Climate Change Data

Environmental Metrics

ESG Focus Areas

• Ethics and Governance
• Valuing People
• Supply Chain Management
• Community
• Environment, Health and Safety

Environmental Achievements

• Reduced Total Case Rate (occupational injury and illness cases requiring treatment beyond first aid per 100 employees) from 5.28 in 2004 to 3.39 in 2007 (36% reduction)
• Reduced number of injury/illness cases from 6,094 in 2004 to 4,180 in 2007 (31% reduction)
• Reduced Days Away from Work Case Rate from 1.66 per 100 employees in 2004 to 1.22 in 2007 (27% reduction)
• Reduced overall electrical consumption in 2006 by 1.2 million kilowatt-hours (kWh) and cut CO² emissions by almost 1 million pounds at California-based Marine Systems business unit
• Reduced electrical usage by 10% at Bethpage, NY site from July 2005 to July 2006
• Recycled more than 2,500 tons of paper and cardboard, 500 tons of wood, 31,500 tons of metals, 345 tons of computers and related equipment, 135,788 gallons of fuel/oil, and 85 tons of other materials in 2007

Social Achievements

• Hosted second Women’s Conference in September 2007 with over 500 attendees
• Expanded Employee Resource Groups (ERGs) across the corporation in 2007
• Achieved a workforce comprised of 26.13% women and 31.25% minorities by the end of 2007
• Forged 28 Mentor-Protégé agreements (compared to 19 in 2006) and subcontracted more than $21.8 million to those protégés in 2007 (compared to $6.4 million in 2006)
• Contributed $24 million in total philanthropic donations in 2007 (compared to $21.1 million in 2006)
• Employees personally gave more than $7 million in 2007 through internal vehicles

Governance Achievements

• Improved OpenLine process and created a company-wide Case Tracking System in 2007
• Investigated 509 cases of alleged internal governance malfeasance in 2007, resulting in disciplinary actions up to and including termination of 36 employees

Climate Goals & Targets

Environmental Challenges

• Establishing clear baseline data for hazardous waste and air emissions due to ongoing acquisitions and divestitures
• Aligning various subcultures and communication challenges across multiple business sectors
• Achieving Service-Disabled Veteran and HUBZone small-business subcontracting goals
• Negative media attention for inaccurate small-business size coding on certain contracts

Mitigation Strategies

• Developing a strategy to more aggressively address the corporation’s environmental footprint
• Establishing consistent acceptance and assimilation of supplier base goals throughout the corporation
• Implementing a five-year improvement plan (started in 2005) to move toward Service-Disabled Veteran and HUBZone small-business goals
• Working with the customer to identify and review contracts, issuing corrections and/or taking mitigating actions

Supply Chain Management

Supplier Audits: 43 audits and risk assessments in 2007

Responsible Procurement

• One Northrop Grumman initiative to improve supply chain relationships
• Annual letters to suppliers outlining ethics policies and code of conduct
• Mentor-Protégé programs

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI

Certifications: ISO 14001, OHSAS 18001

Awards & Recognition

• California’s 2006 and 2007 Waste Reduction Award Program (WRAP) honor
• California’s “Flex your Power” award
• Ron Brown Award For Corporate Leadership
• U.S. Secretary of Labor Elaine L. Chao’s New Freedom Initiative Award for Operation IMPACT
• INROADS Corporate Sponsor Leader of the year (two awards)

Environmental Metrics

ESG Focus Areas

• Ethics and Governance
• People
• Supply Chain Management
• Community
• Environmental, Health and Safety Stewardship

Environmental Achievements

• Created three teams to advance environmental performance and sustainability.
• Won two AIA Worker Safety Excellence Awards for lowest injury and illness rate.
• Implemented various energy and water conservation projects resulting in significant savings.

Social Achievements

• Achieved a workforce comprising 26 percent women and 32 percent people of color.
• Launched a new diversity and inclusion website.
• Contributed $18.8 million in philanthropic donations and employees gave over $8 million.

Governance Achievements

• Maintained a nationwide toll-free OpenLine for ethics and business conduct reporting, receiving over 3,300 contacts.
• Investigated 628 OpenLine contacts, resulting in disciplinary actions against 30 employees.
• Changes to the board membership and structure, including the appointment of three new members.

Climate Goals & Targets

Environmental Challenges

• Supply chain management challenges with $11 billion in procurement across 16,000 suppliers.
• Difficulty in establishing clear historical baseline data for hazardous waste and air emissions due to acquisitions and divestitures.
• Two work-related fatalities and two serious injuries occurred.

Mitigation Strategies

• Instilled the “One Northrop Grumman” charter throughout the procurement organization.
• Established a baseline year (2005) for documenting selected environmental data.
• Working diligently with workers’ compensation carrier and Shipbuilding sector to identify higher-risk conditions and implement mitigation strategies.

Supply Chain Management

Supplier Audits: 139 subcontracts evaluated; 88% met or exceeded performance requirements

Responsible Procurement

• Annual ethics letters sent to 16,000 suppliers.
• Procurement processes keep technical bid data separate from financial data.
• Procurement employees annually review procurement integrity policy.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced GHG intensity (normalized by sales) by 3.1%
• Reduced electrical usage by 3 million kilowatt hours at Pascagoula, Mississippi facility
• Diverted roughly 69 percent of total waste away from landfills in 2009
• Improved Carbon Disclosure Project score by 62 percent in 2010
• Rose from #335 to #173 in Newsweek magazine’s 2010 environmental ranking of the 500 largest American businesses
• Ranked as one of the Top 12 Green IT organizations in 2010 by Computerworld magazine

Social Achievements

• 24 percent women and 33 percent people of color in the workforce
• Continued work on Organizational Leadership Review process to identify high-potential women and people of color for executive positions
• Total Northrop Grumman community support in 2010 was $34.5 million
• Donated $1.5 million for Haiti relief efforts
• Raised $353,121 for the USO in 2010

Governance Achievements

• Ethics theme for 2010 was “Ethics: Our Reputation and Our Future.”
• 3,835 total OpenLine contacts, with 764 cases of alleged internal governance malfeasance
• Termination of 77 employees for ethics and business conduct violations

Climate Goals & Targets

Environmental Challenges

• Increase in Days Away Case Rate (DACR) in 2010
• Two findings in the annual internal ethics audit (incomplete Form C-196 for new hires and insufficient mandatory password changes)
• 26 enforcement actions from regulatory agency representatives for environmental compliance (one rescinded)

Mitigation Strategies

• Broadening injury prevention efforts in 2011 to manage and track TCR performance and focus on a new severity-based safety goal
• Strengthened process for collecting new-hire C-196 forms and implemented mandatory password changes for the automated case tracking system
• Giving priority attention to shortcomings indicated by enforcement actions

Supply Chain Management

Supplier Audits: 199 subcontracts evaluated for top 11 subcontractors in 2010

Responsible Procurement

• Annual letter outlining ethics policies and code of conduct to every supplier
• Process controls built into supply chain bidding and evaluation processes

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI

Third-party Assurance: GRI confirmed A reporting level

Awards & Recognition

• Ranked #2 among the Top 50 Employers by Minority Engineer magazine
• Ranked #47, “Top 50 Companies in Diversity” by DiversityInc.
• “Corporation of the Year” award from the Association of Philanthropists.
• Over $29 million in philanthropic donations through the company Contributions Program.
• Ranked #9, “2011 Top Military Friendly” employers by G.I. Jobs.
• Ranked in “Top 20 Corporations for Multicultural Business Opportunities” by Diversity Business Multicultural e-Business Solutions.
• Ranked in “Top 50 Organizations for Diversity” by DiversityBusiness.com.

Environmental Metrics

ESG Focus Areas

• Environmental Sustainability
• Social Responsibility
• Ethics and Governance

Environmental Achievements

• Achieved a 14.9 percent reduction in carbon intensity compared to the 2008 baseline.
• Implemented 63.3 percent of water best management practices and 76.6 percent of solid waste best management practices.
• Received Reasonable Assurance for 2010 and 2011 greenhouse gas inventories by Lloyd’s Register Quality Assurance (LRQA).

Social Achievements

• Workforce comprised of 28 percent women and 29 percent people of color.
• Launched ECO Classroom program, providing environmental science training to middle and high school teachers.
• Operation IMPACT program helped 108 returning service personnel and their family members join the company.

Governance Achievements

• Received a “green” rating on the annual internal ethics audit.
• Trained 100 percent of employees on ethics and compliance topics.
• Board of Directors is approximately 92 percent independent.

Climate Goals & Targets

Environmental Challenges

• Maintaining downward trend in workplace injuries.
• Challenging budget environment for U.S. government customers and uncertain global economic conditions.
• Maintaining a diverse pipeline of talented professionals for senior leadership positions.

Mitigation Strategies

• Implementing preventive measures to reduce workplace injuries (repetitive motion injuries and slips, trips, and falls).
• Focusing on delivering top performance, ensuring high quality, maintaining close communication with customers, and applying innovative approaches to deliver more affordable products and services.
• Revising talent acquisition programs to deliver a diverse slate of interview candidates for senior and middle management positions.

Supply Chain Management

Supplier Audits: Top 11 suppliers evaluated semi-annually

Responsible Procurement

• Annual letter outlining ethics policies and code of conduct to all suppliers.
• Specialized ethics training for employees with procurement authority.
• Integrated supply chain management strategy.

Climate-Related Risks & Opportunities

Physical Risks

• Volatile weather impacting information systems and operations.

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI G3

Certifications: ISO 14001 (multiple sites)

Third-party Assurance: Lloyd’s Register Quality Assurance (LRQA)

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• 2012 Cool Planet Award
• Aerospace Industries Associations (AIA) 2012 Safety Award

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Sustainability
• Waste Reduction
• Water Conservation
• Governance

Environmental Achievements

• Reduced greenhouse gas (GHG) emissions intensity by 26.3% from the 2008 base year (equivalent to a 31.4% absolute reduction).
• Achieved 96.5% implementation rate of solid waste reduction best management practices (BMPs) and 79.3% implementation rate of water conservation BMPs.

Social Achievements

• Launched ECO Classroom Program with Conservation International to promote environmental science education.

Governance Achievements

• Established environmental performance goals linked to executive compensation.
• Integrated climate change into multi-disciplinary company-wide risk management processes.

Climate Goals & Targets

Environmental Challenges

• Increased operational costs due to emission reporting obligations (e.g., AB32 in California, UK CRC Energy Efficiency Scheme).
• Increased operational costs due to changes in precipitation extremes and droughts.
• Increased operational costs due to changes in temperature extremes.
• Reduced demand for goods/services due to fluctuating socio-economic conditions and federal budget reductions.

Mitigation Strategies

• Implementation of energy efficiency and GHG reduction assessments.
• Implementation of water conservation best management practices (BMPs).
• Energy cost mitigation strategies, investment in energy-efficient buildings and HVAC systems.
• Engagement with U.S. federal customers and policymakers to discuss risks associated with budget reductions.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Contract terms and conditions requiring supplier support for environmental sustainability goals.

Climate-Related Risks & Opportunities

Physical Risks

• Changes in precipitation extremes and droughts
• Changes in temperature extremes

Transition Risks

• Changes in regulation (emission reporting obligations, fuel/energy taxes)

Opportunities

• Reduced operational costs through voluntary agreements (PPAs)
• Reduced operational costs through fuel/energy tax and regulation strategies
• Increased demand for products/services supporting climate monitoring (Global Hawks, satellite instruments)

Reporting Standards

Frameworks Used: Greenhouse Gas Protocol, GHG Reporting Guidance for the Aerospace Industry

Certifications: Null

Third-party Assurance: EY (Ernst & Young)

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Advanced hybrid electric drive for surface combatant ships.

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental Sustainability
• Ethics and Integrity
• Diversity and Inclusion
• Supply Chain
• Corporate Citizenship

Environmental Achievements

• Exceeded greenhouse gas emissions reduction goal, maintaining commitment to achieve a 30 percent reduction by 2020
• Achieved LEED certification for two additional buildings
• Implemented projects estimated to reduce annual emissions by 10,180 MTCO2e
• Implemented water conservation projects to reduce annual water consumption by 64 million gallons
• Reduced water use at California locations by 11.8 percent from 2014 base year
• Implemented solid waste projects estimated to divert approximately 400 tons from landfill

Social Achievements

• Increased female leaders from 25.2 percent in 2016 to 26.3 percent in 2017
• Increased People of Color in leadership from 23.7 percent in 2016 to 25.2 percent in 2017
• More than 50 percent of college hires were diverse in 2017
• Increased People with Disabilities representation from 6 percent in 2016 to 7.1 percent in 2017
• Invested over $20 million in STEM programs
• Partnered with EarthEcho International to sponsor 25 middle school teachers on a week-long expedition examining water scarcity

Governance Achievements

• Maintained a leadership score on the CDP climate change program for the sixth consecutive year
• Revised standard supplier terms and conditions to add a provision requiring compliance with Supplier Standards of Business Conduct
• Published new Supplier Standards of Business Conduct in 12 languages
• 12 of 13 directors were independent as of December 31, 2017
• All Board committees comprised entirely of independent directors

Climate Goals & Targets

Environmental Challenges

• Increased safety rates attributed to an overall increase in hours worked in 2017 and an increase in manufacturing activities
• External agencies logged 32 complaints of discrimination across the company

Mitigation Strategies

• Investing in accident prevention strategies to reduce the frequency and severity of injuries
• Investigating all discrimination complaints and taking appropriate action
• Implementing corrective action plans for any non-compliance with supplier standards and monitoring closely until closure

Supply Chain Management

Responsible Procurement

• Supplier Standards of Business Conduct, annual ethics training for employees with procurement authority, due diligence to monitor and assess suppliers for various risks

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI G4 guidelines

Certifications: ISO 14001 (23 sites), LEED (15 buildings)

Third-party Assurance: LRQA under ISO 14064-3 (for greenhouse gas, water, and solid waste inventories)

UN Sustainable Development Goals

• Goal 4 (Quality Education)

Supporting STEM education programs and initiatives

Awards & Recognition

• Included in the Dow Jones Sustainability Index for North America
• Named on DiversityInc’s annual Top 50 Companies for Diversity list
• Supplier Diversity Advocate of the Year (by National LGBT Chamber of Commerce)
• Perfect 100 point rating on the Disability Equality Index Best Places to Work for Individuals with Disabilities

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Sustainability
• Waste Reduction
• Water Conservation

Environmental Achievements

• Achieved 100% of 30% absolute GHG emissions reduction target from 2010 levels by 2020.
• Achieved 62.2% solid waste diversion rate from landfill in 2018.
• Achieved 6.6% reduction in potable water use in 2018.

Social Achievements

• Not disclosed

Governance Achievements

• Board-level oversight of climate-related issues through the Policy Committee of the Board of Directors.
• Integration of environmental sustainability as a non-financial metric influencing executive and employee compensation.

Climate Goals & Targets

Environmental Challenges

• Acute physical risks from extreme weather events (e.g., hurricanes) impacting operations and causing revenue loss and increased costs.
• Chronic physical risks from changes in precipitation patterns and extreme weather variability increasing operating costs (e.g., water scarcity).
• Transition risks from enhanced emissions-reporting obligations and stricter environmental regulations increasing compliance costs.

Mitigation Strategies

• Business Continuity Program to respond effectively to unanticipated events, including natural disasters.
• Implementation of water conservation projects saving 157 million gallons of water from 2015-2018.
• Proactive emissions reductions through energy efficiency projects and investments in renewable energy installations.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Prioritizing SmartWay certified carriers for US domestic ground shipments.

Climate-Related Risks & Opportunities

Physical Risks

• Increased severity of extreme weather events (e.g., cyclones, floods)
• Changes in precipitation patterns and extreme weather variability

Transition Risks

• Enhanced emissions-reporting obligations and stricter environmental regulations

Opportunities

• Resource efficiency leading to reduced operating costs
• Reduced water usage leading to reduced operating costs
• Increased demand for climate monitoring technologies and services

Reporting Standards

Frameworks Used: Greenhouse Gas Protocol, IAEG Aerospace GHG Reporting Guidance

Certifications: Null

Third-party Assurance: LRQA America’s Sustainability, Inc.

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Global Hawk unmanned aircraft for science missions and disaster relief
• Systems and services for environmental intelligence

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Sustainability
• Water Conservation
• Waste Management

Environmental Achievements

• Reduced absolute GHG emissions by 43.7% from 2010 levels (exceeding the 30% target)
• Achieved 20% reduction in potable water use from 2014 levels
• Achieved 69.2% solid waste diversion rate from landfill (close to the 70% target)

Social Achievements

• Not disclosed

Governance Achievements

• Board-level oversight of climate-related issues through the Policy Committee and Audit and Risk Committee
• Integration of environmental sustainability metrics into executive and employee compensation

Climate Goals & Targets

Environmental Challenges

• Increased severity and frequency of extreme weather events (acute physical risk)
• Changes in precipitation patterns and extreme variability in weather patterns (chronic physical risk)
• Enhanced emissions-reporting obligations (current regulation)
• Increased operating costs due to compliance requirements

Mitigation Strategies

• Business Continuity Program to manage acute physical risks
• $13 million investment in water conservation projects to mitigate drought risks
• Proactive emissions reductions to minimize exposure to future environmental regulations
• Implementation of targeted conservation projects resulting in an estimated savings of 312 million gallons of water

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• EPA SmartWay Transport Partner program for domestic ground shipments

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (hurricanes, floods)
• Changes in precipitation patterns
• Wildfires

Transition Risks

• Increased operating costs due to compliance with climate-related regulations

Opportunities

• Reduced operating costs through resource efficiency
• Increased demand for climate-monitoring technologies and services

Reporting Standards

Frameworks Used: Greenhouse Gas Protocol, IAEG Aerospace GHG Reporting Guidance

Certifications: Null

Third-party Assurance: LRQA America’s Sustainability, Inc. (Limited Assurance)

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Advanced composite materials for aircraft
• Energy-efficient T6 radio

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Sustainability
• Supply Chain Sustainability

Environmental Achievements

• Reduced Scope 1 and Scope 2 emissions by 9.54% relative to the 2019 base year.
• Implemented 48 greenhouse gas emissions-reduction projects, reducing annual emissions by approximately 3,137 MTCO2e.
• Completed installation of a 1.1 MW onsite solar array at Rolling Meadows facility.
• Implemented 28 water conservation projects, estimated to conserve 41 million gallons annually.

Social Achievements

• Not disclosed

Governance Achievements

• Board-level oversight of climate-related issues.
• Incentives for management of climate-related issues linked to emissions reduction.

Climate Goals & Targets

Environmental Challenges

• Acute physical risks from extreme weather events.
• Chronic physical risks from precipitation and hydrological variability.
• Increased operating costs due to compliance requirements.
• Potential for increased direct costs from carbon pricing mechanisms.

Mitigation Strategies

• Business Continuity Program to respond effectively to unanticipated events.
• Investments in water conservation measures ($2.5 million in 2015, $4.9 million in 2021).
• Proactive emissions reduction to minimize exposure to future carbon taxes.
• Net Zero emissions by 2035 goal for operations.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• SmartWay Transport Partner program

Climate-Related Risks & Opportunities

Physical Risks

• Cyclones, hurricanes, typhoons
• Precipitation and hydrological variability
• Wildfires

Transition Risks

• Carbon pricing mechanisms
• Increased operating costs due to compliance requirements

Opportunities

• Reduced indirect (operating) costs through resource efficiency
• Increased revenues from increased demand for climate-related products and services

Reporting Standards

Frameworks Used: TCFD, Greenhouse Gas Protocol

Certifications: Null

Third-party Assurance: Third-party limited assurance

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Unmanned Aerial Vehicle (UAS)

Awards & Recognition

• Disaster Recovery Institute International’s “Award for Excellence” in Response and Recovery of the Year (2021)

Environmental Metrics

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental Sustainability
• Diversity, Equity, and Inclusion
• Ethics and Compliance
• Employee Well-being
• Corporate Citizenship

Environmental Achievements

• 11% reduction in GHG emissions from 2019 baseline
• 42 million pounds of waste diverted from landfill
• 16% of electricity sourced from renewable sources
• Implemented 68 greenhouse gas and energy projects, estimated to reduce emissions by 3,400 MT CO2e annually
• Implemented 15 solid waste projects, estimated to divert or reduce 260 tons from landfills/incineration annually
• Implemented 15 water conservation projects, expected to reduce 29 million gallons annually (70% in water-stressed locations)
• Expanded Technology for Conservation (T4C) initiatives to 74 sites

Social Achievements

• Named one of DiversityInc’s “Top 50 Companies for Diversity”, ranking highly for various diversity categories
• Maintained 14 ERGs in 280 chapters with over 30,000 members, ranking #4 on DiversityInc’s Top Companies for ERGs
• 82% favorable employee response rate on inclusion in the annual Employee Experience Survey
• Established first EH&S Expertise Center in Public Health and Occupational Health
• 87% of employees felt their experience met or exceeded expectations
• Nearly 100,000 employees benefited from My Learning Experience
• Generated $40 million in social value through corporate citizenship activities
• Logged nearly 100,000 employee volunteer hours valued at $3.1 million
• Provided 4.8 million STEM experiences
• Connected over 30,000 employees and family members with NGCare services
• Employees used over 3,200 days of back-up child and elder care support

Governance Achievements

• Updated Standards of Business Conduct
• Over 99% of employees completed ethics training
• Received a 100% score on the 2023 CPA-Zicklin Index for five consecutive years
• Published first Human Rights Report
• Concluded production of depleted uranium ammunition
• Updated Standards of Business Conduct for Suppliers and Other Trading Partners
• Exceeded U.S. government’s 23% small business statutory goal for the 19th consecutive year
• Held first Supplier Excellence Awards recognition event

Climate Goals & Targets

Environmental Challenges

• Increases in water withdrawals and waste sent to landfills/incineration during a period of strong business growth

Mitigation Strategies

• Focus on identifying high-impact projects to reduce water use and disposed waste

Supply Chain Management

Responsible Procurement

• Updated Standards of Business Conduct for Suppliers and Other Trading Partners to incorporate industry-leading sustainability practices

Climate-Related Risks & Opportunities

Awards & Recognition

• One of DiversityInc’s “Top 50 Companies for Diversity”,
• LinkedIn’s best places to grow a career
• MSCI ESG Rating of AA
• Perfect score on the CPA-Zicklin Index
• One of JUST Capital’s “100 Most Just Companies” for 2023
• Dow Jones Sustainability North America Index
• Perfect score on the Corporate Equality Index