Report of the Directors
Governance

Governance and Sustainability

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Introduction

Johnson Matthey’s well established policies, processes and management systems support our governance and sustainability efforts and apply to all our operations around the world. They encompass the key areas of:

Together these provide the framework for managing social, environmental and ethical matters. Brief summaries are set out in this section and further details, together with information about progress and developments over the year ended 31st March 2013, can be found on our website.

Read more on our website.

Compliance with applicable legal requirements is a minimum standard for Johnson Matthey’s operations and employees. In many cases we set standards which are in advance of these.

Our employment contracts, handbooks and policies specify acceptable business practices and our position on ethical issues. The Group Control Manual, which is distributed to all our operations, and security manuals provide further operational guidelines to reinforce these.

The Corporate Governance Report describes the role of the board, the Audit Committee and other committees in risk management and internal control.

Our board of directors is ultimately responsible for social, environmental and ethical matters. These matters are embedded in Johnson Matthey’s risk management processes and are formally reviewed annually by our board. Policies are set and approved by the Chief Executive’s Committee (CEC). The CEC also addresses risk and control issues and reviews key EHS, social and governance issues. The CSR Compliance Committee, a sub-committee of the CEC, has specific executive responsibility for the identification and monitoring of risks in these areas. It sets and oversees compliance with group standards through the adoption, dissemination and implementation of appropriate group policies and other operational measures.

Every business is required to include sustainability in its annual budget setting process and define the nature of programmes and projects to be undertaken together with capital expenditure requirements and value generated over a three year business cycle. Plans are discussed with the CEC and are formally approved by the board. As part of the process, progress against the Sustainability 2017 targets is assessed on a group basis to establish if additional management action is required.

We also have a formal system of site and functional reviews to drive improved performance in sustainability.

The group’s sustainability strategy (which we detail in the section on Our Strategy) was defined following an assessment of the risks, major impacts and future commercial opportunities open to the business. The long term targets within it address the issues which could potentially have a material effect on the group’s future performance. The group’s materiality map outlines the key material issues and the targets in place to address and monitor them.

View the materiality map online.

The area of sustainability continues to develop rapidly and we continually monitor emerging issues, regulation, legislation, standards and good practice. Developments are proactively managed through reviewing the external landscape to understand the material issues that may impact the group or present real business opportunities. Responsibility for identifying and assessing these issues lies with the group sustainability team and the CSR Compliance Committee. During the year we have considered new ways to further enhance our ability to manage our material issues and will be introducing the use of an additional tool during the first quarter of 2013/14.

We continued to develop our understanding of life cycle assessment (LCA) and completed a further LCA, this time on the health benefits of our active pharmaceutical ingredient products (see the Case Study on Measuring the Health Benefits of our Products). We have also continued to build on our understanding of the potential implications of water stress to our operations.

We constantly monitor developments on reporting practices including those of the International Integrated Reporting Framework and those within the EU Commission. We are also assessing the new Global Reporting Initiative (GRI) guidance, which was published on 22nd May 2013, in the context of our future reporting.

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 care for the rights of the individual wherever we do business. Our ethical principles and standards are set out in our Business Integrity and Ethics Policy which applies to all our employees.

The board and its committees, the Chairman, the Chief Executive and the other individual directors all play key roles, together with management, in promoting and monitoring ethical behaviour and safeguarding Johnson Matthey’s reputation.

We provide compliance training to our 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, face to face seminars and individual training. Online compliance training for employees addresses the bribery and corruption, money laundering and competition risks faced by the group.

All our facilities have established policies and procedures for employees to raise employment related issues for consideration and resolution.

A confidential, secure, externally-run ‘whistleblowing’ website and telephone helpline are also in place to give all employees additional means to raise any issue of concern. The website offers multilingual access and allows for written or telephone reports. The site is publicised via site notice boards and our corporate intranet site. Reports received through the website and helpline (as well as any received through other media, such as email, telephone or letter) are appropriately investigated in accordance with the Group Human Resources Policy on whistleblowing. Responses and outcomes are posted on the website, or are communicated to employees via other internal media, such as site notices or briefings. For Johnson Matthey as a whole, there was a total of 17 new whistleblowing reports in the calendar year 2012 (2011 8) and all but two have been resolved as at the date of approval of this annual report. At its meeting in January 2013, the Audit Committee reviewed the group’s whistleblowing procedures and the matters raised during 2012/13.

The focus on sustainability is very much in evidence at Johnson Matthey’s Colour Technologies site in Maastricht, The Netherlands.

Scientists at Johnson Matthey’s Technology Centre in Sonning Common, UK.

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