sustainability risk management
DESCRIPTION
Sustainability Risk Management. Johnson Controls, Inc. John F. Vargo Director, Risk Management. Agenda. Company Overview The Path to Sustainability Sustainability at Johnson Controls Risks and Rewards Results. Johnson Controls Overview. Founded in 1885 HQ: Milwaukee, Wisconsin - PowerPoint PPT PresentationTRANSCRIPT
Agenda
Company Overview
The Path to Sustainability
Sustainability at Johnson Controls
Risks and Rewards
Results
Johnson Controls Overview
Founded in 1885
HQ: Milwaukee, Wisconsin
67th Fortune 500 - 2007
136,000 employees
500 locations in 52 countries
Credo: 5 Core Values
Building21%
Europe41%
ROW19%
Power11%
4
Interior Experience
Global provider of seating, overhead, electronics, door and cockpit systems
More than 50% of revenues generated outside of North America
Leading presence in China through joint ventures
NorthAmerica
44%Europe48%
Asia 8%
2006 sales: $18.3 billion$165 billion market275 locations in 30 countries
Customer Diversity (2007 sales*, includes unconsolidated)
North America Europe Asia
Delivering world-class technologies that differentiate vehicle interiors and increase consumer demand
North American
52%
Asian & European
OEs48% European
OEs69%
Asian & NA31% Asian
OEs 66%
European & NA34%
*projected
5
36%
Power Solutions
80% of sales to aftermarket– Hundreds of customers and dozens of brands
Geographic diversity– 25 manufacturing plants on five continents
Wide range of automotive battery technologies– Lead-acid– Nickel metal hydride, lithium-ion
Providing the highest quality, lowest cost automotive batteries to help customers grow their market shares
2006 Sales:$3.7 billionJCI Global Market Share 30% 9%
Asia
36%
Americas63%
Europe31%
6%Asia
6
*HVAC/fire/security only
Building Efficiency
2006 sales: $10.2 billion
$200+ billion non-residential global market*
Creating quality indoor environmentsthat are energy efficient, comfortableand safe
Non-residential buildings– Tens of thousands of customers– 125 countries– Revenues 75% aftermarket; 25% new construction– Systems, products, services and solutions offerings
Residential– Home air conditioning and heating,
65% replacement
Europe29%
Asia17%
NorthAmerica
54%
7
What is Sustainability?
“Sustainable development meets the needs of the present generation without compromising the ability of future generations to meet their needs."
- 1987 United Nations Brundtland Report
“A business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.”
- Dow Jones Sustainability Index
Measuring the triple bottom line
Environmental
Econom
ic SocialJohnson Controls
provides products and services that
address risks and opportunities
in order to contribute to an organization's long-term
social, financial and environmental success.
What is Sustainability?
Sustainability: Before 2000 Sustainability a new concept
Social investing immature
Johnson Controls:– Strong commitment to Core Values and
Ethics – Outstanding governance, social and
environmental track record– Little press or NGO attention– Rapidly growing and not a Fortune 100
All seemed well...
Sustainability: After 2000
Social investing:– Over 230 social mutual funds in U.S. today– Influence trillions of investment dollars– Growing about 30% annually
NGOs:– More and better organized– Target big companies– Current focus:
• Climate change• Governance • Supply chain management
Customers:– Demand less risks
Sustainability
Define it
Measure it
Report it (transparency)
Use it (to find value)• New products and services• Branding
Defining Sustainability
External
• Numerous definitions depending on stakeholder’s agenda• AKA: Sustainable Development, Corporate Social Responsibility
(CSR), Environmental, Social & Corporate Governance (ESG)• “Triple Bottom Line” most accepted externally and consistent with
internal policies/practices
• Core Values
• Ethics Policy
• ESH Policies
• Committed management
• Performance metrics
Internal
Environmental Stewardship
Social Responsibilit
y
AnIntegrated,BalancedStrategicApproach
Economic Prosperity
Integrity – Through annual reporting and a commitment to transparency, we demonstrate our integrity and ethics.
Customer Satisfaction – By helping our customers meet their sustainability goals we demonstrate our commitment to their success.
Our Employees – Through leadership development, and commitment to diversity and community involvement we strive to be an employer of choice.
Improvement and Innovation – Commitment to sustainability drives innovation.
Safety and the Environment – Our participation in USGBC, EPA Climate Leaders and other organizations demonstrates our leadership on meeting today’s challenges and planning for tomorrow’s.
Our Values = Sustainability
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The Johnson Controls Path to Sustainability
Commit To
Understanding Sustainability
Assess &Prioritize
Your Risks and Opportunities
Communicate Intent & Results
ImplementTechnologies and Strategies
Johnson Controls/Others
Culture of Sustainability
Addressing risks and opportunities that contribute to an organization's long-term social, financial and environmental success
16
Johnson ControlsCorporate Commitment
Risk/Opportunity
Social
Financial
Environment
Strategies
How we operate
Facility Optimization
Manufacturing Processes
Employee Involvement
Supply Chain Management
Intent & Results
Internal
External
Certification
Technologies
What we sell
Building Efficiency
Interior Experience
Power Solutions
Commit Assess &Prioritize
CommunicateImplement
UnderstandSustainability
Executive Leadership
Business Group Accountability
Culture of Sustainability
Asset Management
- Real Estate- Transportation- Physical Assets
Continuous Improvement
Supply Chain Management
Marketing & Public/Community
Relations
Employee Education & Involvement
Products/ Services/ Programs
Manufacturing & Operations
Executive/ Leadership
Developing a Culture of Sustainability
Culture of Culture of SustainabilitySustainability
Transparency: Reporting Before 2000 published only an Annual
Financial Report
2003: published ESH Report and a Financial Report
2004:Sustainability Report and kept Financial Report
2005 combined Financial & Sustainability Report and post additional details on Web.
2006 and beyond:
– Using programs to simplify reporting to multiple stakeholders
– More NGO dialogue
Sustainability Metrics—(GRI)
ECONOMIC
Direct Economic Impacts
Customers
Suppliers
Employees
Providers of capital
Public sector
Governance
ENVIRONMENTAL
Environment Materials
Energy
Water
Biodiversity
Emissions
Effluents
Waste
Suppliers
Products and services
Compliance
Transport
Overall
SOCIAL
Labor Practices Employment
Labor/management relations
Health and safety
Training and education
Diversity and opportunity
Human Rights Strategy and management
Non-discrimination
Freedom of association
Child labor
Forced labor
Disciplinary practices
Security practices
Indigenous rights
Society Community
Bribery
Political contributions
Competition and pricing
Product Responsibility Product safety
Advertising
Respect for privacy
Managing the Risk – Economics
Protect our employees
Protect our physical assets
Work with our suppliers to ensure they understand the risks and act appropriately
Ensure that our vendors adhere to JCI’s ethic’s policy or equivalent
Ensure the ongoing financial viability of the business through the management of risk
Managing the Risk – Environment
Accountability and Responsibility
Reduce Waste
Minimize Environmental Impact
Minimize Hazardous Substances – Mercury-Free Products– End-of-Life Regulations
Commitment to the environment impacts our approach to risk management programs
Managing the Risk – Social
Establish written employee policies and follow them
Make employee safety an emphasis
Design safe products and monitor any issues
Support supplier diversity
Act within the law in every country we operate
Commitment to the social responsibility
What’s the Payoff?
2004 WEC Gold Medal Award
FTSE4Good Index
President Bush visits Johnson Controls Advanced Battery Lab 2/2006
2006 EPA Climate Protection Award
2005 EPA Clean Air Excellence Award
Business Ethics Magazine 100 Best Corporate Citizens
The TOP RANKED AUTOMOTIVE SUPPLIER in Fortune magazine’s 2006 Most-Admired Companies survey.
Finding Value for our Customers
Maturity
Val
ue
Ch
ain
Regulatory Compliance: Address “end of pipe” issues Safety, permitting, auditing, pollution prevention
Reduce Costs: Waste management Energy management
Competitive Advantage: Provide customers GHG tracking tools Provide sustainability training Closer supplier monitoring Market green buildings Design products for Sustainability
Must Do
Gro
w B
usin
ess
26
Marketplace Factors
Technology has improved
Accountability has improved
Global access and communications have improved
Government and the marketplace are both driving change
Managing Risks & Embracing Opportunity
Risk
• Mandates/regulations• Air pollution• GHG emissions• Water quality
Risk
• High energy bills• High operating
costs• Outdated
equipment• No capital project
fundingOpportunity
• Lower energy bills• Reduced
O&M/deferred maintenance
• Stable energy supply
• Funds capital Improvements
Opportunity
• Streamlined approvals• Reduced air pollution• Reduced GHG emissions• Reduced water use
Risk
• Health care issues• Poor indoor air• Productivity• Community
concerns
Opportunity
• Public Health• Worker productivity• Socially
responsible investorsEnvironmental
Econ
omic Social
28
The Path to Sustainability:Building Efficiency Offerings
Risk/Opportunity• Overall Goals
– Social– Financial– Environment
• Project Scope– Infrastructure– Facility– Service/FM
• Project Approach– Funding– Timetable– Implementation
Team– Technologies/
Strategies
Strategies• Funding• Energy & Water
Services• Renewables• Design/Build • Lifecycle
Program Mgmt.• Operations &
Maintenance• Facility
Management• Service • Supply Chain• GHG tracking
and reporting
Intent & Results• Internal
– Evaluation– Communication– Education
• External – Public Relations– Community Rel– GHG Reports– Corp Soc Resp
• Certification – LEED– ENERGY STAR– GRI– MBE/DBE etc.
Technologies• Infrastructure
– Energy Supply– Water Supply– Wireless
• Facility– Automation– Technology
Systems– Energy– Water– HVAC/R– Lighting
• Environmental Products
Commit Assess &Prioritize
CommunicateImplement(JCI / Third Party)
UnderstandSustainability
• Business Case Dev’t
– Financial– Environment
Issues– Social
• Employee• Community
• Life Cycle Approach
• Flexible
• Scalable
Culture of Sustainability
Sustainable Success
Measuring the triple bottom line
Environmental
Econom
ic SocialJohnson Controls
provides products and services that
address risks and opportunities
in order to contribute to an organization's long-term
social, financial and environmental success.