Report of the Directors
Governance

Governance and Sustainability

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Supply Chain Management

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 for 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.

Our Ethical and Sustainable Procurement Policy provides clear guidance on various topics including those relating to the selection of, and ethical conduct with, suppliers.

During the year a group of our procurement professionals participated in a supply chain and procurement session led by the Group Sustainability Director and the non-governmental organisation, Forum for the Future. The aim of the workshop was to discuss emerging supply chain issues, identify any gaps in our approach to suppliers and share good practice. The group examined a range of issues, including Scope 3 greenhouse gas emissions, conflict minerals and developing regulation. In 2013/14 we will establish a cross divisional supply chain steering group to further improve dialogue and share information about our suppliers across Johnson Matthey.

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.

In response to US national legislation, Johnson Matthey’s North American businesses have a Conflict Free Minerals Policy and a Slavery and Human Trafficking Policy. Both are available on our website.

Johnson Matthey is responding to regulations enacted in August 2012 by the United States Securities and Exchange Commission (SEC) requiring certain companies to disclose the use of conflict minerals, specifically tin, tungsten, tantalum and gold that originate from the Democratic Republic of the Congo and its adjoining countries. Although we are not currently directly required to comply with the SEC regulations, we are conscious of the need to be in a position to promptly and accurately respond to any queries from our customers (many of whom may need to comply) on the origin of any of these metals used in the products that we supply to them.

We are carrying out a ‘reasonable country of origin’ enquiry with all our suppliers of these metals and their chemical derivatives in order to determine their provenance. Once complete, this will enable us to address requests from customers for information relating to the supply of these materials. We are also working to incorporate disclosure on the origin of these materials into our due diligence processes for new suppliers.

Environment, Health and Safety

Johnson Matthey is committed to providing the highest level of protection to the environment and to safeguarding the health, safety and wellbeing 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 our sites worldwide. In addition, all facilities have developed local policies to meet international, national, local and corporate requirements.

The Environment, Health and Safety Policy is a written statement, formulated and agreed by the CEC. Signed by the Chief Executive, it is available at all sites and forms the basis of the group EHS management system.

The group EHS management system comprises a set of mandatory EHS policies, written as performance standards. Where there are different acceptable methods of achieving these performance standards, appropriate written guidance is also provided to assist in creating and managing local processes. 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 performance standards against which EHS conformance audits are assessed.

Our EHS Governance Processes

EHS compliance audits are conducted to verify that performance standards contained in corporate EHS policies are being achieved and to maintain continuous improvement. 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 and reviewed by the Group EHS Assurance Director. Health management reviews are undertaken every three to five years at all operational sites, depending on indicators of performance. 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.

At each board meeting, the board reviews group EHS performance reports for the prior months. These reports set out the group’s EHS performance in terms of accident and incidence rates, lost work days and the rolling all lost time accident rate. The reports also contain information from the businesses across the group on lost time accidents, as well as details of any contractor incidents, occupational illness, sickness absence and any material regulatory action. The board reviews EHS strategy and the EHS risks and assurance process on an annual basis.

All EHS audit reports, including health management reviews and process risk management audit reports, are reviewed by the CSR Compliance Committee and appropriate follow up actions are taken on outstanding issues. During 2012/13 a total of 29 detailed compliance audits and 25 one day audit action reviews were completed. Health management reviews were conducted at 12 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.

Human Resources

Our 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 CEC and the CSR Compliance Committee.

Johnson Matthey’s policies on equal opportunities and training are published on our website and are also detailed below.

In line with our Equal Opportunities Policy, we recruit, train and develop employees who meet the requirements of the job role regardless of gender, ethnic origin, age, religion or belief, marriage or civil partnership, pregnancy or maternity, sexual orientation, gender reassignment 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.

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

View the policy online.

Our human resources strategy aims to support long term business growth over the next decade and includes a focus on significant recruitment at our operations in Asia as our businesses in the region continue to expand. We have further enhanced our learning and development programmes in Asia during the year and these are further detailed in the Strategy in Action Case Study and in the Social section.

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