Board and Management Oversight of CSR
Our single-tier Board is led by our Chairman and CEO and a strong independent Lead Director. All our directors other than our CEO are independent directors as defined by the NYSE. Our directors are highly qualified, with a diversity of skills, backgrounds and perspectives. Upon the election of our current director nominees in May 2020, our Board will be composed of 10 directors, including two females and two African-American men, resulting in 40 percent gender or ethnic diversity. The Board believes that its structure and composition of highly experienced and engaged independent directors provide effective oversight of the company’s management.
The Board has an active role in the company’s overall strategies. The Board also conducts an annual review of the company’s corporate governance practices and periodically reviews the company’s CSR strategy. Furthermore, the Board is responsible for overall risk oversight of the company, which includes certain environmental, social, supply chain and governance matters. To this end, ITW’s Board receives periodic updates regarding the company’s CSR-related initiatives and progress, including those related to climate change risk management. The Audit committee of the Board oversees the risk factors disclosed in our Annual Report on Form 10-K, which include uncertainties relating to climate change risk.
During its update in 2019, the Board and management reviewed, among other sustainability matters, the greenhouse gas (GHG) emissions reduction target to reduce the company’s combined Scope 1 and 2 GHG emissions per U.S. dollar of operating revenue by 20 percent below 2017 levels by 2027. In setting this target, ITW is committed to continuous improvement in reducing its impact on the environment.
ITW’s management team, subject to oversight by our Board, structures, monitors and adjusts ITW’s CSR efforts in a manner that is consistent with our core values, and in a manner that best serves the interests of the company and all of ITW’s stakeholders. Each year, senior management reviews the long-range plans of our segments and divisions. These plans consider, as appropriate, long-term CSR implications and the ability to meet customer needs related to sustainability and climate change risk management.
In addition, ITW’s director of environmental health, safety & sustainability has day-to-day environmental-related responsibilities, including overseeing the execution of ongoing environmental, safety and regulatory compliance initiatives. Within our decentralized culture, each ITW division utilizes ITW’s CSR framework to develop and execute a fit-for-purpose environmental management methodology and safety program appropriate for its business.
Read more about our Board composition and oversight role as well as our strong governance profile in our 2020 Proxy Statement.
Rooted in our values of Integrity, Respect and Trust, we set high ethical standards for our company and partners that help us deliver best-in-class performance. With a focus on continuous improvement, we regularly review and update, as appropriate, our policies governing ethical conduct and responsible behavior.
- Corporate Governance Guidelines ensure the company is governed in a manner that serves the interests of our shareholders, colleagues and other stakeholders.
- Code of Ethics outlines ITW’s principles regarding fair, ethical and honest business dealings, full and fair disclosure, and compliance with applicable laws.
- Statement of Principles of Conduct describes the expected standard of behavior governing all ITW colleagues, businesses and subsidiaries around the world. It also outlines our commitment to compliance with human rights laws, including those against slavery, human trafficking and child labor. These standards are also applied to our suppliers through our Supplier Code of Conduct and in our standard purchase order terms and conditions found on www.itw.com.
- Safety Policy stipulates that we strive every day to foster a proactive safety culture through the execution of our Enterprise Safety Strategy, which is based on a philosophy that every accident is preventable and with a shared goal of zero accidents.
- Environmental & Sustainability Policy reinforces ITW’s commitment to global environmental sustainability reflected in the following priorities: improving our environmental performance on an ongoing basis; working with suppliers who operate with similar dedication to global environmental sustainability; and partnering with our customers in innovating solutions that address their needs for environmentally responsible products.
- Global Anti-Corruption Policy emphasizes the importance of complying with anti-corruption laws of all countries in which ITW and our divisions, subsidiaries, agents, consultants and affiliates operate.
- Human Rights Policy reinforces our commitment to demonstrating respect for human rights at ITW and throughout our supply chain, and it applies to all ITW colleagues and locations worldwide and to others who may act on ITW’s behalf.
- Conflict Minerals Policy seeks to assure that our products are conflict free.
- Modern Slavery and Human Trafficking Statement describes the steps we take to mitigate slavery and human trafficking in our supply chain.
- Supplier Code of Conduct requires our suppliers, vendors and contractors to operate to our high ethical standards. This Code applies all relevant aspects of ITW’s Statement of Principles of Conduct to our suppliers. Among their requirements, our suppliers are required to adhere to applicable laws, including those concerning human rights, child or forced labor, wage and working hours, discrimination, environmental, health and safety, and fair dealing. Furthermore, our suppliers are required not to engage in corruption, and they commit to fully comply with all applicable anti-corruption laws and regulations of the countries in which they operate.
- Supplier Expectations inform our suppliers that they are expected to operate in compliance with rigorous performance standards and improve their own environmental and social performance.
- Government Affairs statement describes our prohibition against use of company assets or funds for political purposes.
- Hedging/Anti-Pledging Policy for executive officers and directors prohibits hedging the risk of ownership in ITW stock and prohibits pledging of ITW stock to secure payment obligations.
- Clawback Policy provides for the recovery of incentive compensation payments from our senior officers in the event of an accounting restatement (whether or not based on misconduct) due to material noncompliance with financial reporting requirements.
View our policies here.
Reporting Ethics Concerns
ITW colleagues around the world are encouraged to share any ethics or compliance concerns with their local management teams. They may also submit reports directly to ITW’s ethics & compliance legal group or our Vice President, Chief Audit Executive, or through our confidential Helpline. ITW partners with EthicsPoint, an external third-party supplier, to provide a web- and telephone-based confidential reporting system in 40 countries. Web-based reporting is offered in 16 languages, and telephone-based reporting is offered in more than 200 languages. The EthicsPoint reporting system is also available to external stakeholders through a public domain website.
All reports are investigated promptly and appropriately. Our Vice President, Chief Audit Executive provides regular updates to the Audit Committee of the Board of Directors.
Alignment with Sustainability Accounting Standards
Consistent with our overarching CSR strategic framework and our ongoing engagement with our shareholders, we have been monitoring the financial materiality framework of the Sustainability Accounting Standards Board (SASB) as a way to assess the financial materiality of environmental, social and governance risks to our company. In 2019, we utilized the SASB Materiality Map® to review the environmental, social and governance risks identified by SASB for companies in the Industrial Machinery and Goods industry under SASB’s Sustainable Industry Classification System®.
The SASB framework describes several disclosure topics including:
- Energy Management (discussed in the “Environmental Responsibility” section of this report)
- Employee Health & Safety (discussed in the “Employee Safety” section of this report)
- Fuel Economy & Emissions in Use-Phase (referenced in the “2019 CSR Report Index”)
- Remanufacturing Design & Service (discussed in the “Environmental Responsibility” section of this report)
- Materials Sourcing (discussed in the “Supply Chain Responsibility” section of this report)
Metrics related to the above topics are discussed in more detail in the respective sections of this report. We continue to monitor the SASB framework as it applies to the company in order to identify any environmental, social and governance risks that may be material to the company.
Questions about the Report
In the spirit of continuous improvement, we welcome feedback from our stakeholders regarding our CSR initiatives and reporting process. Any questions or comments about this report or future reports may be directed to email@example.com.