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:

“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 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

 

78% 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.

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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

Note to Northrop Grumman: 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.

What are the material issues the company has identified?

In its 2018 Corporate Responsibility Report Northrop Grumman identified a range of material issues, such as financial performance, customer satisfaction, data privacy, product and service quality, talent management. Among these, promoting ethical business conduct 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:

“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 Northrop Grumman engages with:

Stakeholder Group	Method of engagement
Customers	·      Engage with customers on establishing goals and priorities ·      Pilot “Joint Quality Council” quarterly meetings with Defence Contracts Management Agency (DCMA) representatives. Invited DCMA members as keynote speakers at the 2018 Quality Symposia.
Suppliers	·      Host supplier outreach events, offer mentoring programmes and sponsor academic, customer and industry activities that support small business growth and development ·      Collaborate with government and industry partners to develop and drive common strategies and standards in order to reduce supply chain risk
Shareholders	·      Bi-annual engagement with the governance leads of the largest shareholders, as well as ongoing engagement with the investment leads at actively managed shareholders
Employees	·      Host Leadership Council Meetings and Sector Diversity and Inclusion Council Meetings ·      Consult and collaborate with the 12 Employee Resource Groups, Global and Sector Diversity & Inclusion Committees, and the Veterans Inclusion Committee on numerous issues ·      Charter the Technical Talent Working Group to address the development needs of the technical staff across the enterprise
Industry Organisations	·      Engage with governmental agencies and industry groups on workplace accommodations and equal employment opportunity ·      Engage with and represent the company on industry working groups addressing security stakeholder topics such as critical technology protection, controlled unclassified information, insider threat and personnel security clearances ·      Host industry compliance meetings with various nonprofit and government organisations
Community	·      Meet and collaborate with leadership to develop community outreach plans and review programmes and initiatives ·      Engage with community partners at nonprofit organisations to facilitate funding and grant requests ·      Collaborate with educational thought leaders to develop and provide relevant professional development programming to middle school science, technology, engineering and mathematics (STEM) teachers ·      Collaborate with organisations focused on military and veterans and diversity and inclusion to understand key issues and needs

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Northrop Grumman carried out a materiality assessment survey in 2017 with employees across different levels and business units, asking employees to rate the importance of each potentially material topic to four different stakeholder groups: customers, investors, employees and society.

What actions were taken by Northrop Grumman to promote ethical business conduct?

In its 2018 Corporate Responsibility Report Northrop Grumman reports that it took the following actions for promoting ethical business conduct:

• Providing ethics and compliance training
• All Northrop Grumman employees participate in mandatory annual ethics and compliance training and, in 2018, approximately 84,000 employees received such training (including online and in-person training sessions). Northrop Grumman provided enterprise training on Northrop Grumman’s Values, building the best culture, information security, export awareness, property awareness, and for U.S. employees, the importance of time and labour charging accuracy. For international employees, Northrop Grumman included a module on Anti-Corruption and translated training content into German, French, Italian, Dutch, Flemish, Chinese and Arabic. Additionally, U.S. employees are required to annually disclose any conflicts of interest and certify that they have read, understand and will comply with the Northrop Grumman Standards of Business Conduct. Northrop Grumman’s Standards of Business Conduct brochure is published in 12 different languages.

• Encouraging employees to raise concerns
• Northrop Grumman operates OpenLine, a valuable resource where employees, business partners, suppliers and other stakeholders can seek guidance on ethics questions and report suspected violations of laws, regulations and company policy. The toll-free 24/7 number, administered by a third-party service provider, is communicated on brochures, posters, the company intranet and internet sites and there are dedicated OpenLine numbers at most of Northrop Grumman’s international locations, so employees in those countries can speak to a representative in their native language. In addition, an online web-based reporting system is available to employees. In 2018, Northrop Grumman extended OpenLine to Singapore and Hong Kong and revamped its global OpenLine intake process to make it easier and more employee friendly, and there were 2,573 OpenLine contacts, including phone and web entries, as well as input from Northrop Grumman’s business conduct officers and human resources business partners. The number of allegations were about the same from the previous year, but inquiries decreased by 3.4%, possibly due to targeted training and enhanced communications. Most inquiries relate to business courtesies and conflicts of interest and are generally a one-time contact with a response based on policy or procedures. They are documented for evaluation and guidance on training and communication content. Callers may choose to remain anonymous if permitted by local law and Northrop Grumman’s non-retaliation policy, prominently posted online and in brochures, clearly states zero tolerance of direct or indirect retaliation against any individual who reports a concern in good faith. Allegations are investigated by dedicated teams of full-time professionals trained to conduct interviews in a manner that respects the reporting individual and the trust they have placed with Northrop Grumman. Examples of allegations include misuse of company resources, violations of employment, harassment or retaliation practices and policy or security concerns; however, most raise issues involving employee behavioural misconduct and time reporting. In 2018, 33% of these allegations were substantiated, up 3% from the previous year, and there were 94 terminations due to substantiated OpenLine allegations.

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

The GRI Standard addressed in this case is: Disclosure 205-2 Communication and training about anti-corruption policies and procedures

Disclosure 205-2 Communication and training about anti-corruption policies and procedures corresponds to

• Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
• Business theme: Anti-corruption

 

78% 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.

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References:

1) 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 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 Northrop Grumman: 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.