Case study: How Northrop Grumman promotes sustainability among its suppliers
Northrop Grumman is an American multinational aerospace and defense technology company, solving the toughest problems in space, aeronautics, defense and cyberspace to meet the ever-evolving needs of its customers worldwide. Northrop Grumman requires its partners and suppliers in its worldwide supply chain to share its commitment to sustainability Tweet This!, including through its Standards of Business Conduct for Suppliers and Other Trading Partners.
This case study is based on the 2020 Sustainability Report by Northrop Grumman, prepared in accordance with the GRI Standards, 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
Northrop Grumman fully supports, among others, the elimination of human trafficking and forced labour from its supply chain and does not tolerate either. Accordingly, Northrop Grumman’s suppliers must comply with all applicable local laws in the country or countries in which they operate. In order to promote sustainability among its suppliers Northrop Grumman took action to:
- implement Standards of Business Conduct for Suppliers and Other Trading Partners
- engage with suppliers
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With this case study you will see:
- Which are the most important impacts (material issues) Northrop Grumman has identified;
- How Northrop Grumman proceeded with stakeholder engagement, and
- What actions were taken by Northrop Grumman to promote sustainability among its suppliers
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What are the material issues the company has identified?
In its 2020 Sustainability Report Northrop Grumman identified a range of material issues, such as product safety and quality, talent management, employee wellbeing and engagement, cybersecurity and data privacy, diversity, equity and inclusion. Among these, promoting sustainability among its suppliers stands out as a key material issue for Northrop Grumman.
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 Northrop Grumman engages with:
| Stakeholder Group | Method of engagement |
| Customers
| · Engage customers on establishing programme goals and priorities · Collaborate with government and industry partners to develop and drive common strategies and standards that support programme performance, foster innovation and reduce supply chain risk |
| Suppliers | · Host supplier outreach events and offer mentoring programmes · Sponsor academic, customer and industry activities that support small business growth and development |
| Shareholders | · Engage with investment leads at actively managed shareholders · Meet regularly with the governance leads of the largest shareholders |
| Employees
| · Consult and collaborate with employees through a variety of ways, including annual employee survey, Employee Resource Groups, Global and Sector Diversity and Inclusion Committees and all hands and small group forums · Offer volunteer opportunities and programmes in areas such as mentoring, STEM education, environmental conservation, military and veterans, matching gifts and payroll contributions to charities |
| Industry partners
| · Engage with and represent the company on industry associations addressing security stakeholder topics such as critical technology protection, controlled unclassified information, insider threats and personnel security clearance · Participate in industry meetings with various nonprofit and government organisations |
| Community
| · Review programmes and initiatives in collaboration with community partners and senior leadership; develop community engagement plans that align with strategic priorities · Collaborate with leaders from organisations in targeted areas, including military and veterans, STEM education and diversity-focused organisations, to understand key issues and needs |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics Northrop Grumman interviewed both internal leaders and external stakeholders including investors, customers and industry partners, suppliers, academia and a diverse set of community organisations.
What actions were taken by Northrop Grumman to promote sustainability among its suppliers?
In its 2020 Sustainability Report Northrop Grumman reports that it took the following actions for promoting sustainability among its suppliers:
- Implementing Standards of Business Conduct for Suppliers and Other Trading Partners
- Northrop Grumman requires each of its suppliers to act in compliance with all applicable laws, regulations and contract terms, including adherence to its Standards of Business Conduct for Suppliers and Other Trading Partners. These standards establish requirements, including those related to ethics and integrity, labour and employment practices, human rights protection, sustainability and diversity and inclusion. In 2020, Northrop Grumman updated these standards to incorporate and reflect its newly stated corporate Values. Northrop Grumman also promotes best practices in environmental management within its supply chain function and across its supply base with a focus on improved risk management, performance and transparency. As stated in its Standards of Business Conduct for Suppliers and Other Trading Partners, Northrop Grumman expects its suppliers to support its commitment to operate as responsible stewards of the environment. Northrop Grumman’s Enterprise Terms and Conditions include a provision requiring compliance with its Standards of Business Conduct for Suppliers and Other Trading Partners, as a condition of doing business. In the event of a violation, Northrop Grumman reserves the right to terminate its contract. These standards apply to suppliers at all tiers and those who work for them.
- Engaging with suppliers
- As part of its supplier engagement and communication activities, Northrop Grumman provides targeted supplier training, resources and awareness through its online Suppliers Portal. This portal serves as an extension of Northrop Grumman’s commitment to building long-term, mutually beneficial relationships with its suppliers, and serves as a communication and collaboration hub for doing business with Northrop Grumman. Northrop Grumman regularly communicates and engages with its suppliers regarding social responsibility and regulatory compliance in areas including, but not limited to: Equal Employment Opportunity, Affirmative Action, Cyber Security, Conflict Minerals, Counterfeit Parts, Anti-Human Trafficking, Harassment and Discrimination and International Trade.
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 414-1 New suppliers that were screened using social criteria
Disclosure 308-1 New suppliers that were screened using environmental criteria does not correspond to any SDG.
Disclosure 414-1 New suppliers that were screened using social criteria corresponds to:
- Sustainable Development Goal (SDG) 5: Gender Equality
- Targets: 5.2
- Sustainable Development Goal (SDG) 8: Decent Work and Economic Growth
- Targets: 8.8
- Sustainable Development Goal (SDG) 16: Peace, Justice and Strong Institutions
- Targets: 16.1
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References:
This case study is based on published information by Northrop Grumman, 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 following link:
https://www.northropgrumman.com/wp-content/uploads/Northrop-Grumman_2020-SustainabilityReport.pdf
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