We embody our principle of doing business right by prioritising the sustainability impacts that matter most to our stakeholders and to us as a company. We have analysed our most important sustainability priorities, which are now integrated into our sustainability and reporting strategies and serve as our compass for mapping future performance.
Our first analysis of key sustainability topics was finalised in 2014, and in 2017 we completed an update to ensure that our issue prioritisation is up to date.
Our analysis consisted of the following steps:
Our business operations affect many groups and organisations 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 impact and influence on our business practices. Our key stakeholders are:
Our processes for engaging with stakeholder groups and identifying and responding to their concerns vary. One way we identify and summarise stakeholder concerns is through the materiality assessment. The outcome of this assessment helps us define our strategy, goals, metrics and reporting on the issues that are most important to Eaton and our stakeholders.
Customer engagement: to understand market needs and drive business value
Our customers help us to understand and explore innovation opportunities. Through our direct and frequent engagement, we develop and launch products that solve our customers' critical power management challenges.
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 performance. 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) are a face-to-face interview process conducted with decision-makers and influencers from key strategic customers. We conduct more than 1,000 CRR interviews each year. We often interview more than one contact at each account to gain a well-rounded view of the customer's perceptions of our company.
Results are delivered to key leaders within each business and follow-up action plans are developed and monitored.
Learn more about the value we deliver to our customers.
Our primary method for measuring employee engagement is our biennial employee survey. The survey provides 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 favourable employee engagement score, according to external normative data, since 2008. A common Eaton-wide action planning and follow-up process is utilised 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 an intermittent basis. While managers regularly meet with their direct reports, they also conduct skip-level meetings with the employees who report to their direct reports, which is a common practice for informal feedback.
Round-table 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 at their specific job site.
Eaton pursues ongoing engagement with our shareholders through:
Our Investor Relations team hosts our quarterly earnings calls and communicates with our investors. Through these communications, we describe our financial position and the value of our company to current and potential shareholders.
Almost a decade ago, Eaton was among those companies that pioneered the integration of financial and sustainability reporting. In 2016, we transitioned to providing most of this information digitally, through www.eaton.com/sustainability.
Since 2006, we have reported our GHG emissions to CDP, an international non-profit environmental reporting organisation. The annual CDP Climate Change survey provides critical information to our investor and potential investor audience. Learn more about our CDP survey responses.
Our supply chain activities are an important element of our sustainability performance. We work actively with our suppliers to ensure that they meet Eaton's expectations to operate responsibly.
We further engage directly with suppliers on select focus areas such as:
Our managers and buyers supplement these strategic approaches with direct, daily interactions.
Financial stability and risk management:
Through our Supply Chain Continuity Programme (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 categorise 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 as well as 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.
CDP Supply Chain programme:
Through the CDP Supply Chain Programme, we seek to better understand and improve our environmental footprint and those of our suppliers. Our participation emphasises to our suppliers the importance of tracking and reducing emissions, energy use and identification of associated risks and opportunities.
In 2016, we asked approximately 150 strategic suppliers to join us in our sustainability commitment by completing the CDP Supplier Questionnaire. We prioritise and select suppliers based on a variety of risk-based criteria. These criteria include top spend and the carbon emissions intensity of supplied products or operations, among others.
We provide support assistance including training and one-on-one consultations with suppliers completing the questionnaire.
We leverage the 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 utilise relevant supplier-reported emissions data in calculating our publicly reported Scope 3 emissions.
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.
Supply Chain Management meetings:
Our Supply Chain Management meetings are an important method for engaging with our 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 at one event. In 2016, we hosted a combined in-person and virtual global supplier meeting event, which was both highly successful in terms of participation and enabled our more remote suppliers to participate more easily at lower cost, thereby also avoiding 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 best-performing suppliers.
Additionally, we emphasise the important role of suppliers in helping us achieve our sustainability goals and as critical partners in doing business right.
Learn about our supply chain practices.
We care deeply about the communities in which we live and work. We invest our time and money in programmes that make 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 programmes their facility will support, through philanthropy or volunteerism. This allows our efforts to have the most impact, as programmes are selected by members of the community.
Supporting local communities is ingrained in our history. Our founder, Joseph O. Eaton, partnered with other community leaders to establish the entity that eventually became the 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.
Governments represent three different relationships for our company. Governments are 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:
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.
Our corporate governance policies establish a common set of expectations and governance practices that guide our senior management and board of directors.
Learn more about our corporate governance policies and charters.
Integrating sustainability performance with financial performance and providing monetary incentives for meeting goals
We communicate our EHS performance in conjunction with our annual financial reporting to stakeholders. We evaluate our performance against the goals developed annually by our Senior Leadership Council. Once established, we communicate our goals across our business units. We ensure that this communication reaches down through our organisation to our manufacturing service and other operations within the company.
We assess the progress towards reaching these goals through our APEX program. APEX enables us to evaluate each employee against established goals and conformance to company values. We leverage these APEX performance evaluations to make compensation and other financial incentive decisions for all employees and executive leaders.
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 the 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 recognise 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.
Eaton is proud to have strong internal processes and controls for managing our sustainability performance. Many of these controls connect individuals and teams across our company and include management at each level of the organisation.