Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Nanjing Plant 1 eliminated nearly 250 tons of HFC emissions and reduced natural gas consumption by 26 million cubic feet annually.
• Cyclone units saved 1,616 MM ft3 of natural gas and avoided 96,700 tons of GHG emissions annually in the US.
• Voltex units saved 93,400 MWH of energy and avoided 18,600 tons of GHG emissions annually in the US, and 151,100 MWH of energy and avoided 97,200 tons of GHG emissions annually in China.
• CREST units saved 2,012 MM ft3 of natural gas and avoided 120,500 tons of GHG emissions annually in the US.
• AOS Green RO MAX products saved a typical household 8 gallons of water per day.

Social Achievements

• Launched an anti-harassment training module.
• Updated Guiding Principles training and legal department training materials.
• Established a security awareness program.
• Achieved zero lost-time incidents, zero violations, and zero work-related illnesses in Bangalore plant in 2017.
• Completed an equal remuneration study in the US, achieving pay parity for men and women in similar roles.

Governance Achievements

• Implemented rigorous policies and reporting procedures as part of the Corporate Compliance Program.
• 8 of 10 board members are independent, with 20% gender diversity.

Climate Goals & Targets

Environmental Challenges

• Reducing energy and water usage at plants.
• Improving efficiency, conservation, and sustainability.

Mitigation Strategies

• Formed a Corporate Responsibility & Sustainability (CRS) Council.
• Implementing a harmonized global EHS management framework consistent with ISO 14001 and ISO 45001.
• Implementing a common global platform to collect environmental performance data.

Supply Chain Management

Responsible Procurement

• Compliance with laws on human trafficking, conflict minerals, and hazardous substances.
• Compliance with trade compliance and C-TPAT requirements.

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• High-efficiency water heaters and boilers.
• Patented reverse osmosis membrane element technology.

Awards & Recognition

• A. O. Smith Green Star Award (Nanjing Plant 1)
• President’s Safety Award (Bangalore)
• Excellence in Safety Award (McBee, South Carolina)

Environmental Metrics

ESG Focus Areas

• Business Ethics
• Product Lifecycle
• Product Safety
• Energy Management
• Materials Sourcing

Environmental Achievements

• Sales of high-efficiency products in North America water heating business offset 222,790 tons of GHG emissions in 2019.
• Sales of high-efficiency boilers in North America offset 289,110 tons of GHG emissions in 2019.
• Decreased wastewater from water treatment products by up to 200 percent using patented reverse osmosis (RO) membrane element technology.
• Juárez facility achieved a 29-ton reduction in powder paint waste and a 20% reduction in disposal cost.
• Juárez facility switched forklifts from gas to electric, reducing CO2 emissions by 814 tons/year.
• Veldhoven facility's solar panel system generated 27% of total facility electrical energy consumption and exported 40.39 MWh back to the grid in 2019, reducing energy costs by 32%.

Social Achievements

• 96% employee participation in the 2020 Global Employee Engagement Survey.
• Average workforce tenure in the U.S. is 11.3 years (compared to the national average of 4.1 years).
• A. O. Smith China ranked in the Top 30 Best Employers in China for the sixth consecutive year.
• Bengaluru facility achieved 100% compliance, zero work-related illness, and 1.33 million working hours without a lost-time incident in 2019.

Governance Achievements

• 80% of board members are independent; 20% gender diversity on the board.
• Updated and reissued the Eighth Edition of the Guiding Principles in 2020.
• 14 live training sessions on “Reinforcing A Values Based Culture” provided to various levels of leadership in 2020.
• Annual certification by salaried employees that they have read, understand, and agree to abide by the Guiding Principles and key policies.

Climate Goals & Targets

Environmental Challenges

• Lack of effective commercial heat pump water heater (HPWH) sizing tools in the multifamily and commercial sectors.
• Managing plastic waste associated with water treatment product manufacturing (plastic accounts for approximately 90% of total product weight).

Mitigation Strategies

• Developing a new HPWH sizing tool to optimize capacity and storage volume.
• Grounding plastic waste back into pellets for reuse and donating surplus pellets for recycling.

Supply Chain Management

Supplier Audits: 118 international supplier audits in 2019

Responsible Procurement

• Adherence to A. O. Smith Guiding Principles
• Third-party risk assessment program to identify bribery and corruption risks
• Conflict minerals reporting requirements

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: SASB

Certifications: ISO 9001:2015 (select facilities), ISO 14001 (select facilities), ISO 45001 (select facilities), ASME (commercial manufacturing facilities)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• High-efficiency water heaters and boilers
• Water treatment products with reduced wastewater
• Whole-house water filter certified to reduce PFAS, lead, and cysts

Awards & Recognition

• A. O. Smith Green Star Award
• Lloyd B. Smith President’s Safety Award
• Excellence in Safety Awards
• Natural Child World’s Eco-Excellence Awards™ (Aquasana)
• Frost & Sullivan 2019 North American Company of the Year (Aquasana)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Prevented almost 500,000 metric tons of carbon emissions in 2021 through sales of our highly efficient water heaters and boilers.
• Received WAVE verification from The Water Council for water stewardship performance.

Social Achievements

• Board of Directors is 50% diverse.
• 97 percent participation in Global Employee Engagement Survey.
• Diversity and inclusive leadership training for senior leadership team globally and senior management in the U.S.

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions
• Persistent cost inflation
• Significant downward volume reset in the U.S. residential water heater market
• Lower consumer demand in China due to COVID-19 related disruptions

Mitigation Strategies

• Right-sized production to meet current demands and improve efficiencies.
• Restructured China operations to improve cost position.
• Maintained insurance coverage and implemented mitigation steps for natural disasters (e.g., berm, flood gates, pumping stations).
• Close contact with suppliers and logistics providers to resolve supply chain constraints.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Hurricanes
• Earthquakes

Transition Risks

• Regulatory changes promoting non-fossil fuel energy sources.
• Market shifts towards higher efficiency and electric products.

Opportunities

• Development of energy-efficient products (e.g., heat pump technology).

Reporting Standards

Frameworks Used: Null

Certifications: WAVE (Water Stewardship), Energy Star Partner of the Year Award

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Voltex® AL residential heat pump water heater
• Aquasana Clean Water Machine

Awards & Recognition

• Eco Excellence Award (7 consecutive years)
• Energy Star Partner of the Year Award (4 consecutive years)