Doing business right

The foundation of our commitment to being a responsible global citizen is to operate efficiently and sustainably, while producing products and services that allow our customers to do the same. We care about "doing business right" — and how we get our results is just as important as the results themselves.

Portfolio

Materiality

Proactively managing Eaton’s material issues is the foundation for our sustainability program

We embody our principle of Doing Business Right by focusing on the sustainability impacts in our business. In 2014, we completed a materiality assessment process to identify the business issues that matter most. As part of this process, we conducted the following steps:

  1. Collected input from a diverse group of internal and external stakeholders.
    • We researched an extensive collection of internal and external documents and compiled a master list of potential issues to consider for additional review.
  2. Identified the key issues and aligned them with GRI G4 reporting standards.
    • We leveraged our understanding of the GRI framework to narrow our master list to those issues that were most important to stakeholders.
  3. Conducted internal interviews to prioritize the topics with substantive impact.
  4. Confirmed the top issues with senior leadership.
    • We presented our findings to members of our leadership team.
    • Eaton leaders provided feedback which we incorporated to finalize our list of material issues.
  5. Assessed our strategy, goals, metrics, performance and reporting on each issue.
    • We reviewed existing data and interviewed functional leaders to gain a greater understanding of our current state.
    • We integrated our material issues into our sustainability and reporting strategies to serve as our compass for mapping future performance.

Throughout our process, we implemented the GRI “Principles for Defining Report Content”:

  • Materiality: We evaluated potential issues based on the significant economic, environmental and social impact using stakeholder input.
  • Stakeholder Inclusiveness: We collected input from both internal and external stakeholders and validated our results with internal leaders.
  • Sustainability Context: In identifying potential material issues, we consulted sources both within and outside our industry. We present our sustainability performance so that stakeholders may easily compare us with other organizations.
  • Completeness: For each of our prioritized material issues, we provide stakeholders with our management approach and performance.
  • Balance: We consider both our successes and our challenges associated with managing each of our material issues.

To understand the boundary for each of our material issues, we mapped the impacts along our value chain. Through this exercise, we divided our impacts into two groups: upstream and downstream. In the table below, we have captured the material issues and their associated boundaries.

Stakeholder engagement

Engaging with our stakeholders is essential to Eaton's continued business success

Our business operations affect many groups and organizations across the globe. In turn, these stakeholders have a fundamental impact on Eaton's sustainability performance.  We identify these groups based on each group's impacts and influence associated with our business practices.  Our key stakeholders are:

  • Customers
  • Employees
  • Investors/shareholders
  • Suppliers
  • Local Communities
  • Governments

Our processes for engaging with stakeholder groups, and identifying and responding to their concerns, vary. One way we identify and summarize stakeholder concerns is through our materiality analysis. The outcome of this analysis helps us define our strategy, goals, metrics, and reporting on the most important issues to Eaton and our stakeholders.  Learn more about our process for determining material issues.

Learn more about our EHS Policy.

Learn more about our Climate Change Commitment.

Eaton engages with customers to understand market needs and drive business value

Innovative Products form the core of our business model.  Our customers help us understand and explore our innovation opportunities.  Through our direct and frequent engagement, we develop and launch products that exceed our customers' expectations. 

We engage with our customers through two innovative methods: our Customer Advisory Board and our Customer Relationship Reviews.

Through our Customer Advisory Board, we solicit unfiltered feedback about how we can continuously improve our sustainability performance.  Our goal is to integrate the voice of customer into our sustainability reporting.  Customer feedback through this channel helps us identify our successes and areas of opportunity.  We incorporate this feedback directly into our action plans and reporting efforts. 

The Customer Relationship Reviews (CRR) is a face-to-face interview process conducted with decision makers and influencers from key strategic customers.  We conduct more than 1000 CRR interviews each year.  We often interview more than one contact at each account to gain a well-rounded view of the customers' perceptions of our company.

The output of the CRR process is both quantitative and qualitative. An Executive Summary of the results includes key strengths and areas of suggested improvement.  Results are delivered to key leaders within each business.  Numerous focused reports are used by employees throughout Eaton. Follow-up action plans are developed and monitored based on CRR input.

Learn more about the value we deliver to our customers.

Eaton engages employees to foster a collaborative atmosphere of sustainability and excellence at every level of our operations

Our primary method for measuring employee engagement is our biennial employee survey. The survey provides us with a structured way to evaluate employee engagement and to solicit ideas for how we can keep improving our workplaces. We have held what is considered a favorable employee engagement score, according to external normative data, since 2008. A common Eaton-wide action planning and follow-up process is utilized to produce direct and measurable improvements. This process extends all the way to the direct reports of the CEO, who each provide a summary of their action plans after the survey.

In addition to the survey, it is common for managers to conduct informal meetings with employees on a intermittent basis. 

  • Skip level meetings occur when managers meet with the employees who report to their direct reports. This is a common practice for informal feedback for all managers.  Managers regularly meet with their direct reports.
  • Roundtable meetings occur when a plant manager or other executive calls a meeting with a small number of employees during site visits. During these meetings, employees can ask questions and provide feedback. This practice commonly occurs when an executive travels to visit a site.

All employees receive information through our internal intranet system called JOE (named after our founder, Joseph Oriel Eaton).  Employees without computer access can access JOE at kiosks on their specific job site.

Eaton engages investors and shareholders to identify and address potential risks to our long-term financial viability

Eaton pursues ongoing engagement with shareholders through:

  • Annual shareholders meetings
  • Annual reporting mailed to shareholders and available on our website
  • Analyst conferences and reports
  • Investor Relations page on Eaton.com where shareholders can submit questions or retrieve financial information from Eaton archives
  • Meetings between investors, senior leadership and investor relations

Our Investor Relations team hosts our quarterly earnings call and communicates with our investors.  Throughout these communications, we describe our financial position and the value of our company to current and potential shareholders.

To emphasize the importance of sustainability, we publish an annual integrated report of our financial and sustainability data. We provide additional environmental, social and governance information through our website.

Our CDP Climate Change response describes our commitment to reducing our environmental footprint and thereby enhancing shareholder value.  The CDP Climate Change survey provides critical information to our investor and potential investor audience.

Eaton engages our suppliers to proactively manage our sustainability performance

Our supply chain activities are an important element of our sustainability performance. We work actively with our suppliers to ensure they are meeting Eaton's expectations to operate responsibly. We further engage directly with suppliers on select focus areas such as greenhouse gas emissions  management and safety and efficiency improvement..

We engage with our supplier through three primary methods:

  • CDP Supply Chain Program
  • Our Supply Chain Continuity Program (SCCP)
  • Periodic Supply Chain Meetings

Our managers and buyers supplement these strategic methods with direct, daily interactions. Additionally, we are working to create a supplier portal where suppliers can interact online.

CDP Supply Chain Program

Through the CDP Supply Chain Program, we seek to better understand and improve our environmental footprint and those of our suppliers. Our participation emphasizes to our suppliers the importance of tracking and reducing emissions, energy use and identification of associated risks and opportunities.

In 2015, we asked approximately 150 strategic suppliers to join us in our sustainability commitment by completing the CDP Supplier Questionnaire.  We prioritize and select suppliers based on a variety of risk-based criteria. These criteria include top spend and carbon emissions intensity of supplied products or operations, among others.

We provide support assistance including training and one-on-one consultation to suppliers completing the questionnaire.

We leverage climate change data reported by our suppliers to enhance our understanding of our footprint. We also use this qualitative and quantitative data to monitor climate change-related risks and opportunities within our supply chain and utilize relevant supplier-reported emissions data in calculating  our publicly reported Scope 3 emissions.

Supply Chain Continuity Program

Through our Supply Chain Continuity Program (SCCP), we aim to develop a predictive supply chain. We work directly with suppliers to develop guidelines, processes, tools and technology to support supplier continuity planning.  This planning aligns with the financial, operational, environmental and safety requirements of our suppliers. Our Supplier Excellence Manual includes our risk management and continuity guidelines.

We engage extensively with our top 100 suppliers, by spend, to assess risks. We categorize risks and enhance our mutual understanding of the types of risks affecting each relationship.  After identifying potential risks, we discuss mitigation strategies to prevent failures and recovery strategies to address failures.

Additionally, we deploy our structured supply chain continuity and risk management guidelines. We apply these guidelines to a variety of situations.   We also implement tools to monitor suppliers for financial risk, evaluate potential events and conduct assessments. During site visits with all suppliers, our business continuity team members discuss risks and back-up plans with our suppliers.

Learn more about our supply chain guidelines.

Supply Chain Management Meetings

Our Supply Chain Management meetings are an important method for engaging with our suppliers. To determine attendees, we target strategic suppliers. These suppliers represent those with whom we hope to grow our business and expand our relationship in the future.

We aim to conduct these meetings annually.  In the past, we have hosted more than 250 strategic suppliers and 500 attendees. In 2015, we hosted our first-ever combined in person and virtual global supplier meeting event, which was both highly successful for participation and enables our more remote suppliers to participate more easily at lower cost and even avoid greenhouse gas emissions and other travel-related impacts. During these events, we typically bestow our highest award for supplier excellence and other recognitions for outstanding performance to our highest performing suppliers.

Additionally, we emphasize the important role of suppliers in helping achieve our sustainability goals and as critical partners in Doing Business Right.  

Learn more about our supply chain practices.

Eaton engages local communities to enhance quality of life for our employees and those impacted by our operations

We care deeply about the communities in which we live and work. We invest our time and money in programs making a difference in the lives of others. Robust, healthy communities are a vital component of global sustainability.

To deliver value on a local level, we identify the specific needs of individual communities. In each of our facilities around the world, local managers and employees work together to determine the programs their facility will support, through philanthropy or volunteerism. This allows our efforts to have the most impact, as programs are selected by members of the community.

Supporting local communities is engrained in our history. Our founder, Joseph O. Eaton, partnered with other community leaders to establish the entity that eventually became United Way. Through our various community contributions, we exemplify deep, personal commitments to the communities where we live and work. Joseph's legacy lives on through our work and our enhanced communities around the world.

Learn more about our local community involvement.

Eaton engages governments to develop and support products, programs and policies that benefit our global society

Governments represent three different relationships for our company.  Governments represent our customers, our partners in enhancing global sustainability, and our regulators.  We value and respect our relationships with all government bodies.

Governments represent an important customer segment for our company.   We implement environmentally beneficial power management projects for local and national governments worldwide.  These projects include, among others:

  • Hybrid powertrains that boost fuel economy and reduce emissions in commercial and government vehicles
  • Electrical power control systems for the efficient use of power in office buildings
  • Hydraulic aircraft systems that reduce weight and save fuel
  • Automotive superchargers for enhanced fuel economy
  • Electrical and hydraulic products for solar power and wind turbine systems

Throughout our work, we respect the role of governments as our regulators.  We have extensive policies to ensure compliance with the special laws, rules and regulations related to government contracts.  The policies extend to our relationships with government personnel. We do not make contributions on behalf of our company to political candidates or parties, even where lawful.

Learn more about our commitment to Ethics and compliance.

Learn more about our Ethics Guide and associated policies.

Governance

Eaton demonstrates accountability for sustainability practices and performance at the highest levels of governance

The success of our sustainability practices is reflective of the accountability we instill throughout our organization. Given our commitments, we appoint executive-level leaders for our Environment, Health and Safety (EHS) program who communicate with our CEO and our Board of Directors.

Our Senior Vice President of EHS reports to our Executive Vice President of Eaton Business System. This structure assures that we link EHS to all critical company practices, processes and operations. Our SVP of EHS provides updates to the Governance Committee of our Board of Directors at least once every 18 months. Our Chief Executive Officer (CEO) also updates our Board on EHS progress on a quarterly basis. Our Board receives our annual report on financial and sustainability performance.

We have had corporate governance policies in place for many years. These policies and charters are reviewed and updated periodically.

Integrating sustainability performance with financial performance and demonstrating performance improvements are priorities for Eaton

We communicate our EHS performance in conjunction with our annual financial reporting to stakeholders. We evaluate our performance against the goals developed annually through collaboration between our SVP of EHS and our CEO. Once established, we communicate our goals across our business units. We ensure this communication reaches down through our organization to our manufacturing service and other operations within the company.

We assess EHS progress through our APEX program. APEX enables us to evaluate each employee against established goals and conformance to company values. The APEX process determines performance on all goals, including EHS. We leverage these APEX performance evaluations to make compensation and other financial incentive decisions for all employees and executive leaders.

Eaton provides monetary incentives and other awards to encourage progress towards reaching our sustainability goals

Meeting and exceeding our sustainability goals is essential to our overall business success. To encourage progress across our business, we provide incentives for achieving high performance. Our corporate executive team receives a monetary reward when we achieve our annual emissions reduction targets set by our CEO. Additionally, all employees have the opportunity to receive awards celebrating excellence in the workplace. We design the awards process to engage the entire workforce in our progress. We also aim to increase the development and transfer of best practices through these awards.

Our awards recognize practices enhancing our energy efficiency and sustainability progress. Awards highlighting sustainability achievement include our Continuous Improvement Award, Engineer of the Year and Eaton Business Excellence, among others.

Conflict minerals

Eaton is committed to ensuring our products do not incorporate conflict minerals, which are minerals smelted into tin, tantalum, tungsten and gold sourced from entities that directly or indirectly finance conflict in the Democratic Republic of Congo or adjoining countries. Eaton's dedicated management team with senior executive oversight works to directly engage our supply chain on responsible sourcing practices.

Learn more about our policy on conflict minerals.