Sustainability.

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Governance

Good governance is a cornerstone of sustainability and the group has well established processes, policies and management systems to support this which apply to all operations worldwide. Legal requirements are a minimum standard and in many cases our policies and systems are in advance of these. Johnson Matthey has policies in the areas of Environment, Health and Safety (EHS); Employment; and Business Integrity and Ethics which provide the framework for managing environmental, social and governance matters. These are presented on the company’s website at www.matthey.com/sustainability. Further details of our management processes, policies, initiatives and progress can be found on our website and in the Sustainability Report and are presented here in summary.

As outlined in the Corporate Governance section the board has embedded environmental, social and governance matters into its risk management processes and formally reviews the area once a year. These matters are monitored by the CSR Compliance Committee, a sub-committee of the Chief Executive’s Committee. A description of the role of the CSR Compliance Committee can be found in the Corporate Governance section.

Policies and Management Systems – Environment, Health and Safety

Johnson Matthey is committed to providing the highest level of protection to the environment and to safeguarding the health and safety of its employees, customers, communities and other stakeholders. This is supported by policies, a comprehensive management system, governance, careful risk assessment, auditing and training which promote continuous improvement and ensure that high standards are achieved at sites worldwide. In addition, all facilities have developed local policies to meet international, national, local and corporate requirements.

The EHS policy is a written statement, formulated and agreed by the Chief Executive’s Committee and approved by the board. Signed by the Chief Executive, it is available at all sites, is published on the website and forms the basis of the group EHS management system.

The group EHS management system is available to all employees via the group intranet. It is regularly reviewed and, together with the corporate policies and objectives, it defines accountability and sets the standards against which conformance audits are assessed. During 2010/11 a comprehensive review of the management system was undertaken to ensure that our policies, standards and guidance are up to date, reflect legislative updates and meet ongoing EHS requirements in our businesses.

EHS compliance audits are conducted to maintain continuous improvement and all Johnson Matthey operated manufacturing and research and development facilities are included in the audit programme. Audit frequency for each facility is determined by the scale, inherent risk and past performance of the operation. Audits are carried out by experienced ISO qualified EHS professionals and controlled by the Group EHS Assurance Director. Health management reviews are undertaken every three to four years at all operational sites. They are conducted by the Director of Group Health who provides consulting advice to support the prioritisation and planning of programmes to optimise workplace health and promote workforce sustainability. In addition, all businesses undertake annual health management improvement planning to adjust health programmes to meet changing business needs.

All audit reports, including health management reviews, are reviewed by the CSR Compliance Committee and appropriate follow up actions are taken on outstanding issues. During 2010/11 a total of 30 detailed compliance audits and seven one day audit action reviews were completed. Health management reviews were conducted at 15 facilities.

A variety of training programmes are in place to support continuous improvement in EHS performance and regular meetings are held in Europe, North America and Asia to enable the group’s EHS professionals to network, share best practice and discuss the impact of future EHS legislation.

Regulatory Matters and Product Stewardship

The group successfully completed all the planned first tier substance registrations within our corporate EU REACH compliance programme this year. Significant progress has also been made in other projects and we continued to participate in industry consortia to support our work. We expect that the majority of our next phase of registrations will be in place well ahead of the REACH regulatory deadlines, so as to support our customers.

Our businesses have made further progress in the transition to the Globally Harmonised System (GHS) for chemical classification and hazard communication. Work has included updates to product safety datasheets and hazard labelling to comply with the new EU Classification, Labelling and Packaging Regulation and similar activities were undertaken to meet equivalent regulations in other regions.

The comprehensive training update programme at our North American facilities on the US Toxic Substances Control Act (TSCA) is now fully complete.

As part of our commitment to the safe management of chemicals throughout their life cycle, Johnson Matthey has commenced a voluntary programme to establish expanded product safety assessments for designated priority products. This aligns with the International Council of Chemical Associations’ (ICCA) best practices.

No notifications of significant health effects at end user level involving our products and no major incidents or environmental releases during product transportation and distribution were recorded during 2010/11. On 30th August 2010 Johnson Matthey Inc. Emission Control Technologies (Heavy Duty Diesel) settled an agreed penalty of $55,000 with the California Air Resources Board (CARB) in respect of a product mislabelling infringement. Actions have been taken by the business to prevent recurrence.

Policies and Management Systems – Human Resources

The group’s human resources standards are progressive, consistent and aimed at bringing out the best in our people. Group policies are supported by detailed regional and individual business procedures which are regularly updated to reflect both regional best practice and local legislation. Site specific human resources policies and procedures are communicated to staff at inductions and through staff handbooks. Human resources policies and risks are examined by the Chief Executive’s Committee and the CSR Compliance Committee.

The group’s policies on equal opportunities and training are published on the website.

Our Equal Opportunities Policy is to recruit, train and develop employees who meet the requirements of the job role, regardless of gender, ethnic origin, age, religion, sexual orientation or disability. The policy recognises that people with disabilities can often be denied a fair chance at work because of misconceptions about their capabilities and seeks to enhance the opportunities available by attempting, wherever possible, to overcome obstacles, such as the need to modify equipment, restructure jobs or to improve access to premises, provided such action does not compromise health and safety standards.

Similarly, employees who become disabled during their employment will be offered employment opportunities consistent with their capabilities. We value the diversity of our people as a core component of a sustainable business and employment applications are welcomed and encouraged from all sections of the community including minority groups.

The Management Development and Remuneration Committee of the board takes a special interest in ensuring compliance with the Training and Development Policy objectives in order to:

During the year, a ten year human resources strategy has been developed to support business growth over the next decade. In the coming year, significant recruitment in our operations in Asia will be a particular focus as our businesses in the region continue to expand.

Policies and Management Systems – Business Integrity and Ethics

Johnson Matthey strives to maintain the highest standards of ethical conduct and corporate responsibility worldwide to ensure we act with integrity, transparency and with care for the rights of the individual. The group’s principles are set out in the Business Integrity and Ethics Policy and issues are further safeguarded through corporate governance processes and monitoring by the board and its committees. The policy applies to all the group’s employees and is presented on the website.

Compliance training is provided to employees to support their understanding of and commitment to group policies in order to protect and enhance the company’s reputation. The training educates managers in their responsibilities for employees, commercial contracts and company assets and is delivered globally via online learning programmes and seminars. Online compliance training for employees across our global businesses relating to the UK Bribery Act 2011, Anti Money Laundering and Competition is being developed and in the US, local training on compliance with this Act is already underway.

All facilities have established policies and procedures for employees to raise employment related issues for consideration and resolution. A confidential and secure ‘whistleblowing’ website and telephone helpline are also in place to give all employees additional means to raise any issue of personal concern.

Management of supply chain and contractor activities is a core component of the ISO 9000 and ISO 14000 series of standards. Supply chain and contractor management questionnaires are a requirement of achieving and maintaining registration and as such, ISO registered Johnson Matthey operations require the completion of appropriate questionnaires. For those operations without ISO registration, the group EHS management system provides policy and guidance on supply chain management and contractor control.

In May 2010 the group published its Ethical and Sustainable Procurement Policy which is available on the website. The policy provides clear guidance on various topics including those relating to the selection of suppliers, auditing against standards and ethical conduct with suppliers.

Johnson Matthey is confident of the human rights performance of its own operations but recognises that business practices in the supply chain are not always transparent and represent a risk that must be managed. Every effort is made to ensure the issues are managed effectively. We support the principles defined within the United Nations Universal Declaration of Human Rights and the International Labour Organisation Core Conventions including the conventions in relation to child labour, forced labour, non-discrimination, freedom of association and collective bargaining. Compliance with and respect for these core principles are integrated within the risk assessment procedures and impact assessments which are undertaken when entering into business in a new territory and within the due diligence processes when making an acquisition or entering a joint venture.

During the year Johnson Matthey’s North American businesses developed a Conflict Free Minerals Policy in response to reports on the role of conflict minerals in financing human rights violations in the Democratic Republic of the Congo. The policy was published in March 2011 and is available on the website.

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