company are designated FVTPL where they
are managed on a fair value basis. These are long term borrowings held in an
Asset and liability management portfolio where the interest rate risk is man-
aged by matching fixed and floating interest rates of interest-bearing balance
sheet items. Changes in fair value of this portfolio are recognized in financial
expense, except for changes in fair value due to changes in credit risk which are
recognized in other comprehensive income.
Borrowings not managed on a fair value basis are classified as amortized
cost liabilities. These include revolving credit facilities and commercial papers
program which are used for short term liquidity purposes and cash collaterals
received.
Employee related
For further disclosure, see the notes under section G.
Post-employment benefits
Pensions and other post-employment benefits are classified as either defined
contribution plans or defined benefit plans. These include gratuity plans,
medical plans and leave encashment plans which are expected to be provided
to employees over a period longer than 12 months.
The present value of the defined benefit obligations for current and former
employees is calculated using the Projected Unit Credit Method. The discount
rate for each country is determined by reference to market yields on high-
quality corporate bonds that have maturity dates approximating the terms
of the Company’s obligations. In countries where there is no deep market for
such bonds such as Sweden the market yields on government bonds are used.
The calculations are based upon actuarial assumptions that are updated
annually. The Company’s net liability for each defined benefit plan consists of
the present value of pension commitments less the fair value of plan assets
and is recognized net on the balance sheet. When the result is a net benefit to
the Company, the recognized asset is limited to the present value of any future
refunds from the plan or reductions in future contributions to the plan, referred
to as ‘asset ceiling’. The pension asset is presented as Other Financial assets,
non-current.
Interest cost on the defined benefit obligation and interest income on plan
assets is calculated as a net interest amount and presented within Financial
expenses. Curtailment gains and losses due to restructuring programs are
recognized as part of the restructuring costs. Settlement events are considered
as risk management activities driven by Group Treasury functions, therefore
any gains and losses are presented within Financial expenses. Swedish special
payroll tax is accounted for as a part of the pension cost, and the pension
liability respectively.
Borrowings are presented as current liabilities unless the Company has an
Payroll taxes related to actuarial gains and losses are included in determin-
unconditional right to defer settlement of the liability for at least 12 months
after the balance sheet date.
Cash flow hedge accounting
The Company has the following recurring hedge programs:
a) Certain customer contracts where a fluctuation in the USD/SEK foreign
exchange (FX) rate would significantly impact net sales. These contracts are
multi-year contracts denominated in USD with highly probable payments at
fixed points in time.
b) Highly probable forecasted sales denominated in USD in Ericsson AB (EAB)
for the next 7 to 18 months are hedged on a monthly rolling basis.
For both programs, the Company enters into FX forward contracts that match
the terms of the foreign exchange exposure as closely as possible and desig-
nates these as hedging instruments.
At inception, the Company documents the economic relationship between
the hedged item and hedging instrument. For FX hedges, the hedge ratio is
usually 1:1. The Company designates changes in forward rates as the hedged
risk. When applying hedge accounting, the effective portion of changes in the
fair value of derivatives that is designated and qualifies as cash flow hedges is
recognized in OCI. The gain or loss relating to an ineffective portion is recog-
nized immediately in Financial income and expenses, net. Upon recognition
of the hedged net sales, the cumulative amount in cash flow hedge reserve is
released in the OCI as a reclassification adjustment and recognized in net sales.
In addition to the recurring hedge programs, cash flow hedge is also des-
ignated for certain highly probable acquisition expected to be transacted in
foreign currencies. FX derivatives are used as hedging instruments, at a hedge
ratio of 1:1. The Company designates changes in forward rates as the hedged
risks. The accounting is similar to that described for the cash flow hedge
above, except that upon recognition of the hedged acquisition, the cumulative
amount in the cash flow hedge reserve is released and recognized as a basis
adjustment to the goodwill.
ing actuarial gains and losses, reported under OCI.
In note A2, “Critical accounting estimates and judgments” further disclosure
is presented in relation to key sources of estimation uncertainty.
Share-based compensation to employees and the Board of Directors
Share-based compensation relates to remuneration to employees, including
key management personnel and the Board of Directors, and could be settled in
either shares or cash.
The majority of the granted share-based programs are cash-settled, except
for programs for the Executive Team and the long-term variable compensation
(LTV) 2023 program. These programs are share-settled. Share-settled plans
will be settled in the Parent Company Class B shares provided the market-
related and non-market-related vesting conditions are met.
Share-settled plans
Compensation costs are recognized during the vesting period, based on the
fair value of the Ericsson share at the grant date, and considers performance
and market-related vesting conditions. All plans have service conditions, while
some have performance and market-related vesting conditions. Examples of
performance conditions could be revenue and profit targets and market condi-
tions relate to the development of the Parent Company’s share price in relation
to a group of reference shares.
For further detailed information, see note G3 “Share-based compensation.”
Cash-settled plans
The total compensation expense for a cash-settled plan is equal to the pay-
ments made to the employees at the date of the end of the service period.
The fair value of the synthetic shares, being the cash equivalents of shares, is
therefore reassessed and amended during the service period, and accounted
for as a provision. Otherwise the accounting is similar to a share-settled plan.
Cash-settled plans relating to employees’ share-based payment programs
have similar vesting criteria to share-settled plans. All plans have service condi-
tions, while some have performance and market-related vesting conditions.
Up to and including 2022, non-executive directors could elect to receive part
of their remuneration as synthetic shares, which will be converted to cash at
the end of a specified vesting period based upon the market value of the class
B shares in the Parent company at the time of payment.
44
Notes to the consolidated financial statements
Financial report 2023
Note A1, cont’d.
For further detailed information, see notes G2 “Information regarding
members of the Board of Directors and Group management” and G3 “Share-
based compensation.”
Other
For further disclosure, see the notes under section H.
Income taxes
Income taxes in the consolidated financial statements include both current
and deferred taxes. Income taxes do not include VAT, sales/use taxes, or other
taxes not based on taxable profits. Income taxes are reported in the income
statement unless the underlying item is reported directly in equity or OCI. For
those items, the related income tax is also reported directly in equity or OCI. A
current tax liability or asset is recognized for the estimated taxes payable or
refundable for the current year or prior years.
Current income tax and deferred taxes are measured at the tax rate that is
expected to be applied based on the tax laws that have been enacted or sub-
stantially enacted for the reporting period in the corresponding jurisdiction.
Deferred tax is recognized for temporary differences between the book
values of assets and liabilities and their tax values for unused tax loss carry-
forwards and for unused tax credits. A deferred tax asset is recognized only to
the extent that it is probable that future taxable profits will be available against
which the deductible temporary differences, tax loss carry-forwards and tax
credits can be utilized. In the recognition of income taxes, the Company offsets
current tax receivables against current tax liabilities and deferred tax assets
against deferred tax liabilities in the balance sheet, when the Company has a
legal right to offset these items and the intention to do so. Deferred tax is not
recognized for temporary differences when it is probable that the temporary
difference will not reverse in the foreseeable future.
In note A2 “Critical accounting estimates and judgments,” further disclosure
is presented in relation to (i) key sources of estimation uncertainty and (ii) the
decision made in relation to accounting policies applied.
Statement of cash flows
The statement of cash flows is prepared using the indirect method. Cash flows
from foreign subsidiaries are translated at the average exchange rate during
the period. For practical reasons, the Company uses the closing rate of the
previous month end as approximation of the period average exchange rate.
Payments for subsidiaries acquired or divested are reported as cash flow from
investing activities, net of cash and cash equivalents acquired or disposed of
respectively. Movements in cash collaterals received and bank borrowings
less than 3 months (used for short-term liquidity purposes) are presented net
within “Other financing activities”.
Cash and cash equivalents consist of cash, bank, and interest-bearing
securities that are highly liquid monetary financial instruments with a remain-
ing maturity of three months or less at the date of acquisition.
Government grants
Government grants are recognized when there is reasonable assurance that
the Company will comply with the conditions attached to them and the grants
will be received. Government grants received are mainly recognized in the
consolidated income statement as a deduction against the related expense.
Climate-related considerations
The Company has performed an analysis of how different climate scenarios
could affect the Company and its value chain. The analysis did not identify any
short-term material financial risks or changes to significant accounting policies
and accounting estimates. In the middle to long-term horizon, carbon pricing
and potential scarcity in raw materials used in products and equipment affect-
ing actors in the upstream value chain, as well as disruptions in supply due to
severe weather events have been identified as emerging risks. The Company
intends to refine the analysis and assess climate-related financial implications
in more granularity in coming years.
New accounting standards and interpretations
On January 1, 2023, the following amendments issued by the IASB were
adopted with no material impact on the results and financial position of the
Company.
– IFRS 17 Insurance contracts (including the June 2020 and December 2021
amendments to IFRS 17, which establishes principles for the recognition,
measurements, presentation and disclosure of insurance contracts)
– Amendments to IAS 1 Presentation of Financial Statements and IFRS
Practice Statement 2 – Disclosure of Accounting policies
– Amendments to IAS 8 Accounting policies, Changes in Accounting
Estimates and Errors – Definition of Accounting Estimates
– Amendments to IAS 12 Income Taxes – Deferred Tax related to Assets and
Liabilities arising from a Single Transaction.
– Amendments to IAS 12 Income taxes: International Tax Reform – Pillar
Two Model Rules
The application of the amendment to IAS 1 above resulted in a reassessment
and revision to the of the Company’s existing accounting policies disclosure
compared to what was previously disclosed in the 2022 financial statements,
taking into consideration the materiality of the related accounting items.
On 13 December 2023, the government of Sweden, where the parent company
is incorporated, enacted the Pillar Two income taxes legislation effective from
1 January 2024. Under the legislation, the parent company will be required
to pay, in Sweden, top-up tax on profits of its subsidiaries that are taxed at an
effective tax rate of less than 15 per cent unless this is due and payable locally.
Management does not believe that there will be any material impact on the
results of the Group’s operations for the year ending 31 December 2024 in any
of the main jurisdictions in which Ericsson currently operates.
The Group is continuing to assess the impact of Pillar Two income taxes
legislation on its future financial performance, however, based on the analysis
performed management does not expect the legislation effective in 2024 will
have a material impact on the results of operations or cash flows for the year
ending 31 December 2024 or the financial position as at that date.
A number of new amendments to standards and interpretations are not yet
effective for the year ended December 31, 2023, and have not been applied in
preparing these consolidated financial statements.
The IASB has issued the following new amendments with effective date
January 1, 2024:
– Amendments to IAS 1 Presentation of financial statements – Classification
of liabilities as current or non-current
– Amendments to IAS 1 Presentation of financial statements – Non-current
liabilities with covenants
– Amendments to IFRS 16 Leases – Lease liability in a sale and leaseback
– Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments – Disclosures: Supplier Finance Arrangements
– These amendments will increase the disclosures for Supplier Finance
Arrangements.
The Company has finalized the evaluation of any impact on financial results
or position from these amendments and concluded that they will not have a
material impact on the results and financial position of the Company.
The IASB has issued the following new amendment with effective date
January 1, 2025:
– Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates:
Lack of Exchangeability (issued on 15 August 2023)
The Company has not finalized the evaluation of any impact on financial
results or position from this amendment and its effect on the results and finan-
cial position of the Company.
Financial report 2023
Notes to the consolidated financial statements
45
A2 Critical accounting estimates and judgments
The preparation of financial statements and application of accounting
standards often involve management’s judgment and the use of estimates and
assumptions deemed to be reasonable at the time they are made. However,
other results may be derived with different judgments or using different
assumptions or estimates, and events may occur that could require a material
adjustment to the carrying amount of the asset or liability affected. Examples
of this could occur with a change in strategy or restructuring. Judgments for
accounting policies to be applied as well as estimates may also be impacted
due to this. The following are the most important accounting policies subject
to such judgments and the key sources of estimation uncertainty that the
Company believes could have the most material impact on the reported results
and financial position.
The information in this note is grouped as per:
– Key sources of estimation uncertainty
– Judgments management has made in the process of applying the
Company’s accounting policies.
Revenue recognition
Key sources of estimation uncertainty
The Company uses estimates and judgments in determining the amount and
timing of revenue particularly when determining the transaction price and its
allocation to performance obligations identified under the contract.
Transaction price, including variable considerations, for example volume
rebate earnings, is estimated at the commencement of the contract (and
periodically thereafter). Judgment is used in the estimation process based on
historical experience with the type of business and customer. This includes
assessment of price concession based on latest available information on
contract negotiations that could have retrospective impact on prices for prod-
ucts and services already ordered or delivered.
The Company uses an adjusted market assessment approach to estimate
stand-alone selling prices for its products and services for the purposes of
allocating transaction price.
Judgments made in relation to accounting policies applied
Management applies judgment when assessing the customer’s ability and
intention to pay in a contract. The assessment is based on the latest customer
credit standing and the customer’s past payment history. This assessment may
change during the contract execution, and if there is evidence of deterioration
in the customer’s ability or intention to pay, then no further revenue shall be
recognized until the collectability criteria is met. Conversely, this assessment
may also change favorably over time, upon which revenue shall now be recog-
nized on a contract that did not initially meet the collectability criteria.
Revenue for standard products is recognized when control over the equip-
ment is transferred to the customer at a point in time. This assessment shall be
viewed from a customer’s perspective considering indicators such as transfer
of titles and risks, customer acceptance, physical possession, and billing rights.
Judgment may be applied in determining whether risk and rewards have
been transferred to the customer and whether the customer has accepted the
products. Often all indicators of transfer of control are assessed together and
an overall judgment formed as to when transfer of control has occurred in a
customer contract.
Impairment allowance on receivables and contract assets
Key sources of estimation uncertainty
The Company monitors the financial stability of its customers, the environ-
ments in which they operate and historical credit losses. This is combined
with expectations of future economic conditions to calculate expected credit
losses (ECLs). ECLs on trade receivables and contract assets are assessed
using a provision matrix based on days past due for groupings of customers
that are classified as low, medium and high. The amount of ECLs is sensitive
to changes in the payment patterns, circumstances of our customers and the
environments in which they operate as well as management’s expectations
of future economic conditions. Actual credit losses may be higher or lower
than expected, therefore are regularly monitored to ensure the provision
matrix is updated if required. Total allowances for expected credit losses as
of December 31, 2023 were SEK 2.6 (2.5) billion or 5% (4%) of gross trade
receivables and contract assets. For further detailed information see note F1
“Financial risk management”.
Customer financing receivables are valued at fair value on an individual
basis. When market pricing is not available, an internal valuation model is
applied considering external credit rating, political and commercial risks and
bank pricing. Regular monitoring of customer behavior is also a part of the
internal assessment. At December 31, 2023, the fair value of customer finance
receivables amounted to SEK 6.9 (5.4) billion. For further detailed information
see note F1 “Financial risk management”.
Inventory valuation
Key sources of estimation uncertainty
Inventories are valued at the lower of cost and net realizable value. Estimates
are required in relation to forecasted sales volumes, prices and inventory
balances. Inventory write-downs during the period, amounted to SEK 4.0 (3.9)
billion or 10% (8%) of gross inventory at year end. For further detailed informa-
tion, see note B5 “Inventories.”
Judgments made in relation to accounting policies applied
In situations where excess inventory balances are identified, estimates of
net realizable values for the excess volumes are made.
Allowances for obsolescence in inventory considers aging, historical
consumption and judgments around market demands. There may also be
judgments around internal and external circumstances, e.g. withdrawal of
a product or economic and political changes in the global market.
Acquired customer relationships, intellectual property rights and other
intangible assets, including goodwill
Key sources of estimation uncertainty
At initial recognition, future cash flows are estimated, to ensure that the
initial carrying values do not exceed the expected discounted cash flows for
the items of this type of asset. After initial recognition, impairment testing is
performed when there is an indication of impairment. Additionally, goodwill
impairment testing is performed once per year aligned with updated business
plans. An indication of impairment may be a material deviation in actual cash
flows compared to the business plan as well as new estimates that indicate
lower future cash flows. The estimation uncertainty is considered higher for
the Enterprise segment than the other segments in the next twelve months.
Impairment losses for intangible assets and goodwill amounted to SEK –31.9
(–0.1) billion for 2023.
At December 31, 2023, the carrying amount of acquired intangible assets
amounted to SEK 75.6 (110.9) billion, including goodwill of SEK 52.9 (84.6)
billion.
For further discussion on goodwill, see note A1 “Material accounting poli-
cies.” Estimates related to acquired intangible assets are based on similar
assumptions and risks as goodwill. For more information, see note C1
“Intangible assets.”
Judgments made in relation to accounting policies applied
At initial recognition and subsequent remeasurement, management
judgments are made, both for key assumptions and impairment indicators.
Management judgment is required for the purchase price allocation, for
example when determining the fair values of acquired intangible assets.
Judgment is also required in defining the cash-generating units for impairment
testing purposes.
Leases
Key sources of estimation uncertainty
Estimation uncertainty exists due to possible future changes in business
operations, which may impact the actual lease term of a contract. For example,
if a restructuring program is initiated which could mean termination of existing
lease contracts. The determination of the rates at which the lease liabilities are
discounted is another uncertainty and this affects the lease liability and inter-
est expense amounts. At December 31, 2023, lease liabilities amounted to SEK
7.5 (9.3) billion. For more information, see note C3 “Leases.”
46
Notes to the consolidated financial statements
Financial report 2023
Note A2, cont’d.
Judgments made in relation to accounting policies applied
At initial recognition and subsequent remeasurement, management judgment
is used for the term applied in a lease contract. The outcome of these judg-
ments may turn out not to match the actual outcome of the lease and may
have an adverse effect on the right-of-use assets. An incremental borrowing
rate is used in discounting of the lease liabilities and requires judgment to
reflect the rate of interest that would have to be paid to borrow over a similar
term, and with a similar security, the funds necessary to obtain an asset of a
similar value to the right-of-use asset in a similar economic environment.
Provisions and contingent liabilities
Key sources of estimation uncertainty
The key sources of estimation uncertainty relating to provisions are the assess-
ment of the probability of outflow and whether a reliable estimate can be
made. Supplier-related provisions require a reliable forecast of sales volumes
to estimate the expected usage of the committed inventory purchases.
Therefore, estimation uncertainty exists regarding the forecast and expected
usage to assess the risk and the provision amount. Estimation uncertainty
exists regarding restructuring provisions as the eventual outcome of the
program, in terms of costs and actual impacted employees, may differ from the
estimates made in the management plan. Estimation uncertainty exists with
respect to ongoing internal investigations, proceedings and other matters with
government and regulatory authorities. The Company’s internal investigation
and its cooperation with authorities in relation to the matters discussed in the
2019 internal Iraq investigation report remain open and ongoing. Estimation
uncertainty over the expected settlement relating to litigation and disputes
including intellectual property related topics such as patents exists as they
may continue over several years and the outcome is unknown.
The same estimation uncertainties described above for provisions exist for
contingent liabilities. Contingent liabilities mainly relate to estimates for litiga-
tion including intellectual property related topics such as patents, tax litigation,
losses on customer contracts, and pension guarantees. As the contingent
liabilities will only be confirmed in the future based on the resolution of the
litigation or dispute, management is required to estimate the possibility of an
adverse outcome occurring and the potential settlement value. A contingent
liability may exist at year end, and/or expense (provision) may have to be
recognized at a later stage based on the latest conditions and progress of the
potential obligation.
Provisions and contingent liabilities are regularly reassessed based on the
latest information available and are adjusted to reflect the Company’s best
estimate of the eventual outcome.
At December 31, 2023, provisions amounted to SEK 11.7 (11.6) billion.
For further detailed information, see note D1 “Provisions.”
Pensions and other post-employment benefits
Key sources of estimation uncertainty
Accounting for the costs of defined benefit pension plans and other applicable
post-employment benefits is based on actuarial valuations, relying on key
estimates for discount rates, future salary increases, employee turnover rates
and mortality tables. The discount rate assumptions are based on rates for
high-quality fixed-income investments with durations as close as possible to
the Company’s pension plans. In countries where there is not a deep market
in high-quality corporate bonds, the market yields on government bonds shall
be applied. Judgment is applied in determining the depth of the high-quality
corporate bond market in each country. The impact of applying an alternative
discount rate based on Swedish covered bonds is disclosed in note G1, “Post-
employment benefits.” At December 31, 2023, defined benefit obligations
for pensions and other post-employment benefits amounted to SEK 85.5
(83.7) billion and fair value of plan assets amounted to SEK 62.6 (60.5) billion.
For more information on estimates and assumptions, see note G1 “Post-
employment benefits.”
Accounting for deferred tax
Key sources of estimation uncertainty
The measurement of deferred tax assets involves judgment regarding the
deductibility of costs not yet subject to taxation and estimates regarding
sufficient future taxable income to enable utilization of unused tax losses
and/or tax credits in different tax jurisdictions. All deferred tax assets are
subject to annual review of probable utilization.
The valuation of temporary differences, tax loss carry-forwards and tax
credits are based on management’s estimates of future taxable profits in
different tax jurisdictions against which the temporary differences, loss carry-
forwards and tax credits may be utilized. These estimates are primarily based
on business plans for the Company´s estimated outcome of future taxable
profits.
At December 31, 2023, the value of deferred tax assets amounted to
SEK 22.4 (19.4) billion. For further detailed information see note H1 “Taxes.”
The deferred tax assets related to loss carry-forwards are reported as non-
current assets.
Accounting for income tax, value added tax, and other taxes
Key sources of estimation uncertainty
Accounting for income taxes is based upon evaluation of taxable income in all
jurisdictions where the profits arise. As prescribed in IFRIC 23, only uncertainty
over income tax treatment is considered if and when recognizing and measur-
ing income tax items in the financial statements.
Assets relating to value added tax, and other taxes are separately assessed
At December 31, 2023, contingent liabilities disclosed amounted to
for recoverability in each jurisdiction according to the local regulations.
SEK 3.0 (3.3) billion. For further detailed information, see note D2 “Contingent
liabilities” including a description of contingent liabilities which cannot be
quantified.
The total complexity of rules related to taxes and the accounting for these
require management’s involvement in judgments regarding classification of
transactions and in estimates of probable outcomes of claimed deductions
and/or disputes.
Judgments made in relation to accounting policies applied
The nature and type of risks for these provisions and contingencies differ and
management applies judgment regarding the nature and extent of the obliga-
tions in deciding the probability of the outcome. Further judgment is required
in determining the value of the present or possible obligation as this is based
on the Company’s best estimate as to the expected future expenditure required
to settle the obligation.
Climate-related factors
Judgments made and key sources of estimation uncertainty
The Company has considered the effect of climate-related factors on the
financial statements, see references in the notes B5 “Inventories“ and C1
“Intangible Assets“ on measurements of non-financial assets. There are also
long-term incentive plans with specific climate-related targets as described in
note G3 “Share-based compensation” that impacts the financial statements.
There are no significant judgments or estimates made in relation to climate-
related effect in all these areas.
Financial report 2023
Notes to the consolidated financial statements
47
Section B – Business and operations
B1 Segment information
Segments
When determining Ericsson’s operating segments, consideration has been
given to the financial reporting reviewed by the Chief Operating Decision
Maker (CODM). Markets and what type of customers the products and services
aim to attract has been considered, as well as the distribution channels they
are sold through. Commonality regarding technology, research and develop-
ment has also been taken into account. To best reflect the business focus, three
operating segments are presented:
– Networks
– Cloud Software and Services
– Enterprise
Segment Networks offers multi-technology-capable Radio Access Network
(RAN) solutions for all network spectrum bands, including purpose-built and
Open RAN-prepared high-performance hardware and software. The offerings
also includes a Cloud RAN portfolio, a transport portfolio, passive and active
antenna solutions and a complete service portfolio, covering network deploy-
ment and support. 82% (82% in both 2022 and 2021) of the IPR licensing
revenues are reported as part of segment Networks.
Segment Cloud Software and Services provides solutions for core networks,
business and operational support systems, network design and optimization,
and managed network services. The focus is to enable CSPs to succeed in their
transition to cloud operations, intelligent and automated networks. 18% (18%
in both 2022 and 2021) of the IPR licensing revenues are reported as part of
segment Cloud Software and Services.
Segment Enterprise comprises three business areas offering solutions
primarily to enterprise customers: Global Communications Platform (Vonage)
including cloud-based Unified Communications as a Service (UCaaS), Contact
Center as a Service (CCaaS) and Communications Platform as a Service
(CPaaS); Enterprise Wireless Solutions, including private wireless networks
and wireless WAN (Cradlepoint) pre-packaged solutions; and Technologies
and New Businesses including mobile financial services, security solutions and
advertising services.
Other includes the media business and other non-allocated business.
Segment-level information has also been presented for Other.
Market areas
The market areas are the Company’s primary sales channel with the responsi-
bility to sell and deliver Mobile Networks customer solutions.
The Company operates worldwide and reports its operations divided into
five geographical market areas:
– Europe and Latin America
– Middle East and Africa
– North America
– North East Asia
– South East Asia, Oceania and India.
Segment Enterprise has a multi-channel go-to-market distribution model.
Sales from segment Enterprise and Other, and the IPR licensing revenues are
externally reported as market area Other.
Major customers
The Company derives most of its sales from large, multi-year agreements with
a limited number of significant customers. Out of a customer base of more
than 500 customers, mainly consisting of CSPs, the 10 largest customers
accounted for 43% (50% in 2022 and 49% in 2021) of net sales. The largest
customer accounted for approximately 8% (14% in 2022 and 13% in 2021)
and the second largest customer accounted for 7% (10% in 2022 and 9% in
2021) of net sales. These customers were reported under segments Networks
and Cloud Software and Services.
Segment information 2023
Segment sales
Net sales
Gross income
Gross margin (%)
Earnings (loss) before financial items and income tax (EBIT)1)
EBIT margin (%)
Financial income and expenses, net
Income (loss) after financial items
Income tax
Net income (loss)
Other segment items
Share in earnings of JV and associated companies
Amortizations
Depreciations
Impairment losses1)
Restructuring charges
Gains/losses on investments and sale of operations
Networks
171,442
171,442
67,959
39.6%
19,382
11.3%
Cloud Software
and Services
63,630
63,630
22,088
34.7%
–220
–0.3%
Enterprise
25,745
25,745
12,016
46.7%
–38,336
–148.9%
Other
2,534
2,534
–461
–18.2%
–1,152
–45.5%
Total
Segments
263,351
263,351
101,602
38.6%
–20,326
–7.7%
83
–1,013
–4,460
–527
–4,437
–24
41
–43
–1,470
–176
–1,924
–39
–
–3,401
–274
–31,952
–173
–16
–
–1
–495
–77
13
–206
124
–4,458
–6,699
–32,732
–6,521
–285
Group
263,351
263,351
101,602
38.6%
–20,326
–7.7%
–2,993
–23,319
–2,785
–26,104
124
–4,458
–6,699
–32,732
–6,521
–285
1) Segment Enterprise includes impairment of goodwill of SEK –31.9 billion related to the acquisition of Vonage. For more information, see note C1 “Intangible assets.”
48
Notes to the consolidated financial statements
Financial report 2023
Note B1, cont’d.
Segment information 2022
Segment sales
Net sales
Gross income
Gross margin (%)
Earnings (loss) before financial items and income tax (EBIT) 1)
EBIT margin (%)
Financial income and expenses, net
Income after financial items
Income tax
Net income
Other segment items
Share in earnings of JV and associated companies
Amortizations
Depreciations
Impairment losses
Restructuring charges
Gains/losses on investments and sale of operations
Networks
193,468
193,468
86,368
44.6%
38,512
19.9%
30
–1,424
–4,073
–211
–146
253
Cloud Software
and Services
Enterprise 2)
60,524
60,524
20,106
33.2%
–1,689
–2.8%
27
–122
–1,792
–91
–96
–
14,597
14,597
7,096
48.6%
–4,473
–30.6%
–
–2,019
–515
–87
–65
111
Other 2)
2,957
2,957
–275
–9.3%
–5,330
–180.3%
Total
Segments
271,546
271,546
113,295
41.7%
27,020
10.0%
–40
–12
–185
–12
–92
–108
17
–3,577
–6,565
–401
–399
256
Group
271,546
271,546
113,295
41.7%
27,020
10.0%
–2,411
24,609
–5,497
19,112
17
–3,577
–6,565
–401
–399
256
1) Segment Other includes a provision of SEK –2.3 billion related to the DPA breach resolution with the U.S. Department of Justice, including expenses for the extended monitorship, and by SEK –1.0 billion due to
charges related to the divestment of IoT and other portfolio adjustments.
2) The segments have been restated to reflect the change where the divested IoT business in the first quarter 2023 was transferred from segment Enterprise to segment Other.
Cloud Software
and Services
Enterprise 1)
5,513
5,513
3,026
54.9%
–1,774
–32.2%
Other 1)
2,739
2,739
25
0.9%
–1,478
–54.0%
Total
Segments
232,314
232,314
100,749
43.4%
31,780
13.7%
Segment information 2021
Segment sales
Net sales
Gross income
Gross margin (%)
Earnings (loss) before financial items and income tax (EBIT)
EBIT margin (%)
Financial income and expenses, net
Income after financial items
Income tax
Net income
Other segment items
Share in earnings of JV and associated companies
Amortizations
Depreciations
Impairment losses
Restructuring charges
Gains/losses on investments and sale of operations
Networks
167,838
167,838
78,869
47.0%
37,266
22.2%
40
–1,169
–3,764
–127
–262
14
56,224
56,224
18,829
33.5%
–2,234
–4.0%
72
–508
–1,568
–185
–254
–51
–
–830
–430
–188
9
998
–372
–
–189
–11
–42
–
–260
–2,507
–5,951
–511
–549
961
Group
232,314
232,314
100,749
43.4%
31,780
13.7%
–2,530
29,250
–6,270
22,980
–260
–2,507
–5,951
–511
–549
961
1) The segments have been restated to reflect the change where the divested IoT business in the first quarter 2023 was transferred from segment Enterprise to segment Other.
Products and Services by Segments
2023
Products
Services
Total
2022
Products
Services
Total
2021
Products
Services
Total
Networks
Cloud Software
and Services
Enterprise 1)
Other 1)
Total
Segments
131,393
40,049
171,442
147,997
45,471
193,468
128,951
38,887
167,838
21,672
41,958
63,630
21,105
39,419
60,524
19,267
36,957
56,224
5,704
20,041
25,745
4,923
9,674
14,597
3,955
1,558
5,513
–4
2,538
2,534
–1
2,958
2,957
24
2,715
2,739
158,765
104,586
263,351
174,024
97,522
271,546
152,197
80,117
232,314
1) The segments have been restated to reflect the change where the divested IoT business in the first quarter 2023 was transferred from segment Enterprise to segment Other.
Financial report 2023
Note B1, cont’d.
Market area 2023
South East Asia, Oceania and India 3)
North East Asia 4)
North America 2)
Europe and Latin America 1)
Middle East and Africa
Other 1) 2) 3) 4) 6)
Total
1) Of which in EU 6)
Of which in Sweden 6)
2) Of which in the United States 6)
3) Of which in India 6)
4) Of which in Japan 6)
4) Of which in China 6)
Notes to the consolidated financial statements
49
Networks
Cloud Software
and Services
43,235
18,986
44,640
42,298
12,902
9,381
171,442
10,038
4,720
14,199
22,270
10,457
1,946
63,630
Net sales
Enterprise
36
37
266
245
378
24,783
25,745
Other
9
189
125
71
2
2,138
2,534
Non-current
assets 5)
Total
886
1,775
33,214
64,497
174
–
100,546
59,456
58,728
32,133
535
132
1,449
Total
53,318
23,932
59,230
64,884
23,739
38,248
263,351
34,257
1,774
85,313
31,205
10,139
10,716
5) Total non-current assets excluding financial instruments, deferred tax assets, and post-employment benefit assets.
6) Including IPR licensing revenue reported under Market area Other which is allocated based on the country location of the customer. Other sales are attributed to countries based on the destination of products or
services delivered.
Market area 2022
South East Asia, Oceania and India 3)
North East Asia 4)
North America 2)
Europe and Latin America 1)
Middle East and Africa
Other 1) 2) 3) 4) 6)
Total
1) Of which in EU 6)
Of which in Sweden 6)
2) Of which in the United States 6)
3) Of which in India 6)
4) Of which in Japan 6)
4) Of which in China 6)
Networks
Cloud Software
and Services
Enterprise 7)
Other 7)
Net sales
23,695
22,488
81,917
44,644
11,707
9,017
193,468
9,179
4,015
13,362
21,638
10,472
1,858
60,524
17
8
47
99
368
14,058
14,597
60
222
68
409
24
2,174
2,957
Non-current
assets 5)
Total
999
3,385
41,065
93,612
–804
–
138,257
92,167
88,057
39,906
519
187
2,068
Total
32,951
26,733
95,394
66,790
22,571
27,107
271,546
35,859
3,239
109,709
10,957
9,965
10,523
5) Total non-current assets excluding financial instruments, deferred tax assets, and post-employment benefit assets.
6) Including IPR licensing revenue reported under Market area Other which is allocated based on the country location of the customer. Other sales are attributed to countries based on the destination of products or
services delivered.
7) The segments have been restated to reflect the change where the divested IoT business in the first quarter 2023 was transferred from segment Enterprise to segment Other.
Market area 2021
South East Asia, Oceania and India 3)
North East Asia 4)
North America 2)
Europe and Latin America 1)
Middle East and Africa
Other 1) 2) 3) 4) 6)
Total
1) Of which in EU 6)
Of which in Sweden 6)
2) Of which in the United States 6)
3) Of which in India 6)
4) Of which in Japan 6)
4) Of which in China 6)
Net sales
Cloud Software
and Services
Enterprise 7)
Other 7)
8,493
4,405
10,913
21,181
9,726
1,506
56,224
10
1
20
41
309
5,132
5,513
27
251
59
379
7
2,016
2,739
Networks
20,299
24,464
66,464
38,671
10,743
7,197
167,838
Non-current
assets 5)
Total
1,010
2,700
11,971
52,141
209
–
68,031
50,428
45,997
10,749
484
261
2,202
Total
28,829
29,121
77,456
60,272
20,785
15,851
232,314
31,307
2,349
79,896
7,482
13,678
10,078
5) Total non-current assets excluding financial instruments, deferred tax assets, and post-employment benefit assets.
6) Including IPR licensing revenue reported under Market area Other which is allocated based on the country location of the customer. Other sales are attributed to countries based on the destination of products or
services delivered.
7) The segments have been restated to reflect the change where the divested IoT business in the first quarter 2023 was transferred from segment Enterprise to segment Other.
50
Notes to the consolidated financial statements
Financial report 2023
B5 Inventories
Inventories
Finished products and components
Contract work in progress
Inventories, net
2023
2022
24,222
11,851
36,073
31,249
14,597
45,846
Net inventories include SEK 8,287 (11,692) million of components related to
third-party service providers. The amount of inventories recognized as expense
and included in Cost of sales was SEK 65,042 (68,838) million.
During the period, write-downs of inventory to net realizable values were
expensed for an amount of SEK 3,994 (3,927) million. Write-downs were
reduced by SEK 823 (859) million in respect of reversals. Previous write-downs
have been reversed primarily as a result of changes in estimated customer
demand.
Contract work in progress consists of costs incurred to date on customer
projects where the performance obligations are yet to be fully delivered. These
costs will be recognized as cost of sales when the related revenue is recognized
in the income statement.
The Company has had to increase its buffer of vital components to mitigate
the supply chain issues affecting electronic components globally. Inventory
allowance is reviewed periodically to ensure obsolete components are
adequately provided for.
The Company’s current climate-related strategy’s aim to have a portfolio of
energy efficient products may affect recoverability of inventories as customers
push for fast substitution and uptake of volume towards the most energy effi-
cient products. The current radio product offering largely reflects the latest and
most energy efficient technologies and ongoing improvements are expected
in future. These factors have been included in the inventory obsolescence risk
assessment at year end.
Physical risks of climate changes on manufacturing facilities have also been
identified as a potential climate-related risk to the Company’s operations,
although these risks are mostly mitigated through having appropriate insur-
ance policies for damage to inventories and fixed assets, as well as potential
business interruptions. The Company also has a globally spread production
capability as well as geographically diverse sourcing channels to mitigate
risks of supply interruptions due to natural disasters, including severe weather
events.
B2 Net sales
Net sales
Hardware
Software
Services
Net sales
Of which IPR licensing revenues
Of which export sales from Sweden
B3 Expenses by nature
Expenses by nature
Goods and services
Employee remuneration
Amortizations and depreciations
Impairments, obsolescence allowances
and revaluation
Inventory increase, net
Additions to capitalized development
Expenses charged to cost of sales and
operating expenses
2023
99,642
59,123
104,586
263,351
11,101
125,242
2022
119,215
54,809
97,522
271,546
10,399
153,833
2021
106,399
45,798
80,117
232,314
8,134
140,898
2023
127,214
101,438
11,157
4,996
9,304
–2,173
2022
147,023
89,191
10,142
4,383
–7,738
–1,720
2021
119,787
77,462
8,458
1,456
–5,565
–962
251,936
241,281
200,636
Total restructuring charges in 2023 were SEK 6.5 (0.4) billion, which relates
to the cost reduction activities during the year. Restructuring charges are
included in the expenses presented above, and consist mainly of employee
renumerations.
Restructuring charges by function
Cost of sales
R&D expenses
Selling and administrative expenses
Total restructuring charges
2023
2,802
2,431
1,288
6,521
2022
195
54
150
399
2021
273
137
139
549
B4 Other operating income and expenses
Other operating income and expenses
Other operating income
Gains on sales of intangible assets
and PP&E
Gains on investments and sale
of operations 1)
Other operating income
Total other operating income
Other operating expenses
Losses on sales of intangible assets
and PP&E
Losses on investments and sale
of operations 1)
Impairment of goodwill 2)
Other operating expenses 3)
Total other operating expenses
2023
2022
2021
17
136
841
994
85
701
445
1,231
–
–54
–421
–31,897
–541
–32,859
–445
–
–3,994
–4,493
13
1,199
314
1,526
–3
–238
–112
–811
– 1,164
1) Information about divestments is presented in note E2 “Business combinations.” The loss of the
divestment of the IoT business is reduced by the release of the provision reported in 2022 as Other
operating expenses.
2) 2023 includes an impairment of SEK –31.9 billion related to the acquisition of Vonage. For more
information about the impairment of goodwill, see note C1 “Intangible assets.”
3) 2022 includes a provision of SEK –2.3 billion related to the DPA breach resolution with the
U.S. Department of Justice, including expenses for the extended monitorship, and by SEK −1.0
billion due to charges related to the divestment of IoT and other portfolio adjustments.
Financial report 2023
Notes to the consolidated financial statements
51
B6 Customer contract related balances
B7 Other current receivables
Trade receivables, customer finance, contract assets, contract liabilities and
deferred sales commissions
Other current receivables
Customer finance credits 1)
Trade receivables 2)
Contract assets
Contract liabilities 3)
Deferred sales commissions 4)
2023
6,917
42,215
7,999
34,416
1,006
2022
5,370
48,413
9,843
42,251
754
Prepaid expenses
Advance payments to suppliers
Derivative assets 1)
Other taxes 2)
Other 3)
Total
2023
2,552
128
1,851
4,176
3,255
11,962
2022
2,506
473
1,121
3,349
2,239
9,688
1) Of the total Customer finance credits balance, SEK 5,570 (4,955) million is current.
2) Total trade receivables include SEK 166 (70) million relating to associated companies.
3) The decrease in contract liabilities is mainly due to decreased incentive earnings based on lower sales
as well as utilization of incentives in the period.
4) Of the total Deferred sales commissions balance SEK 414 (345) million is current. The non-current
balance is presented within Other financial assets, non-current (see note F3 “Financial assets, non-
current”) and the current balance is presented within Other current receivables (see note B7 “Other
current receivables”).
Deferred sales commissions amortized in the year is SEK 457 (288) million.
For information about credit risk and impairment of customer contract
related balances, see note F1, “Financial risk management.”
Revenue recognized in the period
Revenue recognized relating to the opening contract
l iability balance
Revenue recognized relating to performance obligations
satisfied, or partially satisfied, in prior reporting periods
2023
2022
32,874
25,601
134
–7
Revenue recognized relating to performance obligations satisfied, or partially
satisfied, in prior reporting periods is a net adjustment that relates to contract
modifications, retrospective price adjustments, settlement and adjustments to
variable consideration based on actual measurements concluded in the period.
Transaction price allocated to the remaining performance obligations
Aggregate amount of transaction price allocated
to unsatisfied, or partially unsatisfied, performance
obligations
2023
2022
133,247
169,609
The Company expects that the transaction price allocated to the remaining
performance obligations will be converted into revenue in accordance with
the following estimates: 65% in 2024, 15% in 2025 and the remaining 20% in
2026 and beyond.
1) See also note F1 “Financial risk management.”
2) Other taxes mainly includes VAT receivables.
3) Includes items such as loans to associates, deferred sales commissions and deposits paid to third
parties.
B8 Trade payables
Trade payables
Trade payables to associated companies and
joint ventures
Trade payables, excluding associated companies
and joint ventures 1)
Total
2023
2022
434
179
27,334
27,768
38,258
38,437
1) Of the trade payables amount SEK 8.2 (9.7) billion relates to supplier invoices under Ericsson’s sup-
plier payments program.
B9 Other current liabilities
Other current liabilities
Accrued interest
Accrued expenses
Of which employee-related
Of which supplier-related
Of which other 1)
Derivative liabilities 2)
Other 3)
Total
1) Major balance relates to accrued expenses for customer projects.
2) See also note F1 “Financial risk management.”
3) Includes items such as VAT and other payroll deductions.
2023
439
26,294
13,440
8,009
4,845
1,794
8,458
36,985
2022
335
35,896
19,630
9,849
6,417
2,621
7,341
46,193
52
Notes to the consolidated financial statements
Financial report 2023
Section C – Long-term assets
C1 Intangible assets
Intangible assets
Capitalized
development
expenses
21,096
2,173
–
–153
–16
–117
22,983
–13,646
–1,137
–
153
70
–14,560
2023
Goodwill
90,914
–
348
–
–
–77
91,185
–
–
–
–
–
–
Customer relationships,
IPR 1),
and other intangible
assets
Capitalized
development
expenses
82,854
97
306
– 563
–
–1,884
80,810
–48,770
–3,321
–
563
1,123
19,158
1,720
–
–
–
218
21,096
–11,885
–1,586
–
–
–175
–50,405
–13,646
2022
Goodwill
44,963
–
40,881
–
–
5,070
90,914
–
–
–
–
–
–
–3,745
–6,344
–7,744
–3,745
–6,759
–
–
–
–3,745
4,678
–
–31,897
–
–38,241
52,944
–
–19
25
–7,738
22,667
–
–
–
–3,745
3,705
415
–
–
–6,344
84,570
Cost
Opening balance
Additions
Balances regarding acquired/divested
business 2)
Disposals
Reclassifications
Translation differences
Closing balance
Accumulated amortizations
Opening balance
Amortizations
Balances regarding divested
business 2)
Disposals
Translation differences
Closing balance
Accumulated impairment losses
Opening balance
Balances regarding divested
business 2)
Impairment losses
Translation differences
Closing balance
Net carrying value
1) Intellectual property rights.
2) For more information on acquired/divested businesses, see note E2 “Business combinations.”
Customer relationships,
IPR 1),
and other intangible
assets
55,936
126
23,451
–452
–
3,793
82,854
–44,456
–1,991
22
452
–2,797
–48,770
–7,650
81
–61
–114
–7,744
26,340
The total goodwill for the Company is SEK 52.9 (84.6) billion and is allocated to
the operating segments Networks, with SEK 27.8 (28.5) billion, Cloud Software
and Services, with SEK 3.5 (3.6) billion and Enterprise, with SEK 21.6 (52.5) bil-
lion. Within Enterprise Vonage carries SEK 11.1 (42.0) billion and Cradlepoint
SEK 9.0 (9.0) billion. Segment Other does not carry goodwill. More information
is disclosed in note B1 “Segment information.”
Intangible assets
The carrying value of customer relationships, IPR, and other intangible assets
is SEK 22.7 (26.3) billion, of which customer relationships, acquired through
the Vonage transaction, amounts to SEK 16.1 (18.8) billion with a remaining
amortization period of 6 to 9 years.
Impairment losses
In 2023 an impairment charge of goodwill attributed to the acquisition of
Vonage by SEK -31.9 billion was made in the cash generating unit, CGU,
Vonage and reported on the line item Other operating expenses in the income
statement for segment Enterprise. The reason for the impairment was mainly
due to macroeconomic headwinds, including rising interest rates and changing
demand trends. The impairment charge represented 50% of the total amount
of goodwill and other intangible assets attributed to the Vonage acquisition.
For more information, see note E2 “Business combinations.” The recoverable
amount for the CGU was SEK 29.5 billion. this amount was determined by
value in use and was higher than the value determined by Fair value less costs
of disposal.
In 2022 there was an impairment loss of intangibles of SEK 61 million in a
business related to the Internet of Things in segment Enterprise due to a strate-
gic decision to discontinue the business operation, which is reported on the line
item Research and development expenses in the income statement.
In 2021 there was an impairment loss of SEK 176 million in the restated
segment Enterprise and an impairment loss of SEK 137 million in the restated
segment Cloud Software and Services.
Capitalized development expenses
The Company capitalizes 5G radio product development costs and Enterprise
platform costs which are amortized over a period of 3 years. In considering the
Company’s climate-related aim to have more energy efficient products, the
Company continually assesses the impact of future radio product improve-
ments on the recoverability of such development costs. The conclusion is that
the carrying value at year-end is appropriate as the amortization period and
product development lifecycle are relatively short.
Goodwill allocation
Goodwill allocation has not changed during 2023 but goodwill of SEK 0.3
billion has been added to the CGU Cradlepoint within segment Enterprise from
the acquisition of Ericom of SEK 0.3 billion. Goodwill from the Vonage acquisi-
tion made in 2022 has been allocated to the Vonage CGU within segment
Enterprise.
Impairment tests
Each of segment Networks and segment Cloud Software and Services is a CGU.
There are several CGUs within segment Enterprise. The value in use method
has been applied for goodwill impairment testing, which means that the
recoverable amounts for CGUs are established as the present value of expected
Financial report 2023
Note C1, cont’d.
future cash flows based on business plans approved by management. The
assumptions are also based on the Company’s market share ambition and
upon information gathered in the Company’s long-term strategy process,
including assessments of new technology, the Company’s competitive position
and new types of business and customers.
Estimation of future cash flows includes assumptions mainly for the follow-
ing key financial parameters:
– Sales growth
– Development of EBIT (based on EBIT margin or cost of goods sold and
operating expenses relative to sales)
– Related development of working capital and capital expenditure
requirements.
The assumptions regarding industry-specific market drivers and market
growth are based on industry sources as input to the projections made within
the Company for the development 2024–2028 for key telecom industry
parameters:
– By 2028, about 37 years after the introduction of digital mobile technology,
it is predicted that there will be 9.1 billion mobile subscriptions (excl. Cellular
IoT) compared to 8.5 billion in 2023. Out of all mobile subscriptions, 8.2
billion will be associated with a smartphone.
– The number of 5G subscriptions is forecasted to reach 4.7 billion (excluding
Cellular IoT) by the end of 2028 compared to 1.6 billion in 2023.
– By 2028, about 46 billion connected devices are forecasted compared
to 26 billion in 2023, of the 46 billion around 30 billion will be related to
Internet of Things, IoT. Connected IoT devices includes connected cars,
machines, meters, sensors, point-of-sale terminals, consumer electronics
and wearables.
– Cellular IoT is predicted to grow from 3.5 billion devices in end of 2024 to
5.5 billion devices in end of 2028.
– Mobile data traffic volume is estimated to increase by more than two times
in the period 2024–2028. The mobile traffic is driven by smartphone users
and video traffic, with mobile video traffic forecasted to grow by almost 25%
annually through 2028 to account for more than 70% of all mobile data traf-
fic. Fixed Wireless Access is another contributor to mobile traffic, growing
with more than 30% annually in the period to account for more than 25% of
all mobile data traffic in 2028.
Rates per CGU
CGU
Networks
Cloud Software and Services
Vonage
Cradlepoint
iconectiv
Emodo
Red Bee Media
Notes to the consolidated financial statements
53
Sales growth in the Enterprise segment is driven by the adoption of 5G and
the convergence of 5G and Cloud communications in the enterprise market.
The Enterprise Wireless WAN addressable market is expected to grow with a
CAGR of 24% 2022–2027. The global CPaaS market is expected to grow with
a CAGR of approximately 24% 2023–2026, with the growth mainly driven by
the introduction of high-value API’s.
The CGUs Vonage and Cradlepoint have assumed a forecasted com-
pounded annual growth rate above 15% (20%) over the next five years
followed by a gradual decline in growth rates. The assumptions reflect the
expected high growth market conditions in which both CGUs are present.
Market maturity and market growth at long term sustainable levels (nominal
rates described above) are not expected to be reached until after the 5-year
forecast period. It is noted that it is more difficult to estimate market conditions
the further into the future they are forecasted.
The forecasted cash flows to calculate recoverable amounts are based on
five-year explicit business plans. For the CGUs Vonage and Cradlepoint an
additional two years have been added to reflect the progression towards the
steady state cash flow projections.
There are no reasonably possible changes that would lead to the carrying
value not being recoverable for any CGU, except for Vonage. The recoverable
amount of CGU Vonage exceeds the carrying amount by SEK 1.1 billion. This
CGU was written down to its recoverable amount in Q3 2023. The current
head room comes mainly from the amortization of intangible assets since the
write-down. The recoverable amount for CGU Vonage would equal the carry-
ing value, if the long-term EBIT margin would be decreased by 1%, or if sales
CAGR during the forecast period or terminal growth rate decreased by 1%.
Likewise, an increase in the applied WACC would give the same outcome.
An after-tax discount rate has been applied for the discounting of projected
after-tax cash flows. This discounting is not materially different from a dis-
counting based on before-tax future cash flows and before-tax discount rates,
as required by IFRS. The higher rates for Vonage and Cradlepoint are partly
driven by increased uncertainty and partly by the higher risk-free rate implied
by USD treasury bonds, which are used for these CGUs as the cash flows are
forecasted in USD.
In note A1 “Material accounting policies,” and note A2 “Critical accounting
estimates and judgments,” further disclosures are given regarding goodwill
impairment testing. The assumptions for 2022 are disclosed in note C1
“Intangible assets” in the Annual Report of 2022.
Risk assessment on the business plans is carried out on a regular basis and
an impairment review will be performed if conditions suggest that such assets
may be impaired.
Post-tax discount rates (%)
Terminal growth rates (%)
2023
10.0
10.5
11.0
11.0
10.5
14.5
12.5
2022
9.0
10.0
9.5
9.5
10.0
14.5
11.0
2023
2022
2.0
1.5
3.5
3.5
3.5
2.0
2.0
2.0
2.0
3.5
2.0
2.0
2.0
2.0
54
Notes to the consolidated financial statements
Financial report 2023
C2 Property, plant and equipment
Property, plant and equipment 2023
Real estate
Machinery and other
technical assets
Other equipment, tools
and installations
Construction in progress
and advance payments
Cost
Opening balance
Additions
Balances regarding acquired/divested business
Disposals
Reclassifications
Translation differences
Closing balance
Accumulated depreciations
Opening balance
Depreciations
Balances regarding divested business
Disposals
Reclassifications
Translation differences
Closing balance
Accumulated impairment losses
Opening balance
Impairment losses
Disposals
Translation differences
Closing balance
Net carrying value
7,523
87
–
–443
327
–158
7,336
–4,282
–480
–
395
–
102
3,825
134
–
–221
75
–61
3,752
–2,797
–382
–
220
1
60
–4,265
–2,898
–385
–101
40
9
–437
2,634
–114
–114
7
10
–211
643
38,220
1,713
–347
–2,318
627
–498
37,397
–27,606
–3,410
227
2,321
–1
378
–28,091
–1,121
–428
65
38
–1,446
7,860
973
1,363
–
–232
–1,029
–17
1,058
–
–
–
–
–
–
–
–
–19
19
–
–
1,058
Contractual commitments for the acquisition of property, plant and equipment as per December 31, 2023, amounted to SEK 632 (510) million.
Property, plant and equipment 2022
Cost
Opening balance
Additions
Balances regarding acquired/divested business
Disposals
Reclassifications
Translation differences
Closing balance
Accumulated depreciations
Opening balance
Depreciations
Disposals
Translation differences
Closing balance
Accumulated impairment losses
Opening balance
Impairment losses
Disposals
Translation differences
Closing balance
Net carrying value
Real estate
Machinery and other
technical assets
Other equipment, tools
and installations
Construction in progress
and advance payments
6,946
47
37
–275
287
481
7,523
–3,741
–502
226
–265
–4,282
–283
–115
44
–31
–385
2,856
3,549
200
–
–421
213
284
3,825
–2,678
–373
434
–180
–2,797
–104
–4
3
–9
–114
914
35,009
2,705
138
–1,638
593
1,413
38,220
–24,769
–3,239
1,509
–1,107
–27,606
–1,054
–146
145
–66
–1,121
9,493
705
1,525
11
–253
–1,093
78
973
–
–
–
–
–
–
–9
9
–
–
973
Total
50,541
3,297
–347
–3,214
–
–734
49,543
–34,685
–4,272
227
2,936
–
540
–35,254
–1,620
–662
131
57
–2,094
12,195
Total
46,209
4,477
186
–2,587
–
2,256
50,541
–31,188
–4,114
2,169
–1,552
–34,685
–1,441
–274
201
–106
–1,620
14,236
Financial report 2023
Notes to the consolidated financial statements
55
C3 Leases
Leases with the Company as lessee
Right-of-use assets
Cost
Opening balance
Additions
Balances regarding acquired/divested business
Terminations
Translation differences
Closing balance
Accumulated depreciations
Opening balance
Depreciations
Terminations
Translation differences
Closing balance
Accumulated impairment losses
Opening balance
Impairment losses
Terminations
Translation differences
Closing balance
Financial sublease
Opening balance
Derecognition for sublease
Translation differences
Closing balance
Net carrying value
Real estate
Vehicles
Other
Total
Real estate
Vehicles
Other
Total
2023
2022
15,895
1,307
2
–870
–331
16,003
–7,789
–2,146
546
209
–9,180
–374
–93
3
11
–453
–396
–2
13
–385
5,985
998
257
–
–489
3
769
–629
–232
373
–1
–489
–
–
–
–
–
–
–
–
–
280
303
1
–
–
–4
300
–138
–49
–
3
–184
–
–61
–
–
–61
–
–
–
–
55
17,196
1,565
2
–1,359
–332
17,072
–8,556
–2,427
919
211
–9,853
–374
–154
3
11
–514
–396
–2
13
–385
6,320
13,756
1,650
334
–719
874
15,895
–5,687
–2,141
393
–354
–7,789
–303
–66
27
–32
–374
–345
–
–51
–396
7,336
930
168
–
–178
78
998
–495
–250
159
–43
–629
–
–
–
–
–
–
–
–
–
171
136
–
–
–4
303
–79
–60
–
1
–138
–
–
–
–
–
–
–
–
–
369
165
14,857
1,954
334
–897
948
17,196
–6,261
–2,451
552
–396
–8,556
–303
–66
27
–32
–374
–345
–
–51
–396
7,870
Lease liabilities
The lease liabilities amounted to SEK 7,455 (9,304) million, of which
SEK 2,235 (2,486) million is classified as current. The remaining contractual
maturities as of December 31, 2023, is shown in note D4 “Contractual
obligations.”
Lease cost
The total lease cost amounted to SEK 3,788 (3,775) million, of which deprecia-
tion was SEK 2,427 (2,451) million, impairment losses were SEK –154 (–66)
million, lease expense relating to low-value assets was SEK 459 (516) million,
interest expense was SEK 464 (464) million and variable lease expense was
SEK 284 (278) million. Variable lease expense consists mainly of property tax.
Future cash outflow
Future cash outflows from leases not yet commenced in 2023 to which the
Company is committed as the lessee is SEK 249 (71) million.
Leases with the Company as lessor
Lessor leases relate to subleases of real estate. These lease contracts vary in
length from 1 to 9 years.
Receivables related to subleases in 2023 amounted to SEK 70 (62) million
for operating leases and to SEK 75 (75) million for financial leases. Interest
income from financial subleases was SEK 5 (8) million.
At December 31, 2023, future minimum payment receivables were
distributed as follows:
Cash payments
Cash payments
Repayments of the lease liabilities 1)
Interest expense of the lease liabilities
Low-value asset not included in the measurement
of the liabilities
Variable lease payments not included in
the measurement of the lease liabilities
Total cash outflow
1) Including advance payments.
Future minimum payment receivables
2023
–2,857
–464
2022
–2,593
–464
–459
–516
–284
–4,064
–278
–3,851
2024
2025
2026
2027
2028 and later
Total
Financial leases
Operating leases
78
13
–
–
–
91
48
22
19
11
4
104
56
Notes to the consolidated financial statements
Financial report 2023
Section D – Obligations
D1 Provisions
Provisions
2023
Opening balance
Additions
Balances regarding acquired business
Reversal of excess amounts
Charged to income statement
Utilization
Reclassifications
Translation differences
Closing balance
Of which current provisions
Of which non-current provisions
2022
Opening balance
Additions
Balances regarding acquired business
Reversal of excess amounts
Charged to income statement
Utilization
Reclassifications
Translation differences
Closing balance
Of which current provisions
Of which non-current provisions
Restructuring
Customer
related
Supplier
related
Warranty
Share-based
payments
669
6,082
–112
–2,866
–14
–39
3 ,720
2, 865
855
639
400
–
–54
–338
–21
43
669
448
221
3,093
481
–131
–541
–
–45
2 ,857
984
1,873
3,440
1,024
–
–585
–824
–31
69
3,093
1,215
1,878
722
849
–416
–138
–57
–6
954
346
608
1,231
561
–
–960
–144
32
2
722
198
524
678
831
–
–547
–
–6
956
705
251
1,074
368
–
–120
–646
–
2
678
572
106
985
1,410
–60
–682
–
–69
1 ,584
902
682
1,591
303
–
–99
–897
–
87
985
642
343
Other
5,441
824
–821
–3,792
7
–24
1 ,635
977
658
1,529
4,129
1,050
–220
–1,724
595
82
5,441
4,554
887
Total
11,588
10,477
–
–1,540
8,937
–8,566
–64
–189
11,706
6,779
4,927
9,504
6,785
1,050
–2,038
4,747
–4,573
575
285
11,588
7,629
3,959
Provisions will fluctuate over time depending on the business mix, market mix
and technology shifts. Risk assessment in the ongoing business is performed
monthly to identify the need for new additions and reversals. Management
uses its best judgment to estimate provisions based on this assessment. Under
certain circumstances, provisions are no longer required due to outcomes
being more favorable than anticipated, which affect the provision balance as
a reversal. In other cases, the outcome can be negative, and if so, a charge is
recorded in the income statement.
For 2023, the total provision value is SEK 11.7 (11.6) billion, of which
SEK 4.9 (4.0) billion is classified as non-current. The significant restructuring
provision additions of SEK 6.1 billion and utilization of SEK 2.9 billion is due
to the cost-reduction activities announced during the year. Other provisions
utilization of SEK 3.8 billion includes the payment of USD 206.7 million
(approximately SEK 2.2 billion) for the fine in relation to the resolution of previ-
ously announced, non-criminal, alleged breaches under the deferred prosecu-
tion agreement (DPA) with the United States Department of Justice (DoJ).
For more information, see note A1 “Material accounting policies” and note A2
“Critical accounting estimates and judgments” for key estimation uncertainty
regarding timing and amount.
Restructuring provisions
Restructuring provisions relate to structural efficiency programs that are
planned and controlled by management and have a material impact on either
the scope of the business undertaken or the manner in which the business
is conducted. Restructuring provisions in 2023 relate to the cost-reduction
activities that have resulted in fundamental reorganizations of the impacted
units. The scope of the structural efficiency measures involves service delivery,
supply and manufacturing, R&D, and selling and administration expenses.
Restructuring provisions are recognized based on the expected costs of the
respective restructuring programs and primarily consist of personnel costs.
Estimation uncertainty exists regarding the execution of the restructuring
programs, which may impact the expected timing and realization of costs.
Restructuring provisions are reviewed and adjusted regularly based on man-
agement’s best estimate. The expected timing and amount of outflows are
dependent on whether the plan execution is in line with management’s assess-
ment. The majority of the restructuring provision will be utilized within 1 year.
For more information about the restructuring charges booked in the income
statement, see note B3 “Expenses by nature.”
Customer-related provisions
Customer-related provisions mainly consist of provisions for losses on cus-
tomer contracts. To measure the customer-related provisions, management
estimates the unavoidable costs to fulfill the obligations under the customer
contract. If the exit penalty is lower than the estimated costs to fulfill the
contract, then the provision value is limited to the exit penalty value. The
unavoidable costs to fulfill the contract sometimes differ from management’s
estimates. Provisions raised for loss-making customer contracts are therefore
regularly reviewed and adjusted based on the latest information available
considering the realization of the costs estimated. The expected timing and
amount of outflows are dependent on whether the customer contract execu-
tion is in line with management’s assessment. The majority of the customer-
related provisions will be utilized over 5 years.
Supplier-related provisions
Supplier-related provisions are for supplier claims/guarantees based on the
contractual obligations mostly relating to inventory. The provision is calculated
by comparing the committed inventory purchases with the expected usage
based on a forecast of sales volumes, and any excess is provided for based
on an assessment of the risk of obsolescence. If the committed inventory is
not required to be purchased, but a fee is chargeable by the vendor due to
the failure to meet the committed volumes, then the provision is based on
the expected fee to be incurred. Estimation uncertainty exists regarding the
Financial report 2023
Note D1, cont’d.
Notes to the consolidated financial statements
57
expected usage and sales volumes forecast and, if applicable, the assessment
of the risk of obsolescence, as these are based on management’s expectations.
When the committed inventory is purchased, the provision is reclassified
from provisions to inventory allowances. The expected timing and amount
of outflows are dependent on the actual outcome of the supplier claims and
guarantees. The majority of the supplier-related provisions will be utilized over
2 years.
Warranty provisions
Warranty provisions are based on historic quality rates for established products
as well as estimates regarding quality rates for new products and costs to
remedy the various types of faults predicted. Uncertainty exists regarding the
timing and amount as management utilizes the historical trends to estimate
the warranty provisions as well as the cost to repair or replace, which may differ
from the actual outcomes. New product warranty provisions require further
estimation since historical information is not available. These provisions do
not include costs for service in additions within customer contracts that are
accounted for as separate performance obligations. The expected timing and
amount of outflows are dependent on the actual product faults which may
occur. The majority of the warranty provisions are expected to be utilized
within 1 year.
Share-based payments provisions
Share-based payments provisions relate to cash-settled share-based pro-
grams and are based on the present period’s best estimate of the eventual
pay-outs, see note G3 “Share-based compensation” for more information.
The uncertainty regarding outflows is relating to the fair value of the under-
lying instrument during the service period and expected fulfilment of the
service conditions. Share-based payment provisions will be utilized according
to the awards’ vesting dates and will be utilized over a period of 3 years.
Other provisions
Other provisions mostly relate to litigation and patent infringement disputes.
Management regularly assesses the likelihood of any adverse outcomes relat-
ing to ongoing litigations and disputes, and if deemed probable then a provi-
sion is raised based on the best estimate of the expenditure required to settle
with the counterpart. There is uncertainty in the final outcome and settlement,
therefore management reviews the estimation regularly. Outflows relating to
litigations are inherently uncertain regarding timing and amount, and there-
fore the majority of the provisions are classified as current, but outflows may
happen over a number of years depending on when settlement is reached.
58
Notes to the consolidated financial statements
D2 Contingent liabilities
Contingent liabilities
Contingent liabilities
Total
2023
3,037
3,037
2022
3,322
3,322
Contingent liabilities mainly relate to, in order of materiality, tax litigations in
subsidiaries, other litigations and disputes, including related to intellectual
property matters, pension guarantees and losses on customer contracts,
which are assessed to be possible obligations for the Company. The Company
actively manages its IPR portfolio and its need for third party licenses and
is involved from time to time, in the ordinary course of business, in litigation
related thereto, as plaintiff, defendant and other capacities. The Company also
monitors the performance of obligations due to it by third party vendors and
other suppliers and takes appropriate action where necessary to secure such
performance. The single largest contingent liability relates to the pension com-
mitments in Sweden of SEK 0.6 (0.5) billion. See note G1 “Post-employment
benefits” for more information on the pension contingent liability in Sweden.
Outflows relating to litigation, both tax and legal, due to their nature are
inherently uncertain regarding timing and amount. All ongoing litigations
are, therefore, regularly evaluated, their potential economic outflows and
probability estimated, and necessary provisions made, or contingent liabilities
disclosed. In note A2 “Critical accounting estimates and judgments,” further
disclosure is presented in relation to (i) key sources of estimation uncertainty
and (ii) the decision made in relation to accounting policies applied.
D4 Contractual obligations
Contractual obligations, SEK billion
2023
Current and non-current
debt 1)
Lease obligations 2)
Other non-current liabilities
Purchase obligations 3)
Trade payables
Commitments for customer
finance 4)
Derivatives liabilities 4)
Total
2022
Current and non-current
debt 1)
Lease obligations 2)
Other non-current liabilities
Purchase obligations 3)
Trade payables
Commitments for customer
finance 4)
Derivatives liabilities 4)
Payment due by period
<1
year
1–3
years
3–5
years
>5
years
18.3
2.6
–
18.4
27.8
27.3
1.3
95.7
6.3
3.0
–
17.8
38.4
44.3
0.9
4.9
3.6
0.1
0.7
–
5.7
0.2
15.2
12.9
4.4
0.6
3.1
–
8.6
1.1
Total
53.6
8.6
0.7
19.3
27.8
37.0
1.8
12.0
1.1
–
–
–
–
–
13.1
148.8
11.2
1.1
0.1
–
–
–
–
39.5
10.6
0.7
21.1
38.4
54.1
2.6
12.4
167.0
18.4
1.3
0.6
0.2
–
4.0
0.3
24.8
9.1
2.1
–
0.2
–
1.2
0.6
13.2
As part of its defense to a now settled patent infringement lawsuit filed by
Total
110.7
30.7
1) Current and non-current debt, including interest commitments.
2) Future lease obligations, nominal lease liability, see also note C3 “Leases.”
3) The amounts of purchase obligations are gross, before deduction of any related provisions.
4) See also note F1 “Financial risk management.”
Contractual purchase obligations and trade payables at the end of 2023 were
lower than the previous year as supply chain constraints have eased and lower
supply volumes. Demand for customer finance arrangements continues to
be strong. The outstanding commitment in 2023 decreased as the financing
facility was utilized for the business in India during the year.
Ericsson in 2013 in the Delhi High Court against Indian handset company
Micromax, Micromax filed a complaint against Ericsson with the Competition
Commission of India (CCI). The CCI decided to refer the case to the Director
General’s Office for an in-depth investigation. The CCI opened similar inves-
tigations against Ericsson in January 2014 based on claims made by Intex
Technologies (India) Limited and, in 2015, based on a now settled claim from
iBall. Ericsson has challenged CCI’s jurisdiction in these cases before the Delhi
High Court.
On July 13, 2023, the Division Bench of the Delhi High Court found that
in this instance the CCI has no power to conduct the pending investigations
against Ericsson. The CCI has appealed this order to the Supreme Court of
India.
In April 2019, Ericsson was informed by China’s State Administration for
Market Regulation (SAMR) Anti-monopoly bureau that SAMR has initiated
an investigation into Ericsson’s patent licensing practices in China. Ericsson is
cooperating with the investigation, which is still in a fact-finding phase. The
next steps include continued fact finding and meetings with SAMR in order
to facilitate the authority’s assessments and conclusions. In case of adverse
findings, SAMR has the power to impose behavioral and financial remedies.
The above matters relating to Micromax and SAMR are possible obligations
which cannot be quantified and are, therefore, not included in the contingent
liability amount disclosed in the table.
D3 Assets pledged as collateral
Assets pledged as collateral
Chattel mortgages 1)
Bank deposits 2)
Marketable securities 2)
Total
2023
7,678
547
276
8,501
2022
6,333
604
289
7,226
1) See also note G1 “Post-employment benefits.”
2) As of 2023, “Marketable securities” which was previously disclosed under “Bank deposits” is now
presented as a separate line and the comparative year has been adjusted accordingly.
Financial report 2023
Financial report 2023
Notes to the consolidated financial statements
59
Section E – Group structure
E1 Equity
Capital stock
Capital stock
Parent Company
December 31, 2023
December 31, 2022
Class A shares
Class B shares
1,309
1,309
15,413
15,363
Total
16,722
16,672
The capital stock of the Parent Company is divided into two classes: Class A
shares (quota value SEK 5.00) and Class B shares (quota value SEK 5.00).
Both classes have the same rights of participation in the net assets and earn-
ings. Class A shares, however, are entitled to one vote per share while Class B
shares are entitled to one tenth of one vote per share.
The Annual General Meeting (AGM) 2023 resolved to issue 10,000,000
Class C shares for the Long-Term Variable Compensation Program (LTV II)
2023, 2022 and 2021 for Ericsson’s executive team and other executives.
In accordance with an authorization from the AGM, the Board of Directors
resolved to repurchase the new issued shares, which were subsequently
converted into Class B shares. The quotient value of the repurchased shares
was SEK 5.00, totaling SEK 50.0 million, representing less than 0.3% of capital
stock. The acquisition cost was SEK 50.2 million.
At December 31, 2023, the total number of treasury shares was 14,009,306
(4,009,306 in 2022 and 4,009,306 in 2021) Class B shares.
Number of shares
2023
As of January 1
As of December 31
2022
As of January 1
As of December 31
Class A shares
Class B shares
Total
261,755,983
261,755,983
3,072,395,752
3,082,395,752
3,334,151,735
3,344,151,735
Class A shares
Class B shares
Total
261,755,983
261,755,983
3,072,395,752
3,072,395,752
3,334,151,735
3,334,151,735
Dividend proposal
The Board of Directors propose to the Annual General Meeting a dividend to the
shareholders of SEK 2.70 per share (SEK 2.70 in 2022 and SEK 2.50 in 2021),
representing a total dividend of SEK 9.0 (9.0) billion. The dividend is proposed
to be paid in two equal installments, SEK 1.35 per share with the record date
April 5, 2024 (payment date April 10, 2024), and SEK 1.35 per share with the
record date October 2, 2024 (payment date October 7, 2024).
Additional paid in capital
Additional paid in capital relates to payments made by owners and includes
share premiums paid.
Other reserves
Other reserves include translation reserves, cash flow hedges and revaluation
of borrowings.
Translation reserves
The translation reserves comprise all foreign currency translation reserves
arising from the translation of the financial statements of foreign operations to
the Group presentation currency and changes regarding revaluation of excess
value in local currency.
Cash flow hedge reserve
For further information, see note F1 “Financial risk management.”
Revaluation of borrowings
For further information, see note F4 “Interest-bearing liabilities.”
Retained earnings
Retained earnings, including net income for the year, comprise the earned
profits of the Parent Company and its share of net income in subsidiaries,
joint ventures and associated companies. Retained earnings also include
remeasure ments related to post-employment benefits.
Remeasurements related to post-employment benefits
Actuarial gains and losses resulting from experience-based events and
changes in actuarial assumptions, fluctuations in the effect of the asset ceiling,
and adjustments related to the Swedish special payroll taxes. For more infor-
mation, see note G1 “Post-employment benefits.”
Non-controlling interests
Equity in a subsidiary not attributable, directly or indirectly, to a parent.
Other reserves
SEK million
Opening balance
Other comprehensive income
Items that will not be reclassified to profit
or loss
Revaluation of borrowings due to change in
credit risk
Cash flow hedge reserve
Gains/losses arising during the period
Transfer to goodwill
Tax on items that will not be reclassified to
profit or loss
Items that have been or may be reclassified
to profit or loss
Cash flow hedge reserve
Gains/losses arising during the period
Reclassification to profit and loss
Translation reserves
Changes in translation reserves
Reclassification to profit and loss
Share of other comprehensive income of JV
and associated companies
Tax on items that have been or may be
reclassified to profit or loss
Other comprehensive income, net of tax
Total comprehensive income
Transfer to retained earnings
Closing balance
2023
2022
Translation
reserves
Cash flow
hedge reserve
Revaluation
of borrowings
Total other
reserves
Translation
reserves
Cash flow
hedge reserve
Revaluation
of borrowings
Total other
reserves
8,443
–719
477
8,201
1,206
–411
–341
454
–
–
–
–
–
–
–2,425
59
–10
–
–2,376
–2,376
–
6,067
–
–
–
–
754
1,090
–
–
–
–380
1,464
1,464
–
745
–667
–667
–
–
–
–
137
137
–
–
–
–
–
–
–530
–530
–
–53
754
1,090
–2,425
59
–10
–380
–1,442
–1,442
–
6,759
–
–
–
–
–
–
7,273
–85
49
–
7,237
7,237
–
8,443
–
1,030
1,030
3,703
–3,677
–
–
3,703
–3,677
–758
–212
–970
–701
280
–
–
–
87
–1,066
–1,066
758
–719
–
–
–
–
–
–
818
818
–
477
–701
280
7,273
–85
49
87
6,989
6,989
758
8,201
60
Notes to the consolidated financial statements
Financial report 2023
E2 Business combinations
Acquisitions
Acquisitions 2021–2023
2023
2022
2021
Consideration
Purchase price paid on acquisition
Deferred consideration/Others 1)
Total consideration, all cash and cash
equivalents
579
–
51,297
1,972
579
53,269
Net assets (liabilities) acquired
Intangible assets
Property, plant and equipment
Right-of-use of assets
Cash and cash equivalents
Other assets
Provisions, incl. post-employment
benefits
Other liabilities
Total identifiable net assets
(liabilities)
Goodwill
Total
Acquisition-related costs 2)
306
1
2
7
83
–
–168
231
348
579
36
23,554
186
334
521
5,344
–1,050
–16,916
11,973
41,296
53,269
436
256
–
256
–95
1
–
–
21
–
–348
–421
677
256
11
1) Deferred consideration relates to the pre-combination portion of employee stock awards that were
previously granted to Vonage employees, which will be paid out post acquisition according to the
original award vesting schedule.
2) Acquisition-related costs are included in Selling and administrative expenses in the consolidated
income statement.
In 2023, the Company made acquisitions resulting in a negative cash flow
effect from business combinations amounting to SEK 1,309 (51,734) million,
see also note H3 “Statement of cash flows.”
The cash flow effect differs from the total consideration in the above table
due to the acquired cash of SEK 7 million from the Ericom acquisition and the
current year pay-out of deferred consideration of SEK 737 million relating to
the prior year Vonage acquisition.
Ericom: On April 3, 2023, Cradlepoint, a wholly owned subsidiary of Ericsson,
acquired 100% of the shares in Israel based Ericom Software Limited in an
all cash transaction. Ericom, with their advanced enterprise cloud security
platform, will solidify Cradlepoint’s SASE (secure access service edge) and
zero trust offerings for hybrid 5G and wireline environments. Goodwill in this
transaction represents future technology and technology synergies and is
not expected to be deductible for tax purposes. The fair values of the assets
acquired, and liabilities assumed at the acquisition date, as presented in the
table under the column “2023,” are final.
Vonage: On July 21, 2022, the Company acquired, in an all cash transaction,
all of the shares in Vonage Holdings Corp., a US-based global provider of
cloud-based communications. This acquisition provides the Company with an
opportunity to access a complementary, substantial and high growth segment.
Goodwill in this transaction represents future customers, technology, and
synergies and is not expected to be deductible for tax purposes. The intangible
assets mainly relate to customer relationships. The fair values of the assets
acquired, and liabilities assumed at the acquisition date, were made final in
2022 and are presented in the table under the column “2022.”
In the third quarter of 2023, the Company impaired the goodwill related to
the Vonage acquisition by SEK 31.9 billion. For more information, see note C1
“Intangible assets.”
Acquisitions 2021–2023
Business
Ericom
Vonage
Quortus
Axonix
Description
An Israel based enterprise cloud security platform provider.
A US based global provider of cloud-based communications.
A UK based mobile core software business with expertise in enterprise 4G/5G technology.
A UK based mobile-first programmatic advertising exchange business.
Transaction date
Apr 2023
Jul 2022
Nov 2021
Mar 2021
Financial report 2023
Note E2, cont’d.
Divestments
Divestments 2021–2023
Proceeds
Cash and cash equivalents
Shares in associated companies
Total proceeds
Net assets disposed of
Property, plant and equipment
Right-of-use assets
Investments in associates
Goodwill
Other assets
Provisions, incl. post-employment
benefits
Other liabilities
Total net assets
Net gains/losses from divestments
Shares in associated companies
Cash flow effect
Divestments 2021–2023
Business
IoT
Aerialink
Data center
Notes to the consolidated financial statements
61
In 2023, the Company made divestments with a cash flow effect amounting
to SEK –633 (20) million, mainly relating to the divestment of the IoT busi-
ness. Net gains/losses from the divestments are presented in Other operating
income/Other operating expenses in the income statement, see also note B4
“Other operating income and expenses.”
For more information, see note H3 “Statement of cash flow.”
2023
2022
2021
–633
–
–633
121
–
–
–
–
–
35
156
–789
–
–633
20
298
318
–
–
82
–
23
–42
–101
–38
356
–298
20
273
–
273
26
7
–
–48
51
–30
36
42
231
–
273
Description
IoT accelerator and connected vehicle cloud businesses and related assets.
A US based company providing premier messaging solutions for business to business communications.
A data center business located in the Netherlands.
Transaction date
Mar 2023
Nov 2022
Nov 2021
E3 Associated companies
Equity in associated companies
Opening balance
Investments
Share in earnings
Distribution of capital stock
Taxes
Dividends
Divested business
Translation differences
Closing balance
2023
1,127
–
124
–25
–20
–46
–
–10
1,150
2022
941
298
17
–24
–14
–58
–82
49
1,127
The Company owns 49.07% of the shares in Ericsson Nikola Tesla d.d., located
in Croatia and 35.6% of the shares in ConcealFab Inc., located in the US.
See also note H4 “Related party transactions.”
62
Notes to the consolidated financial statements
Financial report 2023
Section F – Financial instruments
F1 Financial risk management
The Company’s financial risk management is governed by a policy approved
by the Board of Directors. The Board of Directors is responsible for overseeing
the capital structure and financial management of the Company, approving
certain matters (such as investments, customer finance commitments and
borrowing) and setting limits on the exposure to financial risks.
For the Company, a robust financial position with an investment grade
rating, low leverage and ample liquidity is deemed important. This provides
financial flexibility and independence to operate and manage variations in
working capital needs as well as to invest in business opportunities.
The Company’s overall capital structure should support the financial targets.
The capital structure is managed by balancing equity, debt financing and
liquidity in such a way that the Company can secure funding of operations
at a reasonable cost of capital. Regular borrowings are complemented with
committed credit facilities to give additional flexibility to manage unforeseen
funding needs. The Company strives to deliver strong free cash flow.
The Company’s capital objectives are:
– Free cash flow before M&A of 9–12% of net sales
– Positive net cash position
– Investment grade rating by Moody’s (Baa3), S&P Global (BBB–) and Fitch
Ratings (BBB–).
Capital objectives-related information
Free cash flow before M&A as % of net sales 1)
Positive net cash (SEK billion) 1)
2023
–0.4%
7.8
2022
8.2%
23.3
Foreign exchange risk
The Company is a global company with sales mainly outside Sweden. Sales
and costs incurred are to a large extent denominated in currencies other
than SEK and therefore the financial results of the Company are impacted by
currency fluctuations. The Company reports the financial statements in SEK.
Movements in exchange rates between currencies that affect these statements
will impact the comparability between periods.
Line items, primarily sales, are impacted by translation exposure incurred
when converting foreign entities’ financial statements into SEK. Line items and
profitability, such as EBIT are impacted by transaction exposure incurred when
financial assets and liabilities, primarily trade receivables and trade payables,
are initially recognized and subsequently remeasured due to changes in
foreign exchange rates.
The table below presents the external net sales and cost exposures for the
largest currencies which impact profitability. The internal exposures will not
impact group profitability if all related transactions occur and are recognized in
the profit and loss in the same month. Any effect on profit and loss from inter-
nal transactions is a function of timing and FX volatility, therefore impossible
to predict.
Currency exposure, SEK billion
Sales
trans-
lation
exposure
Sales
trans-
action
exposure
Cost
trans-
lation
exposure
Cost
trans-
action
exposure 1)
Sales net
exposure
Exposure
currency
USD 2)
EUR
INR
JPY
GBP
CNY
SAR
BRL
81.7
40.9
31.2
10.1
9.1
7.8
5.6
5.0
55.6
–0.5
–0.7
–
–1.0
–
0.4
–
137.3
40.4
30.5
10.1
8.1
7.8
6.0
5.0
–62.2
–37.3
–19.9
–4.1
–3.6
–5.7
–3.5
–4.1
–42.4
–2.6
0.2
–
–
1.1
0.1
1.2
Cost
net
exposure
–104.6
–39.9
–19.7
–4.1
–3.6
–4.6
–3.4
–2.9
Credit rating and outlook
Fitch Ratings
S&P Global
Moody´s
BBB–, stable BBB–, stable
BBB–,
developing
Ba1, stable
BBB–,
developing
Ba1, stable
1) External purchases in foreign currency translated to functional currency.
2) Sales transaction exposure in 2023 includes volume in the cash flow hedge of USD 2,462 million.
Based on the outstanding cash flow hedge volume at year end, the hedged sales volume that will
occur in 2024 is USD 2,467 million.
1) For more information about the measures, see Alternative performance measures and Financial
terminology.
The ratings and outlooks have remained unchanged throughout 2023.
Translation exposure
Translation exposure relates to sales and cost incurred in foreign entities when
converted into SEK upon consolidation. These exposures cannot be addressed
by hedging.
The Company has a Treasury and Customer Finance organization with the
principal role to ensure that appropriate financing is in place through loans and
committed credit facilities, actively manage the Company’s liquidity as well as
financial assets and liabilities, and manage and control financial risk exposures
in a manner consistent with underlying business risks and financial policies.
The Customer Finance function may support with suitable third-party financ-
ing solutions for customers to facilitate their purchases from Ericsson. In some
cases, and to the extent that customer loans are not provided directly by banks,
the Parent Company may provide vendor finance credits to customers directly.
The central function also monitors the exposure from outstanding vendor
credits and credit commitments.
The Company classifies financial risks as:
– Foreign exchange risk
– Interest rate risk
– Credit risk
– Liquidity risk
– Refinancing risk
– Market price risk in own and other equity instruments.
The Board of Directors has established risk limits for defined exposures to
foreign exchange and interest rate risks as well as to political risks in certain
countries.
For further information about accounting policies, see note A1 “Material
accounting policies.”
Transaction exposure
The Company considers the following transaction exposures.
a) Transaction risk impacting net sales and net income
Transaction exposure relates to sales and cost incurred in non-reporting
currencies in individual group companies. Foreign exchange risk is as far as
possible concentrated in Swedish group companies, primarily Ericsson AB, by
selling to foreign subsidiaries in either the functional currency of the customers,
EUR or USD. This transaction risk can be hedged, although it is only done for
material cash inflows or outflows that are highly certain. The Company has the
following recurring hedge programs:
i) The Company has identified certain customer contracts where a fluctuation
in the USD/SEK foreign exchange rate would significantly impact net sales.
These contracts are multi-year contracts with highly probable payments at
fixed points in time denominated in USD.
The Board of Directors has provided a mandate to the Company to hedge
between 0%–100% of the next three years receipts on a rolling basis, up to the
end of the contract period. This mandate instructs the treasury function to hedge
a percentage of this exposure according to a defined scale, locking in a higher
percentage of exposure as the USD strengthens against SEK, up to 100%.
ii) The Board of Directors has provided a mandate to the Company to hedge
highly probable forecasted sales and purchases denominated in USD in EAB
for the next 7 to 18 months, on a monthly rolling basis. This mandate instructs
the treasury function to hedge a percentage of this exposure according to a
defined scale, locking in a higher percentage of exposure as the USD strength-
ens against SEK, up to 100%.
Financial report 2023
Note F1, cont’d.
Notes to the consolidated financial statements
63
For both programs, hedge accounting is applied, whereby the Company
enters into foreign exchange forward contracts that match the terms of the
foreign exchange exposure as closely as possible and designates them as
hedging instruments. Hedge ineffectiveness is expected to be minimal but may
arise due to differences in timing of the cash flows between the hedged items
and the hedging instruments.
In the asset-liability management activity, the interest rate risk is managed
by matching fixed and floating interest rates in interest-bearing balance
sheet items. The policy is that the net sensitivity on a one basis point move on
interest-bearing assets matching interest-bearing liabilities, taking derivatives
into consideration, is less than SEK 10 million. The average exposure during
2023 was SEK 1.5 (1.5) million per basis point shift.
b) Transaction exposure in individual balance sheet
According to Company policy, transaction exposure in subsidiaries’ balance
sheets (e.g., trade receivables and trade payables that are remeasured due to
change in foreign exchange rates) should be fully hedged. Foreign exchange
exposures in balance sheet items are hedged through offsetting balances or
derivatives. Foreign exchange exposures are managed net, and its effects are
presented net within Financial income and expenses. This is not designated as
hedge accounting.
Sensitivity to interest rate increase of 1 basis point, SEK million
< 3M 3–12M
1–3Y
3–5Y
>5Y
Total
Interest-bearing assets
Interest-bearing
liabilities 1)
Derivatives
Total
–
–
–
–
–1
–1
–1
–
–3
–
–
–1
–
1
–
5
–2
2
4
–3
1
9
–4
2
1) Borrowings are included as they are designated FVTPL.
c) FX execution risk in Ericsson AB (EAB)
As balance sheet hedging is done net on a monthly basis, significant volatility
in USD hedge volumes exposes EAB to FX execution risk. In order to spread
the FX execution risk over the year, 14% of each of the next six months fore-
casted sales and purchases in EAB are hedged monthly, whereby forecasted
sales (excluding volume in the 7 to 18 month cash flow hedge program) are
funded by internal loans and forecasted purchases funded by deposits with its
parent company. Cash flow hedge accounting is not designated, therefore the
FX impact on revaluation of the internal loan and deposit is recognized in net
FX as incurred.
The sensitivity of the FX impact is dependent on changes in foreign
exchange rates, forecasts and seasonality. USD is the only currency being
hedged. Since the start of the 7 to 18 month cash flow hedge program in March
2022, the USD sales volume funded by internal loan has steadily reduced,
whereas the USD purchases volume reduced to a lesser extent. This resulted
in a net deposit balance with its parent company throughout the second half
of 2023. The outstanding net deposit at year-end is USD 199 million (loan
of USD 149 million), with an average net loan balance of USD 52 million
(USD 529 million) over the year. Net realized FX gain recognized is SEK 4 mil-
lion and unrealized loss is SEK 211 million, giving a total net loss of SEK 207
million.
d) Transaction risk impacting business combination
The Company is exposed to FX execution risk on consideration payable
for acquisition in foreign currency from the period of communication of the
proposed transaction to final completion date. Such transaction, if deemed
material and highly probable, will be hedged to protect the cash consideration
for acquisition accounting.
Cash flow hedge accounting is applied, whereby the Company enters
into foreign exchange forward contracts that match the terms of the foreign
exchange exposure as closely as possible and designates them as hedging
instruments. Hedge ineffectiveness is expected to be minimal but may arise
due to differences in timing of the cash flows between the hedged item and
the hedging instruments.
Interest rate risk
The Company is exposed to interest rate risk through market value fluctuations
in certain balance sheet items and through changes in interest income and
expenses.
Sensitivity analysis
The Company uses the Value at Risk (VaR) methodology to measure foreign
exchange and interest rate risks managed by the treasury function. This
statistical method expresses the maximum potential loss that can arise with
a certain degree of probability during a certain period of time. For the VaR
measurement, the Company has chosen a probability level of 99% and a
one-day time horizon. The daily VaR measurement uses market volatilities and
correlations based on historical daily data (one year), with the limitation that
historical data does not necessarily reflect future events.
The treasury function operates under two mandates. In the liquidity
management activity, it has a mandate to deviate from floating interest on net
liquidity and take foreign exchange positions up to an aggregated risk of VaR
SEK 45 million given a confidence level of 99% and a one-day horizon. The
average VaR calculated for 2023 was SEK 15.9 (21.0) million. No VaR limits
were exceeded during 2023.
Outstanding derivatives
Outstanding derivatives
Gross
amount
recognized
Net
amount
presented
Related
amounts
not offset
– collaterals
Net
Offset
1,916
–1,837
–43
43
1,873
–1,794
–1,486
873
387
–921
–
–22
–
–
–
–22
–
–
–
–22
Gross
amount
recognized
Net
amount
presented
Related
amounts
not offset
– collaterals
Net
Offset
1,275
–2,778
–165
165
1,110
–2,613
–277
2,382
833
–231
11
–8
–
–
11
–8
–
–
11
–8
2023
Currency
derivatives 1)
Assets
Liabilities
Interest rate
derivatives
Assets
Liabilities
2022
Currency
derivatives 1)
Assets
Liabilities
Interest rate
derivatives
Assets
Liabilities
1) Currency derivatives designated as cash flow hedge of SEK 1,617 (566) million are included in Other
current receivables and SEK 679 (1,472) million in Other current liabilities.
Cash collaterals paid or received under Credit Support Annex (CSA) to ISDA
for cross-currency derivatives are recognized as Interest-bearing securities,
current or Borrowings, current, respectively.
The Company holds the following currency derivatives designated as hedging
instruments:
Foreign exchange forward contracts
2023
Notional Amount (USD millions)
Average forward rate (SEK/USD)
< 3
months
1,091
9.81
3 – 12
months
1,376
10.46
> 1 year
1,888
10.03
Total
4,355
Hedge ratio is 1:1 and changes in forward rate have been designated as
the hedged risk. The change in the fair value of the hedging instrument is
compared with the change in fair value of the hedged item, and the lower
amount is taken to OCI. If the change in fair value of the hedging instrument is
higher, then the excess change in fair value is considered ineffective hedging
and recorded in net foreign exchange gains and losses. For hedge on customer
contracts, upon recognition of the hedged net sales, the cumulative amount
in hedging reserve is released in the OCI as a reclassification adjustment and
recognized in net sales. For hedge on business combination, the cumulative
amount in hedge reserve is transferred as a basis adjustment to goodwill upon
recognition of the business combination.
64
Notes to the consolidated financial statements
Financial report 2023
Note F1, cont’d.
See note E1 “Equity” for movement in the cash flow hedge reserve. No
hedge ineffectiveness was recognized in the income statement in 2023.
Credit risk
Credit risk is divided into three categories: credit risk in trade receivables and
contract assets, customer finance risk and financial credit risk, see note A1
“Material accounting policies.”
Credit risk in trade receivables and contract assets
Credit risk in trade receivables and contract assets is governed by a policy
applicable to all legal entities in the Company. The purpose of the policy is to:
– Avoid credit losses through establishing internal standard credit approval
routines in all the Company’s legal entities
– Ensure monitoring and risk mitigation of defaulting accounts, i.e. events
of non-payment
– Ensure efficient credit management within the Company and thereby
improve days sales outstanding and cash flow
– Define escalation path and approval process for customer credit limits.
The credit risk of all customers is regularly assessed. Through credit manage-
ment system functionality, credit checks are performed every time a sales order
is generated in the source system. These are based on the credit limit and risk
profile set on the customer. Credit blocks appear if credit limit is reached or if
past due receivables are higher than permitted levels. Release of a credit block
requires authorization.
Letters of credits are used as a method for securing payments from custom-
ers operating in emerging markets, in particular in markets with unstable politi-
cal and/or economic environments. By having banks confirming the letters of
credit, the political and commercial credit risk exposures to the Company are
mitigated.
Impairment of trade receivables and contract assets
Trade receivables and contract assets are assessed for impairment under a
unified model. The Company has determined that credit risk largely depends
on both the risk in the country where the customer resides (e.g. ability to make
cross border payments) as well as the payment pattern of the customer.
Therefore, expected credit losses (ECLs) are calculated using a provision matrix
that specifies a fixed rate depending both on the number of days past due and
the country risk rating. The country risk ratings depend on the ratings used by
all Export Credit Agencies within the OECD. The rates defined in the provision
matrix are based on historical loss patterns for that grouping of customers.
These rates are adjusted for current conditions as well as management expec-
tations of changes to political risks and payment patterns in the future. The
provision rates are higher on high risk countries compared to low risk countries
and also higher on amounts that remain unpaid for longer periods of time.
The Company has assessed the recent global economic conditions on the
expected credit losses model for trade receivables and updated the provision
matrix as appropriate.
Trade receivables and contract assets, net of allowance, amounted to
SEK 50,214 (58,256) million as of December 31, 2023. Provisions for expected
credit losses on trade receivables and contract assets amounted to SEK 2,585
(2,492) million as of December 31, 2023. Total past due more than 360 days
has increased, resulting in a higher allowance as a percentage of gross expo-
sure at year end. The Company’s write-offs have historically been low. During
the year SEK 35 (70) million were written off due to the Company having no
reasonable expectation of collection.
Movements in allowances for impairment of trade receivables and contract assets
Opening balance
Balances regarding acquired business
Increase in allowance
Write-offs
Translation difference
Closing balance
2023
2,492
–16
268
–35
–124
2,585
2022
2,398
90
40
–70
34
2,492
The distribution of trade receivables and contract assets closely follows the
distribution of the Company’s sales, see note B1 “Segment information.” The
10 largest customers represented 47% (45%) of the total trade receivables
and contract assets in 2023.
Aging analysis of gross values of trade receivables and contracts assets
by risk category
Days past dues
2023
Not due
1–90 91–180 181–360
>360
Total
Country risk :Low
27,431
Country risk: Medium 14,369
3,364
Country risk: High
45,164
Total
2022
2,434
826
512
3,772
445
227
186
858
137
224
197
558
Days past dues
Not due
1–90 91–180 181–360
Country risk :Low
32,015
Country risk: Medium 17,731
3,304
Country risk: High
Total
53,050
2,090
1,614
610
4,314
165
150
384
699
103
134
295
532
320
605
1,522
2,447
>360
328
585
1,240
2,153
30,767
16,251
5,781
52,799
Total
34,701
20,214
5,833
60,748
Customer finance credit risk
All major commitments to finance customers are made only after approval in
accordance with the work procedure for the Board of Directors and according
to the established credit approval process.
Prior to the approval of new facilities reported as customer finance, an
internal credit risk assessment is conducted in order to assess the credit rating
of each transaction for political and commercial risk. The credit risk analysis is
made by using an assessment tool, where the political risk rating is identical to
the rating used by all Export Credit Agencies within the OECD. The commercial
risk is assessed by analyzing a large number of parameters, which may affect
the level of the future commercial credit risk exposure. The output from the
assessment tool for the credit rating also includes an internal pricing of the risk.
This is expressed as a risk margin per annum over the relevant base rate. The
reference pricing for political and commercial risk, on which the tool is based, is
reviewed using information from Export Credit Agencies and prevailing pricing
in the bank loan and bond markets for structured financed deals. The objective
is that the internally set risk margin shall reflect the assessed risk and that the
pricing is as close as possible to the current market pricing. A reassessment of
the credit rating for each customer finance facility is made on a regular basis.
As of December 31, 2023, the total amount payable to the Company
under customer finance credits was SEK 9,681 (7,758) million. The carrying
value of these assets was SEK 6,917 (5,370) million as of December 31,
2023. Customer finance is arranged for infrastructure projects in different
geographic markets. As of December 31, 2023, there were a total of 65 (73)
customer finance arrangements originated by or guaranteed by the Company.
As of December 31, 2023, the five largest facilities, calculated based on gross
exposure, represented 86% (74%) of the customer finance exposure. The
geographical split of the year end gross exposure is as follows: South East Asia,
Oceania and India 38% (18%), Middle East and Africa 22% (30%), Europe
and Latin America 21% (27%) and North America 19% (24%). As of December
31, 2023, the Company also had unutilized customer finance commitments of
SEK 37,019 (54,086) million.
Security arrangements for customer finance facilities may include pledges
of equipment, pledges of certain assets belonging to the borrower and pledges
of shares in the operating company. If available, third-party risk coverage is
arranged. “Third-party risk coverage” means that a financial payment guaran-
tee covering the credit risk has been issued by a bank, an export credit agency
or an insurance company. All such institutions have been rated at least invest-
ment grade. A credit risk transfer under a sub-participation arrangement with
a bank can also be arranged. In this case the entire credit risk and the funding
is taken care of by the bank for the part that they cover.
The table below summarizes the Company’s outstanding customer finance
as of December 31, 2023 and 2022.
Financial report 2023
Note F1, cont’d.
Outstanding customer finance credit risk exposure 1)
Fair value of customer finance credits
Financial guarantees for third-parties
Accrued interest
Maximum exposure to credit risk
Less third-party risk coverage
The Company’s risk exposure, less third-party risk
coverage
1) This table shows the maximum exposure to credit risk.
2023
6,917
4
7
6,928
–79
2022
5,370
6
8
5,384
–298
6,849
5,086
Fair value assessment of customer finance credits
Customer finance risk exposures are held at fair value and are classified
as Level 3 in the fair value hierarchy. The Credit Asset Management Team
within Ericsson Credit AB, reporting to Head of Group Treasury and Customer
Finance, has established a process with respect to measurement of fair values.
The quarterly credit review uses an internal model to determine a commercial
rating for each credit and for calculation of the fair value. The model is based
on external credit rating, political/country rating and bank pricing. Regular
monitoring of customer behavior is also a part of the internal assessment.
Revaluation of customer finance (excluding effect of foreign exchange transla-
tion) amounted to a net loss in the consolidated income statement of SEK 209
million in 2023 (loss of 15 million), of which net loss of SEK 209 million related
to credits held as of December 31, 2023 (loss of 17 million). This effect is pre-
sented within selling and administrative expenses.
Customer finance fair value reconciliation
Opening balance
Additions
Disposals/repayments
Revaluation/amortization of interest
Translation difference
Closing balance
Of which non-current
2023
2022
5,370
49,583
–47,409
–467
–160
6,917
1,347
3,287
37,295
–35,412
–151
351
5,370
415
Due to the 5G buildout, the demand for customer financing arrangements has
continued to increase significantly. Most of such financing arrangements have
been transferred to banks.
Financial credit risk
Financial instruments carry an element of risk in that counterparts may
be unable to fulfill their payment obligations. This exposure arises in the
investments in cash, cash equivalents, interest-bearing securities and from
derivative positions with positive unrealized results against banks and other
counterparties.
The Company mitigates these risks by investing cash primarily in high rated
securities such as treasury bills, government bonds, commercial papers, and
mortgage-covered bonds (see Liquidity risk section below). Separate credit
limits are assigned to each counterpart in order to minimize risk concentration.
All derivative transactions are covered by ISDA netting agreements to reduce
the credit risk. For cross-currency derivatives a Credit Support Annex (CSA)
to ISDA is signed to further reduce the credit risk by exchanging collateral
weekly against market value. The Company has also moved some derivative
exposures to clearing counterparties with daily settlement of margins.
At December 31, 2023, the credit risk in financial cash instruments was
equal to the instruments’ carrying value. The expected credit losses on cash
equivalents and interest-bearings securities classified as amortized cost were
immaterial. Credit exposure in derivative instruments was SEK 0.4 (0.8) billion.
Liquidity risk
The Company minimizes the liquidity risk by maintaining a sufficient cash
position, centralized cash management, investments in highly liquid interest-
bearing securities, and by having sufficient committed credit lines in place to
meet potential funding needs. For information about contractual obligations,
analyzed by contractual maturity, see note D4 “Contractual obligations.” The
short-term commitment on debt in the next 12 months are sufficiently covered
Notes to the consolidated financial statements
65
by cash and other interest-bearing assets at year end. Ongoing collection from
customers are expected to satisfy operational requirements including trade
payables and other purchase obligations. Commitments for new customer
finance is not expected to have negative short-term effect on collection as
majority are sold within a short period. Where required, the Company expects
short-term borrowing facilities to be drawn down or rolled over to meet liquid-
ity needs.
Cash, cash equivalents, interest bearing securities and derivative assets
Rating
or equi-
2023
valent
< 3 M 3–12 M
1–5 Y
>5 Y
Total
Bank deposits
Other financial
institutions
Type of issuer:
Governments
Corporates
Mortgage institutes
Derivative assets
AA/AAA
A2/P2
AAA
33,298
181
548
—
—
—
—
33,479
—
548
789
1,510
1,995
445
490
296
5,668
749
1,254
—
8,676
622
—
—
—
35
2,533
1,806
16,339
1,851
38,585
7,384
10,552
35
56,556
Rating
or equi-
2022
valent
< 3 M 3–12 M
1–5 Y
>5 Y
Total
Bank deposits
Other financial
institutions
Type of issuer:
Governments
Corporates
Mortgage institutes
Derivative assets
AA/AAA
A2/P2
AAA
38,485
166
604
—
7
—
—
38,658
—
604
915
1,283
—
323
3,950
—
1,682
385
277
—
8,880
277
—
—
—
136
5,142
1,283
10,562
1,121
41,610
6,183
9,441
136
57,370
Refinancing risk
Refinancing risk is the risk that the Company is unable to refinance outstand-
ing debt under reasonable terms and conditions, or at all, at a given point in
time. The Company mitigates the risk by having diversified funding sources
through a mix of bonds, bilateral loans and private placements, with a
spread of debt maturing over time. The funding strategy is flexible to enable
pre-financing before loan maturities and funding in various currencies. The
average maturity of long-term borrowings is 3.7 years (3.8 years) at December
31, 2023. In addition to the long-term funding programs, the Company has a
commercial paper program and a committed liquidity revolving credit facility
for short-term borrowings.
Funding programs 1)
Euro Medium Term Note program
(USD million)
SEC Registered program (USD million) 2)
Commercial Paper Program (SEK million)
Amount
Utilized
Unutilized
5,000
—
10,000
2,842
—
2,014
2,158
—
7,986
1) There are no financial covenants related to these programs.
2) Program amount indeterminate.
In November 2023, the Company issued a 4.5-year EUR 500 million green
bond under the Euro Medium Term Note program and Green Financing
Framework. During the year, the Company established a new committed
liquidity revolving credit facility of USD 1.0 billion, of which USD 0.4 billion was
utilized as at year end, and increased the borrowings under the commercial
paper program by SEK 2.0 billion. Furthermore, the Company signed two
7-year loan agreements, one with European Investment Bank for USD 273
million and one with Nordic Investment Bank for USD 107 million.
66
Notes to the consolidated financial statements
Financial report 2023
Note F1, cont’d.
Committed credit facilities
Multi-currency revolving credit facility
(USD million)
Liquidity revolving credit facility
(USD million)
Amount
Utilized Unutilized
2,000
—
2,000
1,000
400
600
In September 2023, the Company exercised the second and the last one-year
extension option on the USD 2 billion sustainability-linked revolving credit
facility. The facility does not have interest rates linked to credit rating or finan-
cial covenants but is linked to two of Ericsson’s sustainability KPIs.
Fair valuation of the Company’s financial instruments
The Company’s financial instruments accounted for at fair value generally
meet the requirements of level 1 valuation as they are based on quoted prices
in active markets for identical assets. For some of the Company’s financial
assets and liabilities, especially derivatives, quoted prices are not readily
available and fair values are calculated using market inputs such as interest
rate quotes and currency rates.
For financial liabilities designated at fair value to profit and loss, the carry-
ing amount reflects the effect in own credit spreads either in quoted prices or
quoted Credit Default Swap (CDS) for Investment Grade companies.
Valuation hierarchy
– Quoted market prices – level 1
Assets and liabilities are classified as level 1 if their value is observable in an
active market. Such instruments are valued by reference to unadjusted quoted
prices for identical assets or liabilities in active markets where the quoted price
is readily available, and the price represents actual and regularly occurring
market transactions.
– Valuation technique using observable inputs – level 2
Assets and liabilities classified as level 2 have been valued using models whose
inputs are observable either directly or indirectly. Valuations based on observ-
able inputs include cash equivalents (e.g. discounted papers, term deposits) and
interest rate derivatives which are valued using interest rate yield curves. Other
market observable inputs include credit spreads and FX forward rates. Inputs for
base interest rates are quoted fixing rates, interest rates swaps and IBOR rates.
FX derivatives are valued by using observable forward rates, discounted
using base interest rate curve. Valuation of foreign exchange options are
made using the Black-Scholes formula. The value of credit risks in derivative
contracts are monitored regularly. Derivative credit and debit valuations
adjustments are calculated based on outstanding market values and default
probabilities from the CDS market, and if effect on valuation is material, are
included in the fair value of the derivatives.
– Valuation technique using significant unobservable inputs – level 3
Assets and liabilities are classified as level 3 if their valuation incorporates
significant inputs that are not based on observable market data (unobservable
inputs). Apart from trade receivables and customer finance receivables, this
valuation technique mainly applies to investment in shares and other partici-
pations whereby valuation input is considered observable if it can be directly
observed from transactions in an active market, or if there is compelling exter-
nal evidence demonstrating an executable exit price. Using a market approach
to valuation, unobservable inputs are generally determined via reference to
observable inputs, historical observations or other analytical techniques.
Reconciliation of Level 3 fair value of other financial asset
Opening balance
Additions
Disposals
Gains or losses 1)
Translation differences
Closing balance
Investment in shares
and participations
1,986
206
–2
–186
–2
2,002
1) Table shows net gains or losses recognized in Other operating income or expenses, of which SEK 186
million unrealized loss relate to Level 3 assets held at the end of the year.
Financial instruments carried at amortized cost
Financial instruments, such as some cash equivalents, interest-bearing securi-
ties, borrowings and payables, are carried at amortized cost which is deemed
to be equal to fair value. When a market price is not readily available and there
is insignificant interest rate exposure and credit spreads affecting the value, the
carrying value is considered to represent a reasonable estimate of fair value.
From January 1, 2023, liquidity portfolios in some subsidiaries are managed
on a fair value basis, therefore deposits (cash equivalents) held in these port-
folios are reclassified as fair value through profit or loss (previously classified
as amortized cost). The fair value of assets reclassified from amortized cost
to FVTPL is SEK 2.9 billion. The effect on profit and loss account is a gain of
SEK 2 million.
Financial instruments
SEK billion
Assets at fair value through
profit or loss
Customer finance
Interest-bearing securities
Cash equivalents 1)
Other financial assets
Other current assets
Assets at fair value through OCI
Trade receivable
Assets at amortized cost
Interest-bearing securities
Cash equivalents 1)
Other financial assets
Financial assets
Financial liabilities at designated
FVTPL
Parent Company borrowings
Financial liabilities at FVTPL
Other current liabilities
Liabilities at amortized cost
Trade payables
Borrowings
Financial liabilities
2023
2022
Amortized
cost
Fair
value
Fair value hierarchy level
Level 1
Level 2
Level 3
Amortized
cost
Fair
value
Fair value hierarchy level
Level 1
Level 2
Level 3
–
–
–
–
–
–
0.4
–
0.6
1.0
–
–
–27.8
–8.9
–36.7
6.9
19.1
17.5
2.1
1.9
42.2
–
–
–
89.7
–
18.6
0.8
0.1
–
–
–
–
–
–
0.5
16.7
–
1.9
–
–
–
–
–38.0
–23.7
–14.3
–1.8
–
–
–39.8
–
–
–
–1.8
–
–
6.9
–
–
2.0
–
42.2
–
–
–
–
–
–
–
–
–
–
–
–
–
0.4
2.9
0.6
3.9
–
–
–38.4
–3.3
–41.7
5.4
17.5
15.7
2.1
1.1
48.4
–
–
–
90.2
–
17.5
–
0.1
–
–
–
–
–
–
–
15.7
–
1.1
–
–
–
–
–29.6
–16.7
–12.9
–2.6
–
–
–32.2
–
–
–
–2.6
–
–
5.4
–
–
2.0
–
48.4
–
–
–
–
–
–
–
1) Total Cash and cash equivalent is SEK 35.2 (38.3) billion, of which SEK 17.5 (18.6) billion relating to Cash equivalents are presented in the table above.
Financial report 2023
Note F1, cont’d.
Market price risk in own shares and other listed equity investments
The Company is exposed to fluctuations in its own share price through share-
based compensation for employees and the Board of Directors. Some of the
plans are share-settled and some are cash-settled as further disclosed in note
A1 “Material accounting policies”, note G2 “Information regarding members
of the Board of Directors and Group management” and note G3 “Share-based
compensation.”
Share-based plans for employees
The obligation to deliver shares under the Long-Term Variable compensation
programs (LTV) for the Executive Team is covered by holding Ericsson Class
B shares as treasury stock. The cash flow exposure is managed through the
holding of Ericsson Class B shares as treasury stock shall be sold to generate
funds, which also cover social security payments, when shares are delivered to
participants at the end of their service period.
Notes to the consolidated financial statements
67
Cash-settled plans to employees and the Board of Directors
In the case of synthetic share programs (a cash-settled program as defined
in IFRS 2) to Board members and cash-settled plans to employees, the
Company is exposed to risks in relation to own share price, both with regard
to compensation expenses and social security charges. The obligations to pay
compensation amounts under the synthetic share-based compensations to
the Board of Directors and employees are covered by a provision in the balance
sheet. For further information about LTV, the cash- settled plans to employees
and the synthetic share-based compensations to the Board of Directors, see
note G2 “Information regarding members of the Board of Directors and Group
management” and note G3 “Share-based compensation.”
F2 Financial income and expenses
Financial income and expenses
Contractual interest on financial assets
of which on financial assets at amortized cost
Net revaluation gains and losses on financial assets
Other financial income
Financial income
Contractual interest on financial liabilities
of which on financial liabilities at amortized cost
Net revaluation gains and losses on financial liabilities
Lease interest expense
Net interest on pension liabilities
Other financial expenses
Financial expenses
Net foreign exchange gains/losses
Financial income and expenses, net
Net gains and losses on financial instruments exclude effect of foreign exchange translations:
Financial instruments at fair value through profit or loss 1)
Financial liabilities designated at fair value through profit or loss
2023
1,897
403
64
184
2,145
–2,282
–501
–134
–464
–517
–721
–4,118
–1,020
–2,993
885
–1,100
2022
717
251
–146
207
778
–972
–128
379
–464
–361
–512
–1,930
–1,259
–2,411
–2,552
2,847
2021
360
148
10
321
691
–525
–41
67
–426
–262
–528
–1,674
–1,547
–2,530
–534
404
1) Excludes net loss from revaluation of customer finance receivables of SEK 209 million (net loss of SEK 15 million in 2022 and net gain of SEK 350 million in 2021), reported as Selling and administrative expenses, and
net loss on revaluation of investments in shares and participations of SEK 186 million (net loss of SEK 205 million in 2022 and net gain of SEK 784 million in 2021) reported as Other operating income or expenses.
F3 Financial assets, non-current
Financial assets, non-current
Opening balance
Additions
Disposals/repayments/deductions
Amortization
Change in value in funded pension plans 2)
Revaluation
Reclassification
Translation differences
Closing balance
Other
investments
in shares and
participations
2,074
206
–2
–
–
–185
–
–2
2,091
2023
Interest-
bearing
securities,
non-current
9,164
12,887
–4,127
–
–
269
–8,262
–
9,931
Other
financial
assets,
non-current 1)
Other
investments
in shares and
participations
6,839
1,899
–816
–457
–1,033
–
–65
–17
6,350
2,258
218
–205
–
–
–205
–
8
2,074
2022
Interest-
bearing
securities,
non-current
30,626
13,583
–29,523
–
–
262
–5,784
–
9,164
Other
financial
assets,
non-current 1)
6,217
1,249
–481
–288
244
85
–542
355
6,839
1) Includes items such as pension surplus assets, tax credit receivables, deferred sales commissions and loans to associates.
2) This amount includes asset ceiling. For further information, see note G1 “Post-employment benefits.”
68
Notes to the consolidated financial statements
Financial report 2023
F4 Interest-bearing liabilities
As of December 31, 2023, the Company’s outstanding interest-bearing liabili-
ties were SEK 46.9 (32.9) billion.
Reconciliation of liabilities arising from financing activities
(including lease obligations)
Interest-bearing liabilities (excluding lease obligations)
Opening balance
Borrowings, current
Current part of non-current borrowings
Other borrowings, current
Total borrowings, current
Borrowings, non-current
Notes and bond loans
Other borrowings, non-current
Total borrowings, non-current
Total interest-bearing liabilities
2023
2022
8,995
8,660
17,655
29,071
147
29,218
46,873
2,865
3,119
5,984
26,752
194
26,946
32,930
Cash flows
Proceeds from issuance of borrowings
Repayment of borrowings
Other financing activities
Lease payments
Non-cash changes
Effect of foreign exchange movement
Revaluation due to changes in credit risk
Other changes in fair value
New lease contracts
Balances regarding acquired business
Other non-cash movements
Closing balance
Notes, bonds, bilateral loans, syndicated loans and commercial papers in the Parent Company
2023
2022
42,234
41,134
19,728
–7,884
1,101
–2,857
–930
667
1,131
1,547
2
–411
54,328
10,755
–16,029
315
–2,593
4,762
–1,030
–2,888
1,986
6,876
–1,054
42,234
Nominal
amount
Coupon
Currency
Maturity date
Carrying value
2023
Changes in fair
value due to
changes in credit
risk 2023
Cumulative
changes in fair
value due to
changes in credit
risk 2023
Carrying value
2022
Issued-maturing
Notes and bond loans
2017–2024
2017–2025 1)
2020–2030 1)
2021–2029
2022–2027
2023–2028
500
150
200
500
750
500
1.875%
2.741%
3.020%
1.000%
1.125%
5.375%
Total notes and bond loans
Bilateral loans and syndicated loans
2017–2023 2)
2019–2024 3)
2019–2025 2)
2021–2028 3)
2023–2030 2)
2023–2030 3)
2023–2024 4)
2023–2024 4)
220
281
150
305
107
273
200
200
Total bilateral and syndicated loans
Commercial papers
EUR
USD
USD
EUR
EUR
EUR
USD
USD
USD
USD
USD
USD
USD
USD
Mar 1, 2024
Dec 22, 2025
Dec 30, 2030
May 26, 2029
Feb 8, 2027
May 29, 2028
Jun 15, 2023
July 31, 2024
Dec 18, 2025
Jun 21, 2028
Dec 16, 2030
Dec 18, 2030
Aug 30, 2024
Feb 29, 2024
2023–2024 4) 5)
2,030
SEK
Feb–Mar 2024
Total commercial papers
1) Private Placement, Swedish Export Credit Corporation (SEK).
2) Nordic Investment Bank (NIB), R&D project financing.
3) European Investment Bank (EIB), R&D project financing.
4) Short-term borrowings are classified as amortized cost liabilities.
5) Commercial papers with weighted average yield of 4.633%.
5,523
1,416
1,736
4,701
7,714
5,798
26,888
–
2,829
1,509
2,976
1,097
2,718
2,002
2,002
15,133
2,014
2,014
–33
–3
69
160
205
141
539
–6
7
9
107
29
–18
–
–
128
–
–
13
27
87
–152
–2
141
114
–
11
8
–76
29
–18
–
–
–46
–
–
5,392
1,422
1,682
4,196
7,119
–
19,811
2,292
2,925
1,555
2,981
–
–
–
–
9,753
–
–
To secure long-term funding, the Company uses notes and bond programs
together with bilateral research and development loans, as well as private
placements. All outstanding notes and bond loans are issued by the Parent
Company under its Euro Medium Term Note (EMTN) program. Bonds issued at
a fixed interest rate are normally swapped to a floating interest rate using inter-
est rate swaps under the Asset and liability management mandate described
in note F1 “Financial risk management.” In addition to the long-term funding
programs, the Company has a commercial paper program and a committed
liquidity revolving credit facility to efficiently manage liquidity needs, further
described in note F1 “Refinancing risk.” Total weighted average interest rate
cost for parent company funding during the year was 5.15% (2.45%).
The global economy continues to face multiple challenges due to geopoliti-
cal uncertainty and the threat of economic downturn affecting all major econo-
mies. Central banks across the world have raised interest rates in response
to inflation. The higher short-term interest rates increased interest payments
on long-term borrowings as fixed coupons payments are normally swapped
to floating rates. As all long-term borrowings are also denominated in either
USD or Euro, interest payments and cost of borrowings in SEK have increased
compared to prior years.
Financial report 2023
Notes to the consolidated financial statements
69
Section G – Employee related
G1 Post-employment benefits
Ericsson sponsors a number of post-employment benefit plans throughout the
Company, which are in line with market practice in each country.
The Company has updated the assumptions used to value the defined ben-
efit pension liabilities based on the latest market conditions. Financial assump-
tion changes resulted in net actuarial gains on defined benefit obligations of
SEK 0.9 billion although this was largely offset by changes in demographic
assumptions and experience losses.
Swedish plans
Sweden has both defined benefit and defined contribution plans based on
collective agreement between the parties in the Swedish labor market:
– A defined benefit plan, known as ITP 2 (occupational pension for salaried
employees in manufacturing industries and trade), complemented by
a defined contribution plan, known as ITPK (supplementary retirement
benefits). This is a final salary-based plan.
– A defined contribution plan, known as ITP 1, for employees born in 1979
or later.
– A defined contribution plan ITP 1 or alternative ITP, for employees earning
more than 10 income base amount and who have opted out of the defined
benefit plan ITP 2, where rules are set by the Company and approved by
each employee selected to participate.
The Company has by far most of its Swedish pension liabilities under defined
benefit plans which according to IAS 19 is funded to 59% (57%) by the assets
of Ericsson Pensionsstiftelse (a Swedish Pension Foundation). These liabilities,
if valued using different methodology and assumptions established by the
Swedish PRI Pensionsgaranti, are considered funded to more than 100% by
the assets of Ericsson Pensionsstiftelse. There are no funding requirements for
the Swedish plans.
The disability and survivors’ pension part of the ITP-plan is secured through
an insurance solution with the company Alecta, see section about Multi-
employer plans.
The Company pays benefit directly to the pensioners as the obligations fall
due. The responsibility for governance of the plans and the plan assets lies with
the Company and the Pensionsstiftelse. The Swedish Pensionsstiftelse is man-
aged on the basis of a capital preservation strategy and the risk profile is set
accordingly. Traditional asset-liability matching (ALM) studies are undertaken
on a regular basis to allocate within different asset classes.
The plans are exposed to various risks, e.g., a sudden decrease in the bond
yields, which would lead to an increase in the plan liability. A sudden instability
in the financial market might also lead to a decrease in fair value of plan assets
held by the Pensionsstiftelse, as the holdings of plan assets partly are exposed
to equity markets; however, this may be partly offset by higher values in fixed
income holdings. Swedish plans are linked to inflation and higher inflation will
most likely lead to a higher liability.
Multi-employer plans
As before, the Company has secured the disability and survivors’ pension part
of the ITP Plan through an insurance solution with the insurance company
Alecta. Although this part of the plan is classified as a multi-employer defined
benefit plan, it is not possible to get sufficient information to apply defined
benefit accounting, as for most of the accrued pension benefits in Alecta,
information is missing on the allocation of earnings process between employ-
ers. Full vesting is instead registered on the last employer. Alecta is not able to
calculate a breakdown of assets and provisions for each respective employer,
and therefore, the disability and survivors’ pension portion of the ITP Plan has
been accounted for as a defined contribution plan.
Alecta has a collective funding ratio which acts as a buffer for its insurance
commitments to protect against fluctuations in investment return and insur-
ance risks. Alecta’s collective funding ratio ranges from 125% to 175% and
reflects the market value of Alecta’s plan assets as a percentage of its commit-
ments to policy holders (both guaranteed and non-guaranteed), measured
in accordance with Alecta’s actuarial assumptions, which are different from
those in IAS 19. Alecta’s collective funding ratio was 158% (172%) as of
December 31, 2023. The Company’s share of Alecta’s saving premiums is 0.4%
and the total share of active members in Alecta is 2.1%. The expected contribu-
tion to the plan is SEK 95 million for 2024.
Contingent liabilities / Assets pledged as collateral
Contingent liabilities include the Company’s mutual responsibility as a credit
insured company of PRI Pensionsgaranti in Sweden. This mutual responsibility
can only be imposed in the instance that PRI Pensionsgaranti has consumed
all of its assets, and it amounts to a maximum of 2% of the Company’s pen-
sion liability in Sweden. The Company has a pledged business mortgage of
SEK 7.4 billion to PRI Pensionsgaranti at year end. PRI continuously measures
the Company credit risk levels according to the credit insurance terms and
conditions.
US plans
The Company operates both defined contribution and defined benefit pension
plans in the US, which are a combination of final salary pension plans and
contribution-based arrangements. The final salary pension plans provide
benefits to members in the form of a guaranteed level of pension payable for
life. The level of benefits provided depends on members’ length of service and
their salary in the final years leading up to retirement. Retirees generally do not
receive inflationary increases once in payment.
The other type of plan is a contribution-based pension plan, which provides
a benefit determined using a “cash balance” approach. The balance is credited
monthly with interest credits and contribution credits, based on a combination
of current year salary and length of service.
The majority of benefit payments are from trustee-administered funds;
however, there are also a number of unfunded plans where the Company
meets the benefit payment obligation as it falls due. In the US, the Company’s
policy is at least to meet or exceed the funding requirements of federal regula-
tions. The funded level in the US Pension Plan is above the point at which
minimum funding would be required for fiscal year 2023.
Plan assets held in trusts are governed by local regulations and practice,
as is the nature of the relationship between the Company and the trustees (or
equivalent) and their composition. Responsibility for governance of the plans,
including investment decisions and contribution schedules, lies with the Plan
Administrative Committee (PAC). The PAC is composed of representatives
from the Company.
The Company’s plans are exposed to various risks associated with pen-
sion plans, i.e., a sudden decrease in bond yields would lead to an increase
in the present value of the defined benefit obligation. A sudden instability in
the financial markets might also lead to a decrease in the fair value of plan
assets held by the trust. Pension benefits in the US are not linked to inflation;
however, higher inflation poses the risk of increased final salaries being used to
determine benefits for active employees. There is also a risk that the duration
of payments to retirees will exceed the life expectancy in mortality tables.
UK plans
The Company operates both defined benefit and defined contribution plans in
the UK. All defined benefit plans in the UK are closed to future pension accrual.
The defined benefit plans provide benefits to members in the form of a
guaranteed level of pension payable for life. The level of benefits provided is
defined by the Trust Deed & Rules and depends on members’ length of service
and their salary. Pensions in payment are generally updated in line with the UK
retail price index, subject to caps defined by the rules.
The plans’ assets are held in trusts and are invested in a diverse range of
assets. The plans are governed by local regulations and responsibility for the
governance of the plans lies with the Trustee Directors, who are appointed by
the Company from its employees and from the plans’ members. Independent
professional trustees sit on a number of the Boards.
The plans remain exposed to various risks associated with defined benefit
plans, e.g. a decrease in bond yields or increase in inflation would lead to an
increase in the present value of the defined benefit obligation. Alternatively,
the duration of payments to retirees could exceed the life expectancy assumed
70
Notes to the consolidated financial statements
Financial report 2023
Note G1, cont’d.
in the current mortality tables leading to an increase in liabilities. A sudden
instability in the financial markets might also lead to a decrease in the fair
value of the plans’ assets. The Company’s and Trustees’ aim is to reduce the
plans’ exposure to the key risks over time.
Other plans
The Company also sponsors plans in other countries. The main plans are in
Brazil, India and Ireland. The main pension plans in Brazil are wholly funded
with a net surplus of assets. The plan in Ireland is a final salary pension plan
and is partly funded. The plans are managed by corporate trustees with
directors appointed partly by the local company and partly by the plan mem-
bers. The trustees are independent from the local company and subject to the
specific country’s pension laws.
The Provident Fund Plan in India is self-managed through a registered
Exempted Trust and according to local legislation, investment returns shall
be guaranteed at minimum rates of return specified by the government. The
Company has an obligation to fund any shortfall on the yield of the trust’s
investments over the administered interest rates on an annual basis. These
administered rates are determined annually predominantly considering the
social and economic factors in the past.
Amount recognized in the Consolidated balance sheet
Amount recognized in the Consolidated balance sheet
2023
Defined benefit obligation (DBO)
Fair value of plan assets
Deficit/surplus (+/–)
Plans with net surplus, excluding asset ceiling 1)
Provision for post-employment benefits 2)
2022
Defined benefit obligation (DBO)
Fair value of plan assets
Deficit/surplus (+/–)
Plans with net surplus, excluding asset ceiling 1)
Provision for post-employment benefits 2)
Sweden
US
UK
Other
Total
50,043
29,627
20,416
–
20,416
50,441
28,521
21,920
–
21,920
5,073
4,815
258
255
513
5,365
5,111
254
298
552
10,595
12,410
–1,815
1,889
74
9,866
11,999
–2,133
2,137
4
19,824
15,741
4,083
1,143
5,226
18,019
14,849
3,170
1,715
4,885
85,535
62,593
22,942
3,287
26,229
83,691
60,480
23,211
4,150
27,361
1) Plans with a net surplus, i.e., where plan assets exceed DBO, are reported as Other financial assets, non-current, see note F3 “Financial assets, non-current.”
The asset ceiling increased during the year to SEK 755 (584) million.
2) Plans with net liabilities are reported in the balance sheet as Post-employment benefits, non-current.
Total pension cost recognized in the Consolidated income statement
The costs for post-employment benefits within the Company are distributed between defined contribution plans and defined benefit plans.
Pension costs for defined contribution plans and defined benefit plans
Sweden
US
UK
Other
Total
2023
Pension cost for defined contribution plans
Pension cost for defined benefit plans 1)
Total
Total pension cost expressed as a percentage of wages and salaries
2022
Pension cost for defined contribution plans
Pension cost for defined benefit plans
Total
Total pension cost expressed as a percentage of wages and salaries
2021
Pension cost for defined contribution plans
Pension cost for defined benefit plans
Total
Total pension cost expressed as a percentage of wages and salaries
1,223
2,013
3,236
1,192
2,144
3,336
1,199
1,920
3,119
522
67
589
542
160
702
460
97
557
148
–67
81
128
–22
106
138
–6
132
1,571
1,166
2,737
1,209
1,204
2,413
1,084
931
2,015
3,464
3,179
6,643
7.8%
3,071
3,486
6,557
8.9%
2,881
2,942
5,823
9.3%
1) For the UK plans, negative cost was due to interest income of SEK 626 million exceeding interest cost of SEK 514 million during the year.
Financial report 2023
Note G1, cont’d.
Change in the net defined benefit obligation
Change in the net defined benefit obligation
Opening balance
Included in the income statement 2)
Current service cost
Past service cost and gains and losses on settlements
Interest cost/income (+/–)
Taxes and administrative expenses
Other
Remeasurements
Return on plan assets excluding amounts in interest expense/income
Actuarial gains/losses (–/+) arising from changes in demographic
assumptions
Actuarial gains/losses (–/+) arising from changes in financial assumptions
Experience-based gains/losses (–/+)
Other changes
Translation difference
Contributions and payments from:
Employers 3)
Plan participants
Payments from plans:
Benefit payments
Settlements
Other
Closing balance
1) The weighted average duration of DBO is 16.8 (18.3) years.
2) Excludes the impact of the asset ceiling of SEK 62 (55) million in 2023.
3) The expected contribution to the plans during 2024 is SEK 2.3 billion.
Present value of the defined benefit obligation
2023
DBO, closing balance
Of which partially or fully funded
Of which unfunded
2022
DBO, closing balance
Of which partially or fully funded
Of which unfunded
Notes to the consolidated financial statements
71
Present value
of obligation
2023 1)
Fair value
of plan
assets
2023
Total
2023
Present value
of obligation
2022 1)
Fair value
of plan
assets
2022
Total
2022
83,691
–60,480
23,211
113,543
–81,355
32,188
2,291
179
2,839
–
108
5,417
–
2,291
–
–2,371
78
–7
–2,300
179
468
78
101
3,117
2,772
311
1,716
–
43
4,842
–
2,772
–
–1,475
62
1
–1,412
311
241
62
44
3,430
–
–663
–663
–
14,135
14,135
267
–943
347
–329
–
–
–
–663
267
–943
347
–992
1,118
–29,031
3,236
–24,677
–
–
–
14,135
1,118
–29,031
3,236
–10,542
–179
110
–69
3,381
–3,297
84
–1,737
350
–1,294
–488
104
85,535
–594
–342
1,292
488
–104
–2,331
8
–1,302
334
–2
–
–
–1,806
–10,759
135
–652
–325
1,806
10,755
–135
–1,954
9
–
–4
–
–62,593
22,942
83,691
–60,480
23,211
Sweden
US
UK
Other
Total
50,043
50,043
–
50,441
50,441
–
5,073
4,560
513
5,365
4,812
553
10,595
10,595
–
9,866
9,866
–
19,824
16,702
3,122
18,019
14,417
3,602
85,535
81,900
3,635
83,691
79,536
4,155
72
Notes to the consolidated financial statements
Financial report 2023
Note G1, cont’d.
Asset allocation by asset type and geography 1)
2023
Cash and cash equivalents
Equity securities
Debt securities
Real estate
Investment funds
Assets held by insurance company
Other
Total
Of which real estate occupied by the Company
Of which securities issued by the Company
2022
Cash and cash equivalents
Equity securities
Debt securities
Real estate
Investment funds
Assets held by insurance company
Other
Total
Of which real estate occupied by the Company
Of which securities issued by the Company
Sweden
US
UK
Other
Total
Of which
unquoted 2)
271
7,311
14,335
5,461
2,016
–
233
29,627
–
–
1,151
6,803
14,114
5,577
917
–
–41
28,521
–
–
181
361
3,591
–
834
–
–152
4,815
–
–
184
419
3,646
–
789
–
73
5,111
–
–
681
769
5,681
–
2,346
2,437
496
12,410
–
–
449
1,113
5,818
199
2,417
1,872
131
11,999
–
–
133
1,873
9,285
544
1,829
1,679
398
15,741
–
–
88
2,791
8,539
603
578
1,717
533
14,849
–
–
1,266
10,314
32,892
6,005
7,025
4,116
975
62,593
–
–
1,872
11,126
32,117
6,379
4,701
3,589
696
60,480
–
–
22%
27%
21%
100%
69%
100%
38%
6%
50%
28%
100%
74%
100%
15%
1) Asset class is presented based on the underlying exposure of the investment. This includes direct investment in securities or investment through pooled funds that invest in an asset class.
2) Unquoted refers to assets classified as fair value level 2 and 3. Unquoted assets comprise mainly investments in pooled investment vehicles.
Actuarial assumptions
Financial and demographic actuarial assumptions
Financial assumptions
Discount rate
Inflation rate
Salary increase rate
Demographic assumptions
Life expectancy after age 65 in years
2023
2022
Sweden
2.1%
2.0%
2.5%
23
US
5.0%
2.5%
4.0%
23
UK
4.8%
3.0%
–
23
Sweden
2.0%
2.3%
2.8%
23
US
5.4%
2.5%
3.0%
22
UK
4.9%
3.1%
–
23
Actuarial assumptions are assessed on a quarterly basis. See also note A1
“Material accounting policies” and note A2 “Critical accounting estimates and
judgments.”
Sweden
The defined benefit obligation (DBO) has been calculated using a discount rate
based on the yields of Swedish government bonds. IAS 19 Employee Benefits
prescribes that if there is not a deep market in high-quality corporate bonds,
the market yields on government bonds shall be applied for the pension liabil-
ity calculation. As of December 31, 2023, the discount rate applied in Sweden
was 2.1% (2.0%). If the discount rate had been based on Swedish covered
mortgage bonds, the discount rate as of December 31, 2023 would have been
3.5% (3.9%). If the discount rate based on Swedish covered mortgage bonds
had been applied for the pension liability calculation, the DBO at December 31,
2023 would have been approximately SEK 12.1 (16.5) billion lower.
US and UK
The defined benefit obligation has been calculated using a discount rate based
on yields of high-quality corporate bonds, where “high-quality” has been
defined as a rating of AA and above.
Total remeasurements in Other comprehensive income related to
post-employment benefits
Actuarial gains and losses (+/–)
The effect of asset ceiling
Swedish special payroll taxes
Total
2023
538
–87
454
905
2022
8,943
127
1,599
10,669
Sensitivity analysis of significant actuarial assumptions, SEK billion
Impact on the DBO of a change
in assumptions
Financial assumptions
Discount rate –0.5%
Discount rate +0.5%
Inflation rate –0.5%
Inflation rate +0.5%
Salary increase rate –0.5%
Salary increase rate +0.5%
Demographic assumptions
Longevity – 1 year
Longevity + 1 year
2023
Sweden
US
UK
5.2
–4.6
–4.4
4.9
–1.4
1.5
–2.1
2.1
0.3
–0.2
–
–
–
–
–0.1
0.1
0.8
–0.7
–0.1
0.6
–
–
–0.3
0.3
Financial report 2023
Notes to the consolidated financial statements
73
G2 Information regarding members of the Board of Directors and Group management
Remuneration to the Board of Directors
Remuneration to members of the Board of Directors
Number of
synthetic
shares/portion
Value at
grant date of
synthetic
shares
allocated
SEK
Board fees
of Board fee 4)
in 2023 4)
Board member
Jan Carlson
Jacob Wallenberg
Börje Ekholm
Carolina Dybeck Happe
Christy Wyatt
Eric A. Elzvik
Helena Stjernholm
Jon Fredrik Baksaas
Jonas Synnergren
Kristin S. Rinne
Kurt Jofs 5)
Nora Denzel 5)
Ronnie Leten 5)
Employee Representatives
Kjell-Åke Soting
Annika Salomonsson 6)
Ulf Rosberg 7)
Loredana Roslund (deputy)
Frans Frejdestedt (deputy) 8)
Stefan Wänstedt (deputy) 8)
Torbjörn Nyman 9)
Anders Ripa 10)
4,500,000
1,140,000
–
1,140,000
1,140,000
1,140,000
1,140,000
1,140,000
1,140,000
1,140,000
–
–
–
54,750
54,750
54,750
54,750
29,250
29,250
25,500
23,250
Total
13,946,250
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
A
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Number of
previously
allocated
synthetic
shares
outstanding
34,041
34,041
–
10,003
–
11,345
22,693
25,391
–
16,913
11,427
11,345
63,985
–
–
–
–
–
–
–
–
Net change
in value of
synthetic
shares 1)
B
–837,475
–837,475
–
–166,650
–
–279,111
–558,274
–619,545
–
–458,693
–239,336
–279,111
–1,784,460
–
–
–
–
–
–
–
–
Committee
fees
Total fees
paid in cash 2)
C
4,920,000
1,325,000
–
–
1,325,000
1,635,000
1,325,000
1,635,000
1,610,000
1,510,000
–
–
–
76,950
69,150
63,750
54,750
29,250
29,250
37,200
30,150
420,000
185,000
–
–
185,000
495,000
185,000
495,000
470,000
370,000
–
–
–
22,200
14,400
9,000
–
–
–
11,700
6,900
241,184
–6,060,130
2,869,200
15,675,450
Total
remunera-
tion 2023
(A+B+C)
Total
remunera-
tion 2022
4,082,525
487,525
–
–166,650
1,325,000
1,355,889
766,726
1,015,455
1,610,000
1,051,307
–239,336
–279,111
–218,839
–493,839
–
609,182
–
983,791
97,535
–214,424
–
305,308
1,275,090
688,791
–1,784,460
2,258,226
76,950
69,150
63,750
54,750
29,250
29,250
37,200
30,150
9,615,320 3)
58,500
28,500
43,500
43,500
–
–
66,000
55,500
5,586,321
1) The difference in value as of the time for payment, compared to December 31, 2022, for synthetic shares allocated in 2018 (for which payment was made in 2023). The difference in value as of December 31, 2023
compared to December 31, 2022, for synthetic shares allocated in 2019, 2020, 2021 and 2022. Calculated on a share price of SEK 63.11. The value of synthetic shares allocated in 2019, 2020, 2021 and 2022
includes respectively SEK 1.50, SEK 2.00, SEK 2.50 and SEK 2.70 per share in compensation for dividends resolved by the Annual General Meetings 2020, 2021, 2022 and 2023, and the value of the synthetic
shares allocated in 2018 includes dividend compensation for dividends resolved in 2019, 2020, 2021 and 2022.
2) Committee fee and cash portion of the Board fee.
3) Excluding social security charges in the amount of SEK 2,077,206.
4) None of the Board members participated in the synthetic share program during 2023.
5) Resigned from the Board of Directors in connection with the AGM held on March 29, 2023.
6) Appointed employee representative Board member as of July 31, 2023, previously deputy employee representative Board member.
7) Appointed employee representative Board member as of July 4, 2023, previously deputy employee representative Board member.
8) Appointed deputy employee representative Board members as of September 1, 2023.
9) Resigned as employee representative Board member as of July 31, 2023.
10) Resigned as employee representative Board member as of July 4, 2023.
Comments to the table
– The Chair of the Board was entitled to a Board fee of SEK 4,500,000.
– The other Directors elected by the Annual General Meeting were entitled to a
fee of SEK 1,140,000 each.
– The Chair of the Audit and Compliance Committee was entitled to a
fee of SEK 495,000 and the other non-employee members of the Audit
and Compliance Committee were entitled to a fee of SEK 285,000 each.
The Chairs of the Finance, Remuneration and Enterprise Business and
Technology Committees were entitled to a fee of SEK 210,000 each and the
other non-employee members of these Committees were entitled to a fee of
SEK 185,000 each.
– Members of the Board, who are not employees of the Company, have
not received any remuneration other than the fees and synthetic shares
as above. None of the Directors have entered into a service contract with
the Parent Company or any of its subsidiaries, providing for termination
benefits.
– Members and deputy members of the Board who are Ericsson employees
received no remuneration or benefits other than their entitlements as
employees and a fee to the employee representatives and their deputies
of SEK 2,250 per attended Board meeting and SEK 1,800 per attended
Committee meeting.
– The Annual General Meeting 2023 resolved that non-employee Directors
may choose to receive the Board fee (i.e., exclusive of Committee fee) as
follows: i) 25% of the Board fee in cash and 75% in the form of synthetic
shares, ii) 50% in cash and 50% in the form of synthetic shares, or iii) 75% in
cash and 25% in the form of synthetic shares. Directors may also choose not
to participate in the synthetic share program and receive 100% of the Board
fee in cash. Committee fees are always paid in cash.
If the Board members would have chosen synthetic shares, the number of
synthetic shares allocated would have been based on a volume-weighted
average of the market price of Ericsson’s Class B shares on Nasdaq Stockholm
during the five trading days immediately following the publication of Ericsson’s
74
Notes to the consolidated financial statements
Financial report 2023
Note G2, cont’d.
interim report for the first quarter 2023; SEK 55.34. The number of synthetic
shares would then have been rounded down to the nearest whole number of
shares.
The synthetic shares are vested during the Directors’ term of office and the
right to receive payment with regard to the allocated synthetic shares occurs
after the publication of the Company’s year-end financial statement during
the fifth year following the Annual General Meeting, which resolved on the
synthetic share program, i.e., in 2028. The amount payable shall be determined
based on the volume-weighted average price for Ericsson’s Class B shares
on Nasdaq Stockholm during the five trading days immediately following the
publication of the year-end financial statement.
Synthetic shares were allocated to members of the Board for the first time
in 2008 and have been allocated annually since then on equal terms and
conditions. Payment based on synthetic shares allocated in 2018 occurred
in 2023. The amounts paid in 2023 under the synthetic share programs were
determined based on the volume-weighted average price for Ericsson’s Class
B shares on Nasdaq Stockholm during the five trading days immediately
following the publication of the year-end financial statements for 2022:
SEK 59.91 and totaled SEK 6,350,763, excluding social security charges.
The payments made do not constitute a cost for the Company in 2023. The
Company’s costs for the synthetic shares have been disclosed each year and
the net change in value of the synthetic shares for which payment was made in
2023, is disclosed in the table above “Remuneration to members of the Board
of Directors”.
The value of all outstanding synthetic shares fluctuates in line with the
market value of Ericsson’s Class B share and may differ from year to year
compared to the original value on their respective grant dates. The change
in value of the outstanding synthetic shares is established each year and
affects the total recognized costs that year. As of December 31, 2023, the total
outstanding number of synthetic shares under the programs is 241,184 and
the total accounted debt is SEK 16,690,551.
Remuneration to the Group management
The Company’s costs for remuneration to the Group management are the
costs recognized in the income statement during the financial year. These costs
are disclosed under Remuneration costs below.
Costs recognized during a financial year in the income statement are not
fully paid by the Company at the end of the fiscal year. The unpaid amounts
that the Company has in relation to the Group management are disclosed
under Outstanding balances.
Remuneration costs
The total remuneration to the President and CEO and to other members of
the Group management, consisting of the Executive Team (ET), includes
fixed salary, short- and long-term variable compensation, pension and other
benefits. These remuneration elements are based on the guidelines for remu-
neration to Group management (the Guidelines) as approved by the Annual
General Meetings (AGM) of shareholders held in 2020 and 2023.
Remuneration costs for the President and CEO and other members of the Executive Team (ET)
SEK
Salary 1)
Termination benefits
Annual variable
remuneration provision
earned for the year
Long-term variable
compensation provision
Pension costs 2)
Other benefits
Social charges and taxes
President
and CEO 2023
President
and CEO 2022
President
and CEO 2021
Other
members
of ET 2023 3)
Other
members
of ET 2022 3)
Other
members
of ET 2021
Total 2023
Total 2022
Total 2021
19,520,568
–
19,154,852
–
18,208,859
–
135,208,734
–
132,945,295
25,503,967
110,043,431 154,729,302
–
–
152,100,147 128,252,290
–
25,503,967
–
–
–
48,399,226
90,908,181
52,507,185
48,399,226
90,908,181
52,507,185
31,708,587
41,125,015
43,701,650
30,547,582
43,688,149
48,260,833
62,256,169
84,813,164
91,962,483
10,151,804
828,287
19,546,145
9,856,121
135,743
22,079,378
9,569,049
555,688
22,633,474
24,607,643
19,575,733
45,222,286
42,248,588
20,167,043
60,745,133
40,886,802
11,199,631
57,469,705
34,759,447
20,404,020
64,768,431
52,104,709
20,302,786
82,824,511
50,455,851
11,755,319
80,103,179
Total
81,755,391
92,351,109
94,668,720
303,561,204
416,206,356
320,367,587 385,316,595
508,557,465 415,036,307
1) Includes compensation for unused vacation days.
2) Includes cash payments to the President and CEO in lieu of defined contribution payment in a cost neutral way to Ericsson.
3) Does not include cash compensation paid to Rory Read of USD 32.76 million in 2022 and USD 10.64 million in 2023. The total amount was reported separately as ‘Deviations from adopted Guidelines for remuneration to
Group Management’ in Remuneration Report 2022 as compensation for acceleration of pre-existing long-term share based variable incentive program of restricted and performance stock units (RSU and PSU) in Vonage.
Comments to the table
– Fredrik Jejdling was appointed Executive Vice President by the Board of
Directors effective November 7, 2017. He did not substitute the President
and CEO as the deputy to the President and CEO in 2023. Information
regarding Fredrik Jejdling is included in the group “Other members of ET.”
The details of Fredrik Jejdling’s remuneration in 2023 can be found in the
Remuneration report 2023.
Heuveldop, Chris Houghton, Fredrik Jejdling, Jan Karlsson, Peter Laurin,
Stella Medlicott, Carl Mellander, Nunzio Mirtillo, Fadi Pharaon and
Åsa Tamsons.
– The salary stated in the table for the President and CEO and other mem-
bers of the ET includes vacation pay paid during 2023, as well as other
contracted compensation expenses in 2023.
– “Long-term variable compensation provision” refers to the compensation
– The group “Other members of ET 2023” comprises the following
costs for full year 2023 for all outstanding share-based plans.
persons: MajBritt Arfert, Scott Dresser, Erik Ekudden, Moti Gyamlani,
Niklas Heuveldop, Chris Houghton, Fredrik Jejdling, Stella Medlicott,
Carl Mellander, Nunzio Mirtillo, Per Narvingar, Fadi Pharaon, Rory Read
and Åsa Tamsons. In addition, Jenny Lindqvist joined ET on February 1,
2023, and George Mulhern left ET effective November 1, 2023.
– The group “Other members of ET 2022” comprises the following persons:
MajBritt Arfert, Scott Dresser, Erik Ekudden, Niklas Heuveldop, Chris
Houghton, Fredrik Jejdling, George Mulhern, Moti Gyamlani, Per Narvingar,
Stella Medlicott, Carl Mellander, Nunzio Mirtillo, Fadi Pharaon, Rory Read
and Åsa Tamsons. In addition, Xavier Dedullen left ET effective March 21,
2022 and Arun Bansal, Jan Karlsson and Peter Laurin left ET effective
June 1, 2022.
– The group “Other members of ET 2021” comprises the following persons:
MajBritt Arfert, Arun Bansal, Xavier Dedullen, Erik Ekudden, Niklas
Outstanding balances
The Company has recognized the following liabilities relating to unpaid
remunerations in the balance sheet:
– Ericsson’s commitments for defined benefit based pensions as of December 31,
2023, for other members of ET under IAS 19 amounted to 2023: SEK 35.4
million, 2022: SEK 37.6 million of which 2023: SEK 28.3 million, 2022: SEK
30.0 million refers to the ITP and early retirement, and the remaining 2023
SEK 7.1 million, 2022 SEK 7.7 million to disability and survivors’ pensions.
The President and CEO does not have a Swedish defined benefit based
pension plan, hence, Ericsson bears no commitment.
– For previous Presidents and CEOs, the Company has made provisions for
defined benefit pension plans in connection with their active service periods
within the Company.
Financial report 2023
Notes to the consolidated financial statements
75
G3 Share-based compensation
Accounting treatment of Long-Term Variable Compensation Programs
In note A1” Material accounting policies”, the overall accounting policies for
share-based payments within the Company are disclosed. In summary:
– Share-settled programs, the total compensation expense is calculated
based on the fair value (FV) at grant date and recognized over the service
period of three years.
– Cash-settled plans, the accounting principles are the same as for any other
accruals or provisions. Prior to payout an accrual or provision is recognized
every period based on the present period’s best estimate of the total
amount. Any difference between total payout and the sum of accruals
or provisions is recognized in the income statement in the period of final
payout.
Long-Term Variable Compensation
All long-term variable compensation programs have been designed to form
a part of a well-balanced total remuneration package and in general to span
over a minimum of three years (service period). As these are variable compen-
sation programs, the outcomes cannot be predicted when the programs are
introduced and rewards depend on long-term personal commitment, corpo-
rate performance and the share price performance.
To reinforce a strong alignment between our shareholders and our
Executives the LTV 2023 for Executives will grant, vest and be delivered in
Ericsson Class B-shares. Until LTV 2022 Executive Performance Plan (EPP),
the granting and vesting has been in synthetic shares with the outcome
LTV and EPP performance criteria
delivered as a cash settlement. With this action the new Long-Term Variable
Compensation Program (LTV) for the Executive Team (ET) and the Executive
Performance Plan (EPP) for senior managers have merged into one plan.
All programs are share-based payment programs as defined by IFRS 2
“Share-based Payment,” either share- or cash-settled. The significant share-
based payment programs are described below.
Share-Settled Programs
Long-Term Variable Compensation Program for the Executive Team
The Long-Term Variable Compensation Program for the ET and Executives as
approved by the shareholders, is designed to provide long-term incentives for
members of the ET and Executives, to incentivize the Company’s performance
creating long-term value.
Awards under LTV (Performance Share Awards) are granted to the par-
ticipants, provided that certain performance conditions are met, to receive a
number of shares, free of charge, following expiration of a three-year vesting
period (vesting period). Allotment of shares pursuant to Performance Share
Awards are subject to the achievement of performance criteria which are
defined specific to each year’s program when the program is introduced.
Which portion, if any, of the Performance Share Awards for LTV will vest is
determined at the end of the relevant performance period based on the satis-
faction of the predetermined performance criteria for that year’s LTV program
(performance period). The performance criteria for the currently running
LTV and EPP are summarized in the below table along with the satisfaction
Target
Criteria
Weight
Performance Period
Vesting Opportunity
(linear pro-rata)
Range (SEK billion): 26.4 - 40.4
45%
Jan 1, 2023–Dec 31, 2023
0%–200%
Achievement
SEK 21.4
billion 2)
Achieved
Vesting Level
0%
2023 Group operating
income (EBITA)
Absolute TSR
Relative TSR
Group Environmental,
Social and Governance
(“ESG”)
2022 Group operating
income (EBIT)
Absolute TSR
Relative TSR
Group Environmental,
Social and Governance
(“ESG”)
Range: 6%-14%
Ranking of Ericsson: 6–2
CO2e emissions (ktonnes):
142–121
CO2e emissions (ktonnes):
132–113
CO2e emissions (ktonnes):
122–104
Increasing the representation
of women leaders in the Ericsson
Group: Range 23%–25%
Range (SEK billion): 24.1–34.1
Range: 6%-14%
Ranking of Ericsson: 6–2
CO2e emissions (ktonnes):
265–200
Increasing the representation
of women leaders in the Ericsson
Group: Range 22%–24%
25%
20%
Jan 1, 2023–Dec 31, 2025
Jan 1, 2023–Dec 31, 2025
0%–200%
0%–200% 1)
1.66%
Jan 1, 2023–Dec 31, 2023
0%–200%
121.9 ktonne
CO2
193.72%
1.66%
Jan 1, 2024–Dec 31, 2024
0%–200%
1.68%
5%
Jan 1, 2025–Dec 31, 2025
Jan 1, 2023–Dec 31, 2025
0%–200%
0%–200%
100%
45%
25%
20%
5%
Jan 1, 2022–Dec 31, 2022
Jan 1, 2022–Dec 31, 2024
Jan 1, 2022–Dec 31, 2024
Jan 1, 2022–Dec 31, 2024
0%–200%
0%–200%
0%–200%
0%–200% 1)
0%–200%
5%
Jan 1, 2022–Dec 31, 2024
0%–200%
SEK 32.2
billion 2)
162.76%
2021 Group operating
income (EBIT)
Absolute TSR
Relative TSR
2020 Group operating
income (EBIT)
Absolute TSR
Relative TSR
Range (SEK billion): 15.0–24.0
Range: 6%–14%
Ranking of Ericsson: 6–2
Range (SEK billion): 19.1–27.9
Range: 6%–14%
Ranking of Ericsson: 6–2
100%
50%
30%
20%
100%
50%
30%
20%
100%
Jan 1, 2021–Dec 31, 2021
Jan 1, 2021–Dec 31, 2023
Jan 1, 2021–Dec 31, 2023
Jan 1, 2020–Dec 31, 2020
Jan 1, 2020–Dec 31, 2022
Jan 1, 2020–Dec 31, 2022
0%–200%
0%–200%
0%–200%
0%–200% 1)
0%–200%
0%–200%
0%–200%
0%–200% 1)
0%–200%
SEK 27.4
billion 2)
-16.17%
12 out of 11
SEK 29.1
billion 3)
–6.65%
12 out of 11
200%
0.00%
0.00%
100.00%
200%
0.00%
0.00%
100.00%
1) The portion of the Performance Share Awards granted to a participant based on the relative TSR performance condition is subject to fulfilment of the related performance criteria over the performance period
compared to Peer Groups consisting of 11 companies for the program year 2023, 2022, 2021 and 2020. The vesting of the Performance Share Awards under this performance condition will vary depending on the
Company’s TSR performance ranking versus the other companies in the peer group at the end of the performance period.
2) Excludes restructuring charges and items not included in target performance criterion.
3) Excludes restructuring charges.
4) Excludes fines and similar related to the United States Department of Justice (DOJ) / U.S. Securities and Exchange Commission (SEC) resolution, including payments required pursuant to the DOJ Plea Agreement
announced by the Company on March 2, 2023.
Program
Year
2023
2023
2023
2023
2023 Total
2022
2022
2022
2022
2022 Total
2021
2021
2021
2021 Total
2020
2020
2020
2020 Total
76
Notes to the consolidated financial statements
Financial report 2023
Note G3, cont’d.
and achieved vesting levels for the ones where the performance period have
lapsed. It is generally required that the participant retains his or her employ-
ment over a period of three years from the date of grant of awards to be eligible
for receiving the performance awards.
Provided that the performance criteria have been met during the perfor-
mance period and that the participant has retained his or her employment
(unless special circumstances are at hand) during the service period, allotment
of vested shares will take place as soon as practicably possible following the
expiration of the vesting period.
When determining the final vesting level of Performance Share Awards, the
Board of Directors examines whether the vesting level is reasonable consider-
ing the Company’s financial results and position, conditions on the stock mar-
ket and other circumstances, and if not, reserves the right to reduce the vesting
level to a lower level deemed appropriate.
In the event delivery of shares to the participants cannot take place under
applicable law or at a reasonable cost and employing reasonable administra-
tive measures, the Board of Directors is entitled to decide that participants
may, instead, be offered cash settlement.
All major decisions relating to outcome of LTV are taken by the
Remuneration Committee, with approval by the full Board of Directors
as required.
2023 Long-Term Variable Compensation Program for the Executive Team
(LTV 2023)
LTV 2023 was approved at the Annual General Meeting (AGM) of shareholders
held in 2023 and includes all members of the ET and Executives, a total of
176 members in 2023, including the President and CEO.
The participants were granted Performance Share Awards on May 18, 2023.
The value of the underlying shares in respect of the Performance Share Awards
made to the President and CEO was 190% of the annual base salary, and for
other participants ranged between 30% and 70% of the participants’ respec-
tive annual base salaries at the time of grant. The share price used to calculate
the number of shares to which the Performance Share Awards entitles was
calculated as the volume weighted average of the market price of Ericsson B
shares on Nasdaq Stockholm during the five trading days immediately fol-
lowing the publication of the Company’s interim report for the fourth quarter
of 2022.
Having evaluated the ongoing long-term variable compensation programs
and considering investor input obtained, the Remuneration Committee and
the Board of Directors proposed to the Annual General Meeting of share-
holders 2023 a long-term variable compensation program 2023 similar to
the long-term variable compensation program 2022 adjusting the Group
Environmental, Social and Governance performance criterion (“ESG”) on
reducing carbon dioxide equivalent (“CO2e”) emissions in the Ericsson Group’s
own activities from one to three annual targets. The purpose is to further
strengthen Ericsson’s commitment to long-term sustainability and responsible
business. Hence again a one-year Group operating income (EBITA) target
measured over the period January 1, 2023 to December 31, 2023 was included
as a performance condition for LTV 2023 in addition to the standard three-year
total shareholder return (TSR) performance conditions, which were also used
for LTV 2022, LTV 2021 and LTV 2020 however with different weights.
The performance criteria relating to TSR are absolute TSR development and
relative TSR development for the Ericsson B share over the period January 1,
2023 to December 31, 2025 (the performance period). The criteria related to
ESG are split into two sub-components: reducing carbon dioxide equivalent
(“CO2e”) emissions in the Ericsson Group’s own activities and increasing the
representation of women leaders in the Ericsson Group. The ESG performance
criteria are being measured over the period January 1, 2023 to December 31,
2025 (the performance period), where the reducing carbon dioxide equivalent
(“CO2e”) emissions in the Ericsson Group’s own activities is split into 3 annual
targets.
The Remuneration Committee and the Board decided to propose a long-
term variable remuneration program for 2024 with a similar structure as
the long-term variable remuneration program for 2023 to the 2024 Annual
General Meeting.
The performance criteria for LTV 2023 along with the details on how the
performance criteria will be calculated and measured are explained in minutes
from the AGM 2023 under Item 16.
The Board of Directors resolved on the achieved vesting level for the
2023 Group operating income (EBITA) performance criteria as 0% for this
portion of the Performance Share Awards granted based on the 2023 Group
operating income (EBITA) outcome. The Board of Directors resolved on the
achieved vesting level for the 2023 ESG performance criteria being measured
over the period January 1, 2023 to December 31, 2023 (the performance
period), where the reducing carbon dioxide equivalent (“CO2e”) emissions in
the Ericsson Group’s own activities performance criteria as 193,72% for this
p ortion of the Performance Share Awards granted based on the 2023 Group
ESG outcome.
2022 Long-Term Variable Compensation Program for the Executive Team
(LTV 2022)
LTV 2022 was approved at the Annual General Meeting (AGM) of shareholders
held in 2022 and includes all members of the ET, a total of 15 ET members in
2022, including the President and CEO.
The participants were granted Performance Share Awards on May 18,
2022. The value of the underlying shares in respect of the Performance Share
Awards made to the President and CEO was 190% of the annual base salary,
and for other participants ranged between 30% and 70% of the participants’
respective annual base salaries at the time of grant. The share price used
to calculate the number of shares to which the Performance Share Awards
entitles was calculated as the volume weighted average of the market price
of Ericsson B shares on Nasdaq Stockholm during the five trading days imme-
diately following the publication of the Company’s interim report for the fourth
quarter of 2021.
Having evaluated the ongoing long-term variable compensation programs
and considering investor input obtained, the Remuneration Committee and the
Board of Directors proposed to the Annual General Meeting of shareholders
2022 a long-term variable compensation program 2022 for the Executive
Team similar to the long-term variable compensation program 2021 adding a
Group Environmental, Social and Governance performance criterion (“ESG”).
The purpose is to further strengthen Ericsson’s commitment to long-term sus-
tainability and responsible business. Hence again a one-year Group operating
income (EBIT) target measured over the period January 1, 2022 to December
31, 2022 was included as a performance condition for LTV 2022 in addition
to the standard three-year total shareholder return (TSR) performance condi-
tions, which were also used for LTV 2021, LTV 2020 and LTV 2019 however
with different weights.
The performance criteria relating to TSR are absolute TSR development and
relative TSR development for the Ericsson B share over the period January 1,
2022 to December 31, 2024 (the performance period). The criteria related to
ESG are split into two sub-components: reducing carbon dioxide equivalent
(“CO2e”) emissions in the Ericsson Group’s own activities and increasing the
representation of women leaders in the Ericsson Group. The ESG performance
criteria are being measured over the period January 1, 2022 to December 31,
2024 (the performance period).
The Remuneration Committee and the Board decided to propose a long-
term variable remuneration program for 2023 with a similar structure as
the long-term variable remuneration program for 2022 to the 2023 Annual
General Meeting.
The performance criteria for LTV 2022 along with the details on how the
performance criteria will be calculated and measured are explained in minutes
from the AGM 2022 under Item 16.
The Board of Directors resolved on the achieved vesting level for the 2022
Group operating income (EBIT) performance criteria as 162.76% for this
portion of the Performance Share Awards granted based on the 2022 Group
operating income (EBIT) outcome.
2021 Long-Term Variable Compensation Program for the Executive Team
(LTV 2021)
LTV 2021 was approved at the Annual General Meeting (AGM) of shareholders
held in 2021 and includes all members of the ET, a total of 15 ET members in
2021, including the President and CEO.
The participants were granted Performance Share Awards on May 3, 2021.
The value of the underlying shares in respect of the Performance Share Awards
made to the President and CEO was 190% of the annual base salary, and for
other participants ranged between 30% and 70% of the participants’ respec-
tive annual base salaries at the time of grant. The share price used to calculate
Financial report 2023
Note G3, cont’d.
Notes to the consolidated financial statements
77
the number of shares to which the Performance Share Awards entitles was
calculated as the volume weighted average of the market price of Ericsson B
shares on Nasdaq Stockholm during the five trading days immediately follow-
ing the publication of the Company’s interim report for the fourth quarter of
2020.
Following evaluation of the previously introduced Long-term variable
compensation programs, the Board of Directors decided to use the same per-
formance criteria for LTV 2021 as the ones used for LTV 2020, LTV 2019 and
LTV 2018 in order to secure continuity and consistency in supporting achieve-
ment of the Company’s 2022 targets. Hence again a one-year Group operating
income (EBIT) target measured over the period January 1, 2021 to December
31, 2021 was included as a performance condition for LTV 2021 in addition
to the standard three-year total shareholder return (TSR) performance condi-
tions, which were also used for LTV 2020, LTV 2019 and LTV 2018.
The performance criteria relating to TSR are absolute TSR development and
relative TSR development for the Ericsson B share over the period January 1,
2021 to December 31, 2023 (the performance period).
The performance criteria for LTV 2021 along with the details on how the
performance criteria will be calculated and measured are explained in minutes
from the AGM 2021 under Item 16.
The Board of Directors resolved on the achieved vesting level for the 2021
Group operating income (EBIT) performance criteria as 200% for this portion
of the Performance Share Awards granted based on the 2021 Group operating
income (EBIT) outcome.
The Board of Directors also resolved on the achieved vesting levels for the
absolute and relative TSR development performance criteria as 0.00% and
0.00% based on the achievement results of – 16.17% absolute TSR and 12th
ranking for relative TSR respectively, which resulted in an overall achieved
vesting level of 100.00% for LTV 2021 as illustrated in the table LTV and EPP
Performance Criteria on page 75.
2020 Long-Term Variable Compensation Program for the Executive Team
(LTV 2020)
LTV 2020 was approved at the Annual General Meeting (AGM) of shareholders
held in 2020 and includes all members of the ET, a total of 15 ET members in
2020, including the President and CEO.
The participants were granted Performance Share Awards on April 1, 2020.
The value of the underlying shares in respect of the Performance Share Awards
made to the President and CEO was 180% of the annual base salary, and for
other participants ranged between 30% and 70% of the participants’ respec-
tive annual base salaries at the time of grant. The share price used to calculate
the number of shares to which the Performance Share Awards entitles was
calculated as the volume weighted average of the market price of Ericsson
B shares on Nasdaq Stockholm during the five trading days immediately
following the publication of the Company’s interim report for the fourth
quarter of 2019.
Following evaluation of the previously introduced Long-term variable
compensation programs, the Board of Directors decided to use the same
performance criteria for LTV 2020 as the ones used for LTV 2019 and LTV
2018 in order to secure continuity and consistency in supporting achievement
of the Company’s 2020 targets. Hence again a one-year Group operating
income (EBIT) target measured over the period January 1, 2020 to December
31, 2020 was included as a performance condition for LTV 2020 in addition
to the standard three-year total shareholder return (TSR) performance condi-
tions, which were also used for LTV 2019, LTV 2018 and LTV 2017.
The performance criteria relating to TSR are absolute TSR development and
relative TSR development for the Ericsson B share over the period January 1,
2020 to December 31, 2022 (the performance period).
The performance criteria for LTV 2020 along with the details on how the
performance criteria will be calculated and measured are explained in minutes
from the AGM 2020 under Item 17.
The Board of Directors resolved on the achieved vesting level for the 2020
Group operating income (EBIT) performance criteria as 200% for this portion
of the Performance Share Awards granted based on the 2020 Group operating
income (EBIT) outcome.
The Board of Directors also resolved on the achieved vesting levels for the
absolute and relative TSR development performance criteria as 0.00% and
0.00% based on the achievement results of -6.65% absolute TSR and 12th
ranking for relative TSR respectively, which resulted in an overall achieved
vesting level of 100.00% for LTV 2020 as illustrated in the table LTV and EPP
Performance Criteria on page 75.
Accordingly, the Board have approved vesting for LTV 2020 (which expired
in 2023). Planned vesting date will be during Q1 2024.
2019 Long-Term Variable Compensation Program for the Executive Team
(LTV 2019)
LTV 2019 was approved at the AGM 2019 and includes a total of 14 ET mem-
bers in 2019, including the President and CEO, but excluding Helena Norrman
who was not granted LTV 2019 due to her resignation, and Stella Medlicott
and Fadi Pharaon who carried over their EPP entitlements for 2019 after their
appointments to the ET.
The participants were granted Performance Share Awards on May 18, 2019.
The value of the underlying shares in respect of the Performance Share Awards
made to the President and CEO was 180% of the annual base salary, and for
other participants ranged between 30% and 70% of the participants’ respec-
tive annual base salaries at the time of grant. The share price used to calculate
the number of shares to which the Performance Share Awards entitles was
calculated as the volume weighted average of the market price of Ericsson B
shares on Nasdaq Stockholm during the five trading days immediately follow-
ing the publication of the Company’s interim report for the first quarter of 2019.
Following evaluation of the previously introduced Long-Term Variable
Compensation Programs, the Board of Directors decided to use the same per-
formance criteria for LTV 2019 as the ones used for LTV 2018 in order to secure
continuity and consistency in supporting achievement of the Company’s
2020 targets. Hence again a one-year Group operating income (EBIT) target
measured over the period January 1, 2019 to December 31, 2019 was included
as a performance condition for LTV 2019 in addition to the standard three-year
total shareholder return (TSR) performance conditions, which were also used
for LTV 2018 and LTV 2017.
The performance criteria relating to TSR are absolute TSR development and
relative TSR development for the Ericsson B share over the period January 1,
2019 to December 31, 2021 (the performance period).
The performance criteria for LTV 2019 along with the details on how the
performance criteria will be calculated and measured are explained in minutes
from the AGM 2019 under Item 17.
The Board of Directors resolved on the achieved vesting level for the
2019 Group operating income (EBIT) performance criteria as 200% for this
portion of the Performance Share Awards granted based on a 2019 Group
operating income (EBIT) outcome excluding fines and similar related to the
United States Department of Justice (DOJ) / U.S. Securities and Exchange
Commission (SEC) resolutions.
The Board of Directors also resolved on the achieved vesting levels for the
absolute and relative TSR development performance criteria as 74,89% and
19,39% based on the achievement results of 9.00% absolute TSR and 6.52th
ranking for relative TSR respectively. Which resulted in an overall achieved
vesting level of 126.35% for LTV 2019 as illustrated in the table LTV and EPP
Performance Criteria on page 75.
Accordingly, the Board have approved vesting for LTV 2019 (which expired
in 2022). Planned vesting date will be during Q1 2024.
Cash-Settled Plans
Executive Performance Plans (EPP)
No new EPP plan was issued in 2023 as the eligible executives were offered
the LTV 2023 share granted and vested Plan. The running Executive
Performance Plans (EPP) continue to run over the performance period until
vesting as is.
The Executive Performance Plan (EPP) is a cash-settled plan which uses the
same performance criteria as the ones under the respective year’s long-term
variable compensation program for the ET.
Senior managers, except for the members of the ET, are selected as partici-
pants to EPP annually through a nomination process that identifies individuals
according to performance, potential, critical skills, and business critical roles.
There are two award levels, high and regular, which represent the potential
award levels as a percentage of the participant’s annual gross salary, which
are determined separately by the Board of Directors for each year’s plan before
the plan is launched. Participants are assigned a potential award, which is
converted into a number of synthetic shares based on the same market price
of Ericsson B shares used for the respective year’s LTV. The three-year vesting
78
Notes to the consolidated financial statements
Financial report 2023
Note G3, cont’d.
period is the same as for the LTV. The vesting level of the award is subject to
the achievement of the same performance criteria over the same performance
period defined for the respective year and generally requires that the partici-
pant retains his or her employment over the vesting period.
At the end of the vesting period, the allotted synthetic shares are converted
into a cash amount, based on the market price of Ericsson B shares at Nasdaq
Stockholm at the vesting date, and this final amount is paid to the participant in
cash gross before tax.
Executive Performance Plan 2022 (EPP 2022)
165 senior managers were selected to participate in EPP 2022. The regular
award level is set at 15% and the high award level is set at 25% for all countries
except for the USA/Canada. The regular and high award levels are set at 35%
and 45% respectively in the USA/Canada.
Executive Performance Plan 2021 (EPP 2021)
159 senior managers were selected to participate in EPP 2021. The regular
award level is set at 15% and the high award level is set at 25% for all countries
except for the USA. The regular and high award levels are set at 25% and 35%
respectively in the USA.
Executive Performance Plan 2020 (EPP 2020)
155 senior managers were selected to participate in EPP 2020. The regular
award level is set at 15% and the high award level is set at 25% for all countries
except for the USA. The regular and high award levels are set at 25% and 35%
respectively in the USA.
Executive Performance Plan 2019 (EPP 2019)
161 senior managers were selected to participate in EPP 2019. The regular
award level is set at 15% and the high award level is set at 22.5%.
The awards under EPP 2019 were paid in 2022 at the end of the vesting period
and EPP 2019 was officially closed.
Key Contributor Plans (KC Plans)
The KC Plan is a cash-settled retention plan. Employees, except for senior
managers and the members of the ET, are selected as participants to KC Plan
annually through a nomination process that identifies individuals according to
performance, potential, critical skills, and business critical roles. Participants are
assigned a potential award based on a percentage of their annual gross salary,
which is converted into a number of synthetic shares based on the same market
price of Ericsson B shares used for the respective year’s LTV.
The KC Plan is a retention plan, therefore there are no performance criteria
for vesting of awards. In general, there is a three-year service period for receiv-
ing the award in full and the award is subject only to continued employment
during the service period. As of the KC 2019 plan the total service period is three
years, however the payout is distributed over the entire service period with
staggered payments according to the below schedule:
– 25% of the award to be paid at the end of the first year,
– 25% of the award to be paid at the end of the second year, and
– the remaining 50% of the award to be paid at the end of the third year.
Accounting wise, the plans with three staggered payments are seen as three
separate tranches. The tranches are accounted for as separate awards and
accrued in parallel with the same grant date but different vesting dates. The
consequence of the staggered payments is a front-end loaded cost for these
plans. The accounting model is referred to as staged vesting.
The value of each synthetic share is driven by the absolute share price
performance of Ericsson B shares during the service period. At the end of the
service period, the allotted synthetic shares are converted into a cash amount,
based on the market price of Ericsson B shares Nasdaq Stockholm at the vest-
ing date, and this final amount is paid to the participant in cash gross before
tax.
Key Contributor Plans 2023 (KC Plan 2023)
10,154 employees were selected to participate in KC Plan 2023. There are at
multiple levels between 10%–50% of the participants’ annual gross salary.
The total service period is three years, however the payout is distributed over
the entire service period with staggered payments as explained under Key
Contributor Plans (KC Plans).
In addition, Vonage has issued a retention plan to 87 participants with a
two-year service period, no performance criteria and the vesting is 50%/50%
on each annual anniversary.
Key Contributor Plan 2022 (KC Plan 2022)
7,704 employees were selected to participate in KC Plan 2022. There are at
multiple levels between 10%–40% of the participants’ annual gross salary.
The total service period is three years, however the payout is distributed over
the entire service period with staggered payments as explained under Key
Contributor Plans (KC Plans).
Cradlepoint Key Contributor Conversion Plan 2022
(KC Conversion Plan 2022)
The KC Conversion Plan is a cash-settled retention plan with 95 participants.
The plan has a closed participation group and there will not be any new
participants. There is a two-year service period, no performance criteria,
(February 2022–February 2024) for receiving the award in full. The payout is
distributed over the two-year period: 50% of the award was paid March 2023:
USD 4.8 million and 50% of the award to be paid March 2024. The value of
each payout is based on the share price of Ericsson B shares at vesting date.
Key Contributor Plan 2021 (KC Plan 2021)
7,246 employees were selected to participate in KC Plan 2021. There are three
award levels at 10%, 25% and 30% of the participants’ annual gross salary.
The total service period is three years, however the payout is distributed over
the entire service period with staggered payments as explained under Key
Contributor Plans (KC Plans).
Key Contributor Plan 2020 (KC Plan 2020)
7,007 employees were selected to participate in KC Plan 2020. There are three
award levels at 10%, 25% and 30% of the participants’ annual gross salary.
The total service period is three years, however the payout is distributed over
the entire service period with staggered payments as explained under Key
Contributor Plans (KC Plans).
Key Contributor Plan 2019 (KC Plan 2019)
6,941 employees were selected to participate in KC Plan 2019. There are three
award levels at 10%, 25% and 30% of the participants’ annual gross salary.
The total service period is three years, however the payout is distributed over
the entire service period with staggered payments as explained under Key
Contributor Plans (KC Plans) and was officially closed in 2022.
Number of shares and synthetic shares
The awards granted to the participants of the LTV programs and the develop-
ment of the granted shares over time, considering the fulfilment of performance
conditions, are displayed in the below table, together with the number of
synthetic shares for the EPP and KC plans.
Claw back policy
In 2023, the Board of Directors of the Company adopted a written clawback
policy for the purpose of recovering certain incentive compensation from
executive officers in the event of a required accounting restatement, and to
disclose any recovered compensation. This policy is applicable in parallel to
the clawback rights contained in the guidelines for remuneration to Group
management, and ongoing compensation programs (which are connected to
breaches of Ericsson’s Code of Business Ethics).
Financial report 2023
Note G3, cont’d.
Number of shares and synthetic shares
Notes to the consolidated financial statements
79
(million)
Share-settled programs
LTV 2023
LTV 2022
LTV 2021
LTV 2020
LTV 2019
Total LTV 2023
LTV 2022
LTV 2021
LTV 2020
LTV 2019
Total
Executive programs1) 2)
Of which the President and CEO
Maximum shares required
Granted shares
Outstanding number
of shares beginning of 2023
Exercised during 2023
Forfeited during 2023
Increase/decrease due to
performance condition 2023
Outstanding number
of shares end of 2023
4.1
3.7
–
–
–
2.0
0.7
0.9
–
–
2.1
0.6
0.9
–
–0.1
–1.7
–
–0.3
2.0
0.9
0.5
2.5
0.9
0.9
–
–
–
0.9
3,0
0.6
0.8
–
–
13.7
6.5
3.5
–
–0.1
–
0.6
–
–
–
–
0.3
0.4
–
–
–
0.3
0.5
–
–
–
–2.0
–0.3
–
–0.2
0.8
5.1
0.3
0.4
0.3
–
0.4
0.4
–
–
–
0.4
–
0.3
0.3
–
–
–
1.9
1.6
—
—
–
–0.5
0.3
1.7
1) LTV 2023 includes Executive Team and Executives
2) LTV 2019 and 2020 actual share delivery in 2024 can deviate due to reduced or cancelled vesting and withholding of shares.
Cash-settled plan
Synthetic shares
Executive performance program
EPP 2022
EPP 2021
EPP 2020
1.1
0.7
–
Total
1.8
KC 2023
KC 2022
KC 2021
KC 2020
30.2
7.5
3.4
–
Total
41.1
Key contributors plans
Compensation expense
The compensation expense is based on the FV and the number of shares or
synthetic shares. The compensation expense for the share-settled long-term
variable compensation programs for the President and CEO, the ET and
Executives during 2023 was SEK 82 million.
The compensation expense for the EPP and the KC Plans during 2023,
which are cash settled, was SEK 39 million and SEK 1,250 million respectively
as shown in the table Compensation expense for LTV 2020-2023 below.
Compensation expense for LTV 2020–2023
The total compensation expense during 2023 amounted to SEK 1,371 (450)
million. The total provision for the cash-settled plans amounted to SEK 1,584
(985) million, including social charges of SEK 153 (120) million, at the end of
2023.
Share-settled programs
LTV 2023 1)
LTV 2022
LTV 2021
LTV 2020
LTV 2019
Total share-settled programs
Of which the President and CEO
Cash-settled plans
EPP 2022
EPP 2021
EPP 2020
Total executive performance plans
KC 2023
KC 2022
KC 2021
KC 2020
Total key contributor plans
Total cash-settled plans
Total compensation expense
1) LTV 2023 includes Executive Team and Executives.
2023
2022
2021
2020
Total
25
20
31
6
–
82
32
20
16
3
39
811
330
91
18
1,250
1,289
1,371
–
12
36
31
10
89
41
12
15
–19
8
–
280
89
5
374
382
471
–
–
24
31
28
83
38
–
17
56
73
–
–
355
376
731
804
887
–
–
–
23
28
51
24
–
–
34
34
–
–
–
523
523
557
608
25
32
91
91
66
305
135
32
48
74
154
811
610
535
922
2,878
3,032
3,337
80
Notes to the consolidated financial statements
Financial report 2023
Note G3, cont’d.
Fair value (FV)
The compensation expense for the share-settled plans is based on FV and
the number of shares. The FV for the LTV programs includes adjustments for
absolute and relative TSR development performance criteria at the grant date,
using a Monte Carlo model, which uses a number of inputs, including expected
dividends, expected share price volatility and the expected period to exercise.
The performance criteria of the LTV program are also based on the outcome of
the Group operating income (EBITA) as per fiscal year 2023 and Group operat-
ing income (EBIT) as per fiscal years 2022 and 2021. The FV for the Group
operating income (EBITA and EBIT) performance criteria is calculated as the
share price at grant date, reduced by the net present value of the dividend
expected during the three-year vesting period. For the performance criteria
the number of shares is adjusted in relation to the achievement level of the
performance criteria at the end of the performance period.
The compensation expense for the cash-settled plans is based on the FV
and the number of synthetic shares allocated. The FV for the EPP includes the
same criteria as the share-settled plans and calculated in a similar way, how-
ever reassessed quarterly with updated criteria. The FV for the KC Plans are the
share price reduced by the net present value of the dividend expected during
the service period. The KC Plans have three FVs based on the three different
service periods. The FV per performance criteria and program is shown in the
table Fair values below.
Fair values (SEK)
Executive team/ Executives programs
Share price at grant
Fair value Absolute TSR
Fair value ESG – Environmental (1,2,3)
Fair value ESG – Social
Fair value Relative TSR
Fair value Group operating income (EBITA and EBIT)
Executive performance plans
Fair value Absolute TSR
Fair value ESG – Environmental
Fair value ESG – Social
Fair value Relative TSR
Fair value Group operating income (EBIT)
Key contributor plans
Fair value – Tranche 1
Fair value – Tranche 2
Fair value – Tranche 3
Payout of Cash-settled Plan
During 2023 four plans vested: EPP 2020, KC Plan 2020 tranche 3, KC Plan
2021 tranche 2 and KC Plan 2022 tranche 1 (vesting February 18). The share
price for the plan that vested February 18 was SEK 60.31 and the accumulated
payout to the participants amounted to SEK 604.4 million.
The Ericsson share purchase plan (ESPP)
Ericsson is committed to helping employees thrive and to recognizing them
for the impact they create by providing opportunities to enrich their working
experience. In order to encourage employees to play an active role in achieving
the Company’s purpose, further create sense of belonging and ownership, the
new Ericsson share purchase plan was launched in November 2021. At the
end of 2023 the plan is implemented in 77 countries to approximately 77,700
eligible employees.
The ESPP is an all-employee share purchase plan that enables employees
to purchase Ericsson B-shares up to a maximum value of SEK 50,000 per year
via monthly payroll deduction. In recognition of the employees’ commitment,
Ericsson supports the participants with a net cash payment up to 15% of their
elected contribution amounts and will cover the tax on the Company sup-
ported amount, which is payable via payroll. Under the ESPP participants will
acquire Ericsson B shares at market price on the stock exchange and the ESPP
does therefore not have any dilutive effect.
Ericsson share purchase plan
Eligible employees
Number of
countries with
ESPP
77,748
77
Number of
participants
14,030
Take-up rate
– percent of eligible
employees
18.0%
LTV 2019
90.70
87.92
–
–
94.63
86.94
LTV 2023
55.59
32.75
47.80
47.80
39.40
47.80
EPP 2023
–
–
–
–
–
KC 2023
61.12
58.40
55.81
LTV 2022
78.88
41.18
71.45
71.45
54.48
71.45
LTV 2021
116.66
113.47
–
–
108.61
110.70
EPP 2022
2.30
EPP 2021
–
58.42
58.42
2.40
58.42
KC 2022
60.31
61.13
58.42
–
–
–
61.13
KC 2021
94.13
60.31
61.13
LTV 2020
78.88
54.69
–
–
98.06
74.22
EPP 2020
–
–
–
–
60.31
KC 2020
109.80
94.13
60.31
Option agreements
Prior to taking office as President and CEO of Ericsson, Board member Börje
Ekholm entered into an option agreement in 2016 with Investor AB and AB
Industrivärden, shareholders of Ericsson. Each of these two shareholders has
issued 1,000,000 call options to Börje Ekholm on market terms (valuation
conducted, using the Black & Scholes model, by an independent third party).
Under the agreements, Börje Ekholm has purchased in total 2,000,000 call
options, issued by the shareholders, for a purchase price of SEK 0.49 per call
option. Each call option entitles the purchase of one Ericsson Class B share
from the shareholders at a strike price of SEK 80 per share (to be recalculated
to neutralize the effects of dividend payments during the option period)
after a seven-year period. The exercise period is one year with the possibility
to be extended for up to one year in the event that the holder is unable to
exercise the option during the exercise period due to a regulatory restriction
or prohibition. Due to the fact that the call options were purchased on market
terms as described above, no compensation expense has been recognized by
the Company during the option period and will not be recognized during the
remaining part of the exercise period.
In 2019, Investor AB, shareholder of Ericsson, made an offer to the Board
Chairs of its listed core investment to purchase call options relating to shares in
the respective core investment. Following this offer, Ronnie Leten, the former
Chair of the Board of Directors, entered into such a call option agreement with
Investor AB with respect to Ericsson Class B shares. Under the agreement,
Investor AB has issued 128,452 call options to Ronnie Leten on market terms
(valuation conducted, using the Black & Scholes model, by an independent
third party) and Ronnie Leten has purchased these call options for a purchase
price of SEK 15.57 per call option. Each call option entitles the purchase of one
Ericsson Class B share from Investor AB at a strike price of SEK 87.97 per share
(to be recalculated to neutralize the effects of dividend payments during the
option period) after a four-year period starting February 5, 2019. The exercise
period is one year with the possibility to be extended for up to one year in
the event that the holder is unable to exercise the option during the exercise
period due to a regulatory restriction or prohibition. Due to the fact that the call
options were purchased on market terms as described above, no compensa-
tion expense has been recognized by the Company during the option period
and will not be recognized during the remaining part of the exercise period.
Financial report 2023
Notes to the consolidated financial statements
81
G4 Employee information
Employee numbers, wages and salaries
Average number of employees by gender and market area
South East Asia, Oceania and India
North East Asia
North America
Europe and Latin America 1)
Middle East and Africa
Total
1) Of which in EU
Of which in Sweden
2023
Women
Men
6,035
4,293
2,720
11,772
886
25,706
8,900
3,393
21,625
8,403
8,546
33,740
3,624
75,938
25,564
10,224
Total
27,660
12,696
11,266
45,512
4,510
101,644
34,464
13,617
2022
Women
Men
5,700
4,376
2,471
12,017
883
25,447
9,006
3,408
20,902
8,711
8,415
34,637
3,629
76,294
26,259
10,635
Total
26,602
13,087
10,886
46,654
4,512
101,741
35,265
14,043
Number of employees by market area at year-end
Wages and salaries and social security expenses
South East Asia, Oceania and India
North East Asia
North America
Europe and Latin America 1)
Middle East and Africa
Total
1) Of which in EU
Of which in Sweden
Number of employees by gender and age at year-end 2023
Under 25 years old
25–35 years old
36–45 years old
46–55 years old
Over 55 years old
Percent of total
Women
1,378
9,222
8,093
5,019
2,265
26%
2023
27,016
12,331
10,744
45,380
4,481
99,952
34,763
13,977
Men
2,063
19,196
26,681
17,809
8,226
74%
27,761
13,207
11,993
48,023
4,545
105,529
36,594
14,481
Percent
of total
3%
29%
35%
23%
10%
100%
Employee movements
Headcount at year-end
Employees who have left the Company
Employees who have joined the Company
Temporary employees
2023
99,952
13,362
7,785
433
2022
105,529
13,028
17,235
627
2022
(SEK million)
Wages and salaries
Social security expenses
Of which pension costs
2023
84,996
16,442
6,175
2022
73,526
15,665
6,316
Amounts related to the President and CEO and the Executive Leadership Team
are included in the table above.
Remuneration to Board members and Presidents in subsidiaries
(SEK million)
Salary and other remuneration
Of which annual variable remuneration
Pension costs 1)
2023
459
109
36
2022
477
90
34
1) Pension costs are over and above any social security charges and taxes.
Board members, Presidents and Group management by gender at year end
2023
2022
Women
Men
Women
Men
Parent Company
Board members and
President
Group Management
Subsidiaries
Board members and
Presidents
38%
25%
62%
75%
36%
19%
64%
81%
21%
79%
20%
80%
82
Notes to the consolidated financial statements
Financial report 2023
Section H – Other
H1 Taxes
The Company’s tax expense for 2023 was SEK –2,785 (–5,497) million
or –11.9% (22.3%) of income after financial items. The tax rate may vary
between years depending on business and geographical mix.
Income taxes recognized in the income statement
Current income taxes for the year
Current income taxes related to prior years
Deferred tax income/expense (+/–)
Share of taxes in joint ventures and
associated companies
Income tax expense
2023
–4,289
118
1,406
2022
–7,353
253
1,617
2021
–6,110
–337
188
–20
–14
–11
–2,785
–5,497
–6,270
A reconciliation between reported tax expense for the year and the theoretical
tax expense that would arise when applying the statutory tax rate in Sweden,
20.6% (20.6% in 2022, 20.6% in 2021), on the consolidated income before
taxes, is shown in the table below.
In 2023 the tax rate is negatively impacted by the effect on the non-tax
deductible goodwill impairment related to Vonage of SEK 31.9 billion. In 2022
taxes were positively impacted by SEK 411 (969 in 2021) million as a result
of utilization of previously expensed withholding tax assets in Sweden and
negatively impacted by the tax effect of the provision for the Department of
Justice (DOJ) settlement of SEK 450 million.
Reconciliation of Swedish income tax rate with effective tax rate
2023
2022
2021
Calculated tax expense at Swedish tax
rate of 20.6%
Effect of foreign tax rates
Current income taxes related to
prior years
Remeasurement of tax loss
carry-forwards
Remeasurement of deductible
temporary differences
Withholding tax expense
Recognition of previously expensed
withholding tax
Tax effect of non-deductible expenses
Tax effect of non-taxable income
Tax effect of changes in tax rates
Income tax expense
Effective tax rate
4,804
–884
118
–28
394
–217
–
–7,311
335
4
–2,785
–11.9%
–5,070
–605
–6,025
–324
253
–49
15
–
411
–760
327
–19
–5,497
22.3%
–337
–175
220
–
969
–975
392
–15
–6,270
21.4%
2023
Intangible assets and property, plant
and equipment
RoU lease assets and similar assets
Current assets
Post-employment benefits
Provisions
RoU lease liabilities and similar
liabilities
Deferred tax credits
Other
Loss carry-forwards
Deferred tax assets/liabilities
Netting of assets/liabilities
Deferred tax balances, net
2022
Intangible assets and property, plant
and equipment
RoU lease assets and similar assets
Current assets
Post-employment benefits
Provisions
RoU lease liabilities and similar
liabilities
Deferred tax credits
Other
Loss carry-forwards
Deferred tax assets/liabilities
Netting of assets/liabilities
Deferred tax balances, net
Changes in deferred taxes, net
Deferred tax balances
Deferred tax assets and liabilities are derived from the balance sheet items
as shown in the table below. The table includes the IAS 12 amendments on
deferred tax arising from a single transaction effective January 1, 2023 and the
comparables have been updated accordingly.
Tax effects of temporary differences and tax loss carry-forwards
Deferred tax
liabilities
Deferred
tax assets
Net
balance
1,195
–
3,413
5,297
3,980
1,337
5,453
2,095
6,158
7,193
1,272
1,313
477
–
–
–
178
–
28,928
–6,553
22,375
10,433
–6,553
18,495
3,880
18,495
1,098
–
3,605
5,558
5,215
1,394
2,081
1,837
5,190
25,978
–6,584
19,394
8,136
1,311
1,055
571
–
–
–
295
–
11,368
–6,584
4, 784
2023
14,610
1,406
–631
–57
3,249
–82
18,495
14,610
14,610
2022
22,225
1,617
–2,099
–3,911
–3,586
364
14,610
Opening balance, net
Recognized in net income
Recognized in other comprehensive income
Balances regarding acquired/divested businesses
Deferred tax credits increase (+) / utilization (–)
Translation difference
Closing balance, net
Total tax reported in other comprehensive income (OCI) amounted to
SEK –494 (–2,980) million, of which actuarial gains and losses related to
pensions constituted SEK –251 (–2,093) million, revaluation of borrowings
SEK 137 (–212) million, cash flow hedges SEK –380 (–671) million and
non-controlling interests SEK 0 (–4) million. Of the total tax effect reported in
OCI, SEK –631 (–2,099) million is deferred tax and SEK 137 (–881) million
is current tax.
As a result of parent company exemptions from tax on dividends from
subsidiaries and on capital gains on disposal, there are no significant taxable
temporary differences associated with investments in subsidiaries, branches,
associates and joint ventures.
Financial report 2023
Note H1, cont’d.
Notes to the consolidated financial statements
83
Tax loss carry-forwards
Significant tax assets regarding tax loss carry-forwards are reported to the
extent that realization of the related tax benefit through future taxable profits
is probable also when considering the period during which these can be
utilized, as described below.
The majority of the recognized tax loss carry-forwards pertains to Sweden,
US, Brazil and Mexico. These countries have long or indefinite periods of utili-
zation. Of the total SEK 6,158 (5,190) million recognized deferred tax assets
related to tax loss carry-forwards, SEK 4,172 (3,508) million relates to Sweden.
Future income projections support the conclusion that the deferred tax
assets will be utilized in the foreseeable future.
As of December 31, 2023, the recognized tax loss carry-forwards amounted
to SEK 27,666 (23,438) million. The tax value of the tax loss carry-forwards
is reported as a tax asset based on the utilization periods and the expectation
that the group will realize a significant taxable income to offset these loss
carry-forwards. Tax loss carry-forwards of SEK 8,918 (8,490) million at a tax
value of SEK 1,819 (1,777) million have not been recognized due to judgments
that they are unlikely to be utilizable against future taxable profits in the
respective jurisdictions. The majority of both recognized and unrecognized tax
loss carry-forwards have an expiration date in excess of five years. The major-
ity of unrecognized tax loss carry-forwards pertains to US, UK and Ireland. The
final years which the recognized and unrecognized tax loss carry-forwards can
be utilized are shown in the following table.
Tax loss carry-forwards
Year of expiration
2024
2025
2026
2027
2028
2029 or later (also includes unlimited carry-forwards)
Total
Recognized tax loss
Unrecognized tax loss
Tax loss
carry-forwards
15
16
124
1,101
1,688
24,722
27,666
Tax value
3
3
31
281
373
5,467
6,158
Tax loss
carry-forwards
159
153
151
92
100
8,263
8,918
Tax value
20
20
25
10
13
1,731
1,819
Deferred tax credits
In addition to deferred tax credits of SEK 5,453 (2,081) million recognized
in 2023, unused deferred tax credits, relating mainly to R&D tax credits, for
which no deferred tax asset was recognized in the consolidated balance sheet
amounted to SEK 1,148 (1,296) million. The final years in which the tax credits
can be utilized are shown in the below table.
Risk assessment on the business plans is carried out on a regular basis,
and deferred tax asset recoverability analysis will be performed if conditions
suggest that such assets might need to be impaired.
Deferred tax credits
Year of expiration
2024
2025
2026
2027
2028
2029 or later
Total
Recognized
deferred
tax credits
Tax Value
Unrecognized
deferred
tax credits
Tax Value
99
938
46
1,778
1,521
1,071
5,453
135
108
125
133
8
639
1,148
The Group has applied the temporary exception issued by the IASB in
May 2023 from the accounting requirements for deferred taxes in IAS 12.
Accordingly, the Group neither recognises nor discloses information about any
deferred tax assets or liabilities related to Pillar Two income taxes. See also
note A1 “Material accounting policies” for more information.
H2 Earnings per share
Earnings per share
Basic
Net income (loss) attributable to owners of
the Parent Company (SEK million)
Average number of shares outstanding,
basic (millions)
Earnings (loss) per share, basic (SEK)
Diluted
Net income (loss) attributable to owners of
the Parent Company (SEK million)
Average number of shares outstanding,
basic (millions)
Dilutive effect for stock purchase (millions)
Average number of shares outstanding,
diluted (millions)
Earnings (loss) per share, diluted (SEK)
2023
2022
2021
–26,446
18,724
22,694
3,330
–7.94
3,330
5.62
3,329
6.82
–26,446
18,724
22,694
3,330
–
3,330
–7.94
3,330
4
3,334
5.62
3,329
3
3,332
6.81
84
Notes to the consolidated financial statements
Financial report 2023
H3 Statement of cash flows
Cash and cash equivalents include cash of SEK 17,686 (19,746) million and
cash equivalents of SEK 17,504 (18,603) million. For more information regard-
ing the disposition of cash and cash equivalents and unutilized credit commit-
ments, see note F1 “Financial risk management.”
Cash and cash equivalents as of December 31, 2023, include SEK 1,115
(2,246) million in countries where there exist significant cross-border conver-
sion restrictions due to hard currency shortage or strict government controls.
This amount is not directly available for distribution to the Parent Company or
be used to pay normal business expenditures in the local jurisdictions for the
next 12 months.
Adjustments to reconcile net income to cash
Property, plant and equipment
Depreciations
Impairment losses
Total
Right-of-use assets
Depreciations
Impairment losses
Total
Intangible assets
Amortizations
Capitalized development expenses
Customer relationships, IPRs and other
intangible assets
Total amortizations
Impairments
Customer relationships, IPRs and other
intangible assets
Goodwill
Total impairments
Total
Total depreciation, amortization and
impairment losses on property, plant
and equipment and intangible assets
Taxes
Dividends from joint ventures/associated
companies 1)
Undistributed earnings in joint ventures/
associated companies 1)
Gains/losses on investments and sale of
operations, intangible assets and PP&E, net 2)
Other non-cash items 3)
Total adjustments to reconcile
net income to cash
2023
2022
2021
4,272
662
4,934
2,427
154
2,581
4,114
274
4,388
2,451
66
2,517
3,674
198
3,872
2,277
–
2,277
1,137
1,586
1,343
3,321
4,458
1,991
3,577
1,164
2,507
19
31,897
31,916
36,374
61
–
61
201
112
313
3,638
2,820
43,889
10,543
3,189
5,383
46
–104
268
4,422
58
–3
–287
1,944
8,969
6,576
90
270
–971
2,209
51,710
17,638
17,143
1) See note E3 “Associated companies.”
2) Includes revaluation gains and losses on investments, see note B4 “Other operating income and
expenses.
3) Relates mainly to unrealized foreign exchange, gains/losses on financial instruments.
For information about reconciliation of liabilities arising from financing
activities, see note F4 “Interest-bearing liabilities.”
Acquisitions/divestments of subsidiaries and other operations
Acquisitions Divestments
2023
Cash flow from business combinations 1)
Acquisitions/divestments of other investments
Total
2022
Cash flow from business combinations 1)
Acquisitions/divestments of other investments
Total
2021
Cash flow from business combinations 1)
Acquisitions/divestments of other investments
Total
1) See also note E2 “Business combinations.”
–1,309
– 206
–1,515
–51,734
–261
–51,995
–256
–133
–389
–633
8
–625
20
287
307
273
175
448
H4 Related party transactions
Related party transactions, SEK billion
Sales to Ericsson Nikola Tesla
Purchases from Ericsson Nikola Tesla
Loans to MediaKind (Leone Media Inc.)
2023
0.4
1.6
0.6
2022
2021
0.3
1.5
0.6
0.4
1.2
0.5
IAS 24, “Related Party Disclosures” requires disclosure of related party rela-
tionships, transactions and outstanding balances.
During 2023, various minor related party transactions were executed pursu-
ant to contracts based on terms customary in the industry and negotiated on
an arm’s length basis. The main related party transactions related to Ericsson
Nikola Tesla d.d located in Croatia, where Ericsson holds 49.07% of the shares
and to MediaKind (Leone Media Inc.) located in US, where Ericsson holds
45.5% of the shares. For information regarding equity and Ericsson’s share of
assets, liabilities and income in joint ventures and associated companies, see
note E3 “Associated companies.”
For information regarding transactions with the Board of Directors and
Group management, see note G2 “Information regarding members of the
Board of Directors and Group management.”
For information about the Company’s pension trusts, see note G1 ”Post-
employment benefits.”
Financial report 2023
Notes to the consolidated financial statements
85
H5 Fees to auditors
H6 Events after the reporting period
Fees to auditors
2023
Audit fees
Audit-related fees
Tax fees
All other fees
Total
2022
Audit fees
Audit-related fees
Tax fees
All other fees
Total
2021
Audit fees
Audit-related fees
Tax fees
All other fees
Total
Deloitte
Others
164
6
12
–
182
163
7
2
1
173
132
9
2
1
144
8
—
13
37
58
7
2
11
22
42
8
1
6
2
17
Total
172
6
25
37
240
170
9
13
23
215
140
10
8
3
161
At the 2023 Annual General Meeting, Deloitte was appointed auditor for the
period until the 2024 Annual General Meeting.
The audit-related services include quarterly reviews and assurance regard-
ing Ericsson’s Sustainability and Corporate Responsibility report. The tax
services include corporate tax compliance work. Other services include work
related to agreed-upon-procedures engagements.
Ericsson appoints Lars Sandström as Chief Financial Officer
On January 23, 2024, Ericsson announced the appointment of Lars Sandström
as its new Chief Financial Officer, Senior Vice President, and Head of Group
Function Finance. Mr. Sandström will replace Carl Mellander, whose departure
Ericsson announced in April 2023. Mr. Sandström will join Ericsson on April 1,
2024, and will be based in Sweden.
Lars Sandström is currently Chief Financial Officer and member of the execu-
tive team at Getinge, a listed global leader within Medtech. Mr. Sandström
has been with Getinge since 2017 and holds a Master of Science in Business
Administration. Mr. Sandström has previously held several senior positions at
AB Volvo, Scania and Swedish Orphan Biovitrum AB.
Ericsson announces changes to the Executive Team
On January 24, 2024, Ericsson announced that Senior Vice President
Niklas Heuveldop had been appointed as new Head of Business Area Global
Communications Platform and CEO of Vonage as of February 1, 2024. Mr.
Heuveldop, who has been a member of the Executive Team and headed Market
Area North America since 2017, succeeds Rory Read who will leave Ericsson at
the end of the first quarter 2024.
Yossi Cohen replaces Mr. Heuveldop as Head of Market Area North America,
effective as of February 1, 2024. Effective the same date, he will become
member of the Executive Team, reporting to the President and CEO. Mr. Cohen
previously has been Head of Strategy, Technology, Marketing and Business
Development within Market Area North America.
Ericsson appoints Chafic Nassif Head of Market Area North East Asia
On January 29, 2024, Ericsson announced that Chafic Nassif has been
appointed as Head of Market Area North East Asia and Senior Vice President,
effective as of February 26, 2024. Effective the same date, he will become a
member of the Executive Team, reporting to the President and CEO. Chafic
Nassif succeeds Chris Houghton who was appointed Chief Operating Officer
of Ericsson in November 2023.
Chafic Nassif has held several executive and management positions within
Ericsson across various business segments and geographies worldwide. Most
recently, he was the Head of Ericsson’s Customer Unit Latin America North
within Market Area Europe & Latin America. Before joining Ericsson, Mr. Nassif
was active in tech start-ups, as well as IT and business consulting leadership
roles in Europe.
Ericsson to utilize mandate to transfer shares
Ericsson’s annual general meeting on March 29, 2023 authorized the
Company’s board of directors to resolve on the transfer of the Company’s own
shares. Under the authorization the Company may, in conjunction with the
delivery of vested shares under the long-term variable compensation programs
2019 and 2020 (“LTV 2019” and “LTV 2020”), prior to the annual general
meeting in 2024, decide to retain and sell no more than 60% of the vested
shares of series B in the Company in order to cover for the costs for withholding
and paying tax and social security liabilities on behalf of the participants in
relation to the performance share awards for remittance to revenue authorities.
Ericsson decided, on February 16, 2024, to utilize the authorization to transfer
shares for these purposes.
The transfer of own shares may take place on Nasdaq Stockholm during the
period from and including February 16, 2024 up to the annual general meeting
2024 at a price within the price interval registered from time to time.
Ericsson currently holds 12,932,223 shares of series B in the Company and
the maximum number of shares that may be transferred on Nasdaq Stockholm
pursuant to the decision to utilize the authorization amounts to 774,889 shares
of series B in the Company.
86
Parent Company financial statements with notes
Financial report 2023
Parent Company
financial statements with notes
Contents
Parent Company financial statements
87 Parent Company income statement and
statement of comprehensive income
88 Parent Company balance sheet
90 Parent Company statement of cash flows
91 Parent Company statement of changes in
stockholders’ equity
Notes to the Parent Company
financial statements
Material accounting policies
Other operating income
and expenses
Financial income and expenses
Taxes
Intangible assets
92 P1
93 P2
93 P3
93 P4
94 P5
94 P6
95 P7
96 P8
97 P9
98 P10
Receivables and liabilities –
subsidiary companies
98 P11 Other current receivables
98 P12
Equity and other
comprehensive income
99 P13
Contributions
99 P14
Post-employment benefits
100 P15 Other provisions
100 P16
Interest-bearing liabilities
101 P17
Financial risk management
and financial instruments
102 P18 Other current liabilities
102 P19
Trade payables
103 P20
Assets pledged as collateral
103 P21
Contingent liabilities
103 P22
Statement of cash flows
Property, plant and equipment
103 P23
Leases
Financial assets
Investments
Trade receivables and customer
finance
103 P24
Information regarding employees
104 P25
Related party transactions
104 P26
Fees to auditors
104 P27
Events after the reporting period
Financial report 2023
Parent Company financial statements
87
Parent Company
financial statements
Parent Company income statement
January–December, SEK million
Selling expenses
Administrative expenses
Operating expenses
Other operating income and expenses
EBIT (loss)
Financial income and expenses, net
Income (loss) after financial items
Contributions to subsidiaries, net
Taxes
Net income (loss)
Parent Company statement of comprehensive income (loss)
January–December, SEK million
Net income (loss)
Other comprehensive income (loss)
Items that will not be reclassified to profit or loss
Cash flow hedge reserve
Gains/losses arising during the period
Transfer to investments
Tax on items that will not be reclassified to profit or loss
Total other comprehensive loss, net of tax
Total comprehensive income (loss)
Notes
P2
P3
P13
P4
2023
–203
–1,615
–1,818
3,606
1,788
–2,496
–708
–81
–789
–382
–1,171
2022
–298
–1,194
–1,492
691
–801
19,213
18,412
–7,272
11,140
631
11,771
2021
–470
–350
–820
1,770
950
8,399
9,349
–1,526
7,823
–167
7,656
2023
–1,171
2022
11,771
2021
7,656
–
–
–
–
–1,171
3,703
–3,677
–758
–732
11,039
–26
–
–
–26
7,630
88
Parent Company financial statements
Financial report 2023
Parent Company balance sheet
December 31, SEK million
Assets
Fixed assets
Intangible assets
Tangible assets
Financial assets
Investments
Subsidiaries
Joint ventures and associated companies
Other investments
Receivables from subsidiaries
Customer finance, non-current
Deferred tax assets
Other financial assets, non-current
Interest-bearing securities, non-current
Current assets
Receivables
Trade receivables
Customer finance, current
Receivables from subsidiaries
Current income taxes
Other current receivables
Interest-bearing securities, current
Cash and cash equivalents
Total assets
Notes
P5
P6
P7, P8
P7, P8
P7
P7, P10
P9
P4
P7
P7
P9
P9
P10
P11
P17
P17
2023
2022
–
344
4
380
106,534
628
2,059
6,635
150
561
26
9,930
128,638
628
2,039
15,414
222
586
36
9,157
126,867
157,104
6
81
17,839
84
4,423
9,355
15,640
47,428
11
322
24,180
12
3,139
8,540
23,731
59,935
174,295
217,039
Financial report 2023
Parent Company financial statements
89
Parent Company balance sheet, cont’d.
December 31, SEK million
Stockholders’ equity, provisions and liabilities
Stockholders’ equity
Capital stock
Revaluation reserve
Statutory reserve
Restricted equity
Retained earnings
Net income (loss)
Non-restricted equity
Provisions
Post-employment benefits
Other provisions
Non-current liabilities
Notes and bond loans
Other borrowings, non-current
Liabilities to subsidiaries
Other non-current liabilities
Current liabilities
Borrowings, current
Trade payables
Liabilities to subsidiaries
Other current liabilities
Total stockholders’ equity, provisions and liabilities
Notes
P12
P14
P15
P16
P16
P10
P16
P19
P10
P18
2023
2022
16,722
20
31,472
48,214
28,755
–1,171
27,584
75,798
3
272
275
20,975
8,096
–
79
29,150
15,578
435
47,585
5,474
69,072
174,295
16,672
20
31,472
48,164
25,982
11,771
37,753
85,917
–
2,435
2,435
19,712
7,040
–
83
26,835
2,814
542
94,401
4,095
101,852
217,039
90
Parent Company financial statements
Financial report 2023
Parent Company statement of cash flows
January–December, SEK million
Operating activities
Net income (loss)
Adjustments to reconcile net income to cash
Changes in operating net assets
Customer finance, current and non-current
Trade receivables
Trade payables
Provisions and post-employment benefits
Other operating assets and liabilities, net
Interest received
Interest paid
Taxes paid/received
Cash flow from operating activities
Investing activities
Investments in property, plant and equipment
Investments in intangible assets
Sales/disposals of property, plant and equipment
Investments in shares and other investments
Divestments of shares and other investments
Other investing activities
Purchase of investments
Sale of investments
Cash flow from investing activities
Cash flow before financing activities
Financing activities
Borrowings from subsidiaries
Repayment of loans from subsidiaries
Proceeds from issuance of borrowings
Repayment of borrowings
Share issue
Repurchase of own shares
Dividends paid
Settled contributions from/to (–) subsidiaries
Other financing activities
Cash flow from financing activities
Effect from remeasurement in cash
Net change in cash
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Notes
P22
P17
2023
2022
2021
–1,171
34,369
33,198
313
–1,717
–3
–2,161
1,033
–2,535
3,786
–4,310
-337
29,802
–83
–
–
–12,031
1,227
1,908
–12,887
9,845
–12,021
11,771
8,382
20,153
242
–5
243
2,142
–1,068
1,554
1,708
–1,542
–259
21,614
–81
–
–
–58,586
552
–3,634
–13,583
40,541
–34,791
7,656
2,202
9,858
135
94
–124
–50
519
574
759
–634
–94
10,463
–62
–
–
–6,657
2,076
66
–35,415
20,114
–19,878
17,781
–13,177
–9,415
72,081
–51,527
15,989
–3,333
50
–50
–8,991
–7,272
–41,387
–24,440
–1,432
–8,091
23,731
15,640
57,291
–53,716
7,777
–9,993
–
–
–8,325
–1,526
7,353
–1,139
919
–13,397
37,128
23,731
144,574
–150,656
7,574
–5,066
–
42
–6,658
–1,540
30,375
18,645
–877
8,353
28,775
37,128
Financial report 2023
Parent Company financial statements
91
Parent Company statement of changes in stockholders’ equity
Revaluation
reserve
Statutory
reserve
Total
restricted
equity
Disposition
reserve
Cash flow
hedge
reserve
SEK million
January 1, 2023
Capital stock
16,672
Total comprehensive income (loss)
Transactions with owners
Share issue, net
Repurchase of own shares
Long-term variable compensation plans
Dividends paid
December 31, 2023
January 1, 2022
Total comprehensive income
Transfer to Other retained earnings
Transactions with owners
Share issue, net
Repurchase of own shares
Long-term variable compensation plans
Dividends paid
–
50
–
–
–
16,722
16,672
–
–
–
–
–
–
20
–
–
–
–
–
20
20
–
–
–
–
–
–
31,472
48,164
100
–
–
–
–
–
–
50
–
–
–
31,472
31,472
48,214
48,164
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
–
–
–
–
–
–
December 31, 2022
16,672
20
31,472
48,164
100
Other
retained
earnings
37,653
Non-
restricted
equity
37,753
Total
85,917
–1,171
–1,171
–1,171
–
–50
43
–8,991
27,484
34,910
–
–50
43
–8,991
27,584
34,984
50
–50
43
–8,991
75,798
83,148
11,771
11,039
11,039
–758
–
–
–
–
55
–8,325
37,653
–
–
55
–8,325
37,753
–
–
55
–8,325
85,917
–
–
–
–
–
–
–
–26
–732
758
–
–
–
–
–
92
Notes to the Parent Company financial statements
Financial report 2023
Notes to the Parent Company
financial statements
P1 Material accounting policies
The financial statements of the Parent Company, Telefonaktiebolaget
LM Ericsson, have been prepared in accordance with the Annual Accounts Act
and RFR 2 “Reporting in separate financial statements.” RFR 2 requires the
Parent Company to use the same accounting principles as for the Group, i.e.,
IFRS, to the extent allowed by RFR 2.
The main deviations between accounting policies adopted for the Group
and accounting policies for the Parent Company are:
Subsidiaries, associated companies and joint ventures
The investments are accounted for according to the acquisition cost method.
Investments are carried at cost and only dividends are accounted for in the
income statement. An annual impairment test for the investments in each
subsidiary company is performed in the fourth quarter, or when there is an indi-
cation of impairment. An impairment loss is recognized if the carrying amount
of an investment exceeds the sum of the subsidiary’s equity and related good-
will, intangible liabilities and deferred tax liabilities or its estimated future cash
flows after tax. Cash flows are discounted to present value using an after-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.
Contributions to/from subsidiaries and shareholders’ contributions
are accounted for according to RFR 2. Contributions from/to Swedish subsidi-
aries are reported net in the income statement. Shareholders’ contributions
increase the Parent Company’s investments.
Classification and measurement of financial instruments
IFRS 9 “Financial instruments” is adopted, except regarding financial guar-
antees and revaluation of borrowings due to change in credit risk. Financial
guarantees are included in Contingent liabilities according the exception
allowed in RFR 2. Revaluation of borrowings due to change in credit risk are
reported in the Income statement.
Leases
Leases are reported according to the exception allowed in RFR 2. For leases
where the Parent Company is lessee this means that the right-of-use assets
and liabilities are not recognized on the balance sheet. Costs under the lease
are recognized in the income statement on a straight-line basis over the term
of the lease. Lease incentives received are recognized as an integral part of
the total lease expense, over the term of the lease. For leases where the Parent
Company is lessor, the equipment is recorded as property, plant and equipment
and revenue as well as depreciation is recognized on a straight-line basis over
the lease term. Expenses related to the lease income are recognized when
incurred. Direct expenses incurred when a lease agreement is entered are
added to the carrying amount of the leased asset and expensed over the lease
period on the same basis as the lease income.
Deferred taxes
The accounting of untaxed reserves in the balance sheet results in different
accounting of deferred taxes as compared to the principles applied in the con-
solidated statements. Swedish GAAP and tax regulations require a company to
report certain differences between the tax basis and book value as an untaxed
reserve in the balance sheet of the standalone financial statements. Changes
to these reserves are reported as an addition to, or withdrawal from, untaxed
reserves in the income statement.
Pensions
Pensions are accounted for according to the simplification rule in RFR 2. The
pension obligation is secured with transferring of funds to a pension trust. A net
pension obligation is only accounted for to the extent that the fair value of the
trust is lower than the pension obligation. According to RFR 2, disclosures from
IAS 19 is adopted as applicable.
Business combinations
Transaction costs attributable to the acquisition are included in the cost
of acquisition in the Parent Company statements compared to Group
Statements where these costs are expensed as incurred.
Critical accounting estimates and judgments
See notes to the consolidated financial statements – note A2 “Critical account-
ing estimates and judgments.” Major critical accounting estimates and judg-
ments applicable to the Parent Company include trade and customer finance
receivables and acquired intellectual property rights and other intangible
assets,excluding goodwill.
Changes in accounting policies
On January 1, 2023, the following amendments issued by the IASB were
adopted with no material impact on the results and financial position of the
Parent Company.
– IFRS 17: Insurance contracts
– IAS 1: Presentation of Financial Statements and IFRS Practice Statement
2 – Disclosure of Accounting policies
– IAS 8: Accounting policies, Changes in Accounting Estimates and Errors –
Definition of Accounting Estimates
– IAS 12: Income Taxes, Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
– IAS 12: Income Taxes,International Tax Reform – Pillar Two Model Rules
A number of new amendments to standards and interpretations are not yet
effective for the year ended December 31, 2023, and have not been applied
in preparing the Parent Company financial statements. The IASB has issued
amendments with effective date January 1, 2024, relating to “IAS 1 Presenta-
tion of financial statements”, “IFRS 16 Leases”, “IAS 7 Statement of Cash
Flows and IFRS 7 Financial Instruments”. The amendments are not estimated
to have a material impact and there are no additions or exceptions allowed in
RFR 2. Among the amendments issued by IASB with effective date January 1,
2025, are “Amendments to IAS 21 The Effects of Changes in Foreign Exchange
Rates: Lack of Exchangeability.” There are no additions or exceptions in RFR2
relating to this amendment and it is not expected to have any material impact,
but to consider is the already existing rule in RFR 2 regarding reporting cur-
rency. For the changes in IFRS standards, more details can be found in the
Consolidated Financial Statements, note A1” Material accounting policies.”
Financial report 2023
Notes to the Parent Company financial statements
93
P2 Other operating income and expenses
P4 Taxes
Other operating income and expenses
Income taxes recognized in the income statement
License revenues and other
operating revenues
Subsidiary companies
Other operating income/expenses
Total
2023
2022
2021
3,468
138
3,606
2,956
–2,2651)
691
2,573
–803
1,770
Current income taxes for the year
Current income taxes related to prior years
Deferred tax income/expense (+/–)
Tax income/expense
2023
–113
–244
–25
–382
2022
758
–294
167
631
2021
–72
–64
–31
–167
1) 2022 includes a provision of SEK –2.3 billion related to the DPA breach resolution with the U.S.
Department of Justice, including expenses for the extended monitorship.
P3 Financial income and expenses
Financial income and expenses
Financial income
Result from participations
in subsidiary companies
Dividends
Net gains on participations
Result from participations in joint
ventures and associated companies
Dividends
Result from participations in other companies
Net gains on participations
Interest income from subsidiary companies
Interest income from others
2023
2022
2021
32,422
78
19,412
19
8,602
12
45
59
121
2,838
1,076
96
1,465
147
72
718
886
41
A reconciliation between reported tax expense for the year and the theoretical
tax expense that would arise when applying the statutory tax rate in Sweden,
20.6% (20.6% in 2022 and 2021), on the income before taxes, is shown in the
table below.
Reconciliation of Swedish income tax rate with effective tax
Expected tax expense at Swedish tax rate
Current income taxes related to prior years
Tax effect of non-deductible expenses
Tax effect of non-taxable income
Tax effect related to write-downs of
investments in subsidiary companies
Utilization of previous years’ tax losses
Tax income/expense
2023
163
–244
–291
6,739
–6,753
4
–382
2022
–2,295
–294
–668
4,186
–298
–
631
2021
–1,605
–64
–190
1,962
–270
–
–167
Income taxes recognized in Other retained earnings
2023
–
–
2022
–758
–758
2021
–
–
Total
36,580
21,198
10,331
Tax expense/income
Current income taxes for the year
Financial expenses
Losses on sales of participations
in subsidiary companies
Write-down of investments in subsidiary
companies 1)
Net loss from joint ventures and
associated companies
Net loss from participations in other
companies
Interest expense to subsidiary companies
Interest expenses to others
Other financial expenses 2)
Total
Net foreign exchange gain/(loss) on financial
liabilities/assets
Financial income and expenses, net
Net gains and losses on financial instruments
below excluding effect of gains and losses
from foreign exchange transactions:
Net gains and losses on financial instruments
at FVTPL
Net gains and losses on financial liabilities
designated at FVTPL
–5
–
–8
–32,783
–1,446
–1,300
Deferred tax balances
Deferred tax assets are derived from the balance sheet items as shown in the
table below.
–
–557
–
Tax effects of temporary differences
–299
–2,858
–2,054
–695
–209
–712
–368
948
–
–30
–304
–179
Current assets
Post-employment benefits
Provisions
Other
–38,694
–2,344
–1,821
Deferred tax assets
–382
–2,496
359
19,213
–111
8,399
Changes in deferred taxes
Opening balance
Reclassification
Recognized in net income (loss)
Closing balance
–900
–2,563
–543
–1,100
2,847
404
2023
2022
388
35
30
108
561
348
34
48
156
586
2023
2022
586
0
–25
561
507
–88
167
586
1) For information about write-downs in 2023 see note P7 “Financial assets.”
2) Revaluation of borrowings due to change in credit risk in 2023: SEK - 667 million
(SEK 1,030 million in 2022 and SEK 31 million in 2021).
Interest expenses on pension liabilities are included in the interest expenses
shown above.
94
Notes to the Parent Company financial statements
Financial report 2023
P5 Intangible assets
Patents, licenses, trademarks and similar rights
Accumulated acquisition costs
Opening balance
Acquisitions
Sales/disposals
Closing balance
Accumulated amortization
Opening balance
Amortization
Sales/disposals
Closing balance
Accumulated impairment losses
Opening balance
Impairment losses
Closing balance
Net carrying value
2023
2022
5,086
–
–
5,086
–4,134
–4
–
–4,138
–948
–
–948
–
5,086
–
–
5,086
–4,130
–4
–
–4,134
–948
–
–948
4
The balances are mainly related to Radio Frequency technology.
P6 Property, plant and equipment
Property, plant and equipment
2023
Accumulated acquisition costs
Opening balance
Additions
Sales/disposals
Reclassifications
Closing balance
Accumulated depreciation
Opening balance
Depreciation
Sales/disposals
Closing balance
Net carrying value
2022
Accumulated acquisition costs
Opening balance
Additions
Sales/disposals
Reclassifications
Closing balance
Accumulated depreciation
Opening balance
Depreciation
Sales/disposals
Closing balance
Net carrying value
Other equipment
and instal lations
Construction in
process and advance
payments
1,972
8
–84
67
1,963
–1,618
–117
82
–1,653
310
1,948
26
–45
43
1,972
–1,548
–115
45
–1,618
354
26
79
–4
–67
34
–
–
–
–
34
13
59
–3
–43
26
–
–
–
–
26
Total
1,998
87
–88
–
1,997
–1,618
–117
82
–1,653
344
1,961
85
–48
–
1,998
–1,548
–115
45
–1,618
380
Financial report 2023
Notes to the Parent Company financial statements
95
P7 Financial assets
Investments in subsidiary companies, joint ventures and associated companies
Opening balance
Acquisitions and stock issues
Shareholders’ contribution
Repayment of shareholders’ contribution
Write-downs 1)
Disposals
Closing balance
Subsidiary companies
Associated companies
2023
128,638
150
11,857
–1,028
–32,783
–300
106,534
2022
72,009
2,244
55,835
–
–1,446
–4
128,638
2023
628
–
–
–
–
–
628
2022
1,184
298
–
–
–791
–63
628
1) In 2023 write-downs of investments in subsidiary companies were made by SEK 32.8 (2.2) billion, whereof SEK 31.9 billion was related to the investment in Vonage. The reason for the write-down of the invest-
ment in Vonage was mainly macroeconomic headwinds, including rising interest rates and changing demand trends. Other write-downs were mainly a result of devaluation of currency and lowered expectation
on future profitability for a few entities. For impairment test in 2023 of investments in subsidiary and associated companies a discount rate of 11.0% (9.0%) was applied. For high inflation countries individual dis-
count rates ( 12.0-24.0%) were applied. At the time of the write-downs the recognized amounts in the balance sheet related to each impacted subsidiary company were equal to value in use or equity value of the
entity.
Other financial assets
Accumulated acquisition costs
Opening balance
Additions
Disposals/repayments/ deductions
Reclassifications
Fair value remeasurement
Translation difference
Closing balance
Other investments in shares
and participations
Interest-bearing
securities, non-current
Other financial assets,
non-current
Receivables from
subsidiaries, non-current
2023
2022
2023
2022
2023
2022
2023
2022
2,039
206
–1
–
–185
–
2,059
2,175
168
–96
–1
–207
–
2,039
9,157
12,887
–4,233
–8,152
271
–
9,930
30,615
13,583
–29,666
–5,632
257
–
9,157
36
–
–
–10
–
–
26
544
–
–
–588
80
–
36
15,414
11,517
–10,804
–8,026
–
–1,466
6,635
13,284
5,963
–5,189
–
–
1,356
15,414
96
Notes to the Parent Company financial statements
Financial report 2023
P8 Investments
The following listing shows certain shareholdings owned directly and indirectly by the Parent Company as of December 31, 2023.
A complete listing of shareholdings, prepared in accordance with the Swedish Annual Accounts Act and filed with the Swedish Companies Registration Office
(Bolagsverket), may be obtained upon request to: Telefonaktiebolaget LM Ericsson, External Reporting, SE-164 83 Stockholm, Sweden.
Shares owned directly by the Parent Company
Company
Reg. No.
Domicile
Percentage of
ownership
Par value in local
currency, million
Carrying value,
SEK million
Subsidiary companies
Ericsson AB
Ericsson Shared Services AB
Datacenter i Rosersberg AB
Datacenter i Mjärdevi Aktiebolag
Aktiebolaget Aulis
Other (Sweden)
Ericsson Austria GmbH
Ericsson Danmark A/S
Oy L M Ericsson Ab
Ericsson France S.A.S
Ericsson Antenna Technology Germany GmbH
Ericsson Germany GmbH
Ericsson Hungary Ltd.
L M Ericsson Limited
Ericsson Telecomunicazioni S.p.A.
Ericsson Holding International B.V.
Ericsson A/S
Ericsson Sp. z o.o.
Ericsson España, S.A.U.
Ericsson Ltd.
Other (Europe, excluding Sweden)
Ericsson Holding II Inc.
Ericsson Smart Factory Inc.
Ericsson Global Network Platform Holding Inc.
Compañía Ericsson S.A.C.I.
Ericsson Canada Inc.
Ericsson de Colombia S.A.S.
Ericsson Telecom S.A. de C.V.
Other (United States, Latin America)
Teleric Pty Ltd.
Ericsson (China) Company Ltd.
P.T. Ericsson Indonesia
Ericsson India Private Limited
Ericsson Kenya Limited
Ericsson-LG Co., Ltd.
Ericsson (Malaysia) Sdn Bhd
Ericsson South Africa (Pty) Ltd.
Ericsson Taiwan Ltd.
Ericsson (Thailand) Ltd.
Ericsson Telekomünikasyon A.Ş.
Other countries (the rest of the world)
Total
Joint ventures and associated companies
ConcealFab,Inc.
Leone Media Inc.
Ericsson Nikola Tesla d.d.
Total
556056-6258
556251-3266
556895-3748
556366-2302
556030-9899
Sweden
Sweden
Sweden
Sweden
Sweden
Austria
Denmark
Finland
France
Germany
Germany
Hungary
Ireland
Italy
The Netherlands
Norway
Poland
Spain
United Kingdom
United States
United States
United States
Argentina
Canada
Colombia
Mexico
Australia
China
Indonesia
India
Kenya
Korea
Malaysia
South Africa
Taiwan
Thailand
Turkey
USA
USA
Croatia
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
95 1)
100
97 1)
100
–
100
100
95
100
100
75
100
70
90
49 2)
100
–
36
46
49
50
361
–
10
14
4
90
13
21
2
1
1,301
4
44
222
75
4
28
53
–
–
–
193
–
701
1,439
20
65
9,531
291
–
285
3
–
270
90
5
–
134
65
20,731
2,216
74
69
6
706
94
216
196
524
21
1,816
120
34
2,429
2,983
114
412
14
1,957
709
34,295
424
30,674
10
221
176
576
435
100
475
614
51
10
2,279
131
94
36
17
150
325
106,534
298
–
330
628
1) Through subsidiary holdings, total holdings amount to 100% of Compañía Ericsson S.A.C.I. and Ericsson de Colombia S.A.S.
2) Through subsidiary holdings, total holdings amount to 74% of Ericsson (Thailand) Ltd.
Financial report 2023
Note P8, cont’d.
Shares owned by subsidiary companies
Company
Subsidiary companies
Emodo Inc.
Ericsson Telekommunikation GmbH
Ericsson GmbH
Ericsson Telecommunicatie B.V.
Ericsson Inc.
Vonage Holdings Corp.
Ericsson Wireless Office Inc.
Cradlepoint Inc.
Iconectiv, LLC.
Ericsson Telecomunicações LTDA.
Ericsson Australia Pty. Ltd.
Ericsson (China) Communications Co. Ltd.
Nanjing Ericsson Panda Communication Co. Ltd.
Ericsson Japan K.K.
Notes to the Parent Company financial statements
97
Reg. No.
Domicile
Percentage
of ownership
United States
Germany
Germany
The Netherlands
United States
United States
United States
United States
United States
Brazil
Australia
China
China
Japan
P9 Trade receivables and customer finance
Credit risk management is governed on a Group level.
For further information, see notes to the consolidated financial statements – Note B6, “Customer contract related balances”
and note F1 “Financial risk management.”
Trade receivables and customer finance
Movements in allowances for impairment
Trade receivables excluding associated
companies and joint ventures
Allowances for impairment
Trade receivables, net
Trade receivables related to associated
companies and joint ventures
Trade receivables, total
Customer finance
Customer finance, net
2023
2022
24
–18
6
–
6
231
231
29
–19
10
1
11
544
544
Opening balance
Additions
Utilization
Reversal of excess amounts
Translation difference
Closing balance
Outstanding customer finance credit risk exposure 1)
Customer Finance Fair Value Reconciliation
Fair value of customer finance credits
Of which current
Financial guarantees for third-parties
Accrued interest
Maximum exposure to credit risk
Less third-party risk coverage
Parent Company’s risk exposure,
less third-party risk coverage
Credit commitments for customer finance
1) This table shows the maximum exposure to credit risk.
2023
2022
231
81
4
7
242
–
242
185
544
322
6
8
558
–
558
412
Opening balance
Additions
Disposals/repayments
Revaluation
Translation difference
Closing balance
100
100
100
100
100
100
100
100
83
100
100
100
51
100
Trade receivables
2023
2022
19
–
–
–
–1
18
16
–
–
–
3
19
2023
544
292
–388
–217
–
231
2022
786
53
–288
–7
–
544
98
Notes to the Parent Company financial statements
Financial report 2023
P10
Receivables and liabilities –
subsidiary companies
P11 Other current receivables
Receivables and liabilities – subsidiary companies
Other current receivables
Non-current receivables
Financial receivables
Current receivables
Trade receivables
Financial receivables
Total
Non-current liabilities
Financial liabilities
Current liabilities
Trade payables
Financial liabilities
Total
Payment due by period
< 1
year
1–5
years
>5
years
Total
2023
Total
2022
–
6,635
2,408
15,431
17,839
–
316
47,269
47,585
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,635
15,414
2,408
15,431
17,839
1,662
22,518
24,180
–
–
316
47,269
47,585
230
94,171
94,401
Prepaid expenses
Accrued revenues
Derivative assets
Other
Total
2023
315
123
3,326
659
4,423
2022
353
105
2,017
664
3,139
P12 Equity and other comprehensive income
Capital stock 2023
Capital stock at December 31, 2023, consisted of the following:
Capital stock
Class A shares 1)
Class B shares 1)
Total
Number of shares
Capital stock
261,755,983
3,082,395,752
3,344,151,735
1,309
15,413
16,722
1) Class A shares (quotient value SEK 5.00) and Class B shares (quotient value SEK 5.00).
The Annual General Meeting (AGM) 2023 resolved to issue 10,000,000 Class
C shares for the Long-Term Variable Compensation Program (LTV II) 2023,
2022 and 2021 for Ericsson’s executive team and other executives. In accord-
ance with an authorization from the AGM, the Board of Directors resolved to
repurchase the new issued shares, which were subsequently converted into
Class B shares. The quotient value of the repurchased shares was SEK 5.00,
totaling SEK 50.0 million, representing less than 0.3% of capital stock. The
acquisition cost was SEK 50.2 million.
The Board of Directors proposes a dividend of SEK 2.70 (2.70) per share
and that the Parent Company shall retain the remaining part of non-restricted
equity. The dividend is proposed to be paid in two equal installments, SEK 1.35
per share with the record date April 5, 2024 (payment date April 10, 2024),
and SEK 1.35 per share with the record date October 2, 2024 (payment date
October 7, 2024). Holders of the Class B treasury shares are not entitled to
receive a dividend. All Class B treasury shares are held by the Parent Company.
Assuming that no treasury shares remain on the record date, the Board of
Directors proposes that earnings be distributed as follows:
Proposed disposition of earnings
Proposed disposition of earnings
Amount to be paid to the shareholders
Amount to be retained by the Parent Company
Total non-restricted equity of the Parent Company
9,029,209,684
18,555,216,849
27,584,426,533
Equity and other comprehensive income 2023
January 1, 2023
Net income (loss)
Total other comprehensive income, net of tax
Total comprehensive income (loss)
Transactions with owners
Share issue,net
Repurchase of own shares
Long-term variable compensation plans
Dividends paid
December 31, 2023
Capital stock
Revaluation
reserve
Statutory
reserve
Total
restricted
equity
Disposition
reserve
16,672
20
31,472
48,164
100
–
–
–
50
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50
–
–
–
–
–
–
–
–
–
–
16,722
20
31,472
48,214
100
Other
retained
earnings
37,653
–1,171
–
–1,171
–
–50
43
–8,991
27,484
Non-
restricted
equity
37,753
–1,171
–
–1,171
–
–50
43
–8,991
27,584
Total
85,917
–1,171
–
–1,171
50
–50
43
–8,991
75,798
Financial report 2023
Note P12, cont’d.
Equity and other comprehensive income 2022
January 1, 2022
Net income
Other comprehensive income (loss)
Items that will not be reclassified to profit or loss
Cash flow hedge reserve
Gains arising during the period
Transfer to investments
Tax on items that will not be reclassified to profit or loss
Total other comprehensive loss, net of tax
Total comprehensive income
Transfer to Other retained earnings
Transactions with owners
Share issue,net
Repurchase of own shares
Long-term variable compensation plans
Dividends paid
December 31, 2022
P13 Contributions
Notes to the Parent Company financial statements
99
Capital
stock
Revaluation
reserve
Statutory
reserve
Total
restricted
equity
Disposition
reserve
Cash flow
hedge
reserve
Other
retained
earnings
Non-
restricted
equity
16,672
–
–
–
–
–
–
–
–
–
–
–
20
–
–
–
–
–
–
–
–
–
–
–
31,472
48,164
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
–
–
–
–
–
–
–
–
–
–
–
16,672
20
31,472
48,164
100
–26
34,910
34,984
Total
83,148
–
11,771
11,771
11,771
3,703
–3,677
–758
–732
–732
758
–
–
–
–
–
–
–
–
–
11,771
–758
–
–
55
–8,325
37,653
3,703
–3,677
–758
–732
11,039
3,703
–3,677
–758
–732
11,039
–
–
–
–
–
–
55
–8,325
37,753
55
–8,325
85,917
Contributions to Swedish subsidiaries amount to SEK 81 (7,272) million. There were no contributions from Swedish subsidiaries in 2023 and 2022.
P14 Post-employment benefits
The Parent Company has two types of pension plans:
– Defined contribution plans: post-employment benefit plans where the
Parent Company pays fixed contributions into separate entities and has no
legal or constructive obligation to pay further contributions if the entities do
not hold sufficient assets to pay all employee benefits relating to employee
service. The expenses for defined contribution plans are recognized during
the period when the employee provides service.
– Defined benefit plans: post-employment benefit plans where the Parent
Company’s undertaking is to provide predetermined benefits that
the employee will receive on or after retirement.
Defined benefit obligation – amount recognized in the Balance sheet
Present value of wholly or partially funded pension plans1)
Fair value of plan assets
Net obligation/surplus(–) of funded pension plans
Excess from plan assets not accounted for
Closing balance provision for pensions
2023
1,659
2022
1,491
–1,821
–1,753
–162
165
3
–262
262
0
1) The total defined benefit obligation is considered to be secured in the pension trust but not wholly
funded.
The defined benefit obligations are calculated based on the actual salary levels
at year-end and based on a discount rate of 2.85% (2.85%) regarding ITP2
and 1.0% (0.2%) for other pension liabilities.
Weighted average life expectancy after the age of 65 is 24.7 (24.7) years
for women and 23.5 (23.5) years for men.
The Parent Company utilizes no assets held by the pension trust.
Return on plan assets was 3.9% (–4.5%).
2023
of which
unquoted
2022
of which
unquoted
Plan assets allocation
Cash and cash equivalents
Equity securities
Debt securities
Real estate
Derivatives
Investment funds
Total
Of which Ericsson securities
0%
38%
20%
100%
87%
100%
17
449
881
336
14
124
1,821
–
Change in the net defined benefit obligation
Opening balance
Pension costs, excluding taxes, related to defined benefit
obligations accounted for in the income statement
Pension payments
Return on plan assets
Closing balance provision for pensions
71
418
867
343
–2
56
1,753
–
2023
0
250
–82
–165
3
0%
41%
19%
100%
100%
100%
2022
0
266
–72
–194
0
Estimated pension payments for 2024 related to defined benefit obligations
are SEK 93 million.
100
Notes to the Parent Company financial statements
Financial report 2023
Note P14, cont’d.
Total pension cost and income recognized in the Income statement
P15 Other provisions
Defined benefit obligations
Costs excluding interest and taxes
Interest cost
Return of plan assets
Total cost defined benefit plans
excluding taxes
Defined contribution plans
Pension insurance premium
Total cost defined contribution plans
excluding taxes
Credit insurance premium
2023
2022
2021
Other provisions
211
39
–165
233
33
–194
85
59
59
2
72
67
67
0
64
39
–32
71
70
70
2
Opening balance
Additions
Reversal of excess amounts
Cash out/utilization
Reclassifications
Closing balance
Of which current provisions
Of which non-current provisions
Restructuring
Other Total 2023 Total 2022
–
232
–
2,435
29
–
–58 –2,366 1)
–
–
174
97
77
98
98
–
2,435
261
–
–2,424
–
272
195
77
293
2,338
–60
–136
–
2,435
2,424
–
1) Includes a payment of USD 206,7 million (approximately SEK 2.2 billion) for the fine in relation to the
previously announced, non-criminal, alleged breaches under the deferred prosectution agreement
(DPA) with the United States Department of Justice (DoJ).
Total cost, net excluding taxes
146
139
143
Of the total pension cost, SEK 271 (300 in 2022 and 136 in 2021) million is
included in operating expenses and SEK –125 (–161 in 2022 and 7 in 2021)
million in the financial net.
P16 Interest-bearing liabilities
As of December 31, 2023, the Parent Company’s outstanding interest-bearing
liabilities, excluding liabilities to subsidiaries, stood at SEK 44.6 (29.6) billion.
Interest-bearing liabilities
Reconciliation of liabilities arising from financing activities
Borrowings, current
Current part of non-current borrowings
Other borrowings, current
Total borrowings, current
Borrowings, non-current
Notes and bond loans
Other borrowings, non-current
Total borrowings, non-current
Total interest-bearing liabilities
2023
2022
8,947
6,631
15,578
20,975
8,096
29,071
44,649
2,814
–
2,814
19,712
7,040
26,752
29,566
Opening balance
Cash flows
Proceeds from issuance of borrowings
Repayment of borrowings
Other financing activities
Non-cash changes
Effect of foreign exchange movement
Revaluation due to changes in credit risk
Other changes in fair value
Closing balance
2023
29,566
15,989
–3,333
1,503
–870
667
1,127
44,649
2022
31,421
7,777
–9,993
–
4,041
–1,030
–2,650
29,566
To secure long-term funding, the Company uses notes and bond programs
together with bilateral research and development loans, as well as private
placements. All outstanding notes and bond loans are issued by the Parent
Company under its Euro Medium Term Note (EMTN) program or under its
U.S. Securities and Exchange Commission (SEC) Registered program. Bonds
issued at a fixed interest rate are normally swapped to a floating interest rate
using interest rate swaps under the Asset and liability management mandate
described in note F1, “Financial risk management.” Total weighted average
interest rate cost for the long-term funding during the year was 5.15% (2.45%).
The borrowings issued by the Parent Company are held at fair value with
changes in value recognized in the Income statement. See note P1 “Material
Accounting Policies.”
For detailed information about Notes, bonds, bilateral loans, syndicated
loans and commercial papers, see notes to the Consolidated Financial State-
ments, note F4 “Interest-bearing liabilities.”
Financial report 2023
Notes to the Parent Company financial statements
101
P17 Financial risk management and financial instruments
Ericsson’s financial risk management is governed on a Group level. For further information see notes to the Consolidated Financial Statements,
note F1, ”Financial risk management.”
Outstanding derivatives
Gross
amount
recognized
Offset
Net
amount
presented
Related
amounts
not offset
– collaterals
Net
2022
Gross
amount
recognized
Offset
Net
amount
presented
Related
amounts
not offset
– collaterals
2023
Currency derivatives
Assets
Liabilities
Interest rate
derivatives
Assets
Liabilities
3,392
–4,241
–43
43
3,349
–4,198
–1,487
874
1,862
–3,324
–
–23
–
–
–
–23
–
–
–
–23
Currency derivatives
Assets
Liabilities
Interest rate
derivatives
Assets
Liabilities
2,171
–2,727
–165
165
2,006
–2,562
–277
2,382
Net
1,729
–180
11
–8
–
–
11
–8
–
–
11
–8
Cash collaterals paid or received under Credit Support Annex (CSA) to ISDA for cross-currency derivatives are recognized as Interest-bearing securities, current or
Borrowings, current, respectively.
Cash, cash equivalents, interest bearing securities and derivative assets
2023
Bank deposits
Other financial
institutions
Type of issuer:
Governments
Corporates
Mortgage institutes
Derivative assets
Total
Rating or
equivalent
< 3 M 3–12 M 1–5 Y
> 5 Y
Total
2022
Rating or
equivalent
< 3 M 3–12 M 1–5 Y
> 5 Y
Total
14,488
548
–
1,510
1,995
1,920
–
–
–
–
490
296
5,668
749
1,254
–
8,676
622
– 14,488
–
548
1,744
–
–
1,806
– 16,339
Bank deposits
Other financial
institutions
Type of issuer:
Governments
Corporates
Mortgage institutes
35
3,326
Derivative assets
AAA
A2/P2
AAA
24,252
604
500
1,283
–
951
–
–
–
–
– 24,252
–
604
3,950
–
1,682
93
277
–
8,880
837
4,727
–
–
1,283
– 10,562
136
2,017
20,461
7,203 10,552
35 38,251
Total
27,590
5,725
9,994
136 43,445
AAA
A2/P2
AAA
Debt financing is mainly carried out through borrowing in the Swedish and
international debt capital markets. Bank financing is used for certain subsidiary
funding and to obtain committed credit facilities, see note P16, “Interest-
bearing liabilities.”
Funding programs 1)
Euro Medium Term Note program
(USD million)
SEC Registered program (USD million) 2)
Commercial Paper Program (SEK million)
Amount
Utilized
Unutilized
5,000
–
10,000
2,842
–
2,014
2,158
–
7,986
1) There are no financial covenants related to these programs.
2) Program amount indeterminate.
In November 2023, the Company issued a 4.5-year EUR 500 million green
bond under the Euro Medium Term Note program and Green Financing Frame-
work. During the year, the Company established a new committed liquidity
revolving credit facility of USD 1.0 billion, of which USD 0.4 billion was utilized
as at year end, and increased the borrowings under the commercial paper
program by SEK 2.0 billion. Furthermore, the Company signed two 7-year loan
agreements, one with European Investment Bank for USD 273 million and one
with Nordic Investment Bank for USD 107 million.
Committed credit facilities
Multi-currency revolving credit facility
(USD million)
Liquidity revolving credit facility
(USD million)
Amount
Utilized Unutilized
2,000
1,000
–
2,000
400
600
In September 2023, the Company exercised the second and the last one-year
extension option on the USD 2 billion sustainability-linked revolving credit
facility. The facility does not have interest rates linked to credit rating or finan-
cial covenants but is linked to two of Ericsson’s sustainability KPIs.
The following table shows analysis of financial liabilities by contractual
maturity:
2023
Trade payables
Borrowings and loans
Derivative liabilities
Total
2022
Trade payables
Borrowings and loans
Derivative liabilities
Total
< 1 Y
435
15,578
3,681
19,694
< 1 Y
542
3,133
868
4,543
1–3 Y
–
3,472
211
3,683
1–3 Y
–
12,835
1,091
13,926
3–5 Y
–
16,489
306
16,795
3–5 Y
–
8,992
611
9,603
> 5 Y
Total
–
435
9,110 44,649
4,198
–
9,110 49,282
> 5 Y
Total
–
542
11,144 36,104
2,570
–
11,144 39,216
102
Notes to the Parent Company financial statements
Financial report 2023
Note P17, cont’d.
The Company has a Treasury and Customer Finance organization with the
principal role to ensure that appropriate financing is in place through loans and
committed credit facilities, actively manage the Company’s liquidity as well as
financial assets and liabilities, and manage and control financial risk exposures
in a manner consistent with underlying business risks and financial policies.
The Customer Finance function may support with third-party financing solu-
tions for customers to facilitate their purchases from Ericsson. In some cases,
and to the extent that customer loans are not provided directly by banks, the
Parent Company may provide vendor finance credits to customers directly. The
central function also monitors the exposure from outstanding vendor credits
and credit commitments.
Fair valuation of the Company’s financial instruments
For a description of the Company’s valuation techniques and valuation
hierarchies, see note F1 “Financial risk management.”
Reconciliation of Level 3 fair value of other financial assets
Opening balance
Additions
Disposals
Gains or losses 1)
Closing balance
Other investments in
shares and participations
1,952
206
–2
–186
1,970
1) Table shows net gains or losses recognized in Financial income or expenses, of which SEK 186 million
unrealized loss relate to Level 3 assets held at the end of the year.
Financial instruments
SEK billion
Assets at fair value through profit or loss
Customer finance
Interest bearing securities
Cash equivalents 2)
Other financial assets 1)
Other current receivables
Assets at fair value through OCI
Trade receivables
Assets at amortized cost
Interest bearing securities
Cash equivalents
Other financial assets
Receivables subsidiaries
Financial assets
Financial liabilities at designated FVTPL
Interest-bearing liabilities
Financial liabilities at FVTPL
Other current liabilities
Liabilities at amortized cost
Trade payables
Borrowings
Liabilities subsidiaries
Financial liabilities
2023
Fair value hierarchy level
2022
Fair value hierarchy level
Amortized
cost
Fair value
Level 1
Level 2
Level 3
Amortized
cost
Fair value
Level 1
Level 2
Level 3
–
–
–
–
–
–
0.2
–
0.6
22.1
22.9
–
–
–0.4
–6.6
–47.3
–54.3
0.2
19.1
10.1
2.1
3.3
0.0
–
–
–
–
34.8
–
18.6
–
0.1
–
–
–
–
–
–
–
–
0.5
10.1
–
3.3
–
–
–
–
–
–
–38.0
–23.7
–14.3
–4.2
–
–
–
–42.2
–
–
–
–
–
–4.2
–
–
–
–
0.2
–
–
2.0
–
0.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.2
–
0.6
39.6
40.4
–
–
–0.5
–0.0
–94.4
–94.9
0.5
17.5
15.3
2.0
2.0
0.0
–
–
–
–
37.3
–
17.5
–
0.1
–
–
–
–
–
–
–
–
–
15.3
–
2.0
–
–
–
–
–
–
–29.6
–16.7
–12.9
–2.6
–
–
–
–32.2
–
–
–
–
–
–2.6
–
–
–
–
0.5
–
–
1.9
–
0.0
–
–
–
–
–
–
–
–
–
–
–
1) Other financial assets relate to investment in equity interests which are included in ‘Other investments in shares and participations’ within note P7.
2 ) Total Cash and cash equivalent is SEK 15.6 (23.7) billion, of which SEK 10.1 (15.3) billion relating to Cash equivalents are presented in the table above.
P18 Other current liabilities
Other current liabilities
Accrued interest
Accrued expenses
Of which employee related
Of which other
Derivative liabilities
Other current liabilities
Total
2023
429
482
326
156
4,198
365
5,474
2022
251
965
388
577
2,570
309
4,095
P19 Trade payables
Trade payables
Trade payables excluding associated companies and joint
ventures
Associated companies and joint ventures
Total
2023
2022
432
3
435
542
–
542
Financial report 2023
Notes to the Parent Company financial statements
103
P20 Assets pledged as collateral
Assets pledged as collateral
Leases with the Parent Company as lessor
The operating lease income is mainly income from the subleasing of real estate.
At December 31, 2023, future minimum payment receivables were
Bank deposits
Other
Total
2023
823
229
1,052
2022
893
234
1,127
distributed as follows:
Future minimum payment receivables
Other includes pledged capital insurances for pension agreements to
employees.
P21 Contingent liabilities
Contingent liabilities
Total contingent liabilities
2024
2025
2026
2027
2028
2029 and later
Total
2023
28,417
2022
24,811
P24 Information regarding employees
Contingent liabilities include pension commitments of SEK 28,272
(24,680) million.
Average number of employees
P22 Statement of cash flows
Adjustments to reconcile net income to cash
Europe and
Latin America 1)
Total
1) of which in EU
2023
2022
2021
of which in Sweden
2023
2022
Men Women
Total
Men Women
Total
170
170
170
170
165
165
165
165
335
335
335
335
177
177
177
177
179
179
179
179
356
356
356
356
Operating leases
9
2
–
–
–
–
11
Property, plant and equipment
Depreciation
Total
Intangible assets
Amortization
Total
Total depreciation and amortization
on tangible and intangible assets
Taxes
Write-downs and capital gains (–)/losses
on sale of fixed assets, excluding customer
finance, net
Unsettled group contributions
Other non-cash items
Total adjustments to reconcile
net income to cash
P23 Leases
117
117
4
4
121
382
32,888
81
897
115
115
4
4
119
–631
2,097
7,272
–475
110
110
18
18
128
160
578
1,526
–190
34,369
8,382
2,202
Remuneration
Wages and salaries and social security expenses
Wages and salaries
Social security expenses
of which pension costs
Wages and salaries per region
Europe and Latin America 1)
Total
1) of which in EU
of which in Sweden
2023
2022
597
311
184
557
327
178
2023
2022
597
597
597
597
557
557
557
557
Remuneration in foreign currency has been translated to SEK at average
exchange rates for the year.
Remuneration to the Board of Directors and the President and CEO
See notes to the consolidated financial statements, note G2 “Information
regarding members of the Board of Directors and Group management.”
Long-term variable compensation
Compensation costs for employees of the Parent Company for the cash-settled
plan amounted to SEK 7.3 (2.0) million and the cost for share-settled program
amounted to SEK 44.4 (54.8) million. See notes to the consolidated financial
statements, note G3, “Share-based compensation.”
Leases with the Parent Company as lessee
The Parent Company has the following types of lease contracts: lease of real
estate and vehicles. 2023 costs for real estate amounted to SEK 675.8 (633.4)
million and vehicles to SEK 4.2 (4.9) million. The Parent Company had varia-
ble lease expenses of SEK 49.9 (51.6) million in 2023 related to property taxes.
At December 31, 2023, future payment obligations for leases were
distributed as follows:
Future payment obligations for leases
2024
2025
2026
2027
2028
2029 and later
Total
Operating leases
624
564
451
160
68
28
1,895
104
Notes to the Parent Company financial statements
Financial report 2023
P25 Related party transactions
P26 Fees to auditors
IAS 24, “Related Party Disclosures” requires disclosure of related party
relationships, transactions and outstanding balances.
During 2023, various transactions were executed pursuant to contracts
based on terms customary in the industry and negotiated on an arm’s
length basis.
Ericsson Nikola Tesla d.d.
Ericsson Nikola Tesla d.d. is a company providing the design, sales and service
of telecommunications systems and equipment and an associated member
of the Ericsson Group. Ericsson Nikola Tesla d.d. is located in Zagreb, Croatia.
The Parent Company holds 49.07% of the shares.
For the Parent Company, the major transactions are license revenues for
Ericsson Nikola Tesla d.d.’s usage of trademarks and received dividends.
Ericsson Nikola Tesla d.d.
Related party transactions
License revenues
Dividends
Related party balances
Receivables
2023
2022
5
45
–
5
59
5
The Parent Company does not have any contingent liabilities, assets pledged
as collateral or guarantees toward Ericsson Nikola Tesla d.d.
Leone Media Inc.
Leone Media Inc., operating under the brand name MediaKind, includes plat-
forms for compression video processing and storage. 51% of the MediaKind
business was divested February 1, 2019. After the t ransaction, the Parent
Company held 49% of the shares. During 2022, Leone Media Inc. launched
a share-based incentive program for its employees, which reduced the Parent
Company holding to 45.5% of the shares. The Parent Company has provided
a loan to Leone Media Inc. of SEK 0.6 (0.6) billion.
Leone Media Inc.
Related party transactions
License revenues
Dividends
Related party balances
Receivables
2023
2022
–
–
–
–
594
615
The Parent Company does not have any contingent liabilities, assets pledged
as collateral or guarantees toward Leone Media Inc.
Other related parties
Total receivables from other related parties were SEK 3.9 (3.8) million.
For information regarding the remuneration of management, see notes to the
consolidated financial statements, note G2, “Information regarding members
of the Board of Directors and Group management.”
Fees to auditors
2023
Audit fees
Audit-related fees
Tax services fees
Other fees
Total
2022
Audit fees
Audit-related fees
Tax services fees
Other fees
Total
2021
Audit fees
Audit-related fees
Tax services fees
Other fees
Total
Deloitte
Others
Total
90
3
–
–
93
94
2
–
–
96
90
–
–
–
90
1
–
–
9
10
–
–
–
7
7
3
–
9
1
13
91
3
–
9
103
94
2
–
7
103
93
–
9
1
103
The allocation of fees to the auditors is based on the requirements in the
Swedish Annual Accounts Act.
At the 2023 Annual General Meeting, Deloitte was appointed auditor for the
period until the 2024 Annual General Meeting.
The audit-related services include quarterly reviews, SSAE 16 reviews
and services in connection with the issuing of certificates and opinions and
con sultation on financial accounting. The tax services include corporate tax
compliance work. Other services include services related to acquisitions.
P27 Events after the reporting period
The impact of inflation on the defined benefit obligations
PRI non-profit association decides on the indexation of ITP 2 every year, which
means that pensions are increased to provide compensation for i nflation. The
level of the indexation as of January 1, 2024 was decided by PRI non-profit
association on November 14, 2023. PRI non-profit association followed
Alecta’s decision, which involves an indexation of 6.48%, which corresponds to
the increase in the consumer price index from September 2022 to September
2023.
Ericsson to utilize mandate to transfer shares
Ericsson’s annual general meeting on March 29, 2023 authorized the Compa-
ny’s board of directors to resolve on the transfer of the Company’s own shares.
Under the authorization the Company may, in conjunction with the delivery
of vested shares under the long-term variable compensation programs 2019
and 2020 (“LTV 2019” and “LTV 2020”), prior to the annual general meeting in
2024, decide to retain and sell no more than 60% of the vested shares of series
B in the Company in order to cover for the costs for withholding and paying
tax and social security liabilities on behalf of the participants in relation to the
performance share awards for remittance to revenue authorities. Ericsson
decided, on February 16, 2024, to utilize the authorization to transfer shares
for these purposes.
The transfer of own shares may take place on Nasdaq Stockholm during the
period from and including February 16, 2024 up to the annual general meeting
2024 at a price within the price interval registered from time to time.
Ericsson currently holds 12,932,223 shares of series B in the Company and
the maximum number of shares that may be transferred on Nasdaq Stockholm
pursuant to the decision to utilize the authorization amounts to 774,889
shares of series B in the Company.
For other events after the reporting period, see notes to the Consolidated
Financial Statements, note H6, ”Events after the reporting period”.
Financial report 2023
Risk factors
105
Risk factors
All the information in this Annual Report and in particular the risks
and uncertainties outlined below should be carefully considered.
Based on the information currently known to the Company, Ericsson
believes that the following section identifies the most significant
risks affecting its business. Any of the factors described below, or
any other risk factors discussed elsewhere in this report, could have
a material negative effect on strategic objectives, business, opera-
tions, future performance, revenues, operating and after-tax results,
profit margins, financial condition, cash flow, liquidity, credit rating,
market share, reputation, brand and/or its share price. Additional
risks and uncertainties not presently known to the Company or that
Ericsson currently believes to be immaterial may also materially
adversely affect its business. Furthermore, Ericsson’s operating
results may have a greater variability than in the past and Ericsson
may have difficulties in accurately predicting future developments.
See also “Forward-Looking Statements”.
Contents
105 Risks related to business activities and industry
112 Risks related to Ericsson’s financial condition
113 Legal and regulatory risks
116 Cybersecurity risks
118 Environmental, social and business conduct risks
Risks related to business activities and industry
1.1 Ongoing geopolitical and trade uncertainty from a range of
factors may have a material adverse impact on Ericsson’s business,
operations, and ability to meet its targets.
Geopolitical alliances are shifting as global tensions, including between
US and China over trade, influence and the status of Taiwan, drive
growing economic, technological, military, and political competition
across the world. At the same time, there are numerous ongoing local
and regional conflicts, including the ongoing military conflicts between
Ukraine and Russia and in the broader Middle East. While the ultimate
impact of these dynamic tensions is unclear, the uncertainty they create
is expected to continue. These geopolitical developments, including
trade or security restrictions and export controls, enhanced sanctions
measures, vendor consolidation, and increased safeguards for national
security purposes, can impact global market conditions, including
market share, access and position. The current environment continues to
be challenging for global supply chains in general and ICT supply chains
in particular, while also increasing costs. These uncertainties include the
effects of trade disputes and other political tensions involving, among
others, the governments of the European Union, the US, China, India,
South Korea and Japan.
There are particular uncertainties for the future bilateral trading
relationship between China and a number of countries as a result of the
restrictions imposed on Chinese vendors or components in 5G networks
that have been adopted in many countries, and access to hardware
and software products and components may be constrained. Of special
relevance for Ericsson in this context is the trade relationship between
Sweden and China. Although Ericsson is a global company with a global
presence, it has its headquarters in Sweden and therefore risks being
affected by any deterioration of the Swedish-Chinese relationship. In
addition, the Company has business operations in China, and further
changes in economic and political policies in or relating to China could
have a material adverse effect on the Company’s business. During the
last few years, Ericsson has observed sustained challenges to the global
free trade system, including towards the World Trade Organization
(WTO) dispute settlement body. Any increased prospect of government
policies and actions violating WTO agreements could negatively impact
Ericsson’s ability to benefit from open markets and free trade.
The mandated or otherwise required localization of manufactur-
ing and R&D or use of local suppliers or production, as well as their
digital counterparts (including data localization of IT-infrastructure
and restrictions on data flows), has been steadily growing, motivated
by protectionism, indigenous industrial policies and national security
concerns. Geopolitical uncertainty has led to reduced efficiency in R&D,
including restrictions on use of R&D resources, and opportunities to
scale or grow with increasing logistical and administrative burdens,
while polarization of the industry and fragmentation of global standards
continues to develop (e.g., O-RAN). There is a risk of moves away from
global value chains and towards more regional or national alternatives.
Governments may continue to impose conditions that require the use of
local suppliers and local production or partnerships with local compa-
nies for R&D and IT-infrastructure, require the license or other transfer
of intellectual property, or engage in other efforts to promote local busi-
nesses and local competitors, which could have a significant adverse
impact on Ericsson’s ability to pursue a business globally.
Additionally, political instability, strict requirements on localization
of data, manufacturing and R&D, or use of local suppliers or production
in the regions in which the Company operates may further increase the
risk of possible legal or regulatory violations by Ericsson or its employ-
ees. Any violation by Ericsson or its employees could cause severe
reputational harm to the Company and have a material adverse effect
on Ericsson’s business operations and result in government actions
and the imposition of significant financial penalties and restrictions on
the Company’s ability to do business, including with certain customers,
such as government bodies or those in certain regulated sectors (e.g.
telecommunications).
The continually evolving global geopolitical situation has had and
will continue to have consequences for the entire ICT industry, with the
possibility of further industry splits, separation of global value chains
and separation of global standards for mobile telecommunications.
These developments have also led to several countries evaluating how
to ensure uninterrupted access to telecommunication network infra-
structure, for example through promoting disaggregation of the Radio
106
Risk factors
Financial report 2023
Access Network and support of national communication network infra-
structure champions as alternatives to the established global vendors
such as Ericsson, although the timing and extent of this remains unclear.
All of the above may have a material and potentially lasting adverse
impact on Ericsson’s international product development and global sup-
ply chains and necessitate a flexible and adaptive organizational setup,
therefore impacting its profitability and business as a whole.
1.2 Challenging global economic conditions may adversely impact
the demand, cost and pricing for Ericsson’s products and services as
well as limit the Company’s ability to grow.
Challenging global economic conditions, including due to downturns
in the global economy, political unrest and uncertainty, labor and sup-
ply shortages, increasing inflation and rising interest rates or a period
of elevated interest rates, health epidemics, or geopolitical risks and
trade frictions may have adverse, wide-ranging effects on demand
for Ericsson’s products and for the products and services of Ericsson’s
customers. This could cause operators and other customers to postpone
investments or initiate other cost-cutting measures to maintain or
improve their financial position. This could, in turn, result in signifi-
cantly reduced expenditures for the Company’s products and services,
including network infrastructure. This reduced demand for products
and services could result in increased price competition or deferrals of
purchases, leading to lower revenues not fully offset by reduced costs.
Reduced demand could also result in excess and obsolete inventories
and excess manufacturing capacity, which would have an adverse
impact on Ericsson’s cost base.
Some operators and other customers, in particular in markets with
weak currencies, may encounter funding difficulties and slower traffic
development, which may negatively affect their investment plans and
cause them to purchase fewer of the Company’s products and services.
Increased inflation may impact the Company’s cost base through
increased costs of labor and supply of material, products and services.
Ericsson is particularly exposed to these risks in certain key geographies
where its largest customers are located, such as the United States and
India. It may not be possible to fully compensate for such increased
costs through increased sales prices to the Company’s customers, lead-
ing to lower margins and decreased financial performance. Challenging
macroeconomic conditions could also lead to financial difficulties or
failures among Ericsson’s customers or suppliers, increased demand for
customer finance, difficulties in collection of accounts receivable and an
increased risk of counterparty failures.
Macroeconomic volatility can also lead to increased difficulties in
forecasting sales and financial results, as well as increased volatility
in Ericsson’s reported results and potential impairment losses related
to Ericsson’s intangible assets as a result of lower forecasted sales of
certain products. Should any of the foregoing factors persist or worsen,
the adverse impacts on Ericsson’s business and financial condition could
become more pronounced.
1.3 Ericsson’s business depends upon the continued growth of
mobile communications and the success of Ericsson’s existing and
targeted customer base, which can impact customer demand, as well
as Ericsson’s product mix and margins.
A substantial portion of Ericsson’s business depends on the continued
growth of mobile communications in terms of both the number of sub-
scriptions and usage per subscriber, which in turn drives the continued
deployment and expansion of network systems by Ericsson’s customers.
If communications service providers fail to increase the number of
subscribers and/or usage does not increase, or if they fail to capitalize
on opportunities created through technological evolution, Ericsson’s
business and operating results could be materially adversely affected.
If communications service providers fail to monetize services, fail to
adapt their business models or experience a decline in their revenues or
profitability, their willingness to further invest in their existing and new
networks may decrease, which will reduce their demand for Ericsson’s
products and services and have an adverse effect on the Company’s
business, operating results, and financial condition.
During 2023, macroeconomic conditions, including inflationary
pressures, were more challenging than expected, which has led to
reduced volumes and pace of investment by many of Ericsson’s custom-
ers. The timing and magnitude of market recovery, particularly in North
America, has been slower than expected. There can be no assurance as
to when levels of market investment will recover. Traffic development on
cellular networks could be further affected if more traffic is offloaded to
WI-FI networks, which would have profound effects on operator voice/
broadband/SMS revenues with possible reduced capital expenditures
as a consequence. Additionally, new technologies such as satellite could
be further developed and launched. Ericsson’s strategy depends on the
development and success of global standards. This could be adversely
affected in the future by industry forces more interested in de-facto
standards or geopolitical forces leading to fragmentation of standards
and increased difficulties in creating economies of scale.
Fixed and mobile networks converge and new technologies, such
as IP and broadband, enable communications service providers to
deliver services in both fixed and mobile networks. Ericsson is depend-
ent on the uptake of such services and the outcome of regulatory and
standardization activities such as spectrum allocation. Delays in uptake,
standardization or regulation could adversely affect Ericsson’s business,
operating results, and financial condition.
In addition, Ericsson’s sales volumes and gross margin levels can
be reduced by an unfavorable mix and order time of Ericsson’s prod-
ucts and services. Ericsson’s sales to operators and other customers
represent a mix of equipment, software and services, which normally
generate different gross margins. The operators still represent the main
part of Ericsson’s business and are also the focus for sales going for-
ward. Ericsson provides all of the Company’s customers with solutions
based on Ericsson’s own products as well as third-party products, which
normally have lower margins than Ericsson’s own products. As a con-
sequence, Ericsson’s reported gross margin in a specific period will be
affected by the overall mix of products and services as well as the rela-
tive content of third-party products. In the Company’s Cloud Software
and Services and Other segments, third-party products and services rep-
resent a larger portion of Ericsson’s business than the Company’s tradi-
tional sales, which impact Ericsson’s business models. Further, network
expansions and upgrades have much shorter lead times for delivery
than initial network build outs. Orders for such network expansions and
upgrades are normally placed on a short notice by customers, often less
than a month in advance, and, consequently, variations in demand are
difficult to forecast. As a result, changes in Ericsson’s product and service
mix and the short order time for certain of Ericsson’s products may affect
Ericsson’s ability to accurately forecast sales and margins or detect in
advance whether actual results will deviate from market consensus
and expectations. Product and delivery lead times of certain products
may be prolonged due to the potentially restricted market availability of
certain components caused by supply chain delays. Short-term variation
could have a material adverse effect on Ericsson’s business, operating
results, financial condition and cash flow.
Financial report 2023
Risk factors
107
1.4 Ericsson may not be successful in implementing its key
strategies, including improving profitability, capturing 5G market
opportunities, capitalizing on the GNP and Enterprise opportunity,
or achieving expected benefits from restructuring activities.
There can be no assurance that Ericsson will be able to successfully
implement its strategy to achieve future profitability, growth or create
shareholder value. When deemed necessary, Ericsson has undertaken
and expects to continue to undertake specific restructuring or cost-
saving initiatives; however, there are no guarantees that such initiatives
will be sufficient, successful or executed in time to deliver improvements
in Ericsson’s earnings. Furthermore, this Annual Report includes certain
estimates with respect to addressable markets as well as with respect
to growth rates in the operating segments in which Ericsson operates,
including Networks, Cloud Software and Services, Enterprise and Other.
If the underlying assumptions on which the Company’s estimates are
based prove not to be accurate, the actual performance or addressable
markets and CAGR may be materially different from the estimates pre-
sented in this Annual Report.
Ericsson’s 5G market opportunity will depend on availability of
attractive spectrum for 5G, and time of spectrum allocations, amount
of spectrum, type of frequency bands such as low bands (below 1 GHz),
mid-bands (3–6 GHz) and high bands (above 24 GHz), as well as terms
of spectrum licenses, such as cost and license period of time, may not be
according to needs and plans, which could delay or reduce the 5G mar-
ket. In addition, the operator usage of this spectrum could be restricted
by regulatory authorities for shorter or longer time and in different
geographical areas, due to unforeseen circumstances such as interfer-
ence with other electronic equipment at sensitive locations, e.g. airports.
The Company cannot guarantee that it will not become the subject of
related liability claims (such as product liability or claims associated with
the configuration or installation of equipment), all of which could have a
material adverse impact on Ericsson’s business and reputation.
Operator speed and scale to adopt 5G could also be changed due
to market conditions, including resolution of M&A transactions as well
as government incentives to deploy 5G. Operator 5G deployment plans
could also be delayed by operational issues such as site access, permits,
availability of installation crews. There is also a risk that the scale and
time of 5G deployments will change due to the availability of 5G devices,
not only for launch but also due to the speed with which device prices
will decline to drive mass market adoption. The timing, size and technol-
ogy choices of market opportunities beyond enhanced mobile broad-
band, such as fixed wireline access, industrial IoT and private networks,
may materialize differently than estimated. Ericsson or its suppliers may
encounter unforeseen technical challenges that can affect Ericsson’s
ability to develop, supply or deploy 5G networks.
Ericsson’s future growth is partly dependent on enterprises in several
industries that are digitalizing and increasingly utilizing cellular wireless
solutions (including Private Cellular Networks), as well as increasingly
utilizing and offering automated services, which are growth drivers
for GNP. Ericsson can provide no assurance regarding the timing or
magnitude of growth of its GNP. Competing technologies, such as
Wi-Fi, macroeconomic headwinds, and customers’ unwillingness to pay
for services might slow down this development. Legal and regulatory
restrictions such as Net neutrality can also slow down or restrict global
expansion of this business. Furthermore, access to devices, sensors, and
spectrum might also impact the pace and ability for enterprises to adopt
cellular wireless technology. In addition, as described in Risk Factor 3.3
below, Vonage and Ericsson are engaged in a remediation process relat-
ing to ongoing compliance with obligations under the National Security
Agreement (NSA) entered into in connection with Ericsson’s acquisition
of Vonage. The ongoing compliance efforts and related remediation
may adversely affect the Vonage business, including changes required
to business structure and additional compliance costs.
Furthermore, the Company may not achieve some or all of the
expected benefits of its restructuring activities, and the Company’s
restructuring may adversely affect its business. Restructuring activities
may be costly and disruptive to Ericsson’s business, and Ericsson may
not be able to achieve and retain the cost savings and benefits that were
initially anticipated. Additionally, restructuring activities can result in a
loss of continuity, loss of accumulated knowledge and/or inefficiency
during transitional periods. Reorganization and restructuring can
require a significant amount of management and other employees’
time and focus, which may divert attention from operating and growing
Ericsson’s business. Restructuring activities can create unanticipated
consequences and negative impacts on the business, such as Ericsson’s
ability to develop, sell and deliver its products and services, and there
is no assurance that any ongoing or future restructuring efforts will be
successful or generate expected cost savings. Factors that may impede
a successful implementation include the retention of key employees, the
impact of regulatory matters, and adverse market and macroeconomic
conditions. If Ericsson fails to achieve some or all of the expected ben-
efits of its restructuring initiatives, the Company’s competitive position,
business, financial condition, operating results, cash flows, reputation
and share price could all be negatively impacted.
1.5 Ericsson engages in acquisitions and divestments that may be
disruptive and require the Company to incur significant expenses,
and Ericsson may not be successful in consummating such transac-
tions, protecting the value of acquisitions during integration, or
creating the value anticipated from the acquisition.
In addition to in-house innovation efforts, Ericsson makes acquisitions
to obtain various benefits, such as reduced time-to-market, access to
technology and competence, increased scale or a broadened product
portfolio or customer base. Recent examples are the acquisitions of
Vonage and Cradlepoint. Acquisitions could result in the incurrence of
material contingent liabilities or an increase in amortization expenses
related to intangible assets or impairment of goodwill, which could have
a material adverse effect on Ericsson’s business, operating results, finan-
cial condition and liquidity. Ericsson has recorded impairment charges
related to acquisitions in the past, including a non-cash impairment
charge of SEK 31.9 billion in the third quarter of 2023 related to goodwill
and other intangible assets attributed to Vonage and may record addi-
tional impairment charges in future. Further risks Ericsson could face
with respect to acquisitions include:
– Inability to consummate acquisitions that it considers important to
the future of its business.
– Underperformance of the acquired company, failure to realize
expected benefits and synergies and/or inability to deliver on antici-
pated business plans to the extent or in the timeframe anticipated.
– Insufficiencies of technologies and products acquired, including
unexpected quality problems.
– Difficulties in the full or partial integration of the operations, tech-
nologies, products and personnel of the acquired company to mate-
rialize expected synergies or to maintain independent operations in
these companies at a risk appropriate level.
– Risks of entering markets in which the Company has no or limited
prior experience, or in creating such market or eco-system as envi-
sioned in e.g., the Vonage and Cradlepoint examples.
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Risk factors
Financial report 2023
– Potential loss of key employees.
– Diversion of management’s attention away from other business
concerns.
– Risks and expenses of any disclosed, undisclosed or potential legal
liabilities of or other adverse financial impacts on the acquired
company, including failure to comply with laws or regulations or
other requirements or conditions, e.g., from foreign direct investment
reviews and decisions such as the Committee on Foreign Investment
in the United States (CFIUS) review process. See Risk Factor 3.3 for
further information related to the CFIUS review process.
From time to time, Ericsson also divests parts of its business to opti-
mize the Company’s product portfolio or operations. Any decision to
dispose of or otherwise exit businesses may result in the recording of
special charges, such as workforce reduction costs and industry- and
technology-related write-downs. Risks Ericsson could face with respect
to divestments include:
– Difficulties in the separation of the operations, technologies, products
and personnel of the business divested.
– Potential loss of key employees.
– Impairment losses or write-downs of the carrying value of the rel-
evant assets.
– Expenses of any undisclosed or potential legal liabilities of the busi-
ness divested.
The risks associated with acquisitions and divestments could have a
material adverse effect upon Ericsson’s business, operating results,
financial condition, and liquidity.
1.6 Ericsson has entered into Joint Venture (JV) and partnership
arrangements, and in the future may enter into additional JV or
partnership arrangements, which may not be successful and could
expose the Company to future costs.
Ericsson’s JV and partnership arrangements may fail to perform as
expected for various reasons, including an incorrect assessment of the
Company’s needs and synergies, an inability to take action without the
approval of Ericsson’s partners, difficulties in implementing business
plans, or the lack of capabilities or financial instability of the Company’s
strategic partners. Ericsson’s ability to work with these partners or
develop new products and solutions, e.g., as part of Ericsson’s 5G
portfolio, may become constrained, which could harm the Company’s
competitive position in the market. In addition, any adverse regulatory,
governmental or authority decision towards a partner could negatively
impact Ericsson or the JV, and Ericsson’s brand or reputation could also
be harmed if a partner does not adhere to Ericsson’s Code of Conduct for
Business Partners, including compliance rules. Additionally, Ericsson’s
share of any losses from or commitments to contribute additional capital
or borrowings to such JV and partnership arrangements may adversely
affect Ericsson’s business, operating results, financial condition and cash
flow.
1.7 Ericsson may not be able to properly respond to market trends
in the industries in which it operates, including virtualization of
network functions and fluctuations in investments in the telecom-
munications industry.
Ericsson is affected by market conditions and trends in the industries in
which the Company operates, including the convergence of the IT and
telecommunications industries. Technological developments largely
drive convergences enabling digitalization and a move from dedicated
hardware to software and cloud-based services. This also includes
a disaggregation of the Radio Access Network, although the timing
and extent of this remains unclear. This is changing the competitive
landscape of Ericsson’s business as well as value chains and business
models and affects Ericsson’s objective-setting, risk assessment and
strategies. The change makes access to market easier for new competi-
tors, including new competitors to Ericsson’s business that have entered
and may continue to enter the market, and negatively impacts Ericsson’s
market share in selected areas. If Ericsson fails to understand or antici-
pate market trends and developments or fails to acquire the necessary
competencies to develop and sell products, services and solutions that
are competitive in this changing business environment, the Company’s
business, operating results and financial condition will suffer.
The telecommunications industry has historically experienced down-
turns in which operators substantially reduced their capital spending
on new equipment. Uncertainty surrounding global economic growth
and geopolitical impacts may materially harm actual market conditions,
which could have a material adverse effect on Ericsson’s business.
Moreover, market conditions are subject to substantial fluctuation and
could vary geographically and across technologies. Uncertainties can
have an impact on both the CAPEX driven market as well as the OPEX
market, e.g., Managed Services. Ericsson’s strategy is based on an
expansion towards the Enterprise segment, which is a market that is
more affected by the overall economic conditions than the operator mar-
kets. Even if global conditions improve, conditions in the specific industry
segments in which the Company participates could be weaker than in
other segments. In that case, the Company’s revenue and operating
results may be adversely affected. If capital expenditures by operators
and other customers are weaker than anticipated, the Company’s rev-
enues, operating results and profitability may be adversely affected. The
level of demand from operators and other customers who buy Ericsson’s
products and services can vary over short periods of time, including from
month to month. Due to the uncertainty and variations in the telecom-
munication industry, as well as in the ICT industry, accurately forecast-
ing revenues, results, and cash flow remains difficult.
With 5G volume at scale shifting from early 5G markets into markets
with higher volatility and as Ericsson is establishing business relation-
ship with new customers, the levels of uncertainty and fluctuation
can increase going forward. For example, both sales and profit can be
impacted due to a significant variation in underlying market and/or
product and services mix. Furthermore, Ericsson might fail to anticipate
customer demand properly, leading to an over or under supply of com-
ponents, production capacity and deployment capabilities.
1.8 Ericsson faces intense competition from the Company’s exist-
ing competitors as well as new entrants, including vendor consolida-
tion resulting in stronger competitors.
The markets in which Ericsson operates are highly competitive in terms
of price, functionality, service quality, customization, timing of develop-
ment, and the introduction of new products and services. The Company
faces intense competition from significant competitors, many of which
are very large companies, with substantial technological and financial
resources and established relationships with operators. Additionally,
Ericsson faces competition from more diverse vendors, many of which
are better able to cross-subsidize. Ericsson’s operator customers, which
represent the main part of Ericsson’s business, are also large and highly
sophisticated and exercise significant buying power through the com-
mon use of a competitive bidding process. Ericsson also encounters
increased competition from new market entrants and alternative
Financial report 2023
Risk factors
109
technologies as industry standards evolve. In addition, if Ericsson
chooses to enter a new market segment, it might underestimate the
skills and practices of the relevant competitors. The Company’s competi-
tors may implement new technologies before Ericsson does, offer more
attractively priced or enhanced products, services or solutions, or offer
other incentives that Ericsson does not provide. Some of the Company’s
competitors may also have greater resources in certain business seg-
ments or geographic areas than Ericsson does. Increased competition,
and the crystallization of any of the risks above, could result in reduced
profit margins, loss of market share and increased research and devel-
opment costs, as well as increased sales and marketing expenses, which
could have a material adverse effect on Ericsson’s business, operating
results, financial condition and market share.
Additionally, Ericsson operates in markets in which the technology
and the manner in which it is being brought to market is rapidly chang-
ing. This has resulted and may continue to result in continuous price
pressure on Ericsson’s products and services, especially in light of global
macroeconomic uncertainty. If Ericsson’s counter measures, including
enhanced products and business models or end-to-end cost reductions,
cannot be achieved or do not occur in a timely manner, there could be
adverse impacts on Ericsson’s business, operating results, financial
condition and market share. In addition, vendor consolidation may lead
to stronger competitors who are able to benefit from integration, scale
and greater resources, which could increase competition in Ericsson’s
market. Industry convergence and consolidation among equipment and
services suppliers could potentially result in stronger competitors that
are competing as end-to-end suppliers, as well as competitors more
specialized in particular areas, which could, for example, impact certain
of Ericsson’s segments such as Cloud Software and Services and Other.
If established actors in adjacent markets acquire players with new tech-
nologies in Ericsson’s markets, new strong competitors could emerge.
Consolidation may also result in competitors with greater resources
and market position than Ericsson has. Both of these events could have
a materially adverse effect on Ericsson’s business, operating results,
financial condition and market share.
1.9 Ericsson relies on a limited number of third-party suppliers,
which exposes the Company to supply chain risks.
Ericsson’s ability to deliver according to market demands and contrac-
tual commitments depends significantly on obtaining a timely and
adequate supply of materials, components, production capacity, R&D
and IT services, and other vital services on competitive terms, including
from single-source suppliers in some instances, or in the case of the
development and supply of, for example, key ASIC and FPGA compo-
nents, printed circuit boards, standard electronics or semiconductors
(including foundry node availability) from very few suppliers, on which
Ericsson depends. Some of these suppliers have very limited geographi-
cal redundancy, making them vulnerable to natural disasters, macro-
economic impacts, conflicts or other potentially disruptive events. Due
to the current tensions between the US and China as well as China and
Taiwan, this risk has increased. In addition, for certain suppliers Ericsson
faces risks related to continued supplier concentration.
Accordingly, there is a risk that the Company will be unable to
obtain key supplies it needs to produce Ericsson’s products and provide
Ericsson’s services on commercially reasonable terms, in time, or at all.
This is particularly critical in connection with large projects like the cur-
rent 5G rollout in India. Failure by the Company or any of the Company’s
suppliers could delay or interrupt Ericsson’s products or services supply
or operations and significantly limit sales or increase Ericsson’s costs,
for example through damages. In the event of a supply chain disruption,
it may take significant time to find an alternative supplier or redesign
products to replace components, which could cause significant delays
or interruptions in the delivery of Ericsson’s products and services and
result in a reduction in sales. Ericsson has, from time to time, experi-
enced interruptions of supply, and the Company may experience such
interruptions in the future, which could hamper Ericsson’s ability to
procure adequate supplies at commercially reasonable prices, or at all.
Furthermore, the Company’s procurement of supplies requires
Ericsson to predict future customer demands. If Ericsson fails to antici-
pate customer demand properly, an over or under supply of components
and production capacity could occur. In many cases, some of Ericsson’s
competitors utilize the same manufacturers, and if they have purchased
capacity ahead of Ericsson, the Company could be blocked from
acquiring the needed products. This factor could limit Ericsson’s ability
to supply its customers and increase costs. At the same time, Ericsson
commits to certain capacity levels or component quantities, which, if
unused, will result in charges for unused capacity, unrecoverable costs or
the scrapping of costs used to procure such components. The Company
is also exposed to financial counterpart risks to suppliers when Ericsson
pays in advance for supplies. Such supply disruptions and cost increases
may negatively affect the Company’s business, operating results and
financial condition.
1.10 A significant portion of Ericsson’s revenue is currently gener-
ated from large, multi-year agreements with a limited number of
key customers, and operator consolidation may increase Ericsson’s
dependence on key customers and key markets.
Ericsson derives most of its business from large, multi-year agreements
with a limited number of significant customers, many of whom are
concentrated by industry or product. Many of these agreements are
reviewed on a yearly basis to renegotiate the price for Ericsson’s products
and services and do not contain committed purchase volumes and may
include commitments to future price reductions, requiring the Company
to constantly manage and control its cost base. However, there can be
no assurance that Ericsson’s actions to reduce costs, particularly with
increasing inflation and interest rates, will be sufficient or quick enough
to maintain the Company’s gross margin in such contracts, which may
have a material adverse effect on Ericsson’s business, operating results
and financial condition. In 2023, Ericsson’s largest customer represented
approximately 8% of the Company’s net sales, and its ten largest custom-
ers accounted for 43% of net sales. A loss of or a reduced role with a key
customer could have a significant adverse impact on sales, profit and
market share for an extended period. This concentration also subjects
Ericsson to increased risks regarding the quality of the contractual
arrangements it has in place with key customers. In addition, Ericsson’s
dependence on the sales of certain of Ericsson’s products and services
may have a significant adverse impact on sales, profit and market share.
If the Company’s customers’ financial conditions deteriorate, Ericsson
will be exposed to increased credit and commercial risks. Challenging
financial conditions have impacted some of Ericsson’s customers’ ability
to pay their invoices, and the Company may encounter difficulty col-
lecting accounts receivables and could be exposed to risks associated
with uncollectable accounts receivable. Ericsson has also experienced
demand for customer financing, and in adverse financial markets or
more competitive environments for the customers, those demands may
increase. Upon the financial failure of a customer, the Company may
110
Risk factors
Financial report 2023
experience losses on credit extended and loans made to such customer,
losses relating to Ericsson’s commercial risk exposure, and the loss of the
customer’s ongoing business. If customers fail to meet their obligations
to us, the Company may experience reduced cash flows and experience
losses in excess of reserves, which could have a material adverse effect
on its operating results and financial condition.
In addition, during the past decade, communications service providers
have undergone significant consolidation, resulting in fewer operators
with activities in several countries. This trend is expected to continue
due to competitive pressure. A market with fewer and larger operators
will increase Ericsson’s reliance on key customers and may negatively
impact Ericsson’s bargaining position and profit margins. Moreover, if the
combined companies operate in the same geographic areas, networks
may be shared, and less network equipment and fewer associated
services may be required. Network investments could be delayed by the
consolidation process, which may include, among others, actions relat-
ing to merger or acquisition agreements, securing necessary regulatory
approvals, or integration of businesses. Network operators also share
parts of their network infrastructure through cooperation agreements
rather than legal consolidations, which may adversely affect demand
for network equipment. Accordingly, operator consolidation may have a
material adverse effect on Ericsson’s business, operating results, market
share and financial condition.
In addition, some of the communications service providers may
become more willing to partner with hyperscalers to build and run the
telecom’s access networks. Ericsson risks having more complex rela-
tions wherein new relationships with its customers or competitors could
appear, e.g., Ericsson’s customers could also become its competitors by
selling telecommunications cloud solutions to operators, or Ericsson’s
competitors could also become its partners when its software would
potentially run on their hardware run-time environment. Moreover, com-
munications service providers including Ericsson’s key customers may be
adversely impacted by new competition, especially in rural mobile broad-
band growth affected by the emerging competition from the greenfield
satellite broadband sector. Accordingly, Ericsson’s business may experi-
ence a material adverse effect, including impacts on Ericsson’s operating
sales, operating results, market share and financial condition.
Product, solution or service quality issues could lead to reduced
revenue and gross margins and declining sales to existing and new
customers, as well as penalties, claims or damages. Sales contracts
normally include warranty undertakings for faulty products and often
include provisions regarding penalties and/or termination rights in the
event of a failure to deliver ordered products or services on time or with
required quality, possibly also for damages incurred on customer busi-
nesses. Ericsson’s quality assurance measures may be unable to prevent
certain issues related to reliability, product and service quality, security,
privacy or service performance, which may negatively affect Ericsson’s
reputation, business, operating results and financial condition. This could
also include poor quality of AI-based solutions, or third-party products
that are part of Ericsson’s solutions. If significant warranty obligations
arise due to reliability, security, privacy or quality issues with Ericsson’s
products, solutions or services, Ericsson’s operating results, reputation
and financial position could be negatively impacted by costs associated
with fixing software or hardware defects, including replacement, high
service and warranty expenses, high inventory obsolescence expense,
adapting or creating a replacement service, delays in collecting accounts
receivable or declining sales to existing and new customers.
1.11 Ericsson may not be successful in maintaining technology
leadership, including developing new products and enhancements
to existing products.
Ericsson depends upon the development of new products and enhance-
ments to the Company’s existing products, and the success of Ericsson’s
substantial research and development investments is uncertain. Rapid
technology and market changes in Ericsson’s industry require the
Company to make significant investments in research and develop-
ment to be innovative. Ericsson invests significantly in new technology,
products and solutions, e.g. related to 5G, machine learning, and AI.
To be successful, those technologies, products and solutions must
often be accepted by relevant standardization bodies and/or by the
industries and markets as a whole. The failure of Ericsson’s research
and development efforts to be technically or commercially successful
could have adverse effects on Ericsson’s business, operating results and
financial condition. If Ericsson invests in the development of technolo-
gies, products and solutions that do not function as expected, are not
adopted by the industry, are not ready in time, or are not successful in
the marketplace, the Company’s sales and earnings may materially
suffer. Additionally, it is common for research and development projects
to encounter delays due to changing requirements and unforeseen
problems. Delays in production and research and development may
increase the cost of research and development efforts and put Ericsson
at a disadvantage compared to Ericsson’s competitors. These could
have a material adverse effect upon the Company’s business, customer
relationships, operating results and financial condition.
Ericsson may be unable to meet its Cloud Software and Services
business objectives, and several risks related to market, technology and
operations can impact the plan. 5G market development and subscriber
growth, as well as the uptake of cloud native technologies and conse-
quent adoption of Ericsson’s new offerings, and automated delivery and
life-cycle-management of the products can be slower than expected.
Increased competition from both emerging and established competitors
may impact Ericsson’s market position. The Company could be too slow
to adapt to and adopt new technologies like AI and machine learning to
drive more automation in products, solutions and services. The trans-
formation to the cloud native solutions that 5G core standards are built
on could also include greater complexity and take longer than expected.
In addition, the increasing influence of open-source initiatives could
drive a best of breed approach in Ericsson’s customers, driving prices
down and adversely impact the Company’s full suite of offerings. For
managed services, most contracts span more than one year, with a long
sales cycle for new contracts. Risk of termination and reduced scope or
renegotiation of existing contracts may have a negative impact on sales
and earnings. In the operational dimension, Ericsson may be unable to
successfully execute on continued end-to-end efficiency measures to
simplify the operating model, as well as being unable to mitigate risks
in the customer projects, which could have a material adverse effect on
Ericsson’s business.
Ericsson incorporates Artificial Intelligence (AI) technology in certain
of its products and services and in its business operations. The research
and development of such technology remains ongoing. AI presents
risks, challenges, and unintended consequences that could affect
Ericsson’s and its customers’ adoption and use of this technology. AI
algorithms and training methodologies may be flawed. Additionally,
AI technologies are complex and rapidly evolving, and the Company
faces significant competition in the market and from other compa-
nies regarding these technologies. Ericsson may be unsuccessful in
identifying or resolving AI-related ethical and legal issues before they
arise. Regulation of AI technology is nascent and rapidly changing,
Financial report 2023
Risk factors
111
complicating both compliance and development efforts. AI-related
issues, deficiencies and/or failures could give rise to legal and/or regula-
tory action, including with respect to proposed legislation regulating AI
in certain jurisdictions, such as the European Union, which evolves from
time to time, and as a result of new applications of existing data protec-
tion regulation, which could damage Ericsson’s reputation or otherwise
materially harm its business.
1.12 Ericsson’s ability to benefit from intellectual property rights
(IPRs), which are critical to the Company’s business, may be limited
by changes in regulation relating to patents, inability to prevent
infringement, the loss of licenses to or from third parties, infringe-
ment claims brought against the Company by competitors and
others and changes in the area of open standards when it comes to
licensing of open standard essential patents.
There can be no assurance that the Company’s patents will not be
challenged, invalidated, or circumvented, or that any rights granted
in relation to Ericsson’s patents will in fact provide the Company with
competitive advantages.
Ericsson’s use of a combination of trade secrets, confidentiality poli-
cies, nondisclosure and other contractual arrangements, in addition to
relying on patent, copyright and trademark laws to protect Ericsson’s
IPRs, may not be adequate to prevent or deter infringement or other
misappropriation. In addition, Ericsson relies on many software patents,
and limitations on the patentability of software may materially affect
Ericsson’s business.
Moreover, the Company may not be able to detect unauthorized use
or take appropriate and timely steps to establish and enforce Ericsson’s
proprietary rights. In fact, existing legal systems of some countries in
which Ericsson conducts business offer limited, if any, protection of IPRs.
The Company’s solutions may also require it to license technologies from
third parties. It may be necessary in the future to seek or renew licenses,
and there can be no assurance that they will be available on acceptable
terms, or at all. Moreover, the inclusion in Ericsson’s products of software
or other intellectual property licensed from third parties on a non-
exclusive basis could limit the Company’s ability to protect proprietary
rights in Ericsson’s products.
condition. Using free and open-source software may allow third parties
to further investigate the Company’s software due to the accessibility of
source code. This may in turn make this software more prone to asser-
tions from third parties.
Investigations held by antitrust authorities, court judgments and
legislative change could potentially affect Ericsson’s ability to benefit
from its patent portfolio when licensing patents necessary to conduct an
open standard (e.g. 4G and 5G technology), which could have a material
adverse effect on Ericsson’s business, reputation, operating results and
financial condition. Ericsson holds a leading patent portfolio in open
standards and possible changes regarding such a portfolio may materi-
ally affect Ericsson’s reputation, business, operating results and financial
condition.
Ericsson’s ability to benefit from IPRs may be limited by the loss of
patent licenses to or from third parties. Patent licensing agreements
are generally multi-year and term based and the process for renewal of
these licenses normally requires negotiations, particularly in conjunc-
tion with technology shifts and the introduction of new standards,
such as 5G. Such renewals and negotiations may take time to resolve,
sometimes involve litigation and may have material adverse impacts
on Ericsson’s business and financial position, including on the timing for
and level of revenues from the IPR licensing contract portfolio.
Challenging global economic conditions and political unrest and
uncertainty, geopolitical risks and trade frictions may increase the
uncertainty around the direction of the global cellular eco-systems and
standards, which could have adverse effects on Ericsson’s IPR licensing
revenues as well as on the ability to acquire licenses.
1.13 Ericsson may not be successful in continuing to attract
and retain the highly qualified employees necessary to remain
competitive.
Ericsson believes that the Company’s future success largely depends
on Ericsson’s continued ability to hire, develop, motivate and retain
engineers and other qualified employees who develop successful new
products/solutions, support Ericsson’s existing product range and
provide services to the Company’s customers and create great customer
experience.
Many key aspects of telecommunications and data network technol-
Competition for highly qualified people in the industries in which the
ogy are governed by industry-wide standards usable by all market
participants. As the number of market entrants and the complexity of
technology increases, the possibility of functional overlap and inadvert-
ent infringement of IPRs also increases, which has been the case with
the introduction of 5G technology. In addition to industry-wide stand-
ards, other key industry-wide software solutions are currently developed
by market participants as free and open-source software. Contributing
to the development and distribution of software developed as free and
open-source software may limit Ericsson’s ability to enforce applicable
patents in the future. Third parties have asserted, and may assert in the
future, claims, directly against Ericsson or against Ericsson’s custom-
ers, alleging infringement of their IPRs. Defending such claims may be
expensive, time-consuming and divert the efforts of Ericsson’s manage-
ment and/or technical personnel. As a result of litigation, Ericsson could
be required to pay damages and other compensation directly or to
indemnify Ericsson’s customers for such damages and other compensa-
tion, develop non-infringing products/technology or enter into royalty
or licensing agreements. However, the Company cannot be certain that
such licenses will be available to the Company on commercially reason-
able terms or at all, and such judgments could have a material adverse
effect on Ericsson’s business, reputation, operating results and financial
Company operates remains intense. This competition is only further
increased by the fact that other industries are looking for similar talent.
The Company’s ability to succeed depends in part on maintaining a
favorable corporate reputation that can be adversely impacted by many
factors, including ongoing litigation, investigations, and adverse media
reports. There are no guarantees that Ericsson will be successful in
attracting and retaining employees with the right skills in the future, and
failure in retaining and recruiting could have a material adverse effect on
Ericsson’s business and brand.
1.14 Unforeseen risks and disruptions, whether due to natural or
man-made events, may be highly damaging to the operation of
Ericsson’s business.
Ericsson’s operations are complex, and several critical operations are
centralized in a single location. The Company’s business operations and
those of its suppliers and customers are vulnerable to interruption by fire,
earthquake, hurricane, flood or other natural disasters, power loss, secu-
rity incidents, systems failure, telecommunications failure, pandemics,
such as the COVID-19 pandemic, quarantines, national catastrophes,
terrorist activities, war and other events beyond the Company’s control.
If any disaster were to occur, Ericsson’s or its suppliers’ and customers’
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Risk factors
Financial report 2023
ability to operate could be seriously impaired, and Ericsson could
experience material harm to its business, operating results and financial
condition.
Having outsourced significant portions of Ericsson’s operations, such
as parts of IT, finance and HR operations, Ericsson depends on the per-
formance of external companies, including their security and reliability
measures. Regardless of protection measures, systems and communica-
tions networks are susceptible to disruption due to failure, vandalism,
security incidents, natural disasters, power outages and other events.
Ericsson also has a concentration of operations on certain sites, includ-
ing R&D, production, manufacturing, workforce concentrated areas,
network operation centers, ICT centers and logistic centers and shared
services centers, where business interruptions could cause material
damage and costs. In addition, these disasters could significantly
disrupt Ericsson’s business by, among other things, reducing demand
for its products and services, impairing its customers’ ability to purchase
or pay for its products or services, delaying or preventing its suppliers
from providing the Company with critical components, damaging or
destroying inventory, preventing operators from upgrading their wireless
networks to meet new technology standards, or preventing a significant
number of its employees, including those who perform critical functions,
from performing their duties. Interruptions to Ericsson’s systems and
communications may have an adverse effect on the Company’s opera-
tions and financial condition.
Furthermore, employees and sub-contractors may be put at risk
in areas where Ericsson operates due to these unforeseen risks and
disruptions. Ericsson’s commitment to bring connectivity to the world
involves operations in areas of high risk related to local conflicts, war-
fare, criminality, authoritarian rule, man-made accidents or naturally
caused crises, such as flooding, earthquakes, tsunamis or other natural
disasters. Such situations may risk the lives or welfare of employees,
subcontractors’ employees, or their families, as well as trigger liabilities
under International Humanitarian Law. Ericsson’s internal frameworks,
contractual agreements, protective measures, and emergency response
plans may not be enough to protect employees or subcontractors’
employees from harm. If Ericsson is found to not have done enough to
provide protection or support in such situations, it could have adverse
material effects on its business and reputation and can lead to litigation
and sanctions.
2 Risks related to Ericsson’s financial condition
2.1 Ericsson’s debt increases the Company’s vulnerability to
general adverse economic and industry conditions, limits Ericsson’s
ability to borrow additional funds, and may limit the Company’s flex-
ibility in planning for, or reacting to, changes in Ericsson’s business
and industry.
As of December 31, 2023, Ericsson’s outstanding debt was SEK 46.9
billion and the Company is rated investment grade by S&P Global
(BBB-) and Fitch Ratings (BBB-) and one step below investment grade
by Moody’s (Ba1). This degree of debt and the credit ratings could have
important adverse consequences, including:
– Increasing Ericsson’s vulnerability to general economic and industry
conditions.
– Requiring a substantial portion of cash flow from operations to be
dedicated to the payment of principal and interest on the Company’s
indebtedness, thereby reducing Ericsson’s ability to use its cash flow
to fund the Company’s operations, capital expenditures and future
business opportunities.
– Restricting Ericsson from making strategic acquisitions or causing
Ericsson to make non-strategic divestitures.
– Limiting Ericsson’s ability to obtain additional financing for adjusted
working capital, capital expenditures, debt service requirements,
acquisitions and general corporate or other purposes.
– Limiting the Company’s ability to adjust to changing market condi-
tions and placing Ericsson at a competitive disadvantage compared
to Ericsson’s competitors.
Ericsson may choose to incur substantial additional indebtedness in
the future. If new indebtedness is added to the Company’s current
debt levels, the related risks that Ericsson now faces could increase. If
Ericsson’s financial performance were to deteriorate, the Company may
not be able to generate sufficient cash to service all of its indebtedness
and may be forced to take other actions to satisfy Ericsson’s obligations
under the Company’s indebtedness, which may not be successful.
Ericsson’s ability to make scheduled payments on or to refinance
the Company’s debt obligations depends on its financial condition and
operating performance, which is subject to prevailing economic and
competitive conditions and to certain financial, business and other
factors beyond Ericsson’s control. If Ericsson’s financial performance
were to deteriorate significantly, the Company might be unable to main-
tain a level of cash flows from operating activities sufficient to permit
Ericsson to pay the principal, premium, if any, and interest on Ericsson’s
indebtedness.
If, due to such a deterioration in the Company’s financial perfor-
mance, Ericsson’s cash flows and capital resources were to be insuf-
ficient to fund its debt service obligations, Ericsson may be forced to
reduce or delay investments and capital expenditures, or to sell assets,
seek additional capital or restructure or refinance Ericsson’s indebted-
ness. These alternative measures may not be successful and may not
permit Ericsson to meet Ericsson’s scheduled debt service obligations. In
addition, if the Company were required to raise additional capital in the
current financial markets, the terms of such financing, if available, could
result in higher costs and greater restrictions on its business.
In addition, if Ericsson were to refinance its existing indebtedness, the
conditions in the financial markets at that time could make it difficult to
refinance Ericsson’s existing indebtedness on acceptable terms or at all.
If such alternative measures proved unsuccessful, Ericsson could face
substantial liquidity problems and might be required to dispose of mate-
rial assets or operations to meet the Company’s debt service and other
obligations.
Furthermore, Ericsson relies on various sources for short-term and
long-term capital for the funding of the Company’s business. Should
such capital become unavailable or available in insufficient amounts
or on unreasonable terms, Ericsson’s business, financial condition and
cash flow may materially suffer. Ericsson’s business requires a signifi-
cant amount of cash. If Ericsson does not generate sufficient amounts
of capital to support the Company’s operations, service its debt and
continue Ericsson’s research and development and customer finance
programs, or if the Company cannot raise sufficient amounts of capital
at the required times and on reasonable terms, Ericsson’s business,
financial condition and cash flow are likely to be adversely affected.
Access to funding may decrease or become more expensive as a result of
Ericsson’s operational and financial condition, market conditions, or due
to deterioration in Ericsson’s credit rating. There can be no assurance
that additional sources of funds that Ericsson may need from time to
time will be available on reasonable terms or at all. If the Company can-
not access capital on a commercially viable basis, Ericsson’s business,
financial condition and cash flow could materially suffer.
Financial report 2023
Risk factors
113
2.2 Due to having a significant portion of Ericsson’s costs in SEK
and revenues in other currencies, the Company’s business is exposed
to foreign exchange fluctuations that could negatively impact its
revenues and operating results.
Ericsson incurs a significant portion of the Company’s expenses in
SEK. As a result of Ericsson’s international operations, Ericsson gener-
ates, and expects to continue to generate, a significant portion of the
Company’s revenue in currencies other than SEK. To the extent Ericsson
is unable to match revenue received in foreign currencies with costs paid
in the same currency, exchange rate fluctuations could have a negative
impact on Ericsson’s consolidated income statement, balance sheet and
cash flows when foreign currencies are exchanged or translated to SEK,
which increases volatility in reported results.
As market prices are predominantly established in US dollars or
Euros, Ericsson presently has a net revenue exposure in foreign curren-
cies, which means that a stronger SEK exchange rate would generally
have a negative effect on Ericsson’s reported results. The Company’s
attempts to reduce the effects of exchange rate fluctuations through a
variety of natural and financial hedging activities may not be sufficient
or successful, resulting in an adverse impact on Ericsson’s results and
financial condition.
2.3 Impairment of goodwill, other intangible assets, property
and equipment (PP&E) and right-of-use (RoU) assets leased by the
Company have impacted and may continue to negatively impact
Ericsson’s financial condition and operating results.
Ericsson has a significant amount of these assets; for example, patents,
customer relations, trademarks, software, PP&E and RoU.
Goodwill is the only intangible asset the Company has recognized to
have an indefinite useful life. Other intangible assets are mainly amor-
tized on a straight-line basis over their estimated useful lives, and the
assets are reviewed for impairment whenever events such as product
discontinuances, product dispositions or other changes in circumstances
indicate that the carrying amount may not be fully recoverable. Those
intangible assets not yet in use are tested for impairment annually.
Historically, the Company has recognized impairment charges mainly
due to restructuring, which is usually limited, but occasionally signifi-
cant. Additional impairment charges may be incurred in the future and
could be significant due to various reasons, including strategy changes,
restructuring actions or adverse market conditions that are either
specific to Ericsson or the broader industries in which Ericsson operates,
or more general in nature and that could have an adverse effect on
Ericsson’s operating results and financial condition. For example, in the
third quarter of 2023, Ericsson recorded a non-cash impairment charge
of SEK 31.9 billion related to goodwill and other intangible assets attrib-
uted to Vonage due to the significant drop in the market capitalization
of Vonage’s publicly traded peers, increased interest rates and overall
slowdown in Vonage’s core markets.
Negative deviations in actual cash flows compared to estimated cash
flows as well as new estimates that indicate lower future cash flows
might result in recognition of impairment charges. Other impairment
indicators, such as the impact of increased interest rates, inflation,
macroeconomic conditions, and other market events can also lead to
the recognition of impairment charges. Non-cash impairment charges
reduce the Company’s non-restricted equity. The impairment charge
referred to above represented 50% of the total amount of goodwill
and other intangible assets attributed to Vonage. The impairment was
reported in segment Enterprise as an item affecting comparability.
Estimates require management judgment as well as the definition of
cash-generating units for impairment testing purposes. Other judgments
might result in significantly different results and may differ from the
actual financial condition in the future.
3 Legal and regulatory risks
3.1 Ericsson could experience penalties and adverse rulings in
enforcement or other proceedings, breach of contract claims and/
or loss of revenue for non-compliance with laws, rules and regula-
tions governing its business. Compliance with existing or changed
laws, rules or regulations may subject Ericsson to increased costs or
reduced products and services demand and may adversely affect
Ericsson’s development efforts.
Ericsson is subject to applicable laws, rules and regulations in multiple
jurisdictions. The Company could experience penalties and adverse
rulings in enforcement or other proceedings for non-compliance with
applicable laws, rules or regulations governing its business, which could
have a material adverse effect on Ericsson and its customers, including
its reputation, business, financial condition, operations, research and
development, operating results, cash flows, prospects or its current or
future customer relationships, including both private and government
customers. While Ericsson strives for compliance, the burden of monitor-
ing and maintaining compliance across global operations in a rapidly
changing world and evolving industry is significant. The Company has
not been in compliance with all such laws, rules and regulations in the
past and cannot assure that all past violations have been addressed
or that additional violations will not occur in the future. Ericsson’s
non-compliance with laws, rules and regulations may also affect its
customers’ compliance requirements and/or lead to actual or perceived
breach of Ericsson’s contractual obligations to its customers resulting in
contract claims and loss of revenue. It may also impact Ericsson’s ability
to gain new customers.
Further changes in laws, rules or regulations could subject Ericsson
to liability, increased costs, or reduced products and services demand,
market access restrictions, inability to deliver products of certain origin
and have a material adverse effect on Ericsson, including its reputation,
business, financial condition, operating results, cash flows or prospects.
Changes to laws, rules or regulations may adversely affect both
Ericsson’s customers’ and the Company’s own operations. For example,
regulations imposing more stringent, time-consuming or costly planning
and zoning requirements or building approvals for radio base stations
and other network infrastructure could adversely affect the timing and
costs of network construction or expansion, and ultimately the commer-
cial launch and success of these networks. Similarly, tariff and roaming
laws, regulations or rules on network neutrality could also affect com-
munications service providers ability or willingness to invest in network
infrastructure, which in turn could affect the sales of Ericsson’s systems
and services. Additionally, delay in radio frequency spectrum allocation,
and allocation between different types of usage may adversely affect
communications service provider spending or force Ericsson to develop
new products to be able to compete. Furthermore, the rapid develop-
ment and deployment of tools that leverage AI is also causing govern-
ments to consider regulation of AI, even for AI that does not pertain to
personal data.
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Financial report 2023
Further, Ericsson develops many of its products and services based
on existing laws, rules, regulations and technical standards. Changes to
existing laws, rules, regulations and technical standards, or the imple-
mentation of new laws, rules, regulations, restrictions and technical
standards relating to products and services not previously regulated,
could adversely affect Ericsson’s development or supply efforts by
increasing compliance costs and causing delay or disruptions. Demand
for those products and services could also decline. Regulatory changes
related to e.g. license fees, environment, health and safety, security, data
localization, privacy (including the cross-border transfer of personal
data for example between the EU and the US), and other regulatory
areas may increase costs and restrict Ericsson’s operations or the
operations of network operators. Also, indirect impacts of such changes
and changes to laws, rules or regulations in other fields, such as pricing
regulations, could have an adverse impact on Ericsson, even though the
specific laws, rules or regulations may not apply directly to the Company
or its products.
3.2 Ericsson’s substantial international operations are subject to
uncertainties that could affect the Company, including its reputa-
tion, business, financial condition, operating results, cash flows or
prospects.
Ericsson conducts business throughout the world and is subject to the
effects of general global economic conditions as well as conditions
unique to specific countries or regions. The Company has customers
in more than 180 countries, with a significant proportion of Ericsson’s
sales to emerging markets in the Asia Pacific region, Latin America,
Eastern Europe, the Middle East and Africa. Ericsson’s extensive global
operations subject the Company to additional risks on many fronts,
including civil disturbances, acts of terrorism, acts of war, economic and
geopolitical instability and conflict, potential misuse of technology lead-
ing to human rights violations, pandemics, the imposition of exchange
controls, economies that are subject to significant fluctuations, nation-
alization of private assets or other governmental actions affecting the
flow of goods and currency, effects from changing climate and difficulty
of enforcing agreements and collecting receivables through local legal
systems.
Further, in certain markets in which Ericsson operates, there is a risk
that national governments actively favor or establish local vendors or
introduce requirements for local content in their respective markets at
the expense of foreign competitors or introduce other requirements
impacting how Ericsson can provide products and services to its cus-
tomers. The implementation of such measures could adversely affect
Ericsson’s sales, Ericsson’s market share and its ability to purchase or
supply critical products or components.
Compliance with applicable export control regulations and sanc-
tions or other trade embargoes in force is paramount for the Company.
The geopolitical situation in parts of the world, particularly in Russia/
Ukraine, parts of the Middle East and China, remains uncertain, and
the level of export controls and sanctions is still relatively high from a
historical perspective. This level could even increase, thus significantly
impacting Ericsson’s operations where such increase occurs, including
in these markets. The most recent increase in export controls has par-
ticularly targeted China’s ability to develop advanced super computers
and artificial intelligence, including the semiconductors needed for
those operations. A universal element of the sanctions is the financial
restrictions with respect to individuals and legal entities, but sanctions
can also restrict certain exports and ultimately lead to a complete trade
embargo towards a country. During the last few years, the global free
trade system has been under sustained attack, which has increased
the risk of states adopting policies and actions that violate WTO agree-
ments. Further, there is a risk in many countries of unexpected changes
in regulatory requirements, tariffs and other trade barriers, price or
exchange controls, restrictions of imports, or other governmental poli-
cies that could limit Ericsson’s operations and decrease Ericsson’s profit-
ability. Furthermore, export control regulations, sanctions or other forms
of trade restrictions targeting countries in which Ericsson is active may
result in a reduction of commitment in those countries. As an example,
an escalation of trade tensions between the US and China has resulted
in additional trade restrictions including export controls, and increased
tariffs, which if further negatively developed could harm the Company’s
ability to compete effectively in Chinese markets or with Chinese com-
panies and negatively impact Ericsson’s operations in the country. The
need to terminate activities as a result of further trade restrictions may
also expose Ericsson to customer claims and other inherent risks. The
export control and sanctions laws, rules and regulations are complex,
frequently changing and increasing in number; and the Company has
not been in compliance with all such export control and sanctions rules
or regulations in the past, and cannot assure that all past violations
have been addressed or that additional violations will not occur in the
future. Such violations could have material adverse effects on Ericsson,
including its reputation, business, financial condition, operating results,
cash flows, or prospects and could constitute a violation of the Plea
Agreement (as defined below) or the consent judgment with the US
Securities and Exchange Commission (SEC).
Ericsson’s business operations are complex, involving the develop-
ment, production and delivery of telecommunications solutions to
customers in a very large number of jurisdictions. Each jurisdiction has
its own tax laws, rules and regulations subject to updates or changes in
interpretation or enforcement, and the Company has to comply with the
relevant laws, rules and regulations in each of these countries. These
laws, rules and regulations involve income taxes and indirect taxes such
as VAT and sales taxes as well as withholding taxes on domestic and
cross border payments and social security charges related to Ericsson’s
employees. Constant changes in the laws, rules or regulations and the
interpretation thereof also create exposures regarding taxes. This results
in complex tax issues and tax disputes that may lead to additional tax
payment obligations. Being a global operation, Ericsson also faces the
risk of being taxed for the same income in more than one jurisdiction
(double taxation). This could have adverse effects on Ericsson, includ-
ing its reputation, business, financial condition, operating results, cash
flows, or prospects.
There has been a concern reported by some media and others, that
certain countries may use features of their telecommunications systems
in ways that could result in actual or potential violation of human rights,
among others. This may adversely affect the telecommunications busi-
ness and may have a negative impact for people and Ericsson. All of the
above may have a material and potentially lasting adverse impact on
Ericsson, including its reputation, business, including sales market share,
market access, supply chain and R&D activities, financial condition,
operating results, cash flows, or prospects.
Financial report 2023
Risk factors
115
3.3 Ericsson is subject to certain US and other anti-corruption
(including anti-bribery, anti-money-laundering, sanctions, terror
finance and anti-terrorism) laws, rules and regulations and other
regulatory requirements or conditions imposed as a result of foreign
direct investment reviews and decisions. Ericsson may be subject to
further adverse consequences under the Plea Agreement with the
United States Department of Justice (DOJ) and the injunction issued
in connection with the 2019 settlement with the SEC, as well as other
investigations by governmental authorities.
Ericsson is, from time to time, involved in legal proceedings and regula-
tory investigations, and is subject to certain other regulatory require-
ments, conditions and agreements. If any of these lawsuits or legal
proceedings are determined unfavorably against the Company or it is
determined that the Company is not in compliance with any of these
regulatory requirements, conditions or agreements, the Company could
be required to pay substantial damages, fines and/or penalties, be sub-
ject to public scrutiny, negative reputational consequences, or become
subject to additional enforcement actions, regulatory review and/or
adverse decisions. Ericsson could face potential debarment from gov-
ernment contracting in the United States and elsewhere, reputational
risk, as well as potential counterparty reluctance to continue business
relationships. In addition, these ongoing matters and investigations
require significant resources and costs for investigation, compliance
and remediation that could lead to adverse financial and reputational
consequences.
For example, in connection with the acquisition of Vonage by
Ericsson, and as a condition to CFIUS’s approval of the acquisition,
Vonage, Ericsson and the DOJ and the US Department of the Treasury,
in their capacity as CFIUS monitoring agencies (CMAs), entered into a
NSA in July 2022, which imposes restrictions on access to certain types
of sensitive data, equipment and systems. Vonage and Ericsson are
engaged and cooperating with the CMAs in relation to ongoing compli-
ance with the NSA restrictions, related remediation efforts to address
concerns raised by the CMAs regarding such access, and the CMAs’
requests for information. The ongoing compliance efforts and related
remediation may adversely affect the Vonage business, including
changes required to business structure and additional compliance costs.
In addition, violations of a CFIUS mitigation agreement, such as the
NSA, can result in an enforcement action imposing monetary penalties
or other remedies.
determinations on the outcome of any such investigation until the
process is completed. The scope and duration of the remaining process
remains uncertain.
If Ericsson fails to meet its continuing obligations and is found to
have breached the Plea Agreement, the Company could face further
adverse consequences, including additional costs and liability result-
ing from ongoing compliance liabilities with the Plea Agreement and
extended monitorship, including prosecution for additional federal
criminal violations, as well as other investigations by governmental
authorities.
For additional information regarding certain of the legal proceedings
and inquiries in which Ericsson is involved, see “Legal proceedings” in
the Board of Directors’ Report.
3.4 Ericsson is involved in lawsuits, legal proceedings and regula-
tory investigations, which, if determined unfavorably, could require
the Company to pay substantial damages, fines and/or penalties.
Ericsson is involved in legal proceedings in the ordinary course of its
business. These proceedings include matters such as commercial
disputes, intellectual property rights disputes, labor disputes and any
government or authority inquiry or investigation, e.g., antitrust and tax,
disputes. Legal proceedings can be expensive, lengthy and disruptive
to normal business operations. Moreover, the results of complex legal
proceedings are difficult to predict. An unfavorable resolution of a par-
ticular matter could have a material adverse effect on Ericsson’s busi-
ness, operating results, financial condition and reputation. As a publicly
listed company, Ericsson may be exposed to lawsuits in which plaintiffs
allege that the Company or its officers have failed to comply with securi-
ties laws, stock market regulations or other laws, regulations or require-
ments. Whether or not there is merit to such claims, the time and costs
incurred to defend the Company and its officers and the potential settle-
ment or compensation to the plaintiffs could have significant impact on
Ericsson’s reported results and reputation.
In addition, the Company is from time to time and may in the future
be subject to additional inquiries, litigation or other proceedings or
actions, regulatory or otherwise, arising in relation to the matters
described above and related or other litigation and investigative
matters. An unfavorable outcome of any such litigation or regulatory
proceeding or action could have a material adverse effect on Ericsson’s
business, financial condition and operating results.
In addition, as previously reported, the Company reached a resolu-
For additional information regarding certain of the legal proceedings
tion (Plea Agreement) in March 2023 with the DOJ regarding the
non-criminal breaches of its DPA. Under the Plea Agreement, Ericsson
pleaded guilty to previously deferred charges relating to conduct prior
to 2017. In addition, Ericsson agreed to pay a fine of USD 206.7 million.
The entry of the Plea Agreement brought the DPA to an end. As set
forth in the Plea Agreement, Ericsson has certain continuing obliga-
tions through June 2024, including cooperation, reporting evidence or
allegations of potential Foreign Corrupt Practices Act (FCPA) violations,
continuing to engage an independent compliance monitor and continu-
ing to improve its compliance program and internal controls.
The Company’s 2019 internal Iraq investigation did not conclude
that Ericsson made or was responsible for any payments to any terrorist
organization. With respect to the matters discussed in the 2019 internal
Iraq investigation report, the Company continues to investigate these
matters and related matters in full cooperation with the DOJ and the
SEC. As additional information continues to be identified and evaluated
during the ongoing investigation in continued cooperation with the
DOJ and the SEC, it is expected that there will not be any conclusive
and inquiries in which Ericsson is involved, see “Legal proceedings” in
the Board of Directors’ Report.
3.5 Ericsson is subject to a broad range of rapidly evolving privacy,
security and data localization regulations, as well as corresponding
contractual obligations, and may be subject to regulatory penalties
and/or breach of contract claims for failure to comply.
Ericsson and certain of its third-party providers receive, store, handle,
transmit, use and otherwise process proprietary information belonging
to the Company’s business and information about actual and prospec-
tive customers, end users, employees and service providers, including
personal information (collectively, “Confidential Information”). More
stringent privacy, security and data localization regulations are develop-
ing at a rapid pace in many countries and markets in which Ericsson
operates, including the General Data Protection Regulation (EU/UK),
and national privacy regimes in India, China and some states of the
United States (such as the California Consumer Privacy Act and similar
laws in other states). These regulations require subject entities to,
116
Risk factors
Financial report 2023
among other things, notify individuals about how personal information
is used and provide individuals certain rights with respect to such infor-
mation, including rights to access, correct and delete such information
and to opt-out of certain uses and disclosures of such information. In
addition, cybersecurity regulatory requirements are evolving, including
regulations and laws related to cybersecurity incident notifications,
supply chain security, and baseline cybersecurity requirements in the EU,
US, UK and India, which may be applicable to Ericsson’s internal opera-
tions, portfolio and customers’ operations.
Ericsson is also subject to contractual obligations to its customers
and third parties relating to privacy, security and use of data generally,
which, amongst other things, requires Ericsson to ensure appropriate
security and limit the use of customer data, including personal informa-
tion. While Ericsson strives to comply with applicable privacy, security
and data localization regulations and its contractual obligations, the
complexity, uncertainty, pace of implementation of new laws, chal-
lenges in applying the concepts to new technologies and contradictions
in local and regional privacy, security and data localization regulations
may mean that Ericsson is found to be non-compliant with these
requirements or its contractual obligations, and subject to penalties and
breach of contract claims, along with potential damage to Ericsson’s
brand and reputation. Ericsson continues to periodically review its
privacy and cybersecurity compliance across its global operations to
comply with these varied global and ever-changing requirements, which
does and will continue to require significant investments and resources.
For example, as part of this review cycle, Ericsson is reviewing data
management in connection with its customer support function and is in
the process of identifying and implementing certain changes, for exam-
ple, changes to data access and amendments to customer contracts and
policies and procedures. Due to the diverse nature worldwide of privacy,
security and data localization regulations, any single incidence of non-
compliance, or serious breach of confidentiality or disruption of secure
operations, by Ericsson may lead to regulatory agencies in various juris-
dictions levelling separate penalties or judgments against Ericsson. Due
to the nature of Ericsson’s business, which often involves telecommuni-
cations and critical infrastructure, and the amount of personal informa-
tion of which Ericsson is the controller or processor, such an event could
have far-ranging consequences, such as orders to change its operations
or cease processing personal information, even if it was accidental or
caused by a third party outside of the control of Ericsson. Consequences
could include large fines, as well as significant damage claims and the
loss of trust of customers, end users and employees, which may have
material adverse effects on Ericsson’s business, reputation, financial
condition and operating results and may require it to change its business
practices and potentially the services, features, integrations and other
capabilities of its offerings.
3.6 Ericsson may be found non-compliant with existing, new and
emerging human rights and environmental due diligence regulations
and may be subject to administrative penalties and/or civil liability.
The regulatory landscape addressing corporate conduct in relation to
human rights and environmental impacts is rapidly evolving. New legis-
lation, imposing more stringent due diligence requirements (for example
the US Uyghur Forced Labor Prevention Act (UFLPA), the Norwegian
Transparency Act, the UK Modern Slavery Act, France’s Duty of Vigilance
Law, the German Supply Chain Due Diligence Law), has already
entered into force and requires Ericsson to assess risks from a full supply
chain perspective, beyond first-tier suppliers. Additionally, emerging
legislation from the European Union (the Corporate Sustainability
Due Diligence Directive and the Forced Labor Ban Regulation) will put
additional significant requirements on Ericsson to adopt and refine
additional mechanisms to identify, address, prevent and mitigate certain
human rights and environmental risks in its operations and business
relationships and on Ericsson’s Board of Directors to oversee these
matters. Because of this existing and future regulation, Ericsson may
be expected to engage in increasingly more detailed due diligence with
respect to its third parties, such as customers, suppliers and employees,
some of which may not have the controls and data necessary to assist
Ericsson with its compliance. Due to the global reach of these legisla-
tions, impacts in any country of operation or where Ericsson engages
with suppliers, customers or other third parties may lead to non-com-
pliance and thereby potential administrative penalties or civil or other
liability or reputational harm. Moreover, the UFLPA and the upcoming
EU Forced Labor Ban Regulation, enable customs authorities to seize
and destroy shipments that include components produced with forced
labor, unless the company in question provides credible evidence of full
supply chain due diligence efforts that prove the absence of forced labor.
Such actions by law enforcement would have significant financial and
reputational impacts on Ericsson’s operations and business relation-
ships. In order to comply with the relevant legislation, Ericsson needs
to endeavor to increase supply chain transparency and knowledge of
supplier base and material content. Ericsson might also need to shift
its supply chains from high-risk countries, which could have adverse
financial implications, including increasing the total costs associated
with its businesses.
4 Cybersecurity risks
4.1 Vulnerabilities (and threat actors exploiting vulnerabilities),
including in Ericsson’s products, services and operations may lead to
compromise of identities, target of work force, misuse of accounts,
network disruption, cybersecurity incidents, and material harm to
Ericsson or Ericsson’s customers, any of which may have a material
adverse effect on Ericsson’s business, operations, financial perfor-
mance, customer and vendor relationships, reputation and brand,
and may lead to significant penalties or litigation, or to regulatory
investigations or actions.
Ericsson relies on computer systems, hardware, software, technology
infrastructure and networks for both internal and external operations
that are critical to its business (collectively, “IT Systems”). Ericsson
develops, owns and manages some of these IT Systems but also relies
on third parties for a range of IT Systems and related products and
services, including but not limited to cloud computing services. Ericsson
faces numerous and evolving cybersecurity risks, including from diverse
threat actors, such as state-sponsored organizations, opportunistic
hackers and hacktivists, as well as through diverse attack vectors, such
as social engineering/phishing, malware (including ransomware),
malfeasance by insiders, human or technological error, and as a result
of bugs, misconfigurations or exploited vulnerabilities in software or
hardware.
Cyberattacks and security incidents are expected to accelerate in
both frequency and impact as attacks are increasingly sophisticated and
utilize tools and techniques that are designed to circumvent controls,
Financial report 2023
Risk factors
117
avoid detection, and remove or obfuscate forensic evidence, which
means that Ericsson may be unable to detect, investigate, contain or
recover from future attacks or incidents in a timely or effective manner.
For example, the presence of vulnerabilities in Ericsson’s products,
services or operations, may not be detected during product develop-
ment and operations, and may be leveraged by a threat actor to cause
material harm to Ericsson or Ericsson’s customers. Vulnerabilities in
Ericsson’s products, solutions or services not detected and treated
during product development or solution delivery may be exploited
by a threat actor to cause harm to Ericsson’s customers, end users or
Ericsson. Vulnerabilities could be brought in through different stages
of the product life cycle. In some situations, it may be hard to detect
these vulnerabilities due to their location, or due to the fact that they are
unknown or “zero-day” vulnerabilities. As almost any modern software
can contain open source and third-party components, so does software
in networks, and unmitigated security exposures can put Ericsson cus-
tomers at varying levels of risk and expose Ericsson to liabilities or loss of
business.
Moreover, threat actors exploiting vulnerabilities in Ericsson’s
IT Systems, processes or personnel due to insufficient implementa-
tion of controls, such as lack of access management or use of more
sophisticated attack techniques could result in security incidents that
may impact the confidentiality, availability or integrity of Ericsson’s IT
Systems, Confidential Information, personnel, products, services, or
solutions. These incidents may include data breaches, intrusions, espio-
nage, disruptive attacks utilizing malware (such as ransomware or other
extortion-based tactics), exploitation of hardware or software vulner-
abilities, bugs, hardware or software misconfigurations in Ericsson’s
IT Systems, data privacy infringements, leakage of Confidential
Information, unauthorized or accidental usage or modification of
data or accounts and general malfeasance. For example, in 2023, an
anonymous individual or group of individuals obtained and exploited
unlawful access to a system Ericsson uses to interface externally with
its customers to remove a small number of non-sensitive materials from
that system. While Ericsson did not experience significant financial loss,
data theft, encryption or any significant disruptions to normal business
operations, by reason of the incident, Ericsson further fortified security
measures in the impacted system in response to the intrusion.
Ericsson utilizes third parties to a large extent to whom the Company
has outsourced significant aspects of Ericsson’s IT Systems, product
development, services, finance and other internal and external-facing
operations. Events or incidents caused as a result of vulnerabilities
in their operations or products could have a material adverse effect
on Ericsson, Ericsson’s business, potentially disrupting operations,
leaking valuable or sensitive information, personal data or damaging
Ericsson’s products that have been installed in the Company’s custom-
ers’ networks. Furthermore, Ericsson has acquired and continues to
acquire companies that may have cybersecurity vulnerabilities and/or
unsophisticated security measures, which may expose the Company to
significant cybersecurity, operational, and financial risks.
A cybersecurity incident in Ericsson’s operations or supply chain could
have an adverse impact on the integrity of solutions or services provided
by Ericsson as well as Ericsson’s ability to comply with legal, regulatory
or contractual requirements. These incidents may include tampering
with components, the inclusion of backdoors or implants, the uninten-
tional inclusion of vulnerabilities in components or software, and cyber-
security incidents which prevent a supplier from being able to fulfil com-
mitments to Ericsson. In the past few years, widely publicized incidents
involving third parties such as SolarWinds and Apache’s Log4j software
are examples of situations in which cyberattacks on supply chain players
affected companies that utilized their products and services.
Any cybersecurity incident including unintended use, misconfigura-
tion, or unintended actions, involving Ericsson’s operations, supply
chain, product development, services, third-party providers or installed
product base, could cause severe harm to Ericsson. For example, a
misconfiguration incident in 2023 led to a data breach that Ericsson
reported to certain EU data protection authorities as well as certain
customers and employees.
Ericsson’s IT Systems and storage and other business applications,
and the systems, storage and other business applications maintained
by the Company’s third-party providers, have been in the past, and are
expected to be in the future, subject to cybersecurity incidents. Ericsson
expects continued attempts to gain unauthorized access to breach
Ericsson’s IT Systems and/or Confidential Information, and other forms
of malfeasance and disruptive attacks. In some cases, such incidents are
difficult to anticipate or to detect immediately and the damage caused
thereby. Ericsson also cannot guarantee that a material incident will not
occur in the future.
If an actual or perceived breach of security occurs in Ericsson’s net-
work or any of its third-party providers’ networks, Ericsson could incur
significant costs, and the Company’s reputation could be harmed. While
Ericsson works to safeguard Ericsson’s internal network systems and
assess and validate the security of the Company’s third-party providers
to mitigate these potential risks, including through security requirements
and employee awareness and training, there is no assurance that such
actions will be sufficient to prevent security incidents. Ericsson cannot
guarantee that the Company’s cybersecurity program and processes will
be fully implemented, complied with or effective in protecting Ericsson’s
IT Systems and Confidential Information. Any insurance that Ericsson
carries may be partially or wholly insufficient to cover losses or costs
associated with responding to and remediating any or all cybersecurity
incidents that the Company may experience.
In addition, insiders may steal or monitor Confidential Information
or disrupt networks related to Ericsson or its customers, through techno-
logical or non-technological means. To gain strategic access or to steal
specific information, competitors or governments may induce insiders or
recruit employees who sell information or services for personal gain. Any
insider incident could cause severe harm to Ericsson.
If identities in Ericsson are misused or compromised, it can be difficult
to differentiate authorized parties undertaking normal account activi-
ties from the threat actor’s use of a compromised identity or credential.
Ericsson’s identity and access management routines are required
to access Ericsson’s customers’ networks, and any limitation of this
capability would adversely impact Ericsson’s ability to offer services and
products to Ericsson’s customers.
Furthermore, threat actors may target employees, or other members
of Ericsson’s workforce, through technological and non-technological
means. Recent trends have shown that there is a willingness to target
end users, rather than the entire enterprises. This has manifested itself
in the rise of threats such as ransomware, phishing, spear phishing,
spoofing and other extortion methods. With a diverse workforce of
approximately 100,000 employees, Ericsson is susceptible to risks of
disruption or information loss resulting from large scale attacks towards
Ericsson’s employees, or society at large. Additionally, remote and hybrid
working arrangements at Ericsson (and at many third-party providers)
also increase this risk due to the challenges associated with managing
118
Risk factors
Financial report 2023
remote computing assets and security vulnerabilities that are present in
many non-corporate and home networks.
The forgoing risks are increasing and rapidly evolving, and any of the
above could result in a material adverse effect on Ericsson’s business,
operations, financial performance, customer and vendor relationships,
reputation and brand and result in financial penalties, litigation, regula-
tory investigations and other governmental actions.
5 Environmental, social and business conduct risks
5.1 Failure to comply with environmental, social and business
conduct regulations and laws in applicable jurisdictions may expose
Ericsson to significant penalties and other sanctions or liabilities.
Ericsson is subject to environmental, social and business conduct laws,
rules and regulations as well as related requirements, which apply to
Ericsson’s operations, facilities, products and services. Ericsson expects
these laws, rules and regulations and the burdens associated with com-
plying with them to increase as governments impose new laws, rules,
regulations and other requirements. Ericsson’s measures for managing
compliance with these laws, rules, regulations and other requirements
may not be effective at avoiding potential liabilities arising from
Ericsson’s current, historical and future processes and operations.
Ericsson has failed to comply with these laws, rules, regulations and
other requirements in the past, and if it fails to comply in future, the
Company could be subject to significant penalties and other sanctions
or liabilities that could have a material adverse effect on Ericsson. The
Company’s suppliers’ adherence to Ericsson’s Code of Conduct for
Business Partners and laws related to environmental, social and busi-
ness conduct is also subject to risk. If suppliers do not adhere to the Code
of Conduct for Business Partners and laws related to environmental,
social and business conduct, this could also have a material adverse
effect on Ericsson. Additionally, there is a risk that Ericsson may have
to incur expenditures to cover environmental, occupational health and
safety-liabilities to maintain compliance with current or future appli-
cable laws and regulations or to undertake any necessary remediation.
Future regulations or judgments could have a significant adverse effect
on Ericsson. These changing rules, regulations, and stakeholder expec-
tations have resulted in, and are likely to result in, increased general and
administrative expenses and increased management time and atten-
tion. For example, developing and acting on environmental, social and
business conduct initiatives, and collecting, measuring, and reporting
environmental, social and business conduct information and metrics
can be costly, difficult and time consuming and is subject to evolving
reporting standards. Failure to manage the foregoing risks could have
an adverse impact on Ericsson’s business, operating results, financial
condition, reputation and brand.
There is also an increased demand from external stakeholders, for
example non-governmental organizations and investors, on transpar-
ency about environmental, social and business conduct issues that
might be difficult to fulfil, including expectations that the Company
make commitments. If Ericsson fails to adequately meet these expecta-
tions or timely meet any related goals or commitments, its business
and reputation may be adversely affected. In addition, the Company’s
disclosures regarding such matters may make the Company the target
of activists, regulators and others who want the Company to take dif-
ferent approaches on such matters or provide additional disclosures
or commitments, and such engagement could result in increased costs
or reputational damage. Certain of Ericsson’s disclosures and com-
mitments regarding such matters may be based in part or in whole on
third-party information or third-party performance, and Ericsson cannot
assure the quality of third-party information nor assure third-party
performance. To the extent that Ericsson’s required and voluntary disclo-
sures about sustainability matters increase, Ericsson could be criticized
for the accuracy, adequacy, or completeness of such disclosures.
Climate change and the potential environmental impact resulting
therefrom may also result in new environmental, health and safety laws,
rules and regulations that may affect the Company, its suppliers, and
its customers. Such laws, rules or regulations could cause Ericsson to
incur additional direct costs for compliance, including costs associated
with changes to manufacturing processes, or costs associated with
the procurement of raw materials and components used in Ericsson’s
products, as well as increased indirect costs resulting from its customers,
suppliers or both incurring additional costs that are passed on to us.
These costs may adversely impact the Company, including its reputa-
tion, business, financial condition, operating results, cash flows, or pros-
pects. In addition, climate change could cause severe weather events,
such as droughts, heat waves, wildfires, storms, and flooding, to occur
more frequently or with greater intensity, as well as chronic changes in
temperatures and rising sea levels, which could pose physical risks to
the Company’s manufacturing facilities or its suppliers’ facilities, cause
disruptions in its upstream and downstream logistic flows, and conse-
quently increase operating costs and/or cause business interruptions.
It is difficult to reasonably estimate the future impact of environmental
matters, such as climate change and extreme weather events, including
potential liabilities.
5.2 Potential health risks related to radiofrequency electro-mag-
netic fields may subject Ericsson to various product liability claims
and result in regulatory changes.
The mobile telecommunications industry is subject to claims that mobile
devices and other equipment that generate radiofrequency electromag-
netic fields may expose individuals to health risks. At present, a sub-
stantial number of scientific reviews conducted by various independent
research bodies have concluded that radiofrequency electromagnetic
fields, when used at levels within the limits prescribed by public health
authority safety standards and recommendations, cause no adverse
effects to human health. However, any perceived risk or new scientific
findings of adverse health effects from mobile communication devices
and equipment could adversely affect Ericsson through a reduction
in sales or through liability claims. Although Ericsson’s products are
designed to comply with currently applicable safety standards and regu-
lations regarding radio frequency electromagnetic fields, the Company
cannot guarantee that Ericsson will not become the subject of product
liability claims. Ericsson also cannot guarantee that the Company will
not be held liable for such claims or be required to comply with future
changed regulatory requirements. Ericsson may, in addition, be affected
by regulatory or other restrictions imposed on the Company’s custom-
ers use of radio equipment that may have a material adverse effect on
Ericsson’s business, operating results, financial condition, reputation
and brand.
Financial report 2023
Risk factors
119
5.3 Regulations related to “conflict minerals” may cause Ericsson
to incur additional expenses and may make Ericsson’s supply chain
demands more complex.
In 2012, the SEC adopted a rule requiring disclosures of specified
minerals (“conflict minerals”) that are necessary to the functionality or
production of products manufactured or contracted to be manufactured
by companies that file periodic reports with the SEC, whether or not
these products or their components are manufactured by third par-
ties. Ericsson may incur material costs to comply with the disclosure
requirements and underlying due diligence. These requirements could
adversely affect the sourcing, availability and pricing of minerals used
in the manufacture of certain of Ericsson’s products, which may have
a material adverse effect on its business. In addition, since Ericsson’s
supply chain is complex, the Company may not be able to sufficiently
verify the origins for these minerals contained in its products through the
due diligence procedures that Ericsson implements, which may harm its
reputation and its business. Ericsson may also encounter challenges if
customers request that all Ericsson’s product components be certified as
“conflict-free”. Ericsson acknowledges that similar challenges exist for
other mineral and metals, outside the scope of the SEC disclosure rule.
In addition, in March 2023, the European Commission announced a
proposed Critical Raw Materials Act, which would seek to improve the
EU’s access to a secure and sustainable supply of certain raw materials
that are to be designated strategic or critical. The European Parliament
and European Council reached a political agreement on the Critical Raw
Materials Act in November 2023, and it is anticipated that the Critical
Raw Materials Act will enter into force in early 2024. The legislative
initiatives under the Critical Raw Materials Act may impact Ericsson’s
current supply chains in relation to the sourcing of certain materials, and
such impact may therefore have an adverse effect on its business.
120
Auditor’s report
Financial report 2023
Auditor’s report
To the general meeting of the shareholders of Telefonaktiebolaget LM Ericsson (publ) corporate identity number 556016-0680
Report on the annual accounts and consolidated
accounts
Opinions
We have audited the annual accounts and consolidated accounts
of Telefonaktiebolaget LM Ericsson (publ) for the financial year
January 1, 2023–December 31, 2023. The annual accounts and
consolidated accounts of the company are included on pages 16–119
in this document.
In our opinion, the annual accounts have been prepared in
accordance with the Annual Accounts Act and present fairly, in all
material respects, the financial position of the parent company as of
December 31, 2023 and its financial performance and cash flow for the
year then ended in accordance with the Annual Accounts Act. The con-
solidated accounts have been prepared in accordance with the Annual
Accounts Act and present fairly, in all material respects, the financial
position of the group as of December 31, 2023 and their financial
performance and cash flow for the year then ended in accordance with
International Financial Reporting Standards (IFRS), as adopted by the
EU, and the Annual Accounts Act. The statutory administration report is
consistent with the other parts of the annual accounts and consolidated
accounts.
We therefore recommend that the general meeting of shareholders
adopts the income statement and balance sheet for the parent com-
pany and the group.
Our opinions in this report on the annual accounts and consolidated
accounts are consistent with the content of the additional report that
has been submitted to the parent company’s audit committee in accord-
ance with the Audit Regulation (537/2014) Article 11.
Basis for Opinions
We conducted our audit in accordance with International Standards on
Auditing (ISA) and generally accepted auditing standards in Sweden.
Our responsibilities under those standards are further described in
the Auditor’s Responsibilities section. We are independent of the par-
ent company and the group in accordance with professional ethics
for accountants in Sweden and have otherwise fulfilled our ethical
responsibilities in accordance with these requirements. This includes
that, based on the best of our knowledge and belief, no prohibited
services referred to in the Audit Regulation (537/2014) Article 5.1 have
been provided to the audited company or, where applicable, its parent
c ompany or its controlled companies within the EU.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinions.
Key Audit Matters
Key audit matters of the audit are those matters that, in our professional
judgment, were of most significance in our audit of the annual accounts
and consolidated accounts of the current period. These matters were
addressed in the context of our audit of, and in forming our opinion
thereon, the annual accounts and consolidated accounts as a whole,
but we do not provide a separate opinion on these matters.
Revenue recognition of significant contracts
Ericsson generates revenues primarily from sales of hardware, software,
and services to its customers. The majority of these revenues are
related to large multi-year framework agreements with customers which
often include discounts and incentives arrangements. The customers
associated with those issue purchase orders under these framework
agreements that in combination constitute a contract and commitment
to purchases of products and services over the duration of the agreement
with the customer. These large contracts may give rise to a risk of mate-
rial misstatement due to incorrect identification of performance obliga-
tions and timing of revenue recognition for the respective obligation,
that could have a material impact on the financial statements.
Ericsson conducts an assessment at contract inception to determine
which promised goods and services in a contract are distinct and
accordingly identified as performance obligations. The amount and
timing of revenue recognized is determined in relation to the individual
performance obligations of the contract. Transaction prices includ-
ing variable considerations, discounts, concessions and incentive
agreements, are estimated at the commencement of the contract
(and periodically thereafter). Judgment is used in the estimation process
based on historical experience with the type of business and customer
and in allocating revenue to each performance obligation by reference
to their standalone selling prices.
We identified revenue recognition from large contracts with custom-
ers as a key audit matter due to the complex application of revenue
recognition accounting standards and that it requires management to
make judgments and estimates in determining the amount and timing
of revenue recognized in relation to individual elements of the contracts.
Our audit procedures related to the amount and timing of revenue
recognized in relation to significant contracts included, but were not
limited to the following:
– We tested the effectiveness of the Company’s controls over revenue
recognition with particular focus on the controls related to the
identification of performance obligations within large contracts with
customers and determination of the timing of recognition for each
revenue obligation.
– We tested a sample of large contracts with customers to assess man-
agement’s judgments and estimates related to the identification of
performance obligations and determination of the timing of recogni-
tion for each revenue obligation based on the contract.
– We tested a sample of revenue transactions recorded during the year
by tracing them to supporting evidence of delivery and acceptance
and assessed the judgments and estimates for revenue recorded in
the period by comparing it to contract terms such as, delivery terms,
transaction prices including variable considerations, discounts and
incentive agreements.
– We tested a sample of ongoing negotiations with existing customers
and analysed reversals of revenue subsequent to year end for indica-
tors of unrecorded discounts and concessions during the period.
Financial report 2023
Auditor’s report
121
Valuation of Goodwill related to Vonage, Cradlepoint, and Cloud
Software and Services
Goodwill is a significant asset in the consolidated balance sheet and
the Company’s evaluation of the carrying value of goodwill involves the
comparison of the recoverable amount of each cash generating unit
to their carrying values. The Company’s assessment of the recoverable
amount is based on discounted future cash flow models derived from
internal business plans covering five years followed by a terminal value
or with a declining growth period before terminal value. The assessment
requires management to make significant estimates and assumptions
regarding forecasts of future sales growth, operating income, working
capital and capital expenditure requirements, as well as assumptions
on discount rates. In Q3 2023 Ericsson recorded an impairment charge
of SEK 31.9 billion attributed to the cash generating unit Vonage mainly
due to macroeconomic headwinds, including rising interest rates and
changing demand trend.
We identified valuation of the Vonage, Cradlepoint, and Cloud
Software and Services goodwill as a key audit matter due to the
significant judgments and estimates used in determining the forecasts
of future sales growth, operating income, working capital and capital
expenditure requirements, as well as assumptions on discount and
terminal growth rates. Changes in these assumptions could have a
significant impact on either the recoverable amount, the amount of any
impairment charge, or both. The assessment of management’s assump-
tions regarding recoverable amount requires a high degree of auditor
judgment, including an increased extent of complexity and the need to
involve our valuation specialists.
Our audit procedures related to the assumptions regarding recover-
able amount included, but were not limited to the following:
– We tested the effectiveness of the Company’s controls over good-
will impairment evaluation and determination of the recoverable
amount with particular focus on the controls over management’s
preparation and review of assumptions for future sales growth,
operating income, working capital, capital expenditure requirements
and method for determining the discount rate used.
– We evaluated management’s ability to accurately forecast future
sales growth, operating income working capital and capital expendi-
ture requirements by comparing actual results to management’s
historical forecasts, the Company’s historical results, external analyst
reports and internal communications to management and the Board
of Directors.
– With the assistance of our valuation specialists, we evaluated the
discount rates, including testing the underlying source information
and the mathematical accuracy of the calculations, and developing
a range of independent estimates and comparing those to the dis-
count rates selected by management.
– With the assistance of our valuation specialists, we further evaluated
the company’s sensitivity analysis by comparing to our own sensitiv-
ity analysis to corroborate the disclosures around assumptions that
are most sensitive to a reasonably possible change that could cause
the carrying amount to exceed its recoverable amount for a cash
generating unit.
Other information than the annual accounts and consolidated
accounts
This document also contains other information than the annual
accounts and consolidated accounts and is found on pages 1–15 and
124–139 in the Financial report, 1–11 in the Remuneration report,
1–49 and 51–52 in the Sustainability and corporate responsibility
report. The Board of Directors and the Managing Director are responsi-
ble for this other information.
Our opinion on the annual accounts and consolidated accounts does
not cover this other information and we do not express any form of
assurance conclusion regarding this other information.
In connection with our audit of the annual accounts and consoli-
dated accounts, our responsibility is to read the information identified
above and consider whether the information is materially inconsistent
with the annual accounts and consolidated accounts. In this procedure
we also take into account our knowledge otherwise obtained in the
audit and assess whether the information otherwise appears to be
materially misstated.
If we, based on the work performed concerning this information,
conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this
regard.
Responsibilities of the Board of Directors and the Managing Director
The Board of Directors and the Managing Director are responsible for
the preparation of the annual accounts and consolidated accounts
and that they give a fair presentation in accordance with the Annual
Accounts Act and, concerning the consolidated accounts, in accord-
ance with IFRS as adopted by the EU. The Board of Directors and the
Managing Director are also responsible for such internal control as they
determine is necessary to enable the preparation of annual accounts
and consolidated accounts that are free from material misstatement,
whether due to fraud or error.
In preparing the annual accounts and consolidated accounts, The
Board of Directors and the Managing Director are responsible for the
assessment of the company’s and the group’s ability to continue as a
going concern. They disclose, as applicable, matters related to going
concern and using the going concern basis of accounting. The going
concern basis of accounting is however not applied if the Board of
Directors and the Managing Director intends to liquidate the company,
to cease operations, or has no realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board of
Director’s responsibilities and tasks in general, among other things
oversee the company’s financial reporting process.
Auditor’s responsibility
Our objectives are to obtain reasonable assurance about whether the
annual accounts and consolidated accounts as a whole are free from
material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinions. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs and generally accepted auditing standards
in Sweden will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these
annual accounts and consolidated accounts.
As part of an audit in accordance with ISAs, we exercise professional
judgment and maintain professional scepticism throughout the audit.
We also:
– Identify and assess the risks of material misstatement of the annual
accounts and consolidated accounts, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinions. The risk of not detecting a material mis-
statement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
122
Auditor’s report
Financial report 2023
– Obtain an understanding of the company’s internal control relevant
to our audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opin-
ion on the effectiveness of the company’s internal control.
– Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by the Board of Directors and the Managing Director.
– Conclude on the appropriateness of the Board of Directors’ and the
Managing Director’s use of the going concern basis of accounting
in preparing the annual accounts and consolidated accounts. We
also draw a conclusion, based on the audit evidence obtained,
as to whether any material uncertainty exists related to events or
conditions that may cast significant doubt on the company’s and the
group’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the annual accounts
and consolidated accounts or, if such disclosures are inadequate,
to modify our opinion about the annual accounts and consolidated
accounts. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or
conditions may cause a company and a group to cease to continue
as a going concern.
– Evaluate the overall presentation, structure and content of the
annual accounts and consolidated accounts, including the disclo-
sures, and whether the annual accounts and consolidated accounts
represent the underlying transactions and events in a manner that
achieves fair presentation.
– Obtain sufficient and appropriate audit evidence regarding the
financial information of the entities or business activities within the
group to express an opinion on the consolidated accounts. We are
responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our opinions.
We must inform the Board of Directors of, among other matters, the
planned scope and timing of the audit. We must also inform of signifi-
cant audit findings during our audit, including any significant deficien-
cies in internal control that we identified.
We must also provide the Board of Directors with a statement that
we have complied with relevant ethical requirements regarding inde-
pendence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence,
and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with the Board of Directors, we
determine those matters that were of most significance in the audit of
the annual accounts and consolidated accounts, including the most
important assessed risks for material misstatement, and are therefore
the key audit matters. We describe these matters in the auditor’s report
unless law or regulation precludes disclosure about the matter.
Report on other legal and regulatory requirements
Opinions
In addition to our audit of the annual accounts and consolidated
accounts, we have also audited the administration of the Board of
Directors and the Managing Director of Telefonaktiebolaget LM Ericsson
(publ) for the financial year January 1, 2023 – December 31, 2023 and
the proposed appropriations of the company’s profit or loss.
We recommend to the general meeting of shareholders that
the profit to be appropriated in accordance with the proposal in the
statutory administration report and that the members of the Board of
Directors and the Managing Director be discharged from liability for the
financial year.
Basis for Opinions
We conducted the audit in accordance with generally accepted auditing
standards in Sweden. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities section. We are inde-
pendent of the parent company and the group in accordance with pro-
fessional ethics for accountants in Sweden and have otherwise fulfilled
our ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinions.
Responsibilities of the Board of Directors and the Managing Director
The Board of Directors is responsible for the proposal for appropria-
tions of the company’s profit or loss. At the proposal of a dividend, this
includes an assessment of whether the dividend is justifiable consider-
ing the requirements which the company’s and the group’s type of
operations, size and risks place on the size of the parent company’s and
the group’s equity, consolidation requirements, liquidity and position in
general.
The Board of Directors is responsible for the company’s organization
and the administration of the company’s affairs. This includes among
other things continuous assessment of the company’s and the group’s
financial situation and ensuring that the company’s organization
is designed so that the accounting, management of assets and the
company’s financial affairs otherwise are controlled in a reassuring
manner. The Managing Director shall manage the ongoing administra-
tion according to the Board of Directors’ guidelines and instructions
and among other matters take measures that are necessary to fulfill the
company’s accounting in accordance with law and handle the manage-
ment of assets in a reassuring manner.
Auditor’s responsibility
Our objective concerning the audit of the administration, and thereby
our opinion about discharge from liability, is to obtain audit evidence to
assess with a reasonable degree of assurance whether any member of
the Board of Directors or the Managing Director in any material respect:
– has undertaken any action or been guilty of any omission which can
give rise to liability to the company, or
– in any other way has acted in contravention of the Companies Act,
the Annual Accounts Act or the Articles of Association.
Our objective concerning the audit of the proposed appropriations of
the company’s profit or loss, and thereby our opinion about this, is to
assess with reasonable degree of assurance whether the proposal is in
accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not a guar-
antee that an audit conducted in accordance with generally accepted
auditing standards in Sweden will always detect actions or omissions
that can give rise to liability to the company, or that the proposed appro-
priations of the company’s profit or loss are not in accordance with the
Companies Act.
As part of an audit in accordance with generally accepted auditing
standards in Sweden, we exercise professional judgment and maintain
professional scepticism throughout the audit. The examination of the
administration and the proposed appropriations of the company’s
profit or loss is based primarily on the audit of the accounts. Additional
audit procedures performed are based on our professional judgment
with starting point in risk and materiality. This means that we focus the
examination on such actions, areas and relationships that are material
Financial report 2023
Auditor’s report
123
for the operations and where deviations and violations would have
particular importance for the company’s situation. We examine and test
decisions undertaken, support for decisions, actions taken and other
circumstances that are relevant to our opinion concerning discharge
from liability. As a basis for our opinion on the Board of Directors’
proposed appropriations of the company’s profit or loss we examined
the Board of Directors’ reasoned statement and a selection of support-
ing evidence in order to be able to assess whether the proposal is in
accordance with the Companies Act.
The auditor’s examination of the Esef report
Opinion
In addition to our audit of the annual accounts and consolidated
accounts, we have also examined that the Board of Directors and the
Managing Director have prepared the annual accounts and consoli-
dated accounts in a format that enables uniform electronic reporting
(the Esef report) pursuant to Chapter 16, Section 4 a of the Swedish
Securities Market Act (2007:528) for Telefonaktiebolaget LM Ericsson
(publ) for the financial year January 1, 2023–December 31, 2023.
Our examination and our opinion relate only to the statutory
requirements.
In our opinion, the Esef report has been prepared in a format that,
in all material respects, enables uniform electronic reporting.
Basis for opinion
We have performed the examination in accordance with FAR’s recom-
mendation RevR 18 Examination of the Esef report. Our responsibility
under this recommendation is described in more detail in the Auditors’
responsibility section. We are independent of Telefonaktiebolaget
LM Ericsson (publ) in accordance with professional ethics for account-
ants in Sweden and have otherwise fulfilled our ethical responsibilities
in accordance with these requirements.
We believe that the evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Responsibilities of The Board of Directors and the Managing Director
The Bord of Directors and the Managing Director are responsible for
the preparation of the Esef report in accordance with the Chapter 16,
Section 4 a of the Swedish Securities Market Act (2007:528), and for
such internal control that the Board of Directors and the Managing
Director determine is necessary to prepare the Esef report without
material misstatements, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to obtain reasonable assurance whether the Esef
report is in all material respects prepared in a format that meets the
requirements of Chapter 16, Section 4(a) of the Swedish Securities
Market Act (2007:528), based on the procedures performed.
RevR 18 requires us to plan and execute procedures to achieve
reasonable assurance that the Esef report is prepared in a format that
meets these requirements.
Reasonable assurance is a high level of assurance, but it is not a
guarantee that an engagement carried out according to RevR 18 and
generally accepted auditing standards in Sweden will always detect
a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic decisions
of users taken on the basis of the Esef report.
The firm applies International Standard on Quality Management 1,
which requires the firm to design, implement and operate a system of
quality management including policies or procedures regarding compli-
ance with ethical requirements, professional standards and applicable
legal and regulatory requirements.
The examination involves obtaining evidence, through various pro-
cedures, that the Esef report has been prepared in a format that enables
uniform electronic reporting of the annual accounts and consolidated
accounts. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement in the
report, whether due to fraud or error. In carrying out this risk assess-
ment, and in order to design audit procedures that are appropriate in
the circumstances, the auditor considers those elements of internal
control that are relevant to the preparation of the Esef report by the
Board of Directors and the Managing Director, but not for the purpose
of expressing an opinion on the effectiveness of those internal controls.
The examination also includes an evaluation of the appropriateness and
reasonableness of assumptions made by the Board of Directors and the
Managing Director.
The procedures mainly include a validation that the Esef report has
been prepared in a valid XHMTL format and a reconciliation of the Esef
report with the audited annual accounts and consolidated accounts.
Furthermore, the procedures also include an assessment of whether
the consolidated statement of financial performance, financial position,
changes in equity, cash flow and disclosures in the Esef report have
been marked with iXBRL in accordance with what follows from the
Esef regulation.
Deloitte AB, was appointed auditor of Telefonaktiebolaget LM Ericsson
(publ) by the general meeting of the shareholders on the 2023-03-29
and has been the company’s auditor since 2020-03-31.
Stockholm March 5, 2024
Deloitte AB
Thomas Strömberg
Authorized public accountant
124
Auditor’s report
Financial report 2023
Forward-looking statements
This Annual Report includes forward-looking statements, including
statements reflecting the Company’s current views relating to the
growth of the market, future market conditions, future events, financial
condition, and expected operational and financial performance, includ-
ing, in particular the following:
– Potential material additional costs and liability resulting from our
ongoing future compliance with the terms of the Plea Agreement
with the DOJ and extended monitorship
– Potential to become a target for public scrutiny as a result of enter-
ing into the Plea Agreement with the DOJ, which could damage our
reputation and materially and adversely affect our business and
prospects
– Risks resulting from entering into the Plea Agreement, including
potential debarment from government contracting in the United
States and elsewhere, reputational risk, as well as potential counter-
party reluctance to continue business relationships
– Potential material additional liability resulting from past conduct,
including allegations of past conduct that remains unresolved or
unknown in multiple jurisdictions including Iraq, which remains the
subject of ongoing investigations by Ericsson and US governmental
authorities
– Risks related to internal controls and governance, including the
potential to incur material liability in connection with internal con-
trols surrounding payments made to third parties in connection with
past conduct in multiple jurisdictions, including Iraq which remains
the subject of ongoing investigations by Ericsson and US govern-
mental authorities
– The risk that the ongoing investigations by Ericsson and US
governmental authorities result in a conclusion by Ericsson or US
governmental authorities that the Company’s past conduct included
making or having responsibility for making payments to a terrorist
organization or other improper payments, which could lead to mate-
rial additional liability
– Risks related to our ongoing compliance with obligations under
the National Security Agreement entered into in connection with
Ericsson’s acquisition of Vonage, which may adversely affect the
Vonage business and subject the Company to additional liabilities
– Our goals, strategies, planning assumptions and operational or
financial performance expectations
– Macroeconomic conditions, including inflationary pressures and
effects on customer investments, market recovery and growth
– Ongoing geopolitical and trade uncertainty, including challenging
global economic conditions, market trends and pandemics such as
COVID-19
– Risks related to cybersecurity and privacy
– Industry trends, future characteristics and development of the
markets in which we operate
– Our ability to comply with legal and regulatory requirements
internationally
– Our future liquidity, capital resources, capital expenditures, cost
savings and profitability
– The expected demand for our existing and new products and ser-
vices as well as plans to launch new products and services, including
research and development expenditures
– Our ability to deliver on future plans and achieve future growth
– The expected operational or financial performance of strategic coop-
eration activities and joint ventures
– Risks related to acquisitions and divestments, including our ability
to successfully consummate such transactions, protect the value of
acquisitions during integration, or achieve the value anticipated with
an acquisition
– Trends related to our industry, including our regulatory environment,
competition and customer structure
– Other factors included in our filings with the U.S. Securities and
Exchange Commission (the “SEC”), including the factors described
throughout this report, included in the section Risk
Factors, as updated by subsequent reports filed with the SEC.
The words “believe,” “expect,” “foresee,” “anticipate,” “assume,”
“intend,” “likely,” “projects,” “may,” “could,” “plan,” “estimate,” “forecast,”
“will,” “should,” “would,” “predict,” “aim,” “ambition,” “seek,” “potential,”
“target,” “might,” “continue,” or, in each case, their negative or variations,
and similar words or expressions are used to identify forward-looking
statements. Any statement that refers to the Company’s strategy, future
financial performance, expectations, projections or other characteri-
zations of future events or circumstances, including any underlying
assumptions, are forward-looking statements. Such statements are
based on management’s expectations as of the date of this report,
unless an earlier date is specified, including expectations based on
third-party information and projections that management believes to
be reputable.
We caution investors that these statements are subject to risks
and uncertainties many of which are difficult to predict and generally
beyond our control that could cause actual results to differ materially and
adversely from those expressed in, or implied or projected by, the forward-
looking information and statements. Important factors that could affect
whether and to what extent any of our forward-looking statements
materialize include but are not limited to the factors described throughout
this Annual Report, including in the section Risk factors. These forward-
looking statements also represent our estimates, assumptions and expec-
tations only as of the date that they were made, and to the extent they
represent third-party data, we have not undertaken to independently
verify such third-party data and do not intend to do so.
Financial report 2023
Forward-looking statements
125
Given these risks and uncertainties, readers are cautioned not to
place undue reliance on such forward-looking statements. Readers are
urged to carefully review and consider the various disclosures made in
this Annual Report and in other documents we file from time to time with
our regulators that disclose risks and uncertainties that may affect our
business. Unless specifically indicated otherwise, the forward-looking
statements in this Annual Report do not reflect the potential impact of
any divestitures, mergers, acquisitions, or other business combinations
that have not been completed as of the date of this report. We expressly
disclaim a duty to provide updates to these forward-looking statements,
and the estimates and assumptions associated with them, after the
date of this Annual Report, to reflect events or changes in circumstances
or changes in expectations or the occurrence of anticipated events,
whether as a result of new information, future events or otherwise,
except as required by applicable law or stock exchange regulation. This
Annual Report includes websites or references to additional company
reports. These are intended to provide inactive, textual references only.
The information on websites and contained in those reports is not
part of this report and not incorporated by reference in this report. This
Annual Report contains statements based on hypothetical scenarios
and assumptions as well as estimates that are subject to a high level of
uncertainty, and these statements should not necessarily be viewed as
being representative of current or actual risk or performance, or forecasts
of expected risk or performance. In addition, historical, current, and
forward-looking environmental and social-related statements may be
based on standards for measuring progress that are still developing and
on internal controls and processes that continue to evolve. While certain
matters discussed in this Annual Report may be significant, any signifi-
cance should not be taken, or otherwise assumed, as necessarily rising
to the level of materiality used for purposes of complying with Ericsson’s
public company reporting obligations pursuant to the U.S. federal securi-
ties laws and regulations, even if the report uses the words “material” or
“materiality.”
126
Five-year summary – Financial information
Financial report 2023
Five-year summary – Financial information
For definitions of certain financial terms used, see Alternative performance measures and Financial terminology.
Five-year summary
Income statement and cash flow items, SEK million
Net sales
Operating expenses
EBIT
Net income (loss)
Cash flow from operating activities
Year-end position, SEK million
Total assets
Property, plant and equipment
Stockholders’ equity
Non-controlling interests
Per share indicators
Earnings (loss) per share, basic, SEK
Earnings (loss) per share, diluted, SEK
Dividends per share, SEK 1)
Dividends per share, USD 1)
Number of shares outstanding (in millions)
end of period, basic
average, basic
average, diluted
Other information, SEK million
Additions to property, plant and equipment
Depreciations and write-downs/impairments of property, plant
and equipment
Acquisitions/capitalization/divestments of intangible assets
Amortizations and write-downs/impairments of intangible assets
Research and development expenses
as percentage of net sales
Inventory turnover days
Alternative Performance Measures (APMs) 2)
Sales growth adjusted for comparable units and currency
Gross margin
Gross margin excluding restructuring charges
EBIT margin
EBIT margin excluding restructuring charges
EBIT margin excluding restructuring charges and goodwill impairment
EBITA margin
EBITA margin excluding restructuring charges
Restructuring charges, SEK million
Free cash flow before M&A, SEK million
Free cash flow after M&A, SEK million
Free cash flow before M&A as percentage of net sales
Capital employed, SEK million
Return on equity
Return on capital employed
Equity ratio
Capital turnover
Adjusted working capital, SEK million
Gross cash, SEK million
Net cash, SEK million
Statistical data, year-end
Number of employees
of which in Sweden
Export sales from Sweden, SEK million
2023
Change
2022
2021
2020
2019
263,351
–90,187
–20,326
–26,104
7,177
297,036
12,195
98,673
–1,265
–7.94
–7.94
2.70
0.25
3,330
3,330
3,337
–3%
9%
–175%
–237%
–77%
–15%
–14%
–27%
–16%
–241%
–241%
0%
0%
0%
0%
0%
271,546
–83,030
27,020
19,112
30,863
349,537
14,236
134,814
–1,510
5.62
5.62
2.70
0.25
3,330
3,330
3,334
232,314
–69,071
31,780
22,980
39,065
305,614
13,580
108,775
–1,676
6.82
6.81
2.50
0.23
3,330
3,329
3,332
232,390
–66,280
27,808
17,623
28,933
271,530
13,383
86,674
–1,497
5.26
5.26
2.00
0.16
3,328
3,323
3,326
3,297
–26%
4,477
3,663
4,493
4,934
2,924
36,374
50,664
19.2%
92
–10%
38.6%
39.6%
–7.7%
–5.2%
6.9%
5.7%
8.1%
6,521
–1,084
–3,224
–0.4%
177,965
–22.7%
–10.7%
32.8%
1.4
45,479
54,705
7,832
99,952
13,977
125,242
12%
–96%
900%
7%
–1%
–
–
–
–
–
–
–
–
–
–105%
–89%
–
–12%
–
–
–
0%
25%
–3%
–66%
–5%
–3%
–19%
4,388
66,178
3,638
47,298
17.4%
93
3%
41.7%
41.8%
10.0%
10.1%
10.1%
10.7%
10.9%
399
22,196
–29,492
8.2%
202,899
15.4%
14.0%
38.1%
1.4
36,653
56,249
23,319
105,529
14,481
153,833
3,872
1,723
2,820
42,074
18.1%
88
4%
43.4%
43.5%
13.7%
13.9%
14.0%
14.3%
14.6%
549
32,056
32,115
13.8%
184,283
23.2%
18.4%
35.0%
1.3
59,667
97,608
65,777
101,322
14,183
140,898
4,114
11,817
2,126
39,714
17.1%
78
5%
40.3%
40.6%
12.0%
12.5%
12.5%
12.5%
13.1%
1,306
22,261
12,663
9.6%
161,990
20.7%
17.0%
31.4%
1.4
45,613
72,045
41,885
100,824
13,173
132,269
227,216
–64,215
10,564
1,840
16,873
276,383
13,850
82,559
–681
0.67
0.67
1.50
0.16
3,314
3,306
3,320
5,118
3,947
–13,692
2,593
38,815
17.1%
77
4%
37.3%
37.5%
4.6%
5.0%
5.0%
5.1%
5.5%
798
7,633
6,128
3.4%
165,273
2.6%
6.7%
29.6%
1.4
48,821
72,192
34,496
99,417
12,730
120,822
1) For 2023, as proposed by the Board of Directors.
2) A reconciliation to the most directly reconcilable line items in the financial statements for 2023 and four comparison years is available on pages 128–132.
Financial report 2023
Five-year summary – Non-financial information
127
Five-year summary – Non-financial information
For additional information and definitions, see the Consolidated sustainability notes, found on pages 10–49 of the Sustainability and Corporate
Responsibility report 1).
Five-year summary 2)
Employees
Employee headcount at year-end
Average number of employees
Employees who have left the Company
Employees who have joined the Company
Employees by age group
Under 25
25–35
36–45
46–55
Over 55
Share of women
All employees
Line managers
Executive population
Executive Team
Board of Directors
Occupational health and safety
Fatalities – Employees
Fatalities – Suppliers, subcontractors and third parties
Lost workday incidents – Employees
Lost workday incidents – Suppliers and subcontractors and third parties
Facility energy consumption
Energy consumption in own operations (GWh)
Share of renewable energy in own operations
Energy intensity (GWh/net sales SEK billion)
Waste, product take-back and water
Waste generated in own operations (metric tons)3)
of which recycled
Product take-back (metric tons)
of which recycled or re-used
Water consumption (Mm3)
Green House Gas Emissions (kiloton CO2e)
Direct emissions – Scope 1
Indirect emissions – Scope 2 (market based)
Other indirect emissions – Scope 33) 4)
Emissions intensity (kiloton CO2e / net sales SEK million)
Scope 1
Scope 2 (market based)
2023
Change
2022
2021
2020
2019
99,952
101,644
13,362
7,785
–5%
0%
–7%
–55%
105,529
101,741
14,381
17,235
101,322
100,757
11,631
12,129
100,824
98,589
7,839
9,246
99,417
94,503
11,078
15,136
3%
29%
35%
23%
10%
26%
23%
31%
25%
38%
1
9
53
44
690
70%
2.6
7,182
48%
3,869
94%
0.9
27
42
37,182
0.10
0.16
–
–
–
–
–
–
–
–
–
–
–
13%
–45%
26%
0%
–
0%
–12%
–
–20%
–
–14%
–30%
–7%
21%
–29%
–6%
4%
30%
34%
23%
10%
26%
22%
35%
19%
36%
0
8
96
35
693
67%
2.6
8,130
47%
4,825
97%
1.1
38
45
30,844
0.14
0.17
3%
31%
34%
23%
9%
25%
21%
36%
20%
23%
1
13
77
68
631
62%
2.7
6,777
67%
5,389
96%
1.2
38
58
28,023
0.16
0.25
3%
33%
34%
22%
8%
25%
21%
32%
20%
23%
0
7
90
53
628
62%
2.7
6,916
49%
6,079
95%
1.5
40
74
30,035
0.17
0.32
3%
35%
32%
22%
8%
25%
20%
32%
20%
23%
0
11
180
87
664
50%
2.9
11,013
44%
–
–
1.5
49
124
–
0.22
0.55
1) The Sustainability and Corporate Responsibility report is not to be considered incorporated by reference due to being referenced here.
2) Ericsson continuously develops its methodologies for measuring and reporting environment, social and governance (ESG) performance data. As methodologies evolve it is not always possible to re-calculate
performance data for previous periods. Where this is the case this is indicated with a “-” in the table below.
3) Scope and/or measurement methodologies have been updated in 2023 wherefore data for previous periods have been restated. See note O3 in the Sustainability and Corporate Responsibility Report for more
information.
4 ) See note E1 in the Sustainability and Corporate Responsibility report for more information on the Scope 3 categories included and Ericsson’s GHG accounting methodologies.
128
Alternative performance measures
Financial report 2023
Alternative performance measures
In this section, the Company presents its Alternative Performance
Measures (APMs), which are not recognized measures of financial
performance under IFRS. This section includes a reconciliation of the
APM’s to the most directly reconcilable line items in the financial state-
ments. The presentation of APMs has limitations as analytical tools
and should not be considered in isolation or as a substitute for related
financial measures prepared in accordance with IFRS.
APMs are presented to enhance an investor’s evaluation of ongoing
operating results, to aid in forecasting future periods and to facilitate
meaningful comparison of results between periods.
Management uses these APMs to, among other things, evaluate
ongoing operations in relation to historical results, for internal planning
and forecasting purposes and in the calculation of certain performance-
based compensation. APM’s should not be viewed as substitutes for
income statement or cash flow items computed in accordance with IFRS.
The Company decided to include EBIT and EBIT margin excluding
restructuring charges and goodwill impairment to better explain the
financial performance. Free cash flow before M&A as percentage of net
sales (%) is added since it is used by the Company as one of the long-
term targets. Adjusted earnings per share is removed as an APM since it
is no longer used by the Company.
The APMs presented in this report may differ from similarly titled
measures used by other companies.
Adjusted working capital
SEK million
Current assets
Current non-interest-bearing provisions and liabilities
Provisions, current
Contract liabilities
Trade payables
Current tax liabilities 1)
Other current liabilities 1)
Adjusted working capital
2023
154,988
–6,779
–34,416
–27,768
–3,561
–36,985
45,479
2022
173,803
–7,629
–42,251
–38,437
–2,640
–46,193
36,653
2021
174,805
–5,782
–32,834
–35,684
–2,917
–37,921
59,667
2020
149,795
–7,580
–26,440
–31,988
–4,486
–33,688
45,613
2019
153,914
–8,244
–29,041
–30,403
–
–37,405
48,821
1) As from 2021 current tax liabilities is presented as a separate line item in the balance sheet and the comparison year 2020 has been updated accordingly. For 2019 the current tax liabilities is included in other cur-
rent liabilities.
Definition
Current assets less current non-interest-bearing provisions and
liabilities (which include: current provisions, contract liabilities, trade
payables, current tax liabilities and other current liabilities).
Reason to use
Due to the need to optimize cash generation to create value for Ericsson’s shareholders, management focuses
on working capital and reducing lead times between orders booked and cash received.
Capital employed
SEK million
Total assets
Non-interest-bearing provisions and liabilities
Provisions, non-current
Deferred tax liabilities
Other non-current liabilities
Provisions, current
Contract liabilities
Trade payables
Current tax liabilities 1)
Other current liabilities 1)
Capital employed
2023
297,036
4,927
3,880
755
6,779
34,416
27,768
3,561
36,985
177,965
2022
349,537
3,959
4,784
745
7,629
42,251
38,437
2,640
46,193
202,899
2021
305,614
3,722
884
1,587
5,782
32,834
35,684
2,917
37,921
184,283
2020
271,530
2,886
1,089
1,383
7,580
26,440
31,988
4,486
33,688
161,990
2019
276,383
2,679
1,224
2,114
8,244
29,041
30,403
–
37,405
165,273
1) As from 2021 current tax liabilities is presented as a separate line item in the balance sheet and the comparison year 2020 has been updated accordingly. For 2019 the current tax liabilities is included in other cur-
rent liabilities.
Definition
Total assets less non-interest-bearing provisions and liabilities
(which includes non-current provisions, deferred tax liabilities,
contract liabilities, other non-current liabilities, current provisions,
trade payables, current tax liabilities and other current liabilities).
Reason to use
Capital employed represents the value of the balance sheet assets that contributes to revenue and profit
generation. It is also used in the calculation of return on capital employed.
Financial report 2023
Alternative performance measures
129
Capital turnover
SEK million
Net sales
Average capital employed
Capital employed at beginning of period
Capital employed at end of period
Average capital employed
Capital turnover (times)
2023
263,351
202,899
177,965
190,432
1.4
2022
271,546
184,283
202,899
193,591
1.4
2021
232,314
161,990
184,283
173,137
1.3
2020
232,390
165,273
161,990
163,632
1.4
2019
227,216
149,615
165,273
157,444
1.4
Definition
Net sales divided by average capital employed (based on the amounts at
January 1 and December 31).
Reason to use
Capital turnover indicates how effectively investment capital is used to generate revenues.
EBIT and EBIT margin / EBIT and EBIT margin excluding restructuring charges / EBIT and EBIT margin excluding restructuring charges and goodwill
impairment
SEK million
EBIT (loss)
Net sales
EBIT margin (%)
Restructuring charges
EBIT (loss) excluding restructuring charges
EBIT margin excluding restructuring charges (%)
Impairment of goodwill
EBIT excluding restructuring charges and goodwill impairment
EBIT margin excl. restructuring charges and goodwill impairment (%)
2023
–20,326
263,351
–7.7%
6,521
–13,805
–5.2%
31,897
18,092
6.9%
2022
27,020
271,546
10.0%
399
27,419
10.1%
–
27,419
10.1%
2021
31,780
232,314
13.7%
549
32,329
13.9%
112
32,441
14.0%
2020
27,808
232,390
12.0%
1,306
29,114
12.5%
–
29,114
12.5%
2019
10,564
227,216
4.6%
798
11,362
5.0%
–
11,362
5.0%
Definition
Earnings (loss) before financial items and income tax.
EBIT as a percentage of net sales.
Earnings (loss) before financial items and income tax excluding restructuring charges.
EBIT excluding restructuring charges as a percentage of net sales.
Earnings before financial items and income tax excluding restructuring charges and
goodwill impairment.
EBIT excluding restructuring charges and goodwill impairment as a percentage of net sales.
Reason to use
EBIT margin shows the EBIT in per centage of net sales. EBIT margin is a key internal
measure as the Company believes that it provides users of the financial statements with a
better understanding of the Group’s financial performance both short and long term.
The Company’s view is that EBIT margin excluding restructuring charges and goodwill
impairment gives a fair view of the profitability of the ongoing business.
EBITA and EBITA margin / EBITA and EBITA margin excluding restructuring charges
SEK million
Net income (loss)
Income tax
Financial income and expenses, net
Amortizations and write-downs of acquired intangible assets
EBITA
Net sales
EBITA margin (%)
Restructuring charges
EBITA excluding restructuring charges
EBITA margin excluding restructuring charges (%)
2023
–26,104
2,785
2,993
35,238
14,912
263,351
5.7%
6,521
21,433
8.1%
2022
19,112
5,497
2,411
2,051
29,071
271,546
10.7%
399
29,470
10.9%
2021
22,980
6,270
2,530
1,477
33,257
232,314
14.3%
549
33,806
14.6%
2020
17,623
9,589
596
1,220
29,028
232,390
12.5%
1,306
30,334
13.1%
2019
1,840
6,922
1,802
1,038
11,602
227,216
5.1%
798
12,400
5.5%
Definition
Earnings (loss) before interest, income tax, amortizations and write-downs of acquired
intangible assets.
EBITA as a percentage of net sales.
EBITA excluding restructuring charges.
EBITA excluding restructuring charges as a percentage of net sales.
Reason to use
Amortizations and write-downs of intangible assets are normally non-cash items in
the annual income statement, EBITA margin % gives an indication of the financial
performance without the impact from acquired companies. The Company’s view is that
EBITA margin excluding restructuring charges gives a fair view of the profitability of the
ongoing business.
Additionally, Ericsson provides forward-looking targets for EBITA margin excluding restructuring charges and free cash flow before M&A, which are non-IFRS financial measures. Ericsson
has not provided quantitative reconciliation of these targets to the most directly comparable IFRS measures because certain information needed to reconcile these non-IFRS financial
measures to the most comparable IFRS financial measures are dependent on specific items or impacts that are not yet determined, are subject to incarcerating and variability in timing
and amount due to their nature, are outside of Ericsson’s control or cannot be predicted, including items and impacts such as currency exchange rate changes, acquisitions and disposals,
and charges such as impairments or acquisition related charges. Accordingly, reconciliation of these non-IFRS forward-looking financial measures to the most directly comparable IFRS
financial measures are not available without unreasonable efforts. Such unavailable reconciling items could significantly impact our results of operations and financial condition.
130
Alternative performance measures
Financial report 2023
Equity ratio
SEK million
Total equity
Total assets
Equity ratio (%)
2023
97,408
297,036
32.8%
2022
133,304
349,537
38.1%
2021
107,099
305,614
35.0%
2020
85,177
271,530
31.4%
2019
81,878
276,383
29.6%
Definition
Equity expressed as a percentage of total assets.
Reason to use
This supports financial flexibility and independence to operate and manage variations in working capital needs as well
as to capitalize on business opportunities.
Free cash flow before M&A / Free cash flow after M&A
SEK million
Cash flow from operating activities
Net capital expenditures and other investments (excluding M&A)
Investments in property, plant and equipment
Sales of property, plant and equipment
Product development
Other investments 1)
Repayment of lease liabilities
Free cash flow before M&A
Acquisitions of subsidiaries and other operations
Divestments of subsidiaries and other operations
Free cash flow after M&A
Net sales
Free cash flow before M&A as percentage of net sales (%)
2023
7,177
–3,297
163
–2,173
–97
–2,857
–1,084
–1,515
–625
–3,224
263,351
–0.4%
2022
30,863
–4,477
249
–1,720
–126
–2,593
22,196
–51,995
307
–29,492
271,546
8.2%
2021
39,065
–3,663
115
–962
–131
–2,368
32,056
–389
448
32,115
232,314
13.8%
2020
28,933
–4,493
254
–817
801
–2,417
22,261
–9,657
59
12,663
232,390
9.6%
2019
16,873
–5,118
744
–1,545
–331
–2,990
7,633
–1,753
248
6,128
227,216
3.4%
1) Other investments is part of the line item Other investing activities in the Consolidated cash flow statement. The difference is movements in other interest-bearing assets which is not part of the definition of Free
cash flow.
Definition
Free cash flow before M&A: Cash flow from operating
activities less net capital expenditures, other investments
and repayment of lease liabilities (excluding M&A).
Free cash flow after M&A: Cash flow from operating
activities less net capital expenditures, other investments
and repayment of lease liabilities.
Free cash flow before M&A as a percentage of net sales.
Gross cash
SEK million
Cash and cash equivalents
Interest-bearing securities, current
Interest-bearing securities, non-current
Gross cash
Reason to use
Free cash flow before M&A represents the cash that the Company generates after capital expenditures, other
investments and repayment of lease liabilities. The Company believes that free cash flow before M&A is a good way
of reflecting the cash flows generated by the Company that can be used to expand the business, invest in subsidiaries,
pay dividends and reduce debt.
Free cash flow after M&A represents the cash that the Company generates after capital expenditures, other
investments, repayment of lease liabilities and acquisitions/divestments of subsidiaries. The Company believes that
free cash flow after M&A is a good way of reflecting the cash flows generated by the Company that can be used to
expand the business, pay dividends and reduce debt.
Free cash flow before M&A as a percentage of net sales is used by the Company as one of the long-term targets.
2023
35,190
9,584
9,931
54,705
2022
38,349
8,736
9,164
56,249
2021
54,050
12,932
30,626
97,608
2020
43,612
6,820
21,613
72,045
2019
45,079
6,759
20,354
72,192
Definition
Cash and cash equivalents plus interest-bearing securities
(current and non-current).
Reason to use
Gross cash is showing total available cash and interest-bearing securities and is a parameter for calculating
the net cash position.
Financial report 2023
Alternative performance measures
131
Gross margin and Gross margin excluding restructuring charges
SEK million
Gross income
Net sales
Gross margin (%)
Restructuring charges included in cost of sales
Gross income excluding restructuring charges
Gross margin excluding restructuring charges (%)
Definition
Gross income as a percentage of net sales.
Gross income excluding restructuring charges as a
percentage of net sales.
Net cash
SEK million
Cash and cash equivalents
+ Interest-bearing securities, current
+ Interest-bearing securities, non-current
– Borrowings, current
– Borrowings, non-current
Net cash
2023
101,602
263,351
38.6%
2,802
104,404
39.6%
2022
113,295
271,546
41.7%
195
113,490
41.8%
2021
100,749
232,314
43.4%
273
101,022
43.5%
2020
93,724
232,390
40.3%
725
94,449
40.6%
2019
84,824
227,216
37.3%
337
85,161
37.5%
Reason to use
Gross margin shows the difference between net sales and cost of sales, in percentage of net sales. Gross margin is
impacted by several factors such as business mix, service share, price development and cost reductions. Gross margin
is an important internal measure and this number is also provided in the income statement as the Company believes
that it provides users of the financial statements with a better understanding of the Group’s business development.
The Company’s view is that gross margin excluding restructuring charges gives a fair view of the profitability of the
ongoing business.
2023
35,190
9,584
9,931
17,655
29,218
7,832
2022
38,349
8,736
9,164
5,984
26,946
23,319
2021
54,050
12,932
30,626
9,590
22,241
65,777
2020
43,612
6,820
21,613
7,942
22,218
41,885
2019
45,079
6,759
20,354
9,439
28,257
34,496
Definition
Cash and cash equivalents plus interest-bearing securities
(current and non-current) less borrowings (current and non-
current).
Reason to use
A positive net cash position is one of the company’s capital targets.
This creates financial flexibility and independence to operate and manage variations in working capital needs.
Operating expenses excluding restructuring charges
SEK million
Operating expenses
Restructuring charges included in R&D expenses
Restructuring charges included in selling and administrative expenses
Operating expenses excluding restructuring charges
2023
–90,187
2,431
1,288
–86,468
2022
–83,030
54
150
–82,826
2021
–69,071
137
139
–68,795
2020
–66,280
411
170
–65,699
2019
–64,215
344
117
–63,754
Definition
Operating expenses excluding restructuring charges.
Reason to use
Restructuring charges vary between years and in order to analyse trends in reported expenses over time,
restructuring charges are excluded.
Return on capital employed
SEK million
EBIT (loss)
Average capital employed
Capital employed at beginning of period
Capital employed at end of period
Average capital employed
Return on capital employed (%)
2023
–20,326
202,899
177,965
190,432
–10.7%
2022
27,020
184,283
202,899
193,591
14.0%
2021
31,780
161,990
184,283
173,137
18.4%
2020
27,808
165,273
161,990
163,632
17.0%
2019
10,564
149,615
165,273
157,444
6.7%
Definition
EBIT (loss) as a percentage of average capital employed
(based on the amounts at January 1 and December 31).
Reason to use
Return on capital employed is a measure of the profitability after taking into account the amount of capital used.
A higher return on capital employed indicates a more efficient use of capital.
132
Alternative performance measures
Financial report 2023
Return on equity
SEK million
Net income (loss) attributable to owners
of the Parent Company
Average stockholders’ equity
Stockholders’ equity, beginning of period 1)
Stockholders’ equity, end of period
Average stockholders’ equity
Return on equity (%)
1) For 2019, adjusted opening balance due to implementation of IFRS 16 “Leases.”
2023
2022
2021
2020
–26,446
18,724
22,694
17,483
134,814
98,673
116,744
–22.7%
108,775
134,814
121,795
15.4%
86,674
108,775
97,725
23.2%
82,559
86,674
84,617
20.7%
2019
2,223
86,729
82,559
84,644
2.6%
Definition
Net income (loss) attributable to owners of the Parent
Company as a percentage of average stockholders’ equity
(based on the amounts at January 1 and December 31).
Reason to use
Return on equity is a measure of the profitability in relation to the book value of shareholder equity. Return on equity is
a measure of how investments are used to generate earnings growth.
Sales growth adjusted for comparable units and currency
SEK million
Net sales
Acquired/divested business
Net FX impact
Comparable net sales, excluding FX impact
Comparable net sales adjusted for acquired/divested business
Sales growth adjusted for comparable units and currency (%)
2023
263,351
–9,048
–9,421
244,882
271,373
–10%
2022
271,546
–7,015
–25,968
238,563
232,314
3%
2021
232,314
–1,201
11,607
242,720
232,390
4%
2020
232,390
–1,362
7,796
238,824
227,132
5%
2019
227,216
–96
–10,675
216,445
208,130
4%
Definition
Sales growth adjusted for the impact of acquisitions and
divestments as well as the effects of foreign currency
fluctuations. Also named organic sales.
Reason to use
Ericsson’s presentation currency is SEK while the total revenues are mainly in other currencies. Reported sales growth
is dependent on fluctuations in SEK versus other currencies and in addition acquired or divested business can have an
impact on reported net sales. Sales growth adjusted for comparable units and currency shows the underlying sales
development without these parameters.
Financial report 2023
The Ericsson share
133
The Ericsson share
Share trading
The Telefonaktiebolaget LM Ericsson (the Parent Company) Class A and Class B shares
(Ericsson shares) are listed on Nasdaq Stockholm. In the United States, the Class B shares
are listed on Nasdaq New York in the form of American Depositary Shares (ADS) evidenced
by American Depositary Receipts (ADR) under the symbol ERIC. Each ADS represents one
Class B share.
In 2023, approximately 2.1(2.0) billion Class B shares were traded on Nasdaq Stockholm
and approximately 2.5 (2.3) billion ADS were traded in the United States (including Nasdaq
New York). A total of 4.6 (4.3) billion Ericsson Class B shares were thus traded on the
exchanges in Stockholm and in the United States. According to Nasdaq, trading volume in
Ericsson shares increased by approximately 6% on Nasdaq Stockholm and increased by
approximately 6% in the United States when compared to 2022.
With the implementation of the Mifid directive
in the EU, share trading became heavily fragmen-
ted across a large number of venues and trading
categories. Trading on MTFs (multilateral trading
facilities) and other venues gained market shares
from stock exchanges such as Nasdaq Stockholm.
In the last few years, following a series of merger
and acquisitions among trading venues, trading
has become more concentrated.
According to Nasdaq, total trading in Ericsson
B shares on all venues combined has increased
over the past five years from 7.6 billion shares
in 2019 to 10.2 billion shares in 2023. Over the
same period, trading of Ericsson ADS in the US has
increased from 1.5 billion shares in 2019 to 2.5
billion shares in 2023.
Share trading on different
market places (B shares and ADS)
Shares, millions
12,000
10,000
8,000
6,000
4,000
2,000
0
2019
2020
2021
2022
2023
Stockholm
US
Other
Source: Nasdaq
The Ericsson share
Share/ADS listings
Nasdaq Stockholm
Nasdaq New York
Share data
Total number of shares in issue
of which Class A shares,
each carrying one vote 1)
of which Class B shares, each carrying
one tenth of one vote 1)
Ericsson treasury shares, Class B
Quotient value
Market capitalization, December 31, 2023
ICB (Industry Classification Benchmark)
1) Both classes of shares have the same rights of participation
in the net assets and earnings.
3,344,151,735
261,755,983
3,082,395,752
14,009,306
SEK 5.00
SEK 211 billion
9,500
Ticker codes
Nasdaq Stockholm
Nasdaq New York
Bloomberg Nasdaq Stockholm
Bloomberg Nasdaq
Reuters Nasdaq Stockholm
Reuters Nasdaq
ERIC A/ERIC B
ERIC
ERICA SS/ERICB SS
ERIC US
ERICa.ST/ERICb.ST
ERIC.O
Changes in number of shares and capital stock 2019–2023
2019
2020
2021
2022
2023
2023
December 31
December 31
December 31
December 31
May 2, new issue (Class C shares, later converted to Class B shares) 1)
December 31
Number of shares
Share capital (SEK)
3,334,151,735
3,334,151,735
3,334,151,735
3,334,151,735
10,000,000
3,344,151,735
16,670,758,678
16,670,758,678
16,670,758,678
16,670,758,678
50,000,000
16,720,758,678
1) The Annual General Meeting 2023 resolved to issue 10,000,000 Class C shares for the Long-Term Variable Compensation Programs LTV II 2023, LTV 2022 and LTV 2021 for Ericsson’s Executive Team and other
executives. In accordance with an authorization from the AGM, the Board of Directors resolved to repurchase the new issued shares, which were subsequently converted into Class B shares. The quotient value of
the repurchased shares was SEK 5, totaling SEK 50 million, representing less than 0.3% of capital stock. The acquisition cost was approximately SEK 50.2 million.
Share performance indicators
Earnings (loss) per share, diluted (SEK) 1)
Dividend per share (SEK) 2)
Total shareholder return (%)
P/E ratio
1) Calculated on average number of shares outstanding, diluted.
2) For 2023 as proposed by the Board of Directors.
2023
–7.94
2.70
8
–8
2022
5.62
2.70
–36
11
2021
6.81
2.50
4
15
2020
5.26
2.00
22
19
2019
0.67
1.50
6
122
For definitions of the financial terms used, including a description of alternative performance measure, see Glossary and Financial Terminology.
134
The Ericsson share
Financial report 2023
Share and ADS prices
Share prices on Nasdaq Stockholm
Principal trading market – Nasdaq Stockholm – share prices
The tables state the high and low share prices for the Class A and Class B
shares as reported by Nasdaq Stockholm for the periods indicated. Trading on
the exchange generally continues until 5:30 p.m. (CET) each business day. In
addition to trading on the exchange, there is trading off the exchange and on
alternative venues during trading hours and also after 5:30 p.m. (CET).
Nasdaq Stockholm publishes a daily Official Price List of Shares, which
includes the volume of recorded transactions in each listed stock, together with
the prices of the highest and lowest recorded trades of the day. The Official
Price List of Shares reflects price and volume information for trades completed
by the members.
(SEK)
Class A at last day of trading
Class A high
(Jan 12, 2023)
Class A low
(Oct 17, 2023)
Class B at last day of trading
Class B high
(Jan 12, 2023)
Class B low
(Oct 30, 2023)
2023
63.80
2022
2021
2020
66.00
100.20
105.40
2019
85.40
73.00
118.40
128.80
119.00
96.80
50.00
63.11
63.50
60.90
91.90
99.79
64.10
99.98
74.70
81.56
68.50
117.32
121.80
110.15
96.74
48.53
58.81
91.00
59.54
74.02
Source: Nasdaq Stockholm
Host market – Nasdaq New York – ADS prices
The tables state the high and low share prices quoted for the ADSs on
Nasdaq New York for the periods indicated. The Nasdaq New York quotations
represent prices between dealers, not including retail markups, markdowns or
commissions, and do not necessarily represent actual transactions.
Share prices on Nasdaq New York
(USD)
ADS at last day of trading
ADS high (Jan 12, 2023)
ADS low (Oct 27, 2023)
2023
6.30
6.43
4.33
2022
5.84
12.78
5.16
2021
10.87
15.32
9.93
2020
11.95
12.20
6.15
2019
8.78
10.46
7.58
Source: Nasdaq New York
Share prices on Nasdaq Stockholm and Nasdaq New York
Period
Annual high and low
2019
2020
2021
2022
2023
Quarterly high and low
2022 First Quarter
2022 Second Quarter
2022 Third Quarter
2022 Fourth Quarter
2023 First Quarter
2023 Second Quarter
2023 Third Quarter
2023 Fourth Quarter
Monthly high and low
August 2023
September 2023
October 2023
November 2023
December 2023
January 2024
1) One ADS = 1 Class B share.
Nasdaq Stockholm
SEK per Class A share
SEK per Class B share
Nasdaq New York
USD per ADS 1)
High
Low
High
Low
High
Low
96.80
119.00
128.80
118.40
73.00
118.40
97.00
88.30
77.00
73.00
70.00
63.00
64.70
58.70
60.40
56.20
55.90
64.70
67.00
74.70
64.10
91.90
63.50
50.00
78.50
76.00
66.30
63.50
60.40
56.40
53.10
50.00
55.10
53.10
50.00
52.00
53.00
59.70
96.74
110.15
121.80
117.32
68.50
117.32
94.77
81.32
73.56
68.50
62.66
59.62
64.28
57.29
58.62
55.51
53.92
64.28
65.33
74.02
59.54
91.00
58.81
48.53
72.56
72.60
64.12
58.81
54.96
53.36
49.79
48.53
52.39
51.76
48.53
49.86
51.41
58.72
10.45
12.61
15.32
12.78
6.43
12.78
9.80
7.81
6.82
6.43
6.04
5.75
6.36
5.24
5.29
4.96
5.07
6.36
6.28
7.58
6.15
9.93
5.16
4.33
5.16
7.26
5.65
5.16
5.22
5.01
4.74
4.33
4.83
4.74
4.33
4.39
4.86
5.62
Source: Nasdaq Stockholm and Nasdaq New York.
Financial report 2023
Shareholders
As of December 31, 2023, the Parent Company had 413,786 shareholders
registered at Euroclear Sweden AB (the Central Securities Depository – CSD),
of which 744 holders had a US address. According to information provided
by the Company’s depositary bank, Deutsche Bank, there were 299,256,666
ADSs outstanding as of December 29, 2023, and 2,756 registered holders of
such ADSs. A significant number of Ericsson ADSs are held by banks, brokers
and/or nominees for the accounts of their customers. As of January 31, 2024,
the total number of bank, broker and/or nominee accounts holding Ericsson
ADSs was 188,834.
According to information known at year-end 2023, approximately 88.1% of
the Class A and Class B shares were owned by institutions, Swedish and other
international institutions. The major shareholders do not have different voting
rights than other shareholders holding the same classes of shares. As far as
Ericsson knows, the Company is not directly or indirectly owned or controlled
by another corporation, by any foreign government or by any other natural or
legal person(s) separately or jointly.
The table below shows the total number of shares in the Parent Company
owned by the Executive Team and Board members (including Deputy
employee representatives) as of December 31, 2023.
The Executive Team and Board members, ownership
Number of
Class A shares
Number of
Class B shares
Voting rights,
percent
The Executive Team and
Board members
(31 persons)
For individual holdings, see Corporate Governance report.
0
2,464,565
0.4%
The Ericsson share
135
Geographical ownership breakdown of share capital including
retail shareholders and treasury shares
Percent of capital
Sweden
United States
United Kingdom
Norway
Denmark
2023
40.85%
25.42%
12.31%
5.50%
1.20%
2022
40.53%
26.96%
9.21%
4.68%
1.55%
Other countries
14.72%
17.07%
Source: Nasdaq
Ownership breakdown by type of owner
Percentage of voting rights
Swedish institutions
Of which:
– Investor AB
– AB Industrivärden
– AMF Tjänstepension and AMF
Fonder
Foreign institutions
Swedish retail investors
Other
2023
58.32%
23.75%
15.11%
4.52%
2022
58.07%
23.79%
15.14%
4.87%
29.76%
28.28%
5.52%
6.4%
5.41%
8.24%
Source: Nasdaq
Number of shares 1)
Holding
1–500
501–1,000
1,001–5,000
5,001–10,000
10,001–15,000
15,001–20,000
20,001–
Total, December 31, 2023 2)
No. of
shareholders
326,620
38,509
39,367
5,301
1,398
733
1,857
413,786
No. of
A shares
1,424,814
968,303
2,800,106
1,151,118
378,550
344,628
254,688,464
261,755,983
No. of
B shares
Percentage
of share capital
Percentage
of voting rights
Market value
(MSEK)
41,017,663
28,288,228
83,213,686
37,095,706
16,863,538
12,793,236
2,862,378,791
3,082,395,752
1.27%
0.87%
2.57%
1.14%
0.52%
0.39%
93.21%
100%
0.97%
0.67%
1.95%
0.85%
0.36%
0.28%
94.90%
100%
2,682
1,849
5,436
2,417
1,089
830
197,091
211,441
1) Source: Euroclear.
2) Includes a nominee reporting discrepancy of 744,904 shares.
The following table shows share information as of December 31, 2023 with respect to the 15 largest shareholders ranked by voting rights as well as their
percentage of voting rights as of December 31, 2023, 2022 and 2021.
Largest shareholders December 31, 2023 and percentage of voting rights December 31, 2023, 2022 and 2021
Identity of person or group 1)
Investor AB
AB Industrivärden
AMF Tjänstepension and AMF Fonder
Cevian Capital
BlackRock Institutional Trust Company, N.A.
Fidelity International
AFA Försäkring AB
Swedbank Robur Fonder AB (EX Folksam)
The Vanguard Group, Inc.
PRIMECAP Management Company
Norges Bank Investment Management (NBIM)
Livförsäkringsbolaget Skandia, ömsesidigt
Tredje AP Fonden
Handelsbanken Asset Management
State Street Global Advisors (US)
Others
Total
1) Source: Nasdaq
Number of
Class A shares
Of total Class
A shares
percent
Number of
Class B shares
Of total Class
B shares
percent
Of total Class
A+B shares
percent
2023
Voting rights
percent
2022
Voting rights
percent
2021
Voting rights
percent
120,762,803
86,052,615
20,650,000
339,228
0
0
11,555,100
7,695
1,161,057
0
123,410
4,143,458
4,250,736
18,246
1,143
12,690,492
261,755,983
145,982,932
46.14
1,000,000
32.88
50,892,267
7.89
152,218,174
0.13
137,894,228
0.00
202,719,471
0.00
3,805,747
4.41
107,105,167
0.00
96,697,401
0.44
54,905,971
0.00
39,008,009
0.05
26,301,905
1.58
16,580,931
1.62
63,430,978
0.01
0.00
53,442,698
4.85 1,930,409,873
100 3,082,395,752
4.74
0.03
1.65
4,94
4.47
6.58
0.12
3.47
3.14
1.78
1.27
0.85
0.54
2.06
1.73
62.63
100
7.98
2.60
2.14
4.56
4.12
6.06
0.46
3.20
2.93
1.64
1.17
0.91
0.62
1.90
1.60
58.10
100
23.75
15.11
4.52
2.73
2.42
3.56
2.09
1.88
1.90
0.96
0.71
1.19
1.04
1.12
0.94
36.09
100
23.79
15.14
4.87
2.72
2.41
2.16
2.14
1.97
1.87
1.45
1.25
1.19
1.08
1.06
0.95
35.95
100
23.79
15.14
4.36
2.72
2.41
1.05
2.05
2.24
1.56
1.86
0.89
1.20
1.02
0.93
0.95
37.83
100
136
The Ericsson share
Financial report 2023
Share trend
In 2023, Ericsson’s total market capitalization increased by 3.9% to SEK 211 billion, from SEK 204 billion
in 2022 (which represented a decrease by 39.0% against 2021). In 2023, the index, OMX Stockholm, on
Nasdaq Stockholm increased by 15.4%, the Nasdaq composite index increased by 41.1% and the S&P 500
Index increased by 24.2%.
Earnings (loss) per share, diluted
SEK
8
7
6
5
4
3
2
1
0
−1
−2
−3
−4
−5
−6
−7
−8
6.81
5.26
5.62
0.67
−7.94
2019
2020
2021
2022
2023
Earnings (loss) per share, diluted
Dividend per share
SEK
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2.70
2.70
2.50
2.00
1.50
2019
2020
2021
2022
2023
1)
1) For 2023 as proposed by the Board of Directors.
Share turnover and price trend, Nasdaq Stockholm
Class A shares, SEK
150
125
100
75
50
25
0
2019
2020
2021
2022
2023
Class B shares, SEK
150
125
100
75
50
25
0
2019
2020
2021
2022
2023
Volume traded, 000’s monthly
Ericsson share
Nasdaq Stockholm Index OMXS30
Volumes reflect trading on Nasdaq Stockholm only.
Share turnover and price trend, Nasdaq New York
ADS, USD
28
24
20
16
12
8
4
0
2019
2020
2021
2022
2023
Volume traded, 000’s monthly
Ericsson ADS
S&P 500
000’s share traded
monthly
26,000
//
5,000
4,000
3,000
2,000
1,000
0
000’s share traded
monthly
600,000
500,000
400,000
300,000
200,000
100,000
0
000’s share traded
monthly
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Financial report 2023
Shareholder information
137
Shareholder information
Telefonaktiebolaget LM Ericsson’s Annual
General Meeting of shareholders 2024 will
be held on Wednesday, April 3, 2024 at
1 p.m. CET at Ericsson’s premises: Open Box,
Grönlandsgatan 8, Kista/Stockholm, Sweden.
Shareholders are also able to exercise their
voting rights by post before the meeting.
Information on registration and notice of
participation, on how shareholders will be able
to exercise their voting rights, and on proxies
and assistants is found in the notice of the
Annual General Meeting. Information is also
available on the Company’s website
www.ericsson.com.
Dividend proposal
The Board of Directors proposes to the
Annual General Meeting a dividend to the
shareholders of SEK 2.70 (2.70) per share
for the financial year 2023, representing a
total dividend of approximately SEK 9.0 (9.0)
billion. The dividend is proposed to be paid in
two installments, SEK 1.35 per share with the
record date April 5, 2024, and SEK 1.35 per
share with the record date October 2, 2024.
Should the Annual General Meeting decide in
favor of the proposal, payment of the dividend
is expected to be made on April 10, 2024, and
on October 7, 2024.
Financial information from Ericsson
2023 Form 20-F for the US market:
– March 12, 2024
Interim reports 2024:
– Q1, April 16, 2024
– Q2, July 12, 2024
– Q3, October 15, 2024
– Q4, January 25, 2025
Annual Report 2024:
– March, 2025
138
Financial terminology
Financial report 2023
Financial terminology 1)
EBITA
Earnings (loss) before interest, income tax, amor-
tizations and write-downs of acquired intangible
assets.
P/E ratio
The P/E ratio is calculated as the price of a Class B
share at last day of trading divided by earnings per
basic share.
Adjusted working capital
Current assets less current non-interest-bearing
provisions and liabilities (which include current
provisions, contract liabilities, trade payables,
current tax liabilities and other current liabilities).
CAPEX
Capital expenditures.
Capital employed
Total assets less non-interest-bearing provisions
and liabilities (which includes non-current provi-
sions, deferred tax liabilities, contract liabilities,
other non-current liabilities, current provisions,
trade payables, current tax liabilities and other
current liabilities).
Capital turnover
Net sales divided by average capital employed
(based on the amounts at January 1 and
December 31).
Compound annual growth rate (CAGR)
The year-over-year growth rate over a specified
period of time.
Days sales outstanding (DSO)
Trade receivables balance at quarter end divided
by net sales in the quarter and multiplied by
90 days. If the amount of trade receivables is
larger than last quarter’s sales, the excess amount
is divided by net sales in the previous quarter
and multiplied by 90 days, and total DSO are
the 90 days of the most current quarter plus the
additional days from the previous quarter.
Earnings (loss) per share (EPS)
Basic earnings (loss) per share: profit or loss attrib-
utable to stockholders of the Parent Company
divided by the weighted average number of
ordinary shares outstanding during the period.
Earnings (loss) per share diluted (EPS diluted)
Earnings (loss) per share, using the weighted
average number of shares outstanding adjusted
for the effects of dilutive potential ordinary shares.
EBIT
Earnings before financial items and income tax.
EBIT margin
EBIT as a percentage of net sales.
EBITA margin
Earnings (loss) before interest, income tax, amor-
tizations and write-downs of acquired intangible
assets as a percentage of net sales.
Equity ratio
Equity expressed as a percentage of total assets.
Financial income and expenses, net
Financial income, Financial expenses, and Net
foreign exchange gains/losses. Also named as
Financial net.
Free cash flow after M&A
Cash flow from operating activities less net capital
expenditures, other investments and repayment
of lease liabilities.
Free cash flow before M&A
Cash flow from operating activities less net capital
expenditures, other investments and repayment
of lease liabilities (excluding M&A).
Gross cash
Cash and cash equivalents plus interest-bearing
securities (current and non-current).
Gross margin
Gross income as a percentage of net sales.
Inventory turnover days (ITO days)
365 divided by inventory turnover, calculated as
total cost of sales divided by the average invento-
ries for the year (net of advances from customers).
M&A
Mergers and Acquisitions.
Net cash
Cash and cash equivalents plus interest-bearing
securities (current and non-current) less borrow-
ings (current and non-current).
OCI
Other comprehensive income.
OPEX
Operating expenses.
1) For additional information of certain financial terms, see Alternative performance measures on pages 128–132.
Payable days
The average balance of trade payables at the
beginning and at the end of the year divided
by cost of sales for the year, and multiplied by
365 days.
Return on capital employed
EBIT as a percentage of average capital employed
(based on the amounts at J anuary 1 and Decem-
ber 31).
Return on equity
Net income (loss) attributable to owners of the
Parent Company as a percentage of average
stockholders’ equity (based on the amounts at
January 1 and December 31).
Sales growth adjusted for comparable units
and currency
Sales growth adjusted for the impact of acquisi-
tions and divestments as well as the effects of
foreign currency fluctuations. Also named as
organic sales.
SG&A
Selling, General & Administrative operating
expenses.
Total shareholder return (TSR)
The increase or decrease in Class B share price
during the period, including dividend, expressed
as a percentage of the share price at the start of
the period.
Value at Risk (VaR)
A statistical method for calculating the maximum
potential loss that may occur with a given confi-
dence level over a given time period.
Exchange rates
Exchange rates in consolidation
SEK/EUR
Average rate 1)
Closing rate
SEK/USD
Average rate 1)
Closing rate
January–December
2023
2022
11.47
11.09
10.62
10.01
10.61
11.08
10.04
10.38
1) Average for the year for disclosure purpose only.
Period income and expenses for each income statement
are translated at period average exchange rates.
Financial report 2023
Glossary
139
Glossary
4G/LTE
Forth generation mobile systems, also known
as LTE.
5G
The fifth generation of mobile systems. An evolu-
tion of 4G/LTE.
5G Core
5G Core Network is responsible for managing
the flow of data in a 5G network and ensures
that the network can meet the demands of the
5G services and applications.
6G
Sixth generation mobile system. An evolution
of 5G.
AI
Artificial Intelligence. The ability of a machine to
perform tasks commonly associated with intel-
ligent beings.
API
Applications Programming Interface. An API
is a set of protocols and routines for building
software applications, enabling communication
and access to services or data of other software
programs.
BSS
Business Support Systems, the IT-systems that a
communications service provider uses to run its
business operations towards customers. Together
with operations support systems (OSS), they are
used to support various services for both business
processes and the network end-to-end.
CCaaS
Contact Center as a Service. A cloud-based
solution for managing customer interactions,
providing businesses with a virtual call center
environment.
Cloud
When data and applications reside in accessible
data centers.
Cloud native
Cloud native is the software approach of building,
deploying, and managing modern applications in
cloud computing environments.
CO2e
The amount of a particular greenhouse gas,
expressed as the amount of carbon dioxide that
gives the same greenhouse effect.
Mobile broadband
Wireless high-speed internet access using
the HSPA, LTE, CDMA2000EV-DO and 5G
technologies.
Core network
The mobile network’s core part, which offers
numerous services to the end users who are inter-
connected by the access network. Its key function
is to direct voice calls and route data traffic.
COVID-19 pandemic
The global spread of the disease caused by the
coronavirus (SARS-CoV-2).
CPaaS
Communications Platform as a Service. A
cloud-based solution that provides businesses
with tools and APIs for integrating real-time
communication capabilities, such as voice, video,
and messaging, into their applications.
CSP
A Communication Services Provider (CSP) is a
company or entity that offers various communica-
tion-related services, such as telecommunications,
internet, and messaging services, to individuals,
businesses, or other organizations.
FWA
Fixed Wireless Access is a high-speed internet
technology using wireless communication
instead of cables.
ICT
Information and Communication Technology.
IoT
Internet of things, interconnection of computing
things enabling them to send and receive data.
IP
Internet Protocol. Defines how information travels
between network elements across the internet.
IPR
Intellectual Property Rights, or specifically patents.
Managed services
Management of operator networks and/or hosting
of their services.
OSS
Operations Support Systems, IT-systems used by
communications service providers to manage
their networks. They support management func-
tions such as network inventory, service provision-
ing, network configuration and fault management.
Together with Business Support Systems (BSS),
they are used to support various services for both
business processes and the network end-to-end.
RAN
Radio Access Network, consists of a large number
of radio base stations that handsets and devices
can connect to.
SASE
Secure Access Service Edge. It is a network
architecture that combines network security
functions with WAN capabilities to support the
dynamic, secure access needs of organiza-
tions, often delivered as a cloud-based service.
Time-bound latency
Time-bound latency refers to the time delay
between when a device sends a request and when
it receives a response from the network.
UCaaS
Unified Communications as a Service. A cloud-
based solution that integrates various communi-
cation tools, such as voice, video, messaging, and
collaboration, into a single platform.
WAN
Wide Area Network. A WAN connects remote
networks for communication and resource
sharing.
XR
Extended Reality. A technology that includes
virtual reality (VR), augmented reality (AR),
and mixed reality (MR), enabling users to
experience and interact with computer-
generated simulations.
The terms “Ericsson”, “the Company”, “the Group”, “us”, “we”, and “our” all refer to Telefonaktiebolaget LM Ericsson and its subsidiaries.
Corporate
Governance
report
Part of
Ericsson
Annual Report
2023
Annual Report 2023
Financial
report
Corporate
Governance
report
Remuneration
report
Sustainability
and Corporate
Responsibility
report
ericsson.com
Contents
Corporate Governance report 2023
Introduction and Key 2023
Governance Updates
Regulation
Governance Structure and Core Values
Ethics & Compliance
Risk Management
General Meetings of shareholders
Nomination Committee
Board of Directors
Committees of the Board of Directors
Remuneration to Board members
Members of the Board of Directors
Management
Cybersecurity
Members of the Executive Team
Auditor
Internal control over financial reporting
Auditor’s report on the Corporate
Governance report
2
3
3
5
6
8
8
9
11
13
14
18
19
20
25
25
28
This Corporate Governance report is rendered as a separate report
added to the Financial Report in accordance with the Annual
Accounts Act ((SFS 1995:1554) Chapter 6, Sections 6 and 8) and
the Swedish Corporate Governance Code.
The report has been reviewed by Ericsson’s auditor in accordance
with the Annual Accounts Act.
A report from the auditor is appended hereto.
Corporate Governance report 2023
1
Corporate Governance report 2023
The Board is actively engaged in Ericsson’s ongoing transformation.
Strong corporate governance, with the Board’s strategic and indepen-
dent oversight, enables Ericsson to execute effectively and respon-
sibly on its strategy while promoting transparency and maintaining
high ethical standards. Ericsson’s culture continues to be enhanced
while implementing improved governance and embedding integrity
throughout the organization.
Throughout Ericsson’s history, the expertise and skill of
its engineers have formed the cornerstone of the strat-
egy and the foundation for success – driving technology
leadership and continuous innovation, and shaping the
world of communications. Today, Ericsson’s technology
leadership is no less important – and perhaps even
more important – to its future success as it was when
Ericsson began. Ericsson’s continued success depends
on maintaining our technology leadership and remain-
ing true to its purpose, vision and values.
Technology leadership alone is not enough to navi-
gate an uncertain and challenging global environment.
Ericsson needs to combine technology and innovation
with operational excellence, the best talent and a strong
culture. As we face the many complexities of a global
technology company – geopolitical change, conflicts,
competition and macroeconomic conditions – Ericsson
will define its long-term success through world leading
technology and innovation paired with the right talent,
an ethical culture and operational excellence under-
pinned by world-class governance.
In addition, Ericsson has continued to strengthen
and enhance its ethics and compliance program
and further embed integrity in its ways of working.
Preparations are underway to conclude the term of our
DOJ resolution, and the related monitorship, in June
of this year. The Board has been actively involved in
overseeing this process. The management team has
established an effective compliance program and
enhanced internal controls, which have been integrated
in the business operations and are subject to rigorous
self-monitoring and testing. In parallel, Ericsson has
achieved major enhancements in its approach to enter-
prise risk management and internal accounting controls.
A compliance culture is embedded with a keen focus
on ethics and integrity that is built to last. We take pride
in Ericsson’s long history and believe that it should lead
as a positive force in every society in which it operates.
The Board is of the unanimous view that Ericsson’s
actions in 2023 have strengthened the Company and
delivered meaningful value for Ericsson’s customers
and all its stakeholders. We are confident that the
strong ethical culture, continued commitment to robust
governance and risk management, and increased focus
on operational excellence will enhance Ericsson’s com-
petitive advantage and strengthen both its performance
and global position, creating connections that make the
unimaginable possible.
Jan Carlson
Chair of the Board
2
Corporate Governance report 2023
Introduction and Key 2023 Governance
Updates
Ericsson’s Corporate Governance
Ericsson is committed to maintaining the highest
standards of corporate governance and has
established a corporate governance framework
that:
– Empowers the business, enabling strategic
execution and operational excellence;
– Promotes and facilitates effective oversight
across the organization by the Board of
Directors (Board), the President and CEO,
the Executive Team and at all levels of the
organization;
– Ensures high-quality decision-making with
clear accountabilities at all levels; and
– Instills a robust approach to risk management
to effectively identify, manage and mitigate
risks and capture opportunities.
Ericsson prioritizes an integrity-led culture and
compliance with law in everything it does, driv-
ing integrity into and across the organization.
Ericsson’s governance framework guides its peo-
ple while building on their strengths – fostering a
culture of transparency, collaboration and open
dialogue, sound and ethical business decisions,
strong risk management, and cross-functional
coordination. Ericsson has implemented prac-
tices and procedures that establish clear rules
of governance, ranging from matters requiring
approval of the Company’s shareholders and
members of its Board, to conflicts of interest
policies and director and management duties
and obligations. More information can be found
at https://www.ericsson.com/en/about-us/
corporate-governance.
Key Corporate Governance Actions in 2023
Ericsson’s intensive work on strengthening and
simplifying its corporate governance practices
continued throughout 2023, and was pursued
in concert with further improvements to its
ethics and compliance (E&C) program. In 2023,
Ericsson:
– Fully embedded the Material Group Risk
Protocol and Business Risk Committee (BRC)
into the Group’s governance and risk man-
agement frameworks, as described further
below.
– Introduced clarified Group governance and
operating principles, to be rolled out in early
2024.
– Refreshed and clarified the Company’s Code
of Business Ethics (CoBE), which is being
re-launched in early 2024.
– Updated, streamlined and clarified the
Group’s key policies and other guidance docu-
ments, including those on contracting, compli-
ance, allegation assessment, investigations
and remediation, and human rights. This work
will continue into 2024.
– Continued to embed various aspects of its
compliance program into business opera-
tions, through a close partnership with the
compliance function and stakeholders across
the entire organization (as described further
below in the Ethics & Compliance section).
– Continued to strengthen performance-
management at all levels of the organization
while also implementing strong remediation
measures where misconduct has occurred.
Throughout 2023, the BRC, comprising senior
executives and chaired by the CLO and CFO, has
provided an important forum for escalating and
analyzing material risks across the Group, provid-
ing appropriate oversight and driving mitigation
and accountability by senior executives. The BRC
has been particularly impactful in strengthening
Ericsson’s approach to managing high levels of
risk associated with certain jurisdictions. The
heads of each market area have been conduct-
ing holistic, ongoing risk assessments of the
countries in their purview, and material risks that
exist or arise are regularly reviewed and moni-
tored. The BRC applies a “heightened scrutiny”
approach in evaluating and mitigating these
types of risks, and the organization has imple-
mented various actions to address these risks,
ranging from enhanced contractual protections,
changes to the scope or nature of operations, or a
decision to responsibly exit the relevant jurisdic-
tion or customer relationship.
Ericsson believes that driving integrity into
day-to-day decision-making requires constant
focus to ensure that compliance processes and
related controls are fit for purpose and that they
are continuously tested and refined. Through
an initiative referred to as the Business Critical
Transformation, discussed in greater detail in
the Ethics & Compliance section of this Report,
Ericsson embedded improved anti-corruption
controls into its operations and managerial
decisions. This further remediated the business
process issues that were, in the past, a contribut-
ing factor in incidents of misconduct. Ericsson
combined this work with rigorous testing of the
E&C program’s effectiveness, which includes
clear expectations for management to under-
stand and address testing results and process
adherence within the areas of their responsibility.
This approach positions Ericsson to conclude its
monitorship related to the DOJ resolution in June
2024, but more importantly, creates a foundation
for a well embedded, self-sustaining ethics and
compliance program.
Shareholder Engagement on Governance
Topics
As part of Ericsson’s ongoing investor engage-
ment, and in addition to the ordinary course
communication between investors and Ericsson’s
Investor Relations and management team
throughout the year, during the second half of
2023, the Chair of Ericsson’s Board, Jan Carlson,
and the Chair of the Audit and Compliance
Committee, Eric Elzvik, had dialogues with share-
holders and held Company-initiated substantive
discussions, with shareholders representing more
than 55% of shares outstanding. These have
been focused on a broad range of governance
topics with the objective to understand and
receive shareholder feedback and respond to
questions. These discussions centered on the
thoughtful, multi-year transformation of the
Company’s governance, culture and E&C pro-
gram alongside sustainability and remuneration
programs, among other topics. The Audit and
Compliance Committee’s (ACC) strong oversight
of the compliance function, and the frequent and
in depth reporting on the effectiveness of the E&C
program to the ACC, was also highlighted during
these discussions.
Feedback from these discussions has been
positive with shareholders appreciating the
information and noting the transformation of the
E&C program.
Other key topics included:
– significant improvements made to Ericsson’s
governance framework which has included
enhanced Board and management oversight
and strong, proactive risk management;
– the effective integration of enhanced
controls into Ericsson’s operations and
decision-making;
– emphasis on driving continuous cultural
change with a focus on embedding integrity
into Ericsson’s ways of working, fostering a
culture of transparency, collaboration and
open dialogue, sound and ethical business
decisions, strong risk management;
– implementation of employee training pro-
grams and providing Speak-Up resources to
drive an integrity-led culture; and
– significant testing of the E&C program’s
effectiveness, simplification of policies, proce-
dures and tools, an improved understanding
of managing risks in business interactions,
and digitalization.
Shareholders also expressed the desire for
more frequent disclosure of these E&C improve-
ments, which the Company has strived to meet
through periodic updates, presentations and
dialogue with investors and other stakehold-
ers. Shareholders also communicated support
for Ericsson’s overall executive remuneration
philosophy (which now includes an integrity
based component; more information on this can
be found in the second paragraph of “Integrating
Compliance into the Business and Testing
Effectiveness” below).
The feedback gathered during these conver-
sations helped inform the Board’s discussions
on remuneration and other topics for 2024. In
direct response to shareholder feedback, the
2024 remuneration package for the President
and CEO will now include a Short-Term Variable
(STV) incentive component which aligns with
the Company’s Remuneration Guidelines and is
described in further detail in the Remuneration
Report.
Corporate Governance report 2023
3
Regulation
Governance Structure and Core Values
The members of the Executive Team lead the
External Rules
As a Swedish public limited liability company
with securities traded on Nasdaq Stockholm
as well as on Nasdaq New York, Ericsson is
subject to a variety of rules that affect its govern-
ance. The primary external rules applicable to
Ericsson’s governance include:
– The Swedish Companies Act.
– Applicable EU regulations.
– The Swedish Corporate Governance Code
(the Code).
– The Nasdaq Stock Market Rules, including the
Nasdaq Nordic Main Market Rules for Issuers
of Shares and applicable Nasdaq New York
corporate governance requirements (subject
to certain exemptions principally reflecting
mandatory Swedish legal requirements).
– Applicable requirements of the US Securities
and Exchange Commission (SEC).
Internal Rules and Policies
Ericsson’s articles of association and the work
procedure for the Board of Directors (and its
respective Committees) establish the foundation
for Ericsson’s internal corporate governance,
including its decision making.
In addition, to promote compliance with
legal and regulatory requirements and the high
standards that Ericsson has set, Ericsson has
established core governance pillars for the Group
and has adopted a range of policies and proce-
dures that include, among others:
– The Code of Business Ethics.
– The Code of Conduct for Business Partners.
– Material Group Risk Protocol.
– A set of core Group policies necessary to
operate the Group’s business and satisfy its
internal and relevant external standards.
Each policy establishes the requirements and
expectations for Ericsson and its employees.
Compliance with securities market
regulations
Compliance with the Swedish Corporate
Governance Code
The Swedish Corporate Governance Code is
based on the principle of “comply or explain”
and is published on the website of the Swedish
Corporate Governance Board, which administers
the Code: www.corporategovernanceboard.
se. Ericsson is committed to complying with
best-practice corporate governance standards on
a global level. Ericsson did not report any devia-
tions from the rules of the Code in 2023.
Compliance with applicable stock exchange
rules
There has been no infringement by Ericsson of
applicable stock exchange rules and no breach of
good practice on the securities market reported by
the disciplinary committee of Nasdaq Stockholm
or the Swedish Securities Council in 2023.
Governance structure
Ericsson’s organizational governance structure is
comprised of the following:
Ericsson
Shareholders
Ericsson
Board of Directors
Group CEO
Executive Team
Business
Operations and
Strategy
Execution
Under the Swedish Companies Act, Ericsson’s
shareholders retain certain decision-making
rights, including any matters that do not
expressly fall within the exclusive competence of
another corporate body. Shareholder decision-
making rights include, among other things, the
power to elect the Board of Directors, approval
of any amendments to the articles of association
and certain corporate restructurings.
The Board consists of members elected annu-
ally at the General Meeting, as well as employee
representatives and their deputies (which the
unions have the right to appoint under Swedish
law). The Board is ultimately responsible for the
organization of Ericsson and the management
of Ericsson’s operations, and is thus ultimately
responsible for overseeing the Company’s
strategy, organization and operations, and
has established four Committees: (1) the Audit
and Compliance Committee, (2) the Finance
Committee, (3) the Remuneration Committee
and (4) the Enterprise Business and Technology
Committee.
The President and CEO is appointed by the
Board and is responsible for the day-to-day man-
agement of the Group in accordance with the
Swedish Companies Act, as well as in accordance
with guidelines from the Board. The President
and CEO updates the Board regularly on issues
of importance to Ericsson, including matters of
business development, results, financial position
and liquidity.
The President and CEO is supported by the
Executive Team. The Executive Team consists
of the President and CEO, the Chief Legal Officer
(the CLO), the Chief Financial Officer (the CFO),
the Chief Operating Officer (the COO), the Chief
People Officer (the CPO), the Chief Technology
Officer (the CTO), the Chief Marketing and
Corporate Relations Officer (the CMO), the Head
of Group Operations, and the Heads of business
areas and market areas.
corporate center of the Group which, led by the
President and CEO, is responsible for: (1) defining
Group strategies and policies, driving the corpo-
rate strategy and establishing and maintaining
the corporate culture; (2) Group-wide oversight
and ensuring an effective framework for risk
management and decision-making (including
through the implementation of effective govern-
ance, a strong compliance program and related
internal controls); (3) managing and executing
on “central” corporate matters (ranging from
managing Ericsson’s capital structure, financing
and other corporate transactions, listing compli-
ance and disclosure obligations); (4) Group
financial management and reporting (includ-
ing determining targets for operational units,
allocating resources and monitoring market
area and business area performance); and (5)
leading on operational excellence, performance
management and realizing global synergies
through efficient organization of the Group.
The Executive Team is primarily responsible for
steering the Group, ensuring global alignment on
strategic priorities, optimizing competitiveness,
and overseeing effective decision making and
risk management. The executive leaders set the
tone for the entire organization by promoting
high standards of performance and critical think-
ing, exemplifying collaboration and maintaining
the “birds’ eye” view for the entire organization.
Ericsson’s organizational structure consists of
central Group functions (including Finance, Legal
Affairs and Compliance, Technology, People,
Marketing and Corporate Communications and
Operations), together with five business areas
and five geographical market areas.
The central Group functions are focused on
managing corporate and Group aspects of the
organization, including corporate governance,
financial reporting and capital markets, as well
as necessary corporate and risk management
controls. The central Group functions also provide
relevant expertise through the Group (including
on legal, mergers and acquisitions, finance,
compliance, technology, communications, secu-
rity, sustainability, health and safety, and people
matters).
Business areas are responsible for develop-
ing competitive product-led business solutions,
including both products and services and for
investing in research and development for tech-
nology and cost leadership, as well as strategic
pricing. Heads of business areas are also part
of the Executive Team and are responsible for
managing the business of their respective busi-
ness area.
Market areas are responsible for selling and
delivering customer solutions and engaging
with customers to establish leading positions,
particularly in critical markets. Heads of market
areas are also part of the Executive Team and
responsible for managing the business of their
respective market area.
4
Corporate Governance report 2023
Ownership structure
As of December 31, 2023, the Parent Company
had 413,786 registered shareholders, of
which 401,331 were resident or located in
Sweden (according to the share register kept by
Euroclear Sweden AB). Swedish institutions held
approximately 58.32% of the votes. The largest
shareholders, as of December 31, 2023, were
Investor AB with approximately 23.75% of the
votes (7.98% of the shares), AB Industrivärden
with approximately 15.11% of the votes (2.6%
of the shares) and AMF Tjänstepension and AMF
Fonder with approximately 4.52% of the votes
(2.14% of the shares).
A significant number of the shares held by
foreign investors are nominee-registered, i.e.,
held of record by banks, brokers and/or nominees
(acting on behalf of underlying shareholders).
This means that the actual shareholder is not
displayed in the share register kept by Euroclear
Sweden AB or included in the shareholding
statistics.
More information on Ericsson’s shareholders
can be found in the chapter “The Ericsson share”
in the Financial Report.
Shares and voting rights
The share capital of the Parent Company con-
sists of two classes of shares listed on Nasdaq
Stockholm: A and B shares. Each Class A share
carries one vote, and each Class B share carries
one tenth of one vote. Class A and B shares entitle
the holder to the same proportion of assets and
earnings and carry equal rights to dividends.
The Parent Company may also issue Class C
shares, which are converted into Class B shares to
create treasury stock to finance and hedge long-
term variable compensation programs resolved
by the General Meeting of shareholders.
In the US, the Ericsson Class B shares
are listed on Nasdaq New York in the form of
American Depositary Shares (ADS) evidenced
by American Depositary Receipts. Each ADS
represents one Class B share.
The members of the Board of Directors and
the Executive Team have the same voting rights
on shares as other shareholders holding the same
class of shares.
Governance structure
General Meeting of shareholders
Annual General Meeting/Extraordinary General Meeting
Nomination
Committee
Shareholders
Ownership percentage (voting rights)
Unions
Board of Directors
Directors elected by the General Meetings of shareholders
3 Directors and 3 Deputies appointed by the Unions
External
Auditors
Audit and
Compliance
Committee
Finance
Committee
Remuneration
Committee
Enterprise
Business and
Technology
Committee
President and CEO
Management
Head of
Internal Audit
Chief Compliance
Officer
Swedish institutions:
Of which:
– Investor AB
– AB Industrivärden
– AMF Tjänstepension
and AMF Fonder
Foreign institutions
Swedish retail investors
Others
Source: Nasdaq
58.32%
23.75%
15.11%
4.52%
29.76%
5.52%
6.40%
Contact the Board of Directors
Telefonaktiebolaget LM Ericsson
The Board of Directors Secretariat
SE-164 83 Stockholm, Sweden
boardsecretariat@ericsson.com
Annual General Meeting 2024
Ericsson’s AGM 2024 is expected to be held on April 3, 2024. Further
information is available on Ericsson’s website.
Corporate Governance report 2023
5
Professionalism
Integrity
Ericsson’s
core values
Respect
Perseverance
Ethics & Compliance
Ethics and Compliance (E&C) Program
Ericsson has invested significant resources and
energy to strengthen its E&C program, imple-
menting and maintaining strong systems, con-
trols and policies to effectively prevent and detect
wrongdoing, including in the areas of ethics,
anti-bribery and corruption, conflicts of interests,
anti-money laundering and competition law.
Importantly, as discussed above, this effort has
been underpinned by work across the organiza-
tion to transform the Company’s culture and
operationalize enhanced governance to enable it
to operate responsibly and with integrity.
A key step taken in 2023 to enhance the
E&C program was to clarify and enhance the
Company CoBE, a core governance pillar. The
updated CoBE sets out the Company’s expecta-
tions, principles and requirements for employees
as they conduct business. It provides the frame-
work for ethical decision-making, and guides
employees in making decisions and managing
risk as they engage with colleagues, customers,
partners, owners, and other stakeholders. It fur-
ther promotes and supports Ericsson’s Speak-Up
Culture, and prohibits retaliation for speaking up
in any form. All employees are required to confirm
their understanding of the CoBE on a regular
basis. Full adherence to the letter and spirit of the
CoBE framework is expected from all employees
to ensure that the Company’s decisions and
actions are ethical, and that Ericsson is acting as
a positive global force.
Integrating Compliance into the Business
and Testing Effectiveness
During 2023, led by the CEO and Executive
Team, the Company drove its Business Critical
Transformation initiative which deployed cross-
functional teams which were led by the business
owners and supported by compliance and
internal controls functions to ensure compliance
was fully embedded in the business, accessible
to everyone, and working effectively in practice.
Incorporating extensive training, monitoring,
testing and continuous feedback, the Business
Critical Transformation strengthened underlying
business and functional processes, improving
the overall effectiveness and sustainability of
Ericsson’s core values
The Company’s core values are the touchstones of its culture. They guide employees’ daily work, in how they
relate to each other and the world around them and in the way the Company does business. As Ericsson executes
its strategy, people are the foundation–embracing and carrying forward the core values of professionalism,
perseverance, respect and integrity. At Ericsson, the satisfaction and well-being of employees is both consistent
with its core values and a key element of its ability to compete and succeed in future.
Ericsson’s E&C program. Self-testing of the E&C
program’s effectiveness was conducted in close
coordination with the independent monitorship
related to the DOJ resolution. This testing focused
heavily on the priorities identified through the
Business Critical Transformation, with additional
focus on simplification of policies, procedures and
tools, an improved understanding of managing
risks in business interactions, and digitalization.
Leaders were, and are, expected to know the
testing results of their area of responsibility,
and oversee the status of actions to ensure any
needed enhancements or remediation. This
approach to testing and continuous improvement
has been integrated into Ericsson’s ways of work-
ing and is a cornerstone of the E&C program. The
Company’s management and Board are commit-
ted to continuing to embed the E&C program in
the business operations so that it remains both
effective and sustainable, and fit for purpose as
the business continues to evolve. With the pro-
gress made to date, and considering the program
to be effective as indicated by the program’s
testing results, Ericsson expects a successful
conclusion of its monitorship in June 2024. As
it looks to the future, the Company continues to
promote a culture of integrity, which ultimately
provides a competitive advantage.
A key tenet of the Business Critical
Transformation was that the business is the first
line responsible and accountable for conducting
business in a manner consistent with Ericsson’s
values and the E&C program. To further drive
accountability throughout the organization, all
employees who are eligible for an STV pay-out
may be denied all or part the entitlement if they
act in breach of Ericsson’s CoBE. In addition, top
executives are subject to evaluation according to
a set of pre-defined integrity criteria, which relate
to compliance training, third party management,
allegation management and other items tied to
the Company’s E&C program. Underperformance
against these pre-defined criteria can reduce
STV pay-out by up to 100%, while exceptional
performance may justify an additional incentive
of up to a maximum of 10% of the executive’s
annual base salary.
In 2023, the Company also continued to
invest in digital capabilities to (i) enable employ-
ees, line managers and compliance professionals
to work more efficiently, by accessing more easily
compliance-relevant data, and (ii) simplify the
E&C program processes, in each case helping
employees making integrity-driven decisions.
The digital landscape continues to evolve, with
emphasis on AI and analytics to further enhance
management of anti-bribery and corruption risks.
These advancements, which will remain a focus
for the Company, facilitate enhanced monitor-
ing and testing activities, which in turn result in
continuous improvement of the E&C program.
Compliance Reporting Framework and
Investigations
The Company promotes transparency through
the maintenance of the Ericsson Compliance
Line, a dedicated communication channel
for employees and external stakeholders to
report any compliance concerns. The Ericsson
Compliance Line is operated by a third party and
is available 24/7, 365 days per year, and enables
reporting from multiple countries in many lan-
guages, anonymously if chosen. Employees are
expected to report concerns related to corruption,
fraud, accounting, internal controls, human rights
matters or other matters that could constitute a
breach of law, or that could harm the business or
reputation of Ericsson, its employees and share-
holders. Where applicable, Ericsson employees
and external stakeholders have the option to
report certain matters via local channels, which
have been implemented in accordance with the
European Union Directive on the protection of
persons who report breaches of Union law.
Ericsson’s Allegation Management Office
is responsible for the overall process from the
time an allegation of potential misconduct is
reported to the remediation of any substantiated
violation of Ericsson policy. The Corporate and
Government Investigations (CGI) team is respon-
sible for appropriately investigating allegations
of potential compliance violations and disclosing
allegations to regulators as required. The CGI
team also regularly reports on investigations to
the ACC.
The Company has increased the frequency
at which it publishes its Speak Up Newsletter,
featuring anonymized examples of actual
misconduct and the way any such misconduct
was addressed by the Company. The Speak Up
6
Corporate Governance report 2023
Newsletter also includes short stories highlight-
ing situations in which employees facing difficult
choices choose to do the right thing. Progress in
the Speak Up culture in recent years can be seen
in the increased raising of compliance questions
and potential concerns by Ericsson’s employees.
The willingness by Ericsson’s employees to speak
up is an essential safeguard to ensure that the
Company conducts business with integrity. The
Company saw a 10% increase in the number
of reported potential compliance concerns in
2023, which it views as an indicator of continued
confidence by employees and third parties in
Ericsson’s allegation management and investi-
gation processes and the seriousness with which
the Company treats potential misconduct.
More information on reporting compliance
concerns can be found on page 39–40 of the
Sustainability and Corporate Responsibility
report.
Sustainability and Corporate Responsibility
The Board oversees Ericsson’s sustainability
and corporate responsibility (S&CR) strategy
and receives reports on developments and
performance annually, or more often as needed.
In addition to the primary oversight exercised by
the Board, each of the Committees of the Board
is involved in Ericsson’s S&CR strategy. The ACC
oversees Ericsson’s E&C program and whistle-
blower procedures, and reviews the Group’s
handling of information and cybersecurity, data
privacy, and its environmental, social and gov-
ernance (ESG) reporting practices. The Finance
Committee oversees the promotion of the
S&CR strategy in external funding through the
application of the Green Financing Framework.
As part of its role to prepare and propose rewards
and compensation policies that attract and
motivate the Company’s executives and align
with the Company’s long-term interests, the
Remuneration Committee considers the inclusion
of ESG criteria in variable compensation plans
and monitors the performance of such criteria.
Part of the Enterprise Business and Technology
Committee’s role of monitoring the Company’s
technology ecosystem, relationships and part-
nerships involves reviewing matters related to
energy and sustainability. The Executive Team,
led by the President and CEO, is responsible for
approving S&CR strategies and related Group
targets, and regularly receives reports on the
implementation of strategies and progress
made on targets and milestones. Its members
are also part of dedicated steering boards and
committees that provide more frequent strategic
guidance and oversight of S&CR-related matters.
In 2023, the Executive Team played a significant
role in validating the double materiality analysis
that will underpin Ericsson’s future reporting.
properly identified, assessed, internally reported,
escalated, and effectively addressed. Ensuring
accountability for risk management at all levels
of the organization is a key priority. Recent
enhancements include the adoption of Ericsson’s
Material Group Risk Protocol, which governs the
analysis and escalation of material risks across
the Group, and the establishment of the BRC. The
BRC is co-chaired by the Chief Legal Officer and
the Chief Financial Officer. The BRC now serves
as a fully embedded risk escalation and oversight
forum which has strengthened management’s
decision making and handling of risks. The BRC
process and Group-wide assessment of risk has
enhanced Ericsson’s insights into enterprise risk
and has increased alignment and the ability to
effectively address risk which impact various
parts of the organization. In particular, the BRC
reviews potential risk matters with material
impact (including risks which arise in “high risk”
jurisdictions) and provides an internal manage-
ment forum for monitoring and assessing risks
identified in the enterprise risk management
system.
Financial risk management is overseen by
the Finance function. For further information on
financial risk management, please see Notes to
the consolidated financial statements – note F1
“Financial risk management” in the Financial
Report.
The Material Group Risk Protocol, the BRC
and Ericsson’s Enterprise Risk Management
(ERM) framework operate in a complementary
manner to provide the Board and management
with a consolidated view of Group risk.
The ERM framework is designed to promote
bottom-up identification and management of
risks that present uncertainty in Ericsson’s ability
to achieve its long- and short-term objectives.
The framework comprises the five elements
described below. The framework applies across
Ericsson’s operations, covering business areas,
market areas and Group functions. The frame-
work establishes an enterprise-level baseline for
transparency and risk oversight.
Governance
and Culture
Strategy
Monitoring
ERM
Framework
Assessment
and Treatment
Communication
and Reporting
Risk Management
Ericsson maintains a robust approach to risk
management. The Company has made signifi-
cant strides in 2022 and 2023 toward ensuring
that strategic, external and internal risks are
Risk Governance
Each manager is charged with addressing risks
within their respective area of responsibility. The
Group Risk Management function drives ERM
strategy execution and ERM operations at the
Group level. The head of each Group function,
market area and business area oversee risk man-
agement of the respective unit and establish and
maintain processes to identify, assess and esca-
late risks with one or more enterprise risk manag-
ers within the unit. The CFO and CLO serve as
co-chairs of the BRC and also oversee Group-
level ERM activities. The Board of Directors and
the Audit and Compliance Committee have
oversight responsibility for the Company’s risk
management and its ERM framework.
Risk Culture
Ericsson has embedded the culture of risk
ownership within Ericsson’s organizational
ethos. Ericsson’s management emphasizes the
importance of identifying and addressing risk in
its decision-making at all levels. Ericsson strives
to ensure that risk is appropriately assessed,
transparently considered, and escalated within
the organization as circumstances warrant.
The BRC drives these objectives and promotes
accountability by providing a forum for assessing
and managing potentially material risks.
Embedding Risk Management into Ericsson’s
Strategy
Risk management is an important element of
strategic decision-making and value creation.
Ericsson strives to capture the opportunities
and threats relating to the Company’s strategic
objectives. Ericsson’s risk management activities
operate in tandem with the development and
deployment of Ericsson’s business plans and
operational strategies.
Assessment and Mitigation
Ericsson’s ERM process provides a system for
assessment and mitigation of risks across the
Group and for all roles with responsibilities for
risk management activities. This process seeks
to ensure that Group functions, market areas
and business areas consider risk in relation
to strategic objectives and decision-making,
while ensuring escalation of risks to the BRC.
Throughout 2023, the Company has bolstered
its transactional controls and data analytics,
including increased due diligence and monitoring
of third-party relationships. Ericsson has also
expanded anti-corruption risk assessments
to address country-specific compliance risks,
developed a State-Owned Entities (SOE) Map
to identify public officials and state-owned
customers, expanded on-the-ground, in-country
compliance officers and increased personnel
levels in both compliance and other gate-keeper
functions.
Further Details on Risk Assessment
Risk assessment includes the maintenance of a
risk register for each business unit and regular
assessment by the Group Risk Management
function, which has responsibility for escalat-
ing potentially material risks to the BRC when
appropriate. The Group Risk Management
function maintains a consolidated risk register of
enterprise-level risk.
Corporate Governance report 2023
7
Risks within the scope of accountability for the
Group function, market area and business area
are identified in a bottom-up risk identification
process. The relevant business leadership team
and other personnel in the unit, supported by the
unit enterprise risk manager, identify and consider
risks including material Group-level risks. Material
risks are then escalated to the BRC in accordance
with the Material Group Risk Protocol.
In a parallel top-down risk identification, the
Group Risk Management function collaborates
with the Strategy Unit and coordinates with
senior management and outside experts to
identify and define the risks Ericsson faces.
Risk analysis focuses on the impact of an
identified risk across four dimensions: (1) finan-
cial impact, (2) strategic impact, (3) occupational
health and safety impact, and (4) reputational
impact. Each unit’s key risks are documented in
the ERM risk register, based on risk ownership,
alignment with managerial responsibility and
functional responsibility.
The Group Risk Management function
analyzes the risks in Ericsson’s risk register to
identify possibilities for consolidating risks across
units based on commonalities such as overlap-
ping mitigation plans or root causes. The Group
Risk Management function also confirms the
consolidation with Enterprise Risk Managers for
applicable units, which are responsible for further
analysis and mitigation of identified risks.
Further Details on Risk Mitigation
For all material risks in each unit’s risk register,
management considers risk mitigation options.
These options may include risk responses or other
actions, such as avoiding or accepting the risk,
mitigating the probability or impact of the risk,
transferring the risk management or potential
impact to a third party, or increasing strategic
business risk in order to pursue an opportunity.
Based on the specific response, a manage-
ment plan and course of action for keeping the
probability and impact within the Company’s
risk appetite is defined and described. After
implementation of the risk management plan, its
effectiveness is assessed on an ongoing basis to
facilitate corrective actions when appropriate.
Communication and Reporting
Risk Communication
Effective communication is important to enable
employees to share information, collaborate,
and support each other in managing risks in
the business. The enterprise risk management
community has the mission to create awareness
and improve knowledge with respect to risk
management issues and requirements. Ericsson
has established a Group Risk Council to facilitate
cross-Group alignment and improvements of the
ERM framework as well as of the management
of actual risks, chaired by the Head of Group Risk
Management and in which all enterprise risk
managers participate.
Risk Reporting
The enterprise risk managers coordinate the
reporting of key risk status to the leadership
teams within the respective unit on a regular
basis. Each unit’s risk register is also reported to
the Group Risk Management function. The Heads
of market areas and business areas report on
the material risks to their business on a quarterly
basis to the BRC. The Head of Group Risk
Management consolidates and summarizes the
risks reported to the BRC in a Group risk report on
a quarterly and annual basis.
Monitoring
The Group Risk Management function monitors
the efficiency and effectiveness of the ERM
Framework. This is done with the help of a risk
management tool and through self-assessments,
as well as by providing assessment requirements
regarding risk management to the ISO 9001
internal assessment process and follow up on
the internal assessment results. The Group Risk
Management function also reviews internal and
external audit results to address identified weak-
nesses as part of the continuous improvements
of the ERM framework.
ERM Process
Group Risk Management
Risk Assessment
Top down
Risk Identification
Group
Risk Consolidation
Material Group Risks
Group Function/Market
area/Business area
Scope
Definition
Bottom up
Risk Identifi cation
Risk
Analysis
Risk
Evaluation
Risk
Treatment
Risk
Sign-off
Ericsson Business and Financial Planning Process
8
Corporate Governance report 2023
– Approval of a share issue of and authorization
to the Board to buy back 4,100,000 shares for
the LTV 2021 and LTV 2022.
The minutes from the AGM 2023 are available
on Ericsson’s website at https://www.ericsson.
com/en/about-us/corporate-governance/share-
holder-meetings/annual-general-meeting-2023.
For the AGM 2024, Ericsson plans to publish
the detailed results of the resolutions at AGM
2024 as voting units will be used for all resolu-
tions. Note that Ericsson has not published the
detailed results of the resolutions at AGM 2023
as historically it has only used voting units for
qualified majority resolutions.
Nomination Committee
A Nomination Committee is appointed each year
by the major shareholders in accordance with
the Instruction for the Nomination Committee
adopted by the AGM. The Instruction for the
Nomination Committee includes the tasks of the
Nomination Committee and the procedures for
appointing its members.
The Instruction applies until the AGM resolves
otherwise. Under the Instruction, the Nomination
Committee shall consist of representatives of the
four largest shareholders by voting power by the
end of the month in which the AGM was held, and
the Chair of the Board of Directors.
The Nomination Committee may also include
additional members following a request by a
shareholder. The request must be justified by
changes in the shareholder’s ownership of shares
and be received by the Nomination Committee
no later than December 31 of each year. No fees
are paid to the members of the Nomination
Committee. However, the Company shall bear
reasonable expenses related to the assignment
of the Nomination Committee.
Members of the Nomination Committee
The current Nomination Committee members are:
– Johan Forssell (appointed by Investor AB),
Chair of the Nomination Committee.
– Bengt Kjell (replaced Karl Åberg on November
30, 2023) (appointed by AB Industrivärden).
– Anders Oscarsson (appointed by AMF
Tjänstepension and AMF Fonder).
– Christer Gardell (appointed by Cevian Capital
Partners Limited).
– Jan Carlson (the Chair of the Board of Directors).
General Meetings of shareholders
Decision-making at General Meetings
The decision-making rights of Ericsson’s
shareholders are exercised at General Meetings
of shareholders. Most resolutions at General
Meetings are passed by a simple majority.
However, the Swedish Companies Act requires
qualified majorities in certain cases, for example,
in the case of a resolution on amendments to the
articles of association or a resolution to transfer
treasury stock to employees participating in long-
term variable compensation programs.
The Annual General Meeting
of shareholders
The Annual General Meeting of shareholders
(AGM) is held in Kista, Stockholm. The date and
venue for the meeting are announced on the
Ericsson website no later than the time of release
of the third quarter interim financial report in the
preceding year.
Shareholders who cannot participate in
person may be represented by proxy. The Board
of Directors may decide, in accordance with the
articles of association, that the shareholders also
shall be able to exercise their voting rights by post
before the AGM pursuant to the procedure stated
in the Swedish Companies Act. Only shareholders
registered in the share register have voting rights.
Nominee-registered shareholders who wish to
vote must request to be entered into the share
register by the record date for the AGM.
The AGM is held in Swedish and is simultane-
ously translated into English. Documentation
provided by the Company is available in both
Swedish and English.
The AGM gives attending shareholders the
opportunity to raise questions relating to the
operations of the Group. Normally, the majority
of the members of the Board of Directors and
the Executive Team are present to answer such
questions.
The external auditor is present at the AGM.
Ericsson’s AGM 2023
Including shareholders represented by proxy,
2,537 shareholders were represented at the AGM
held on March 29, 2023, representing approxi-
mately 70% of the votes.
The AGM 2023 was held in Kista, Stockholm.
The shareholders were also able to exercise
their voting rights by post before the meeting.
In addition to the shareholders, the meeting was
attended by members of the Board of Directors,
members of the Executive Team, members of the
Nomination Committee and the external auditor.
Decisions of the AGM 2023 included:
– Discharge of Carolina Dybeck Happe and
Annika Salomonsson from liability for the
financial year 2022. Shareholders represent-
ing more than 85% of the Company’s share
capital also voted for discharging from liability
for each of the other members of the Board
and the Company’s President and CEO for the
financial year 2022. More than 10% voted
against such discharging.
– Payment of a dividend of SEK 2.70 per share
to be paid in two installments.
– Election of Jan Carlson as new Chair of the
Board of Directors.
– Re-election of the following members of
the Board of Directors: Jon Fredrik Baksaas,
Jan Carlson, Carolina Dybeck Happe, Eric A.
Elzvik, Börje Ekholm, Kristin S. Rinne, Helena
Stjernholm and Jacob Wallenberg.
– New election of the following members of
the Board of Directors: Jonas Synnergren and
Christy Wyatt.
– Approval of Board of Directors’ fees, in
accordance with the Nomination Committee’s
proposal:
– Chair: SEK 4,500,000 (previously
SEK 4,375,000)
– Other non-employee Board members:
SEK 1,140,000 each (previously
SEK 1,100,000)
– Chair of the Audit and Compliance
Committee: SEK 495,000 (previously
SEK 475,000)
– Other non-employee members of the Audit
and Compliance Committee: SEK 285,000
each (previously SEK 275,000)
– Chairs of the Finance Committee, the
Remuneration Committee and the
Enterprise and Technology Committee:
SEK 210,000 each (previously
SEK 205,000)
– Other non-employee members of the
Finance Committee, the Remuneration
Committee and the Enterprise and
Technology Committee: SEK 185,000
each (previously SEK 180,000)
– Approval for part of the Board members’ fees
to be paid in the form of synthetic shares.
– Re-appointment of Deloitte AB as auditor for
the period up until the end of the AGM 2024
and approval of the auditor fee.
– Implementation of the Long-Term Variable
Compensation Programs (LTV) I and II 2023,
including a share issue of and authorization
to the Board to buy back 5,900,000 shares for
the LTV II 2023.
Contact the Nomination Committee
Telefonaktiebolaget LM Ericsson
The Nomination Committee
c/o The Board of Directors Secretariat
SE-164 83 Stockholm
Sweden
nomination.committee@ericsson.com
Proposals to the Nomination Committee
Shareholders may submit proposals to the
Nomination Committee at any time, but
should do so in due time before the AGM to
ensure that the proposals can be considered
by the Nomination Committee. Further infor-
mation is available on Ericsson’s website.
Corporate Governance report 2023
9
The tasks of the Nomination Committee
The main task of the Nomination Committee is to
propose Board members for election by the AGM.
As a member of the Nomination Committee, the
Chair of the Board of Directors fulfils an impor-
tant role in keeping the Nomination Committee
informed of the Company’s strategy and future
challenges. Such insights are necessary for the
Nomination Committee to be able to assess the
competence and experience that is required
by the Board. In addition, the Nomination
Committee must consider independence rules
applicable to the Board of Directors and its
Committees.
The Nomination Committee also makes the
following proposals, for resolution by the AGM:
– Remuneration to non-employee Board mem-
bers elected by the AGM and remuneration of
the auditor.
– Appointment of auditor, whereby candidates
are selected in cooperation with the Audit and
Compliance Committee of the Board.
– Election of Chair at the AGM.
– Changes to the Instruction for the Nomination
Committee (if any).
Work of the Nomination Committee
for the AGM 2024
The Nomination Committee started its work by
reviewing the list of its duties under the Code and
the Instruction for the Nomination Committee
and by setting a timeline for its work. The com-
plete proposals of the Nomination Committee
were presented in connection with the notice
convening the AGM 2024.
A thorough understanding of Ericsson’s busi-
ness and strategy is important for the Nomination
Committee. To facilitate this, both the Chair of
the Board and the President and CEO presented
their views to the Nomination Committee on the
Company’s strategy and challenges.
The Nomination Committee has analyzed
the required competencies in the Board and
has considered the results of the Board work
evaluation led by the Chair of the Board. On this
basis, the Nomination Committee has assessed
the competence and experience required by
Ericsson’s Board members and the need for
improvement of the composition of the Board
in terms of diversity in age, gender and cultural/
geographic background. The Nomination
Committee has applied the Code, section 4.1, as
diversity policy. The Nomination Committee aims
to propose a composition of Board members with
complementing experiences and competencies
to make it possible for the Board to contribute
to the positive development of Ericsson. The
Nomination Committee searches for potential
Board member candidates with both a long-term
and a short-term perspective and always focuses
on diversity to facilitate the inclusion of different
perspectives into the Board work and considera-
tions. The Nomination Committee also considers
the need for renewal and carefully assesses
whether the proposed Board members have the
capability to devote necessary time and care to
the Board’s work.
In 2023, the Committee met with the Chair
of the Audit and Compliance Committee to
acquaint itself with the assessments made by
the Company and the Audit and Compliance
Committee regarding the quality and efficiency of
external auditor work. The Audit and Compliance
Committee also provided its recommendations
on external auditor and audit fees.
As of February 28, 2024, the Nomination
Committee has held four meetings.
Board of Directors
The Board of Directors is ultimately responsible
for the organization of Ericsson and the man-
agement of Ericsson’s operations. The Board
appoints the President and CEO, who is respon-
sible for managing the day-to-day operations in
accordance with guidelines from the Board. The
President and CEO updates the Board regularly
on issues of importance to Ericsson, including
matters of business development, results, finan-
cial position and liquidity.
Board members serve from the close of one
AGM to the close of the next but can serve any
number of consecutive terms.
The President and CEO may be elected as
a Director of the Board (and Börje Ekholm is
currently a Director) but may not be elected Chair
of the Board under the Swedish Companies Act.
Conflicts of interest
Ericsson maintains rules and procedures regard-
ing conflicts of interest. Ericsson employees are
required to promptly disclose any situations that
may constitute a conflict of interest and are asked
periodically to certify that they have disclosed
any relevant situations. Board members are
disqualified from participating in any decision
regarding agreements between themselves
and Ericsson. The same applies to agreements
between Ericsson and any third party or legal
entity in which the Board member has an interest
that may be contrary to the interests of Ericsson.
The Audit and Compliance Committee
oversees the procedures for related-party trans-
actions. The Audit and Compliance Committee
has also implemented a pre-approval process
for non-audit services carried out by the external
auditor.
Composition of the Board of Directors
and diversity
The current Board of Directors consists of ten
Board members elected by the shareholders at
the AGM 2023 for the period until the close of the
AGM 2024. The Board of Directors also consists
of three employee representatives and three
deputies, appointed by the trade unions for the
same period of time.
The Nomination Committee advised before
the AGM 2023 that it had applied the Code,
section 4.1, as diversity policy with the aim to
propose a composition of Board members with
complementing experiences and competencies
The Board’s annual work cycle 2023
The annual cycle applied to the
Board’s work allows the Board to
appropriately address its duties
during the year. It also facilitates
the organization in aligning its
global processes to allow appro-
priate Board involvement.
Financial targets meeting
– Board work evaluation
Fourth-quarter and full-year
financial results meeting
– Financial result of the past year
Third interim report meeting
– Q3 Financial report
Q4
Dec
Jan
Q1
Nov
Feb
Oct
Sep
Mar
Apr
Board meeting
(incl. statutory matters)
First interim report meeting
– Q1 Financial report
Aug
May
Q3
Jul
Jun
Q2
Strategy meeting
Strategy meeting
Second interim report meeting
– Q2 Financial report
– Financial outlook
10
Corporate Governance report 2023
that is also diverse in terms of age, gender and
cultural/geographical background. The current
Board composition is the result of the work of
the Nomination Committee prior to the AGM
2023. The Board consists of Board members with
experiences from different cultural/geographic
areas, competencies from different industry
sectors and, excluding the President and CEO,
44% of the shareholder-elected Board members
are women.
Work procedure
In accordance with the Swedish Companies
Act, the Board of Directors has adopted a work
procedure for the Board and its Committees
outlining rules for the distribution of tasks among
the Board, its Committees and the President and
CEO. This complements the rules in the Swedish
Companies Act and in the articles of association
of the Company. The work procedure is reviewed,
evaluated and amended by the Board as required
or appropriate, and is formally adopted by the
Board at least once a year.
Independence
The Board of Directors and its Committees are
subject to a variety of independence rules under
applicable Swedish law, the Code and applicable
US securities laws, US Securities and Exchange
Commission (SEC) rules and the Nasdaq Stock
Market Rules as a foreign private issuer. Ericsson
can rely on exemptions from certain US and SEC
requirements and may decide to follow Swedish
practices in lieu of some Nasdaq Stock Market
independence rules.
The composition of the Board of Directors
meets all applicable independence criteria. The
Nomination Committee concluded before the
AGM 2023 that, for purposes of the Code, at
least seven of the nominated Board members
were independent from Ericsson, its senior
management and its major shareholders. These
were Jon Fredrik Baksaas, Jan Carlson, Carolina
Dybeck Happe, Eric A. Elzvik, Kristin S. Rinne,
Jonas Synnergren and Christy Wyatt.
Structure of the work of the Board
of Directors
The work of the Board follows a yearly cycle. This
enables the Board to appropriately address each
of its duties and to keep strategy, risk assessment
and value creation high on the agenda.
As the Board is responsible for financial
oversight, financial information is presented and
evaluated at Board meetings. Furthermore, the
Chair of each Committee reports on Committee
work at Board meetings, and minutes from the
Committee meetings are made available to all
Board members.
At Board meetings, the President and CEO
reports on business and market developments
as well as on the financial performance of
the Group. Strategic issues and risks are also
addressed at most Board meetings. The Board
is regularly informed of developments in legal
and regulatory matters of importance. Board
and Committee meetings may, as appropriate,
be held by way of telephone or video conference,
and resolutions may be taken per capsulam
(unanimous written consent). Such resolutions
are accounted for as Board/Committee meetings.
The 2023 annual work cycle of the Board
– Fourth-quarter and full-year financial
results meeting
Following the end of the calendar year, the
Board held a meeting that focused on the
financial results of the entire year 2022 and
handled the fourth-quarter financial report.
– Board meeting (including statutory matters)
A Board meeting was held in connection with
the AGM 2023. Members of each of the Board
Committees were appointed and the Board
resolved on signatory powers.
– First interim report meeting
At the first interim report meeting, the Board
addressed the interim financial report for the
first quarter of the year.
– Strategy meeting
A Board meeting was held to address particu-
lar strategic matters in further detail.
At Board meetings where the Board members
– Second interim report meeting
meet in person, a non-executive session is
normally held without Ericsson management
present.
At the second interim report meeting, the
Board addressed the interim financial report
for the second quarter of the year and the
financial outlook.
– Strategy meeting
A Board meeting was held, in essence dedi-
cated to short-term and long-term strategies
of the Group, with particular focus on merger
and acquisitions.
– Third interim report meeting
At the third interim report meeting, the Board
addressed the interim financial report for the
third quarter of the year.
– Financial targets meeting
A Board meeting was held for the Board to
address the financial targets. At this meeting,
the results of the Board evaluation were
presented to and discussed by the Board.
Training
New Board members receive training tailored to
their individual needs. Introductory training typi-
cally includes meetings with heads of business
areas and Group functions, as well as training
required by Nasdaq Stockholm on listing issues
and insider rules.
The Board’s strategy discussions are usually
combined with deep-dive sessions into issues
of importance for the Group, including business
area and market area deep-dive sessions. Board
members’ knowledge in these fields is crucial to
allow well-founded Board resolutions, and to
allow the Company to take due advantage of the
different competencies of the Board members.
Auditor involvement
At the AGM 2023, Deloitte AB was reappointed
external auditor.
The Board meets with Ericsson’s external
auditor in closed sessions at least once a year to
receive and consider the auditor’s observations.
The auditor provides reports to management
on the accounting and financial reporting of the
Group.
The Audit and Compliance Committee also
meets regularly with the auditor to receive and
consider observations on the interim reports
and the Annual Report. The auditor reports on
whether the accounts and the general financial
position of the Group are presented fairly in all
material respects.
In addition, the Board reviews and assesses
the process for financial reporting, as described
on page 25 under Internal control over financial
reporting. Combined with other steps taken
Organization of the Board work
Number of Committee members as of December 31, 2023
Board of Directors
13 Board members
Audit and Compliance Committee
(4 Board members)
Finance Committee
(4 Board members)
Oversight of financial reporting
Finance strategy
Oversight of internal control
Oversight of auditing
Oversight of the Group’s Ethics
and Compliance program
Oversight of risk management
Remuneration Committee
(4 Board members)
Guidelines for remuneration
to Group management
Long-Term Variable Remuner ation
Executive remuneration
Enterprise Business and
Technology Committee
(4 Board members)
Enterprise business and technol-
ogy strategy and planning
Technology ecosystem and
partnerships
Science direction
Corporate Governance report 2023
11
internally, the Board’s and the auditor’s review
of the interim and annual reports are deemed to
give reasonable assurance of the effectiveness of
the internal controls over financial reporting.
Work of the Board of Directors in 2023
In 2023, the Board held 27 meetings. For attend-
ance at Board meetings, see the table on page 13.
In addition to the Board meetings held as a part
of the annual work cycle of the Board, the Board
receives information updates, in writing or in
telephone meetings, as deemed appropriate.
Business strategy, key customer transactions,
ethics and compliance, geopolitics and regula-
tory matters, are among the matters that have
been in focus with the Board during the year.
Compliance, strategy and risk management are
always high on the Board’s agenda as well as
S&CR, which are integrated into the business
strategy. The Board continuously monitors inter-
national developments and their possible impact
on Ericsson.
Board work evaluation
A key objective of the Board work evaluation is to
ensure that the Board is functioning effectively.
This includes gaining an understanding of the
issues that the Board thinks warrant greater
focus, as well as determining areas where addi-
tional competence is needed within the Board
and whether the Board composition is appropri-
ate. The evaluation also serves as guidance for
the work of the Nomination Committee.
Each year, the Chair of the Board initiates and
leads the evaluation of the Board and Committee
work and procedures. Evaluation tools include
detailed questionnaires and discussions. The
services of an external corporate advisory firm
have been retained by the Company to assist in
developing questionnaires, carrying out surveys
and summarizing responses.
In 2023, Board members responded to a
written questionnaire covering the Board’s work
in general, as well as the work of the Chair of the
Board, the Audit and Compliance Committee,
the Finance Committee, the Remuneration
Committee and the Enterprise Business and
Technology Committee. In addition, each
Director responded to a questionnaire on the
Director’s individual performance. As part of
the evaluation process, the Chair of the Board
also had individual discussions with each of the
Board members. The results from the evaluations
were presented to the Board and were thor-
oughly discussed. The Nomination Committee
was informed of the results of the Board work
evaluation.
Committees of the Board of Directors
The Board of Directors has currently established
four Committees: the Audit and Compliance
Committee, the Finance Committee, the
Remuneration Committee and the Enterprise
Business and Technology Committee. Members
of each Committee are appointed for one year
from among the Board members.
The main task of the Committees is, and
the Board has authorized each Committee, to
provide focused Board oversight on their relevant
subject matters, and to review such matters
prior to any resolution by the Board. The Board
may also, on occasion, resolve on an extended
authorization for one or several Committee(s) to
resolve on additional specific matters outside of
the ordinary authorization. If deemed appropri-
ate, the Board of Directors and each Committee
have the right to engage independent external
expertise, either in general or with respect to
specific matters.
The minutes from the Committee meetings
are made available to all Board members and the
Chair of the Committee reports on the work of the
Committee at Board meetings.
Audit and Compliance Committee
On behalf of the Board, the Audit and
Compliance Committee monitors the following:
– The scope and correctness of the financial
statements
– Compliance with legal and regulatory
requirements
– Internal control over financial reporting
– Risk management
– The effectiveness, appropriateness and
implementation of the Group’s compliance
programs, including the E&C Program.
The Audit and Compliance Committee also
reviews the annual and interim financial reports
and oversees the external audit process. In order
to ensure the auditor’s independence, there are
Members of the Committees as of December 31, 2023
Members of the Committees of the Board of Directors
pre-approval policies and procedures in place
for audit and non-audit related services to be
performed by the external auditor. Pre-approval
authority may not be delegated to management.
The Audit and Compliance Committee
itself does not perform audit work. The Head of
Ericsson’s internal audit function reports directly
to the Audit and Compliance Committee. The
Head of Ericsson´s internal audit function has in
camera sessions with the Audit and Compliance
Committee without the presence of anyone from
the management and unrestricted access to the
Audit and Compliance Committee in her discre-
tion and at least quarterly.
Ericsson’s external auditor is appointed by
the shareholders at the AGM. The Committee
is involved in the preparatory work for the
Nomination Committee to propose external
auditor and auditor fees for resolution by the
AGM. It also monitors the ongoing performance
and independence of the auditor with the aim to
avoid conflicts of interest.
The Audit and Compliance Committee
oversees matters relating to compliance risk
and regularly receives reporting on compli-
ance related matters from the CLO, the Chief
Compliance Officer and the Head of Corporate
and Government Investigations. The CLO has a
direct reporting line to the Audit and Compliance
Committee on compliance matters that fall
outside the scope of the E&C Program, and on the
holistic management of legal, compliance, ethical
and associated reputational risks arising in the
Company’s operations. In addition to reporting
to the CLO, the Chief Compliance Officer has a
further independent reporting line to the Audit
and Compliance Committee on the areas of the
E&C Program. The Chief Compliance Officer
regularly reports to the Audit and Compliance
Committee on the effective operation of the
E&C Program, including information of actual
or suspected serious CoBE violations, insights
from investigations outcomes and remedia-
tion activities, the identification of patterns of
failures, and emerging risks and changes in the
legal and regulatory environment. Such reports
enable proper oversight over the identification of
emerging risks or risk patterns and the adequacy
of corresponding activities to prevent, detect and
remediate such risks in a risk appropriate manner.
In addition to the above, the Chief Compliance
Officer has in camera sessions with the Audit and
Audit and Compliance Committee
Finance Committee
Remuneration Committee
Eric A. Elzvik (Chair)
Jon Fredrik Baksaas
Annika Salomonsson
Jonas Synnergren
Jan Carlson (Chair)
Ulf Rosberg
Helena Stjernholm
Jacob Wallenberg
Jan Carlson (Chair)
Kristin S. Rinne
Kjell-Åke Soting
Jonas Synnergren
Enterprise Business and
Technology Committee
Jon Fredrik Baksaas (Chair)
Ulf Rosberg
Kristin S. Rinne
Christy Wyatt
12
Corporate Governance report 2023
Compliance Committee, without the presence of
anyone from the management, and unrestricted
access to the CEO as well as to the Audit and
Compliance Committee in their discretion and
at least quarterly. However, the Audit and
Compliance Committee has met more frequently
with the Chief Compliance Officer over the course
of 2023. The Head of Corporate and Government
Investigations has an extraordinary reporting line
to the Audit and Compliance Committee in the
event she is impeded or obstructed in fulfilling her
duties.
The Audit and Compliance Committee
also oversees Ericsson’s process for reviewing
transactions with related parties and Ericsson’s
whistleblower procedures. Further, the Audit
and Compliance Committee reviews the Group’s
handling of information and cybersecurity as well
as data privacy, and the Group’s ESG reporting
and performance.
On an annual basis, the Audit and Compliance
Committee receives training on topics of
special relevance to the Audit and Compliance
Committee, within areas such as finance, legal,
compliance and security. During 2023, the Audit
and Compliance Committee received training on
several topics, including accounting principles, tax
and specifically Base Erosion and Profit Shifting
(BEPS), Digital Finance (including AI), ESG
reporting and compliance with sustainability-
related regulation.
Members of the Audit and Compliance
Committee
The Audit and Compliance Committee consists of
four Board members appointed by the Board in
connection with the AGM 2023: Eric A. Elzvik
(Chair), Jon Fredrik Baksaas, Annika Salomonsson
(replaced Torbjörn Nyman on July 31, 2023)
(employee representative) and Jonas Synnergren.
The Board has appointed shareholder elected
Board members with CFO or CEO experience to
the Committee.
The composition of the Audit and Compliance
Committee meets all applicable independence
requirements, including the conditions for reliance
on an exemption for employee representatives.
The Board of Directors has determined that Eric A.
Elzvik is an “audit committee financial expert”, as
defined under the SEC rules and regulations, and
that he qualifies as financially sophisticated under
the applicable Nasdaq listing rules and is familiar
with the accounting practices of an international
company, such as Ericsson.
Work of the Audit and Compliance
Committee in 2023
The Audit and Compliance Committee held
13 meetings in 2023. Board members’ attend-
ance is reflected in the table on page 13. During
the year, the Audit and Compliance Committee
reviewed the scope and results of external
financial audits and the independence of the
external auditor. Prior to publishing, the Audit
and Compliance Committee also reviewed and
discussed each interim report and the annual
report with the external auditor. The Audit and
Compliance Committee also monitored the exter-
nal audit fees and approved non-audit services
performed by the external auditor in accordance
with such policies and procedures.
The Audit and Compliance Committee
approved the audit plan for the internal audit
function, based on, among other things, the
annual risk assessment and reviewed the
reports of the internal audit function. The Audit
and Compliance Committee also received and
reviewed updates and reports to the Ericsson
Compliance Line and from other internal report-
ing channels, including updates on-going investi-
gations within the Group.
The Audit and Compliance Committee
monitored the continued compliance with the
Sarbanes-Oxley Act as well as the internal control
and risk management process and monitored and
evaluated the effectiveness and appropriateness
of Ericsson’s E&C Program. In 2023, the Audit
and Compliance Committee also reviewed and
approved the double materiality analysis which
will underpin Ericsson’s future reporting.
Finance Committee
The Finance Committee is responsible for prepar-
ing for resolution by the Board, matters related
to the finance strategy, such as capital structure,
capital targets, funding strategy and treasury
operations.
Members of the Finance Committee
The Finance Committee consists of four Board
members appointed by the Board in connection
with the AGM 2023: Jan Carlson (Chair), Ulf
Rosenberg (employee representative), Helena
Stjernholm and Jacob Wallenberg. The Board has
appointed shareholder elected Board members
with extensive industrial and financial experience
to the Committee.
Work of the Finance Committee in 2023
The Finance Committee held five meetings in
2023. Board members’ attendance is reflected in
the table on page 13. During 2023, the Finance
Committee assessed the Company’s financial
strength and balance-sheet as well as reviewed
the finance strategy including capital structure,
capital targets, rating strategy and treasury
operations.
Remuneration Committee
The Remuneration Committee’s responsibilities
include:
– Reviewing and preparing, for resolution by the
Board, proposals on salary and other remu-
neration, including retirement compensation,
for the President and CEO.
– Reviewing and preparing, for resolution by the
Board, proposals to the AGM on Guidelines for
remuneration to the Executive Team.
– Reviewing and preparing, for resolution by
the Board, proposals to the AGM on the Long-
Term Variable Compensation Program (LTV)
and similar equity arrangements.
– Approving proposals on salary and other
remuneration, including retirement compen-
sation, for the members of the Executive Team
(other than the President and CEO).
– Approving proposals on target levels for the
short-term variable compensation (STV) for
the members of the Executive Team (other
than the President and CEO).
– Approving pay-out of the STV for the
members of the Executive Team members
(other than the President and CEO), based on
achievements and performance.
In its work, the Remuneration Committee consid-
ers trends in remuneration, legislative changes,
disclosure rules and the general global executive
remuneration environment. It reviews salary
survey data before preparing salary adjustment
recommendations for the President and CEO for
resolution by the Board and before approving any
salary adjustments for the other members of the
Executive Team.
Members of the Remuneration Committee
The Remuneration Committee appointed by the
Board in connection with the AGM 2023 consists
of four Board members: Jan Carlson (Chair),
Kristin S. Rinne, Jonas Synnergren and Kjell-Åke
Soting (employee representative). The Board has
appointed shareholder elected Board members
to the Committee with experiences from different
markets of relevance to the Group.
During the year 2023, Peter Boreham from
Mercer advised and assisted the Remuneration
Committee as an independent expert.
Work of the Remuneration Committee
in 2023
The Remuneration Committee held 13 meetings
in 2023. Director’s attendance is reflected in the
table on page 13.
The Remuneration Committee reviewed and
prepared a proposal for LTV 2023 for the Executive
Team, for resolution by the Board and further
approval by the AGM 2023. It further approved
salaries and STV 2023 for the members of the
Executive Team (other than the President and
CEO), reviewed the vesting results for LTV 2020 and
result of the 2022 EBIT (Group operating income)
performance condition for LTV 2022, and prepared
proposals regarding remuneration to the President
and CEO for resolution by the Board.
It reviewed the implementation of Guidelines
for remuneration to Group management in 2023.
It also proposed the Remuneration Report 2022
to be approved by the Board and subsequently
referred to the AGM 2023 for adoption.
For further information on fixed and
variable remuneration, please see Notes to the
consolidated financial statements – note G2
“Information regarding members of the Board
of Directors and Group management” and note
G3 “Share-based compensation” in the Financial
report and the Remuneration report.
Corporate Governance report 2023
13
The Enterprise Business and Technology
Committee
The responsibilities of the Enterprise Business
and Technology Committee include:
– Reviewing and preparing for consideration
and/or resolution by the Board proposals
on the enterprise business and technology
matters of key importance to the Board of
Directors.
– Reviewing and preparing for consideration
and/or resolution by the Board proposals for
overall direction of the technology and indus-
try strategy for the Group to ensure technology
leadership and world class R&D.
– Reviewing and preparing for consideration
and/or resolution by the Board, matters
related to science direction and influence on a
geopolitical level.
The Committee changed name and scope in April
2023. The Committee was previously known as
Technology and Science Committee and had less
focus on Enterprise Business aspects.
Members of the Enterprise Business and
Technology Committee
The Enterprise Business and Technology
Committee consists of four Board members
appointed by the Board in connection with the
AGM 2023: Jon Fredrik Baksaas (Chair), Kristin S.
Board members’ attendance and fees 2023
Rinne, Christy Wyatt and Ulf Rosberg (employee
representative). The Board has appointed Board
members to the Committee with extensive experi-
ence within technology.
Work of the Enterprise Business and
Technology Committee in 2023
The Enterprise Business and Technology
Committee held four meetings in 2023. Board
members’ attendance is reflected in the table
below. The Enterprise Business and Technology
Committee has, during the year, reviewed
selected focus areas from technology, business
and market perspectives:
– Radio and core network evolution
– Enterprise networking and security solutions
– Application programming interfaces (API) for
telecom networks
– Artificial Intelligence
– Ericsson Research and Development status
and direction
Remuneration to Board members
Remuneration to non-employee Board members
is proposed by the Nomination Committee for
resolution by the AGM.
The AGM 2023 approved the Nomination
Committee’s proposal for fees to non-employee
Board members for Board and Committee work.
For further information on Board of Directors’ fees
2023, please refer to Notes to the consolidated
financial statements – note G2 “Information
regarding members of the Board of Directors and
Group management” in the Financial Report.
The shareholders at the AGM 2023 also
approved the Nomination Committee’s proposal
that Board members may be paid part of their
Board fee in the form of synthetic shares. A
synthetic share gives the right to receive a future
cash payment of an amount that corresponds to
the market value of a Class B share in Ericsson
at the time of payment. The Board members’
right to receive payment with regard to allocated
synthetic shares occurs, as a general rule, after the
publication of the Company’s year-end financial
statement during the fifth year following the
General Meeting that resolved on the allocation
of the synthetic shares. The purpose of paying
part of the Board of Directors’ fee in the form
of synthetic shares is to further align the Board
members’ interests with shareholder interests.
For more information on the terms and conditions
of the synthetic shares, please refer to the notice
convening the AGM 2023 and to the minutes from
the AGM 2023, which are available at Ericsson’s
website.
Board member
Jan Carlson
Jacob Wallenberg
Jon Fredrik Baksaas
Nora Denzel 4)
Carolina Dybeck Happe
Börje Ekholm
Eric A. Elzvik
Kurt Jofs 4)
Ronnie Leten 4)
Kristin S. Rinne
Helena Stjernholm
Jonas Synnergren 5)
Christy Wyatt 5)
Torbjörn Nyman 6)
Anders Ripa 7)
Ulf Rosberg 8)
Kjell-Åke Soting
Annika Salomonsson 9)
Loredana Roslund
Frans Frejdestedt 10)
Stefan Wänstedt 10)
Total number of meetings
Fees resolved by the AGM 2023
Number of Board/Committee meetings attended in 202311)
Board fees,
SEK 1)
Committee fees,
SEK
Audit and
Compliance
Committee
Finance
Committee
Board
Remuner-
ation Com-
mittee
Enterprise
Business and
Technology
Committee
4,500,000
1,140,000
1,140,000
–
1,140,000
– 2)
1,140,000
–
–
1,140,000
1,140,000
1,140,000
1,140,000
25,500 3)
23,250 3)
54,750 3)
54,750 3)
54,750 3)
54,750 3)
29,250
29,250
420,000
185,000
495,000
–
–
–
495,000
–
–
370,000
185,000
470,000
185,000
11,700 3)
6,900 3)
9,000
20,400 3)
14,400
–
–
–
27
25
27
6
27
25
27
9
9
25
27
19
19
14
13
27
27
27
27
13
13
27
3
9
13
3
10
7
8
13
4
5
1
5
2
3
5
9
4
4
4
9
9
11
13
1
3
1
4
3
2
2
4
1) Non-employee Directors can choose to receive part of their Board fee (exclusive of Committee fees) in the form of synthetic shares.
2) Board member remuneration resolved by the AGM is only for non-employee Directors elected by the shareholders.
3) Employee representative Board members and their deputies are not entitled to a Board fee, but instead get paid compensation in the amount of SEK 2,250 per attended Board meeting and SEK 1,800 per
attended Committee meeting. Until March 2023, the compensation was SEK 1,500 per attended Board meeting and SEK 1,500 per attended Committee meeting.
4) Resigned from the Board of Directors in connection with the AGM held on March 29, 2023.
5) Elected member of the Board of Directors at the AGM held on March 29, 2023.
6) Resigned as employee representative Board member as of July 31, 2023.
7) Resigned as employee representative Board member as of July 4, 2023.
8) Appointed employee representative Board member as of July 4, 2023, previously deputy employee representative Board member.
9) Appointed employee representative Board member as of July 31, 2023, previously deputy employee representative Board member.
10) Appointed deputy employee representative Board members as of September 1, 2023.
11) This table reflects the attendance of Board members who are formal members of the Committee at the relevant Committee meetings.
14
Corporate Governance report 2023
Members of the Board of Directors
Board members elected by the AGM 2023
Jan Carlson
Chair of the Board of Directors since
2023, Chair of the Finance Committee
and of the Remuneration Committee
Jacob Wallenberg
Deputy Chair of the Board of Directors,
Member of the Finance Committee
First elected
2017
Born
1960
Education
Master of Science degree in
Engineering Physics and Electrical
Engineering, Linköping University,
Sweden.
Nationality
Sweden
Board Chair
Autoliv Inc.
Board Member
AB Volvo
Holdings in Ericsson
7,900 Class B shares 1) and 34,041
synthetic shares 2)
Principal work experience
and other information
Chair and President and CEO of
Veoneer Inc. (2018-2022). President
and CEO of Autoliv Inc. (2007–
2018) and Chair of Autoliv Inc. since
2014. Previous positions within the
Autoliv Group since 1999, including
President Autoliv Europe, Vice
President Engineering of Autoliv
and President Autoliv Electronics.
Previous positions include President
of Saab Combitech and of Swedish
Gate Array. Honorary Doctor at
the Technical faculty of Linköping
University.
First elected
2011
Born
1956
Education
Bachelor of Science in Economics
and Master of Business Administration,
Wharton School, University of
Pennsylvania, USA. Officer of the
Reserve, Swedish Navy.
Nationality
Sweden
Board Chair
Investor AB and the Confederation of
Swedish Enterprise
Deputy Board Chair
ABB Ltd., FAM, Patricia Industries and
Wallenberg Investments AB
Board Member
The Knut and Alice Wallenberg
Foundation
Holdings in Ericsson
427,703 Class B shares 1) and 34,041
synthetic shares 2)
Principal work experience
and other information
Chair of the Board of Investor AB since
2005. President and CEO of SEB in 1997
and Chair of SEB’s Board of Directors
(1998–2005). Executive Vice President
and CFO of Investor AB (1990–1993).
Honorary Chair of IBLAC (Mayor of
Shanghai’s International Business
Leaders Advisory Council) and member
of the steering committee of the
European Round Table of Industrialists,
Deputy Chair of the Swedish-American
Chamber of Commerce US, member
of the International Advisory Board of
the Atlantic Council, Washington DC,
member of the International Business
Council of the World Economic Forum,
Trilateral Commission and the Advisory
Board of Tsinghua Management School.
Jon Fredrik Baksaas
Chair of the Enterprise Business and
Technology Committee, Member of
the Audit and Compliance Committee
First elected
2017
Born
1954
Education
Master of Science in Economics
(Siviløkonom), NHH Norwegian
School of Economics and Business
Administration, Norway.
Carolina Dybeck Happe
Member of the Board
First elected
2022
Born
1972
Education
Master of Science in Business and
Economics, Uppsala University,
Sweden.
Nationality
Norway
Board Chair
DNV GL Group AS
Nationality
Sweden
Board Chair
–
Board Member
Svenska Handelsbanken AB
Board Member
–
Board Member
–
Board Member
Board Member
Landis+Gyr Group AG and AB Volvo
Synchronoss
Holdings in Ericsson
25,391 synthetic shares 2)
Principal work experience
and other information
President and CEO of Telenor Group
(2002–2015). Previous positions
within the Telenor Group since 1989,
including Deputy CEO, CFO and CEO
of TBK AS. Positions before Telenor
include CFO of Aker AS, finance
director of Stolt Nielsen Seaway AS
and controller at Det Norske Veritas,
Norway and Japan. Member of the
GSMA Board (2008–2016) and Chair
of the GSMA Board (2014–2016).
Holdings in Ericsson
36,100 Class B shares 1) and
10,003 synthetic shares 2)
Principal work experience
and other information
SVP of GE since 2020, CFO of GE
(2020 – 2023). Group CFO of A.P.
Moller - Maersk A/S
(2019–2020). Group CFO of ASSA
ABLOY (2012–2018) as well as
CFO for Europe, the Middle East and
Africa (2007–2011) and CFO for
Central Europe (2002–2006).
Group CFO of Trelleborg Group
(2011–2012). CFO of Establish
(2000–2002). Various positions at
EF Education First (1996–1999).
President, CEO and Member of the
Chair of the Audit and Compliance
Member of the Remuneration
Member of the Finance Committee
Kristin S. Rinne
Helena Stjernholm
Committee and of the Enterprise
Business and Technology Committee
Börje Ekholm
First elected
Board
2006
Born
1963
Education
INSEAD, France.
Nationality
Sweden and USA
Board Chair
Trimble Inc.
Eric A. Elzvik
Committee
First elected
2017
Born
1960
Education
Nationality
Sweden and Switzerland
Board Chair
Global Connect Group and
Deutsche Glasfaser Group
First elected
2016
Born
1954
Education
Nationality
USA
Board Chair
–
First elected
2016
Born
1970
Education
Nationality
Sweden
Board Chair
–
Master of Science in Electrical
Master of Business Administration,
Bachelor of Arts, Washburn
Engineering, KTH Royal Institute of
Stockholm School of Economics,
University, USA.
Technology, Stockholm, Sweden.
Sweden.
Master of Business Administration,
Master of Business Administration,
Stockholm School of Economics,
Sweden.
Holdings in Ericsson
Holdings in Ericsson
260,351 Class B shares, 1,009,000
10,000 Class B shares 1)
ADS 1) and 2,000,000 call options 3)
and 11,345 synthetic shares 2)
Principal work experience
and other information
President and CEO of
Telefonaktiebolaget LM Ericsson
since 2017. CEO of Patricia
Principal work experience
and other information
CFO and member of the Group
Executive Committee of ABB Ltd
(2013–2017). Division CFO ABB
Holdings in Ericsson
16,913 synthetic shares 2)
Principal work experience
and other information
Previously Senior Vice President,
Network Technology, Network
Industries, a division within Investor
Discrete Automation & Motion
AB (2015–2017). President and CEO
(2010–2012) and division CFO
of Investor AB (2005–2015). Former
Automation Products Division
(2007–2014). CTO of Cingular
Wireless (2005–2007) and VP
Technology and New Product
Partners (2008–2015). Investment
Manager at IK Investment Partners
(1998–2008). Previous experience
Head of Investor Growth Capital
(2006–2010). Previous positions
Development of Cingular Wireless
as consultant for Bain & Company
Inc. and New Investments. Previous
within the ABB Group since 1984,
(2000–2005). Previous positions
(1997–1998).
Architecture and Planning, at AT&T
the private equity firm IK Investment
Industrivärden since 2015. Partner in
Board Member
AB Industrivärden, AB Volvo and
Sandvik AB
Holdings in Ericsson
20,000 Class B shares 1)
and 22,693 synthetic shares 2)
Principal work experience
and other information
President and CEO of AB
positions at Novare Kapital AB and
including senior management
within Southwestern Bell and SBC
McKinsey & Co Inc. Holds honorary
positions within finance, M&A and
(1976–2000). Trustee of Washburn
Doctorate at KTH Royal Institute of
new ventures. Currently, senior
University Foundation. Member of
Technology, Sweden. Since 2017,
industrial advisor to EQT.
the Advisory Board of Link Labs.
Honorary Doctorate of Science,
Washburn University, USA.
member of the Steering Committee
of the World Economic Forum
Digital Communication Governors.
Member of the Board of the Swedish-
American Chamber of Commerce
New York.
The Board memberships and holdings in Ericsson reported above are as of December 31, 2023.
1) The number of shares and ADS includes holdings by related persons, if applicable.
2) Since 2008, the AGM has each year resolved that part of the Board fee may be received in the form of synthetic shares. A synthetic share is a right to receive in the future a payment corresponding to the value of
the Class B share in Ericsson at the time of payment. Please see page 13 for further information.
Corporate Governance report 2023
15
Jan Carlson
Jacob Wallenberg
Jon Fredrik Baksaas
Carolina Dybeck Happe
Chair of the Board of Directors since
Deputy Chair of the Board of Directors,
Chair of the Enterprise Business and
Member of the Board
2023, Chair of the Finance Committee
Member of the Finance Committee
Technology Committee, Member of
and of the Remuneration Committee
the Audit and Compliance Committee
Börje Ekholm
President, CEO and Member of the
Board
Eric A. Elzvik
Chair of the Audit and Compliance
Committee
Kristin S. Rinne
Member of the Remuneration
Committee and of the Enterprise
Business and Technology Committee
Helena Stjernholm
Member of the Finance Committee
First elected
2006
Born
1963
Education
Master of Science in Electrical
Engineering, KTH Royal Institute of
Technology, Stockholm, Sweden.
Master of Business Administration,
INSEAD, France.
Nationality
Sweden and USA
Board Chair
Trimble Inc.
First elected
2017
Born
1960
Education
Master of Business Administration,
Stockholm School of Economics,
Sweden.
First elected
2016
Born
1954
Education
Bachelor of Arts, Washburn
University, USA.
First elected
2016
Born
1970
Education
Master of Business Administration,
Stockholm School of Economics,
Sweden.
Nationality
Sweden and Switzerland
Board Chair
Global Connect Group and
Deutsche Glasfaser Group
Nationality
USA
Board Chair
–
Nationality
Sweden
Board Chair
–
Board Member
AB Volvo
The Knut and Alice Wallenberg
Svenska Handelsbanken AB
Board Member
Board Member
Board Member
–
Board Member
Landis+Gyr Group AG and AB Volvo
Board Member
Synchronoss
Holdings in Ericsson
260,351 Class B shares, 1,009,000
ADS 1) and 2,000,000 call options 3)
Principal work experience
and other information
President and CEO of
Telefonaktiebolaget LM Ericsson
since 2017. CEO of Patricia
Industries, a division within Investor
AB (2015–2017). President and CEO
of Investor AB (2005–2015). Former
Head of Investor Growth Capital
Inc. and New Investments. Previous
positions at Novare Kapital AB and
McKinsey & Co Inc. Holds honorary
Doctorate at KTH Royal Institute of
Technology, Sweden. Since 2017,
member of the Steering Committee
of the World Economic Forum
Digital Communication Governors.
Member of the Board of the Swedish-
American Chamber of Commerce
New York.
Holdings in Ericsson
10,000 Class B shares 1)
and 11,345 synthetic shares 2)
Principal work experience
and other information
CFO and member of the Group
Executive Committee of ABB Ltd
(2013–2017). Division CFO ABB
Discrete Automation & Motion
(2010–2012) and division CFO
Automation Products Division
(2006–2010). Previous positions
within the ABB Group since 1984,
including senior management
positions within finance, M&A and
new ventures. Currently, senior
industrial advisor to EQT.
Holdings in Ericsson
16,913 synthetic shares 2)
Principal work experience
and other information
Previously Senior Vice President,
Network Technology, Network
Architecture and Planning, at AT&T
(2007–2014). CTO of Cingular
Wireless (2005–2007) and VP
Technology and New Product
Development of Cingular Wireless
(2000–2005). Previous positions
within Southwestern Bell and SBC
(1976–2000). Trustee of Washburn
University Foundation. Member of
the Advisory Board of Link Labs.
Honorary Doctorate of Science,
Washburn University, USA.
Board Member
AB Industrivärden, AB Volvo and
Sandvik AB
Holdings in Ericsson
20,000 Class B shares 1)
and 22,693 synthetic shares 2)
Principal work experience
and other information
President and CEO of AB
Industrivärden since 2015. Partner in
the private equity firm IK Investment
Partners (2008–2015). Investment
Manager at IK Investment Partners
(1998–2008). Previous experience
as consultant for Bain & Company
(1997–1998).
Master of Science degree in
Bachelor of Science in Economics
Master of Science in Economics
Master of Science in Business and
Engineering Physics and Electrical
and Master of Business Administration,
(Siviløkonom), NHH Norwegian
Economics, Uppsala University,
Engineering, Linköping University,
Wharton School, University of
School of Economics and Business
Sweden.
Pennsylvania, USA. Officer of the
Administration, Norway.
First elected
2017
Born
1960
Education
Sweden.
Nationality
Sweden
Board Chair
Autoliv Inc.
First elected
2011
Born
1956
Education
First elected
2017
Born
1954
Education
Nationality
Norway
Board Chair
Investor AB and the Confederation of
DNV GL Group AS
Reserve, Swedish Navy.
Nationality
Sweden
Board Chair
Swedish Enterprise
Deputy Board Chair
Board Member
Foundation
ABB Ltd., FAM, Patricia Industries and
Wallenberg Investments AB
First elected
2022
Born
1972
Education
Nationality
Sweden
Board Chair
–
–
Holdings in Ericsson
Holdings in Ericsson
Holdings in Ericsson
7,900 Class B shares 1) and 34,041
427,703 Class B shares 1) and 34,041
25,391 synthetic shares 2)
synthetic shares 2)
Principal work experience
and other information
synthetic shares 2)
Principal work experience
and other information
Principal work experience
and other information
Holdings in Ericsson
36,100 Class B shares 1) and
10,003 synthetic shares 2)
Principal work experience
and other information
Chair and President and CEO of
Chair of the Board of Investor AB since
President and CEO of Telenor Group
SVP of GE since 2020, CFO of GE
Veoneer Inc. (2018-2022). President
2005. President and CEO of SEB in 1997
(2002–2015). Previous positions
(2020 – 2023). Group CFO of A.P.
and CEO of Autoliv Inc. (2007–
and Chair of SEB’s Board of Directors
within the Telenor Group since 1989,
Moller - Maersk A/S
2018) and Chair of Autoliv Inc. since
(1998–2005). Executive Vice President
including Deputy CEO, CFO and CEO
(2019–2020). Group CFO of ASSA
2014. Previous positions within the
and CFO of Investor AB (1990–1993).
of TBK AS. Positions before Telenor
ABLOY (2012–2018) as well as
Autoliv Group since 1999, including
Honorary Chair of IBLAC (Mayor of
include CFO of Aker AS, finance
CFO for Europe, the Middle East and
President Autoliv Europe, Vice
Shanghai’s International Business
director of Stolt Nielsen Seaway AS
Africa (2007–2011) and CFO for
President Engineering of Autoliv
Leaders Advisory Council) and member
and controller at Det Norske Veritas,
Central Europe (2002–2006).
and President Autoliv Electronics.
of the steering committee of the
Norway and Japan. Member of the
Group CFO of Trelleborg Group
Previous positions include President
European Round Table of Industrialists,
GSMA Board (2008–2016) and Chair
(2011–2012). CFO of Establish
of Saab Combitech and of Swedish
Deputy Chair of the Swedish-American
of the GSMA Board (2014–2016).
(2000–2002). Various positions at
EF Education First (1996–1999).
Gate Array. Honorary Doctor at
Chamber of Commerce US, member
the Technical faculty of Linköping
of the International Advisory Board of
University.
the Atlantic Council, Washington DC,
member of the International Business
Council of the World Economic Forum,
Trilateral Commission and the Advisory
Board of Tsinghua Management School.
The Board memberships and holdings in Ericsson reported above are as of December 31, 2023.
1) The number of shares and ADS includes holdings by related persons, if applicable.
2) Since 2008, the AGM has each year resolved that part of the Board fee may be received in the form of synthetic shares. A synthetic share is a right to receive in the future a payment corresponding to the value of
the Class B share in Ericsson at the time of payment. Please see page 13 for further information.
3) Call options issued by AB Industrivärden (1,000,000 call options) and Investor AB (1,000,000 call options), each entitling the purchase of one Ericsson B share from AB Industrivärden/Investor AB respectively
(further information is available in the Notes to the consolidated financial statements – note G2 “Information regarding members of the Board of Directors and Group management” in the Financial Report).
16
Corporate Governance report 2023
Board members elected by the AGM 2023, cont’d.
Jonas Synnergren
Member of the Audit and Compliance
Committee and of the Remuneration
Committee
Christy Wyatt
Member of the Enterprise Business
and Technology Committee
First elected
2023
Born
1977
Education
Master of Science in Business and
Economics, Stockholm School of
Economics, Sweden
Nationality
Sweden
Board Chair
–
Board Member
Nordea Oyj
Holdings in Ericsson
–
Principal work experience
and other information
Senior Partner at Cevian Capital
AB since 2020. Various positions
within Cevian Capital AB since 2007,
including Head of Cevian’s Swedish
office since 2012. Various positions
at The Boston Consulting Group AB
(2000–2006).
First elected
2023
Born
1972
Education
Diploma, Scientific Computer
Programming Technology, College of
Geographic Sciences, Canada
Nationality
Canada and USA
Board Chair
–
Board Member
Silicon Laboratories Inc. and
Absolute Software Corporation
Holdings in Ericsson
–
Principal work experience
and other information
President and CEO Absolute
Software since 2018, which was
recently taken private 4). President
and CEO of DTEX Systems
(2016–2018). President and CEO
(2013–2015) as well as Chair
(2014–2015) of Good Technology
(now BB). Global Head, Consumer
eBusiness and Mobile Technology at
Citigroup (2012). Various positions
at Motorola (2005–2011), including
SVP, Ecosystem and GM, Enterprise
Business. Director, Developer
Relations at Apple (2003–2005).
Various positions at Palm
(1999–2003), at Sun Microsystems
JavaSoft (1995–1999) and at Esri
(1994–1995). Member of the Board
in Quotient (2018–2022).
Ronnie Leten, Nora Denzel and Kurt Jofs resigned from
the Board of Directors in connection with the AGM
2023 on March 29, 2023.
Börje Ekholm was the only Director who held an opera-
tional management position at Ericsson in 2023.
The Board memberships and holdings in Ericsson reported above are as of December 31, 2023.
4) Completion of the take-private acquisition of Absolute Software by an affiliate of Crosspoint Capital Partners was announced on July 27, 2023.
Corporate Governance report 2023
17
Board members and deputies appointed by the trade unions
Ulf Rosberg
Employee representative since July 4,
2023 (former Deputy), Member of
the Finance Committee and of the
Enterprise Business and Technology
Committee
First appointed
2021
Born
1964
Appointed by
PTK
Nationality
Sweden
Holdings in Ericsson
110 Class B shares 1)
Employed since
1985
Working as System Developer within
R&D, Business Area Networks
Kjell-Åke Soting
Employee representative, Member of
the Remuneration Committee
Annika Salomonsson
Employee representative since
July 31, 2023 (former Deputy),
Member of the Audit and Compliance
Committee
First appointed
2016
Born
1963
Appointed by
PTK
Nationality
Sweden
Holdings in Ericsson
10,065 Class B shares 1)
Employed since
1996
Working as Global SQA Manager
within Business Area Networks
First appointed
2022
Born
1972
Appointed by
LO
Nationality
Sweden
Holdings in Ericsson
1,998 Class B shares 1)
Employed since
1997–2003 and since 2005.
Working as Verification Engineer
Loredana Roslund
Employee representative – Deputy
Frans Frejdestedt
Employee representative – Deputy
since September 1, 2023
Stefan Wänstedt
Employee representative – Deputy
since September 1, 2023
First appointed
2017
Born
1967
Appointed by
PTK
Nationality
Sweden
Holdings in Ericsson
2,422 Class B shares 1)
Employed since
1994
Working as Project Manager within
R&D, Business Area Networks
First appointed
2023
Born
1979
Appointed by
PTK
Nationality
Sweden
Holdings in Ericsson
–
Employed since
2008
Working as R&D manager within
Business Area Cloud Software and
Services
First appointed
2023
Born
1964
Appointed by
LO
Nationality
Sweden
Holdings in Ericsson
3,235 Class B shares 1)
Employed since
1999
Working as a Senior Researcher
1) The number of shares reflects ownership as of December 31, 2023 and includes holdings by related persons, if applicable.
Anders Ripa was employee repre-
sentative until July 4, 2023. Torbjörn
Nyman was employee representative
until July 31, 2023.
18
Corporate Governance report 2023
Management
The President and CEO and the
Executive Team
The Board of Directors appoints the President
and CEO and the Executive Vice President(s).
The President and CEO is responsible for the
management of day-to-day operations and
is supported by the other members of the
Executive Team.
The Executive Team members are pre-
sented on pages 20–24.
The Executive Team is responsible for:
– Defining Group strategies and policies, driv-
ing the corporate strategy and establishing
and maintaining the corporate culture.
– Group-wide oversight and ensuring an
effective framework for risk management
and decision-making (including through the
implementation of effective governance,
a strong compliance program and related
internal controls).
– Managing and executing on “central”
corporate matters (ranging from managing
Ericsson’s capital structure, financing and
other corporate transactions, listing compli-
ance and disclosure obligations).
– Group financial management and report-
ing (including determining targets for
operational units, allocating resources and
monitoring market area and business area
performance).
– Leading on operational excellence, perfor-
mance management and realizing global
synergies through efficient organization of
the Group.
Guidelines for remuneration to Group manage-
ment were approved by the AGM 2023 and are
expected to remain in place until the AGM
2027. For further information on fixed and var-
iable remuneration, see the Remuneration
Report and note G2, “Information regarding
members of the Board of Directors and the
Group management” in the Financial Report.
Organizational Structure
Ericsson’s organizational structure is summa-
rized above in “Governance Structure and Core
Values – Governance Structure” at pages 3–5.
Segments have been defined for financial
reporting purposes based on the business areas.
See further information in Note B1, “Segment
Information” in the Financial Report.
Audits, assessments, and certification
The purpose of assurance activities, such as
audits and assessments, is to determine the
level of compliance and to provide valuable
information for understanding, analyzing,
and continually improving performance, to
ensure that the Ericsson Group Management
System (EGMS) is adequate and effective in
managing Ericsson´s operations. Management
monitors compliance with policies, directives,
instructions, and processes through internal
self-assessment activities within the respective
units. This is complemented by internal and
external audits and assessments.
To ensure fulfilment of demands and
requirements from customers and other
stakeholders, Ericsson takes conscious deci-
sions on certification. Certification means
that Ericsson’s interpretation of standards or
requirements are confirmed by a third party via
an assessment activity.
ISO certificates are issued by a third-party
certification body proving that the system is
efficient throughout the operations as well
as compliant to the ISO standards in scope.
Ericsson’s operations are currently certified to
ISO 9001 (Quality), ISO 14001 (Environment),
ISO 45001 (Health and Safety) and ISO 27001
(Information Security). Selected Ericsson units
are also certified to TL 9000 (telecom-specific
standard). EGMS is also assessed within the
scope of the audit plan of Ericsson’s internal
audit function (Corporate Audit).
Through 2022, ISO/management system
assessments were performed by BSI (British
Standards Institution). In 2023, the assessment
was performed by DNV (Det Norske Veritas).
Internal audits are performed by the Company’s
internal audit function which reports to the
Audit and Compliance Committee.
With a risk-based approach, Ericsson con-
ducts audits of suppliers to secure compliance
with Ericsson’s Code of Conduct, including
rules with which suppliers to the Ericsson
Group must comply. Ericsson’s external finan-
cial audits are performed by Deloitte AB.
Different types of assurance as described
above have differing scope and rationale. All
assurance providers have defined and estab-
lished accountabilities and responsibilities.
The Ericsson Group Management System
To ensure transparency and consistency across
the organization regarding operational expec-
tations and requirements relating to govern-
ance, decision-making and risk management,
among other things, Ericsson maintains the
EGMS. EGMS ensures that selected ISO stand-
ards and certifications are effectively main-
tained and that the Company’s operations are
continually evaluated and improved.
EGMS is founded on ISO 9001 (inter-
national standard for quality management
systems) and is designed as a dynamic system
to enable Ericsson to adapt to evolving
demands and expectations, including new
Organizational Structure
CEO
Business Areas
Networks
Cloud Software & Services
Technologies & New Businesses
Enterprise Wireless Solutions
Global Communications Platform
Other
Group Functions
Finance & Common Functions
Legal Affairs & Compliance
Technology & Strategy
Global Operations
People
Marketing & Corporate Relations
Market Areas
North America
Europe & Latin America
Middle East & Africa
South East Asia, Oceania & India
North East Asia
Corporate Governance report 2023
19
and changing regulation and legislation as
well as customers’ and other stakeholders’
requirements. As noted, Group-wide policies,
directives and instructions govern how the
organization works, and Ericsson’s approach
to risk management is summarized in the
section titled “Risk Management”. Further,
Ericsson maintains specific accounting and
reporting procedures to fulfill external report-
ing requirements.
Ericsson’s strategy process includes the
whole chain from business intelligence and
strategic forecasting to deployment of devel-
oped strategies into targets and programs
in coordinated cycles, capturing the overall
strategic direction, market development and
progress of strategy execution. Ericsson busi-
ness processes are a set of defined Group-wide
processes integrated in EGMS. They describe
how Ericsson delivers value to customers,
proactively and on-demand. Ericsson busi-
ness processes offer capabilities to translate
customer requirements into defined hardware,
software, solutions, and services offered by
Ericsson.
Cybersecurity
Cybersecurity Risk Management and
Strategy
Every year Ericsson identifies and manages
numerous cyber-attack attempts, vulner-
abilities, and cybersecurity incidents. In 2023,
Ericsson detected and resolved cybersecurity
incidents effectively, none were considered
to be material. Ericsson faces certain ongoing
risks from advanced threat actors that, if real-
ized and not timely detected and mitigated,
are reasonably likely to materially affect the
Company, including its operations, business
strategy, results of operations, or financial
condition. See Risk Factor 4.1.
Ericsson has developed and implemented
cybersecurity programs intended to protect the
confidentiality, integrity, and availability of its
critical systems and information as well as its
products and services.
Ericsson is globally certified to ISO/ECN
27001 for Information Security Management
Systems (ISMS), which is integrated into the
EGMS and encompasses Ericsson’s security
requirements, including for third parties, as
well as practices to assess security posture
and performance. Ericsson has a central threat
intelligence team and multiple security risk
managers responsible for assessing security
threats and vulnerabilities and identifying
cybersecurity risks, including third party risks.
Ericsson’s Cyber Defense Center works to
monitor, detect, respond, and limit any cyber-
security attacks from expanding in severity
or scale. The incident management team is
operational 24/7 and includes security and
computer forensics specialists responsible
for escalating and investigating incidents.
If needed, business continuity plans are in
place to help recover from the effects of a
cybersecurity incident. Internal adherence to
frameworks and processes is achieved through
quantitative and qualitative measurements,
including regular external and internal audits,
and regularly recurring training, including on
security awareness.
To secure Ericsson’s products and services,
Ericsson’s Security Reliability Model (SRM)
mandates product and feature risk assess-
ments, secure design, secure coding principles,
use of analysis tools, and supply-chain security
requirements to avoid vulnerabilities. To
mitigate security risks, Ericsson maintains a
catalogue of externally developed components
or code used in its products and thorough test-
ing is performed to ensure high product quality.
Continuous training is provided to the work-
force about the SRM and its included tasks
and activities. The Product Security Incident
Response Team (PSIRT) coordinates remedia-
tion for customers affected by vulnerabilities
or security incidents in Ericsson products, and
actively monitors vulnerabilities in third-party
software and alerts the relevant product
development organization. Ericsson’s product
development and lifecycle processes have
been successfully audited to GSMA Network
Equipment Security Assurance Scheme since
2020. Several products are also externally
evaluated against 3GPP Security Assurance
Specification.
Ericsson’s cybersecurity programs do not
imply that it meets technical specifications or
requirements at all times, but that the afore-
mentioned frameworks help to identify, assess,
and manage cybersecurity risks relevant to its
business.
Cybersecurity Governance
The Board considers cybersecurity risks as part
of its risk oversight function and has delegated
the specific oversight of cybersecurity risks to
the ACC, which receives regular briefings from
the Chief Security Officer (CSO) on cybersecu-
rity matters.
Ericsson’s President and CEO sets the
overall direction for cybersecurity by approving
its Security Strategy and its Security Policy. In
addition, the Executive Team regularly receives
briefings on cybersecurity risks, posture,
investments and strategy execution and has
established, the Group Enterprise Security
and Privacy Board (GESB), which manages
the oversight of enterprise security, including
cybersecurity, and privacy. The Chair of GESB
is the COO, and GESB’s agenda is driven by
the CSO. GESB assembles executives and
other senior business leaders a minimum of
five times a year to review, recommend and
endorse high-level security plans and monitor
risks and security strategy execution.
Ericsson’s cybersecurity program is under
the direction of the CSO, who is responsible
for enterprise security and reports to the COO.
The CTO is responsible for Product Security
and Privacy and has delegated the handling
of security requirements, standards and
architecture, related to product development
and product management to the Chief Product
Security Officer (CPSO).
The respective Group function, market
area and business area head is responsible for
the implementation of security controls into
Ericsson’s business processes and operations,
which is mandated by the CSO, the CTO or the
CPSO, or through local laws, regulations or cus-
tomer requirements. The CSO and the CPSO
regularly receive briefings and reports from
the business areas, market areas and relevant
Group functions on identified cybersecurity
risks, vulnerabilities, and posture.
Maj.Gen.(Ret) Fredrik Robertsson serves
as Ericsson’s CSO and Head of Group Security.
His diverse experience includes former roles
at the Swedish Armed Forces Headquarters,
such as Director of Plans, Chief Information
Officer, and CISO, which included directing and
developing the Swedish Armed Forces’ cyber
capability and cyber defense. He holds a Mas-
ter of Science degree in Political Science with a
specialization in Security Studies. Additionally,
Maj.Gen.(Ret) Robertsson has been an active
member of the Swedish Contingencies Agency
Cyber Security Council and serves as a board
member for Sectra AB.
Mikko Karikytö is Ericsson’s CPSO and Head
of Product Security and was previously Head of
Network Security and Head of Product Security
Incident Response Team. Additionally, Mr.
Karikytö is engaged in industry collaboration
through organizations like ETIS (a collabora-
tion community for the European Telecom
industry), Forum of Incident Response and
Security Teams, and EU Commission work
groups. He has provided subject matter
expertise for committee hearings of the UK
parliament and the German Bundestag in
connection with 5G security.
20
Corporate Governance report 2023
Members of the Executive Team
Börje Ekholm
President and Chief Executive Officer
(CEO) (since 2017)
Fredrik Jejdling
Executive Vice President, Business
Area Networks (since 2017)
MajBritt Arfert
Senior Vice President, Chief People
Officer (CPO) (since 2017)
Yossi Cohen
Senior Vice President Market Area
North America (since February 2024)
Functions
President and CEO and
Head of Segment Enterprise
Functions
Head of Business Area Networks and
Head of Segment Networks
Functions
Head of Group Function People
Functions
Head of Market Area North America
Born
1963
Born
1969
Born
1963
Born
1971
Education
Master of Science in Electrical
Engineering, KTH Royal Institute
of Technology, Sweden. Master of
Business Administration, INSEAD,
France.
Education
Master of Science in Economics and
Business Administration, Stockholm
School of Economics, Sweden.
Education
Bachelor of Human Resources,
University of Gothenburg, Sweden.
Education
Bachelor of Business Administration,
University of West London. Diploma
in Electronic Technical Engineering
from Mosenson Elite academy, Israel.
Nationality
Sweden and USA
Nationality
Sweden
Board Member:
Telefonaktiebolaget LM Ericsson and
Trimble Inc. (Chair)
Board Member
Teknikföretagen and the
Confederation of Swedish Enterprise
Nationality
Sweden
Board Member
–
Nationality
Israel and USA
Board Member
MediaKind
Holdings in Ericsson 1)
260,351 Class B shares, 1,009,000
ADS and 2,000,000 call options 2).
Background
CEO of Patricia Industries, a division
within Investor AB (2015–2017).
President and CEO of Investor
AB (2005–2015). Formerly Head
of Investor Growth Capital Inc.
and New Investments. Previous
positions at Novare Kapital AB and
McKinsey & Co Inc. Since 2017,
member of the Steering Committee
of the World Economic Forum
Digital Communication Governors.
Member of the Board of the Swedish-
American Chamber of Commerce
New York.
Holdings in Ericsson 1)
74,126 Class B shares.
Holdings in Ericsson 1)
53,218 Class B shares.
Holdings in Ericsson 1)
-
Background
Senior Vice President and Head of
Business Unit Network Services
(2016–2017). Has held a variety of
positions in commercial operations
and financials, including Head of
Region Sub-Saharan Africa, Head
of Region India, and Head of Sales
and Finance for Business Unit Global
Services. Previous positions include
senior positions with LUX Asia Pacific
and Tele2 Group.
Background
Acting Head of Group Function Human
Resources (November 2016–March
2017). Previously Head of Human
Resources Ericsson Sweden (2015–
2016) and Vice President and Head
of Human Resources Business Unit
Support Solutions (2007–2015). Has
held various senior global positions
in Ericsson including Head of Human
Resources Business Unit Broadband
Networks, Head of Human Resources
Microwave Systems as well as a
position as Head of Human Resources
and Internal Communications at Sony
Ericsson Germany.
Background
Until January 31, 2024, Head of
Strategy, Technology, Marketing
and Business Development of
Ericsson North America. Previous
management positions within
Ericsson Business Area and Market
Area organizations include Head
of Customer Unit Verizon in USA
, Global Head of Radio Sales and
Business Management in Sweden,
Head of Global Customer Unit
Softbank based in Japan, Key
Account Manager Bezeq Group and
CTO for Ericsson Israel. Previous
positions outside Ericsson include
roles in telecommunication
technology-centric startup as well as
mobile operator.
The Ericsson holdings reported above are as of December 31, 2023.
1) The number of shares and ADS includes holdings by related persons, if applicable.
2) Call options issued by AB Industrivärden (1,000,000 call options) and Investor AB (1,000,000 call options), each entitling the purchase of one Ericsson B share from AB Industrivärden/Investor AB respectively
(further information is available in the Notes to the consolidated financial statements – note G2 “Information regarding members of the Board of Directors and the Group management” in the Financial Report).
Corporate Governance report 2023
21
Scott Dresser
Senior Vice President, Chief Legal
Officer, and secretary of the Board
of Directors of Telefonaktiebolaget
LM Ericsson (since 2022)
Erik Ekudden
Senior Vice President, Chief
Technology Officer (CTO)
(since 2018)
Moti Gyamlani
Senior Vice President, Group
Function Global Operations
(since 2022)
Functions
Head of Group Function Legal Affairs
and Compliance
Functions
Head of Group Function Technology
Functions
Head of Group Function Global
Operations
Niklas Heuveldop
Senior Vice President, Business Area
Global Communications Platform and
CEO of Vonage (since February 2024),
Head of Market Area North America
(2017–January 2024)
Functions
Head of Business Area Global
Communications Platform and CEO
of Vonage
Born
1967
Born
1968
Born
1973
Born
1968
Education
Juris Doctorate, Vanderbilt
University Law School, Bachelor of
Science Business Administration
and Finance, University of New
Hampshire, USA.
Nationality
USA
Board Member
BirdLife International, Cambridge
UK; member of Advisory Board
Holdings in Ericsson 1)
–
Background
Previously Group General Counsel
at VEON and General Counsel
of Virgin Media. Has held senior
leadership positions with BirdLife
International, White Mountains Re
and Conservation International.
Started professional career in New
York in private practice with law firms
Lord Day & Lord and Morgan Lewis,
and specialized in corporate law,
governance, and M&A.
Education
Master of Science in Electrical
Engineering, KTH Royal Institute of
Technology, Sweden.
Education
Master of Business Administration,
Arizona State University, USA, and
Bachelor of Mechanical engineering,
MIT, India.
Education
Master of Science in Industrial
Engineering and Management,
Linköping Institute of Technology,
Sweden.
Nationality
Sweden
Board Member
ASSA ABLOY AB
Nationality
USA
Board Member
–
Holdings in Ericsson 1)
32,594 Class B shares
and 9,857 ADS.
Background
Group Chief Technology Officer and
Head of Technology and Architecture
within Group Function Technology
and Emerging Business (July 2017–
March 2018). Joined Ericsson in 1993
and has held various management
positions in the Company, including
Head of Technology Strategy,
Chief Technology Officer Americas
in Santa Clara US, and Head of
Standardization and Industry.
Member of the Royal Swedish
Academy of Engineering Sciences
(IVA). Since 2020, member of
the Broadband Commission for
Sustainable Development and vice
chairman of IVA’s Näringslivsråd.
Holdings in Ericsson 1)
4,877 Class B Shares
Background
Head of Group Sourcing (2019–
2022). Previous position as
Chief Procurement and Supply
Chain Officer and Chief Cost
Transformation Officer of Airtel
(2012–2019). Leadership positions
include Group Vice President Global
Supply Chain and Sourcing at
General Electric Power Conversion,
Vice President Global Sourcing at
Honeywell, and Executive Director
at General Motors. Lived and
worked in multiple countries and
markets, including USA, France,
Mexico, and India. Board advisor to
eSmartMobility.
Nationality
Sweden
Board Member
The Swedish-American Chamber of
Commerce New York and CTIA – US
wireless industry trade association
Holdings in Ericsson 1)
82,729 Class B shares
and 14,744 ADS.
Background
Head of Market Area North America
(2017 until January 31, 2024), Chief
Strategy Officer and Head of Group
Function Technology and Emerging
Business (April 2017–March 2018).
Previous positions include Chief
Customer Officer and Head of Group
Function Sales (2016–2017) and
senior leadership positions across
Europe and the Americas, including
Head of Global Customer Unit AT&T
and Head of Market Unit Central
America and Caribbean. Previous
positions outside Ericsson include
CEO of ServiceFactory and COO of
WaterCove Networks.
The Ericsson holdings reported above are as of December 31, 2023.
1) The number of shares and ADS includes holdings by related persons, if applicable.
22
Corporate Governance report 2023
Members of the Executive Team, cont’d.
Chris Houghton
Senior Vice President, Chief Operating
Officer (COO), Business Area
Technology & New Businesses (since
November 2023), Market Area North
East Asia (2017–February 2024)
Functions
Head of Business Area Technology &
New Businesses and Chief Operating
Officer
Jenny Lindqvist
Senior Vice President, Market Area
Europe and Latin America (since
February 2023)
Stella Medlicott
Senior Vice President, Chief
Marketing and Communications
Officer (CMO and CCO) (since 2019)
Carl Mellander
Senior Vice President, Chief Financial
Officer (CFO) (since 2017)
Functions
Head of Market Area Europe and
Latin America
Functions
Head of Group Function Marketing
and Corporate Relations
Functions
Head of Group Function Finance
and Common Functions
Born
1966
Born
1982
Born
1969
Born
1964
Education
Bachelor of Law, Huddersfield
Polytechnic, United Kingdom.
Education
Master of Science in Business and
Economics, Stockholm School of
Economics, Sweden.
Education
Bachelor of Arts (Hons) degree in
Social Science, University of Lincoln
(known at that time as University of
Humberside), United Kingdom and
Postgraduate Diploma in Marketing,
Chartered Institute of Marketing,
United Kingdom.
Education
Bachelor of Arts in Business
Administration and Economics,
Stockholm University, Sweden; and
East- and South East Asia Program,
Lund University, Sweden.
Nationality
United Kingdom and Sweden
Board Member
–
Nationality
Sweden
Board Member
TechSverige
Nationality
United Kingdom
Board Member
–
Nationality
Sweden
Board Member
International Chamber of Commerce
(ICC) Sweden and Grönskär Gruppen
AB
Holdings in Ericsson 1)
96,963 Class B shares.
Holdings in Ericsson 1)
824 Class B shares.
Holdings in Ericsson 1)
8,126 Class B shares.
Holdings in Ericsson 1)
94,856 Class B shares.
Background
Head of Market Area North East
Asia (2017 until February 25, 2024).
Head of Region North East Asia
(2015–2017). Has also previously
held management positions within
Ericsson, including Head of Region
India, Head of Customer Unit UK and
Ireland and various management
positions within Ericsson in China,
Hungary, India, Ireland, Japan,
Sweden and the UK.
Background
Head of Northern and Central Europe
within Market Area Europe and Latin
America. Previous management
positions within Ericsson Business
Area and Market Area organizations
include Head of Global Customer
Unit Telia Company, Head of Solution
Line Intelligent Transport Systems,
Key Account Manager Telenor,
Managed Services Engagement Lead
and Business Manager Multimedia.
Previous positions outside Ericsson
include roles in management
consulting in France and Sweden,
as well as in Pharmaceuticals in the
Philippines.
Background
Vice President of Marketing,
Communications and Government
Relations for Ericsson Market
Area Europe and Latin America
(July 2017–June 2019). Prior to
joining Ericsson, Chief Marketing
Officer at Red Bee Media, which was
acquired by Ericsson in May 2014.
Has over 25 years of marketing
experience in major IT, telecoms
and media companies including
two years at Technicolor as VP
Marketing and 10 years at Siemens
Communications as Global VP
Marketing.
Background
Acting Chief Financial Officer
and Head of Group Function
Finance and Common Functions
(July 2016–March 2017). Previous
positions within Ericsson include Vice
President and Group Treasurer, and
Head of Finance in Region Western
and Central Europe. Also held Head
of Finance/CFO positions within the
telecom operator space and defense
industry.
The Ericsson holdings reported above are as of December 31, 2023.
1) The number of shares and ADS includes holdings by related persons, if applicable.
Corporate Governance report 2023
23
Nunzio Mirtillo
Senior Vice President, Market Area
South East Asia, Oceania and India
(since 2017)
George Mulhern
Former Senior Vice President,
Business Area Enterprise Wireless
Solutions and CEO of Cradlepoint
(2022–October 2023)
Per Narvinger
Senior Vice President, Business Area
Cloud Software and Services
(since 2022)
Chafic Nassif
Senior Vice President, Market Area
North East Asia (since February
2024)
Functions
Head of Market Area South East Asia,
Oceania and India
Functions
Former Head of Business Area
Enterprise Wireless Solutions and
CEO of Cradlepoint
Functions
Head of Business Area Cloud
Software and Services and
Head of Segment Cloud Software
and Services
Functions
Head of Market Area North East Asia
Born
1961
Born
1956
Born
1974
Born
1981
Education
Master in Electronic Engineering,
Sapienza University, Italy.
Education
Bachelor of Science and Master of
Business Administration, San Jose
State University (USA).
Education
Master of Science in Electrical
Engineering, KTH Royal Institute of
Technology, Sweden.
Education
Master of Science in ICT
Entrepreneurship and Master of
Science Wireless Systems, KTH Royal
Institute of Technology, Sweden.
Nationality
Italy
Board Member
–
Nationality
USA
Board Member
Regence Blue Shield of Idaho,
Cambia Health Solutions and Focus
IP, Inc. dba Tracer.
Nationality
Sweden
Board Member
–
Nationality
Sweden
Board Member
–
Holdings in Ericsson 1)
83,276 Class B shares.
Holdings in Ericsson 1)
–
Holdings in Ericsson 1)
9,070 Class B shares.
Holdings in Ericsson 1)
5,944 Class B shares
Background
Previously Head of Region
Mediterranean. Previous
management positions within
Ericsson include Head of Sales
Networks for Western Europe within
Business Unit Networks, Head of
Business Operations in Market Unit
South East Europe and Key Account
Manager for Wind Italy, Vodafone
Italy and other customers.
Background
CEO of Cradlepoint when it was
acquired by Ericsson in 2020.
Previously general partner at
Highway 12 Ventures, a venture
capital firm making investments in
early-stage technology companies.
Held various leading positions
during a long tenure at Hewlett
Packard Company, including senior
vice president, leading the LaserJet
Global Business Unit.
Background
Head of Product Area Networks,
Business Unit Networks
(2018– 2022). Head of Customer
Unit Northern and Central Europe,
Market Area Europe and Latin
America (2017–2018). Has held
a variety of senior management
positions in Ericsson since 1997,
spanning R&D line management,
Head of Customer Solutions
(Australia and Spain) and Product
Management.
Background
Previously Head of Customer Unit
North Latin America & Caribbean
within Market Area Europe & Latin
America with responsibility across
41 countries. Has held various
senior positions in Ericsson spanning
over four continents, including
President and Board Member of
Ericsson Taiwan, Key Account
Manager in Germany, VP Business
Development and Head of TV &
Enterprise Segments for Global
Customer Unit Vodafone based out
of the UK, and Head of TV & Media
Sales for EMEA. Prior to Ericsson, he
held roles in consulting and business
development in the technology
industry in Sweden and the Nordics.
The Ericsson holdings reported above are as of December 31, 2023.
1) The number of shares and ADS includes holdings by related persons, if applicable.
24
Corporate Governance report 2023
Members of the Executive Team, cont’d.
Fadi Pharaon
Senior Vice President, Market Area
Middle East and Africa (since 2019)
Functions
Head of Market Area Middle East
and Africa
Rory Read
Former Senior Vice President, Business
Area Global Communications Platform
and CEO of Vonage (2022–February
2024)
Åsa Tamsons
Senior Vice President, Business
Area Enterprise Wireless Solutions
and CEO of Cradlepoint (since
November 2023).
Functions
Former Head of Business Area Global
Communications Platform and CEO
of Vonage
Functions
Head of Business Area Enterprise
Wireless Solutions and CEO of
Cradlepoint
Born
1972
Born
1961
Born
1981
Education
Master of Science in Computer
Science, KTH Royal Institute of
Technology, Sweden and a Master
of Business Administration, Heriot
Watt University, Edinburgh Business
School, Scotland.
Nationality
Sweden and Lebanon
Board Member
–
Holdings in Ericsson 1)
355 Class B shares
and 1,206 ADS.
Background
Vice President of Networks and
Managed Services (presales and
commercial management) within
Market Area Europe and Latin
America. Previous management
positions within Ericsson include
Head of Presales and Strategy for
Ericsson Region South East Asia and
Oceania, and Country Manager for
Ericsson Singapore and Brunei.
Education
Bachelor of Information Sciences,
Hartwick College, New York, USA.
Education
Master of Business Administration,
Stockholm School of Economics,
Sweden.
Nationality
USA
Board Member
–
Nationality
Sweden
Board Member
CNH Industrial
Holdings in Ericsson 1)
56,614 Class B shares.
Holdings in Ericsson 1)
35,756 Class B shares.
Background
Has more than three decades
of global technology industry
experience and became CEO of
Vonage in July 2020. Vonage was
acquired by Ericsson in July 2022.
Previously, was Chief Operating
Executive of Dell Technologies, CEO
and President of Dell’s Virtustream,
and EVP of Dell Boomi. Also served
as Chief Integration Officer of the
USD 67 billion merger of Dell and
EMC. Earlier, was CEO, President and
Board member of Advanced Micro
Devices and Chief Operating Officer
and President at Lenovo following
23 years at IBM.
Background
Head of Business Area Technology
and New Businesses (2018 until
November 2023). IPR & Licensing
(November 2018–November 2023),
Group Strategy & M&A (April 2018-
March 2020). Previously Partner
at McKinsey & Company, serving
high-tech and telecommunications
companies worldwide on growth
strategies, digital and commercial
transformations. Before joining
Ericsson lived and work in the USA,
Brazil, France, Sweden and
Singapore.
Changes in the Executive Team
during 2023 and 2024
Effective February 1, 2023, Jenny Lindqvist
was appointed new Senior Vice President and
Head of Market Area Europe and Latin America,
replacing Stefan Koetz.
Åsa Tamsons was appointed Head of Business
Area Enterprise Wireless Solutions and CEO of
Cradlepoint replacing George Mulhern, who left
his position to become advisor to Business Area
Enterprise Wireless Solutions.
Effective November 1, 2023, Chris Houghton
was appointed Chief Operating Officer includ-
ing Head of Business Area Technology & New
Businesses.
Effective February 1, 2024, Niklas Heuveldop
was appointed Head of Business Area Global
Communications Platform and CEO of Vonage
replacing Rory Read, who left his position on
February 1, 2024.
Effective February 1, 2024, Yossi Cohen was
appointed Senior Vice President and Head of
Market Area North America replacing Niklas
Heuveldop.
Effective February 26, 2024, Chafic Nassif was
appointed Senior Vice President and Head of
Market Area North East Asia replacing Chris
Houghton.
The Ericsson holdings reported above are as of December 31, 2023.
1) The number of shares and ADS includes holdings by related persons, if applicable.
Corporate Governance report 2023
25
Auditor
According to the articles of association, the
Parent Company shall have no less than one
and no more than three registered public
accounting firms as external independent
auditor. Ericsson’s auditor is currently
appointed each year at the AGM for a one-year
mandate period. The auditor reports to the
shareholders at General Meetings.
The duties of the auditor include:
– Updating the Board of Directors regarding
the planning, scope and content of the
annual audit work
– Reviewing the interim reports to assess
that the financial statements are presented
fairly in all material respects and providing
review opinions over the interim reports for
the third and fourth quarters and the year-
end financial statements
– Providing an audit opinion over the Annual
Report
– Advising the Board of Directors of non-
audit services performed, the consideration
paid and other issues that determine the
auditor’s independence.
Auditing work is carried out by the auditor
continuously throughout the year. For further
information on the contacts between the
Board and the auditor, please see “Work of the
Board of Directors” earlier in this Corporate
Governance report.
Current auditor
Deloitte AB was reappointed auditor at the
AGM 2023 for a period of one year, i.e., until
the close of the AGM 2024. Deloitte AB has
appointed Thomas Strömberg, Authorized
Public Accountant, to serve as auditor in
charge.
Fees to the auditor
Ericsson paid the fees (including expenses)
for audit-related and other services listed in
the table in note H5, “Fees to auditors” in the
Financial Report.
Internal control over financial reporting
This section has been prepared in accordance
with the Annual Accounts Act and the Swedish
Corporate Governance Code and is limited to
internal control over financial reporting.
Since Ericsson is listed in the US, the require-
ments outlined in the Sarbanes-Oxley Act
(SOX) apply, subject to certain exceptions.
These regulate the establishment and mainte-
nance of internal control over financial report-
ing as well as management’s assessment of
the effectiveness of the controls.
In order to support high-quality report-
ing and to meet the requirements of SOX,
the Company has implemented detailed
documented controls and testing, and report-
ing procedures based on the internationally
established 2013 COSO framework for inter-
nal control. The COSO framework is issued by
the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). Man-
agement’s internal control report, according
to SOX, will be included in Ericsson’s Annual
Report on Form 20-F and filed with the SEC.
Ericsson has integrated risk management
and internal control over financial reporting
into its business processes. As defined in
the COSO framework, internal control is an
aggregation of components such, as a control
environment, risk assessment, control activi-
ties, information and communication and
monitoring.
The control framework is updated regularly
to reflect items such as relevant changes in
processes, tools usage, outcome of risk assess-
ments and changes in legislation. Continuous
enhancements strengthen and risk-adapt the
design of the controls and the efficiency of the
internal control over financial reporting. The
scope of the enhancements covers both busi-
ness process controls and IT controls.
Control environment
The Company’s internal control structure
is based on the division of tasks between
the Board of Directors, its Committees and
the President and CEO. The Company has
implemented a management system that is
based on:
– Steering documents, such as policies and
directives, and the Code of Business Ethics.
– A strong corporate culture.
– The Company’s organization and mode
of operations, with well-defined roles and
responsibilities and delegations of authority.
– Several well-defined Group-wide processes
for planning, operations and support.
The most essential parts of the control envi-
ronment relative to financial reporting are
included in steering documents and processes
for accounting and financial reporting. These
steering documents are updated regularly to
include, among other things, changes to laws
and regulations, including financial reporting
standards and listing requirements, such as
IFRS and SOX.
The processes include specific controls to
be performed to ensure high-quality financial
reports. The management of each reporting
legal entity, region and business unit is sup-
ported by finance functions in the execution of
controls related to transactions and reporting.
The finance functions are organized in Com-
pany Control and Business Shared Services
Hubs/Centers, each supporting a number of
legal entities within a geographical area. A
financial controller function is also established
on Group level, reporting to the CFO. For larger
acquisitions, the main finance functions and
the control execution of the acquired entity
remain at the entity and enter into close col-
laboration with the Group finance functions.
Risk assessment
Risks of material misstatements in the finan-
cial reporting may exist in relation to recogni-
tion and measurement of assets, liabilities,
revenue and cost or insufficient disclosure.
Other risks related to financial reporting
include fraud, loss or embezzlement of assets
and undue favorable treatment of counterpar-
ties at the expense of the Company.
Policies and directives regarding account-
ing and financial reporting cover areas of
particular significance to support correct,
complete and timely accounting, reporting
and disclosure.
Identified types of risks are mitigated
through well-defined business processes with
integrated risk management activities, segre-
gation of duties and appropriate delegation
of authority. This requires specific approval of
material transactions and ensures adequate
asset management.
Control activities
The Company’s business processes include
financial controls regarding the approval and
accounting of business transactions. In the
financial closing and reporting process there
are controls regarding recognition, measure-
ment, and disclosure. These include the
application of critical accounting policies and
estimates, in individual subsidiaries as well as
in the consolidated accounts.
26
Corporate Governance report 2023
Regular analyses of the financial results for
each subsidiary, region and business unit cover
the significant elements of assets, liabilities,
revenues, costs and cash flow. Together with
further analysis of the consolidated financial
statements performed at Group level, these
procedures are designed to ensure financial
reports without material errors.
For external financial reporting purposes,
the Disclosure Committee performs additional
control procedures to review whether the
disclosure requirements are fulfilled.
The Company has implemented controls
to ensure that financial reports are prepared
in accordance with its internal accounting and
reporting policies and IFRS, as well as with
the relevant listing regulations. It maintains
detailed documentation on internal controls
related to the accounting and financial report-
ing. It also keeps records on the monitoring of
the execution and results of such controls. This
allows the President and CEO and the CFO to
assess the effectiveness of the controls in a
way that is compliant with SOX.
Entity-wide controls, focusing on the
control environment and compliance with
financial reporting policies and directives, are
implemented in the subsidiaries or opera-
tional units. Detailed process controls and
documentation of controls performed are also
implemented in the significant subsidiaries or
operational units covering these subsidiaries,
covering the items with significant materiality
and risk.
In order to secure compliance, governance
and risk management in the areas of legal
entity accounting and taxation, as well as
securing funding and equity levels, the Com-
pany operates through Company Control and
Business Shared Services Hubs/Centers, cover-
ing subsidiaries in each geographical area.
Based on a common IT platform, a com-
mon chart of accounts and common master
data, the Company Control and Business
Shared Services Hubs/Centers perform
accounting and financial reporting services
for most subsidiaries.
Information and communication
The Company’s information and communica-
tion channels support complete, correct and
timely financial reporting by making all rel-
evant internal process instructions and policies
accessible to all the employees concerned.
Regular updates and briefing documents
regarding changes in accounting policies,
reporting and disclosure requirements are also
supplied.
Subsidiaries and operating units prepare
regular financial and management reports
for internal steering groups and Company
management. These include analysis and
comments on financial performance and
risks. The Board of Directors receives financial
reports monthly. Ericsson has established a
whistleblower tool, the Ericsson Compliance
Line, that can be used for the reporting of
alleged violations that are conducted by Group
or local management, and relate to corruption,
questionable accounting, deficiencies in the
internal control of accounting or auditing mat-
ters, or otherwise seriously affect vital interests
of the Group or personal health and safety.
Disclosure policies
Ericsson’s financial reporting and disclosure
policies follow the International Financial
Reporting Standards (IFRS) and aim to ensure
transparent, relevant and consistent com-
munication with equity and debt investors on
a timely, fair and equal basis. This will support
a fair market value for Ericsson securities.
Ericsson wants current and potential investors
to have a good understanding of how the
Company works, including operational perfor-
mance, prospects and potential risks.
To achieve these objectives, financial
reporting and disclosure must be:
– Transparent – enhancing understanding
of the economic drivers and operational
performance of the business, building trust
and credibility.
– Consistent – comparable in scope and
level of detail to facilitate comparison
between reporting periods.
– Simple – to support the understanding of
the business operations and performance,
and to avoid misinterpretations.
– Relevant – with focus on what is relevant
to Ericsson’s stakeholders or required by
regulation or listing agreements, to avoid
information overload.
– Timely – with regularly scheduled disclo-
sures as well as ad-hoc information, such
as press releases on important events,
performed in a timely manner.
– Fair and equal – where all material infor-
mation is published via press releases to
ensure that the whole investor community
receives the information at the same time.
– Complete – free from material errors and
a reflection of best practice – disclosures
compliant with applicable financial report-
ing standards and listing requirements and
in line with industry norms.
Ericsson’s website includes comprehensive
information about the Group, including an
archive of annual and interim reports and
access to recent news.
Disclosure controls and procedures
Ericsson has controls and procedures in place
to allow for timely disclosure in accordance
with applicable laws and regulations, includ-
ing the (EU) Market Abuse Regulation, the
US Securities Exchange Act of 1934, and
under agreements with Nasdaq Stockholm
and Nasdaq New York. These procedures also
require that such information is provided to
management, including the President and
CEO and the CFO, so timely decisions can be
made regarding the required disclosures.
The Disclosure Committee assists manage-
ment in fulfilling their responsibility regarding
disclosures made to the shareholders and the
investment community. One of the main tasks
of the committee is to monitor the integrity
and effectiveness of the disclosure controls
and procedures. The Disclosure Committee
comprises members with various expertise
including representation from the segments.
Ericsson also has an Insider Committee, which
makes assessments relating to the disclosure
of inside information. The Insider Committee
comprises the Chief Legal Officer, the Chief
Financial Officer and the Chief Marketing and
Communications Officer.
Ericsson has investments in certain entities
that the Company does not control or manage.
With respect to such entities, disclosure con-
trols and procedures are substantially more
limited than those maintained with respect to
subsidiaries.
Controls and procedures, no matter how
well designed and operated, can only provide
reasonable assurance of achieving the desired
control objectives. Ericsson’s President and
CEO and the CFO evaluated the Company’s
disclosure controls and procedures and con-
cluded that they were effective at a reason-
able assurance level as of December 31, 2023.
Corporate Governance report 2023
27
Monitoring
The Company’s process for financial reporting
is reviewed annually by management. This
forms a basis for evaluating the internal man-
agement system and internal steering docu-
ments to ensure that they cover all significant
areas and risks related to financial reporting.
The management of the Company Control and
Business Shared Services Hubs/Centers (and
of the companies handled outside Company
Control and Business Shared Services Hubs/
Centers) continuously monitor accounting
quality through a set of performance indica-
tors. Compliance with policies and directives is
monitored through annual self-assessments
and representation letters from company
heads and company controllers in subsidiaries
as well as in business areas and market areas.
The Company’s financial performance is also
reviewed at Board meetings. The Commit-
tees of the Board fulfill important monitoring
functions regarding remuneration, loans,
investments, customer finance, cash manage-
ment, financial reporting and internal control.
The Audit and Compliance Committee and
the Board of Directors review all interim
and annual financial reports before they are
released to the market. The Company’s inter-
nal audit function reports directly to the Audit
and Compliance Committee. The Audit and
Compliance Committee also receives regular
reports from the external auditor. The Audit
and Compliance Committee follows up on any
actions taken to improve or modify controls.
Board of Directors
Stockholm, March 5, 2024
Telefonaktiebolaget LM Ericsson (publ)
Org. no. 556016-0680
28
Corporate Governance report 2023
Auditor’s report on the
Corporate Governance statement
To the general meeting of the shareholders in Telefonaktiebolaget LM Ericsson (publ) corporate identity number 556016-0680
Engagement and responsibility
It is the board of directors who is responsible for the corporate govern-
ance statement for the financial year January 1, 2023 – December 31,
2023 on pages 1-28 and that it has been prepared in accordance with
the Annual Accounts Act.
The scope of the audit
Our examination has been conducted in accordance with FAR’s stand-
ard RevR 16 The auditor’s examination of the corporate governance
statement. This means that our examination of the corporate govern-
ance statement is different and substantially less in scope than an audit
conducted in accordance with International Standards on Auditing and
generally accepted auditing standards in Sweden. We believe that the
examination has provided us with sufficient basis for our opinions.
Opinions
A corporate governance statement has been prepared. Disclosures in
accordance with chapter 6 section 6 the second paragraph points 2-6
the Annual Accounts Act and chapter 7 section 31 the second paragraph
the same law are consistent with the annual accounts and the consoli-
dated accounts and are in accordance with the Annual Accounts Act.
Stockholm, March 5, 2024
Deloitte AB
Thomas Strömberg
Authorized public accountant
Remuneration
report
Part of
Ericsson
Annual Report
2023
Annual Report 2023
Financial
report
Corporate
Governance
report
Remuneration
report
Sustainability
and Corporate
Responsibility
report
ericsson.com
Contents
Remuneration report 2023
Introduction from the Chair of the
Remuneration Committee
Introduction
Remuneration 2023 at a glance
Total remuneration to the President and
CEO and Executive Vice President
Variable remuneration
Short-term variable compensation (STV)
Long-term variable compensation (LTV)
Information on guidelines for shareholdings
by Executive Team
Deviations from adopted Guidelines for
remuneration to Group Management
Comparative information on changes in
remuneration and the Company’s performance
1
2
3
5
6
6
6
10
10
11
The report has been prepared in accordance with Chapter 8,
Sections 53a and 53b of the Swedish Companies Act (2005:551)
and the Rules on Executive Remuneration and Incentive Schemes
(January 1, 2021) administered by the Swedish Stock Market Self-
Regulation Committee.
Information required by Chapter 5, Sections 40–44 of the Annual
Accounts Act (1995:1554) is included in note G1–G4 in the
Financial report.
Information on the work of the Remuneration Committee in 2023
can be found on page 12 in the Corporate Governance report.
Remuneration report 2023
1
Remuneration report 2023
Introduction from the Chair of
the Remuneration Committee
On behalf of the Board, I am pleased to present
Ericsson’s Remuneration report for the finan-
cial year 2023. The Remuneration report
describes how the Guidelines for Remunera-
tion to Group Management, adopted at the
Annual General Meetings in 2020 and 2023,
have been complied with in 2023. The Remu-
neration report also contains information on
the long-term variable remuneration programs
for 2023 for executives and the Executive
Team.
Ericsson is executing on a strategy to
achieve a higher growth trajectory to be a
more profitable company. This is achieved by
combining technology and innovation with
operational excellence, top talent and a strong
culture. Remuneration is a key strategic lever
to drive execution of our strategy. Ericsson can
only achieve its long-term targets under strong
leadership, consisting of individuals with a
wide range of backgrounds, skills, and abili-
ties. This requires that the Company attracts,
retains and motivates the right people and
offers globally competitive remuneration. That
is why Ericsson’s remuneration philosophy
and practices are based on the principles of
competitiveness, fairness, transparency and
impact. The overall aim is to create long-term
value for shareholders in order to realize the
Company’s strategy and sustainable long-term
interests, including consideration of a defined
Ethics & Compliance criteria.
The Guidelines for Remuneration to Group
Management (including both the guidelines
approved by the Annual General Meeting 2020
and the guidelines amended and approved
by the Annual General Meeting 2023) have
steered the Remuneration Committee’s work.
Remuneration during the year was determined
and paid in accordance with the Guidelines.
In the annual review of total remuneration,
each remuneration element (at target level)
has been compared with the external local and
global markets where Ericsson competes for
employees.
In response to investor feedback for 2024,
the remuneration package for the President
and CEO will include a short-term incentive
(STV) component which aligns with the
Remuneration Guidelines. The Remuneration
Committee and the Board evaluate the
effectiveness of the long-term variable remu-
neration programs for the Executive Team and
executives yearly. In addition, the Committee
has evaluated the potential to increase the
long-term focus of the Executive Team and to
ensure it is in line with the long-term expecta-
tions and interests of shareholders. The long-
term variable remuneration programs were
introduced in 2017 for the Executive Team.
The one-year performance condition regarding
the Group’s operating income (EBITA) was
added in the 2018 year LTV program. In LTV
2022, the LTV plan for the Executive Team
was further strengthened by introducing the
ESG related targets, namely reduction of CO2
emissions and increase of female leaders.
After evaluating the current long-term vari-
able remuneration programs and taking into
account feedback from investors, as well as
the fact that 50% of Ericsson’s LTV program is
based on company performance over a 3 year
performance period, the Remuneration Com-
mittee and the Board have resolved to propose
a 2024 long-term variable remuneration
program for the Executive Team and Executives
to the Annual General Meeting 2024. The
proposed 2024 LTV remuneration program
is similar to the 2023 long-term variable
remuneration program. The aim is to further
strengthen Ericsson’s commitment to long-
term sustainability and responsible business
practices.
Finally, I would like to extend the Remu-
neration Committee’s appreciation to the
Executive Team and all employees worldwide
for Ericsson’s performance during the year.
Thank you, everyone!
Jan Carlson
Chair of the Remuneration Committee
2
Introduction
This Remuneration report provides a summary of how the Guidelines
for Remuneration to Group Management (the “Guidelines”) of Telefon-
aktiebolaget LM Ericsson (“Ericsson” or the “Company”), adopted by the
Annual General Meeting 2020 (applicable until March 28, 2023) and by the
Annual General Meeting 2023 (applicable from March 29, 2023), have been
complied with during the financial year 2023. The report also contains infor-
mation on the total remuneration, including fixed and variable remuneration,
of Ericsson’s President and CEO and Executive Vice President. In addition,
the report contains a summary of the Company’s current short-term and
long-term variable remuneration programs for the Executive Team.
During 2023, the Board of Directors proposed amended Guidelines,
which were approved by the Annual General Meeting 2023. The 2023
Guidelines are intended to remain in place for four years until the Annual
General Meeting 2027.
The remuneration of the President and CEO and the Executive Vice
P resident disclosed in the report represents their total remuneration,
regardless of whether it is paid through the Company or by another group
company.
The Guidelines, adopted by the Annual General Meeting 2023, can be
found on pages 27–29 of the Financial report. The Auditors’ report on the
Company’s compliance with the Guidelines is available on Ericsson’s web-
site, www.ericsson.com.
This report does not include remuneration to the Board of Directors.
Board remuneration is approved annually by the Annual General Meeting
and is disclosed in Note G2 on pages 73–74 of the Financial report for 2023.
Summary
Information on Ericsson’s performance during the financial year is included
in the Financial report 2023.
As part of Ericsson’s business strategy implementation and safeguarding
the sustainable long-term interests of the Company, Ericsson must attract,
retain, and motivate employees with the right skills and offer them competitive
remuneration. Long-term shareholder value creation and performance-based
remuneration are the basis for remuneration at Ericsson. The Guidelines aim
to ensure that remuneration is consistent with Ericsson’s current remuneration
philosophy and practices for the Company’s employees based on the princi-
ples of competitiveness, fairness, transparency, and performance. The main
objectives of the Guidelines are to:
– attract and retain highly competent, performing, and motivated people
who have the ability, experience, and skill to deliver on the Ericsson
strategy;
– encourage behavior consistent with Ericsson’s culture and core values;
– ensure fairness in reward by delivering total remuneration that is appro-
priate but not excessive, and clearly explained;
– have a total compensation mix of fixed pay, variable pay and benefits
that is competitive where Ericsson competes for talent; and
– encourage variable remuneration which aligns employees with clear
and relevant targets, reinforces their performance and enables flexible
remuneration costs for Ericsson.
The Guidelines also aim to enable the Company to offer attractive and glob-
ally competitive total remuneration to the Executive Team.
According to the Guidelines, the remuneration to the Executive Team
must be in line with market conditions and should consist of the following
components: fixed salary, variable remuneration, pension and other bene-
fits. In addition to remuneration covered by the Guidelines, the shareholders
have decided to implement long-term variable remuneration (“LTV”) pro-
grams. The LTV 2021, LTV 2022 and LTV 2023 programs are still ongoing.
In 2023, there has been one deviation from the Guidelines (see section
“Deviations from adopted Guidelines for remuneration to Group Manage-
ment”). There has been no clawback of remuneration in 2023.
In 2023, the following key decisions were made by the Remuneration
Committee and the Board of Directors regarding remuneration:
– The achievement for LTV 2021 was set at 100% of target, based on
pre-determined performance conditions: group operating income and
relative and absolute total shareholder return (TSR).
Remuneration report 2023
– The level of achievement of the performance condition for the Group’s
operating income for LTV 2023 was set at 0%.
– To include STV in the remuneration package for the President and CEO
from January 1, 2024 in alignment with the Remuneration Guidelines
and in direct response to investor feedback. Börje Ekholm was appointed
as CEO of Ericsson on January 16, 2017, and since then, his compensa-
tion structure has been base salary, pension allowance and long-term
variable compensation. The current business strategy is focused on a
combination of short-, mid- and long-term achievements on leadership
in mobile networks, focused expansion into enterprise and to establish
lasting cultural transformation. The external market typically offers CEOs
a combination of long-term and short-term variable pay. From January
1, 2024, the variable compensation for the President and CEO, will be
50% target opportunity for short-term variable pay and 150% target
opportunity for long-term variable pay i.e., total 200% of annual base
pay. This is an increase in the total variable pay at target opportunity
from 190% to 200% of annual base salary compared with 2023.
– To further drive accountability throughout the organization, all employees
who are eligible for an STV pay-out may be denied all or part the entitle-
ment if they act in breach of Ericsson’s Code of Business Ethics (CoBE).
In addition, top executives are subject to evaluation according to a set of
pre-defined integrity criteria, which relate to compliance training, third
party management, allegation management and other items tied to the
Company’s Ethics and Compliance Program (E&C). Underperformance
against these pre-defined criteria can reduce STV pay-out by up to 100%,
while exceptional performance may justify an additional incentive of up to
a maximum of 10% of the executive’s annual base salary.
The Remuneration Committee and the Board of Directors continuously
evaluate the effectiveness of the LTV programs in achieving the objective
of supporting the Company’s strategic goals and sustainable long-term
interests. In addition, the LTV programs potential to increase the long-term
focus of the Executive Team and to link their interests with the long-term
expectations and interests of shareholders is evaluated.
– After evaluating the ongoing LTV programs for the Executive Team, the
Remuneration Committee and the Board of Directors concluded that
the ongoing LTV programs for 2021 and 2022, as well as the completed
programs for 2018, 2019 and 2020, enabled the Company to attract,
retain and motivate Executives and offer them globally competitive
remuneration. Although the performance condition for the Group’s
operating income (EBITA) has a one-year performance period, it has
a three-year vesting period which is the same as the vesting period
of the performance conditions relating to absolute and relative Total
Shareholder Return (TSR), which is in line with the objectives of the LTV
programs. This means that participants cannot redeem any of the Per-
formance Share rights granted before the end of the three-year vesting
period and that participants are fully exposed to share price movements
during the three-year period.
– LTV programs for 2018, 2019, 2020, 2021 and 2022 have supported the
long-term targets, and the Remuneration Committee and the Board of
Directors proposed at the Annual General Meeting 2023 to approve an
LTV program to the Executive Team with the same structure as previ-
ous LTV programs with targets to further strengthen Ericsson’s and the
Executive Team’s commitment to long-term sustainability and responsi-
ble business practices.
– Also, for 2024 the Remuneration Committee and the Board of Directors
propose to include other Executives in LTV 2024 in order to be covered
by a plan that delivers in shares. This is to further reinforce the alignment
between shareholders and Group Management.
In addition to complying with its formal legal and regulatory obligations with
respect to trading restrictions, from time to time the Company may elect to
temporarily restrict trading in Ericsson shares by board members, the Execu-
tive Team or the Company as a prudential measure.
Remuneration report 2023
3
Remuneration 2023 at a glance
Total remuneration
The table below summarizes how the remuneration elements set out in the guidelines have been applied in relation to the President and CEO and
the Executive Vice President (EVP). The table also summarizes information on renumeration as approved by the shareholders.
Purpose and link to strategy
Arrangement in brief
Fixed salary
Attract and retain the executive talent
required to implement Ericsson’s strategy.
Pay a portion of the annual remuneration in
a predictable manner.
Deliver part of the annual compensation in
a predictable format.
Salaries are normally reviewed to be effective in
January, taking into account:
– Ericsson’s overall business performance
– The business performance of the unit that the
employee manages
– Employee performance over time
– External economic conditions
– The scope and complexity of the position
– External market data
– Pay and conditions of other employees in
countries considered relevant to the role.
When determining fixed salaries, the impact on
total remuneration must also be taken into account.
Implementation during the financial year
ending December 31, 2023
President and CEO: fixed annual salary of
SEK 18,799,636 corresponding to an increase
of 3% since 2022.
EVP and Head of Business Area Networks: fixed
annual salary of SEK 9,280,189, corresponding
to an increase of 7% since 2022.
Other benefits
Attract and retain the executive talent
required to implement Ericsson’s strategy.
Benefits are aligned with competitive market
practices in the individual’s country of employment.
President and CEO: other benefits to the value
of SEK 828,287.
Deliver part of the annual compensation in
a predictable format.
EVP and Head of Business Area Networks:
other benefits to the value of SEK 28,600.
The benefits amount to a maximum of 10% of the
annual fixed salary for members the Executive
Team in Sweden.
Benefits for members of the Executive Team on
international long-term assignment (“LTA”) in a
country other than the country of original employ-
ment, are determined in line with the Company’s
global policy on international mobility. Such bene-
fits may include, but are not limited to, commuting
or moving expenses, increased cost of living, hous-
ing costs, travel home, educational allowances, and
tax and social security benefits.
Pension
Provide long-term financial security and
planning for retirement by offering compet-
itive pension solutions that are in line with
local market practice.
The pension plans follow competitive practices in
the individual’s home country.
The pension plans for the President and CEO and
the EVP are defined contribution plans.
Company pension contributions:
– President and CEO: SEK 10,151,804.
– EVP and Head of the Networks Business
Area: SEK 2,728,761.
Short-term
variable
remuneration
(STV)
Setting clear and relevant objectives for the
Executive Team that are in line with Ericsson’s
strategy and sustainable long-term interest.
Offer an individual earning opportunity
linked to performance at a flexible cost to
the Company.
The President and CEO’s compensation in 2023 did
not include an STV component.
For the Executive Vice President the target level is
50% of the fixed salary, and the maximum is 100%
of the fixed salary.
Performance conditions, weightings and target
l evels are set annually.
Subject to malus and clawback.
Outcome for STV 2023:
– EVP and Head of the Networks Business Area:
0% of the maximum level.
Long-term
variable
remuneration
(LTV)
Creating a common ownership interest
between Executive Team and shareholders.
Remuneration is awarded after approval by the
Annual General Meeting.
LTV 2021 target achievement level of 100%.
Remuneration based on long-term perfor-
mance in line with Ericsson’s business
strategy.
Provide individuals with long-term remuner-
ation for long-term commitment and value
creation in accordance with the interests of
shareholders.
Remuneration levels are determined as a percent-
age of the fixed salary.
– For the President and CEO, 190% of the fixed
salary.
– For the Executive Vice President, 50% of the
fixed salary.
Performance conditions, weightings and target
levels are taken to the AGM for approval. Three-
year vesting period.
Subject to malus and clawback.
4
Remuneration report 2023
Remuneration earned in 2023
Börje Ekholm
President and CEO
Fredrik Jejdling
EVP and Head of Business Area Networks
and Head of Segment Networks
Remuneration earned – Fredrik Jejdling
SEK million
SEK million
80
70
60
50
40
30
20
10
0
36.6
24.0
19.4
9.6
9.9
0.6
18.2
0.1
19.2
10.2
19.5
0.8
2021
2022
2023
40
35
30
25
20
15
10
5
0
4.1
4.3
6.7
9.1
0.0
2.7
5.1
6.3
9.5
2.4
2.7
10.2
0.0
0.0
0.2
2021
2022
2023
Fixed salary
Benefits
Pension
LTV
Fixed salary
Benefits
STV
Pension
LTV
STV
The information presented for 2023 covers the financial year 2023 and
the information for 2022 and 2021 covers the financial years 2022 and
2021, respectively.
LTV
The information presented for 2023 includes information on the LTV
2021, which expired in 2023. Information presented for 2022 and 2021
includes information on LTV 2020 and LTV 2019 that expired in 2022
and 2021, respectively.
Performance outcome in 2023
STV 2023 outcome
2023 Short Term Variable Compensation outcome
LTV 2021 outcome
2020 Long Term Variable Compensation outcome
LTV 2021 TSR development (2021–2023)
vs peer group
%
100
80
60
40
20
0
100
60
40
Opportunity
0
Outcome
Fredrik Jejdling
EVP and Head of
Business Area Networks and
Head of Segment Networks
Economic Profit: Business Area/Market Area as % of maximum
opportunity
Economic Profit: Group as % of maximum opportunity
Economic Profit means operating income less cost of capital.
%
100
80
60
40
20
0
100
20
30
50
50
50
0
Opportunity
Outcome
Relative TSR: As % of maximum opportunity
Absolute TSR: As % of maximum opportunity
Group Operating income (EBIT): As % of maximum
opportunity
%
Motorola Solutions
132.52
IBM
Cap Gemini
CGI Group
Juniper
Cisco Systems
87.69
83.14
76.52
69.68
69.09
F5 Networks
33.47
Cognizant
QUALCOMM
Nokia
Corning
Ericsson
17.45
17.24
12.49
8.59
−41.06
–50–25 0 25 50 75 100 125 150
Absolute TSR
–16,17% CAGR
achieved vesting
level 0.0%
Relative TSR
ranking below
all companies in
the peer group
achieved vesting
level 0.0%
To support the execution of Ericsson’s business strategy and the achievement of the Group’s financial targets, the Company’s variable remunera-
tion program focuses on targets related to financial profitability, the Group’s operating income (EBITA) and TSR. The variable remuneration is thus
designed to create incentives to contribute to Ericsson’s short- and long-term strategic plan and business objectives.
Remuneration report 2023
5
Total remuneration to the President and CEO
and Executive Vice President
The table below sets out the total remuneration in SEK between 2021 and 2023 for Ericsson’s President and CEO and Executive Vice President.
Fixed remuneration
Variable remuneration
Financial
year
Fixed salary
(including
holiday pay)
Other
benefits 1)
One-year
variable
remune-
ration 2)
Multiannual
variable
remune-
ration 3)
Additional
agree-
ments 4)
Pension 5)
Total
remuneration 6)
Share of fixed
remuneration 7)
Share of
v ariable
remuneration 8)
2023
2022
2021
2023
2022
2021
19,520,568
828,287
19,154,852
135,743
18,208,859
555,688
10,154,237
28,600
– 19,371,871
– 24,034,229
– 36,630,457
– 2,399,101
– 10,151,804
49,872,530
– 9,856,121
53,180,945
– 9,569,049
64,964,053
– 2,728,761
15,310,698
9,515,305
151,452
6,251,115
2,746,240
– 5,061,846
23,725,958
9,129,087
14,980
6,671,595
4,092,344
– 4,314,186
24,222,193
61%
55%
44%
84%
62%
56%
39%
45%
56%
16%
38%
44%
Name and position
Börje Ekholm
President and CEO
Fredrik Jejdling
Executive Vice President
and Head of Business Area
Networks
1) For further information about other benefits, see table regarding the implementation of fixed remuneration and pension for the President and CEO and the Executive Vice President.
2) The amounts represent STV earned during the financial year and paid in the following year, i.e., for 2023 the amounts represent STV 2023, for 2022, the amounts represent STV 2022 and for 2021, the amounts
represent STV 2021.
3) Amounts represent LTVs for which all performance periods expired during the fiscal year. For 2023, the amounts represent LTV 2021, for 2022, the amounts represent LTV 2020 and for 2021, the amounts
represent LTV 2019. For LTV 2019, LTV 2020 and LTV 2021, the amounts are calculated based on the number of Performance Shares that will vest during 2024 multiplied by the volume weighted average of
the last five trading days of each financial year.
4) Amounts represent additional discretionary arrangements approved by the Remuneration Committee or the Board of Directors and entered into during the financial year.
5) Amounts represent cash payment in lieu of pension (for the President and CEO) or pension premium (for the Executive Vice President) paid during the financial year.
6) The amounts represent the sum of fixed remuneration, variable remuneration, additional agreements and pension.
7) Amounts represent the sum of fixed remuneration and pension divided by total remuneration.
8) Amounts represent the sum of variable remuneration and additional agreements divided by total remuneration.
Implementation of fixed remuneration and pension for the President and CEO and the Executive Vice President
The table below shows the implementation of fixed remuneration and pension for the President and CEO and the Executive Vice President.
Fixed salary
Other benefits
Pension
Börje Ekholm
President and
CEO
During the annual review of the total remuneration, the Board of
Directors decided on a salary increase of 3% of the fixed salary
as of January 1, 2023 for the President and CEO. The increase
reflects the performance of the President and CEO until the end
of 2022.
The fixed salary level for 2023 is considered appropriate in
relation to the responsibility of being the President and CEO
of a leading global provider of ICT solutions, compared to the
remuneration packages for the position of President and CEO
of comparable international companies.
According to the Company’s
Swedish benefits policy, Börje
Ekholm is entitled to a company
car or equivalent cash remunera-
tion and other benefits as other
employees in Sweden. Since Börje
Ekholm is a resident of the US, he
is also eligible for health insur-
ance in the US and tax advice
regarding his tax return.
Börje Ekholm receives a cash payment instead
of a defined contribution pension, as it is not
possible to enroll him in the Swedish defined
contribution pension plan (ITP1) as he is a
resident in the US. The cash payment is treated
as salary for tax and social security purposes
and is made in a way that is cost neutral
for Ericsson. According to his employment
contract, the pension supplement shall include
an additional premium on top of the fixed
annual salary to take into account an assumed
achieved target level of STV.
Fredrik Jejdling
Executive Vice
President and
Head of Business
Area Networks
The salary level reflects Fredrik Jejdling’s responsibility as head
of Ericsson’s largest business area, Networks. The salary level
is considered competitive in the external market for both other
VPs on leading ICT solution providers and for the position of
President and CEO of smaller companies.
According to the Company’s
Swedish benefits policy, Fredrik
Jejdling is entitled to a company
car or equivalent cash remunera-
tion and other benefits as other
employees in Sweden.
In accordance with Ericsson’s pension guide-
lines, Fredrik Jejdling participates in the ITP1
defined contribution plan. He is also entitled to
supplementary pension contribution at 30% of
base salary parts exceeding the cap in ITP1
(30 income base amounts).
6
Remuneration report 2023
Variable remuneration
Ericsson believes that, where possible, variable remuneration should
be encouraged as an integral part of total remuneration. The aim is to
link performance and pay by reconciling the employees’ interests with
Ericsson’s strategic business objectives, sustainable long-term and
relevant unit performance.
All variable remuneration programs have defined maximum grant
and vesting levels.
The short-term variable remuneration depends on a combination
of performance of the company at Group level and the relevant unit of
the employee while the long-term variable remuneration depends on
Ericsson’s performance at Group level.
Short-term variable remuneration (STV)
Annual short-term variable remuneration is paid through cash-based
programs that depend only on financial performance targets. The con-
crete business objectives are calculated on the basis of the annual busi-
ness plan approved by the Board of Directors, which in turn is based on
the Company’s long-term strategy. Ericsson strives for industry-leading
operating margins and return on investment as well as good cash gen-
eration, and therefore the starting point is to have a financial profitability
target, which is a measure of operating profitability net of capital costs.
The financial profitability targets are defined for the Executive Team:
– At group level for heads of group functions
– As a combination of group level and business area level for business
area managers
– As a combination of group level and market area level for market
area managers.
To further drive accountability throughout the organization, all employ-
ees who are eligible for an STV pay-out may be denied all or part the
entitlement if they act in breach of Ericsson’s CoBE. In addition, top
executives are subject to evaluation according to a set of pre-defined
integrity criteria, which relate to compliance training, third party man-
agement, allegation management and other items tied to the Compa-
ny’s E&C program. Underperformance against these pre-defined criteria
can reduce STV pay-out by up to 100%, while exceptional performance
may justify an additional incentive of up to a maximum of 10% of the
executive’s annual base salary.
The President and CEO’s compensation in 2023 did not include an STV
component. The Remuneration Committee decides on and approves all
objectives set for the other members of the Executive Team. These objec-
tives are broken down into unit-related objectives across the Group, where
applicable. The Remuneration Committee monitors the appropriateness
and fairness of the target levels for the Group, Business Areas and Market
Areas throughout the performance year and has the power to revise them
if they are no longer relevant, or if they no longer contribute to shareholder
value. The 2023 weighting for the Executive Vice President is made up of
40% Economic Profit for the Group and 60% Economic Profit for business
area Networks.
The tables below describe the STV 2023 outcome for the Executive Vice President, which is determined by evaluating performance against the
applicable financial metrics.
Executive Vice President and Head of Business Area Networks – Fredrik Jejdling (STV 2023)
Performance measures
Weighing
Group Economic Profit 1)
Economic Profit Business Area Networks 1)
Total
40%
60%
1) Economic profit means operating income minus cost of capital.
Threshold level
(in % of target)
Target level
Maximum level
(in % of target)
Outcome (% of target)
SEK outcome
at threshold performance
SEK outcome
at target performance
SEK outcome
at maximum performance
SEK actual
performance outcome
47%
0
77%
0
0
100%
1,856,038
100%
2,784,057
4,640,095
140%
3,712,076
115%
5,568,113
9,280,189
0%
0
0%
0
0
Long-term variable remuneration (LTV)
The current LTV programs have been designed to encourage long-
term commitment and value creation in line with Ericsson’s long-term
strategic goals and shareholders’ interests. They form part of an overall
remuneration package and normally extend over at least three years.
As these are variable remuneration programs, it is not possible to predict
the outcome when they are launched, and the remuneration depends
on long-term personal commitment, the Company’s performance,
the share price performance and the Company’s performance against
relevant ESG (Environmental, Social, and Governance) metrics.
The LTV programs launched at Ericsson consist of share-based
remuneration for members of the Executive Team and Executives.
The objective of the LTV programs is to attract, retain and motivate
executives in a competitive market through performance-based and
share-based incentives, and to encourage the building of a significant
shareholding, in order to create a common ownership interest between
the Executive Team and shareholders. Awards under LTV 2018, 2019,
2020, 2021, 2022 and 2023 (Performance Share Rights) are made free
of charge and entitle participants, subject to the achievement of certain
performance targets, to receive a number of shares free of charge after
the expiry of a three-year vesting period for each program. Awards
of shares under the Performance Share Rights are made upon the
achievement of challenging performance conditions, which are defined
for each year’s program at the time of its launch. The portion of the LTV
Performance Share Rights that will potentially vest will be determined
at the end of the relevant performance period based on whether the
predefined criteria for this year’s LTV program have been met, with the
performance period being one to three years. It is a general requirement
that the participants remain employed for three years from the date of
grant of the Performance Share Rights in order to be eligible to receive
the outcome. Provided that the performance conditions have been met
during the performance period and the participant has continued to
be employed (except in exceptional circumstances) during the vesting
period, shares will be awarded as soon as possible after the vesting
period has expired. When deciding on the final exercise level of the
Performance Share Rights, the Board of Directors considers whether
the exercise level is reasonable in light of the Company’s financial
performance and position, stock market conditions and other circum-
stances. Otherwise, the Board of Directors reserves the right to reduce
the level of outputs to a lower level deemed appropriate.
The Board may, at any time up to the last day of the vesting period,
reduce (including cancel) the number of shares to which the Performance
Share Rights are entitled, to the extent deemed appropriate in view of:
– the Company’s financial performance and position;
– stock market conditions; and/or
– such other circumstances and reasons as the Board of Directors
considers relevant.
Remuneration report 2023
7
In addition, to drive accountability throughout the organization and
support the integration of Ethics and Compliance into all aspects of its
business, the Company has the right to unilaterally decide to withhold
all or part of such awards for a participant in respect of years in which
the participant has violated Ericsson’s Code of Business Ethics. The
Company also has the right to unilaterally decide to demand repayment,
in whole or in part, of awards relating to years in which a participant has
violated Ericsson’s Code of Business Conduct.
The details of each of the ongoing long-term variable remuneration
programs at Ericsson, including the programs for other employees, are
described in the notes to the consolidated financial statements – note G3,
“Share-based compensation”, on pages 75–80 of the Financial report.
Long-Term Variable Remuneration Program 2023 (LTV 2023)
LTV 2023 was approved at the Annual General Meeting 2023 and
covers all members of the Executive Team, a total of 16 members in
2023, including the President and CEO. Participants were awarded
Performance Shares on May 18, 2023. The Performance Share Awards
granted to the President and CEO and the Executive Vice President are
summarized in the table below.
Award information, Long-Term Variable Remuneration 2023 (LTV 2023) program
Participants
Börje Ekholm
Fredrik Jejdling
Allocation value 1)
35,719,309
4,640,094
Allocation value
as a percentage
of annual basic salary 2)
Number of
Performance Shares
granted 3)
Percentage of the award
to which performance
conditions apply 4)
Maximum number of
Performance Shares
that can be earned 5)
190%
50%
596,216
77,451
100%
100%
1,192,432
154,902
1) The amount represents the basic amount in SEK.
2) The figures represent basic amounts as a percentage of annual basic salary at the date of award.
3) Calculated as the respective grant value divided by the volume weighted average price of Ericsson’s B-shares on Nasdaq Stockholm during the five trading days immediately following the publication of the Com-
pany’s fourth quarter report for 2022.
4) All Performance Shares are subject to challenging performance conditions. These are measured over pre-defined performance periods spanning one to three years. Performance conditions for LTV 2023 are: (1)
Group operating income target (weighted at 45%) measured over the period January 1, 2023 to December 31, 2023, (2) absolute TSR performance (weighted 25%) in the range 6%-14% annual growth rate, (3)
relative TSR performance (weighted 20%) of Ericsson’s B-share, ranked 6-2 against 11 peers, measured over the period January 1, 2023 to December 31, 2026, (4) reduction of CO2 emissions (weighted 5%) in
the Company’s own facilities and (5) increased proportion of female leaders (weighted 5%) within the Company. Performance conditions for LTV 2023 and details of how performance conditions will be calculated
and measured are set out in the minutes of the 2023 AGM under item 16.
5) The maximum number of shares that can be allotted will result in a dilution of approximately 0.1% of the total number of outstanding shares. The effect on key ratios is marginal.
LTV 2021 performance outcome and LTV 2023 Group operating income target
LTV 2021 and LTV 2023 had targets with performance periods ending on December 31, 2023, which are summarized in the tables below. LTV 2021 will expire in
2024, as all performance periods under the program have now expired. LTV 2023 will not expire until 2026, but the performance period for the one-year Group
operating income (EBITA) target and Group CO2 emissions for LTV 2023 expired on December 31, 2023.
Performance conditions for LTV 2023
Target
Conditions
Weight Performance period
Possible outcome
(Linear distribution)
Outcome
Target
achievement level 1)
Group Operating
income (EBITA) 2023
Range (billion SEK)
26.4–40.4
Absolute TSR
Range 6%–14%
Relative TSR
Reduction of CO2e
2023
Reduction of CO2e
2024
Reduction of CO2e
2025
Ericsson’s
ranking 6–2
ktonne CO2e
142–121
ktonne CO2e
132–113
ktonne CO2e
122–104
Percentage of
female managers
Range 23%–25%
Jan 1, 2023–
Dec 31, 2023
Jan 1, 2023–
Dec 31, 2025
Jan 1, 2023–
Dec 31, 2025
Jan 1, 2023–
Dec 31, 2023
Jan 1, 2024–
Dec 31, 2024
Jan 1, 2025–
Dec 31, 2025
Jan 1, 2023–
Dec 31, 2025
45%
25%
20%
1,66%
1,66%
1,68%
5%
100%
0%–200%
21,4 billion SEK 2)
0%–200%
0%–200%
–
–
0%
–
–
0%–200%
121,9 ktonne CO2
193,72%
0%–200%
0%–200%
0%–200%
0%–200%
–
–
–
–
–
–
LTV 2023
Female managers
Total
Program
LTV 2023
LTV 2023
LTV 2023
LTV 2023
1) The Board decided that the target achievement level for the performance condition for the Group’s operating income 2023 was 0% for the part of the Performance Share Rights that are granted based on the out-
come of the Group’s operating result in 2023. Furthermore, the target achievement level for the performance condition for the CO2 2023 was approved to be 193,72%. Further information regarding the number
of Performance Share Units earned by each of the President and CEO and the Executive Vice President is provided in the table Long-Term Variable Compensation (LTV) to the President and CEO and to the Execu-
tive Vice President. The performance share rights vest at the end of the vesting period in 2026.
2) Excluding restructuring charges and other items not included in the performance condition.
Performance conditions for LTV 2021
Program
LTV 2021
LTV 2021
LTV 2021
Total
Target 1)
Conditions
Weight Performance period
Possible outcome
(Linear distribution)
Outcome
Target
achievement level 2)
Group Operating
income (EBIT) 2021
Range (billion SEK)
15.0–24.0
Absolute TSR
Range 6%–14%
Relative TSR
Ericsson's ranking 6–2
Jan 1, 2021–
Dec 31, 2021
Jan 1, 2021–
Dec 31, 2023
Jan 1, 2021–
Dec 31, 2023
50%
30%
20%
100%
0%–200%
SEK 27.4 billion
200.00% 1)
0%–200%
0%–200%
0%–200%
-16,17%
Ranking below all
companies in the
peer group
0% 2)
0% 2)
100%
1) As announced in the 2021 Annual Report, the Board decided that the target achievement level for the performance condition for the Group’s 2021 operating income was 200% for the part of the Performance
Share Rights based on an outcome of the Group’s 2021 operating income.
2) The Board of Directors decided that the target achievement level for the performance conditions development of absolute TSR and relative TSR amounted to 0% and 0% respectively, based on the achievements
of -16,17% absolute TSR and ranking 12 (lower than all companies in the peer group) for relative TSR, resulting in an overall achieved target achievement level of 100% for LTV 2021. Performance shares vest at the
end of the vesting period in 2024. For further information on the number of Performance Share Units earned by each of the President and CEO and the Executive Vice President, please refer to the table Long-Term
Variable Remuneration (LTV) of the President and CEO and the Executive Vice President.
8
Remuneration report 2023
Long-term variable remuneration (LTV) to the President and CEO and the Executive Vice President
The table below sets out relevant information of LTV 2019, 2020, 2021, 2022 and 2023 with regards to the President and CEO and the Executive Vice President.
Long-term variable remuneration (LTV) to the President and CEO and to the Executive Vice President
Main conditions for share-based plans
Information concerning the reported financial year
End
date
of the
perfor-
mance
period 4)
End date
of vesting
period 5)
Performance
share rights
granted
(value in SEK) 6)
Maximum
number of
Performance
Shares that can
be Awarded
(value in SEK) 7)
Balance
beginning of
at the year
(value in SEK) 8)
Performance
share rights
earned during
the year
(value in SEK) 9)
Performance
share rights
still subject to
performance
conditions
(value in SEK) 10)
Date of
award 2)
Perfor-
mance
period 3)
Performance
share rights
forfeited and
paid out in
shares during
the year
(value in SEK) 11)
Balance at
year-end,
Performance
shares earned
but not forfeited
(value in SEK) 12)
18/5/
2023
1 year
31/12/
2023
18/5/
2026
268,297
(16,073,673)
536,594
(32,147,346)
0
(0)
0
(0)
18/5/
2023
3 years
31/12/
2025
18/5/
2026
268,297
(16,073,673)
536,594
(32,147,346)
536,594
(33,714,201)
Name and
position
Program
LTV 2023
Target
(weight) 1)
Group
Operat-
ing income
(EBITA)
(45%)
TSR
performance
conditions
(45%)
ESG targets
(10%)
18/5/
2023
3 years
31/12/
2025
18/5/
2026
59,622
(3,571,954)
119,244
(7,143,908)
19,172
(1,204,577)
99,450
(6,248,444)
Group
Operating
income (EBIT)
(45%)
TSR
performance
conditions
(45%)
18/5/
2022
1 year
31/12/
2022
18/5/
2025
137,994
(15,605,741)
275,988
(31,211,483)
224,599
(13,853,266)
18/5/
2022
3 years
31/12/
2024
18/5/
2025
137,991
(15,605,402)
275,982
(31,210,804)
ESG targets
(10%)
18/5/
2022
3 years
31/12/
2024
18/5/
2025
30,664
(3,467,792)
61,328
(6,935,584)
LTV 2022
Börje
Ekholm
CEO and
President
275,982
(17,339,949)
61,328
(3,853,238)
Group
Operating
income (EBIT)
(50%)
TSR
performance
conditions
(50%)
Group
Operating
income (EBIT)
(50%)
TSR
performance
conditions
(50%)
Group
Operating
income (EBIT)
(50%)
TSR
performance
conditions
(50%)
LTV 2021
LTV 202013)
LTV 2019 13)
Total
3/5/
2021
1 year
31/12/
2021
3/5/
2024
154,161
( 16,834,381)
308,322
( 33,668,762)
308,322
(19,017,301)
3/5/
2021
3 years
31/12/
2023
3/5/
2024
154,162
(16 834 490)
308,324
(33,668,981)
1/4/
2020
1 year
31/12/
2020
1/4/
2023
194,830
(15,188,947)
389,660
(30,377,894)
389,660
(24,034,229)
1/4/
2020
3 years
31/12/
2022
1/4/
2023
194,830
(15,188,947)
389,660
(30,377,894)
18/5/
2019
1 year
31/12/
2019
18/5/
2022
146,087
(13,808,143)
292,174
(27,616,286)
292,174
(18,021,292)
18/5/
2019
3 years
31/12/
2021
18/5/
2022
146,087
(13,808,143)
292,174
(27,616,286)
76,974
(4,747,756)
1,291,729
(79,673,845)
19,172
(1,204,577)
973,354
(61,155,832)
19,172
(1,204,577)
224,599
(14,111,555)
308,322
(19,371,871)
389,660
(24,482,338)
292,174
(18,357,292)
76,974
(4,836,276)
1,310,901
(82,363,910)
1) TSR performance conditions include both absolute and relative performance conditions for each program.
2) The date of allocation represents the date on which the original allocation was made.
3) Performance period represents the period over which the performance conditions are measured.
4) The end date of the performance period represents the date on which the performance period ends.
5) The Vesting Period End Date represents the date on which any Performance Shares will vest and entitle participants to receive shares.
6) The figures represent the original number of Performance Share Rights granted on the grant date. Values in SEK represent the corresponding value on the date of award.
7) The figures represent the maximum number of Performance Share Units that can be earned for each performance condition. Values in SEK represent the corresponding value on the date of award.
8) Figures represent the balance at the beginning of the year, which includes Performance Share Units earned for prior years that have not yet been awarded. Values in SEK are calculated as the number of vested
Performance Share rights multiplied by the volume weighted average share price for the last five trading days of the previous financial year.
9) The figures represent the number of Performance Share Units earned that had a performance period that expired during the financial year. Values in SEK are calculated as the number of Performance Share Units
earned multiplied by the volume weighted average share price for the last five trading days of the financial year.
10) The figures represent the maximum number of outstanding Performance Shares that are still subject to an ongoing performance period. Values in SEK are calculated as the number of outstanding Performance
Shares still subject to a performance period multiplied by the volume weighted average share price for the last five trading days of the financial year.
11) The figures represent the number of Performance Share Units that had a vesting period expiring during the financial year and that entitled the participant to receive shares free of charge. Values in SEK represent
the fair value of shares granted to the participant at the end of the vesting period.
12) The figures represent the balance at the end of the year, which includes Performance Share Units earned during the financial year as well as previous Performance Share Units earned but not forfeited. Values in
SEK are calculated as the number of Performance Share Units earned multiplied by the volume weighted average share price for the last five trading days of the financial year.
13) The Board of Directors have approved vesting for LTV 2019 and 2020 (which expired in 2022 and 2023, respectively). Planned vesting date will be during Q1 2024.
Remuneration report 2023
9
Long-term variable remuneration (LTV) to the President and CEO and to the Executive Vice President, cont’d.
Main conditions for share-based plans
Information concerning the reported financial year
End
date
of the
perfor-
mance
period 4)
End date
of vesting
period 5)
Performance
share rights
granted
(value in SEK) 6)
Maximum
number of
Performance
Shares that can
be Awarded
(value in SEK) 7)
Balance
beginning of
at the year
(value in SEK) 8)
Performance
share rights
earned during
the year
(value in SEK) 9)
Performance
share rights
still subject to
performance
conditions
(value in SEK) 10)
Date of
award 2)
Perfor-
mance
period 3)
Performance
share rights
forfeited and
paid out in
shares during
the year
(value in SEK) 11)
Balance at
year-end,
Performance
shares earned
but not forfeited
(value in SEK) 12)
Name and
position
Program
Fredrik
Jejdling
Executive
Vice
President
and Head
of Business
Area
Networks
LTV 2023
LTV 2022
LTV 2021
LTV 202013)
LTV 2019 13)
Total
Target
(weight) 1)
Group
Operat-
ing income
(EBITA)
(45%)
TSR
performance
conditions
(45%)
18/5/
2023
1 year
31/12/
2023
18/5/
2026
34,852
(2,087,983)
69,704
(4,175,966)
0
(0)
18/5/
2023
3 years
31/12/
2025
18/5/
2026
34,853
(2,088,043)
69,706
(4,176,086)
69,706
(4,379,628)
ESG targets
(10%)
18/5/
2023
3 years
31/12/
2025
18/5/
2026
7,746
(464,062)
15,492
(928,125)
2,491
(156,510)
12,920
(811,764)
34,510
(2,168,263)
7,668
(481,780)
Group
Operating
income (EBIT)
(45%)
TSR
performance
conditions
(45%)
18/5/
2022
1 year
31/12/
2022
18/5/
2025
17,257
(1,951,594)
34,514
(3,903,188)
28,087
(1,732,406)
18/5/
2022
3 years
31/12/
2024
18/5/
2025
17,255
(1,951,368)
34,510
(3,902,736)
ESG targets
(10%)
18/5/
2022
3 years
31/12/
2024
18/5/
2025
3,834
(433,587)
7,668
(867,174)
Group
Operating
income (EBIT)
(50%)
TSR
performance
criteria (50%)
Group
Operating
income (EBIT)
(50%)
TSR
performance
criteria (50%)
Group
Operating
income (EBIT)
(50%)
TSR
performance
criteria (50%)
3/5/
2021
3/5/
2021
1/4/
2020
1/4/
2020
1 year
31/12/
2023
3/5/
2024
19,092
( 2,084,846)
38,184
(4,169,693)
38,184
(2,355,189)
3 years
12/31/
2023
3/5/
2024
19,092
( 2,084,846)
38,184
(4,169,693)
1 year
12/31/
2020
1/4/
2023
22,262
(1,735,546)
44,524
(3,471,091)
44,524
(2,746,240)
3 years
12/31/
2022
1/4/
2023
22,263
(1,735,623)
44,526
(3,471,247)
18/5/
2019
1 year
31/12/
2019
18/5/
2022
16,321
(1,542,661)
32,642
(3,085,322)
32,642
(2,013,359)
18/5/
2019
3 years
31/12/
2021
18/5/
2022
16,322
(1,542,755)
32,644
(3,085,511)
8,600
(530,448)
152,037
(9,377,642)
2,491
(156,510)
124,804
(7,841,435)
0
(0)
2,491
(156,510)
28,087
(1,764,706)
38,184
(2,399,101)
44,524
(2,797,443)
32,642
(2,050,897)
8,600
(540,338)
154,528
(9,708,994)
1) TSR performance conditions include both absolute and relative performance conditions for each program.
2) The date of allocation represents the date on which the original allocation was made.
3) Performance period represents the period over which the performance conditions are measured.
4) The end date of the performance period represents the date on which the performance period ends.
5) The Vesting Period End Date represents the date on which any Performance Shares will vest and entitle participants to receive shares.
6) The figures represent the original number of Performance Share Rights granted on the grant date. Values in SEK represent the corresponding value on the date of award.
7) The figures represent the maximum number of Performance Share Units that can be earned for each performance condition. Values in SEK represent the corresponding value on the date of award.
8) Figures represent the balance at the beginning of the year, which includes Performance Share Units earned for prior years that have not yet been awarded. Values in SEK are calculated as the number of vested
Performance Share rights multiplied by the volume weighted average share price for the last five trading days of the previous financial year.
9) The figures represent the number of Performance Share Units earned that had a performance period that expired during the financial year. Values in SEK are calculated as the number of Performance Share Units
earned multiplied by the volume weighted average share price for the last five trading days of the financial year.
10) The figures represent the maximum number of outstanding Performance Shares that are still subject to an ongoing performance period. Values in SEK are calculated as the number of outstanding Performance
Shares still subject to a performance period multiplied by the volume weighted average share price for the last five trading days of the financial year.
11) The figures represent the number of Performance Share Units that had a vesting period expiring during the financial year and that entitled the participant to receive shares free of charge. Values in SEK represent
the fair value of shares granted to the participant at the end of the vesting period.
12) The figures represent the balance at the end of the year, which includes Performance Share Units earned during the financial year as well as previous Performance Share Units earned but not forfeited. Values in
SEK are calculated as the number of Performance Share Units earned multiplied by the volume weighted average share price for the last five trading days of the financial year.
13) The Board of Directors have approved vesting for LTV 2019 and 2020 (which expired in 2022 and 2023, respectively). Planned vesting date will be during Q1 2024.
10
Remuneration report 2023
Deviations from adopted Guidelines for remuneration to
Group Management
The Guidelines adopted by the Annual General Meeting 2020 and as
applicable until March 28, 2023, prescribed a minimum weighting of
short-term variable compensation (“STV”) targets of 40% to be defined
at Group level. At the Annual General Meeting 2023, The Guidelines
where amended and expected to be applicable through the Annual
General Meeting 2027.
One of the purposes of the Guidelines adopted by the Annual General
Meeting 2023 was to clarify the mandate for the Board of Directors and
Remuneration Committee to define meaningful STV targets linked to
Ericsson’s business plan. This enables STV targets to be defined and
weighted differently for different parts of the business given the phase
in the business lifecycle they are in as required by the business strategy.
Therefore, detailed requirements for mandatory weighting and defini-
tion of STV targets have been removed.
In line with the purpose of the new Guidelines and upon recommenda-
tion from the Remuneration Committee, the Board of Directors resolved
on February 8, 2023, on a 20% weighting STV targets for 2023 on
Group level for the Executive Team member George Mulhern. This was
a deviation from the then applicable Guidelines during the period from
January 1, 2023, to March 28, 2023. The rationale behind the decision
to deviate from the then applicable Guidelines was to provide greater
priority to unit targets, and to drive growth in revenue and profits, as
appropriate for the current business lifecycle of Cradlepoint. There has
been no deviation from the decision-making procedures as described in
the Guidelines.
Information on guidelines for shareholdings by Executive Team
The Board has adopted the following shareholding guidelines to apply
to current and future members of the Executive Team as of January 1,
2019, to encourage management to build and maintain a shareholding
to create a common ownership interest between the Company’s share-
holders and the members of the Executive Team:
– The President and CEO must build-up and maintain a shareholding
equivalent to at least 200% of the annual fixed salary.
– Other members of the Executive Team must build up and maintain
a shareholding equivalent to at least 75% of their respective annual
fixed salary.
The current members of the Executive Team shall have the opportunity
to build up the required shareholding over a period of five years starting
from January 1, 2019. In the event that new members of the Executive
Team are appointed, they are expected to meet the shareholding
requirement on the anniversary date five years after they are granted
their first Performance Shares under the LTV Plans. For current mem-
bers of Executive Team, the requirement date is extended for one year
as a part of the self-imposed trading recommendations for ET members
and due to the company’s decision to apply net delivery of shares for
all LTV plans during the years 2017–2020. The Board of Directors
considers the following for the purpose of meeting the shareholding
requirement:
– Holdings of Ericsson Class B-shares held or acquired by the
Executive Team member
– Vested but unexercised options (value calculated after tax and after
utilization costs)
– Share rights held by the member of the Executive Team, for which
performance and/or employment conditions have been met, but
which must be held for a certain period of time (value calculated
after tax).
Shares, synthetic shares, or options that are subject to performance
conditions and continued employment, but which have not vested,
should not be counted under the shareholding guidelines.
The Remuneration Committee shall monitor compliance with the
shareholding guidelines and regularly report to the Board of Directors
and inform the members of the Executive Team on the extent to which
the shareholding guidelines have been complied with.
The holdings of each of the members of the Executive Team are
disclosed on pages 20–24 of the Corporate Governance report.
Remuneration report 2023
11
Comparative information on changes
in remuneration and the Company’s performance
Comparison table of the change in remuneration and the Company’s performance over the last three financial years reported
Remuneration to the President and CEO
and to the Executive Vice President
Börje Ekholm
President and CEO
Fredrik Jejdling
Executive Vice President
and Head of
Business Area Networks
Average remuneration
of employees converted
to full-time equivalents 3)
2023
(% change)
2022
(% change)
2021
(% change)
Fixed remuneration 1)
20,348,855 (5%)
10,182,837 (5%)
1,016,295 (5%)
Variable remuneration 2)
–
6,251,115 (–6%)
176,279 (–24%)
Fixed remuneration 1)
19,290,595 (3%)
9,666,757 (6%)
966,031 (8,5%)
Variable remuneration 2)
–
6,671,595 (–54%)
230,928 (−22%)
Fixed remuneration 1)
18,764,547 (1%)
9,144,067 (15%)
889,538 (13%)
Variable remuneration 2)
Comments
88,782,271 (22%)
LTV 2018 expired and
shares were transferred in
May 2021. LTV 2019 and
2020 expired in 2022 and
2023 respectively but
vesting postponed.
14,626,469 (122%)
LTV 2018 expired and
shares were transferred in
May 2021. LTV 2019 and
2020 expired in 2022 and
2023 respectively but
vesting postponed.
295,193 (−1%)
In 2021, the delayed salary
revision for 2020 took place
with a company-sponsored
retroactive effect, which
increased the remuneration of
other employees.
A majority of employees do not
have variable remuneration.
Ericsson’s performance
Group
operating
income (EBIT)
SEK million
Group
Net Sales
SEK million
Share price at
December 31
for the
financial year
–20,326
(–175,23%)
263,351
(–3,02%)
63,11
(3,63%)
27,020
(10%)
271,546
(17%)
60.9
(–38,97%)
31,780
(14%)
232,314
(–0.03%)
99.79
(2.20%)
1) Fixed remuneration includes fixed salary and other benefits.
2) Variable remuneration for the CEO and President and to the Executive Vice President includes applicable STV and LTV. For the Company’s employees, variable remuneration includes short-term and long-term
variable remuneration. For the sake of comparison, variable remuneration represents figures accrued and paid during the financial year. This is because performance reviews and long-term variable remuneration
programs for other employees with performance periods expiring in fiscal year 2023 have not yet been completed.
3) Employees of Telefonaktiebolaget LM Ericsson, excluding the CEO and President and other members of the Executive Team employed by the Company.
Board of Directors
Stockholm, March 5, 2024
Telefonaktiebolaget LM Ericsson (publ)
Org. no. 556016-0680
Sustainability and Corporate Responsibility reportPart of Ericsson Annual Report 2023Annual Report 2023Financial reportCorporate Governance reportRemuneration reportSustainability and Corporate Responsibility reportericsson.com Contents
Sustainability and Corporate
Responsibility report 2023
Introduction
Strategy and targets
2023 highlights
Environment
Social
Governance
Notes to the Sustainability and Corporate
Responsibility report
Environment
Social
Governance
Other
Assurance report
Glossary
1
2
4
4
6
8
10
11
25
37
46
50
51
This Sustainability and Corporate Responsibility report is rendered
as a separate report added to the Financial Report in accordance
with the Annual Accounts Act (SFS 1995:1554, chapter 6, section
10 and 11). An assurance report from the Company’s auditor is
appended hereto.
Forward-looking statements
This Sustainability and Corporate Responsibility Report includes forward-looking
statements, including statements reflecting the Company’s current views relating to
performance goals and targets, future trends, events, commitments or results, future
market or financial condition, and expected operational and financial performance.
The words “believe,” “expect,” “foresee,” “anticipate,” “assume,” “intend,” “likely,”
“projects,” “may,” “could,” “plan,” “estimate,” “forecast,” “will,” “should,” “would,”
“predict,” “aim,” “ambition,” “seek,” “potential,” “target,” “might,” “continue,” or, in
each case, their negative or variations, and similar words or expressions are used to
identify forward-looking statements. Any statement that refers to the Company’s
strategy, future financial performance, expectations, projections or other characteri-
zations of future events or circumstances, including any underlying assumptions,
are forward-looking statements. Such statements are based on management’s
expectations as of the date of this report, unless an earlier date is specified, including
expectations based on third-party information and projections that management
believes to be reputable.
We caution investors that these statements are subject to risks and uncertainties
many of which are difficult to predict and generally beyond our control that could
cause actual results to differ materially and adversely from those expressed in, or
implied or projected by, the forward-looking information and statements. Important
factors that could affect whether and to what extent any of our forward-looking
statements materialize include but are not limited to the factors described throughout
this Sustainability and Corporate Responsibility Report, including in the section Risk
factors. These forward-looking statements also represent our estimates, assumptions
and expectations only as of the date that they were made, and to the extent they
represent third-party data, we have not undertaken to independently verify such
third-party data and do not intend to do so.
Given these risks and uncertainties, readers are cautioned not to place undue reli-
ance on such forward-looking statements. Readers are urged to carefully review and
consider the various disclosures made in this Sustainability and Corporate Respon-
sibility Report and in other documents we file from time to time with our regulators
that disclose risks and uncertainties that may affect our business. Unless specifically
indicated otherwise, the forward-looking statements in this Sustainability and Cor-
porate Responsibility Report do not reflect the potential impact of any divestitures,
mergers, acquisitions, or other business combinations that have not been completed
as of the date of this report. We expressly disclaim a duty to provide updates to these
forward-looking statements, and the estimates and assumptions associated with
them, after the date of this Sustainability and Corporate Responsibility Report, to
reflect events or changes in circumstances or changes in expectations or the occur-
rence of anticipated events, whether as a result of new information, future events or
otherwise, except as required by applicable law or stock exchange regulation.
This Sustainability and Corporate Responsibility Report includes websites or
references to additional company reports. These are intended to provide inactive,
textual references only. The information on websites and contained in those reports
is not part of this report and not incorporated by reference in this report.
This Sustainability and Corporate Responsibility Report contains statements
based on hypothetical scenarios and assumptions as well as estimates that are
subject to a high level of uncertainty, and these statements should not necessarily be
viewed as being representative of current or actual risk or performance, or forecasts
of expected risk or performance. In addition, historical, current, and forward-looking
environmental and social-related statements may be based on standards for meas-
uring progress that are still developing and on internal controls and processes that
continue to evolve. While certain matters discussed in this report may be significant,
any significance should not be taken, or otherwise assumed, as necessarily rising
to the level of materiality used for purposes of complying with Ericsson’s public
company reporting obligations pursuant to the U.S. federal securities laws and
regulations, even if the report uses the words “material” or “materiality.”
Sustainability and Corporate Responsibility report 2023
Introduction
1
Integrity and sustainability for long-term
value creation
Ericsson was founded on the belief that com-
munication is a basic human need. And for
over 145 years, the Company has been a part
of transforming lives, industries and society for
the better. The Company puts focus on embed-
ding sustainability programs and practices
across the organization to deliver positive
impact to stakeholders and continues a cul-
tural transformation of integrity-led business.
Integrity-led business
With a global presence, Ericsson operates in
markets with varying degrees of complexity in
terms of business culture, geopolitical stability
and maturity of institutions. Within all these
contexts, integrity serves as the foundation for
Ericsson’s ability to create value and reduce
risks to the Company and its stakeholders.
Ericsson is driving a cultural transformation
to build operational excellence and enhanced
governance to promote responsible decision-
making.
Across its operations, Ericsson maintains the
same high standards of ethical business – from
equal opportunity for all and respect for human
rights, to anti-corruption and health and safety.
Ericsson takes a holistic approach to
risk management and is committed to act
with integrity across its value chain. This is a
continuous journey, and Ericsson is dedicating
significant energy towards strengthening
policies, procedures and processes to provide
clarity and ensuring a foundation of respon-
sible business.
Delivering impact
Ericsson’s vision, a world where limitless
connectivity improves lives, redefine business
and pioneer a sustainable future, is built on
the power of open mobile connectivity to
deliver positive impact for communities and
enterprises.
Mobile technology is already one of the
most inclusive technologies globally, with
8.5 billion subscriptions1). The next wave of
digitalization will see the benefits of connec-
tivity extended at scale into enterprises and
broader society. Mobile connectivity, artificial
intelligence (AI) and cloud will be increasingly
viewed as the enabling technologies to realize
this next wave, and without mobile connectiv-
ity the other two cannot be deployed at scale.
This kind of ubiquitous connectivity is critical
for low-carbon future.
Driving digital inclusion
About 2.6 billion people – a third of the global
population – do not have a fast and reliable
broadband connection, due to lack of afford-
ability and accessibility2). Solutions like Fixed
Wireless Access are in many cases the only
option to deliver broadband to unserved and
underserved areas, including households,
businesses and institutions in developing and
developed markets.
Financial inclusion is an important driver for
attaining social inclusion and enabling micro,
small and medium enterprises to grow. Today
the Ericsson Wallet Platform supports about
85 million active users – many of whom were
previously unbanked – with mobile financial
services.
In addition to its commercial offerings,
Ericsson is actively working to ensure that
meaningful connectivity supports essential
societal needs, such as access to education.
Working with with UNICEF and ITU Giga public
private partnership, which aims to connect
every school worldwide to the internet by 2030,
Ericsson has provided its extensive experience
of connecting schools over the past decade.
Ericsson is also a leading private sector partner
in the Digital Transformation Collaborative
led by UNESCO, advising governments on the
digital transformation of education.
Catalyzing Net Zero
The digital transformation of society and
industry is also a low-carbon one. The telecom
industry is leading the race to Net Zero green-
house gas (GHG) emissions both in terms of
Net Zero pledges and by being one of the
largest purchasers of renewable energy3).
Ericsson has set an ambition to be Net Zero
across its value chain by 2040.
Ericsson’s most important contribution to
climate change mitigation is delivering energy-
efficient products and solutions that will help
break the energy curve of mobile networks,
reducing customer energy use, energy costs
and carbon emissions. Ericsson also works
with suppliers to provide relevant tools and
frameworks for business partners to set and
achieve their own 1.5 °C-aligned targets.
Enabling industry transformation
While the Information and Communications
Technology (ICT) sector is responsible for only
1.4% of the global carbon footprint4), it has
the potential to enable a 15% reduction of
emissions across industries by 2030 through
connectivity solutions such as smart building
management systems and connected electric
vehicle charging infrastructure5).
Exponential technologies such as 5G,
AI and the internet of things (IoT) have the
potential to significantly increase productivity
and efficiency. As an open innovation platform,
5G will have a direct impact on a range of
societal infrastructure and industry sectors
including transport, manufacturing, energy
utilities and public safety, to name a few.
In summary, the networks, software and
services Ericsson delivers to its customers
support the digital transformation of industry
and society. With 5G, high performance will
act as engines for economic growth, a funda-
mental lever for fighting climate change and an
enabler of social inclusion.
1) Ericsson Mobility Report (2023)
2) Measuring digital development - Facts and Figures 2023 (2023), ITU Publications
3) Mobile Net Zero: State of the Industry on Climate Action 2022 (2022), GSM Association
4) Malmodin et al. (2023) ICT sector electricity consumption and greenhouse gas emissions – 2020 outcome, SSRN Electronic Journal
5) Malmodin & Bergmark (2015) Exploring the effect of ICT solutions on GHG emissions in 2030, Atlantis Press
2
Strategy and targets
Sustainability and Corporate Responsibility report 2023
Strategy and targets
A business strategy delivering positive impacts
By extending leadership in mobile networks
business and through a focused expansion into
the enterprise market, Ericsson aims to create
value for all stakeholders. Ericsson’s sustain-
ability and corporate responsibility programs
and practices underpin its business strategy.
Leadership in mobile networks
5G is significantly more energy efficient than
previous generations, supporting both cost and
emissions reductions. 5G networks are also
playing a multiplier role in addressing climate
change by reducing not only the ICT industry’s
own emissions, but also enabling other sectors
to transition toward a low-carbon economy.
Ericsson is driving energy-efficient network
development through hardware moderniza-
tion, new software features, network energy
optimization services and the use of AI- enabled
automation and digital twin technologies.
Mobile broadband is one of the most cost-
efficient technology options to connect society,
and Fixed Wireless Access is an efficient and
scalable alternative to wired connections to
create universal and meaningful connectivity,
in both emerging and developed markets.
Focused expansion into enterprise
Through agreed standards that bring global
interoperability and enable economies of
scale, 5G brings new levels of resilience and
efficiency to industrial operations. These
connected systems enable improved ana-
lytic insights through massive, distributed
data collection combined with AI as well as
enhanced automation possibilities supported
by extended reality and IoT technologies.
Together they support the transformation
of industrial applications in areas such as
logistics and manufacturing, renewable energy
systems, low-carbon transportation and many
other sectors. This makes mobile infrastructure,
in particular 5G, an enabler of decarbonization
across industries.
Integrity-led business
Technology leadership alone is not enough to
navigate an uncertain and challenging global
environment. Ericsson faces many global
complexities, including geopolitical change
and conflicts, competition and macroeconomic
conditions, and the long-term success of the
Company will be defined by its ability to pro-
vide world-leading technology and innovation
paired with attraction and retention of the right
talent, an ethical culture and operational excel-
lence, all underpinned by strong governance.
Ericsson is committed to the UN Global
Compact’s ten principles and has made signifi-
cant investments in building a strong culture
of ethics and integrity, as well as health and
safety, as a foundation for responsible busi-
ness and value creation. Ericsson aims to make
a positive impact within and beyond its value
chain, built on the potential of its technology
deployed and used in a responsible way.
Business
Leadership in mobile networks
By investing in technology leadership for performance, security
as well as sustainability and through high performance program-
mable automated cloud-native networks and operations, and
advanced network services.
– Continuously improve portfolio energy performance
– Efficient use of resources and transition to a circular economy
– Offer scalable connectivity solutions where fixed broadband
connectivity is not a viable option.
Focused expansion into enterprise
Through seamless and secure wireless network solutions and
through transforming how network features are exposed,
consumed and paid for via the Global Communications Platform.
– Provide ICT solutions that enable increased efficiency and
decarbonization
– Enabling technologies supporting the transformation of
industries, including small- and medium sized enterprises.
People and planet
Positive impacts
2.4 million children and youth connected to
the internet through the Giga initiative
85 million consumers accessing financial services
though the Ericsson Mobile Wallet Platform every
month
At least 0.8% growth in GDP for every 10% increase
in mobile broadband adoption
Potential for 15% reduction of global GHG
emissions enabled by ICT solutions
Sustainability and Corporate Responsibility report 2023
Strategy and targets
3
Performance on goals and targets
Below is a summary of the performance and current status of Ericsson’s Sustainability and Corporate Responsibility goals and targets. Commentary
on performance highlights is presented on pages 4–9, and target specifics and detailed performance data can be found in the notes to this report on
pages 11–49.
Goals and performance targets
Base year1) Target year
2023 performance
Climate change mitigation
Net Zero GHG emissions across the value chain,
covering scope 1, 2 and 32)
(SBTi3) validated)
Emission reductions
Reduce total GHG emissions in the value chain
by 50%, and scope 1 and 22) by 90%.
(SBTi3) validated)
Portfolio energy performance
Reduce the energy consumption of typical new
radio base station sites by 40%
(New target)
Supply chain engagement
Have 350 high-emitting and strategic suppliers
set their own 1.5 °C-aligned emissions reduction
targets
2020
2040
2020
2030
Total value chain emissions: +24%4)
Scope 1 and 2 emissions: -38%4)
2021
2025
30% reduction4)
2020
2025
237 suppliers with accepted targets
Health and safety
Zero fatalities and lost workday incidents
2020
2025
Fatalities: 10
Lost workday incidents: 97
Diversity and inclusion
30% share of women among all employees,
line managers and executive population
2021
2030
All employees: 26%
Line managers: 23%
Executive population: 31%
Ethics and Compliance
Strengthen and enhance the Ethics and Compli-
ance program to help ensure an effective and
sustainable anti-bribery and corruption program
2019
2024
Implementation in progress
t
n
e
m
n
o
r
i
v
n
E
l
a
i
c
o
S
e
c
n
a
n
r
e
v
o
G
1) For targets tracked using a relative performance metric compared to a set baseline the base year is shown. For targets not tracked through a relative metric, the year the target was set (start year) is shown.
2) Explanations of the boundaries for Scope 1, 2 and 3 emissions are included in the glossary on page 51. Detailed GHG accounting principles can be found in note E1.
3) Science Based Targets initiative
4) Compared to the target base year
Enabling achievement of the Sustainable Development Goals
Ericsson’s products and solutions can contrib-
ute to the achievement of many of the United
Nations Sustainable Development Goals
(SDGs). Ericsson places strategic importance
in meeting SDG 9 – Industry, innovation and
infrastructure) and SDG 17 – Partnership for
the goals) as their combined power helps to
generate positive impact at scale.
Delivering open, resilient and sustainable
networks are core to Ericsson’s role as a
technology and industry leader. By creating
and orchestrating ecosystems and working
across trusted partnerships, Ericsson gener-
ates positive impact at scale to meet the global
challenges of today and tomorrow. Ericsson
engages and collaborates with its customers
and business partners, as well as international
institutions and civil society, in a connected
ecosystem to catalyze climate action and
support digital inclusion.
Ericsson’s indirect positive impacts include,
among other things, alleviating poverty
through mobile financial services, improved
access to education through connected
schools and digital learning, and reduced GHG
emissions in its supply chain and portfolio as
well as through digital data-driven solutions
across industries.
4
2023 highlights – Environment
Sustainability and Corporate Responsibility report 2023
2023 highlights
Environment
Value chain carbon footprint
Million metric tons of CO2e/%
40
35
30
25
20
15
10
5
0
37
31
28
90%
92%
94%
15
9%
<1%
8%
<1%
6%
<1%
2021
2022
2023
Scope 1 and 2
Scope 3 Upstream
Scope 3 Downstream
2030 target
Explanations of the boundaries for Scope 1, 2
and 3 emissions are included in the glossary on
page 51. Detailed GHG accounting principles can
be found in note E1.
Radio base station energy
consumption
%
0
–10
–20
–30
–40
–50
–7
–30
–40
2021
2022
2023
Achieved reductions
2025 target
Net Zero by 2040
Ericsson’s long-term target is Net Zero GHG
emissions across its value chain by 2040, with
a near-term target to halve total value chain
emissions and reduce Scope 1 and 2 emissions
by 90% by 2030 compared to a 2020 baseline.
The targets are 1.5 °C aligned and have been
validated by the SBTi.
In 2023, total value chain GHG emissions
were about 37 (31) million tonnes. 94 (92)%
of the footprint occurred downstream1) in
the value chain, primarily derived from the
energy use of sold network equipment. 6 (8)%
occurred upstream1) in the value chain. Emis-
sions from Ericsson’s own operations (Scope 1
and 2) accounted for less than 1 (<1)% of total
emissions. Ericsson addresses emissions in all
stages of its value chain, but the largest reduc-
tion potential comes from continued improve-
ments in the portfolio’s energy performance,
followed by reducing upstream emissions
through supplier engagement, product design
and material choices.
The increase in total GHG emissions
compared with 2022 is largely explained by
an increase in downstream emissions in the
use-phase of sold products. There has been a
geographical shift in sales to markets, such as
India, where a relatively larger share of elec-
tricity is generated using fossil fuels. This has
led to a net increase in total downstream emis-
sions despite higher energy efficiency in the
Company’s delivered solutions and Ericsson’s
customers buying more renewable electricity.
Reported downstream emissions from the
use of sold products in one year is the sum of
the estimated total lifetime emissions from
network equipment sold in that same year, and
are not accrued over the products’ estimated
lifetime. Shifts in the market mix such as that
seen in 2023 can therefore result in significant
variances in downstream emissions year-
over-year.
Ericsson has continued to implement its Net
Zero strategy, setting milestones for areas and
activities with larger impact, such as product
design and radio site energy consumption.
Under this umbrella, the carbon footprint
calculation and tracking project has continued,
focusing on improving the accuracy of GHG
accounting across Ericsson which will enable
the fact-based decisions necessary to deliver
on the Company’s climate targets.
Portfolio energy performance
Downstream emissions, mainly from products
in use, represented 94 (92)% of total value
chain emissions. This makes continuous
improvement in portfolio energy performance
key to reaching the Company’s emission reduc-
tion targets. Higher efficiency also creates
financial value for customers as it contributes
to reduced energy-related operational expen-
ditures.
During 2023 Ericsson has continued to
improve the energy performance of its port-
folio, delivering increasing mobile broadband
capacity in relation to the energy consump-
tion of its solutions. In 2022, the Company
achieved both of its previous portfolio targets,
and is now pursuing a target to reduce the
average energy consumption of typical new
radio base station sites by 40% by 2025
compared to a 2021 baseline. By year-end, the
Company achieved a reduction of 30 (7)% and
is on track to achieve this new target.
Ericsson has continued to implement AI
and machine learning solutions in its networks.
This allows the service providers to operate
their networks more intelligently to meet traffic
demand and deliver the best user experience
with the lowest energy use. An example is the
Ericsson Predictive Cell Energy Management
solution, which in 2023 was awarded the Net-
work Sustainability Award for best intelligent
automation solution for network sustainability
and energy efficiency by FutureNet World.
In November, Ericsson issued a EUR 500
million green bond. The bond was issued under
the Company’s Green Financing Framework,
which was put in place to finance investments
in energy efficiency and renewable energy.
The proceeds from the bond will be allocated
to R&D aimed at enhancing the energy perfor-
mance of both existing and future solutions.
Enabling effect of ICT
Ericsson’s research2) shows that the potential
for ICT solutions to support other industries
to decarbonize is substantial and much more
significant than the sector’s own carbon foot-
print. Technologies such as electric charging
infrastructure, smart grids and building man-
agement systems all depend on connectivity
and communication network infrastructure to
reach their full potential.
1) Explanations of what constitutes the upstream and downstream parts of a company’s value chain are included in the glossary on page 51.
2) Malmodin & Bergmark (2015) Exploring the effect of ICT solutions on GHG emissions in 2030, Atlantis Press
Sustainability and Corporate Responsibility report 2023
2023 highlights – Environment
5
Supplier climate engagement
No.
400
300
200
100
0
350
237
225
121
2021
2022
2023
Suppliers with accepted targets
2025 target
Scope 1 & 2 emissions
Kiloton CO2e
300
250
200
150
100
50
0
260
112
69
2016
//
2020
//
2023
11
Scope 1
Scope 2 (market-based)
2030 target
Share of renewable electricity and
energy at facilities
%
100
80
60
40
20
0
82
67
84
70
75
62
2021
2022
2023
Share of renewable electricity
Share of renewable energy
In addition, through the development of
technologies such as 5G and platforms for data
and API management, the decarbonization
potential is assessed to be even greater1).
Throughout 2023, Ericsson has continued
to explore this topic, including publishing a
report based on the ITU2) standard on digitali-
zation and Net Zero transition of industries
that showed potential energy and emission
savings in buildings enabled by ICT solutions3).
Supply chain climate action
Supply chain emissions represented 6 (8)%
of the total value chain carbon footprint. As
part of its Net Zero target, Ericsson is working
to reduce these emissions through supplier
engagement, design improvements, and trans-
port efficiency. The Company has continued
to explore and implement ways to reduce the
weight and size of products, and taken initia-
tives targeting carbon intense materials and
processes such as aluminum. Climate-related
criteria were also introduced into supplier
scorecards, showing to what extent a supplier’s
climate commitments support Ericsson’s Net
Zero target.
Ericsson has a 2025 target to have 350
high emitting and strategic direct suppliers set
their own emission reduction targets aligned
with the 1.5 °C ambition, which shall include a
halving of emissions by 2030. These suppliers,
together with their supply chains, represent a
majority of Ericsson’s upstream carbon foot-
print. By year end, 237 (225) suppliers had set
accepted targets, which puts the Company on
track to achieve the 2025 target. As an increas-
ing number of suppliers have made qualifying
commitments, Ericsson has introduced more
stringent requirements for targets to be
accepted, including providing a credible decar-
bonization plan. This in part explains why the
year-over-year increase in aligned suppliers is
smaller compared to previous years.
Climate action in own activities
Scope 1 emissions, primarily related to the
service vehicle fleet, decreased to 27 (38)
thousand tonnes. Part of the reduction is a
result of a late 2023 shift in North America to
subcontractors for network rollout and man-
aged services, meaning emissions have moved
from Scope 1 to Scope 3. Scope 2 emissions
decreased to 42 (45) thousand tonnes, pri-
marily driven by larger volumes of purchased
renewable electricity. The share of purchased
renewable electricity increased to 84 (82)%,
which represented 70 (67)% of total facility
energy consumption. Since the 2016 baseline
of Ericsson’s first SBTi validated emissions
reduction target, yearly Scope 1 and 2 emis-
sions have decreased by about 190 thousand
tonnes.
While emissions from business travel
increased to 53 (25) thousand tonnes, they
remain lower compared with pre-pandemic
levels. Ericsson has set a cap on business travel
to limit these emissions to no more than 50%
of pre-pandemic 2019 levels.
The company has continued to integrate
sustainability KPIs into internal management
reporting for more frequent monitoring. Focus
areas for the coming year include automation
of data management and exploring additional
possibilities to further increase the share of
renewable energy used in facilities.
Transition to circular economy
Work to increase product take-back volumes
and the sale of refurbished equipment
continued during the year. This included the
development of a training for selected employ-
ees to raise their knowledge and awareness of
e-waste, the take-back program and producer
responsibilities. Reuse and product take-back
was also added to the customer engagement
framework, with the aim to increase aware-
ness on these matters both internally and
among customers.
Ericsson has also advocated for recycled
material content to be added to the IEC4)
standard for declaring a product’s material
composition that is used throughout the elec-
tronic manufacturing industry. This will enable
better tracking of the share of recycled input
material in electronic equipment.
Activities contributing to the transition to
a circular economy, including manufacturing
of electronic equipment, were added to the
EU Taxonomy for Sustainable Activities in
2023. This has meant that Ericsson’s share of
Taxonomy-eligible turnover has increased to
38 (0)%. During 2024 Ericsson will assess to
what extent its eligible activities also meet the
criteria for alignment with the Taxonomy.
More information available in the notes to the
S&CR report
p. 11
p. 17
p. 18
p. 18
p. 20
E1 – Climate change
E2 – Pollution
E3 – Water
E4 – Resource use and circular economy
E5 – Reporting according to article 8 of
the EU Taxonomy regulation
p. 24
E6 – Environmental management
1) The enablement effect: The impact of mobile communications technologies on carbon emission reductions. (2019), GSM Association
2) International Telecommunication Union (ITU) - a United Nations specialized agency for information and communication technologies
3) Case Study on the Avoided Emissions from a Building Heating Management System Using an AI Steering Function (2023), The Carbon Trust
4) International Electrotechnical Commission - a NPO publishing standards for infrastructure and trade in electrical and electronic goods.
6
2023 highlights – Social
Sustainability and Corporate Responsibility report 2023
Social
Lost workday incidents and
fatalities
No.
150
125
100
75
50
25
0
145
131
97
14
8
10
2021
2022
2023
Lost workday incidents
Fatalities
Breakdown of fatalities by cause
No.
15
10
5
0
14
3
6
5
10
1
4
5
8
4
4
2021
2022
2023
Other 1)
Fall from heights
Traffic/driving accident
1) Detailed information in note S2.
Share of women per employee
category
%
40
30
20
10
0
35.6
25.2
21.3
35.0
25.5
21.7
31.4
26.0
22.7
2021
2022
2023
Exec. population
All employees
Line managers
2030 target
Health, safety and well-being
In 2023 the number of reported fatalities
increased to 10 (8) and primarily involved site
service suppliers and third parties. One
employee was also fatally injured. The causes of
the fatalities were driving accidents, climbing or
working at heights, and working with electricity.
At the same time, lost workday incidents for
both suppliers and employees decreased
compared to the previous year to 97 (131) and
primarily involved slips, trips and falls, site
installations, climbing and working at heights
and manual lifting and handling. Ericsson firmly
believes that all fatalities and incidents are
preventable and has a target to have zero
fatalities and lost workday incidents.
Working towards this target, Ericsson has
strengthened processes and governance and
has continued embedding safety in its company
culture. A major action taken during 2023 was
assessing the maturity of site services suppliers
against Ericsson’s safety requirements. These
assessments covered 61% of all site service
suppliers and main improvement areas identi-
fied were strengthening project hazard and risk
assessments, controlling high risk activities and
managing subcontractors. In 2024, assess-
ments of remaining suppliers will continue. As
part of the consequence management process,
when there is a non-conformity or fatality, yel-
low and red cards are issued to the supplier with
related consequences such as monetary fines or
contract termination.
Root cause analyses of the fatal incidents
show that lack of risk awareness, poor super-
vision, inadequate risk assessment and unsafe
behaviors are major contributors to these inci-
dents. To address these deficiencies, Ericsson
has put programs in place to proactively
enhance site safety, emphasized the criticality
of the site supervisor role and implemented
the Stop Work Authority standard, in addition
to promoting the Company’s rules for safe
working practices. The Stop Work Authority
standard both requires and empowers people
to immediately stop work when unsafe working
conditions are identified and is a key measure
to mitigate risks of incidents as soon as they are
identified.
Diversity and inclusion
Ericsson drives a broad diversity and inclusion
agenda to support all employees to realize their
full potential. Within this, there is a particular
focus on gender balance, with a target to
achieve at least 30% representation of women
at all levels of the Company by 2030.
To support this target, part of the variable
compensation to executives is linked to a per-
formance criteria where the share of women in
line manager positions is to increase to 23% by
2024. During the year, the share of women line
managers increased to 22.7 (21.7)%. Among
all employees, the share increased slightly to
26.0 (25.5)% while decreasing to 31.4 (35.0)%
within the executive population.
Ericsson has a fifty-fifty gender balance
goal for early career and graduate hires as part
of the strategy to attract candidates from all
backgrounds. In 2023 progress was made,
with women representing 31 (27)% of all
external hires.
Work towards pay equity has continued
with Ericsson putting additional efforts into
measuring and better understanding the
reasons behind gender pay gaps. Ericsson
has made inclusive leadership one of the
critical skills for its workforce to further embed
inclusiveness in the company culture. This is
supported by a bespoke training that com-
bines the latest academic insight with online
simulations. Ericsson also supports a network
of 42 employee resource groups that cover a
wide range of identities and characteristics,
and also provides career accelerator programs
to help remove barriers to progression for high
performing talent, including from underrepre-
sented groups.
Talent attraction, retention and development
Ericsson’s talent acquisition strategy is built
on three key focus areas: demand planning
and capacity; identifying key talent markets;
and attracting and retaining talent with critical
skills. The Company continues to prioritize the
development of future critical skills connected
to its strategy. By year end, over 50,000 people
had been upskilled or reskilled across critical
skill areas such as Cloud Native, Power Skills
and AI, in which 300 experts in 2018 acted
as a catalyst to upskilling more than 30,000
employees as of year-end 2023. Nearly all
employees use Degreed as the main digital
learning experience platform for skill-building
and learning completions, with many desig-
nating their own focus skills aligned to their
career ambitions. After a slight reduction last
year, 2023 saw a 59% increase in learnings
completed through Degreed, reaching over
4.8 (3.0) million, which is the highest level to
date. Employees are also encouraged to gain
experience through internal job moves. This is
supported by an open talent market as well as
targeted succession planning, with increasing
emphasis on putting critical skills to work.
During 2023, Ericsson has enhanced
its sourcing capacity, improved recruiter
capabilities and invested in new technology to
Sustainability and Corporate Responsibility report 2023
2023 highlights – Social
7
Employee satisfaction
eSAT score
100
80
60
40
20
0
81
73
81
77
80
74
2021
2022
2023
Ericsson employees
Benchmark
Digital education – Connect to Learn
Thousands
500
400
300
200
100
0
485
43
400
36
296
30
2021
2022
2023
No.
50
40
30
20
10
0
Impacted children and youth, thousands
Countries deployed, no.
Ericsson Mobile Wallet accounts
and active users
Million
500
400
300
200
100
0
457
379
80
85
314
65
2021
2022
2023
Accounts
Monthly active users
reduce complexity and provide a better hiring
experience. A global recognition program
has been created to drive engagement and
recognize impact. Since 2021 Ericsson has
an employee share purchase plan in place to
encourage employees to take an individual
stake in achieving the Company’s goals. At
the end of 2023 the plan was implemented in
79 countries and available to about 88,000
employees, with a participation rate of 17.1
(18.9)%.
Employee satisfaction scores remained high
at 80 (81) points and continues to be above the
benchmark value for comparable companies in
the industry, which is 74 (77).
Human rights
Ericsson has continued to strengthen its
human rights due diligence practices. As part
of a long-term human rights training plan, an
e-learning course was made available to all
employees and workshops with the Allega-
tion Management Office were conducted, to
heighten awareness of when reported compli-
ance concerns should be treated as human
rights-related. The risk indicators used in the
Sensitive Business process were also updated
to cover human rights aspects tailored to dif-
ferent types of business engagements, such
as public networks for communication service
providers (CSPs) as well as private networks
for government agencies and enterprises. Full
integration of these will be completed in 2024.
895 (683) sales opportunities were reviewed in
the Sensitive Business process and 636 (435)
cases resulted in either technical or contractual
limitations to mitigate identified risks. 7 (13)
sales opportunities were dismissed entirely as
sufficient mitigating actions were not possible
to enact. Relevant decisions also informed the
work of the Business Risk Committee in their
oversight of Group-wide human rights risk
management.
Matters concerning labor rights, in par-
ticular working hours and adequate wages,
continued to make up a significant part of
non-conformities identified in supplier audits.
All identified non-conformities are required to
be addressed by time-bound corrective action
plans. Ericsson also made significant efforts
into improving traceability and visibility in the
supply chain, with a focus on high-risk supplier
categories beyond the first tier. A governance
mechanism for managing findings related to
risks of modern slavery in the supply chain was
also established. During 2023, Ericsson has
not, through its reporting channels, been made
aware of any adverse human rights impacts in
which the Company has been involved.
Corporate citizenship
Ericsson continued to invest in connected
reforestation projects and planted 100,000
mangroves and 20,000 fruit bearing plants
through a project in India, which complements
existing projects in Malaysia and the Philip-
pines. Ericsson Response and the Refugee
Emergency Telecom Cluster in Zimbabwe
distributed connectivity to RETS1) partner
offices that support more than 14,000 refu-
gees and asylum seekers in the Tongogara
refugee camp. Ericsson Response also sup-
ported the WFP-led ETC2) efforts to respond
after the devastating earthquake in Turkey in
February. Preparedness is key for reducing the
impact of natural disasters and during the year
Ericsson Response supported WFP to help the
Philippine Department of ICT to strengthen
communication resilience after typhoons.
Digital inclusion
The Ericsson Mobile Wallet Platform sup-
ported 457 (379) million registered mobile
wallet accounts. About 85 (80) million active
consumers use mobile financial services
powered by the platform every month, many of
whom were previously unbanked. The platform
has enabled many businesses and organiza-
tions to accept digital payments accelerating
the growth of cash-light digital economies.
Ericsson was the first private sector partner of
UNICEF3) and ITU’s Giga initiative, and over
the past two years it has supported Giga in
connecting more than 6,000 schools and 2.4
million children and youth to the internet. To
date, Ericsson has positively impacted 485,000
children and young adults in 43 countries by
providing access to digital learning and skills
development programs through its Connect To
Learn initiative.
More information available in the notes to the
S&CR report
p. 25
p. 29
p. 31
p. 34
p. 35
S1 – Human Capital
S2 – Health, safety and well-being
S3 – Human rights
S4 – Corporate citizenship
S5 – Digital inclusion
1) Refugee Emergency Telecommunications Sector, led by the United Nations High Commissioner for Refugees (UNHCR).
2) World Food Programme – Emergency Telecommunications Cluster.
3) United Nations Children’s Fund.
8
2023 highlights – Governance
Governance
Completion rates for ethics and
compliance trainings
%
100
80
60
40
20
0
97
93
90
99
98
97
99
82
70
2021
2022
2023
Foundational ABC training
Enhanced ABC training
Ethics training for leaders
Reported and substantiated
compliance concerns
No.
1,250
1,000
750
500
250
0
1,201
91
Reported1)
Substantiated2)
1) All reported cases received in 2023.
2) All cases concluded and deemed as substantiated
during 2023, some of which were received in
previous years.
Corrective and disciplinary actions taken1)
No.
0
25
50
75
100
125
Termination
112
Written warning
58
Verbal warning
28
Resignation
1
Other
2
Total: 201
1) Actions taken as a result of substantiated breaches of
Ericsson’s Code of Business Ethics. Each corrective action
represents a unique individual meaning the total of
actions shown here cannot be directly compared to the
number of substantiated cases shown above, as each
case may involve several individuals. An individual can be
subject to several corrective actions but is only counted
once in these statistics, with the most severe consequent
determining classification in the above presentation.
Ethics and compliance
Ericsson is committed to maintaining the high-
est standards of corporate governance, prior-
itizing an integrity-led culture and compliance
with laws in everything it does, driving integrity
into and across the organization. The Company
has invested significant resources and energy
to strengthen its Ethics and Compliance (E&C)
program, implementing and maintaining strong
systems, controls and policies to effectively
prevent and detect wrongdoing, including in
the areas of ethics, anti-bribery and corruption,
conflicts of interests, anti-money laundering
and competition law. There is more information
on this on pages 23-24 of the Financial report,
in the Corporate Governance report and in note
G2 of this report.
Ericsson believes that driving integrity into
day-to-day decision-making requires constant
focus to ensure that compliance processes
and related controls are fit for purpose and
that they are continuously tested and refined.
Through an initiative referred to as the Busi-
ness Critical Transformation, discussed in
greater detail in the Ethics & Compliance
section of the Corporate Governance report,
Ericsson has embedded improved anti-corrup-
tion controls into its operations and manage-
rial decisions, and further remediated the
business process issues that were, in the past, a
contributing factor in incidents of misconduct.
Ericsson combined this work with rigorous
testing of the E&C program’s effectiveness,
which includes clear expectations for manage-
ment to understand and address testing results
and process adherence within their areas of
responsibility. This approach positions Ericsson
to conclude its monitorship related to the DOJ
resolution in June 2024, but more importantly,
sets the foundation for a well embedded, self-
sustaining ethics and compliance program.
To drive further accountability throughout
the organization, all employees who are
eligible for a short-term variable compensation
(STV) pay-out may be denied all or part of the
entitlement if they act in breach of Ericsson’s
Code of Business Ethics (CoBE). In addition,
senior executives are subject to evaluation
according to a set of pre-defined integrity cri-
teria, which relate to compliance training, third
party management, allegation management
and other items tied to the Company’s E&C
program. Underperformance against these
criteria can reduce STV pay-out by up to 100%,
while exceptional performance may justify an
additional incentive of up to a maximum of
10% of the executive’s annual base salary.
Corporate contributions are an essential
aspect of corporate responsibility and help
demonstrate Ericsson’s support for various
communities and causes. They are also impor-
tant for stakeholder engagement, marketing,
research and development, and employer
branding. In 2023, Ericsson replaced the exist-
ing process to evaluate, control, and manage
contribution activities with a comprehensive
new approach. The new process provides
additional assurance that contributions are
consistent with the Company’s values, free
from conflicts of interest, and in full compliance
with all applicable anti-bribery and corruption
(ABC) laws, regulations, and internal rules and
policies.
Ericsson employees are obligated to act
swiftly and transparently to disclose anything
that may constitute a conflict of interest. To help
employees fulfill this obligation, the Company
initiated a global campaign in 2023 in which all
employees have been asked to certify that they
have disclosed all situations that may constitute
a conflict of interest.
Third-party management and supplier audits
The process for vetting and oversight of the
third parties has continued to develop to
enable Ericsson to choose parties that meet
the Company’s expectation of zero tolerance
for bribery and corruption. Through the global
Third-Party Management (TPM) Program,
Ericsson identifies and mitigates corruption
and integrity-related risks in the context of
third-party relationships. Business Partner
Review Boards, comprised of senior business
professionals and guided by compliance
leaders evaluate third parties with higher risk,
approve or reject interactions and monitor
the risk landscape in the geographies where
Ericsson conducts business. TPM works with
businesses to obtain transactional assurance
and helps ensure compliant payments.
Audits of suppliers as part of Ericsson’s
Responsible Sourcing program has continued
where a risk-based approach is used to make
the yearly selection of which suppliers to audit.
123 (114) audits based on the requirements
in the Code of Conduct (CoC) for Business
Partners were conducted in 2023. Critical non-
conformities were identified at 1 (6)% of the
audited suppliers and concerned health and
safety standards and management. Ericsson
also conducted 19 (15) Contract Compliance
(CC) audits. No critical nonconformities were
identified at these audits.
Each audit is seen as an opportunity for
improvement and corrective action plans
are established together with the suppliers
Sustainability and Corporate Responsibility report 2023 2023 highlights – Governance
9
to address non-conformities. The corrective
action rate for all non-conformities identified at
CoC audits was 79 (73)% and the correspond-
ing figure for CC audits was 65 (69)%.
Training and awareness raising
Ericsson has continued to provide mandatory
training on topics critical for driving behavioral
change and promoting integrity within the
Company such as ABC, health and safety, and
security awareness. At year end, mandatory
foundational ABC training had been completed
by 99 (93)% of the workforce. Enhanced ABC
training for people in high risk roles had a 98
(97)% completion rate and 97 (90)% of people
in executive leadership roles had completed
training in workshop format that covered
topics such as ethical decision-making and
handling of ethical dilemmas.
Reported compliance concerns
In 2023, the number of reported compliance
concerns was 1,201 (1,092). The Company
views this increase as an indicator of continued
confidence by employees and third parties
in Ericsson’s allegation management and
investigation processes and the seriousness
with which the Company treats potential
misconduct. Out of the reported concerns, 125
(215) cases were referred for further investi-
gation. 1,076 (877) cases were not referred
for investigation as they were inquiries of a
general nature, not deemed to be related to
misconduct or breaches of the Code of Busi-
ness Ethics, or deemed low-risk and not war-
ranting dedication of investigation resources.
582 of the reported concerns not referred for
investigation were referred to other functions,
such as the People function or Sourcing, to be
addressed in accordance with their processes.
During the year, 91 (118) cases were con-
cluded and found to be substantiated. At year
end, 78 (209) cases were still under investiga-
tion. This figure includes cases reported both
in 2023 and in 2022. More details, including
reported cases broken down by category, are
available in note G2.
During the year, 201 (178) corrective and
disciplinary actions involving individuals found
to have acted in breach of the company’s Code
of Business Ethics were taken. 112 (39) of
these actions resulted in terminations, and 58
(74) in written warnings.
Interactions with governmental authorities
Ericsson is and has been involved in legal pro-
ceedings involving governmental authorities
in different jurisdictions. Further information
about current proceedings is included in the
Financial report on pages 25–26
Security and privacy
Ericsson has continued to execute its security
and data privacy strategies with the goal
to strengthen its operational and portfolio
resilience. There is more information on these
topics on pages 19–20 of the Corporate Gov-
ernance report.
Advocacy and policy influence
Ericsson has continued to advocate for policies
that encourage and incentivize the digital
ecosystem to deploy and use transformational
connectivity. Ericsson acts as a trusted partner
for policy makers, sharing its expertise and
knowledge to address policy dilemmas.
The Company is an active member of
industry organizations and partnerships that
develop policies and thought leadership.
Examples include the European CEO Alliance,
where Ericsson promotes projects focused on
digitalization and energy supply, and Digital
Europe, where it drives climate and environ-
mental topics. Ericsson also contributed to an
international training program, ICT Regulation
– Policy and Practice, commissioned by the
Swedish International Development Coopera-
tion Agency.
Ericsson has hosted frequent government
visits to its Imagine Studio in Stockholm to both
engage in dialogue and demonstrate 5G use
cases. All material policy-influencing interac-
tions with public officials are documented for
internal audit purposes and declared according
to local regulations and practices.
More information available in the notes to the
S&CR report
p. 37
p. 38
p. 41
G1 – S&CR Governance
G2 – Compliance and business ethics
G3 – Supply chain and responsible
sourcing
p. 44
G4 – Advocacy and policy influence
Board of Directors
Stockholm, March 5, 2024
Telefonaktiebolaget LM Ericsson (publ)
Org. no. 556016-0280
Sustainability and Corporate Responsibility report 2023 10
Consolidated sustainability notes
Sustainability and Corporate Responsibility report 2023
Notes to the Sustainability
and Corporate Responsibility report1)
Contents
Environment
11
17
18
18
20
24
E1
E2
Climate change
Pollution
E3 Water
E4
E5
E6
Resource use and circular economy
Reporting according to Article 8 of the EU Taxonomy Regulation
Environmental management
Social
25
S1
29
31
34
35
S2
S3
S4
S5
Human capital
Health, safety and well-being
Human rights
Corporate citizenship
Digital inclusion
Governance
37
G1
Sustainability and corporate responsibility governance
38
41
44
G2
G3
G4
Compliance and business ethics
Supply chain and responsible sourcing
Advocacy and policy influence
Other – Basis for preparation
46
O1
Stakeholder engagement and materiality
48
49
O2
O3
Reporting principles, scope and external assurance
Restatements of information
1) When "material," "materiality," or the like is used in these Notes, the term is meant to refer to material under emerging
European sustainability reporting regulation, and is not necessarily material under US securities or other laws.
Sustainability and Corporate Responsibility report 2023
Consolidated sustainability notes
11
Section E – Environment
E1 Climate change
Impacts, risks and opportunities
Ericsson has identified material impacts related to climate change both
upstream and downstream in its value chain, as well as in its own operations.
The ICT sector represents a relatively small share1) of GHG emissions, with
emissions primarily being derived from the sector’s energy consumption. The
vast majority of GHG emissions in Ericsson’s value chain2), approximately 90%
in recent years, occur downstream, primarily from electricity consumption in the
use phase of sold products. Upstream emissions, which include both resource
extraction and processing, manufacturing activities and transportation rep-
resent around 10% of total value chain emissions but this share is expected to
increase as more renewable energy is deployed and used in the downstream
portion of the value chain, reducing emissions from the use phase of sold
products. While emissions from Ericsson’s direct operations (Scope 1 and 2)
represent less than 1% of the total carbon footprint, they are still considered
material since all sectors of the economy need to reduce emissions in order to
reach global agreements on climate mitigation.
In the past, with the rollout of each new generation of mobile network stand-
ards (such as 2G, 3G and 4G), new equipment has been added, which over
time has increased total energy consumption across global mobile networks.
The increases have been stable across each mobile generation. Ericsson’s
own research3) shows that it is the surface coverage and the installation of
new equipment when deploying new generations of mobile networks that has
driven increased energy usage, rather than increased data traffic.
While the ICT sector must address its own carbon footprint, it can also play
an important role in enabling other sectors in their decarbonization efforts.
Many of the solutions needed in other sectors to reduce emissions, such as
management systems and smart meters in buildings, smart electrical grids,
telematics, and storage and inventory management solutions in enterprises, are
all dependent on ICT solutions and infrastructure to function. Ericsson’s own
peer-reviewed 2015 research4) suggests that ICT solutions have the potential
to enable decarbonization of up to 15% in other sectors by 2030, and poten-
tially even higher when including the enabling potential of 5G and the Internet
of Things.
As part of its overall climate strategy and its commitment to align to the
reporting recommendations of the Task Force on Climate Related Financial
Disclosures (TCFD), Ericsson has analyzed potential climate-related risks
and opportunities using two different scenarios: Net Zero 2050 and Current
Policies. The main conclusions from this analysis are presented below. A
summary of the assessment methodology and assumptions under the two
scenarios used is included at the end of this note. The results of the scenario
analysis were incorporated into Ericsson’s materiality analysis when identify-
ing material climate-related risks and opportunities.
Expansion of network energy performance offering
(opportunity – products and services)
Under the Net Zero 2050 scenario, both emission reduction targets and higher
energy prices drive further efforts by communications service providers to
increase energy performance in mobile networks. The combination of these
two factors creates opportunities for Ericsson to expand its offering of network
energy performance solutions.
Enabling emission reductions in enterprise sectors
(opportunity – markets)
As other more emission-intense sectors – such as power and utilities, transport
and manufacturing – rapidly increase efforts to decarbonize in the Net Zero
2050 scenario, significant investments are made to achieve decarbonization
goals. These investments, such as the deployment of smart grids and private
networks, all depend on ICT solutions, which provides significant opportunity
for Ericsson to expand its connectivity offering to these sectors.
Increased demand for equipment with lower embodied emissions
(opportunity – products and services)
In the Net Zero 2050 scenario, the price of carbon emissions increases
substantially. Simultaneously, Ericsson’s customers rapidly increase the
share of renewable energy used to power the networks, meaning the relative
share of their upstream emissions increases. To address these embodied, and
increasingly costly, emissions, customers’ demand for low-carbon products,
meaning equipment made from less carbon-intense materials and processes, is
expected to increase, which can mean new business opportunities for Ericsson.
Increased costs due to carbon emissions pricing
(transition risk – policy)
In the Net Zero 2050 scenario, the price of carbon emissions increases sub-
stantially, leading to increased costs for actors in Ericsson’s value chain. While
direct impacts are limited, indirect impact upstream in the value chain is more
significant, assuming emissions stay the same and costs are passed through to
Ericsson from affected suppliers.
Disruptions caused by severe weather events
(acute physical risk)
In the Current Policies scenario, the frequency and intensity of severe weather
events, as well as coastal and riverine flooding, increases. This leads to height-
ened risks for long-term business interruptions as well as damage to inventory
and fixed assets in the supply chain at both outsourced manufacturing sites
and at Ericsson’s own sites, such as production facilities and IT centers.
Policies
Ericsson’s Sustainability Policy sets out the Company’s foundational principles
on environmental sustainability, including climate change mitigation. Ericsson
uses life-cycle analysis (LCA) methodology to determine its significant envi-
ronmental aspects and to assess the environmental impact of ICT, reduce the
negative environmental impact of its own operations and take a precautionary
approach to environmental challenges, applying design to ensure continuous
environmental improvements with a life-cycle perspective on its portfolio.
Ericsson also advocates the use of ICT to mitigate and adapt to climate change
and to create low carbon economies of the future.
Ericsson’s Code of Conduct (CoC) for Business Partners requires the com-
pany and its business partners, including suppliers, to develop and implement
plans and targets to reduce their GHG emissions. Business partners must
adopt, and publicly disclose, their targets for reducing emissions in alignment
with the science-based 1.5 °C ambition and actively work toward achieving
them, which includes public reporting on progress made on an annual basis.
The CoC is based on the Responsible Business Alliance Code of Conduct and
the UN Global Compact 10 principles, but also includes Ericsson-specific
requirements and is part of standard-supplier contracts. It is available in
multiple languages on the Company’s website.
For suppliers of hardware components or products, construction work, supply
services, field maintenance and network rollout operations, as well as those
with high environmental risks, where their operations significantly impact the
environment, Ericsson has additional environmental requirements. If energy
consumption and/or GHG emissions are identified as significant environmental
aspects, the supplier must calculate its carbon footprint, using the GHG proto-
col for its Scope 1, Scope 2 and, if applicable, for its Scope 3 emissions.
Management approach
Group climate strategy and targets are coordinated and driven by the central
Sustainability and Corporate Responsibility unit. On an operational level,
climate action strategies and policies are integrated across business and mar-
ket areas, as well as Group functions, with each organization being responsible
for executing on its respective strategies and targets.
1) Malmodin et al. (2023) ICT Sector Electricity Consumption and Greenhouse Gas Emissions – 2020 Outcome, SSRN Electronic Journal
2) See page 15 for a description of Ericsson’s GHG emissions accounting methodology.
3) Ericsson Mobility Report (2015)
4) Malmodin & Bergmark (2015), Exploring the effect of ICT solutions on GHG emissions in 2030, Atlantis Press
12
Consolidated sustainability notes
Sustainability and Corporate Responsibility report 2023
Note E1, cont’d.
Executive variable remuneration
A portion of the variable remuneration to executives is determined by perfor-
mance on selected elements of the Company’s GHG emission reduction targets.
See page 7 of the Remuneration report for further information.
Net Zero transition plan
Ericsson has a SBTi validated target to achieve Net Zero1) value chain emis-
sions by 2040, with a near-term target to reduce total value chain emissions
by 50% from a 2020 baseline by 2030. The most significant actions that the
Company plans to take to reach this target are described below.
ktCO2e
40,000
50% reduction
across value chain
Net Zero across
value chain
–5,000
2020
2021
2022
2023
2030
2040
//
//
Reported value chain emissions (covering Scope, 1, 2 and 3)
2030 target
2040 target
Negative emissions through, for example, Carbon Capture and Storage (CCS)
Total value chain emissions as shown in the graph above should be considered illustrative of Ericsson’s Net
Zero transition plan, as they include forward-looking estimates of future emissions.
Scope 1 direct emissions
Ericsson is working to replace its fleet of internal combustion engine service
vehicles with a low-emission fleet. The transformation will take place gradually,
with some countries and market areas expected to transition faster than others
due to differences in availability of low- or zero-tailpipe emissions vehicles and
market conditions. In addition, the Company plans to increase the coverage
and use of fleet management systems and telematics to optimize fleet utiliza-
tion and reduce unnecessary trips, where feasible. Backup generators and
local heating using fossil fuels at facilities will be phased out or replaced with
low-emitting alternatives wherever possible. Technical building requirements
specify limits on the maximum global warming potential for refrigerants used
at facilities.
Scope 2 indirect emissions
Ericsson aims to source 100% renewable energy at its facilities by 2030. In
addition, Ericsson works together with facility management companies to
improve the energy efficiency of its facilities. The majority of facilities Ericsson
occupies are leased.
Scope 3 upstream emissions2)
Ericsson engages with its high-emitting and strategic first-tier suppliers to have
them set their own 1.5 °C aligned emission reduction targets. For targets to be
accepted by Ericsson, they need to include a commitment to halving emissions
in relevant scopes by 2030, and the supplier must make them public as well as
commit to report on progress toward the targets publicly and at least annually.
Ericsson continues to engage with those suppliers who have not yet set quali-
fying targets.
To reduce the emissions embodied in hardware products, Ericsson applies
other measures such as product design and material choice, substitution and
recycling.
To prevent emissions from business travel from returning to their pre-
pandemic levels, Ericsson has set a cap on business travel emissions at 50%
of their 2019 levels, with each business and market area, Group function and
subunits being allocated yearly emission budgets for business travel.
Scope 3 downstream emissions2)
Ericsson’s approach for reducing indirect downstream emissions from the
use of products and services is through improved energy performance of the
Company’s solutions, which includes hardware, software and service solutions.
A focal point is to ensure that the rollout of 5G does not result in an increase in
the energy consumption of customers’ mobile networks, as has been the case
with rollouts of previous generations of mobile communication networks. This
involves:
– Investments in R&D to increase the energy performance of the portfolio.
– Planning networks both from a performance and an energy usage
perspective.
– Providing guidance on when and how to modernize equipment and operat-
ing networks intelligently by using artificial intelligence, machine learning
and other features to reduce energy use during times of low network load.
To further reduce these emissions, customers also need to transition to low-
carbon and renewable energy sources. Reducing energy demand, and subse-
quent consumption, are important steps in making the transition to renewable
energy sources easier and more financially viable.
Besides improved energy efficiency, Ericsson can support customers with
the integration of on-site renewable energy generation such as solar and wind
energy at base station sites. By using the same management system to control
the radio-access network and the renewable energy sources, the energy supply
and demand can be optimized for the site conditions. More details on how
Ericsson is aiming to reduce energy consumption of mobile networks are avail-
able in the Breaking the Energy Curve report on the Company’s website.
For emissions related to product transport, Ericsson is utilizing increased
data visibility to optimize transport planning and thereby reduce emissions.
Carbon removals
Ericsson plans to use carbon removal technologies, such as carbon capture and
storage, to neutralize the unavoidable part of value chain emissions to reach
its 2040 Net Zero targets. When such technologies are employed, they will not
represent more than 10% of the base year carbon footprint and must adhere to
high standards to ensure the effectiveness and trustworthiness of any Net Zero
claims.
Internal price on carbon
Ericsson has an internal shadow carbon price of USD 100 per metric ton of
carbon dioxide equivalent applicable to equipment transportation. The shadow
price is included in the landed cost model when calculating the total price of
outgoing deliveries of certain hardware product categories. The aim is to visu-
alize the cost of carbon related to downstream transportation when calculating
and deciding on transport routes for outgoing shipments sourced by Ericsson.
Product energy certifications
The majority of the product portfolio, made up of communication network
hardware such as radios and antennas, is currently not covered by any third-
party managed certification scheme for energy efficiency. Products eligible for
certification, such as servers, constitute a smaller part of the product portfolio.
These are currently not certified according to any such scheme.
1) Implying emission reductions of at least 90% within the set timeframe in the selected scopes.
2) See note O2 on page 41 for an explanation on limitations regarding value chain reporting and disclosures.
Sustainability and Corporate Responsibility report 2023
Consolidated sustainability notes
13
Note E1, cont’d.
Enablement strategy
For many sectors, cellular technology has accelerated the digitalization process
and proven to create value through improved productivity, safer workplaces
and more environmentally sustainable operations. As an example, cellular
connectivity helps accelerate the transformation of utility companies in an
environment where energy costs as well as demand for electricity are increas-
ing. Cellular technology has the potential to further provide companies in this
sector with real-time data exchange, automatic grid fault detection, distribu-
tion automation, connected electric vehicle charging and building energy
management and optimization.
Ericsson will continue to assess the use of ICT solutions in reducing GHG
emissions of other sectors following the International Telecommunication
Union’s (ITU) standards and methodologies for making such assessments and
quantifications. This requires companies to assess all types of effects, including
the rebound effect1).
Research and contributions to standardization
Ericsson conducts research into the direct and indirect environmental impacts
of the ICT sector and has for several years used LCAs to understand its port-
folio’s carbon and environmental footprint. In addition, the Company contrib-
utes to the development of methodologies for assessing these impacts. One
example is the ITU’s Net Zero standard, which guides companies in the sector
on setting Net Zero targets, to which Ericsson contributed.
Training and awareness raising
Climate action is one of nine critical skills identified for Ericsson’s workforce.
A framework has been developed to upskill all employees based on the level
of needs in their respective roles. Introductory and fundamental levels are
currently available to all employees.
Collaborations and partnerships
As a general principle, any climate-related commitment or collaboration that
Ericsson partakes in must be based on a scientific approach for the Company
to consider endorsement. On the right, the most significant external collabora-
tions related to climate change mitigation are listed.
Organization
Description
1.5 °C Supply Chain
Leaders
CEO Alliance for Europe
European Green Digital
Coalition
Exponential Roadmap
Initiative
Pathways Coalition
We Don’t Have Time
Members of the 1.5°C Supply Chain Leaders work together to
drive climate action through global supply chains and support
small and medium-sized enterprises (SMEs) through the SME
Climate Hub. The partnership aims to support suppliers in halv-
ing emissions before 2030 and achieving Net Zero emissions
before 2050.
The CEO Alliance for Europe is a cross-sector collaboration
between 12 companies, with over 1.5 million employees and
EUR 500 billion in annual revenue working for a more sustain-
able and resilient Europe, with a focus on digitalization and
decarbonization.
The European Green Digital Coalition is an initiative by a group
of ICT companies, supported by the European Commission and
the European Parliament, which aims to promote and harness
the enabling emission-reducing potential that digital solutions
can have in other sectors.
The Exponential Roadmap Initiative brings together innova-
tive and transformative businesses taking action in line with
limiting global warming to 1.5°C. The purpose is to accelerate
exponential climate action and solutions, integrate climate in
business strategies and influence climate action in society, with
the mission to halve emissions before 2030. The initiative is an
accredited partner to the UN Climate Change High-Level
Champions’ Race to Zero campaign.
The Pathways Coalition aims to accelerate the decarboniza-
tion of heavy transport with member companies committing to
the vision of the coalition: to reach zero CO2 emissions by no
later than 2050.
We Don’t Have Time provides a platform for the dissemination
of knowledge, discussion and rating of businesses and public
individuals from a climate perspective. Together with Ericsson,
the partnership broadcasts Exponential Climate Action Sum-
mits to increase awareness of the need for climate action. We
Don’t Have Time is a member of the UN-backed Race To Zero
campaign and the Exponential Roadmap Initiative.
World Economic Forum
– Alliance of CEO
Climate Leaders
The Alliance of CEO Climate Leaders is a global community of
Chief Executive Officers who work towards climate action
across all sectors and engage with policymakers to help deliver
the transition to a Net Zero economy.
1) The reduction in expected gains from new technologies that increase the efficiency of resource use because of behavioral or other systemic responses.
14
Consolidated sustainability notes
Sustainability and Corporate Responsibility report 2023
Note E1, cont’d.
Metrics and targets
Targets
Emission reductions – long-term
Net Zero value chain emissions by 2040. This implies at least a 90% reduction of emissions in Scope 1, 2 and relevant Scope 3 categories1) 2) 3) from a 2020 base-
line, and the potential use of carbon removal and storage technology for the remaining unavoidable maximum 10% of emissions. This target has been validated
as 1.5 °C aligned by the Science Based Targets initiative (SBTi).
Emission reductions – near-term
Halving of total value chain emissions by 2030, including a 90% reduction in Scope 1 and 2, and a 50% reduction of overall relevant Scope 3 categories1) 2) 3).
The Scope 3 component of the target is disaggregated as shown below.
Emissions covered
Scope
Category(ies)
Target scope
Scope 1 & 2 Market-based
Scope 3
Total
6 & 7 1)
1–5, 9 & 12 2)
11 3)
Company-wide
2020
Base year
(BY)
BY emissions
(tCO2e)
Target year
(TY)
TY change vs.BY
(%)
111,889
65,432
2,576,861
27,281,138
30,035,3206)
2030
– 90
+ 485)
– 50
– 50
– 50
TY emissions
(tCO2e)
11,200
97,000
1,288,400
13,640,600
15,037,200
2023 change
vs. BY (%)
– 38
+ 55
– 21
+ 29
+ 24
2023 emissions
(tCO2e)
69,280
101,599
2,023,358
35,057,200
37,251,437
Use of
CRT/CCS4) SBTi status
Potentially
Validated
(1.5 °C)
1) Business travel and Employee commuting
2) Purchased goods and services, Capital goods, Fuel- and energy-related activities, Upstream transportation, Downstream transportation, End-of-life treatment of sold products and Waste generated in operations
3) Use of sold products and services
4) Carbon removal technology / Carbon capture and storage
5) As the target baseline coincides with the COVID-19 pandemic, Ericsson foresees an increase in business travel and employee commuting compared to the extraordinary low volumes observed in the baseline year.
6) Nominal differences comp. to previously reported emissions for the same period due to alignment with the SBTi methodology. See note O3 for more information.
Portfolio energy performance
Reduce energy consumption at radio base station sites by 40%
Scope
Typical new radio base station site
2021
2025
Base year
Target year
Target energy reduction
(%)
40
2023 energy reduction
(%)
SBTi status
30
Not validated
This target supports the Net Zero target by addressing downstream GHG emissions through reducing the energy consumption of customers’ mobile networks. The target entails reducing the energy consumption of
radio base station type sites by 40% by 2025 compared with a 2021 baseline. The energy consumption is measured in kWh and target performance is expressed as the average of potential reductions for modeled
type sites in rural, suburban and urban locations for a service provider operating in Europe. The target is intended to track the Company’s capability to provide energy-efficient solutions to its customers. For this reason,
it measures energy consumption reduction, compared with the base year, from the best performing solution of software and hardware available in the target and reporting year, respectively. These values should be
understood as the maximum potential energy savings possible in each respective year.
Supply chain engagement
Have 350 suppliers set 1.5 °C aligned emission reduction targets
Scope
First-tier suppliers
Base year
Target year
2020
2030
Targeted alignment
(No.)
350
Aligned in 2023
(No.)
SBTi status
237
Not validated
This target supports the Net Zero target, addressing upstream GHG emissions by having 350 high-emitting and strategic direct suppliers set their own 1.5 °C aligned emission reduction targets, which shall include a
commitment to halve emissions in relevant scopes to 2030. Targets must be made public, be accompanied by a credible transition plan, and the supplier must report at least annually on the progress to Ericsson for the
targets to be accepted as aligned.
Metrics
Energy consumption in own operations
Energy consumption and mix 1)
(MWh)
Fossil sources
Fuel consumption from coal and coal products
Fuel consumption from oil and petroleum products 2)
Fuel consumption from natural gas
Fuel consumption from other fossil sources
Purchased or acquired electricity
Purchased or acquired heat
Purchased or acquired steam
Purchased or acquired cooling
A. Total fossil energy consumption3)
Share of fossil sources in total energy consumption (%)
Share of fossil sources in total electricity consumption (%)
Nuclear sources
Fuel consumption from nuclear sources
Purchased or acquired electricity
B. Total nuclear energy consumption3)
Share of nuclear sources in total energy consumption (%)
Share of nuclear sources in total electricity consumption (%)
2023
2022
2021
(MWh)
2023
2022
2021
−
−
63,525 103,692
44,772
45,127
−
−
76,047
19,090
−
51,534
−
123,445
23,720
−
92,201 126,926
25,693
24,188
−
−
51,453
55,996
255,323 316,306 355,780
47
24
40
16
34
13
Renewable sources
Fuel consumption from renewable sources
Purchased or acquired electricity
Purchased or acquired heat
Purchased or acquired steam
Purchased or acquired cooling
Consumption of self-generated non-fuel renewable energy
C. Total renewable energy consumption
Share of renewable sources in total energy consumption (%)
Share of renew. sources in total electricity consumption (%)
−
−
−
−
1,621
−
478,866 466,208
−
−
−
1,001
480,487 467,209
59
82
64
84
−
389,553
−
−
−
1,000
390,553
52
75
D. Total energy consumption (A+B+C)
749,716 794,303 752,593
−
13,906
13,906
2
2
−
10,788
10,788
1
2
−
6,260
6,260
1
1
1) Measured energy consumption at facilities (offices, production sites, warehouses, data centers
and labs) represents approximately 81 (85) % of reported energy consumption. For locations were
measured data is not available, extrapolation of consumption at similar locations have been used to
estimate the consumption.
2) Fuel consumption is primarily related to the service vehicle fleet and is estimated partially based
on vehicle telematics data and partially on contracted yearly mileages for leased vehicles without
t elematics installed.
3) Energy data for previous reporting periods have been restated. See note O3 for more information.
Sustainability and Corporate Responsibility report 2023
Consolidated sustainability notes
15
Note E1, cont’d.
Energy intensity
(MWh/net sales MSEK)
Facility energy
Fuel for service vehicles
Total
Product transportation
Product transportation by mode1)
(Ktonnekm)
Air
Road
Sea
Rail
Total
2023
2.62
0.23
2.85
2022
2.55
0.37
2.93
2021
2.71
0.53
3.24
2023
2022
2021
94,536
169,090
169,407
170
136,027 153,956
155,086 179,790
119,725 152,230
2,877
5,865
433,203
416,703 488,853
1) Data covers outbound emissions of goods transported from a manufacturing site to either a supply
hub or a customer warehouse. Transported distances are estimated based on linear routes between
locations.
Greenhouse gas emissions
GHG emissions by scope and category
(metric tons of CO2e)
Scope 1 direct GHG emissions
Fuel for service vehicle fleet
Facility stationary combustion and refrigerants
Total gross Scope 1 emissions
Scope 1 emissions under regulated ETSs (%)
Scope 2 indirect GHG emissions
Purchased energy (gross location-based)
Purchased energy (gross market-based)
Scope 3 other indirect GHG emissions
Upstream
Purchased goods and services
Capital goods
Fuel- and energy-related activities1)
Upstream transportation1) 2)
Waste generated in operations
Business travel2)
Employee commuting (incl. teleworking)
Downstream
Downstream transportation1) 2)
Use of sold products and services1)
End-of-life treatment of sold products
2023
2022
2021
16,039
10,990
27,029
0
27,689
10,713
38,402
0
32,176
6,066
38,242
0
136,628
42,251
141,636
45,258
138,985
57,685
1,751,600
37,800
19,700
164,800
1,000
52,599
49,000
2,199,900
39,200
36,600
206,200
1,200
25,469
34,500
2,313,000
42,000
23,200
215,300
800
9,255
26,800
7,090
21,158
7,082
35,057,200 28,262,400 25,352,500
33,000
31,800
27,300
Total gross Scope 3 emissions
37,182,157 30,844,359 28,022,937
Total gross GHG emissions (location-based) 37,345,814 31,024,397 28,200,164
Total gross GHG emissions (market-based)
37,251,437 30,928,019 28,118,864
1) Emissions in previous reporting periods have been restated. See note O3 for more information.
2) Emissions reported do not consider the so-called high-altitude effect of emissions from air travel and
air transport as there is still significant uncertainty as to how large this effect is and how it should be
calculated. For reference purposes only, the high-altitude effect in 2023 is estimated to correspond to
emissions of 108,000 metric tons of CO2e.
Share of GHG emissions by scope
(%)
Scope 1
Scope 2 (market-based)
Scope 3 upstream
Scope 3 downstream
2023
2022
2021
0.1
0.1
5.6
94.2
0.1
0.1
8.2
91.5
0.1
0.2
9.4
90.3
Emissions intensity by scope
(metric tons of CO2e/net sales MSEK)
Scope 1
Scope 2 (location-based)
Scope 2 (market-based)
Scope 3 upstream categories
Scope 3 downstream categories
All scopes (market-based)
Supply chain engagement
2023
0.10
0.52
0.16
7.88
133.30
141.45
2022
0.14
0.52
0.17
9.37
104.22
113.90
2021
0.16
0.60
0.25
11.32
109.30
121.04
Suppliers with 1.5 °C aligned emissions reduction targets
(No.)
Suppliers
2023
237
2022
225
2021
121
GHG accounting methodology
Emissions are reported according to the GHG Protocol using financial control
as the basis for consolidation. Emissions are reported in CO2e and include the
following gases and chemicals: carbon dioxide (CO2), methane (CH4), nitrous
oxide (N2O), hydrofluorocarbons (HFCs) and perfluorochemicals (PFCs).
Measurement periods are aligned to the fiscal year and based on the latest
available data at cut-off date, supplemented with extrapolated estimates for
periods where no measured data is available.
Scope 1
Consumed volumes of fuels and refrigerants are multiplied by applicable
emission factors to derive emissions. Fuel consumption in the service vehicle
fleet is estimated partially based on vehicle telematics data and partially on
contracted yearly mileages for leased vehicles without telematics installed.
Scope 2
Purchased energy volumes are multiplied by country average emission factors
for location-based emissions. For market-based emissions, the residual energy
mix and purchased renewable energy instruments are the source of the emis-
sion factors used in the calculations. Part of the energy consumption at facili-
ties is estimated. See the footnote to the energy table above for details.
Scope 3
Emission factors used to calculate emissions in the categories Purchased
goods and services, Capital goods, Fuel- and energy-related activities, Waste
generated in operations, and End-of-life treatment of sold products are based
on internal studies and Ericsson’s LCAs of the carbon footprint of its products,
multiplied with relevant activity metrics to derive yearly emissions.
Emissions in the category Upstream transportation are calculated using
a combination of calculations based on spend-based data, and calculations
based on measured weights and transported distances of outbound shipments
paid for by Ericsson.
The majority of emissions in the category Business travel are based on data
reported by travel agencies, with a smaller part including hotel nights being esti-
mated based on travel spend. Emissions in category Employee commuting are
estimated based on a survey of employees’ commuting and teleworking habits.
Emissions in the category Use of sold products and services are calculated
and reported in their entirety in the year a product is sold and not accrued
over its expected lifetime. For the purpose of calculating these emissions, the
average expected lifetime of products sold is assumed to be 10 years. Emission
factors relevant to the use phase have been estimated using the current energy
mix in the grids of markets served, or the latest available customer-specific
energy mix data where that is stated in the public domain. Future changes
in grid factors or customer-specific energy mixes that may occur over the
expected lifetime of sold products is not factored into the calculations.
The majority of emissions in the category Downstream transportation are
calculated using the weight and distances of transported products where the
transport has been paid for by the customer.
Emissions in the remaining Scope 3 categories have been assessed as not
material and are therefore not reported on.
Estimating Scope 3 emissions is associated with inherent uncertainties due
to limitations in availability and accuracy of primary data, which is why the
reported figures should not be regarded as exact measurements. The table
below summarizes Ericsson’s Scope 3 accounting methodologies and the
estimated levels of uncertainty of reported figures by category.
16
Consolidated sustainability notes
Sustainability and Corporate Responsibility report 2023
Note E1, cont’d.
Scope 3 category
Purchased goods and services
Capital goods
Fuel- and energy-related
Upstream transportation
Business travel
Employee commuting
Downstream transportation
Use of sold products and services
End-of-life treatment of sold products
Emission factors used in consolidation
Source
Purchased energy
Electricity from fossil sources
Electricity from nuclear sources
Electricity from renewable sources
District cooling
District heating, Sweden
District heating, other
Fuels and refrigerants
Natural gas (local heating)
Diesel
Gasoline
Refrigerants
Travel
Air
Road
Transport
Air
Road
Sea
Rail
Spend-based emissions
Accounting method
Level of uncertainty (±%)
Average data
Average data
Average data
Distance- and spend-based
Distance- and spend-based
Average data and distance-based
Distance-based
Direct use-phase emissions through a hybrid method
Average data
30
30
30
30
10
30
10
10
30
GWP (kg CO2e)
Measured by
Source
0.01 – 1.35
0.00
0.00
0.00 – 0.41
0.04
0.04 – 0.26
0.20
0.26
0.25
466 – 14,800
0.09 – 0.57
0.00 – 0.40
0.78 – 1.19
0.10
0.03
0.04
0.05 – 0.21
kWh
kWh
kWh
kWh
kWh
kWh
kWh
kWh
kWh
kg
pkm
pkm
tonnekm
tonnekm
tonnekm
tonnekm
USD
IEA/US EIA/AIB/Supplier specific
IEA
Supplier specific
IEA
Supplier specific
Country averages
DEFRA
DEFRA
DEFRA
IPCC 4th assessment report
DEFRA
Country averages
DEFRA (adjusted)
DEFRA (adjusted)
DEFRA (adjusted)
DEFRA (adjusted)
Ericsson-specific
Scenario analysis for climate-related risks and opportunities
Scenarios analyzed
Net Zero 2050
– Ambitious mitigating actions introduced imminently
– Net-zero global GHG emissions around 2050
– 50% chance of limiting global warming to below 1.5 °C by the end of the
century
– Relatively low physical risks but high transitional impacts.
Current Policies
– Mitigating actions limited to currently adopted or announced policies
– Emissions grow until 2080
– Global warming of around 3 °C by the end of the century
– High physical risks but lower transitional impacts.
Assessment methodology
Initially, more than 30 potential climate-related risks and opportunities were
considered in the analysis. The items on this longlist were identified through
consultations with internal subject matter experts covering several company
functions, and through external benchmarking. The probability and impact of
all items were analyzed qualitatively through the usage of heatmaps. This was
followed by a more granular analysis of a shortlist of risks and opportunities
considered to be of highest relevance to Ericsson. Risks and opportunities
upstream and downstream in the value chain, as well as in own operations
were considered. Physical risks were mainly assessed using the assumptions
under the Current Policies scenario, whereas transitional risks and opportuni-
ties were primarily analyzed in the context of the Net Zero 2050 scenario. Both
scenarios are published by the Network of Central Banks and Supervisors for
Greening the Financial System (NGFS).
Regarding time horizons, the quantitative analysis of opportunities focused
on the period up to 2025, and the quantitative analysis of risks on the period
between 2025 and 2030. For the purpose of this analysis, Ericsson defined
short-, medium-, and long-term time horizons as up to 2025, 2025-30, and
beyond 2030, respectively. The more long-term impacts of risks and opportuni-
ties, stretching beyond 2030, were primarily assessed in a qualitative fashion.
Under the Current Policies scenario, the impacts of physical risks are expected
to become more severe after 2030.
Sustainability and Corporate Responsibility report 2023
Consolidated sustainability notes
17
E2 Pollution
Impacts, risks and opportunities
Ericsson has identified potential material impacts related to pollution both
upstream and downstream in its value chain. As regards the upstream value
chain, all manufacturing of electronic equipment today requires small volumes
of substances of concern and sometimes substances of very high concern.
Downstream in the value chain, negative impacts can also occur if end-of-life
products are not properly disposed of or recycled. Ericsson’s own manufactur-
ing processes primarily involve assembling products and components manu-
factured by other actors upstream in the value chain. Hence, no significant
amounts of such substances are used in Ericsson’s own operations.
Fossil fuel energy generation is a significant source of air pollution. It is an
indirect environmental impact from the electricity consumption of network
equipment, which is especially relevant in markets where fossil energy sources
make up a significant share of the energy mix.
Increasing regulation on the use of certain substances may drive increased
compliance costs as well as increased costs to research and develop alterna-
tive solutions and substances, exemplified with the recent proposal on restrict-
ing the use of PFAS1) in the European Union. In addition, the availability of
alternatives may be limited, meaning they could come at a higher price than
substances currently used.
Policies
Ericsson’s Code of Conduct (CoC) for Business Partners requires suppliers
to identify the environmental aspects and associated impacts and minimize
adverse effects on the community, environment and natural resources within
their operations, while safeguarding the health and safety of the public. The
CoC is based on the Responsible Business Alliance Code of Conduct but also
includes Ericsson-specific requirements and is part of standard-supplier
contracts. It is available in multiple languages on the Company’s website.
For suppliers of hardware components or products, construction work,
supply services, field maintenance and network rollout operations, as well as
those with high environmental risks where their operations significantly impact
the environment, Ericsson has additional environmental requirements. Among
others, these require the suppliers to comply with the requirements in the
Ericsson Lists of Banned and Restricted Substances related to substances used
in production processes. The requirements are applicable when designing,
purchasing and manufacturing components and products, including batteries
and packaging. Substitution of substances under observation is recommended
as a precautionary approach.
Management approach
Ericsson strives to minimize the environmental impact of its products through-
out all life-cycle stages. For information on portfolio energy performance, see
note E1.
Material declarations
Ericsson collects material declarations from its suppliers. Upon request, sup-
pliers are expected to declare the full material content of products delivered
to Ericsson. This includes substances on the REACH2) candidate list and
declarations of the use of certain critical raw materials (as defined in the EU
Critical Raw Materials List). In addition, there is a SCIP (Substances of Concern
In articles, as such or in complex objects (Products)) reporting process in place
to fulfill requirements in the EU Waste Framework Directive. All electronic
products may contain small traces of declarable substances through impurities
that are near impossible to eliminate, and which fall below the threshold for
what needs to be declared. Ericsson continuously works to avoid inclusion of
harmful substances in products and components.
Product take-back program
See note E4 for information about Ericsson’s product take-back program,
which is part of the Company’s extended producer responsibility.
Metrics
While not related to any identified material impacts, risks or opportunities,
Ericsson discloses emissions of air pollutants derived from its own operations,
as this information is frequently asked for by external stakeholders.
Other emissions to air1)
(metric tons)
NOx
SOx
Particle matters
2023
2022
2021
38
62
11
49
61
12
54
63
13
1) Emission data for previous reporting periods have been restated. See note O3 for more information.
1) Per- and Polyfluorinated Substances (PFAS) are a group of chemicals used to make fluoropolymer coatings and products that resist heat, oil, stains, grease and water, and can be found in a variety of products,
including electric equipment and electronics.
2) REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) is the regulation and system governing the manufacture and import of chemicals in the EU.
18
Consolidated sustainability notes
Sustainability and Corporate Responsibility report 2023
E3 Water
Impacts, risks and opportunities
Material impacts related to water have been identified upstream in the
value chain, primarily linked to the manufacturing of semiconductors and
extraction of natural resources such as minerals used in electronic hardware.
Semiconductor manufacturing requires high quality water. Often freshwater
is used, which may cause impact on the water availability in adjacent com-
munities if not managed properly. Mining of minerals can impact water in
several stages of the mining process, which may impact both the availability of
freshwater as well as the quality of the water.
Ericsson has not identified any material water-related impacts in its own
operations or downstream in the value chain. Ericsson does not use water in
its assembly processes, meaning water used at facilities is primarily used for
sanitary purposes and comes from municipal water supplies. Freshwater is not
directly drawn from ground or surface water sources. Ericsson’s products and
services do not consume water in their use phase.
As water is a key input in certain parts of Ericsson’s upstream value chain,
water shortages affecting these parts of the value chain could lead to supply
chain disruptions. Under the Current Policies scenario considered as part of
Ericsson’s climate scenario analysis (see further details in note E1), several
regions where Ericsson suppliers are located, including manufacturers of
semiconductors in Southeast Asia, are at risk of high-water stress in the future,
which could cause shortages of manufacturing inputs.
Policies
Ericsson’s Code of Conduct (CoC) for Business Partners requires suppliers
to reduce the use of natural resources, including water. The CoC is based on
the Responsible Business Alliance Code of Conduct with additional Ericsson-
specific requirements and is part of standard-supplier contracts. It is available
in multiple languages on the Company’s website.
For suppliers of hardware components or products, construction work,
supply services, field maintenance and network rollout operations, as well as
those with high environmental risks where their operations significantly impact
the environment, Ericsson has additional environmental requirements. Among
others, these require the supplier to measure and control emissions to water
and ensure proper treatment of all effluents of wastewater. Further, suppliers
shall control and measure their water usage. If water consumption is identified
as a significant environmental aspect, the business partner must develop a
water management plan to minimize the overall water consumption, recycle
used water or by any other means reduce their impact.
Management approach
Ericsson conducts audits of first-tier suppliers to verify adherence to the CoC.
Currently, the focus of the CoC audits as relates to water is on assessing sup-
pliers’ wastewater management practices. In 2023, no major nonconformities
related to water management were identified.
Metrics
While not related to any identified material impacts, risks or opportunities,
Ericsson discloses water consumption and intensity metrics for its own opera-
tions, as this information is frequently asked for by external stakeholders.
Water consumption 1)
(m3)
Own operations
2023
2022
2021
906,800
1,053,200
1,150,000
1) Out of total reported water consumption, approximately 37% of the Group’s headcount is covered by
measured data, with the remaining part being estimated based on extrapolations of the measured
volumes.
Water consumption intensity
(m3/net sales MSEK)
Own operations
2023
3.44
2022
3.88
2021
4.95
E4 Resource use and circular economy
Impacts, risks and opportunities
Material impacts related to resource use and the transition to a circular
economy have been identified upstream in the value chain, primarily linked to
manufacturing of electronic equipment, as well as downstream in the value
chain, related to the recovery and treatment of end-of-life electronic equip-
ment. Network equipment is manufactured using finite natural resources such
as steel, aluminum, copper and rare earth minerals, as well as plastics. Metals
are recycled to a high degree, in general, while rare earth metals and plastics
have low recycling rates. Downstream in the value chain, the recovery and
recycling rates of network equipment varies across regions. Product take-back
levels are low because of the second-hand value of products, and the fact that
the ownership resides with Ericsson’s customers. A large share of the network
equipment is assumed to be resold and reused through informal second-hand
markets. A smaller share is assumed to be recycled through substandard
processes.
In its own operations, Ericsson primarily assembles parts and components
from suppliers, which generates comparatively little material waste. Ericsson
can, however, through product design, steer what materials are used by suppli-
ers to enable higher rates of recyclability, use of non-virgin materials and longer
lifetimes of its products.
Redesigning products to meet customer or regulatory demands using
alternative or non-virgin materials could lead to increased R&D costs. Scarcity
of certain raw materials, including both virgin and non-virgin minerals, paired
with increased demand in several industries for the same materials, could lead
to higher costs of input materials and components used in electronic hardware.
Increased requirements on product take-back collection rates may lead to
increased cost of sales.
Policies
Ericsson’s Sustainability policy states that life-cycle assessment methodology
shall be used to determine significant environmental aspects, and reduce the
negative environmental impacts of its own operations and take a precaution-
ary approach to environmental challenges. Ericsson shall also apply design to
ensure continuous environmental improvements with a life-cycle perspective
on the portfolio. In addition, the policy states that Ericsson shall provide
product take-back services and assist customers in end-of-life management of
products and solutions.
Ericsson’s Code of Conduct (CoC) for Business Partners requires suppliers
to identify their environmental aspects and associated impacts, and minimize
adverse effects on the community, environment, and natural resources within
their operations, while safeguarding the health and safety of the public. The
CoC is based on the Responsible Business Alliance Code of Conduct but also
includes Ericsson-specific requirements and is part of standard-supplier
contracts. It is available in multiple languages on the Company’s website.
For suppliers of hardware components or products, construction work,
supply services, field maintenance and network rollout operations, as well as
those with high environmental risks where their operations significantly impact
the environment, Ericsson has additional environmental requirements. Among
others, these require the supplier to reduce, where possible, the presence of
dangerous goods, chemicals, hazardous waste and other substances or materi-
als posing a hazard to humans or the environment, as well as implement a
systematic approach to identify, manage, reduce and responsibly dispose of or
recycle non-hazardous solid waste. The supplier is also required to conserve the
use of natural resources, including water, fossil fuels, minerals and virgin forest
products, by practices such as modifying production, maintenance and facility
processes, materials substitution, reuse, conservation and recycling.
Sustainability and Corporate Responsibility report 2023
Consolidated sustainability notes
19
Note E4 , cont’d.
Management approach
Product design principles
Ericsson utilizes the Design for the Environment principles and has generic
product requirements in this area that apply to all product design processes.
These include specific requirements on ease of dismantling and disassembly
of products to facilitate recycling. In addition, products are designed to be
durable and have a high longevity, which is part of the quality process. The list
of banned and restricted substances and the material declarations (see further
details in note E2) are also important tools to design products that have a high
grade of recyclability. The recyclability of products taken back has historically
been high, averaging above 90% in recent years.
Ericsson works to reduce the weight and size of products and is looking at
more sustainable material choices. This is part of the Net Zero initiative but will
also contribute to more efficient resource use and circularity.
Refurbish, reuse and repair services
The Support Services portfolio includes a structured approach to refurbish,
reuse and recycle used equipment. Shared warehouses and spare parts reduce
the need to produce and store spare parts. Automatic hardware fault analysis is
conducted to avoid unnecessary hardware replacements.
Ericsson offers repair services, and as a complement to new sales also offers
reuse of old equipment.
Packaging
Traditionally, packaging designed by Ericsson mainly consists of fiber-based
materials and inserts made from plastics. Ericsson is piloting alternative pack-
aging with inserts that are fully recyclable and reduce the total plastic content
of the packaging from 20% to less than 1%.
Product take-back program
Ericsson offers a global product take-back program, through collaboration with
third-party vendors, where end-of-life (EoL) products can be collected from
customers and subsequently dismantled and recycled in a way that minimizes
the environmental impact. A limited number of group companies participate
in other collective take-back schemes. As the equipment is the property of
the customer, take-back volumes are dependent on their utilization of the
programs.
Waste from own operations
The waste generated from Ericsson’s own operations is primarily office waste.
Waste generated at production sites is managed according to local legislation
by contracted waste management companies.
Metrics
Resource inflows
Ericsson’s hardware is manufactured using natural resources, and products pri-
marily consist of metals such as aluminum, iron, copper and silicon. Hardware
also contains small amounts of materials found on the EU list of Critical Raw
Materials. The hardware also contains polymers (including plastics) such as
polycarbonates, and additives.
A typical radio contains about 70% aluminum, 10% iron/steel, 5% copper
and 5% silicon. The remaining 10% is made up of smaller amounts of other
compounds, including less than 1% of rare earth elements. Externally sourced
packaging contains cardboard and plastics.
Resource outflows
Products and materials
Physical resource outflows from Ericsson’s production processes, including
outsourced production, include network hardware in the form of radios, anten-
nas, basebands, power modules, routers and modems, and site materials
(such as cables and batteries) as well as packaging in the form of plastics and
cardboard.
All products are designed according to generic product requirements and
Design for the Environment principles as described above. Cradlepoint (now
part of Business Area Enterprise Wireless Solutions) has its own product
requirements containing similar Design for the Environment principles.
Take-back of end-of-life products
Collected EoL product volumes by disposal method
(metric tons)
Reuse
Recycling
Energy recovery (incineration)
Landfill
Total
2023
36
3,581
151
101
3,869
2022
25
4,636
146
18
4,825
2021
2
5,211
164
12
5,389
Waste from own operations
While not related to any identified material impacts, risks or opportunities,
Ericsson discloses waste generated in its own operations, as this information is
frequently asked for by external stakeholders.
Generated waste by disposal method1) 2)
(metric tons)
Total weight generated (A+B)
Waste diverted from disposal
Hazardous waste
Preparation for reuse
Recycling
Other recovery operations
Non-hazardous waste
Preparation for reuse
Recycling
Other recovery operations
A. Total weight diverted from disposal
Share diverted from disposal out of total weight
generated (%)
Waste directed to disposal
Hazardous waste
Incineration
Landfill
Other disposal methods
Non-hazardous waste
Incineration
Landfill
Other disposal methods
B. Total weight diverted from disposal
Share directed to disposal out of total weight
generated (%)
Weight of non-recycled waste
Share of non-recycled waste (%)
2023
7,182
2022
8,130
-
38
5
157
3,435
344
3,979
3
49
-
332
3,831
-
4,215
55
52
43
19
0
1,613
1,528
-
3,203
29
32
-
2,089
1,762
3
3,915
45
48
3,709
52
4,251
52
1) Waste volumes from production sites are based on measured data. Waste volumes from other facili-
ties are estimated based on extrapolations of waste generated at the Company's headquarters. Other
facilities include offices, warehouses, data centers and labs.
2) Waste data for previous reporting periods have been restated. See note O3 for more information.
20
Consolidated sustainability notes
Sustainability and Corporate Responsibility report 2023
E5 Reporting according to Article 8 of the EU Taxonomy Regulation
Accounting policies
According to Article 8 of the EU Taxonomy Regulation (the taxonomy),
turnover, capital expenditure (CapEx) and operational expenditure (OpEx) are
defined as described below. For CapEx and OpEx, these definitions are dif-
ferent compared with Ericsson’s financial reporting. The Company’s financial
statements are prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board
(IASB,) and as endorsed by the EU. The basis of preparation of the financial
statements is explained in note A1 to the consolidated financial statements.
Data-driven solutions for GHG emissions reductions
(Climate change mitigation (CCM) 8.2)
Ericsson offers artificial intelligence-powered and data-driven operations
solutions, focusing on managing energy assets efficiently through intelligent
site measurements and control, enabling customers to improve network energy
efficiency, and consequently reducing energy-related greenhouse gas (GHG)
emissions. This activity does not currently meet the associated technical screen-
ing criteria, and related turnover, CapEx and OpEx are therefore not reported
as aligned.
Turnover
Total turnover corresponds to net sales in the consolidated income statement.
CapEx
Total CapEx corresponds to additions, including capitalized research and
development costs, to balance sheet items property, plant and equipment,
intangible assets, before any remeasurement, depreciation, amortization or
impairment and excluding any changes in fair value but including the effect
of business combinations, as specified in notes C1 and C2 to the consolidated
balance sheet, complemented by additions/changes in IFRS16 classified
right-of-use assets, as specified in note C3 to the consolidated balance sheet as
presented in the Financial Report, part of the Annual Report.
OpEx
Total OpEx corresponds to non-capitalized research and development costs,
building renovation costs, short-term leases, maintenance and repair costs, as
well as other indirect costs for the day-to-day servicing of assets of property,
plant and equipment.
Eligible turnover, CapEx and OpEx
Turnover, CapEx and OpEx in accordance with the above definition and which
is associated with eligible activities (see below) constitutes the basis for
calculating the share of eligible turnover, CapEx and OpEx. Amounts recorded
on product codes related to eligible activities have been used as the basis to
calculate amounts of eligible turnover, CapEx and OpEx. A reconciliation of
amounts has been performed to avoid any double-counting.
Changes in accounting policies or disclosures compared with the previous
reporting period
The adoption of the Environmental Delegated Regulation in 2023 has supple-
mented the taxonomy with additional economic activities. Ericsson has assessed
several of these as relevant to include in its disclosures starting from the fiscal year
2023. Comparative data for 2022 related to these activities has not been included.
Eligible and aligned economic activities
Identifying economic activities relevant for the Company has required interpreta-
tions of the taxonomy as well as the delegated regulations. Ericsson’s interpreta-
tion is that for an economic activity to be considered taxonomy-eligible, it must:
– Be, or be aimed at, generating external turnover
– Meet the description of an activity included in one of the annexes to the
Climate or Environmental Delegated Regulation, and
– Have practically applicable technical screening criteria associated with it.
Based on this interpretation, turnover, OpEx and CapEx derived from activities
meeting these criteria have been included as taxonomy-eligible in the key
performance indicators presented below. Moreover, individually eligible CapEx
and OpEx (see below) can also be added to the share of eligible and aligned
CapEx and OpEx. However, there remains some uncertainty around how the
taxonomy should be applied, and interpretations, as well as reporting practices,
are expected to evolve over time.
Climate Delegated Regulation
Activities in the telecommunication sector are not yet included in the Climate
Delegated Regulation of the taxonomy. The European Commission states
in the Delegated Regulation that it may consider adding such activities and
developing additional technical screening criteria in the future. However, at
present most of Ericsson’s commercial offering to its customers, including
mobile networks, is not covered by activities included as eligible activities in the
Climate Delegated Regulation.
Computer programming and related activities
(Climate change adaptation (CCA) 8.2)
Within all business areas, software development is part of Ericsson’s commer-
cial offering to its customers. Should expenditures associated with making this
activity more resilient to the effects of climate change be incurred, these will be
accounted for as either eligible CapEx or OpEx. Related turnover is not included
in the share of eligible turnover since this activity is not classified as an enabling
activity, as defined in the taxonomy.
Ericsson has not incurred any expenditures of this nature during the report-
ing year.
Environmental Delegated Regulation
As the activities below were added to the taxonomy in 2023, Ericsson is
reporting on eligibility but not alignment of related turnover, CapEx and OpEx
for the fiscal year 2023, in accordance with the amendments to the Disclosure
Delegated Regulation.
Manufacture of electrical and electronic equipment
(Circular economy (CE) 1.2)
Ericsson sells electronic equipment in the form of network hardware such as
radios, antennas, basebands, power modules, routers and modems, and site
materials such as cables and batteries. The equipment is manufactured both
at own manufacturing sites and by third-party electronics manufacturers.
Equipment sold as part of a solution, but which Ericsson has not been involved
in designing, such as laptops sold as part of a network (so-called third-party
equipment), is excluded from eligible turnover as Ericsson does not have any
significant influence over choice of input materials or over features such as
durability, reusability or recyclability.
Repair, refurbishment and remanufacturing
(Circular economy (CE) 5.1)
Ericsson offers hardware support services to its customers, which includes
repairing and refurbishing network equipment.
Sale of spare parts
(Circular economy (CE) 5.2)
Ericsson sells spare parts, including refurbished spare parts, for network equip-
ment it has sold to customers.
Individually eligible CapEx and OpEx
It is permitted to include expenditures for purchases of products and services
related to other economic activities than those stated above as eligible and aligned
CapEx and OpEx, if these are included in either the Climate or Environmental
Delegated Regulation, and if the economic activity of the supplier of the product
or service in question is taxonomy-eligible and aligned, as applicable. Ericsson
includes expenditures for motor vehicles (CCM 6.5), vehicle charging infrastructure
(CCM 7.4), and energy-efficiency measures in buildings (CCM 7.3) as eligible and,
where applicable, aligned CapEx and OpEx. As the assessment of alignment of
these activities requires detailed information about the suppliers' own taxonomy
alignment, Ericsson is currently not able to assess to what extent identified indi-
vidually eligible CapEx and OpEx can be considered to also be taxonomy-aligned.
Minimum safeguards
Minimum safeguards are yet to be assessed in detail. Ericsson’s policies and
procedures to prevent bribery, corruption and anticompetitive behavior are
detailed in note G2 and its policies and procedures as relates to human and
labor rights in notes S1 to S3.
Sustainability and Corporate Responsibility report 2023
Consolidated sustainability notes
21
No
No
No
No
No
No
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Note E5 , cont’d.
Nuclear and fossil gas related activities
Nuclear energy related activities
The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce
energy from nuclear processes with minimal waste from the fuel cycle.
The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the
purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.
The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of
district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.
Fossil gas related activities
The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.
The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil
gaseous fuels.
The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels
Key performance indicators
Turnover
Substantial contribution criteria
Does no significant harm (DNSH)
Proportion
of Taxonomy
aligned (A1)
or eligible (A2)
turnover 2022
%
−
−
−
−
0
-
-
-
0
0
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Propor-
tion of
turnover
2023
%
Yes / No / Not eligible
Code1) Turn over
SEK
million
C
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i
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−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
Economic activities
A. TAXONOMY-ELIGIBLE ACTIVITIES
A1 Environmentally sustainable activities
(Taxonomy-aligned)
-
Turnover of environmentally sustainable
activities (A1)
Of which enabling (%) activities
Of which transitional (%) activities
A2 Taxonomy-eligible but not env. sustainable
activities (not Taxonomy-aligned activities)
Objective(s) for
which activity is eligible2)
Data-driven solutions for GHG emission reductions
CCM 8.2
48
0
EL
N/EL N/EL N/EL N/EL N/EL
Manufacturing of electrical and electronic equipment
CE 1.2
93,288
35 N/EL N/EL N/EL N/EL
Repair, refurbishment and remanufacturing
Sale of spare parts
CE 5.1
CE 5.2
6,064
929
2 N/EL N/EL N/EL N/EL
0 N/EL N/EL N/EL N/EL
EL
EL
EL
N/EL
N/EL
N/EL
Turnover of Taxonomy-eligible but not env.
sustainable activities (A2)
Turnover of Taxonomy-eligible activities (A1+A2)
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy non-eligible activities
Total
100,329
100,329
163,022
263,351
38
38
62
100
Proportion of turnover / Total turnover
Taxonomy-aligned per
objective
Taxonomy-eligible per
objective
0
-
-
-
0
-
0
-
-
-
37
-
(%)
Climate change mitigation
Climate change adaptation
Water and marine resources
Pollution prevention and control
Circular economy
Biodiversity
1) Abbreviated activity codes:
CCM: Climate change mitigation
CCA: Climate change adaptation
CE: Circular economy
2) Eligible (EL) / Non-eligible (N/EL):
22
Consolidated sustainability notes
Sustainability and Corporate Responsibility report 2023
Note E5 , cont’d.
CapEx
Economic activities
Substantial contribution criteria
Does no significant harm (DNSH)
C
l
i
m
a
t
e
c
h
a
n
g
e
m
i
t
i
g
a
t
i
o
n
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
Propor-
tion of
CapEx
2023
l
C
i
r
c
u
a
r
e
c
o
n
o
m
y
P
o
l
l
u
t
i
o
n
W
a
t
e
r
%
Yes / No / Not eligible
Code1) CapEx
SEK
million
i
i
B
o
d
v
e
r
s
i
t
y
C
l
i
m
a
t
e
c
h
a
n
g
e
m
i
t
i
g
a
t
i
o
n
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
l
C
i
r
c
u
a
r
e
c
o
n
o
m
y
P
o
l
l
u
t
i
o
n
W
a
t
e
r
Yes / No
i
i
B
o
d
v
e
r
s
i
t
y
i
i
M
n
m
u
m
s
a
f
e
g
u
a
r
d
s
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
A. TAXONOMY-ELIGIBLE ACTIVITIES
A1 Environmentally sustainable activities
(Taxonomy-aligned)
-
−
CapEx of environmentally sustainable
activities (A1)
Of which enabling (%) activities
Of which transitional (%) activities
A2 Taxonomy-eligible but not env. sustainable
activities (not Taxonomy-aligned activities)
Purchases and leases of vehicles2)
Data-driven solutions for GHG emission reductions
Manufacturing of electrical and electronic equipment
Repair, refurbishment and remanufacturing
Sale of spare parts
CapEx of Taxonomy-eligible but not env.
sustainable activities (A2)
CapEx of Taxonomy-eligible activities (A1+A2)
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy non-eligible activities
Total
CCM 6.5
CCM 8.2
CE 1.2
CE 5.1
CE 5.2
Objective(s) for
which activity is eligible3)
257
0
5
0
EL
EL
N/EL N/EL N/EL N/EL N/EL
N/EL N/EL N/EL N/EL N/EL
EL
EL
EL
N/EL
N/EL
N/EL
2,006
37 N/EL N/EL N/EL N/EL
65
0
2,328
2,328
3,097
5,425
1 N/EL N/EL N/EL N/EL
0 N/EL N/EL N/EL N/EL
43
43
57
100
C
a
t
e
g
o
r
y
t
r
a
n
s
i
t
i
o
n
a
l
a
c
t
i
v
i
t
y
C
a
t
e
g
o
r
y
e
n
a
b
l
i
n
g
a
c
t
i
v
i
t
y
−
E
−
T
Proportion
of Taxonomy
aligned (A1)
or eligible (A2)
CapEx 2022
%
−
−
−
−
0
-
-
-
-
0
0
Proportion of CapEx / Total CapEx
(%)
Climate change mitigation
Climate change adaptation
Water and marine resources
Pollution prevention and control
Circular economy
Biodiversity
Taxonomy-aligned per
objective
Taxonomy-eligible per
objective
0
-
-
-
0
-
5
-
-
-
38
-
1) Abbreviated activity codes:
CCM: Climate change mitigation
CCA: Climate change adaptation
CE: Circular economy
2) Full name: Transport by motorbikes, passenger cars and commercial vehicles
3) Eligible (EL) / Non-eligible (N/EL):
Sustainability and Corporate Responsibility report 2023
Consolidated sustainability notes
23
C
a
t
e
g
o
r
y
t
r
a
n
s
i
t
i
o
n
a
l
a
c
t
i
v
i
t
y
C
a
t
e
g
o
r
y
e
n
a
b
l
i
n
g
a
c
t
i
v
i
t
y
−
E
−
T
Proportion
of Taxonomy
aligned (A1)
or eligible (A2)
OpEx 2022
%
−
−
−
−
0
0
-
-
-
0
0
Note E5 , cont’d.
OpEx
Economic activities
Substantial contribution criteria
Does no significant harm (DNSH)
C
l
i
m
a
t
e
c
h
a
n
g
e
m
i
t
i
g
a
t
i
o
n
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
Propor-
tion of
OpEx
2023
l
C
i
r
c
u
a
r
e
c
o
n
o
m
y
P
o
l
l
u
t
i
o
n
W
a
t
e
r
%
Yes / No / Not eligible
Code1)
OpEx
SEK
million
i
i
B
o
d
v
e
r
s
i
t
y
C
l
i
m
a
t
e
c
h
a
n
g
e
m
i
t
i
g
a
t
i
o
n
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
l
C
i
r
c
u
a
r
e
c
o
n
o
m
y
P
o
l
l
u
t
i
o
n
W
a
t
e
r
Yes / No
i
i
M
n
m
u
m
s
a
f
e
g
u
a
r
d
s
i
i
B
o
d
v
e
r
s
i
t
y
A. TAXONOMY-ELIGIBLE ACTIVITIES
A1 Environmentally sustainable activities
(Taxonomy-aligned)
-
−
OpEx of environmentally sustainable
activities (A1)
Of which enabling (%) activities
Of which transitional (%) activities
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
A2 Taxonomy-eligible but not env. sustainable
activities (not Taxonomy-aligned activities)
Objective(s) for
which activity is eligible3)
Purchases and leases of vehicles2)
Data-driven solutions for GHG emission reductions
CCM 6.5
CCM 8.2
56
9
0
0
EL
EL
N/EL N/EL N/EL N/EL N/EL
N/EL N/EL N/EL N/EL N/EL
Manufacturing of electrical and electronic equipment
CE 1.2
17,070
29 N/EL N/EL N/EL N/EL
Repair, refurbishment and remanufacturing
Sale of spare parts
CE 5.1
CE 5.2
35
0
0 N/EL N/EL N/EL N/EL
0 N/EL N/EL N/EL N/EL
EL
EL
EL
N/EL
N/EL
N/EL
OpEx of Taxonomy-eligible but not env.
sustainable activities (A2)
OpEx of Taxonomy-eligible activities (A1+A2)
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy non-eligible activities
Total
17,170
17,170
41,836
59,006
29
29
71
100
Proportion of OpEx / Total OpEx
(%)
Climate change mitigation
Climate change adaptation
Water and marine resources
Pollution prevention and control
Circular economy
Biodiversity
Taxonomy-aligned per
objective
Taxonomy-eligible per
objective
0
-
-
-
0
-
0
-
-
-
29
-
1) Abbreviated activity codes:
CCM: Climate change mitigation
CCA: Climate change adaptation
CE: Circular economy
2) Full name: Transport by motorbikes, passenger cars and commercial vehicles
3) Eligible (EL) / Non-eligible (N/EL):
24
Consolidated sustainability notes
Sustainability and Corporate Responsibility report 2023
Land use and biodiversity
As part of its analysis of material impacts, risks and opportunities, Ericsson
has assessed its impacts on biodiversity and ecosystems. The conclusion of
this analysis was that the main drivers of loss of biodiversity and degrada-
tion of ecosystems on which Ericsson and its value chain has an impact are
climate change, use of natural resources and air pollution. These impacts, and
Ericsson’s approach to addressing them, are further described in notes E1 to E4.
Other main drivers of biodiversity loss and degradation of ecosystems are
changes in land and sea use as well as the introduction of invasive species.
Ericsson did not identify any material impacts related to these two drivers in
the ICT industry in general or in Ericsson’s value chain in particular through its
materiality analysis. Ericsson’s facilities, including offices, data centers, test
labs and production sites, are located in urban or semi-urban areas with limited
impact on land use and surrounding ecosystems. In some instances, Ericsson
supports customers when building telecommunication sites. In such cases,
Ericsson’s standard procedures include considering location selection as part of
minimizing the environmental impact from land use.
Consequently, Ericsson addresses its biodiversity-related impacts through
its efforts within climate change mitigation, work to reduce pollution, and its
transition to a circular economy. Biodiversity, including ecosystems, is therefore
not managed or reported on as a standalone matter.
E6 Environmental management
Environmental Management System
Ericsson’s Sustainability policy is the Company’s foundation for environmental
management. The policy articulates, among other things, that Ericsson shall
use LCA methodology to determine its significant environmental aspects and
to assess the environmental impact of ICT, that it shall reduce the negative
environmental impact of its own operations and take a precautionary approach
to environmental challenges and apply design to ensure continuous environ-
mental improvements with a life-cycle perspective regarding its portfolio.
In adherence with the Sustainability policy, Ericsson continuously strives
to minimize the negative impacts of its own operations. The Company’s
Environmental Management System (EMS) is certified to the ISO 14001:2015
standard, covering management, research, product management, develop-
ment and supply, sales and installation, and maintenance of hardware,
software, services and solutions for ICT. The EMS, as an integrated part of the
Ericsson Group Management System, builds on Group-wide processes such as
audits and assessments as well as management reviews.
Environmental aspects are assessed to identify those that are significant,
which forms the basis for setting targets. Environmental regulation is periodi-
cally monitored and evaluated on a country level to ensure that Ericsson meets
environmental compliance obligations.
In addition to Ericsson´s Enterprise Risk Management (ERM) framework,
a specific Environmental Risk Management framework, which is aligned to
ERM, is in place. The Company has an incident reporting system through which
employees and suppliers are encouraged to report environmental incidents.
Incident reporting is part of the environmental requirements for suppliers
included in the Ericsson Code of Conduct for Business Partners.
Metrics
Incidents reported
(No.)
Significant environmental incidents 1)
2023
2022
2021
0
0
0
1) A significant environmental incident is defined as an unplanned event that has resulted in, or may
result in, severe long-term negative environmental impact, including impact on air, water, land, natural
resources, flora and/or fauna.
Sustainability and Corporate Responsibility report 2023
25
Section S– Social
S1 Human capital
Impacts, risks and opportunities
With a workforce of around 113,000 people located in more than 110 coun-
tries, counting both employees and the external workforce, Ericsson has identi-
fied several impacts related to its own workforce.
In several of the countries where Ericsson operates and has a significant
share of its workforce there are heightened risks of violations of international
conventions on labor rights and decent working conditions, as well as weak
enforcement of local labor laws such as adequate wages, excessive work-
ing time and the right to freedom of assembly and freedom of association.
Countries and regions with heightened risks in one or several of these areas
include, but are not limited to, China, India, Southeast Asia, the Middle East and
Africa, and parts of Latin America. This means Ericsson must ensure its local
employment policies and practices provide for secure and fair working condi-
tions for its workforce globally and in these markets in particular.
While diversity and inclusion are global challenges, several of the aforemen-
tioned countries have higher risks of discrimination at work and non-respect
of women’s and minority rights. The ICT sector globally has a below average
share of women in the workforce as well as in leadership roles. Within Ericsson,
women today make up about 26% of all employees and 23% of managers.
In recent years, Ericsson has had no substantiated cases of discrimination
at work, and Ericsson performs above the benchmark when employees are
surveyed on whether they believe the Company provides a workplace where
people are given the same opportunities regardless of their background and if
they are treated with respect and dignity. Nevertheless, Ericsson must remain
vigilant and continue to promote an inclusive culture based on mutual respect,
with equal treatment and opportunities for all.
Ericsson provides relevant training and development programs to its work-
force, ensuring that employees build critical skills and that the company is an
attractive employer. This applies to both skilled professionals working in R&D
and commercial areas, as well as professionals in many other job roles and
functional areas.
Impacts related to the health, safety and well-being of Ericsson’s employees
are described further in note S2.
How Ericsson manages its workforce, and how it is perceived as an employer
by current and potential employees, can affect its abilities to attract and retain
key talent, which in turn can impact the Company’s competitiveness, ability
to innovate and efficiently execute on its strategy. Workforce-related factors
such as diversity and inclusion are also increasingly part of customers’ supplier
evaluation processes, meaning Ericsson’s performance in this area could have
an effect on how the Company is assessed in tenders and proposals. Ericsson’s
ability to upskill and reskill its workforce in critical areas can also affect the
Company’s ability to secure its strategic priority of technology leadership.
Policies
Ericsson’s Code of Business Ethics (CoBE), applicable to all people working for
Ericsson, outlines the Company’s position on being committed to fostering an
inclusive and supportive workplace where people can reach their full potential
with respect for the dignity of every human being and in accordance with
all internationally recognized human rights, including those outlined in the
International Bill of Human Rights and the International Labor Organization’s
Declaration on Fundamental Principles and Rights at Work. All forms of dis-
crimination are prohibited, even if local law permits it, including discrimination
based on factors such as race, color, gender, language, religion, political affili-
ation, national or social origin, pregnancy or parental status, disability, marital
status, age, sexual orientation, gender identity and/or expression, transgender
status, health status, trade union membership or any other characteristic.
Anchored on the CoBE is the People Group Policy, which further articulates
that Ericsson is committed to equal opportunity in employment, development,
compensation, benefits and all other personnel actions without discrimination.
The principles set out in the policy include, but are not limited to the idea that
every individual’s employment opportunities shall be based on openness and
fairness, and that pay and recognition will reward impact and be based on the
principles of competitiveness, fairness and transparency.
Executive variable remuneration
A portion of the variable remuneration to executives is determined by perfor-
mance on the Company’s target to increase the share of women in line man-
ager positions. See page 7 of the Remuneration report for further information.
Management approach
Ericsson’s ability to attract, develop and retain talent is largely determined by
the experience it provides for its people. Ericsson strives to enable employees
to realize their full potential, and in doing so, create long-term value for the
business. Focal points of the strategy are culture and leadership, diversity and
inclusion, fair and competitive rewards, career development, and well-being.
Ericsson’s People Strategy is governed by Ericsson’s Global People Leadership
Team, headed by the Chief People Officer, with the team having responsibility
for strategy formulation and execution. Subject matter experts develop
Group-wide core processes that are embedded throughout business areas
and market areas, and other Group functions by unit people leaders. A global
People Services unit supports delivery, ensuring consistent practices across the
business.
Culture and leadership
A strong company culture with defined core values and key behaviors is a pre-
requisite for both a positive people experience and for successfully executing
on business strategies. The cornerstone of Ericsson’s culture are the following
four core values:
– Professionalism: Building trust by delivering on promises
– Respect: Listening and caring with authenticity
– Perseverance: We continually challenge ourselves to be at the forefront
of innovation
– Integrity: Making transparent, honest and uncompromising decisions.
Ericsson’s key behaviors, which are called the Five Focus Areas, were intro-
duced as part of a major culture transformation initiative. Each employee is
expected to live the core values and demonstrate the Five Focus Areas consist-
ently. These Five Focus Areas are:
Empathy and
humanness
A speak-up
environment
Fostering empathy for different perspectives and
approaches, enabling people to bring their unique perspec-
tives and humanness.
Creating an environment where it is safe to share ideas, ask
questions, and speak up if observing compromises on ethics.
Cooperation and
collaboration
Encouraging cross-company cooperation and acting as one
Ericsson, with the customer in focus.
Executing speedily
Moving quickly when needed to seize opportunities.
Fact-based, courageous,
and ethical decision-
making
Basing decisions on the right data and being brave to take
tough decisions – always with an ethical lens.
Engaging with employees
Surveys are carried out regularly to understand how employees are experienc-
ing work and their perceptions of the Company, its leadership and strategies.
Results are summarized on both Group and unit level for managers and leaders
to be able to act when and where appropriate. See note S2 for information
about occupational health and safety committees in which both employer and
employee representatives participate.
Channels for raising concerns
Employees are expected to report concerns related to corruption, fraud,
accounting, internal controls, discrimination and harassment, human rights or
other matters that could constitute a breach of law, or that could harm the busi-
ness or reputation of Ericsson, its employees and shareholders, directly to their
manager, the superior of a manager or to the People or Legal and Compliance
departments. In addition, concerns can be raised via the Ericsson Compliance
Line, either through a secure website or by telephone at any time, see further
details in note G2.
26
Note S1, cont’d.
Sustainability and Corporate Responsibility report 2023
Diversity and inclusion
Ericsson fosters a work environment based on respect. Treating colleagues
with respect, dignity and inclusion brings out the best in everyone and is the
right thing to do. At Ericsson, there is no room for harassment, threats, bullying
or violence against anyone regardless of their position or seniority, and all
forms of harassment, threats and acts of violence are prohibited.
Ericsson is committed to creating a diverse and inclusive organization,
as this is core to the Company’s values and helps ensure that it attracts the
best global talent, fosters innovation, and brings greater value to customers.
Accountability for diversity and inclusion sits with all leaders at Ericsson
including the CEO and Executive Team, with strategy led by the Global People
Leadership Team. Each business area, market area and Group function
has a dedicated diversity and inclusion lead responsible for driving strategy
execution and performance.
Remote and flexible working arrangements
Ericsson offers possibilities for remote working in a hybrid model to employees
where job role and responsibilities allow for it. When possible, employees are
also offered flexible working hours to help them balance work and personal
commitments. For more information on approaches to well-being, see note S2.
Strategic workforce management
Ericsson uses workforce planning and analytics to plan the workforce size and
capabilities required to match current and future business needs and ensure
that the right resources are in the right place at the right time and at the right
cost. A People Analytics and Digital Solutions team provides analytics and
insight to support leaders on both Group and unit level in making informed
workforce and business decisions.
Ericsson aims to achieve a greater gender balance alongside increasing
Metrics and targets
Targets
Gender diversity
To further the policy objectives of inclusiveness and equal opportunity, Ericsson
has set a target to increase the share of women among all employees, line
managers and executive population, as outlined below.
Gender diversity
Employee category Base year
(BY)
Target
year
Share in BY
(%)
Target share
(%)
Share in 2023
(%)
All employees
Line managers
Executive population
2021
2030
25.2
21.3
35.6
≥ 30
26.0
22.7
31.4
Metrics
Characteristics of employees in the workforce and diversity metrics
the representation of currently underrepresented groups. To achieve this,
Ericsson focuses on creating unbiased people processes so that, for example,
job advertisements use gender-neutral language, and on upskilling employees
in inclusive leadership through training programs.
Ericsson supports a network of more than 42 employee resource groups
throughout the organization including but not limited to sexual orientation,
gender, age, families, health, and well-being. It also provides career develop-
ment programs focused on removing barriers to progression for these groups.
Compensation and rewards
At Ericsson, the guiding principle is that people should be paid in a fair way and
be recognized and rewarded for the impact that they create. Consequently, pay
and benefits offered are market competitive and relevant to the individual with
the aim to provide a broad reward offering to attract and retain talent and to
keep employees feeling engaged, supported and rewarded.
Ericsson is consistent in its rewards offerings and works to ensure that pay
decisions are non-discriminatory, based on the Company’s pay philosophy and
always applied using the same criteria. There is a defined and globally consist-
ent job leveling and job architecture in place to ensure that pay is competitive
and fair. To drive fairness and consistency and promote a culture of apprecia-
tion, the Company has put in place a global recognition program and platform.
The global job leveling and job architecture enable Ericsson to make mean-
ingful comparisons on pay, and the Company continues to refine its review of
pay equity to identify where unexplained pay differences may exist.
Career and development
Ericsson enables its people to develop skills and experience through on the job
training and a focus on internal mobility. A set of critical skills areas necessary
to execute on the growth strategy of extending leadership in mobile networks,
and focused expansion into enterprise have been identified, including technol-
ogy, commercial and power skills. Learning and development opportunities
connected to these critical skills range from introductory and fundamental,
to experienced and advanced training, and are offered to upskill and reskill
employees both for their job roles and to prepare for the future. Employees
are offered internal job rotation opportunities, and Ericsson often first looks
internally for candidates to fill open positions.
which gives employees easy access to material and courses, and gives the
Company a tool for tracking and analyzing progress and completions for meas-
uring skills shifting.
Besides training and development programs in the scope of the critical skills
areas, employees have access to a broad range of upskilling assets such as
online internal and external courses and articles through the digital learning
platform. Together with their managers, employees set individual annual and
long-term career goals and learning plans. Employees also receive annual
individual performance evaluations. The Company further emphasizes and
recognizes those who participate in its Teach for Ericsson program, under-
standing that a teaching culture is essential to amplifying a learning culture.
Employees
(Headcount)
Executive Team
Executive population1)
Line managers
Technical employees2)
Non-technical employees
Total
Employees by gender
(Headcount)
Male
Female
Other/Not reported
Total
(%)
Executive Team
Executive population1)
Line managers
Technical employees2)
Non-technical employees
All employees 3)
Upskilling and reskilling are further facilitated by a digital learning platform,
Share of women per employee category
2023
16
175
7,499
74,454
17,808
2022
17
177
7,602
78,789
18,944
2021
15
163
7,241
75,859
18,044
99,952
105,529 101,322
2023
73,919
25,954
79
2022
78,518
26,901
110
2021
75,815
25,480
27
99,952
105,529 101,322
2023
2022
2021
25
31
23
22
46
26
18
35
22
21
46
25
20
36
21
20
47
25
1) Employees reporting to members of the Executive Team.
2) Non-managerial employees in job roles within the fields of science, technology, engineering and
mathematics (STEM).
3) 2022 share presented here differs from the share presented in note G4 in the Financial report (26%)
due to nominal differences when rounding to the nearest whole percentage point.
Sustainability and Corporate Responsibility report 2023
27
Note S1, cont’d.
Employees by contract type and gender
2023
(Headcount)
Permanent employees
Temporary employees
Non-guaranteed hours employees
Total
Full-time employees
Part-time employees
Total
Male
Female
Other / Not
reported
72,686
1,233
-
73,919
73,442
477
73,919
25,503
451
-
25,954
25,482
472
25,954
79
-
-
79
79
-
79
Total
98,268
1,684
-
99,952
99,003
949
99,952
Share of employees by age group1)
(%)
<30
30–50
>50
Employees by country2)
(Headcount)
India
Sweden
China
Other countries
Total
2023
2022
2021
13
66
21
15
65
20
14
67
19
2023
22,848
13,977
9,950
53,177
2022
23,112
14,481
10,791
57,145
2021
21,777
14,183
10,723
54,639
99,952 105,529
101,322
Share of employees by nationality and employee category3)
2023
(%)
Indian
Chinese
Swedish
American
Mexican
Other
2022
(%)
Indian
Chinese
Swedish
American
Romanian
Other
All employees
Line managers
Technical employees4)
26
11
10
5
3
44
20
10
16
6
2
46
30
11
9
4
4
41
All employees
Line managers
Technical employees4)
25
11
10
6
4
44
20
10
16
6
3
45
29
12
9
5
3
42
1) Data on employees broken down by age groups for previous years has been restated. See note O3
for more information.
2) Country-level data is disclosed for countries representing at minimum 10% of the global headcount.
3) Nationalities disclosed are the top five nationalities among all employees.
4) Non-managerial employees in job roles within the fields of science, technology, engineering and
mathematics (STEM).
Employee movements
Turnover
(No. / %)
Employees who have left the company (No.)
Turnover rate (%)
Leavers by gender (%)
Men
Women
Other / not reported
Leavers by age (%)1)
<30
30–50
>50
Hiring
(No. / %)
Employees who have joined the company (No.)
Hiring rate (%)
New joiners by gender (%)
Men
Women
Other / not reported
New joiners by age (%)1)
<30
30–50
>50
Positions filled by internal candidates (%)2)
2023
13,362
13
2022
14,381
14
2021
11,631
12
74
26
0
23
56
21
74
26
0
30
60
10
76
24
0
29
58
13
2023
7,785
8
2022
17,235
17
2021
12,129
12
68
31
0
49
47
4
49
72
27
0
45
50
5
37
70
30
0
49
47
4
40
1) Data on leavers and new joiners broken down by age for previous years has been restated. See note
O3 for more information.
2) Derived by dividing the number of positions filled in a year by people already employed by Ericsson
by the total number of positions filled in the same year.
Characteristics of non-employees in the workforce
Besides employees, Ericsson also has an external workforce that does not have
a direct employment relationship with the Company. This workforce is primarily
made up of consultants working in the fields of service delivery, product devel-
opment and supply. Every year, Ericsson also offers internships to students and
new graduates in various parts of the Company.
Non-employees in workforce
(Headcount)
External workforce
2023
2022
2021
13,125
18,088
12,308
Collective bargaining
Ericsson respects the right of all employees to form or join independent trade
unions as well as the right to collective bargaining. In places where local laws
restrict these rights, Ericsson seeks other ways of having a meaningful dialogue
with employees. This includes alternative, independent and freely elected
forms of employee representation such as employee committees or councils. As
for the rights of employees of suppliers, Ericsson’s requirements in this area are
set out in its Code of Conduct for Business Partners. These requirements are on
par with the rights of Ericsson’s own employees.
Collective bargaining agreements
(%)
Employees covered1)
2023
29
2022
29
1) In 2023 and 2022 Ericsson mapped out the existence and coverage of collective bargaining agree-
ments in the 20 countries with the largest employee headcount. These countries cover approximately
87 (86)% of the Group's total headcount. The share of employees covered stated above is based on
this mapping, assuming the remaining unsurveyed 13 (14)% of the total headcount is not covered.
Comparative figures for 2021 are not available.
28
Note S1, cont’d.
Sustainability and Corporate Responsibility report 2023
Training and skills development metrics
Employee satisfaction
Average recorded training hours per employee and by gender1)
Employee satisfaction by gender
(Hours)
Men
Women
All employees
Completed learning opportunities by gender1) 2)
(Thousands )
Men
Women
Total
2023
38.6
36.8
38.1
2023
3,598
1,230
4,828
2022
18.9
17.8
18.6
2022
2,283
757
3,040
2021
(eSAT score)1)
19.7
17.0
19.0
Men
Women
Total
2023
2022
2021
80
80
80
81
81
81
81
81
81
1) Measuring scale: 0–100 with 100 being the most favorable score. Employees of Vonage are excluded
from these statistics and employees of Cradlepoint are excluded from the 2021 data.
2021
2,321
823
3,144
Spend on learning and development
(SEK thousands)
Average per employee
2023
3.2
2022
4.0
2021
3.8
Share of employees receiving performance and career development reviews1)3)
(%)
Men
Women
Total
2023
2022
2021
93
92
93
93
91
93
n/a
n/a
91
1) Excludes employees of Vonage and Cradlepoint.
2) Refers to learning contents (courses, articles, webinars etc.) consumed and completed through
Ericsson’s learning platform and includes both external and Ericsson-internal content.
3) Performance evaluations recorded as of January 31 the following year. Field service personnel
excluded.
Remuneration metrics
Ratio of compensation of women to men1)
(%)
Base salary
Total compensation
CEO to employee pay ratio2)3)4)
(Ratio)
Base salary – Sweden
Base salary – Global
Total compensation – Sweden
Total compensation – Global
2023
2022
2021
85
85
84
82
86
82
2023
2022
2021
27
39
76
103
26
40
75
109
26
48
74
124
1) The figures presented above reflect the average unadjusted pay ratio of women to men for Erics-
son’s employees globally. This metric does not take into consideration other factors affecting compen-
sation levels, such as location, job role and responsibilities, experience, age, education level etc. For
timing and practical reasons, the calculations are based on compensation levels as of the end of the
third quarter of each respective year. Total compensation includes full time annual base salary, short-
term variable pay (STV) / sales incentive plan (SIP) target entitlement, and long-term variable (LTV)
pay grants given in the current year. The figures for total compensation ratios exclude Field Service
Organization employees in certain companies that follow local STV plans making it difficult to make
relevant comparisons (about 1,100, 1,600 and 7,000 individuals in 2023, 2022 and 2021 respec-
tively). The total compensation ratio includes employees of Vonage (now part of business area Global
Communication Platform) from the year 2023 and employees of Cradlepoint (now part of Business
Area Enterprise Wireless Networks) from the year 2022.
2 ) For comparison reasons, base salary in this context excludes holiday pay in Sweden (including for the
CEO) and therefore differs from the data presented in the table Total Remuneration to the President
and CEO and Executive Vice President on page 5 in the Remuneration report, which includes
holiday pay.
3) For comparison reasons, Total Compensation in this context is based on STV/SIP target level entitle-
ment and LTV granted for each respective year (including for the CEO) and therefore differs from the
information presented in the table Total Remuneration to the President and CEO and Executive Vice
President, on page 5 in the Remuneration report, which shows actual earned STV and vested LTV. The
total compensation ratio includes employees of Vonage (now part of business area Global Communi-
cation Platform) from the year 2023 and Cradlepoint (now part of Business Area Enterprise Wireless
Networks) from the year 2022.
4) Ratios for previous reporting periods have been restated. See note O3 for more information.
Sustainability and Corporate Responsibility report 2023
29
S2 Health, safety and well-being
Impacts, risks and opportunities
Ericsson has identified material impacts within health, safety and well-being
related to both its employees and employees of suppliers such as contractors
and site services suppliers. In recent years, Ericsson has recorded several fatali-
ties among supplier employees, particularly within field operations, and two
fatalities among its own employees.
The two primary causes of these fatalities have been falling when working
at heights and road traffic accidents, with the latter sometimes also involving
fatal injuries to third parties such as members of the public. The same causes,
together with manual handling and lifting, and working with electricity,
represent most of the lost workday incidents recorded in recent years. These
incidents have involved both own employees as well as supplier employees.
For the workforce not involved in field service-related activities, the main
identified risks related to health and well-being are mental health problems
caused by stress, anxiety and poor work-life balance, and musculoskeletal
illnesses caused by, for example, repetitive or static work patterns or lifting
objects. Ericsson has a responsibility to ensure the health, safety and well-
being of all people working for the Company.
Work environment conditions such as health and safety are commonly
included in customers’ supplier evaluation processes, meaning Ericsson’s
performance in this area could affect how the Company is assessed in tenders
and proposals.
Policies
Ericsson’s approach and commitments are set out in its Health, Safety, and
Well-being policy, which states that the Company shall apply a risk-based
approach to prevent, control and mitigate work-related hazards and risks,
and continually improve its processes. Ericsson shall comply with customer
and other applicable health and safety requirements that extend beyond
legal compliance, even when these requirements exceed local legislation.
Further, Ericsson shall design workplaces and work processes, and provide
tools that promote and support the health, safety and well-being of workers.
The Company shall provide necessary training and engage and consult with
employees and other stakeholders to get input for continuous improvement
of the health, safety and well-being management system.
Additionally, through its Code of Conduct (CoC) for Business Partners,
Ericsson sets requirements for occupational health and safety (OHS) for itself
and its business partners, including suppliers. These requirements include
taking a risk-based approach to health and safety, that employees are appro-
priately educated, trained and have the right experience to perform their tasks,
and that appropriate incident reporting and investigation procedures are in
place. For suppliers supplying construction, field maintenance, network rollout,
warehouse services, or where otherwise included in the supplier contract,
Ericsson has additional and more detailed OHS requirements in place to
mitigate risks.
Management approach
Health, safety and well-being is governed globally by two forums. The Global
OHS Board, chaired by the Chief Marketing and Communications Officer,
makes decisions and provides guidance on the OHS strategy and global
programs. The Major Incidents and Performance Review Board, co-chaired
by executives in the Managed Services and Networks organizations, reviews
fatal and major incidents, root causes and actions taken, and follows up on
performance and compliance. Both forums are mirrored in the market areas to
promote consistency, alignment and accountability across the Group.
Ericsson drives a proactive agenda that goes beyond legal compliance,
international standards and customer requirements to prevent work-related
injuries and illnesses. The Ericsson Care program is the company’s overarching
approach for its health, safety and well-being efforts to reach Ericsson's target
of zero fatalities and lost workday incidents. See below for more information
about this target. Annual health, safety and well-being risk and opportunity
assessments are conducted to identify strategic risks as well as the recurring
1) International Organization for Standardization
risks and opportunities. These assessments are aligned to the Enterprise Risk
Management framework.
OHS Management System
The Company’s OHS management system is a part of the Ericsson Group
Management System and is designed to mitigate health, safety and well-being
risks, as well as capture and implement opportunities for improvement in these
areas across Ericsson’s business and processes. It is certified to ISO1) 45001,
the international standard for OHS management.
Stop Work Authority
All people working for Ericsson are provided with the authority, responsibility
and obligation to stop their own work or intervene in other’s work in situations
where there is a belief that there is imminent danger of life-threatening injury or
serious illness. Such cases shall be reported using the incident reporting process
described below. Work shall only recommence once the risk has been mitigated
and the workplace is safe. People applying Stop Work Authority shall not be
criticized or penalized in any way. Ericsson does not accept any form of retalia-
tion toward a person stopping their work or reporting a related case.
Incident reporting and investigation
Ericsson has a global incident reporting tool for reporting hazards, near misses
and incidents involving employees, suppliers and anyone working on behalf
of Ericsson supporting its operations. Concerns related to remote working can
also be reported through this tool. Reported incidents are investigated by per-
forming a root-cause analysis to remedy any damage and prevent recurrence.
Supplier management
Ericsson has specific OHS requirements for suppliers that are part of contracts,
and it is continuously strengthening its processes to improve safety perfor-
mance in its supply chain. The Company has introduced a supplier safety
maturity assessment process to qualify suppliers against a set of predefined
criteria. Based on the maturity assessment, an improvement plan is developed
and shared with the supplier. Completion of actions in the improvement plan is
aimed at helping suppliers improve their safety performance and maturity, and
each supplier should complete assigned actions within set timelines. Ericsson
applies consequence management to suppliers who do not close their actions
in time or refuse to complete or be part of the assessment.
Site services suppliers failing to adhere to Ericsson’s health and safety
requirements are handled through a consequence management process. To
mitigate the risk of repeated failure of suppliers to follow rules and procedures,
Ericsson imposes consequences such as financial penalties, reduction of busi-
ness volumes, more quality inspections and audits, and written warnings. In
severe cases, supplier relationships can be terminated.
Employee consultation and participation
Ericsson has established OHS committees that include managers and employ-
ees, or employee representatives where such exist. The committees meet on
a regular basis, follow up on OHS performance, and discuss and decide on
actions for improvement of the OHS management system and its processes.
Communication around health, safety and well-being targets, performance,
programs and training is available for all employees through internal channels
such as the intranet and newsletters.
Employees are asked yearly about health, safety and well-being through
an annual employee survey, which includes questions about their perceptions
of the Company’s efforts within health, safety and well-being, as well as their
perceived work-life balance.
Health and well-being
Ericsson has a dual approach for well-being made up of a combination of
organizational components and individual areas. The organizational compo-
nents draw on the growing understanding of the conditions that enable health
and well-being and the benefits of good work and include:
30
Note S2, cont’d.
Sustainability and Corporate Responsibility report 2023
– Supportive workplace environment: An inclusive environment in which jobs
Metrics
are designed to consider physical, social and emotional well-being
– Leadership advocacy: Safety and well-being behaviors role-modeled by
Health and safety
leaders to drive accountability at all levels of the Company.
Fatalities by involved party
The individual areas are interrelated and comprise:
– Physical: Maintaining healthy habits in fitness, nutrition, disease prevention
and rest
– Emotional: Good mental health and work-life balance, taking time to discon-
nect and recover, managing stress, and adapting to and coping with change
– Financial: Being financially resilient, educated and confident to make
financial decisions so that employees are prepared for the unexpected and
on track for their future plans
– Social: Sense of belonging, respect and feeling of purpose in career and life.
Ericsson allows for hybrid and flexible working arrangements, which facilitates
greater autonomy for employees on where and when they perform their work.
A home furniture package is provided to improve ergonomics for hybrid work-
ing employees, aimed at preventing musculoskeletal ill-health caused by poor
posture. Ericsson offers confidential counselling and well-being support online
or via telephone through an external employee assistance program provider.
Training and awareness raising
All Ericsson employees and employees of site services suppliers are required
to take health, safety and well-being induction training. Additional training
is required based on a person’s role and risk exposure to ensure adequate
competence needs are met. Further, targeted web-based training that covers
safe driving awareness and lifesaving rules1) is available to all employees and
suppliers. Ericsson has a safety leadership training program for leaders within
three levels of the CEO including Executive Team members and selected key
roles that have a direct impact on operational safety.
Ericsson’s Walk the Talk guide also encourages all leaders to conduct regular
safety and well-being walks by personally visiting a site and having a conversa-
tion exclusively about health, safety and well-being.
(No.)
Ericsson employees
Suppliers and subcontractors1)
Third parties2)
Total
Fatalities by cause
(No.)
Fall from heights
Driving/traffic accident
Electric accident
Slip and fall
Hit by falling object
Total
Lost workday incidents by involved party3)
(No.)
Ericsson employees
Suppliers and subcontractors1)
Third parties2)
Total
Employee fatality and lost workday incident rate
(per 500 FTEs)4) 5)
Fatality rate
Lost workday incident rate
2023
2022
2021
1
8
1
10
0
6
2
8
1
11
2
14
2023
2022
2021
4
5
1
-
-
10
4
4
-
-
-
8
6
5
1
1
1
14
2023
2022
2021
53
43
1
97
96
30
5
131
77
66
2
145
2023
0.00
0.26
2022
–
0.44
2021
0.00
0.35
There is a mental health awareness and well-being training program in
Lost workdays and reported near misses
place which comprises:
– An online course on musculoskeletal health available to all employees on the
importance of behaviors that alleviate injuries.
– An online course aimed at line managers and those in select key roles
to improve their understanding of how to manage mental health in the
workplace.
– Webinars available to all employees on how to improve self-care for mental
health and well-being, information on prevalent diseases such as cardio-
vascular and diabetes, and financial well-being.
– A learning guide aimed at leaders on the connection between well-being
and productivity, safety and performance, and how leaders can enhance
well-being in their teams.
Metrics and targets
Targets
Fatalities and lost-workday incidents
Ericsson has a target to have zero work-related fatalities and lost workday
incidents caused by either physical injuries or work-related illnesses by 2025.
The target scope covers both Ericsson's own workforce and employees of field
service suppliers.
Target Zero
Category
Base
year
Target
year
No. in base
year
Targeted
no.
Fatalities
Lost workday incidents
2020
2025
7
143
0
No. in
2023
10
97
(No.)
Lost workdays6)
Near misses
2023
1,679
11,004
2022
3,040
9,716
2021
2,390
6,699
1) Primarily site service suppliers and subcontractors.
2) Third parties refer to any person not working for Ericsson either as an employee or as a supplier or
subcontractor, such as a member of the public, who is affected by an incident assessed to be within the
Company's control.
3) Incidents resulting in one or more lost workdays.
4) Indicates the rate of fatalities/ lost workday incidents occurring in a year per 500 full-time equivalents
(FTEs), using 1,000,000 hours as the standardized average number of hours worked by 500 FTEs in
one year. Total hours worked is estimated based on standard annual working hours for active employ-
ees and sums to 206 (220) (217) million hours. Due to limitations in data availability, data for suppli-
ers and subcontractors is not available.
5) Rates for previous reporting periods have been restated. See note O3 for more information.
6) Ericsson is currently only able to collect information with satisfactory accuracy on the number of lost
workdays for its own employees.
Supplier consequence management
Warnings by type of finding1)
(No).
Working at
heights
Incorrect use
of PPE2)
Insufficient incident and
resource management
Lack of adherence to
driving/vehicle standards
Lack of required and
certified competence
Lack of risk assessment/
Safe working conditions
Total
2023
2022
2021
Red
cards
Yellow
cards
Red
cards
Yellow
cards
Red
cards
Yellow
cards
72
51
29
6
41
44
243
8
25
2
9
16
24
84
47
40
8
3
15
83
16
32
17
4
17
86
196
172
24
20
3
2
11
22
82
18
29
26
0
18
74
165
1) Eight basic lifesaving rules that apply to the entire workforce, covering driving, seatbelts, wearing
helmets, alcohol and drug use, personal protective equipment, working in drop zones and at heights,
and electricity.
1) Red cards and yellow cards indicate the severity of the consequence issued to a supplier after a viola-
tion of our Health and Safety Standards. Red cards are used for serious breaches and carry significant
consequences.
2) Personal Protective Equipment.
Sustainability and Corporate Responsibility report 2023
31
Note S2, cont’d.
Well-being
Employee perceptions
(Survey results)
Balance 1)
Well-being commitment 2)
2023
2022
2021
79
80
77
85
76
87
1) Scoring of aggregated employee responses to the statement "I am able to successfully balance my
work and personal life" measured on a scale of 0–100 with 100 being the most favorable result.
Cradlepoint employees are not included in 2021 statistics. Vonage employees are not included.
2) Scoring of aggregated employee responses to the statement "Ericsson takes a genuine interest in
employees' well-being" measured on a scale of 0–100 with 100 being the most favorable result.
Cradlepoint employees are not included in 2021 statistics. Vonage employees are not included.
S3 Human rights
Impacts, risks and opportunities
Ericsson has identified material impacts related to human rights in both its
upstream and downstream value chain, as well as in its own operations. The
analysis of impacts has been informed by Ericsson’s prior stakeholder con-
sultations, due diligence practices and analysis of business relationships. The
material impacts related to human rights identified and described below are
largely the same as the identified salient human rights issues across Ericsson’s
value chain.
Ericsson has an extensive supply chain with a global presence. Many sup-
pliers and subcontractors are found in countries and regions including, but not
limited to, Asia, the Middle East and Africa, and Latin America, where there are
heightened risks of workers not being paid an adequate wage or having secure
employment conditions, working excessive hours, not being provided with
adequate housing, or their right to freedom of association not being respected.
Similarly, in largely the same geographies, there are heightened risks of
discrimination and harassment of women and other underrepresented groups
or minorities in the workplace. Beyond its first-tier suppliers, Ericsson has also
identified heightened risks of forced and child labor, in particular for activities
involving the extraction of natural resources used in Ericsson’s hardware, as
well as electronics manufacturing in certain parts of the world including, but
not limited to China, India, Brazil and Malaysia.
Ericsson also has its own workforce and works with suppliers and subcon-
tractors in several countries with heightened risk to personal security caused by
conflicts, civil unrest, criminality or authoritarian rule.
Downstream in the value chain, the material impacts identified relate to how
misuse of the company’s technology and solutions could create risks of nega-
tive impacts on the right to privacy of end users, through functionalities where
governments and authorities can intercept private communications, so-called
lawful intercept. While Ericsson, as a network vendor company, does not hold
a license and does not receive requests directly from authorities, it could be
obliged by authorities to shut down networks where it operates these on behalf
of service providers, which could impact people’s right to exercise their freedom
of expression. The potential severity and likelihood of both these impacts
correlate with the strength of rule of law, the regulatory environment and
robustness of democratic institutions in the countries where Ericsson deploys
and operates networks.
Ericsson is involved in the development of new technologies such as 6G and
artificial intelligence (AI). The application and unintended effects on people
and communities of such technologies are under increasing scrutiny, govern-
mental regulation, litigation, and the subject of public debate. Ericsson has
therefore identified technology ethics as another human rights-related area
with potentially material impacts.
In addition to the material impacts described here, additional identified
impacts related to Ericsson’s own workforce are described in note S1, health
and safety-related impacts in note S2, and impacts related to labor rights in the
supply chain in note G3. More details on human rights risks and considerations
in Ericsson’s value chain can be found in the 5G Human Rights Assessment,
available on the Company’s website.
Existing and emerging legal requirements on companies to ensure respect for
human rights across their value chains, in particular mandatory due diligence
provisions such as those included in the US anti-forced labor import laws and
the anticipated Corporate Sustainability Due Diligence directive in Europe,
require companies to strengthen their measures in the area, which can increase
compliance-related costs. Failure to demonstrate compliance can have both
legal and financial consequences, as well as affect Ericsson’s access to certain
markets. Human rights-related factors are also increasingly included in custom-
ers’ supplier evaluation processes, meaning Ericsson’s performance in this area
could have an effect on how the Company is assessed in tenders and proposals.
Policies
Ericsson’s Business and human rights statement describes the Company’s
commitment to respect internationally recognized human rights, including
those outlined in the International Bill of Human Rights and the International
Labor Organization’s Declaration on Fundamental Principles and Rights at
Work, and how the Company works to embed the UN Guiding Principles on
Business and Human Rights (UNGPs) throughout its business operations.
The statement also describes Ericsson’s commitment to providing grievance
mechanisms in line with the UNGP's effectiveness criteria and access to rem-
edy in cases when Ericsson has caused or contributed to adverse human rights
impacts, engaging with stakeholders and rights holders to identify and mitigate
potential adverse impacts in the development of new technologies and
services, undertaking external assessments of the implementation of human
rights principles and generally tracking the effectiveness of the Company's
actions, and providing for transparent reporting. It also clarifies Ericsson’s
commitment to invest in training and awareness on human rights for both
employees and business partners.
The commitment to respect internationally recognized human rights is
further incorporated in Ericsson’s Code of Business Ethics (CoBE) available to
the Company’s workforce in more than 40 languages. While the Business and
human rights statement outlines the process of human rights due diligence, the
CoBE specifically addresses Ericsson's most salient human rights issues includ-
ing non-discrimination, just and favorable conditions of work such as living
wages and adequate rest and leisure, the right to form and join trade unions
and bargain collectively, the company’s prohibition of forced labor, child labor
and human trafficking, and the right to privacy and freedom of expression.
As a member of the Global Network Initiative (GNI), Ericsson is committed
to the GNI Principles on Freedom of Expression and Privacy.
Ericsson’s Code of Conduct (CoC) for Business Partners requires Ericsson
and its business partners to respect all internationally recognized human
rights standards, including the International Bill of Human Rights and the
principles concerning fundamental rights set out in the International Labor
Organization’s Declaration on Fundamental Principles and Rights at Work.
The CoC is based on the Responsible Business Alliance Code of Conduct but
also includes Ericsson-specific requirements and is a part of standard supplier
contracts. It is available in several languages on the Company’s website.
32
Note S3, cont’d.
Management approach
The area of business and human rights is managed by the Sustainability and
Corporate Responsibility (S&CR) unit. Within the S&CR unit sits human rights
subject matter experts, responsible for developing the Company’s human rights
strategy and for supporting the business and market areas and Group functions
in the implementation of the strategy and commitments.
Human rights due diligence
To operationalize its commitments to respecting human rights, the Company
has integrated human rights due diligence across its business operations. The
aim is to ultimately provide better outcomes for people across the value chain
and ensure the Company’s technology is a force for good, by preventing and
mitigating intended and unintended misuse. Ericsson’s S&CR strategy, part
of its wider business strategy, incorporates its commitment to the UNGPs and
compliance to existing and emerging regulation in the area of human rights.
Human rights risks are also included in Ericsson’s Enterprise Risk Management
Framework and overseen by the Business Risk Committee. In addition to the
information below, additional details on Ericsson’s human rights due diligence
efforts and prioritized areas can be found in Ericsson’s Business and Human
Rights Statement, available on the Company’s website.
Sales opportunities – Sensitive Business Framework
In order to assess, prevent and mitigate potential misuse of Ericsson’s technol-
ogy, human rights due diligence is integrated into the sales process through the
Sensitive Business Framework. The framework aims to ensure that Ericsson’s
solutions are used in accordance with international human rights standards.
The Sensitive Business Framework is managed on an operational level by
a dedicated team of sensitive business experts and governed by a cross-
functional forum with representatives from the business and market areas, and
Group functions. Decisions, and the rationale behind those decisions, can be
escalated to the Business Risk Committee when deemed necessary. Four main
factors are considered when assessing the potential human rights risks in a
given sales opportunity.
Portfolio
All technology in the engagement is
evaluated based on the amount of
personally identifiable information
that it processes and how this infor-
mation will be accessed and stored.
Customer
The type and ownership structure
of the customer.
Purpose
The purpose and context in which the cus-
tomer intends to use the product, service
or solution.
Country
The country-specific risk with regards to
human rights. A third-party risk analytics firm
is used to assess countries based on risks
related to the right to privacy and freedom of
opinion and expression.
When the initial risk screening identifies risks in a sales opportunity that is to be
pursued, the market area shall submit an approval request, which is evaluated
according to the Sensitive Business risk methodology and may be approved,
approved with conditions or rejected. Conditional approvals include technical
and/or contractual mitigations. Implementation of these mitigations by the
relevant market area is monitored to ensure adherence. Described below are
examples of cases reviewed in this process during the reporting year. The
Sensitive Business Framework can also trigger further due diligence measures
(for example, a review of legal frameworks in a country, or heightened human
rights due diligence concerning the customer or country) before a decision is
taken on the opportunity.
Supply chain
See note G3 for a description of how environmental, social and governance
factors, including human rights, are considered in Ericsson’s supply chain
management approach.
Mergers and acquisitions (M&A)
Human rights issues are included as one aspect in Ericsson’s due diligence
process for M&A. The focus is on evaluating main human rights risks of the
target company, as well as to what extent the target company has sufficient
due diligence frameworks in place to identify and address such human rights
risks. In case red flags or gaps are identified, a mitigation plan including
appropriate remediations is required either as a precondition or as part of the
integration post closure.
Sustainability and Corporate Responsibility report 2023
Enhanced measures
When conducting business in conflict-affected areas or when human rights
risks are otherwise considered elevated, enhanced due diligence is conducted.
Measures taken in such situations include engaging with external stakehold-
ers, including potentially affected stakeholders or their intermediaries and
representatives.
In conflict-affected or high-risk contexts, it may be difficult to reach out
directly to impacted stakeholders. In such circumstances, Ericsson tries to
leverage its engagement in forums such as the GNI and the Business Network
on Civic Freedoms and Human Rights Defenders to identify ways of engaging
with external stakeholders that ensure their personal security and safety. This
can involve sharing information about current and future business activities
and practices, potential human rights risks and mitigating measures, and how
to establish meaningful communication channels with concerned stakeholders.
A standalone human rights impact assessment can also be triggered by
factors such as reentry into a market, reports about deteriorating human rights
situations in a specific country, new product developments or identified actual
adverse impacts. The methodology used for conducting human rights impact
assessments is aligned with the UNGPs.
Protection of workforce in high-risk areas
Ericsson has operations in areas of high risk where, for example, armed
conflicts, criminality and authoritarian rule can lead to situations that expose
employees and the external workforce to heightened risk to their personal
security. Ericsson monitors geopolitical and security threats worldwide and
maintains security risk ratings for areas hosting Ericsson operations. The
Company’s security strategy articulates the criticality of proactively and effec-
tively mitigating and managing such risk, which is operationalized through the
deployment of a global framework for Security in High-Risk Areas. The objec-
tive of this framework is to enable business operations in high-risk areas while
safeguarding employees, suppliers and anyone working on behalf of Ericsson
supporting its operations through adequate and risk-based personal protection
measures, for example:
– Procedures, training and precautionary actions to minimize the risk of
becoming the target of criminal activity.
– Requirements on travel routes and transportation arrangement (e.g., timing,
travelling in convoys, use of armed security escorts, security precautions at
stops, tracking of movements).
– Use of satellite telephones in remote locations.
– Physical security requirements for accommodation and work locations.
Technology ethics
Ericsson is involved in the development of new technologies such as 6G and AI,
and its human rights-related policies and commitments apply also to the devel-
opment of new technologies. Ericsson adheres to the EU’s Ethics Guidelines
for Trustworthy AI and has incorporated the guidelines in development and
governance processes, including AI development guidelines and design rules.
The principles cover topics such as explainability, non-bias, non-discrimination
and possibility of human oversight. Apart from the implementation of trustwor-
thy AI by design, Ericsson is also committed to ensuring that the company itself
uses trustworthy AI.
Grievance mechanism
Internal and external stakeholders can report suspected violations of laws,
regulations or company policies, including human rights violations, through the
Ericsson Compliance Line. Reporting through this channel can be done anony-
mously. Ericsson does not require persons that report compliance concerns to
waive their rights to bring claims through a judicial process as a condition to
participating in the grievance process. As part of reporting a compliance con-
cern, either via a manager or through the Ericsson Compliance Line, Ericsson
does not require the reporter to sign a non-disclosure agreement. The reporter
is, however, asked not to share any communication relating to an ongoing
matter, in order to protect the integrity of the process. More information can be
found in note G2.
Sustainability and Corporate Responsibility report 2023
33
Note S3, cont’d.
Collaborations and partnerships
Ericsson leverages its efforts through collaborations and partnerships with
other organizations. Listed below are the most significant external collabora-
tions, partnerships and commitments related to human rights.
Organization
Description
Business Network on Civic
Freedoms and Human Rights
Defenders
Global Network Initiative
Shift Business Learning
Program
UN B-tech Project
A group of companies committed to identifying ways
that businesses and society can benefit from
increased support from the private sector for the pro-
tection of civic freedoms and human rights defenders.
An initiative addressing Freedom of Expression and
Right to Privacy in the ICT sector. Participants are
internet and telecommunications companies, human
rights and press freedom groups, investors, and
academics and academic institutions.
The Business Learning Program supports companies
working to integrate principles on business and
human rights. Shift is a nonprofit, mission-driven
organization working with businesses, financial insti-
tutions and standard setters to drive business respect
for human rights according to the UNGPs.
A project led by UN Human Rights to provide an
authoritative and broadly accepted roadmap for
applying the UNGPs in the ICT sector. The Tech Com-
pany Community of Practice, in which Ericsson par-
ticipates, is an initiative of the UN Human Rights
B-Tech Project to advance business respect for
human rights in the technology industry.
Training and awareness raising
Ericsson provides human rights training accessible to all employees. Targeted
training and capacity building for key job roles and functions is also offered.
All market areas have an appointed single point of contact responsible for
Sensitive Business. Each such person is onboarded by the Sensitive Business
Unit at Group level and is responsible for informing the relevant functions, such
as account managers within their respective market areas, of recent develop-
ments and decisions. Senior members of the Sensitive Business Core Team
receive onboarding as well as continuous updates by the Sensitive Business
Council.
Metrics
Human rights related incidents
During 2023, Ericsson has not, through its reporting channels, been made
aware of any adverse human rights impacts in which the Company has been
involved. Consequently, no remediation actions have been undertaken. See
note G2 for more information on reported compliance concerns.
Sensitive business due diligence
Cases reviewed by outcome
(No.)
Approved
Approved with conditions
Rejected
Total
2023
2022
2021
252
636
7
895
235
435
13
683
286
432
4
722
Sensitive Business case examples
Decision
Approved
Customer
Description
Rationale
Local communications
service provider
A customer in a high-risk country requested an
expansion of its network.
The solution requested was assessed by the Sensitive Business
team and was found to not process any personally identifiable
data. Based on that assessment, there was a low risk of potential
adverse human rights impacts. The engagement was approved.
Approved
Local reseller
A customer requested to buy and resell a private net-
work for smart manufacturing. The solution could
include support for video cameras, connected vehi-
cles and connected robots for manufacturing.
Personal identifiable information, such as call logs, was to be pro-
cessed in the network. Considering that the intended use of the tech-
nology was related to manufacturing and in a low-risk country from
a human rights risk perspective, the engagement was approved.
Approved with conditions Multinational
communications
service provider
Within the scope of a frame agreement, potentially
covering several local operators, a customer asked
Ericsson to provide a financial services technology
where the end users are private consumers.
Approved with conditions Government entity
The customer requested Ericsson to modernize its
existing private network, including both radio and
core network.
Dismissed
Local communications
services provider
An operator requested a new core network solution,
in a country were Ericsson had no previous presence.
The solution processed personal identifiable information and the
local operators were operating in countries with different risk lev-
els. Considering the potential human rights-related risks, contrac-
tual mitigations limiting the use of the Ericsson solution in certain
markets were agreed with the customer.
The intended use of the private network was for internal commu-
nication (voice and data) within the customer’s organization. In
order to restrict the use to the requested purpose, contractual miti-
gations limiting how the private network can be used were
included in the agreement with the customer.
The assessment by Sensitive Business identified regulatory
requirements giving authorities wide-ranging access to user data
from the solution. This finding led to further due diligence concern-
ing the regulatory environment and country-related risks. It was
concluded that the identified risks could not be mitigated, and the
opportunity was therefore dismissed.
Not pursued1)
Local operator
A customer, which was a subsidiary of a multinational
company, requested as part of an engagement that
Ericsson provide a specific monitoring solution which
was said to be required by the authorities.
During early-stage discussions, risks related to the monitoring
solution were identified, and the decision to scope out the identi-
fied part of the opportunity was taken ahead of formally submit-
ting the opportunity for assessment.
1) Sales opportunities that are “not pursued” are not included in Sensitive Business Framework statistics shown above, as the circumstances were such that they were dismissed without the need for a decision by the
Sensitive Business Board. Described here is an example of such a case.
34
Sustainability and Corporate Responsibility report 2023
S4 Corporate citizenship
Impacts, risks and opportunities
Ericsson and its technology have the potential to positively impact people
and communities in a multitude of ways, from facilitating access to education
for children and young people, to providing necessary communications infra-
structure to support humanitarian response in crisis situations. In addition to
the benefits to the receiving parties, meaningful community engagement also
contributes to enhancing the employee experience for the people working for
Ericsson and can positively impact the Company’s brand and reputation.
Ericsson Volunteers
Ericsson Volunteers is one way through which the Company delivers a
meaningful employee experience and contributes to positive impacts on
communities and broader society. Every employee is given one paid day per
year when they can apply their skills and time to volunteering. A volunteering
framework sets the direction for activities applicable for volunteering, including
the five cause categories as well as activities for extended volunteering, such as
Connect To Learn and Ericsson Response.
Policies
To achieve wanted impacts, Ericsson’s efforts are aligned to five cause catego-
ries: humanitarian response, education & digital skills, climate & environment,
community capacity building, with diversity & inclusion underpinning all of
these. Ericsson does not make donations to political or religious causes. Certain
subsidiaries have their own guiding principles for their work with corporate
citizenship that may deviate from the Group’s.
Management approach
Ericsson leverages its core competencies in connectivity technology to support,
develop and create a positive impact for stakeholders in the communities in
which it operates. Described in this section are Group-wide programs and
initiatives through which Ericsson engages with local communities and stake-
holders on a non-commercial basis. In addition to these Group-wide initiatives,
there are local initiatives driven by the market areas not described here.
Initiatives related to digital education are described in note S5.
Group level operational responsibility over the initiatives and programs
described on the next page is delegated to Ericsson’s Sustainability and
Corporate Responsibility unit, often in collaboration with the market areas.
Volunteering activities are managed together with Ericsson’s human
resources department and the heads of Marketing and Communication in the
market areas through the Volunteer Program Board, chaired by the Head of
Sustainability and Corporate Responsibility.
Due diligence of partner organizations
So that Ericsson only partners with organizations that share similar values
and ethical standards, systematic evaluations of partners for sponsorship and
donations are applied. The compliance function is responsible for evaluating
all sponsorships and donations, with regard to potential misuses, ensuring
appropriate due diligence of receiving parties and recommending necessary
mitigation measures to be adhered to when necessary. More information on
third-party management can be found in note G2.
Monitoring and controls
Execution of all donations and sponsorships must follow predefined proce-
dures using a dedicated application with a built-in approval flow. All required
documentation is subsequently stored in the same application for traceability
and verifiability.
Donations, profit distribution and sponsorships
Ericsson makes donations, both in the form of company-matched employee
donations as well as direct donations, to selected causes and organizations.
Donations can be in the form of monetary or in-kind payments and can be
done either directly to a beneficiary or via a third party. In certain markets,
most notably in India and South Africa, Ericsson is subject to mandatory profit
distribution rules, where a portion of the local entity’s profits are to be spent on
community investments.
Ericsson engages in monetary and in-kind sponsorships of activities that
are aligned with Ericsson’s values and brand strategy. Sponsorships should
benefit all involved parties, and lead to a result that can be measured against
predefined financial objectives.
Ericsson Response
Ericsson Response is a global volunteer program founded by employees in
2000. Together with partners, Ericsson Response utilizes the Company’s
technology and the skills of its employees to provide connectivity where local
services are not sufficient, for example after natural disasters or in refugee
situations. It is a partner of the World Food Program-led UN Emergency
Tele communications Cluster, a global network of partners to fill connectivity
gaps for humanitarians and populations affected by disasters. Ericsson is a
partner to the United Nations High Commissioner for Refugees (UNHCR), the
UN Refugee Agency, and contributes to the reach and impact of the Refugee
Emergency Telecommunications Sector (RETS) to provide vital communica-
tions to the humanitarian response community in support of its activities.
Collaborations and partnerships
Ericsson leverages its impacts through collaborations and partnerships with
other organizations. Below a select number of external collaborations are
listed.
Organization
Description
1t.org
International Red Cross
and Red Crescent
Movement
United Nations High Com-
missioner for Refugees
(UNHCR)
United Nations Children's
Fund
(UNICEF)
World Food
Programme
(WFP)
Metrics
Ericsson contributes to 1t.org, part of the World Economic
Forum’s work to accelerate nature-based solutions through
our pledge on Connected Mangroves, which is a reforesta-
tion project in Malaysia, the Philippines and India that lever-
ages connected technologies such as solar-powered sensors
and real-time camera footage to collect and analyze critical
data on mangrove wetlands. The projects offer the local
communities a platform to check on water, soil and humidity
conditions, and remotely monitor any intrusion on the site.
The organized International Red Cross and Red Crescent
Movement is a humanitarian movement with staff and vol-
unteers worldwide. It was founded to protect human life and
health, to ensure respect for all human beings, and to pre-
vent and alleviate human suffering. Ericsson contributes
with donations during emergencies to the Red Cross / Red
Crescent humanitarian work.
UNHCR, the UN Refugee Agency, is a global organization
dedicated to saving lives, protecting rights, and building a
better future for refugees, forcibly displaced communities
and stateless people. Ericsson Response provides critical
equipment and surge capacity to enable the delivery of vital
communication services in refugee emergencies through
UNHCR’s RETS.
UNICEF works in over 190 countries and territories to pro-
tect the rights of children. Ericsson supports UNICEF-led
efforts through donations, employee volunteering and
humanitarian response action in disaster-stricken areas. In
addition, Ericsson is a partner to UNICEF on the Giga initia-
tive for school connectivity, see more information in note S5.
The WFP is the leading humanitarian organization saving
and changing lives, delivering food assistance in emergen-
cies and working with communities to improve nutrition and
build resilience. Ericsson contributes through the Ericsson
Response and WFP partnership.
Community investments
(SEK million)
Donations and sponsorships1)
2023
89
2022
115
2021
113
1) Includes donations, mandatory profit distributions, and sponsorships made by Ericsson Group
companies during the reporting year. Sponsorships include those with activity start date January 1 to
December 31, or multiyear contracts that were active during the reporting year. Sponsorships related
to general marketing and brand building activities, including those related to sports and recreation
are not included.
Sustainability and Corporate Responsibility report 2023
35
S5 Digital inclusion
Impacts, risks and opportunities
The number of internet users has increased from a few million to almost 5 bil-
lion within 30 years. This growth has enabled a digital transformation that
is reshaping societies and economies. Research shows that, on average, a 10%
increase in mobile broadband adoption can increase economic growth by up
to 0.8% , with the effect being significantly larger in low-income countries1).
Moreover, a 2022 study commissioned by Ericsson in 15 countries in Asia,
Africa and Latin America also showed that 5G rollout can generate overall
economic benefits (in terms of GDP growth) three-to-seven times higher than
the incremental cost of extending coverage2). Similarly, increases in school
connectivity can have significant effects of economic growth, with potential
double-digit additions to GDP if low-income countries achieve the same levels
of connectivity as the most connected economies3). While there was improve-
ment between 2022 and 2023, the potential of the internet for social and
economic growth remains largely untapped, as 2.6 billion people or roughly
one-third of the world’s population remains offline, and many among the
two-thirds of the people online lack meaningful connectivity4).
The connectivity gap is twofold and consists of both a gap in overall cover-
age, meaning access to any type of mobile broadband connection, and a gap in
terms of lacking a mobile broadband connection that is good enough to allow
full participation in the digital economy, such as access to at least 4G cover-
age. The challenge in bridging both these gaps is primarily a financial, rather
than a technological, one with a need for new business models to evolve to
enable meaningful connectivity at lower cost. Through solutions such as Fixed
Wireless Access (FWA), Ericsson contributes to increased affordability, which
is one enabler for connecting the unconnected and closing the digital divide.
Nearly one-quarter of the world’s adult population lacks access to formal
banking and financial services, according to World Bank Findex. However, the
majority of the unbanked population owns a mobile phone that can help them
access formal financial services. Mobile financial services offer the possibility
to bring millions of financially underserved people into the formal economy,
improving individual livelihoods and transforming economies. In addition,
without sufficient digital literacy people cannot fully partake in the digital
economy regardless of whether they have a meaningful connection or not,
which is why digital upskilling is another key enabler to achieve broad digital
inclusion in society. Through its digital education program, Connect To Learn,
Ericsson works with governments, communication service providers, non-gov-
ernmental organizations (NGOs) and international/UN agencies to accelerate
access to digital connectivity for schools and learning centers, and to empower
the next generation with digital skills to enhance industry-ready education and
make students more attractive on the job market.
Policies
Ericsson’s Sustainability policy states that the Company shall engage in activi-
ties that have a positive social, environmental and economic impact on people,
business and society and promote digital inclusion. In addition, Ericsson’s
Human Rights policy articulates that the Company shall proactively promote
human rights by working toward fulfillment of the positive potential of ICT for
realizing and sustaining human rights.
Management approach
Ericsson’s approach is based on the belief that technology developed and
deployed responsibly can help bridge the digital divide and ensure that the
benefits of the digital economy and society are enjoyed by all. The Company
works toward this goal through digital inclusion initiatives, which cover the
portfolio, business cases, advocacy and on-the-ground efforts.
Business models for affordable connectivity
Ericsson continues to explore how its portfolio and offerings can be used to
develop cost-efficient and profitable business offerings targeting regions
with no or low internet penetration. The scope of these efforts includes radio
and power management solutions as well as business cases and use case
scenarios. FWA is one example of an efficient and scalable alternative to wired
connections and a portfolio solution that can benefit institutional coverage,
such as, for example, in schools. In recent years, a substantial share of new 5G
FWA launches has been in emerging markets.
Financial inclusion
Ericsson’s Mobile Wallet Platform enables leading communications service
providers and financial institutions to provide easy to use, affordable and
secure mobile financial services to financially underserved people worldwide,
helping them lead a financially empowered life. It allows unbanked people to
save and transfer money, receive financial aid and salary, pay bills and mer-
chants, top up mobile services, get instant loans, as well as access insurance
and other financial services.
Digital education
Ericsson’s commitment to bridging the digital divide includes a focus on
access to education and digital skills development. This is carried out through
Ericsson’s global flagship education program, Connect To Learn, a non-profit
program delivered in collaboration with governments, communications service
providers, NGOs and international/UN agencies, with the ambition to:
– Accelerate access to digital connectivity for schools and community learning
centers and, ultimately, all learners around the globe and their communities.
– Empower the next generation with digital skills, essential for their socio-
economic development and enhance industry-ready education to make
students employment ready.
Key non-profit education offerings that Ericsson deploys globally in collabora-
tion with partners are:
Ericsson Educate
A digital skills development program designed for university students covering
key topics related to emerging technologies such as: telecommunications and
5G, AI, data science, automation and the Internet of Things.
Ericsson Digital Lab
An educational program designed to inspire children aged 11–16 to explore
new technologies and develop their problem-solving skills. The Digital Lab is a
place where instructors from Ericsson and partnering organizations can share
their interest in technology with students, and includes courses on robotics,
game development, electronics and artificial intelligence.
In 2020, Ericsson became the first private sector partner to make a multi-
million-dollar commitment to support the joint UNICEF-ITU5) Giga initiative
for global school connectivity with the aim to connect every school to the
internet and every young person to information, opportunity and choice. With
support from Ericsson, Giga maps schools and their connectivity levels to help
target investment to where it is most needed and to measure progress toward
increasing internet access. Ericsson’s financial and in-kind support has contrib-
uted to Giga’s achievements to date in connecting nearly 6,000 schools and
over 2.4 million students.
1) Edquist et al. (2018) How important are mobile broadband networks for the global economic development? Information Economics and Policy
2) Stewart et al. (2022) Future Value of mobile in emerging markets. Analysys Mason
3) Birdwell et al. (2021) Connecting learners: Narrowing the educational divide. The Economist Intelligence Unit.
4) The State of Broadband 2023 – Digital Connectivity: A Transformative Opportunity (2023) International Telecommunication Union and United Nations Educational Scientific and Cultural Organization Broad-
band Commission for Sustainable Development
5) International Telecommunication Union
Sustainability and Corporate Responsibility report 2023
Metrics
Connect To Learn
(No. cumulative)
Impacted children and youth
Countries covered
Ericsson Mobile Wallet
(No. in millions)
Registered accounts
Active users1)
2023
2022
2021
485,200
43
400,163
36
296,079
30
2023
457
85
2022
379
80
2021
314
65
1) Active users are defined as those having used the service in the past 30 days from the reporting cut-off
date.
36
Note S5, cont’d.
Collaborations and partnerships
Ericsson leverages its efforts through collaborations and partnerships with
other organizations. Described below is a select number of external collabora-
tions around digital inclusion.
Organization
Description
ITU/UNESCO Broadband
Commission for Sustaina-
ble Development
The Digital Transforma-
tion Collaborative
The World Economic
Forum/EDISON Alliance
Whitaker Peace &
Development Initiative
Technovation
Ericsson’s CTO is a Commissioner on the Broadband Com-
mission for Sustainable Development, a multi-stakeholder,
high-level platform for developing policy recommendations
and thought leadership on universal meaningful connectiv-
ity and the importance of broadband on the global sustaina-
ble development agenda. The Commission envisions and
works toward realizing a fully connected world that
harnesses the power of broadband to achieve the UN’s
Sustainable Development Goals (SDGs) by 2030.
The Digital Transformation Collaborative is a tech-focused
public-private partnership led by UNESCO that aims to
mobilize resources at national scale in collaboration with
governments to advance their visions for leveraging sustain-
able digital transformation in education to achieve SDG 4.
Ericsson is a member of the Digital Transformation
Collaborative steering group.
The World Economic Forum-aligned EDISON Alliance
1 Billion Lives Challenge brings together digital inclusion
commitments from governments, companies and other
organizations globally. The members, including Ericsson, are
committed to prioritizing digital inclusion as foundational to
the achievement of the UN’s SDGs so that every person can
fully participate in the digital economy and society.
Ericsson is a long-standing partner to the Whitaker Peace &
Development Initiative aimed at supporting youth and
women from underprivileged backgrounds to develop skills
as leaders, peacemakers, entrepreneurs and community
builders. The partners recognize the important role of ICT in
education and pursue joint efforts to develop peacebuilding
and livelihood programs using ICT as a tool to foster
resilience, peace and sustainability in communities affected
by conflict, violence and poverty.
Ericsson is partnering with education nonprofit Technova-
tion in a global mentorship program with the objective to
inspire girls to be leaders and tech entrepreneurs. With the
support of volunteer mentors and parents, girls work in
teams to code AI-based and mobile apps that address real-
world problems. Ericsson employees support as mentors to
enrolled participants.
Sustainability and Corporate Responsibility report 2023
37
Section G – Governance
G1 Sustainability and corporate responsibility governance
Governance of Sustainability and Corporate Responsibility (S&CR) follows the
Company’s overall governance structure. The Board of Directors, Executive
Team and management’s respective roles and responsibilities with regards to
S&CR are described below.
Board of Directors
Audit and
Compliance
Committee
Finance
Committee
Remuneration
Committee
Enterprise Business and
Technology Committee
President and CEO
Management
Sustainability-related
steering boards and committees
Business
areas
Market
areas
Group
functions
Group Sustainability and Corporate Responsibility unit
Board of Directors
The Board of Directors oversees Ericsson’s S&CR strategy and receives reports
on developments and performance annually, or more often as needed. The
Board approves the annual S&CR report as part of the Company’s statutory
Annual Report.
Board committees
In addition to the primary oversight exercised by the Board, each of the
committees of the Board is involved, to some degree, in Ericsson’s S&CR
strategy. The Audit and Compliance Committee oversees Ericsson’s Ethics
and Compliance program and whistleblower procedures, and reviews the
Group’s handling of information and cybersecurity, data privacy, and its
environmental, social and governance (ESG) reporting practices. The Finance
Committee oversees the promotion of the S&CR strategy in external funding
through the application of the Green Financing Framework. As part of its role
to prepare and propose rewards and compensation policies that attract and
motivate the Company’s executives and align with the Company's long-term
interests, the Remuneration Committee considers the inclusion of ESG and
Ethics & Compliance criteria in variable compensation plans and monitors the
performance of such criteria. Part of the Enterprise Business and Technology
Committee’s role of monitoring the Company’s technology ecosystem, rela-
tionships and partnerships involves reviewing matters related to energy and
sustainability.
President and CEO and the Executive Team
The Executive Team, led by the President and CEO, is responsible for approving
S&CR strategies and related Group targets, and regularly receives reports on
the implementation of strategies and progress made on targets and mile-
stones. Its members are also part of dedicated steering boards and committees
that provide more frequent strategic guidance and oversight of S&CR-related
matters.
Ericsson maintains a robust approach to risk management. The Company
has made significant strides toward ensuring that strategic, external and
internal risks are properly identified, assessed, internally reported, escalated,
and effectively addressed. As part of its enhanced approach to risk manage-
ment, Ericsson has established the Group Business Risk Committee (BRC)
which is co-chaired by the Chief Financial Officer and the Chief Legal Officer.
The BRC now serves as a fully embedded risk escalation and oversight forum
which has strengthened management’s decision making and handling of risks.
The BRC applies a “heightened scrutiny” approach in evaluating and mitigating
these types of risks, and the organization has implemented various actions to
address these risks, ranging from enhanced contractual protections, changes
to the scope or nature of operations, or decisions to responsibly exit relevant
jurisdictions or customer relationships.
Steering boards and committees
Chaired by
Business Risk Committee
Group Compliance Committee
Group Enterprise Security and
Privacy Board
Product Security Board
Global People Leadership Team
Global OHS Board
Chief Financial Officer and Chief Legal Officer
Chief Legal Officer
Chief Financial Officer
Chief Technology Officer
Chief People Officer
Chief Marketing and Communications Officer
Executive remuneration
A portion of the variable remuneration to executives is determined by envi-
ronmental, social and integrity criteria, including compliance with the Code of
Business Ethics (CoBE). See pages 6–7 of the Remuneration report for further
details.
Operational management
A dedicated S&CR unit, reporting to the Chief Marketing and Communications
Officer, is accountable for developing and implementing strategies, policies,
steering documents, targets and processes related to S&CR. Responsibility for
executing on S&CR strategies and progressing on targets lies with the Group
functions, business and market areas, often in cross-functional collaborations.
Policies
During 2023, Ericsson enhanced and clarified its Code of Business Ethics
(CoBE), which is a core governance pillar. The updated CoBE sets out the
Company’s expectations, principles and requirements for employees as they
conduct business. It provides the framework for ethical decision-making, and
guides employees in making decisions and managing risk as they engage with
colleagues, customers, partners, owners, and other stakeholders. Ericsson’s
Code of Conduct (CoC) for Business Partners outlines expectations on Ericsson,
its suppliers and other business partners in key areas such as business ethics
and anti-corruption, labor and human rights, occupational health and safety,
environment and climate change. It is a binding requirement for all business
partners. Additional ESG-related policies are listed below. The main contents
of the two codes and other policies as relates to material impacts, risks and
opportunities are described in the topic-specific notes to this report. The CoBE
is approved by the Board and the CoC and Group-wide policies are approved by
the President and CEO. Ericsson expects employees and encourages external
stakeholders to report concerns of violations of either of the codes through the
Ericsson Compliance Line, see more information in note G2.
Foundational policies and steering documents
Code of Business Ethics
Code of Conduct for Business Partners
Sustainability Policy
Business and Human Rights Statement
Group People Policy
Health, Safety & Well-being Policy
Security Policy
Privacy Policy
Government and Advocacy Policy
Group management system and risk management
Ericsson has a global management system, the Ericsson Group Management
System (EGMS). The EGMS aims to ensure that Ericsson’s business is well-
managed and has the ability to fulfill the objectives of major stakeholders
within established risk limits and with reliable internal control. The EGMS also
aims to promote compliance with applicable laws, listing requirements, gov-
ernance codes and corporate responsibilities.
38
Note G1, cont’d.
Sustainability and Corporate Responsibility report 2023
EGMS is founded on ISO 9001 (international standard for quality manage-
ment systems) and is designed as a dynamic governance system to enable
Ericsson to adapt the system to evolving demands and expectations, including
new and changing regulation and legislation as well as customers’ and other
stakeholders’ requirements. ISO certificates are issued by a third-party certi-
fication body proving that the system is efficient throughout the operations
as well as compliant to the ISO standards in scope. Ericsson’s operations are
currently certified to ISO 9001 (Quality), ISO 14001 (Environment), ISO 45001
(Health and Safety) and ISO 27001 (Information Security). Selected Ericsson
units are also certified to TL 9000 (telecom-specific standard). The EGMS is
also assessed within the scope of the audit plan of Ericsson’s internal audit
function (Corporate Audit). Identification and treatment of ESG-related risks
is an integrated part of the Enterprise Risk Management (ERM) framework,
which is a part of the EGMS. There are also dedicated risk management
frameworks aligned with the ERM framework that cover specific areas of risks
such as anti-corruption, environment, health and safety, and information
security. More information on the EGMS and ERM framework can be found
on pages 23–24 in the Financial report and on pages 16–17 in the Corporate
Governance report.
External commitments and endorsements
In addition to topic-specific commitments and endorsements described in this
report, Ericsson is a founding member of the UN Global Compact and continues
to support its ten principles. Ericsson’s President and CEO is a member of the
World Economic Forum’s Alliance of CEO Climate Leaders, a global community
of chief executive officers who work toward climate action across industry sec-
tors and engage with policymakers to help deliver the transition to a Net Zero
economy. Ericsson’s CEO is a member and incoming chair (2024) of the CEO
Alliance for Europe, a cross-sector action tank, working toward a more prosper-
ous, sustainable and resilient Europe. Ericsson’s Chief Technology Officer is a
commissioner on the ITU/UNESCO1) Broadband Commission for Sustainable
Development, which develops and advocates policy recommendations to
advance broadband connectivity and digital inclusion.
1) International Telecommunication Union / United Nations Educational, Scientific and Cultural Organization
G2 Compliance and business ethics
Impacts, risks and opportunities
Corruption, bribery and unethical business practices are an obstacle to
economic and social development, and often disproportionally affect fragile
communities and undermine democratic institutions. They erode the trust that
people and businesses have in institutions, and damage the business environ-
ment, causing long-term barriers to efficient economic activities in countries
and regions where they occur, leading to lower levels of investments and
reduced growth. Ericsson is a large multinational company with approximately
100,000 employees worldwide, and customers in more than 180 countries.
With its global reach, Ericsson is present in emerging markets in Asia, Latin
America, Eastern Europe, the Middle East, and Africa, including many countries
with weaker institutions and that have a higher risk of bribery and corruption.
As described in more detail below, there have been historical instances
where Ericsson failed to properly mitigate bribery and corruption risks. As a
result, the Company incurred significant costs related to investigations, legal
actions, compliance monitorship and fines, and suffered damage to its brand
and reputation. Further violations of applicable anti-bribery and anti-corrup-
tion laws and regulations could have severe financial and reputational conse-
quences. Since 2019, Ericsson has made significant investments to strengthen
its Ethics and Compliance (E&C) infrastructure, enhance its approach to
governance and risk management and improve its corporate culture, overseen
by the Board of Directors and the Executive Team.
Interactions with US authorities and other governmental authorities
Ericsson is and has been involved in legal proceedings involving governmental
authorities in different jurisdiction. Further information about current proceed-
ings is included in the Financial report on pages 25–26.
Policies
The Company’s foundational values and principles are set out in the Code of
Business Ethics (CoBE) available in over 40 languages. The CoBE articulates
the Company’s commitment to conduct business with integrity and zero toler-
ance for bribery and corruption. It emphasizes that employees must disclose
potential conflicts of interest, not partake in anti-competitive practices and only
engage with vetted third parties who abide by the same standards of integrity
as Ericsson. In addition to the CoBE, specific policies on: anti-corruption; gifts,
entertainment and hospitality; third-party management; conflicts of interest;
anti-money laundering; anti-trust law; and insider rules, among others, are in
place to support Ericsson's employees in conducting business in compliance
with applicable laws and regulations. These policies are supported by relevant
internal controls and recurrent internal testing to ensure end-to-end oversight
and an effective E&C program that reduces the probability of risks occurring
and mitigates the adverse effects if they do.
Ericsson’s Code of Conduct (CoC) for Business Partners articulates the
Company’s expectations and anti-bribery and corruption (ABC) requirements
for its business partners. It also makes clear that Ericsson expects its business
partners to foster a culture of integrity based on transparency, compliance
and ethical business practices. The CoC is based on the Responsible Business
Alliance Code of Conduct but also includes Ericsson-specific requirements and
is part of standard-supplier contracts. It is available in several languages on the
Company’s website.
Executive variable remuneration
Short-term variable compensation of the Company’s executives includes an
evaluation of performance criteria related to integrity. See further information
on page 2 of the Remuneration report.
Management approach
Ericsson focuses on driving continuous cultural change with a focus on embed-
ding integrity into its ways of working, fostering a culture of transparency,
collaboration and open dialogue, sound and ethical business decisions and
strong risk management. Ericsson requires that each employee complies with
the CoBE, seeks assistance when unsure of the right course of action and
speaks up when there are violations or suspected violations of the CoBE. In
turn, it expects that executives will drive the culture of integrity and compliance,
encourage open discussions about ethics and compliance, and anticipate and
mitigate potential compliance issues. As part of this effort to set the tone at the
top, the CEO frequently sends email communications to all employees in which
practical compliance challenges and related solutions are highlighted.
Ericsson’s E&C program consists of ten hallmarks – ranging from leadership
and culture to mergers and acquisitions, rewards and sanctions – based on the
expressed expectations of leading authorities with jurisdiction over Ericsson.
Ericsson’s Group Business Risk Committee, co-chaired by the Chief Legal
Officer (CLO) and the Chief Financial Officer, serves as a fully embedded risk
escalation and oversight forum which has strengthened management’s deci-
sion making and handling of risks. The BRC process and Group-wide assess-
ment of risk has enhanced the Company’s insights into enterprise risk and has
increased alignment and the ability to effectively address risks which impact
various parts of the organization. In particular, the BRC reviews potential risk
matters with high impact (including risks which arise in “high risk” jurisdictions)
and provides an internal management forum for monitoring and assessing
risks identified in the enterprise risk management system.
The Audit and Compliance Committee (ACC) of the Board of Directors
oversees matters relating to compliance risk and regularly receives reporting on
compliance related matters from the CLO, the Chief Compliance Officer (CCO)
and the Head of Corporate and Government Investigations. The Compliance
Sustainability and Corporate Responsibility report 2023
39
Note G2, cont’d.
Office function at Ericsson is led by the CCO, who reports to the CLO. In addition
to reporting to the CLO, the CCO has a further independent reporting line to the
ACC on the areas of the E&C Program. The CCO regularly reports to the ACC on
the effective operation of the E&C Program, including information of actual or
suspected serious CoBE violations, insights from investigations outcomes and
remediation activities, the identification of patterns of failures, and emerging
risks and changes in the legal and regulatory environment. In addition, the CLO
has a direct reporting line to the ACC on compliance matters that fall outside
the scope of the E&C program, and on the holistic management of legal,
compliance, ethical and associated reputational risks arising in the Company’s
operations. The compliance organization consists of compliance officers at
Group level and local compliance officers supporting the line organization.
In 2022, Ericsson created a standalone Competition and Antitrust Unit.
Originally part of the Compliance Office, in 2023 the Competition and Antitrust
unit became part of the newly created Global Risk and Regulatory Policy unit.
Risk assessments, monitoring and controls
Ericsson conducts bribery and corruption risk assessments using a risk-based,
multitiered approach across multiple regions to identify areas of heightened
risk. This typically includes document collection, review and analysis, on-site or
remote interviews of key personnel, and financial transaction testing for select
markets and units. Focus areas include but are not limited to leadership and
culture, sales, third-party management, gifts, entertainment and hospitality,
conflicts of interest, government relations, policies and procedures, corporate
contributions, and joint ventures and partnerships. Further, end-to-end testing
and monitoring of the E&C program is performed in cooperation between
different assurance functions, such as the Control Monitoring Center within the
Finance function, a Monitoring and Testing unit within the Compliance Office,
and a dedicated unit within Corporate Audit.
Digitalization and operational efficiency
Over the last few years, the Company has invested in digital capabilities to enable
the employees, line managers and compliance professionals to work more
efficiently, get easier access to compliance data and simplify the E&C program
processes. Examples of the tools deployed include the E&C Portal (facilitating
controls for conflict of interest, and gifts, entertainment and hospitality, includ-
ing benefits provided to and from third parties, particularly public officials), the
Allegation Case Management System (handling the allegation management
process end-to-end from intake to remediation) and third-party management
(TPM) risk management tools. The digital landscape is continuously evolving,
with emphasis on AI and analytics to further enhance risk management of
ABC risks.
Third-party management
Ericsson maintains a global, risk-based and integrated TPM program to
prevent, detect and manage bribery and corruption risks in the Company’s
relationships with its third parties. The management of third-party compliance
risk is integrated into business processes, and business leaders, managers
and individual contributors are all expected to act as owners of compliance
risk. Components of the TPM program are managed by a central team of due
diligence experts and data specialists. Key elements include a risk-based due
diligence process to assess bribery and corruption risk exposure and potential
liability that may result from relationships with third parties. A risk mitigation
toolbox includes a broad range of measures that can be used to mitigate identi-
fied risks such as training, certifications, financial transaction preapprovals, or,
in extreme cases payment blocks and rejections.
TPM increasingly utilizes advanced data analytics and reviews business
rationale at the transaction level, whilst focusing on monitoring risks through-
out the life cycle of business relationships. Business Partner Review Boards,
comprised of senior business leaders and compliance professionals, regularly
monitor the third-party risk landscape and provide approvals and mitigating
actions on high-risk third parties on both market area and global levels. The
effectiveness of underlying processes in each geography is continuously
measured and strengthened, when necessary.
Training and awareness raising
The purpose and objectives of Ericsson’s E&C training plan are to develop a
robust risk-based training strategy for all employees, establish a sustainable
model for face-to-face training initiatives, and provide employees with training
on the Company’s compliance-related policies and procedures. Training clari-
fies to people working for the company what is expected in their roles, educates
them on how to recognize bribery and corruption risks, and guides them on
how to handle dilemma situations that arise in the course of their work.
To achieve these objectives, Ericsson has considered various learning styles
to engage people and has created multiple training platforms, training material
and communication assets to allow diverse and interactive training experience
tailored to specific target groups and based on the level of risk exposure.
All employees and external workforce must complete foundational online
ABC training courses every second year. Ericsson also provides mandatory
enhanced ABC training for approximately 15,000 employees in high-risk roles,
many of whom are also line managers. About 200 executives, including the
Executive Team, are also provided with training in ethical dilemmas in a work-
shop format. The same type of training is also provided to other leaders on an
ongoing basis as part of broader leadership training or as standalone training
for intact teams. The CoBE promotes and supports Ericsson’s Speak-Up Culture
and prohibits retaliation for speaking up in any form. All employees are required
to confirm their understanding of the CoBE on a regular basis.
Employee perceptions and performance evaluations
Employees are regularly asked about how they perceive Ericsson’s commit-
ment to compliance, business ethics and anti-bribery and corruption. The
annual employee survey includes questions about their perception of the
Company’s commitment to ethical and responsible business practices, as
well as whether they feel free to speak their mind without fear of negative
consequences.
All employees have a goal related to acting with integrity, which encom-
passes a number of specific actions that must be satisfied annually. Failure to
meet any of these specific requirements has a negative impact on the outcome
of an employee’s annual performance evaluation.
Prevention of anticompetitive behavior
As part of the commitment to a compliance culture, Ericsson has a standalone
Competition and Antitrust Unit driving the Company’s Competition and
Antitrust program, which is currently being strengthened after an antitrust
audit. Employees are asked to recognize competition (antitrust) laws and
comply with them. Given the complexity of competition laws, employees are
encouraged to consult with the competition law attorneys in the Company’s
Legal department in case of any questions.
Reporting compliance concerns
Employees are expected to report concerns related to corruption, fraud,
accounting, internal controls, human rights matters or other matters that could
constitute a breach of law, or that could harm the business or reputation of
Ericsson, its employees and shareholders directly to their manager, the superior
of a manager or to the People or Legal and Compliance departments. In addi-
tion, the Company promotes transparency through the maintenance of the
Ericsson Compliance Line, a dedicated communication channel for employees
and external stakeholders to report any compliance concerns either by a secure
website or by phone. The Ericsson Compliance Line is operated by a third
party and is available 24/7, 365 days per year, and enables reporting from
multiple countries in several languages, and anonymously if so chosen. Where
applicable, Ericsson employees and external stakeholders have the option to
report certain matters via local channels, which have been implemented in
accordance with the European Union Directive on the protection of persons
who report breaches of Union law. The process for receiving and handling
compliance concerns is designed to help maintain an appropriate degree of
independent assessment. Ericsson does not accept any discrimination of, or
retaliation against, individuals who report compliance concerns in good faith.
In addition, the Company has increased the frequency at which it publishes
its Speak Up Newsletter, featuring anonymized examples of actual misconduct
and the way any such misconduct was addressed by the Company. The Speak
Up Newsletter also includes short stories highlighting situations in which
employees facing difficult choices chose to do the right thing. Progress in the
Speak Up culture in recent years can be seen in the increased raising of compli-
ance questions and potential concerns by Ericsson’s employees. The willing-
ness by Ericsson’s employees to speak up is an essential safeguard to ensure
that the Company conducts business with integrity.
40
Note G2, cont’d.
Sustainability and Corporate Responsibility report 2023
Ericsson’s Allegation Management Office is responsible for the overall
process from the time an allegation of potential misconduct is reported to the
remediation of any substantiated violation of Ericsson policy. The Corporate
and Government Investigations (CGI) team is responsible for appropriately
investigating allegations of potential compliance violations and disclosing
allegations to regulators as required. The CGI team also regularly reports on
investigations to the ACC. Among other misconduct, the team investigates
allegations that individuals may have offered or provided things of value
to public officials, company customers and other private parties, including
gifts, entertainment or travel. Findings and remediation plans for cases
are presented to Ericsson’s Group Remediation Committee or Market Area
Remediation Committees.
Metrics and targets
Target
Strengthen Ericsson’s E&C program to help ensure an effective and sustainable
anti-bribery and anti-corruption program by 2024.
Metrics
Training and awareness raising
Ethics and compliance training – completion rates
(%)1)
Target audience
Audience size2)
2023
2022
2021
CoBE acknowl-
edgement
Foundational
ABC training
Enhanced
ABC training
Ethics training
for leaders
Employees and
external work-
force
Employees and
external work-
force
Employees in
high-risk roles
Executive
population
106,000
106,000
15,000
200
98
99
98
97
99
93
97
90
99
99
82
70
1) Completion rates are calculated by dividing the number of individuals having completed training at
the reporting year cut-off date with the number of individuals having been assigned the same training.
2) The (rounded) headcount of the respective target audience groups by year end of the current reporting
year. The size of a group may change over time as definitions and scopes are revised.
Employee perceptions
(Survey results)
Ethical and responsible business practices1)
2023
89
2022
88
2021
87
1) Scoring of aggregated employee responses to the statement "Ericsson shows a commitment to ethical
and responsible business practices" measured on a scale of 0–100 with 100 being the most favorable
result. Cradlepoint employees are not included in 2021 statistics. Vonage employees are not included.
Compliance concerns reporting and corrective actions
The table below shows the number of compliance concerns received, the
number investigated, the number concluded in the reporting year which were
found to be substantiated, and the number of open investigations at year-end.
As the length of an investigation varies depending on case complexity, not all
cases are concluded in the same year as they are reported. Hence, the number
of substantiated cases and cases under investigation also includes cases
received in prior reporting periods but which were concluded during the report-
ing year. Many matters reported are not referred for investigation. These are
often inquiries of a general nature or other matters which are not deemed to be
related to misconduct or breaches of the CoBE. When applicable, these cases
were referred directly to the relevant units to address in accordance with their
processes.
Reported, investigated and substantiated compliance concerns1)
(No.)
Concern intake and investigation
Reported
Not referred for investigation2)
Referred for investigation
Status at year end
Substantiated3)
Under investigation
Reported concerns by category
(No.)
Fraud, corruption and regulatory breach
Conflicts of interest
Human resources
Discrimination
Human rights
Operations
Other4)
Total
2023
2022
1,201
1,076
125
1,092
877
215
91
78
118
209
2023
2022
153
86
475
6
–
183
298
177
69
429
20
–
125
272
1,201
1,092
1) The process for categorizing compliance concerns underwent significant transformation in 2022 such
that comparative figures for 2021 are not available.
2) Cases received but not investigated as they pertained to inquiries of a general nature or other matters
not deemed to be related to misconduct or breaches of the Code of Business Ethics.
3) Cases closed and concluded to be substantiated during the reporting year, some of which were
reported in previous reporting years.
4) Includes reported concerns related to environmental sustainability, health and safety, as well as con-
cerns which were assessed as not constituting compliance concerns, such as product quality issues,
employees testing the Compliance Line, or comments of a general nature. When applicable, these
cases were referred directly to the relevant units to address in accordance with their processes.
Corrective and disciplinary actions by type1)
(No.)
Termination
Demotion
Written warning
Verbal warning
Resignation
Other
Total
2023
2022
2021
112
–
58
28
1
2
201
39
4
74
46
8
7
97
2
89
22
19
4
178
233
1) Actions taken as a result of substantiated breaches of Ericsson’s CoBE. Each action represents a
unique individual, meaning the sum of actions shown in this table cannot be directly compared to the
number of substantiated cases shown above, as each case may involve several individuals. An individ-
ual may receive several corrective actions. In the above table, only the most severe action determining
category classification is counted.
Sustainability and Corporate Responsibility report 2023
41
G3 Supply chain and responsible sourcing
Ericsson’s supply chain
Ericsson has a global supply chain with around 20,000 first-tier suppliers.
About 2,000 of these make up more than 90% of the supplier spend, and
around 200 suppliers of the total supplier base are providers of hardware
to Ericsson’s production.
The global electronics supply chain is long and complex. In simple terms, it
begins with the extraction of natural resources used in electronics manufactur-
ing, which are then sold and transported to smelters and refiners for processing.
The refined materials are traded and exchanged, and subsequently used in the
manufacturing of parts and components, which are assembled into finished
products.
Manufacturing and assembly of Ericsson’s electronic hardware takes place
both at Ericsson’s own sites and at third-party electronic manufacturing
services sites. In addition, a limited number of modules are manufactured by
original/joint design manufacturing suppliers supporting specific market and
business requirements.
Ericsson’s supply hubs are regional distribution centers for logistics opera-
tions to serve customer orders and customer projects efficiently with activities
like the collection of deliveries from production units and suppliers, warehous-
ing, co-packing, order configuration and transport optimization. Regional
inbound (component) hubs consolidate material from component suppliers,
and these are a central point of component supply to the production sites,
creating resilience and flexibility in the inbound supply chain.
Manufacturing sites and hubs
(No.)
Manufacturing sites
Own sites
Third-party sites
Hubs
Supply
Component
Share of production (%) 1)
Own sites
Outsourced
2023
2022
6
11
9
2
6
9
9
2
2023
2022
14
86
17
83
1) Calculated based on the number of units delivered in the reporting year. Shares fluctuate over time due
to factors such as demand forecasts and type of hardware that is p roduced.
Impacts, risks and opportunities
Ericsson contributes and is linked to several impacts through its business and
supplier relationships. Material environmental impacts related to the upstream
value chain are primarily greenhouse gas (GHG) emissions from resource
extraction, manufacturing and transportation, use of natural resources and
possible inclusion of banned or restricted substances in Ericsson’s hardware,
as well as freshwater use in primarily resource extraction activities as well as in
semiconductor manufacturing. More information on these impacts is available
in notes E1 to E4.
Manufacturing sites and supply chain hubs
1
20
4
15
16
18
17
3
11
13
9
6
22
21
7
14
10
8
2
5
19
12
Manufacturing sites
Hubs
Ericsson manufacturing site
Third-party manufacturing site
Supply
Component
Locations
1. Borås
2. Dallas
3. Dubai
4. Duisburg
5. Guadalajara
6. Hong Kong
7. Hsinchu City
8. Kuala Lumpur
9. Nanjing
10. Penang
11. Pune
12. São José dos Campos
13. Suzhou (2)
14. Tainan City
15. Tallinn
16. Tczew
17. Timisoara
18. Tiszaújváros
19. Tlaxcala
20. Venlo
21. Wuxi
22. Yancheng
42
Note G3, cont’d.
Sustainability and Corporate Responsibility report 2023
For social factors, the main material impacts identified upstream in the
supply chain relate to equal treatment and opportunities, occupational
health and safety (OHS), freedom from discrimination, forced and child labor,
substandard working conditions as well as the security of workers in the value
chain. More information on these impacts is available in notes S2 and S3.
Additionally, with a complex and global supply chain come risks of a part-
ner's business conduct not being aligned to a company’s own values, principles
and standards. Ericsson has identified material impacts relating to corruption
and bribery in its upstream value chain. More information on this is available in
note G2.
Policies
Ericsson’s Code of Conduct (CoC) for Business Partners is the foundation for
the Company’s work with responsible sourcing. The CoC covers four main
areas: anti-corruption and business ethics, human and labor rights, safe and
healthy working conditions, and environmental management. In addition, and
covering all these areas, there is a requirement on suppliers to have an estab-
lished management system. Business partners must also ensure and monitor
that their suppliers and subcontractors comply with the CoC, or other agreed
equivalent standards. The CoC is based on the Responsible Business Alliance
(RBA) Code of Conduct but also includes Ericsson-specific requirements and is
part of standard-supplier contracts. It is available in several languages on the
Company’s website. More detailed descriptions on the requirements in the CoC
relating to identified material impacts are included in notes E1 to E4, S2 and S3
to this report.
Alongside the CoC, specific environmental and OHS requirements on business
partners and suppliers involved in certain activities with higher environmental
impact or with higher risks to workers' health and safety are also part of relevant
supplier contracts and can also be accessed through the Company’s website.
Management approach
Supplier segmentation and business continuity
Ericsson segments its supplier base to efficiently manage and prioritize supplier
relationship management activities, optimize value from the supplier base
as well as manage risks. Suppliers are segmented into one of four categories
based on a combination of the following four aspects: spend, risk, dependency
and value. Suppliers in the top two categories are considered business critical.
Ericsson strives to have dual supply sources to strengthen the supply chain
resilience wherever possible. The company also invests in strategic buffers
to further reduce the risk of disruptions. In addition, the Company monitors
disruptive events in real time and offers suppliers to be visualized in the moni-
toring process. In case such an event occurs, Ericsson will be notified of which
suppliers may be impacted. The risks and potential severity are subsequently
assessed, and based on supplier input about its impacts and internal insights
into the supply chain, mitigation activities for the specific event will be enacted.
The real-time monitoring can be extended to integrate a supplier’s business
continuity plans, enabling additional granularity in the analysis of the supplier’s
vulnerability.
Responsible sourcing
Within Ericsson’s sourcing organization, a dedicated unit is responsible for
driving sustainability-related initiatives and with a focus on supplier alignment
with environmental and OHS expectations, as well as adherence to the CoC
in the supply chain. The scope of the Responsible Sourcing program mirrors
the topics covered in the CoC. This work is aligned with the Sustainability
and Corporate Responsibility strategy and is an integrated part of the supply
chain strategy. Supplier adherence to standards and requirements is verified
through two audit programs, one based on the CoC and the other on contract
compliance.
Due diligence and supplier screening
Ericsson has a process for assessing its first-tier suppliers for risk of non-
conformity with its CoC. A modular supplier sustainability risk assessment
based on the supplier category's risk profile is triggered during the supplier
onboarding process and for selected active suppliers. The scope of each
assessment is predefined based on the type of products or services the supplier
provides. Once a supplier has been selected for assessment, one or several
self-assessment questionnaires covering environmental, OHS and human
rights management are sent to the supplier for completion. The supplier shall
also provide supporting documentation for its responses. Suppliers are subse-
quently rated as having high, medium, or low risk, depending on how well they
meet Ericsson’s criteria in the assessed area(s). Based on this rating, a recom-
mendation to either approve, not approve , or approve the supplier with certain
conditions to address gaps (or the equivalent recommendations in the case of
an active supplier) will be issued.
Monitoring
Suppliers’ environmental performance and audit findings closure status are
monitored via supplier performance cards together with other criteria such as
quality and timely deliveries. Supplier performance evaluations are primarily
done for top segmented suppliers as a recurrent activity to drive performance
improvements. Ericsson has implemented a consequence management pro-
cess for site services suppliers, where OHS incidents are most frequent. There
is more information on this in note S2.
Code of Conduct for Business Partner audits
Suppliers in focus of this program are first-tier suppliers and primarily those
making up the top 90% of Ericsson’s supplier spend. The inherent risk of these
suppliers – based on factors such as purchase volume, country, type of service
or product supplied and time since the last audit – is assessed and forms the
basis for audit selection. The audits are performed by a contracted third-party
audit firm and are done primarily on-site, with remote audits being an option
for high-risk countries. The overall audit criteria is adherence to the CoC, with
specific criteria including, but not being limited to, employment conditions such
as working hours, wages and management dialogue, OHS matters such as
accident and incident prevention, chemical handling as well as communication
of requirements to sub-suppliers and contractors.
Non-conformities are required to be addressed through time-specific correc-
tive action plans. Since the CoC is part of standard supplier contracts, suppliers
failing to adhere to it may have their contracts terminated. Ericsson does not
conduct unannounced audits.
Contract compliance audits
Ericsson also conducts audits to verify compliance to contractual agree-
ments between suppliers and Ericsson. These are performed by Ericsson’s
internal auditors and follow the principles of ISO 9011 Guidelines for Auditing
Management Systems. Besides the CoC, other criteria such as trade compli-
ance, business continuity management and security are in the scope of these
audits. Non-conformities are required to be addressed through time-specific
corrective action plans.
Responsible Business Alliance (RBA)
Ericsson is a member of the RBA and is working to increase the share of
participating suppliers, and to make further use of its audit programs and other
assets.
Training and awareness raising
Ericsson offers free training through its website to its suppliers and business
partners. Besides general training on the CoC, targeted content covering anti-
corruption, human rights, conflict minerals and OHS is also available via the
Company’s website. For suppliers in scope of the supplier engagement target,
Ericsson offers training on climate change mitigation.
A set of training modules has been created for all sourcing employees focus-
ing on environmental requirements and how to guide suppliers to drive climate
action. Direct access to the United Nation Global Compact and Sustainable
Development Goals training academies is available to employees in the sourc-
ing organization as well as to suppliers via Ericsson’s website.
Conflict minerals due diligence
Ericsson bases its approach on sourcing of minerals and metals on the OECD
Due Diligence Guidance for Responsible Supply Chains of Minerals from
Conflict-Affected and High-Risk Areas. This process covers the metals tin,
tantalum, tungsten and gold (3TGs), as well as cobalt, and from 2023 mica.
As there are often several tiers of suppliers between Ericsson and smelters or
refineries, the Company does not normally have a direct purchasing relation-
ship with these. More information on this topic can be found in Ericsson’s
annual Conflict Minerals report, available on the Company’s website.
Sustainability and Corporate Responsibility report 2023
43
Note G3, cont’d.
Grievance mechanism
The Ericsson Compliance Line, available to internal as well external stakehold-
ers, including suppliers and their employees, can be used to report concerns
about violations of the CoC, policies, laws or regulations. See further informa-
tion in note G2.
Metrics1)
Supplier audits
Conducted audits
(No.)
Code of Conduct for Business Partner audits
Contract Compliance audits
2023
123
19
2022
114
15
2021
124
24
Code of Conduct for Business Partners audits
Contract Compliance audits
(%)
Audit findings 2)
Suppliers with non-conformities
Suppliers with critical non-conformities
Corrective action rate 3)
All non-conformities
Critical non-conformities
2023
2022
(%)
85
1
79
100
97
6
73
63
Audit findings
Suppliers with non-conformities
Suppliers with critical non-conformities
Corrective action rate
All non-conformities
Critical non-conformities
2023
2022
100
-
65
-
100
-
69
-
Audit findings per category (2023)
Audit findings per category (2023)
(%)
Access and transparency4)
Employment conditions
Environmental management
Anti-corruption measures
OHS management
Sub-supplier communication5)
Total
All non-
conformities
Critical non-
conformities
(%)
All non-
conformities
Critical non-
conformities
0
42
4
3
48
3
100
-
-
-
-
100
-
100
Code of Conduct for Business Partners
Quality Management Systems
Security
Sourcing
Business Continuity Management
Other
Total
36
20
9
9
7
19
100
-
-
-
-
-
-
-
1) See note O2 for an explanation on limitations regarding value chain reporting and disclosures.
2) Calculated as the number of audited suppliers with identified non-conformities /critical non-conformities divided by the total number of audited suppliers in the preceding 12-month period. 2022 data was based
on findings in the preceding 24-month period due to a change in data collection processes.
3) Calculated as the number of non-conformities/critical non-conformities addressed and closed within 12 months from the time of identification, divided by the total number of identified non-conformities/critical
non-conformities in the same period. 2022 data was based on findings in the preceding 24-month period due to a change in data collection processes. The corrective action rates are calculated based on the rate
at which findings identified in the reporting period have been addressed and closed during the same period. For this reason, findings identified late in the reporting period may not have been addressed and closed
by the reporting year cut-off date which is December 31.
4) Access to facilities and documentation necessary to conduct the audit.
5) Communication of Ericsson's requirements, such as those in the CoC, to sub-suppliers where this is required.
Conflict minerals due diligence
Smelters and refineries RMAP1) participation and conformity by minerals in scope2)
2023
(No.)
Cobalt
Gold
Tantalum
Tin
Tungsten
Total
Identified
Participating
Conformant
84
186
43
112
62
487
47
111
34
69
38
299
36
95
34
63
37
265
Conformity
rate (%) 3)
77
86
100
91
97
2022
(No.)
Cobalt
Gold
Tantalum
Tin
Tungsten
89
Total
Identified
Participating
Conformant
63
171
36
77
46
393
47
116
35
63
44
305
29
98
35
54
40
256
Conformity
rate (%) 3)
62
84
100
86
91
84
1) Responsible Minerals Assurance Process
2) Numerical information presented here corresponds to information included in the most recent Conflict Minerals Report submitted to the US Securities and Exchange Commission for each respective year. 2022
data has been restated as a result of this. See note O3 for more information.
3) Out of RMAP participating smelters.
44
Sustainability and Corporate Responsibility report 2023
G4 Advocacy and policy influence
Impacts, risks and opportunities
The telecommunications sector in which Ericsson operates is highly regulated
and increasingly politicized. National and transnational sector-specific policies
affect the behavior and investment decision of service providers, which, in turn
has implications on the services offered to consumers. Consequently, Ericsson’s
policy and advocacy activities can have an indirect impact on people’s access
to connectivity and the affordability of those services.
Ericsson’s market is highly regulated, and its evolving technology is increas-
ingly on the agenda of developing geopolitical alliances. The prominence of
global open standards has enabled economies of scale, making mobile connec-
tivity the fastest-ever scaling technology solution globally. Policy, regulation
and new geopolitical alliances can significantly impact Ericsson’s addressable
market and have an influence on its supply chain and research and develop-
ment clusters. At the same time, engaging policymakers, either directly or via
intermediary organizations, to influence policy outcomes must be conducted in
a manner that enhances Ericsson’s reputation and mitigates corruption risks.
Policies
Ericsson’s Group Policy on Government and Policy Advocacy (GPA) states that,
Ericsson needs to anticipate, analyze, manage and mitigate political, regula-
tory, reputational and sensitive technology risks, drawing from several param-
eters to so support its business objectives. It further articulates the Company’s
commitment to conducting government and policy advocacy with transpar-
ency, integrity and ethics. A more detailed Group Directive on Policy Advocacy
and Interaction sets forth the binding requirements applicable to managing
advocacy activities with public officials and industry representatives. These
rules of engagement are mandatory for all GPA advocacy activities.
Ericsson is a member of national and transnational trade associations relevant
to its business and also participates in organizations with a more general
industrial and business focus. Ericsson only participates in intermediary organi-
zations that are aligned with the Company’s values and uses its position to try
and maintain consistency on policy positions as they are developed.
Ericsson does not contribute directly or indirectly to political parties or
individual politicians, as stipulated by the Company’s Code of Business Ethics.
Exempt from this policy is support of voluntary employee contributions permit-
ted under local law and supported by public reporting regulations.
Management approach
Ericsson’s purpose and vision focuses on the power of mobile connectivity
to deliver positive change, and the role that Ericsson will play in shaping
that change. Its advocacy activities aim to achieve positive and sustainable
long-term conditions for the Company and the broader information and com-
munications technology sector. Accordingly, Ericsson acts as a trusted advisor,
offering its expertise to policymakers to help deepen their understanding of the
sector and its interplay across the economy in order to effectively achieve their
policy objectives.
Only employees trained and individually authorized may engage in policy
advocacy activities. All material policy-influencing interactions with public
officials are documented for internal audit purposes and declared according
to local regulation and practices. Further, Ericsson has implemented a policy
on gifts, entertainment and hospitality, which dictates rules of engagement
toward public officials.
Due diligence
Ericsson only participates in trade and industry associations that share its
ethical values. It does not engage in any advocacy efforts that would under-
mine Ericsson’s commitment to ethical business practices. Any new or existing
memberships due for renewal are subject to specific compliance review
requirements and conditions. The same general principles apply when any
employee participates in advocacy activities under the umbrella of any one of
these associations.
Climate policy alignment
The Company’s memberships and involvement in multilateral industry organi-
zations also cover climate-related advocacy efforts. It is central to Ericsson to
only engage in partnerships that share the Company’s position on a science-
based climate perspective, not conflicting with the Paris Agreement, and
partnerships are evaluated on a case-by-case basis.
Significant policy topics
Below is a summary of the most significant topics on which Ericsson is engaging
with industry and policymakers, and the Company’s position on those topics.
Theme
Topic
Objective
Connectivity &
Infrastructure
Investment
Connectivity agenda
Deployment barriers
Tax incentives
Promoting ambitious objectives for
transformational connectivity
Speeding up the permission and lowering
of site access costs
Encouraging horizontal incentives for
productivity enhancing capital expenditure
Competition policy
Evolving to sustainable market structures
Open Innovation
Digital
Transformation,
Trust & Inclusion
Public funding
Net neutrality
Spectrum supply
Spectrum pricing
Global standards
Open standards
6G research and
collaboration
Cross-border
data flows
Artificial intelligence
Privacy
Demand-side
stimulation
Digital transformation
Security & Cyber
Resilience
Security of deployed
mobile networks
Supply chain security
Sustainability
Carbon abatement
Energy efficiency
Amplifying private investment in areas of
clear market failure
Enabling network-based innovation
Ensuring a future roadmap of spectrum
Encouraging investment-friendly approaches
Safeguarding scale economies through
harmonized standards
Promoting market-based approaches
consistent with the World Trade Organization's
Technical Barriers to Trade principles
Catalyzing research collaboration across
geographies
Advocating for harmonized rules to promote
trust and secure use of data
Promoting a risk-based and proportionate
approach that safeguards use of AI in networks
Balancing personal data protection with
flexibility to innovate
Encouraging digital skills and incentivizing
economy-wide take-up of the digital
transformation
Promoting digitalization across industry
verticals and public services
Ensuring the Ericsson Security Trust Stack is
used holistically
Implementing Ericsson’s Security Reliability
Model throughout the supply chain
Incentivizing the use of connectivity-enabled
digitalization to lower carbon emissions
Promoting the use of new technologies to
increase energy efficiency
Sustainability and Corporate Responsibility report 2023
45
Note G4, cont’d.
In addition to the areas listed above, Ericsson also advocates for:
Digital inclusion
Universal internet coverage and for digital inclusion through affordability and
digital literacy efforts. The focus is on low-income countries and countries
with low internet penetration. This is done through organizations such as The
Broadband Commission for Sustainable Development and the International
Telecommunication Union. Ericsson also advocates the use of 5G for broad-
band connectivity in rural areas in developed countries, for example, in Europe.
Environment and climate change mitigation
Ericsson contributes to consultations and hearings on strategies and legislative
proposals in the area of environment and climate. The Company’s approach is
to advocate clear environmental legal requirements that are effective, based
on science and that promote the environmental performance of the sector.
Ericsson is also advocating for the benefits of digitalization and 5G in the
transition to a Net Zero future.
Human rights
Ericsson is engaged in consultations for legislative proposals and policy devel-
opments, and it supports legislation in line with international human rights
standards that ensure companies across value chains are covered by the same
responsibilities, in particular in relation to the right to freedom of expression
and privacy.
Memberships
Ericsson is a member of several associations, which to varying degrees
advocate and/or exercise influence over public policy development. Below are
the most significant memberships maintained on a Group level. Memberships
maintained by subsidiaries and local entities are not included, which is why the
list should not be considered exhaustive. Ericsson is also a member of several
chambers of commerce on a national level.
– African Telecommunications Union
– Alliance Française des Industries du Numérique
– Association of Providers of Telecommunications and Value-Added Services
(VATM)
– Associazione Civita
– Assonime
– Australian Tech Council
– Bitkom
– BusinessEurope
– CTIA The Wireless Association
– Digital Connectivity Forum
– Digital Europe
– Digitales
– European Roundtable for Industry
– European Telecommunications Network Operators Association
– Fondazione Astrid
– Global Business Alliance
– Groupe Speciale Mobile Association (GSMA)
– Information Technology Institute
– International Institute of Communications
– Istituto per la Competitività
– Näringslivets Internationella Råd
– Official College of Telecommunication Engineers
– Stockholms Handelskammare
– Studieförbundet för Näringsliv och Samhälle
– Svenska International Chamber of Commerce
– Svenskt Näringsliv - Teknikföretagen
– Sweden-India Business Council
– Tech UK
– Telecommunication Development Sector (ITU-D)
– Telecommunications Industry Association
– US Telecom – The Broadband Association
46
Sustainability and Corporate Responsibility report 2023
Section O – Other – Basis for preparation
O1 Stakeholder engagement and materiality
Stakeholder engagement
Ericsson continuously engages with its stakeholders through different channels
to understand their expectations, requirements and concerns about current
and emerging environmental, social and governance (ESG) matters. The table
below contains a non-exhaustive list of examples of stakeholder engagements
taking place over the past year, and the main ESG-related topics and concerns
raised by different stakeholder groups.
Stakeholder group
Examples of engagements
Main topics and concerns raised
Employees
Customers
– Employee surveys
– Employee resource groups
– Dialogues with union representatives
–Training and awareness-raising initiatives
– Individual customer meetings and dialogues
– Customer ESG assessments
– Joint research and development.
Investors and
analysts
– Investor dialogues and Capital Markets Day
– Analyst inquiries and meetings
– ESG ratings and rankings
Suppliers
– Responsible Business Alliance
– 1.5 °C Supply Chain Leaders
– Supplier assessments and audits
– Supplier training, seminars and workshops.
Regulators and
international
institutions
Academia and
business
Civil society, NGOs
and other
– Policy advocacy toward regulators
– Partnerships with:
- UNICEF/UNHCR/UN World Food Programme
- UN B-tech Project
- World Health Organization
- ITU Broadband Commission for Sustainable Development.
– Joint research and research funding
– Development of technology curriculum
– Participation in standardization bodies
– Membership of industry associations
– European CEO Alliance.
– Participation in/partnerships with:
- World-Wide Fund for Nature
- Exponential Roadmap Initiative
- Global Network Initiative
- Shift Business Learning Program
Materiality assessment
During 2023, Ericsson undertook a materiality assessment to update its under-
standing of its material sustainability-related impacts, risks and opportunities.
The scope of the assessment was the operations of the Ericsson Group and
its upstream and downstream value chain, with a focus on the electronics
manufacturing supply chain when analyzing upstream impacts. The geograph-
ical scope of the assessment was global, but with a focus on the countries and
regions in which the company has a significant number of employees, suppliers
and customers, also factoring in the Company’s presence in geographies with
known heightened risks of human rights violations and substandard working
conditions.
The assessment was carried out in the following main phases:
A. Definition of the universe of environment, social and governance (ESG)
matters in scope of the assessment
B. Initial assessment of impacts, risks and opportunities
C. Validation with key internal stakeholders and subject matter experts
D. Validation with selected external experts
E. Review and approval by the Executive Team and Audit and Compliance
Committee of the Board of Directors
A. The universe of ESG matters assessed was based on matters found in ESG
reporting frameworks, supplemented by input from benchmarking of mat-
ters included in industry peers' and customers’ external ESG disclosures,
as well as matters covered in the assessment methodologies of a select
number of ESG rating agencies.
– Business ethics and anti-corruption
– Health, safety and well-being of workforce, including working in hybrid working models
– Diversity and inclusion
– Learning and development
– Business ethics and anti-corruption
– Portfolio energy performance and circularity
– Product security and quality features
– Role of industry and digitalization in society
– Supplier management with a focus on labor rights and working conditions
– Business ethics and anti-corruption
– Corporate governance
– Portfolio sustainability
– Supplier management with a focus on labor rights and working conditions
– Business ethics and anti-corruption
– Health, safety and well-being of workforce
– Labor rights and working conditions
– Environmental and climate requirements
– Conflict minerals, and materials and product traceability
– Environmental and human rights impacts of ICT sector
– Digital inclusion, education and connectivity
– Humanitarian relief efforts
– Radio waves and health.
– Environmental impacts of ICT sector
– Enablement effect of ICT in mitigating climate change
– Radio waves and health.
– Collective climate action
– Protection of right to privacy and freedom of expression
– Digital inclusion and education
– Supplier management with a focus on labor rights and working conditions
– Operating in conflict-affected and high-risk countries
B. After scoping out matters with no apparent relation to Ericsson and its value
chain, remaining matters were analyzed in more detail to identify actual
and potential negative and positive impacts, as well as actual and potential
risks and opportunities.
Ericsson’s current understanding of impacts, risks and opportunities,
based on the Company’s peer-reviewed research into the environmental
impacts of its products and solutions, existing human rights due diligence
processes, risk management framework, as well as ongoing stakeholder
engagements, were incorporated in this phase of the assessment. Additional
sources of information used included, but were not limited to, external scien-
tific research, industry and non-governmental organization reports, third-
party ESG risk intelligence tools, results of employee surveys, conducted
supplier audits, internal risk assessments and information about cases
reported via the Ericsson Compliance Line.
Negative impacts were assessed based on their severity (scale, scope
and irremediable character) and positive impacts were assessed based on
their scale and scope. For potential impacts, the likelihood of the impact
occurring was also considered. When assessing impacts downstream in the
value chain, in relation to customers and end-users, impacts with a con-
nection to Ericsson’s portfolio were considered. Impacts occurring within
customers’ operations or value chains but with no or minimal connection to
Ericsson’s products, solutions or technology were not considered relevant
for the assessment.
While numerical scales were used to quantify scale, scope and irremedi-
ability in the initial stages of the assessment of all impacts, the thresholds
applied for ultimately determining if a matter should be considered material
or not were largely qualitative and involved varying degrees of subjective
and professional judgement.
Sustainability and Corporate Responsibility report 2023
47
Note O1, cont’d.
Risks and opportunities were assessed based on their magnitude and likeli-
hood of occurrence. Where relevant, existing conclusions and thresholds
in Ericsson’s enterprise risk management process were factored into the
assessment.
C. The preliminary results were reviewed with internal subject matter experts
and business representatives to both validate the assessment of material-
ity, as well as to embed understanding of impacts, risks and opportunities
across the Company.
D. Subsequently, a not-for-profit organization with expertise in the area of
human rights was consulted for a review of identified impacts related to
human and labor rights. This review was intended to function as external
subject matter expert input. While it is not an affected stakeholder, the
organization had the opportunity to highlight impacts that affected stake-
holders would expect to see analyzed and managed.
E. The consolidated results were reviewed and approved by the Executive
Team and the Audit and Compliance Committee of the Board of Directors.
The results of the materiality assessment are presented below. The table
shows where material impacts occur, or may occur, in the value chain and not
where actions to manage impacts take place, which in most cases would be by
Ericsson through its own operations. While the assessment scope included risks
and opportunities, these will need to be further analyzed and incorporated into
other business processes to ensure consistent treatment with other risk factors
and to enable a more refined analysis of potential financial implications, going
forward. More detailed descriptions of identified impacts, risks and opportuni-
ties, as well as Ericsson’s policies and actions to manage these can be found in
the topic-specific notes to this report.
Changes in material matters compared with previous reporting periods
The 2023 materiality assessment was done on a more granular level compared
with previous assessments, meaning several of the matters presented below
were previously part of broader topics assessed. This does not mean that their
inherent significance has changed, only how they are presented in the list of
material topics. Matters which were previously not considered material, or
which were not included in previous assessments, but which are now included
due to the full value chain being considered include: water resources, air pollu-
tion, adequate housing, security of people, technology ethics, supplier relation-
ships & payment terms, and responsible marketing.
Material impacts, risks and opportunities
Sustainability matters
t
n
e
m
n
o
r
i
v
n
E
l
a
i
c
o
S
e
c
n
a
n
r
e
v
o
G
Climate change and energy
Air pollution
Substances of concern and very high concern
Water resources
Natural resources and circularity
Training & skills development
Diversity & inclusion
Gender equality and equal pay
Discrimination & harassment
Freedom of assembly & association
Adequate wages & secure employment
Working time
Work-life balance
Occupational health & safety
Forced & child labor
Adequate housing
Freedom of expression & right to privacy
Security of people
Technology ethics
Corporate citizenship & emergency response
Digital education
Socioeconomic impacts of ICT
Corruption & bribery
Anti-competitive behavior
Supplier relationships & payment terms
Data privacy & cybersecurity
Political engagement & advocacy
Responsible marketing
Upstream
(extended supply chain)
Impact
Own operations
Downstream
(customers and end-users)
Potential risks and
opportunities
Details in note /
section
E1
E2
E2
E3
E4
S1
S1/G3
S1/G3
S1/G2/G3
S1/G3
S1/G3
S1/G3
S1/S2
S2/G3
S3/G3
S3/G3
S3
S3
S3 1)
S4
S5
S5
G2
G2
– 2)
Corp. Gov. report p. 19
G4
– 2)
1) In this year’s report Ericsson includes information about its position on responsible use of AI. Technology ethics in a wider context will be addressed in coming reports.
2) Matter not addressed in this year’s report. These will be addressed in coming reports.
48
Sustainability and Corporate Responsibility report 2023
O2 Reporting principles, scope and external assurance
This Sustainability and Corporate Responsibility Report ("the report", "this
report"), published on March 6, 2024, constitutes Ericsson’s annual statutory
sustainability report and contains information about material environmental,
social and governance (ESG) related impacts, risks and opportunities, as well
as governance and policies, management approaches, metrics and targets
relevant to these matters. A description of Ericsson’s strategy and business
model can be found on pages 7-12, and a description of financial and non-
financial risk factors on pages 105-119 of the Financial Report, which is also
part of Ericsson’s Annual Report.
Reporting principles and frameworks
The report has been prepared in accordance with the Global Reporting
Initiative (GRI) standards. Ericsson has, in the preparation of the report,
applied reporting principles as prescribed in the standard GRI 1: Foundation
(2021). The report has also been prepared in accordance with the UN Guiding
Principles on Business and Human Rights reporting framework.
The report also includes climate-related disclosures included in the rec-
ommendations of the Taskforce on Climate-Related Financial Disclosures
(TCFD) as well as relevant disclosures in applicable Sustainability Accounting
Standards Board (SASB) standards. Ericsson is also reporting on the core
disclosures of the Stakeholder Capitalism Metrics developed and endorsed
by the International Business Council and the World Economic Forum. As a
supplement to the report, an ESG reporting reference index is published on the
ESG section of the Investor Relations pages on Ericsson’s website. The index
contains detailed references to applied reporting frameworks and standards
and includes the GRI content index.
Scope and boundaries
Unless otherwise stated, the information and data provided pertain to the
period January 1 to December 31. The report covers the Ericsson Group, which
is the parent company Telefonaktiebolaget LM Ericsson and its subsidiaries
as presented in note P8 to the parent company’s financial statements in the
Financial Report. The report does not include environmental and social data
related to associated companies or joint ventures. These constitute a limited
share of the Group’s headcount and operations.
In 2022, Ericsson acquired Vonage, now part of Business Area Global
Communications Platform, and in 2020, Cradlepoint, now part of Business
Area Enterprise Wireless Solutions. For a limited number of ESG disclosures,
primarily people-related, these companies have not yet been fully consolidated
into this report. At year-end 2023, these companies had a combined headcount
of about 4,200 employees, equal to 4,2% of the Group’s total employee
headcount. Where the scope of a disclosure excludes one or both of these
companies, this is indicated in a footnote.
As a general principle, baselines for Group ESG targets are recalculated
when the effect of a merger, acquisition or divestment on the performance of
a target key performance indicator is assessed as significant. In other cases,
baselines or data pertaining to previous reporting periods are not restated.
Information on restatements made in the reporting year can be found in note
O3.
The report contains disclosures related to the Company’s upstream and
downstream value chain including suppliers, vendors, customers and other
business partners. There are inherent uncertainties to the completeness,
accuracy and verifiability of this information, as it relates to performance and
activities that are beyond the Company’s direct influence and control.
External assurance
The report has been subject to assurance procedures by the Company’s statu-
tory auditors in accordance with the assurance standard ISAE 3000. The report
as a whole has been subject to limited assurance procedures. Additionally,
information on GHG emissions in Scope 1, 2 and Scope 3 categories Business
travel and Downstream transportation, presented in note E1, as well as infor-
mation on the share of women per employee category, presented in note S1,
have been subject to reasonable assurance procedures. The assurance report
can be found on page 50.
Related reporting and disclosures
Ericsson publishes other ESG-related statements and reports on its website,
such as the annual CDP Climate Change questionnaire response, a Modern
Slavery and Human Trafficking Statement, and a Conflict Minerals Report.
Sustainability and Corporate Responsibility report 2023
49
– Information in note E4 about waste generated in operations broken down
by disposal method has been restated for the years 2022 and 2021 to align
with emerging disclosure regulation. The total amount of waste generated
has not been restated but the breakdown per recovery and disposal method
is now presented with more granularity compared to previous years.
– Information in note S1 about employees, new hires and turnover broken
down by age groups has been restated for the years 2022 and 2021 to align
with emerging disclosure regulation. Prior to 2023, the age brackets used
were: under 25, 25-35, 36-45, 46-55 and over 55 years old. As of 2023, the
brackets used are: under 30, 30-50 and over 50 years old.
– Information in note S1 about the CEO to employee pay ratio for the years
2022 and 2021 has been restated to align with emerging disclosure regula-
tion. Prior to 2023 the mean employee salary and mean total compensation
was used to calculate this metric. As of 2023, the median employee salary
and median total compensation is used to calculate this metric.
– Information in note S2 about fatality and lost-time incident rates has been
restated for the years 2022 and 2021 to align with emerging disclosure regu-
lation. Prior to 2023 these rates were calculated using the assumed number
of hours worked by 100 FTEs in a year (200,000) as the normalization factor.
As of 2023 the normalization factor is the assumed number of hours worked
by 500 FTEs which is 1,000,000 hours.
– Information in note G3 about the number of smelters, their RMAP participa-
tion and RMAP conformity status has been restated for the year 2022 to
align with information presented in Ericsson’s Conflict Minerals Report filed
with the US Securities and Exchange Commission. In previous years the
information presented in the Sustainability and Corporate Responsibility
Report reflected a snapshot of information available at the reporting year
cut-off date, meaning the period covered was not the same as the period
covered in the Conflict Minerals Report.
O3 Restatements of information
The following information in the Sustainability and Corporate Responsibility
Report has been restated:
– Information in note E1 about purchased non-renewable electricity has been
restated for the years 2022 and 2021 to align with emerging disclosure
regulation. The total amount of purchased non-renewable electricity has
not been restated but is from 2023 presented with a breakdown on electric-
ity from fossil sources and electricity from nuclear sources which was not
included in previous years.
– Information in note E1 about Scope 3 GHG emissions for the years 2022
and 2021 has been restated. In the process to validate Ericsson’s emis-
sion reduction targets by the SBTi, emissions in the categories Upstream
transportation, Downstream transportation, and Fuel- and energy-related
activities were reclassified within the same three categories to align with the
SBTi methodology, including a change in the application of well-to-wheel
and tank-to-wheel emission factors. In short, this has meant an increase of
emissions reported in the category Upstream transportation, and a decrease
in emissions reported in the categories Downstream transportation and
Fuel- and energy-related activities, compared to what was reported in
previous years. In addition, emissions in the category Use of sold products
and services for the year 2022 have been restated due the correction of
an identified calculation error. The resulting changes are presented below.
Consequently, total GHG emissions, the share of the value chain carbon
footprint and emissions intensity broken down per scope for the years 2022
and 2021 reported in note E1 have also been restated.
GHG emissions
(metric tons)
After restatements
Prior to restatements
2022
2021
2022
2021
Fuel- and energy-related activities
36,600
23,200
77,700
79,000
Upstream transportation
Downstream transportation
Use of sold products and services
206,200 215,300
7,082
N/A
7,090
28,262,400
36,600
49,000
116,176 119,169
N/A
25,048,000
– Information in note E2 about other emissions to air has been restated for the
years 2022 and 2021, as Ericsson has redefined the scope of this disclosure.
The new scope is aligned to the boundaries of direct Scope 1 emissions as
set forth by the GHG Protocol. Previously, the scope included indirect sources
of emissions, including purchased energy at facilities, business travel, com-
muting and transport. The resulting changes are presented below.
Other emissions to air
(metric tons)
After restatements
Prior to restatements
NOx
SOx
Particle matters
2022
2021
49
61
12
54
63
13
2022
682
657
71
2021
645
694
77
50
Assurance report
Sustainability and Corporate Responsibility report 2023
Assurance report
Auditor’s Assurance Report on Ericsson’s Sustainability and Corporate Responsibility Report and statement regarding
the Statutory Sustainability Report
To Telefonaktiebolaget LM Ericsson, corporate identity number
556016-0680
Introduction
We have been engaged by the Board of Directors and Executive
Management of Telefonaktiebolaget LM Ericsson (“Ericsson”) to
undertake an assurance engagement of the Ericsson Sustainability and
Corporate Responsibility Report (“the Sustainability Report”) for the
year 2023. The Company has defined the scope of the Sustainability
Report on page 48 in the Sustainability Report, which also constitutes
the Statutory Sustainability Report.
Responsibilities of the Board of Directors and the Executive
Management
The Board of Directors and the Executive Management are responsible
for the preparation of the Sustainability Report including the Statutory
Sustainability Report in accordance with the applicable criteria and the
Annual Accounts Act respectively. The criteria are defined on page 48 in
the Sustainability Report, and are part of the Sustainability Reporting
Guidelines published by GRI (Global Reporting Initiative), which are
applicable to the Sustainability Report, as well as the accounting and
calculation principles that the Company has developed. This responsi-
bility also includes the internal control relevant to the preparation of a
Sustainability Report that is free from material misstatements, whether
due to fraud or error.
Responsibilities of the auditor
Our responsibility is to express a conclusion on the Sustainability Report
based on the assurance procedures we have performed and to express
an opinion regarding the Statutory Sustainability Report. Our engage-
ment is limited to historical information presented and does therefore
not cover future-oriented information.
We conducted our assurance engagement in accordance with ISAE
3000 (revised) Assurance Engagements Other than Audits or Reviews
of Historical Financial Information. The engagement includes limited
assurance on the complete Sustainability Report, and an audit of
selected information consisting of GHG emissions in Scope 1, 2, and
Scope 3 categories Business travel and Downstream transportation
disclosed on page 15, as well as information on the share of women per
employee category, disclosed on page 26 in the Sustainability Report.
The objective of an audit is to obtain reasonable assurance that the
information is free of material misstatements. A reasonable assurance
engagement includes examining, on a test basis, evidence supporting
the selected information in the Sustainability Report. A limited assur-
ance engagement consists of making inquiries, primarily of persons
responsible for the preparation of the Sustainability Report, and apply-
ing analytical and other limited assurance procedures. Our examination
regarding the Statutory Sustainability Report has been conducted in
accordance with FAR’s accounting standard RevR 12 The auditor’s
opinion regarding the Statutory Sustainability Report. A limited assur-
ance engagement and an examination according to RevR 12 is different
and substantially less in scope than an audit conducted in accordance
with International Standards on Auditing and generally accepted
auditing standards in Sweden.
The firm applies International Standard on Quality Management 1,
which requires the firm to design, implement and operate a system of
quality management including policies or procedures regarding compli-
ance with ethical requirements, professional standards and applicable
legal and regulatory requirements. We are independent of Ericsson in
accordance with professional ethics for accountants in Sweden and
have otherwise fulfilled our ethical responsibilities in accordance with
these requirements.
The limited assurance procedures performed and the examination
according to RevR 12 do not enable us to obtain assurance that we
would become aware of all significant matters that might be identified
in an audit. The conclusion based on a limited assurance engagement
and an examination according to RevR 12 does not provide the same
level of assurance as a conclusion based on an audit. Since this engage-
ment is combined, our conclusions regarding the limited assurance, the
reasonable assurance, and the examination according to RevR 12 will
be presented separately below.
Our procedures are based on the criteria defined by the Board of
Directors and the Executive Management as described above. We
consider these criteria suitable for the preparation of the Sustainability
Report.
We believe that the evidence we have obtained is sufficient and
appropriate to provide a basis for our conclusion below.
Conclusion
Based on the limited assurance procedures we have performed,
nothing has come to our attention that causes us to believe that the
Sustainability Report, is not prepared, in all material respects, in accord-
ance with the criteria defined by the Board of Directors and Executive
Management.
In our opinion, the selected information in the Sustainability Report
which has been subject to our reasonable assurance procedures has,
in all material respects, been prepared in accordance with the criteria
defined by the Board of Directors and Executive Management
A Statutory Sustainability Report has been prepared.
Stockholm 5 March 2024
Deloitte AB
Thomas Strömberg
Authorized Public Accountant
Lennart Nordqvist
Expert Member of FAR
Sustainability and Corporate Responsibility report 2023
Glossary
51
Glossary
2G
Second generation of mobile systems (the first digital
generation). Includes GSM, TDMA, PDC and cdmaOne.
3G
Third generation mobile systems. Includes
WCDMA/HSPA, CDMA2000 and TD-SCDMA.
4G
Fourth generation mobile systems, also known as LTE.
5G
The fifth generation of mobile systems. An evolution
of 4G/LTE.
ABC
Anti-bribery and corruption.
AI
Artificial intelligence. The ability of a machine to perform
a task commonly associated with intelligent beings.
API
Application programming interface. A software intermedi-
ary for two or more computer programs to communicate
with each other.
Cloud native
Software approach of building, deploying, and managing
modern applications in cloud computing environments.
CO2e
Carbon dioxide equivalents. The amount of a particular
greenhouse gas, expressed as the amount of carbon
dioxide that gives the same greenhouse effect.
COVID-19
The disease caused by the coronavirus (SARS-CoV-2).
COVID-19 pandemic
The global spread of the disease caused by the corona-
virus (SARS-CoV-2).
Downstream in value chain /
Downstream emissions
Activities (and related greenhouse gas emissions) occur-
ring post manufacturing/production, primarily associated
with a product's distribution, use and end-of-life phases.
ESG
Environment, Social, and Governance. Refers to the three
overarching themes for assessing non-financial factors
which can impact a company’s value-creating abilities.
GHG
Greenhouse gases. Naturally occurring and man-made
gases that trap heat in the atmosphere, contributing to
the greenhouse effect warming the earth.
GHG (Greenhouse gas) protocol
A framework and de facto standard for measuring,
accounting and managing greenhouse gas emissions.
Global Reporting Initiative (GRI) Standards
The first and most widely adopted global standards for
sustainability reporting. GRI is an independent inter-
national organization that has pioneered sustainability
reporting since 1997.
GSM
Global System for Mobile Communications. Second
generation mobile system.
ICT
Information and Communication Technology.
IoT
Internet of things. A common name for technologies
enabling objects with built-in electronics and internet
connection to be controlled or to exchange data over a
network.
ITU
International Telecommunication Union.
LCA
Life-Cycle Assessment. An approach for calculating the
environmental impact of a product or service across
all its lifecycle phases, ranging from extraction of raw
materials and manufacturing to usage and end-of-life
management.
LTE
Long-Term Evolution. 4G; the evolutionary step of mobile
technology beyond 3G HSPA, allowing data rate above
100 Mbps.
LWI
Lost workday incidents. An incident resulting in one or
more lost workdays.
Mobile broadband
Wireless high-speed internet access using the HSPA, LTE,
CDMA2000EV-DO and 5G technologies.
Net Zero
A state in which no net additions of greenhouse gases are
released into the atmosphere. Organizations can achieve
this primarily by reducing their emissions as well as using
certain accepted carbon capture, removal and storage
technologies to neutralize any unavoidable remaining
emissions.
Own Activities
Cover GHG emissions in Scope 1, 2, and Scope 3 catego-
ries Business Travel and Employee Commuting.
SASB
Sustainability Accounting Standards Board. An organiza-
tion publishing sustainability reporting standards. Now
part of the IFRS (International Financial Reporting
Standards) Foundation.
SBTi
The Science Based Target initiative, A partnership between
CDP, the United Nations Global Compact, World Resources
Institute (WRI) and the World Wide Fund for Nature (WWF)
that defines and promotes best practice in emissions
reductions and net-zero targets in line with climate science,
including providing a second opinion on the ambition level
of targets set by corporates and other entities.
Scope 1
Direct GHG emissions derived from assets/sources that
are owned or controlled by an organization, typically
through combustion of fossil fuels.
Scope 2
Indirect GHG emissions derived from the energy
purchased and consumed, but not generated by, an
organization, typically from acquired electricity, heating
and cooling.
Scope 3
Other indirect GHG emissions which are a consequence of
the activities of the company but are derived from sources
not owned or controlled by the company. These include
emissions occurring in the supply chain as well those
occurring when customers use a company’s products
and services.
SDGs
Sustainable Development Goals. The 2030 Agenda for
Sustainable Development, adopted by all United Nations
Member States in 2015, provides a shared blueprint for
peace and prosperity for people and the planet, now
and into the future. At its heart are the 17 Sustainable
Development Goals (SDGs), which are an urgent call for
action by all countries – developed and developing – in a
global partnership.
TCFD
Task force on Climate related Financial Disclosures. A
framework for disclosing on an organization's strategies,
targets and risk management approaches as regards
climate change.
The Paris Agreement
A legally binding international treaty on climate change,
adopted by 196 Parties at the UN Climate Change
Conference (COP21) in Paris 2015. The Paris Agreement
sets out a global framework to avoid dangerous climate
change by limiting global warming to well below 2 °C
and pursuing efforts to limit it to 1.5 °C.
UNGC
United Nations Global Compact. Is a voluntary initiative
adopted in 2005 by the UN Secretary-General, based on
CEO commitments to Implement universal sustainability
principles and to take steps to support the UN Sustainable
Development Goals.
UNGP
United Nations Guiding Principles on Business and
Human Rights. The companies' responsibility to protect
and respect human rights are defined in the UN's
guiding principles for business and human rights
UNHCR RETS
United Nations High Commissioner for Refugees –
Refugee Emergency Telecommunications Sector. RETS
is the mechanism through which UNHCR coordinates the
communications technology response in emergencies.
UNICEF
United Nations children’s fund, established in 1946, and
responsible for providing humanitarian and developmen-
tal aid to children worldwide.
Upstream in value chain /
upstream emissions
Activities (and related greenhouse gas emissions) occur-
ring in an organization’s supply chain, including extraction
of raw materials, manufacturing, assembly and distribu-
tion of purchased products and components, and other
acquired services.
WEF
World Economic Forum.
WFP-led ETC
Emergency Telecommunications Cluster led by World
Food Programme (WFP).
The terms “Ericsson”, “the Company”, “the Group”, “us”, “we”, and “our” all refer to Telefonaktiebolaget LM Ericsson and its subsidiaries.
52
More information
Sustainability and Corporate Responsibility report 2023
More information
Information about Ericsson and its development is available on the website:
www.ericsson.com. Annual and interim reports and other relevant shareholder
information can be found at: www.ericsson.com/investors
Every care has been taken in the translation of this annual report to English.
However, in the event of discrepancies, the Swedish original will supersede
the English translation.
Contact details
Ericsson headquarters
Torshamnsgatan 21, Kista
SE-164 83 Stockholm
Sweden
Registered office
Telefonaktiebolaget LM Ericsson
Torshamnsgatan 21, Kista
SE-164 83 Stockholm
Sweden
Investor relations
For questions on the Company, please contact
Investor Relations:
Phone: +46 10 719 0000
Email: investor.relations@ericsson.com
For printed publications
Contact details for ADR program
Ericsson Annual Report 2023
For ADR institutional investors and brokers
Deutsche Bank ADR broker services desk
New York: Tel +1 212 250 9100
London: Tel +44 207 547 6500
For registered ADR Holders
Deutsche Bank Shareholder Services
American Stock Transfer & Trust Company
Email: DB@amstock.com
Toll-free number: +1 800 937 5449
Direct Dial: +1 718 921 8124
Project management
Ericsson Investor Relations
Design and production
SAFIR Communication
Photos of Board of Directors
and Executive Team
Glenn Røkeberg
Per Myrehed
Printing
Larssons Offset 2024
Printed on Amber Graphic
Order a hard copy of the Annual Report – online:
https://www.ericsson.com/en/investors/financial-reports/order-annual-report
Order a hard copy of the Annual Report – phone:
Strömberg Distribution
Phone: +46 8 449 88 16
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About Ericsson
Ericsson is a leading provider of mobile connectivity solutions to telecom operators
as well as enterprises in various sectors. Together with our customers and partners in
the ecosystem, we are leading the next wave of digitalization in society. We provide
high-performance, differentiated and programmable networks and make advanced
network capabilities available to developers around the world. Through world-leading
research, we drive new standards and are instrumental in the development of the
next-generation mobile communications infrastructure, software, and services.
The Company has approximately 100,000 employees, and customers in around
180 countries. Ericsson is headquartered in Stockholm, Sweden. Our shares are
listed on Nasdaq Stockholm and our American Depositary Shares (ADS) are listed
on Nasdaq New York. Ericsson’s vision is a world where limitless connectivity
improves lives, redefines business and pioneers a sustainable future.
Telefonaktiebolaget LM Ericsson
SE-164 83 Stockholm, Sweden
Telephone +46 10 719 00 00
www.ericsson.com
EN/LZT 138 2392 R1A
© Telefonaktiebolaget LM Ericsson 2024