The case for CSR/ Sustainability Reporting Done Responsibly


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Home / case studies / Case study: How Johnson Controls promotes sustainability among its suppliers

Case study: How Johnson Controls promotes sustainability among its suppliers

Johnson Controls is a global diversified technology and multi-industrial leader serving a wide range of customers in more than 150 countries, creating intelligent buildings, efficient energy solutions and integrated infrastructure to deliver on the promise of smart cities and communities. Johnson Controls expects its suppliers to conduct their business in a safe, sustainable manner, consistent with all laws, and focusing on reducing the carbon footprint of their activities.

This case study is based on the 2020 Sustainability Report by Johnson Controls published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

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Johnson Controls encourages its suppliers to conduct their operations in a socially and environmentally responsible manner  Tweet This!, so as to exceed its customers’ increasing expectations and achieve outstanding performance through best-in-class products, services and processes. In order to promote sustainability among its suppliers Johnson Controls took action to:

  • conduct an online sustainability survey
  • implement a Code of Ethics
  • assess suppliers

What are the material issues the company has identified?

In its 2020 Sustainability Report Johnson Controls identified a range of material issues, such as ethics and compliance, employee health and safety, human rights, cybersecurity, waste and hazardous materials management. Among these, promoting sustainability among its suppliers stands out as a key material issue for Johnson Controls.

Stakeholder engagement in accordance with the GRI Standards                                     

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The reporting organization shall identify its stakeholders, and explain how it has responded to their reasonable expectations and interests.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Johnson Controls engages with:

To identify and prioritise material topics Johnson Controls engaged with its stakeholders through the following channels: 

Stakeholder Group                Method of engagement
Employees including Executive Leadership and Business Resource Group leaders

 

 

·      Quarterly “Town Hall” meetings

·      Employee Surveys

·      Business Resource Group initiatives

·      Sustainability report

·      Internal website

·      Materiality Assessment

Suppliers

 

 

 

·      Calls

·      1×1 engagement

·      Surveys

·      Conferences

·      Top Supplier Awards

·      Supplier Diversity initiatives

·      Materiality Assessment

Customers

 

·      Calls

·      Meetings

·      1×1 engagement

·      Surveys

·      Materiality Assessment

·      Market Research

Investors

 

 

·      Calls

·      Annual Investor Day

·      Materiality Assessment

Non-governmental organisations

 

 

·      Calls

·      Meetings

·      Conferences

·      Materiality Assessment

·      Memberships

·      Funding through Foundation and Sponsorships

·      Employee volunteering

Industry Groups

 

 

 

·      Calls

·      Meetings

·      Conferences

·      Materiality Assessment

Labour Groups

 

·      Calls

·      Meetings

Media

 

·      Calls

·      Meetings

·      Conferences

·      Materiality Assessment

Academia

 

·      Calls

·      Meetings

·      Research partnerships

·      Employee matching programmes for higher educational institutions

·      Materiality Assessment

What actions were taken by Johnson Controls to promote sustainability among its suppliers?

In its 2020 Sustainability Report Johnson Controls reports that it took the following actions for promoting sustainability among its suppliers:

  • Conducting an online sustainability survey
  • Johnson Controls employs a proprietary supplier questionnaire called the Johnson Controls Sustainability Supplier Rating to assess its suppliers’ sustainability programmes. The online survey is administered to key suppliers annually. It was first released in January 2010 and is available on the Johnson Controls website. The survey contains questions related to human rights, working conditions, employee safety, energy management, carbon footprint, waste management, local and diversity sourcing, and overall environmental impact. It also asks if the supplier is publicly reporting data such as their greenhouse gas emissions and specifically asks if the suppliers disclose their carbon emissions to the CDP global disclosure system. In addition to this survey, on-site reviews of supplier operations may also occur as needed. The Johnson Controls Sustainability Rating is part of Johnson Controls’ supplier scorecard.
  • Implementing a Code of Ethics
  • Johnson Controls requires all its suppliers to adhere to its Code of Ethics, which covers issues such as labour, human rights, and the environment. Johnson Controls also has policies and procedures in its business for removing unethical suppliers from its approved vendor lists if they don’t or won’t comply with its Code of Ethics. To date, no significant social or environmental performance issues have been identified with any supplier. Current data indicates that no supplier has refused to abide with the essence of the Code of Ethics or has been terminated because of social or environmental performance issues. However, there have been instances in which follow-up questions and discussions were necessary, particularly relating to environmental permit currency and operations compliance.
  • Assessing suppliers
  • Johnson Controls has a common set of criteria (supplier sustainability rating, supplier scorecard, and supplier assessment survey) for assessing the environmental and social performance of key suppliers, especially those posing the greatest risks to Johnson Controls and its customers (i.e. raw material extraction, chemical processing, manufacturing associated with high labour demands, etc.). Johnson Controls also relies on local, state, and federal agencies to monitor a supplier’s compliance with environmental and labour laws and often uses the web or has direct discussions with the regulatory agency to review a supplier’s compliance record. In addition, Johnson Controls often performs site audits of selected suppliers to make sure that the proper environmental and social processes are documented, implemented and remain effective. Additional supplier oversight may also be prompted by negative reports regarding the environmental and social conditions of a supplier’s facility or process. Falsification of data is taken seriously, and appropriate follow-up actions are taken whenever data is suspect. This action could result in contract termination.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 308-1 New suppliers that were screened using environmental criteria

2) Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken

 

Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.

Disclosure 308-2 Negative environmental impacts in the supply chain and actions taken does not correspond to any SDG.

 

80% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.



FBRH GRI Standards Certified, IEMA & CIM recognised Sustainability Course | Venue: London LSE

By registering for the next 2-day FBRH GRI Standards Certified, IEMA & CIM recognised course you will be taking the first step in gaining the many benefits of sustainability reporting.

Most importantly, you will gain the knowledge to use the GRI Standards, project manage your own first-class sustainability report and:

  • Identify your most important impacts on the Environment, Economy and Society
  • Begin taking solid, focused, all-round sustainability action ASAP

 

References:

1) This case study is based on published information by Johnson Controls, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) https://www.globalreporting.org/standards/gri-standards-download-center/

Note to Johnson Controls: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.