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.
Abstract
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
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With this case study you will see:
- Which are the most important impacts (material issues) Johnson Controls has identified;
- How Johnson Controls proceeded with stakeholder engagement, and
- What actions were taken by Johnson Controls to promote sustainability among its suppliers
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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:
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.
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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/
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