Our commitment to addressing climate change is more than a duty or a growth strategy. It is the filter we apply to every single decision we make.
We strongly support the Task Force on Climate-related Financial Disclosures (TCFD), which launched to help companies understand, measure and respond to climate change risks and opportunities. This year, we expanded our reporting to include information and voluntary disclosures that are aligned with TCFD’s final recommendations report.
|a) Describe the board’s oversight of climate-related risks and opportunities.||2019 ESG Report||Our Governance|
|2019 CDP Climate Change Survey: Question C1.1a||Question C1.1a: Sustainability and climate change risks are a formal responsibility of our Board of Directors’ Corporate Governance and Nominating Committee. The Committee sets the strategic direction for Ingersoll Rand’s sustainability approach and is responsible for overseeing our carbon footprint and environmental health and safety performance. The committee meets twice annually to evaluate the company’s sustainability performance and is informed regularly by the company’s SVP of innovation and Chief Technology Officer. The CTO has the role of providing these and other updates to this Committee on a regular basis. The use of our products is our single largest source of greenhouse gas emissions, consequently our innovative solutions for buildings, transportation markets and industrial processes have the potential for greatest impact on climate change as such, both Innovation and Ingersoll Rand’s sustainability office report directly to our Senior Vice President of Innovation and Chief Technology Officer (CTO).|
|b) Describe management’s role in assessing and managing climate-related risks and opportunities.||2019 CDP Climate Change Survey: Questions C1.2 and C1.2a|| Question C1.2: Within the C-suite, CTO has responsibility for both assessing and managing climate-related risks and opportunities. On a half-yearly basis, the CTO reports to the board on climate-related issues.
Question C1.2a: The CTO reports to the CEO and Chairman of the Board. Since the use of our products is our single largest source of GHG emissions, our innovative solutions for buildings, transportation markets and industrial processes have the potential for the greatest impact on climate change. Ingersoll Rand’s sustainability office reports directly to the SVP of Innovation and the CTO. The CTO also works with business leadership teams and serves on various boards and advisory councils, including The Alliance to Save Energy, to accelerate global innovation and technology-led growth strategies. Our CTO is the sponsor of our Internal Sustainability Strategy council, which governs best practices. Product GHG is a metric on the CTO’s goals, monitored quarterly and annually.
|a) Describe the climate-related risks and opportunities the organization has identified over the short, medium and long term.||2019 Annual Report||Cautionary Statement for Forward Looking Statements, Non-Financial Statements – European Union Directive and Form 10-K|
|2019 ESG Report||Public Policy Advocacy and Compliance, Climate Change, Energy-Efficient and Low-Emissions Products and Technology and Innovation|
|2019 CDP Climate Change Survey: Questions C2.3a and C2.4a|| Question C2.3a: Ingersoll Rand has identified climate-related risks with the potential to have a substantive financial or strategic impact on the business including: transition risk from mandates on and regulation of existing products and services; physical risk from increased severity of extreme weather events; and transition risk from increased cost of raw materials.
Question C2.4a: Increasing demand for energy efficiency, changing weather patterns and growing urban populations create product and service development opportunities for our business. For example, HVAC and lighting systems are a great opportunity to reduce energy consumption in commercial, industrial and residential buildings – which account for nearly half of global energy consumption.
|b) Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy and financial planning.||2019 Annual Report||Item 1A, Risk Factors and Non-Financial Statements – European Union Directive|
|2019 ESG Report||Public Policy Advocacy and Compliance, Energy-Efficient and Low-Emissions Products and Technology and Innovation|
|2019 CDP Climate Change Survey: Questions C2.5, C2.6 and C3.1c|| Question C2.5: Describes where and how identified risks and opportunities have impacted the business. For example, Ingersoll Rand has made investments that enable the company to phase out today’s high global warming potential HFCs ahead of regulatory requirements. We work proactively with government agencies and refrigerant suppliers to help identify alternatives and facilitate a practical transition that reduces GHG emissions as early as possible. We also participate in international forums, such as the United Nations Framework Convention on Climate Change and the Montreal Protocol, to help create an organized approach to global refrigerant transitions.
Question C2.6: Describes where and how the identified risks and operations have factored into the financial planning process. For example, energy costs and costs to transition to lower GWP refrigerants are factored into annual operating budgets.
Question C3.1c: Explains how climate-related issues are integrated into business objectives and strategy. For example, we have committed to a $500m investment in product-related research and development from 2015-2020 to fund the long-term reduction of GHG emissions. The commitment encompasses our entire product portfolio and includes refrigerant and energy efficiency initiatives. In 2015, we launched the Ingersoll Rand EcoWise portfolio of products; the EcoWise endorsement is given to products with next-generation, low-global warming potential (GWP) refrigerants and high efficiency operation. Aspects of climate change have also influenced our strategy. Energy demand and energy efficiency regulations are transforming how commercial buildings are built and how they operate.
|c) Describe the potential impact of different scenarios, including a 2⁰C scenario, on the organization’s businesses, strategy and financial planning.||2019 CDP Climate Change Survey: Questions C3.1a and C3.1d|| Question C3.1a: Ingersoll Rand uses qualitative climate-related scenario analysis to inform our business strategy.
Question C3.1d: We regularly perform scenario assessments to determine product strategy with respect to climate-related drivers such as greenhouse gas emissions and energy efficiency. These scenario assessments are done at the business unit level and incorporate standard work.
Pursuing scenario assessments has led to new product development and technology projects to explore new solutions and changes in strategy. We made a global commitment to reduce the refrigerant-related footprint of our products by 50% by 2020 and committed to investing $500 million in the research and development of new technologies to facilitate a transition to next-generation refrigerants and high efficiency operations.
|a) Describe the organization’s process for identifying and assessing climate-related risks.||Materiality Assessment||We perform a materiality assessment every 3 to 4 years to assess relevant sustainability topics, including those related to climate change. Risks are evaluated and ranked based on impact and importance to the company and stakeholders.|
|2019 CDP Climate Change Survey: Question C2.2b|| Question C2.2b: At the company level, Ingersoll Rand has adopted the Enterprise Risk Management (ERM) Integrated Framework, a three-dimensional approach, considering objectives, risk components and all layers of the organization across the board and for the ones which apply specifically to certain business units (Asset level). Risk objectives and risk components have been identified for strategic, operational, financial and compliance risks with a corresponding control mechanism which allows management to respond according to the particular risk or opportunity, including specifically climate change and other resource-related topics.
At the asset level, ERM provides guidance and direction for integrating the enterprise risk management with the major business processes. The Internal Sustainability Strategy Council represents the functions and businesses globally and meets quarterly to review progress against all sustainability targets, including greenhouse gas emissions of our operations and products. This Council has accountability for monitoring risks associated with climate change. Under ERM, we have developed a Risk Assessment mapping which correlates risk related to innovation, climate change and our supply chain based on vulnerability, impact and likelihood.
| b) Describe the organization’s
processes for managing climate-related risks.
|2019 Annual Report||Non-Financial Statements – European Union Directive|
|2019 ESG Report||Climate Change, Greenhouse Gas Emissions, Pollutant Emissions and Refrigerants, Energy-Efficient and Low-Emissions Products and Water|
|2019 CDP Climate Change Survey: Questions C2.2c and C2.2d|| Question C2.2c: All relevant climate-related risks — including current and emerging regulation, technology, reputation, acute and chronic physical risks and downstream risks — are integrated into Ingersoll Rand’s materiality assessment and Enterprise Risk Management Integrated Framework.
Question C2.2d: Climate-related risks are managed through the Enterprise Risk Management (ERM) Committee through a quarterly review process of priority risks. Both climate-related risks and opportunities are managed at the enterprise level by the Internal Sustainability Strategy Council which meets quarterly to review progress against all sustainability targets, including greenhouse gas emissions of our operations and products. This Council has accountability for sustainability best practices.
|c) Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organization’s overall risk management.||2019 CDP Climate Change Survey: Question C2.2||Question C2.2: Climate-related risks are integrated into multidisciplinary company-wide risk identification, assessment and management processes.|
|METRICS AND TARGETS|
|a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.||2019 ESG Report||Climate Change, Greenhouse Gas Emissions, Pollutant Emissions and Refrigerants, Energy-Efficient and Low-Emissions Products|
|b) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks.||2019 ESG Report||Greenhouse Gas Emissions, Pollutant Emissions and Refrigerants, and GRI Content Index|
|c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.||2019 ESG Report||Climate Change and Our Purpose|
|2019 CDP Climate Change Survey: Questions C4.1, C4.1a and C4.1b|| Question C4.1: We have targets for both absolute emissions and emissions intensity.
Question C4.1a and C4.1b: Our combined absolute and intensity targets constitute an approved science-based target. Absolute Emissions Target, Scope 3 (Use of Products): In September 2014 we announced our 2020 Climate Commitment. We committed to reducing the refrigerant footprint of our products by 50% by 2020 (Dec. 31, 2019) with a baseline of 2013. Emissions Intensity Target, Scope 1+2 (location-based): As part of our 2020 Climate Commitment, in 2014, Ingersoll Rand committed to reducing Scope 1+2 emissions 35% from a 2013 baseline.