SUSTAINABILITY REPORT 21
ABOUT THE REPORT • This Sustainability Report focuses on the sustainability strategy, practices, priorities, targets and performance of our operations across key markets during the financial year ended 31 December 2021 • This Report is approved by the Board and prepared in accordance with Global Reporting Index (GRI) Standards: Core Option, Singapore Exchange Securities Trading Limited Listing Rules 711A, 711B and Practice Note 7.6, Sustainability Accounting Standards Board (SASB), Standards (Aerospace & Defence), and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) • ST Engineering is a signatory of the United Nations Global Compact and is committed to the 10 Principles; This Report serves as the first Communication of Progress • Stakeholders are advised to read the ST Engineering’s Annual Report 2021 for more information on the Group’s business and financial performance WHERE YOU SEE THESE ICONS This directs you to further information online This points to related information in the report This directs you to an external video Contents OVERVIEW About the Report 01 Board Statement on Sustainability 02 Message from Group President & CEO 03 Sustainability Highlights 04 OUR SUSTAINABILITY APPROACH Sustainability Framework 06 Measuring Performance 09 Material Stakeholders & Engagement 11 Assurance & Verification 12 Climate Change 13 ENVIRONMENTAL Environmental Protection 15 Productivity 20 Green Products & Services 23 SOCIAL People Excellence 27 Total Workplace Safety & Health 35 Quality Products & Services 39 Responsible Procurement 42 Economic Performance 46 Corporate Community Contributions 48 GOVERNANCE Ethical Business & Regulatory Compliance 53 → Corporate Governance Report 55 AWARDS 80 INDEX Global Reporting Initiative 81 United Nations Global Compact Ten Principles 86 Sustainability Accounting Standards Board 87 01 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
The Board of Directors oversees the management of material environmental, social and governance (ESG) factors for ST Engineering and takes them into consideration in setting the Group’s strategic direction. We remain steadfast in positively impacting people’s lives and the health of our planet by operating responsibly in our communities and the wider global ecosystem. We create value by addressing real-world problems, including those related to climate change, urbanisation and pandemics. We harness technology and innovation to enable a more secure and sustainable world. We link a range of operational, financial and non-financial key performance indicators to our material ESG factors to encourage the adoption of strategies and practices that are aligned to the sustainable and long-term success of the Group. → BOARD STATEMENT ON SUSTAINABILITY 02 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
MESSAGE FROM GROUP PRESIDENT & CEO Dear shareholders, ST Engineering is committed to sustainability. 2021 has been an eventful year for our sustainability journey, as we stepped up to decarbonise and better organise ourselves for sustainability across the Group. Our efforts include: • Setting a target to halve our absolute greenhouse gas (GHG) emissions by 2030 compared to 2010, as we continue our journey alongside global efforts towards net zero; • Integrating sustainability considerations into our latest five-year business plans; • Launching Group-wide Eco-Initiatives to further increase eco-consciousness in our workplaces and align our work habits and culture; • Being accepted as a signatory of the UN Global Compact (UNGC) and committing to its 10 principles in the areas of Human Rights, Labour, Environment and Anti-Corruption; • Launching a new innovation platform - In.Vent - as a pathway for the Group to build new ventures, with a strong emphasis on business and sustainability impact; and • Incorporating Task Force on Climate-related Financial Disclosures (TCFD) and Sustainability Accounting Standards Board (SASB) reporting elements in our Sustainability Report. OUR APPROACH We aim to positively impact people’s lives and the health of our planet by being a responsible global citizen. We do this by harnessing technology and innovation to address real-world problems. We also incorporate ESG practices into our businesses globally. DOING OUR PART We continue to reduce our impact on the environment, bring value to our people and maintain a high standard of governance practices. These actions build trust and credibility with our wide range of stakeholders. We increased the number of buildings with solar photovoltaic (PV) systems to 39 in our Singapore operations. In the spirit of the circular economy, we provided over 1,000 decommissioned laptops to be refurbished for school children from families in need, to help in their home-based education. We contributed $2.8m in our philanthropic efforts and community investments. This is to encourage volunteerism among our employees and positively impact our communities. We significantly enhanced our policies for export control and intermediaries and strengthened our governance processes and disclosures. ENABLING OUR CUSTOMERS We are committed to enabling a sustainable world through our products and solutions. Our aerospace products and conversion solutions significantly extend the life of aircraft. Our first floating power plant enables a reduction in emissions. Our suite of Smart City solutions helps cities reduce energy consumption and traffic congestion. A PURPOSE-DRIVEN GROUP ST Engineering will continue to harness technology and innovation to enable a more secure and sustainable world. Our focus is on long-term resilience and sustainable value creation for all our stakeholders – customers, employees, communities, shareholders, regulators and suppliers. Sincerely, → VINCENT CHONG Group President & CEO 28 February 2022 03 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
Sustainability Highlights → GHG Emissions 30% reduction in absolute GHG emissions over 2010 base year → Green Energy 8% of electricity consumption from Singapore operations derived from solar PV systems on 39 buildings → Economic Contributions $7.2b by the Group → Corporate Community Contributions $2.8m worth of community contributions by the Group and employees → Average Training Hours 21 hours per employee → Safety Culture 112 workplace safety and health activities to promote a safety culture → Bribery and Corruption Zero → People Managers → Continuous Improvement $23.5m 15% 14% of male employees are people managers of female employees are people managers of realised productivity savings from continuous improvement programmes cases 04 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
OUR SUSTAINABILITY APPROACH ST Engineering believes that creating sustainable value for our stakeholders is essential to the Group’s success. Our business processes reflect long-term and multistakeholder considerations, balancing customers’ needs today with longer-term developments. We strive to offer products and solutions that enable our customers to operate sustainably. OUR APPROACH We aim to positively impact lives of people and the health of our planet by being a responsible global citizen and acting as an effective enabler of a sustainable world, harnessing technology and innovation to address real-world problems. We act responsibly – from the way we treat employees and stakeholders to how we procure, consume and produce. We comply with all applicable laws and regulations in the jurisdictions where we operate. We place safety above profit, contribute to our local communities, and have zero tolerance for fraud and dishonest conduct. We actively protect our data and those entrusted to us. We also do our part for the environment by leveraging renewable energy, conserving resources and recycling our waste. Our products and solutions support our customers on their sustainability journeys across multiple domains, such as aviation and smart cities. We provide trusted solutions that enable our customers’ businesses, augment their capabilities, and support communities and cities in becoming more secure and sustainable. SUSTAINABILITY FRAMEWORK Responsible Global Citizen Doing Our Part Building Trust & Managing Risks Enabler of a Sustainable World Enabling Our Customers Growing with Partners & Seizing Opportunities 05 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
OUR SUSTAINABILITY APPROACH OUR GOVERNANCE STRUCTURE GOVERNANCE STRUCTURE FOR SUSTAINABILITY The Group Chief Strategy & Sustainability Officer works with the Group Executive Committee (EXCO) and senior business leadership to ensure that sustainability is at the core of the Group's business strategy, and that ESG considerations are integrated into both our immediate and long term business plans. Reporting to the EXCO, our business area management teams and Group Functions play critical roles in shaping and supporting our strategy. In addition, they work across the Group in key areas such as Technology & Innovation, Operational Excellence and Sustainability. They are enabled by an annual planning process which is underpinned by our governance and enterprise risk management systems. Sustainability is the responsibility of every ST Engineering employee. We enable this by mobilising teams across the Group at every level. This includes the Group Sustainability Team at Corporate, the Operational Excellence Specialist Teams, the business area Sustainability Focus Teams, the Eco-initiatives Team, to the various operations-level teams and individuals across our global sites. Every employee's effort is important to ST Engineering's sustainability journey. Group Executive Committee Leads the implementation of sustainability as an integral part of the Group’s business strategy, including business plans, product and technology development and operational processes. Board of Directors Provides strategic direction and considers sustainability issues, including the management of material ESG factors in the formulation of the Group’s strategies and policies. Risk & Sustainability Committee Assists the Board by setting direction and providing oversight on risk, internal controls and sustainability matters. It also reviews and approves the annual risk and sustainability workplan. Board of Directors Ultimate Accountability Risk and Sustainability Committee Oversight on behalf of the Board Group Executive Committee Leadership Direction & Execution Business Areas Group Functions Coordination Technology & Innovation Operational Excellence Sustainability 06 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
OUR SUSTAINABILITY APPROACH OUR COMMITMENT We are committed to conducting our business in a responsible manner. We adhere to labour laws and regulations where we operate and have zero tolerance for unethical labour practices such as child labour, forced labour, slavery and human trafficking in any of our operations. We prohibit discrimination and harassment at our workplaces, and are committed to safe and healthy working conditions and the dignity of the individual. We support the right to freedom of association, and encourage effective communication and consultation. Our commitments are guided by international human rights principles encompassed in the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, the United Nations Global Compact and the United Nations Guiding Principles on Business and Human Rights. These principles of respecting people’s dignity and their inherent rights are reflected in our policies, operations and relationships with our stakeholders. Suppliers We expect our supply chain partners to adhere to business principles consistent with our own, outlined in our Vendor Code of Conduct. This includes the fair and ethical treatment of labour within their own companies, as well as that of their suppliers. Customers We offer products and services that generate a positive impact for our customers as well as the communities they serve. This includes improvements in quality of life, health, safety and security. HOW WE PRACTICE OUR COMMITMENT TO HUMAN RIGHTS We do not design, produce or sell anti-personnel mines, cluster munitions, white phosphorus munitions and their related key components. We have zero tolerance for fraud and corrupt practices, and our Code of Business Conduct and Ethics (Code) forms the backbone of our commitment to ethical business conduct and regulatory compliance. We continue to commit to meeting all relevant regulatory and customers’ contractual requirements, including those relating to cybersecurity, data governance and protection and business continuity. We source responsibly and invest in the people and the communities where we operate. In support of our Code and good corporate governance practices, we established enterprise risk management and compliance policies and processes applicable. Beyond full compliance with legal and regulatory requirements, we align our management systems to international and industry standards. Our enterprise risk management policy provides directions for managing and reporting enterprise risks across the Group, with the objective of building a robust risk management process where enterprise risks are evaluated, monitored and treated in a holistic and integrated manner. Accordingly, our processes adopt a precautionary approach, with risk identification being carried out at the initial stage as well as continuously as the business or project progresses. Risk analysis comprises material internal and external analysis to ensure that all aspects are considered. Employees All our workers are required to adhere to honest and ethical conduct and act in accordance to our Code of Business Conduct and Ethics. This includes treating each other with respect, and abiding by our core values of Integrity, Value Creation, Courage, Commitment and Compassion. Learn about our Enterprise Risk Management Framework Read our Code of Business Conduct and Ethics Read our Vendor Code of Conduct 07 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
OUR SUSTAINABILITY APPROACH Why is it more relevant How we Contribute UN SDGs We provide meaningful and sustainable jobs, and contribute to the economic growth of the communities we operate in. • Creation of gainful employment wherever we operate • Generation of business opportunities for local institutions and small-medium enterprises • Payment of government taxes and levies • Enhancement of local communities’ wellbeing through corporate community contributions We enable our customers and support industry ecosystems in building resilience and fostering innovation. • Provision of products and services that help build and maintain resilience of infrastructure, including critical infrastructure at city and national level • Partner with local and global companies to create value and strengthen the industries we participate in • Incorporation of sustainability as part of our strong innovation culture We harness technology and innovation to enable cities and communities to be more secure and sustainable. • Smart mobility to reduce congestion and increase productivity • Smart environment solutions to reduce greenhouse gas (GHG) emissions • Robust digital platforms enabling secure and time-sensitive communication and enhancing city and building management • Cybersecurity and physical security solutions We stay lean and minimise the environmental impact of our operations and are committed to enabling the circular economy. • Offer a wide range of conversion solutions, including for aircraft (Passenger-to-Freighter), ships and vehicles, that can extend the life of valuable assets • Responsible production through upfront sustainable design considerations and strict adherence to industrial standards and regulatory requirements • Responsible consumption through responsible procurement and lean operations backed by a strong continuous improvement and innovation culture We play our part to help address the global challenges of climate change. • Development of greener products and services • Reduction of GHG emissions • Reduction of water consumption • Reduction of waste through Reduce, Reuse and Recycle initiatives We have a strong heritage in public security and have zero tolerance for unethical behaviour. • Development of products and services to help maintain peace, public security and safety • Maintenance of a strong Code of Business Conduct and Ethics • Engagement with suppliers on our Vendor Code of Conduct We affirm our support of all 17 UN SDGs and identified six goals where the Group has more contributions in terms of our internal practices, and the products and services we offer to our customers. ST Engineering is a signatory of the United Nations Global Compact (UNGC) in 2021, supports its Ten Principles and is committed to advance the broader goals of the United Nations Sustainable Development Goals (UN SDGs). References on the practical actions taken to implement the UNGC principles, in each of the four issue areas (human rights, labour, environment and anti-corruption) can be found in the UNGC Index pages. Learn about our UNGC COP 08 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
We measure a range of financial, non-financial and operational Key Performance Indicators (KPIs). These have a significant impact on the resilience and sustained performance of our Group's businesses globally, whether in the short, medium or long term. Our KPI areas include those indicated in the table on the right. We design the remuneration of our senior management executives to motivate them to strive for sustained growth and adopt strategies aligned to the long-term performance of the group. The remuneration package comprises components linked to the achievement of annual performance targets, including material risks and sustainability performance. OUR SUSTAINABILITY APPROACH MEASURING PERFORMANCE Financial Performance • Revenue, Profit, Working Capital People Development • Learning & Development • Peformance Management Operational Excellence • Continuous Improvement • Health & Safety • Quality Technology & Innovation • R&D Investments • New Products & Services • Venture Building Environment • GHG Emissions • Water & Waste Learn more about our Executive Remuneration Structure 09 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
ST Engineering believes that creating sustainable value for all our stakeholders is essential to the Group’s long-term success. Engaging our stakeholders regularly enables us to understand and address their concerns, and strengthens crucial relationships which our business relies on. Material stakeholders are identified as part of the ST Engineering’s enterprise risk management process, based on the magnitude these parties can impact or be impacted by the Group’s activities. Stakeholder Our Responsibility Engagement efforts Customers We forge enduring relationships with our customers and make sure our products and services stay relevant, are safe and reliable, and meet their expectations. We do what it takes to understand our customers, their needs and their challenges. We work closely with them to co-create solutions that enable them to be more effective in their operations. • Regular customer surveys • Company visits • Customer service training for all relevant employees • Regular project review meetings • Technology seminars • Dialogue sessions Employees & Other Workers People are our most valuable asset. We focus our efforts in growing and enhancing their capability and capacity, strengthening a passionate and engaged workforce, and being at the forefront of people practices. • Regular townhalls • Annual Business Conventions • Continuous performance discussions • Team activities, including celebrations, teambuilding and wellness initiatives • News updates via our Corporate Intranet Local Communities We contribute to the development of our host communities. We act responsibly, protect the environment and contribute to our communities’ wellbeing through our corporate community contributions. We also work closely with local government agencies to support their economic development imperatives that are in line with our growth plans. Where possible, we ensure that our health & safety policies, including pandemic precautions, protect our community beyond our workplaces. • Corporate community contributions • Collaborations with educational institutions to develop STEM (Science, Technology, Engineering and Mathematics) talents • Partnerships with small-medium enterprises • Support our workforce by implementing health & safety policies to protect them Regulators & Government We disclose pertinent information in a clear and concise manner and on a timely basis. We comply with legal and regulatory requirements in the jurisdictions where we operate in. • Providing feedback to the public • Regulatory consultation exercises • Incorporate trends and learning points in our business through regular engagements with regulators and governments Shareholders & Investors In line with our strong emphasis on corporate governance, we continue to build investor trust and confidence through open dialogue and two-way communication with shareholders and the investment community. • Quarterly market update • Half-yearly financial results briefings • Investor conferences and roadshows • Investor Day • Annual General Meeting & Extraordinary Meeting • Facility visits • Group and one-on-one meetings Suppliers & Collaborators We cultivate strong, ethical and mutually beneficial relationships with suppliers and collaborators. Our worldwide partners are the cornerstones of our global businesses. • Engagements with partners including strategic programmes with small and medium-sized enterprises • Surveys and feedback sessions with suppliers on procurement policies OUR SUSTAINABILITY APPROACH MATERIAL STAKEHOLDERS & ENGAGEMENT 10 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
In assessing materiality, ST Engineering considers factors that impact our businesses and our stakeholders, from both the financial and non-financial perspectives. Our key stakeholders include shareholders and investors, customers, regulators and governments. employees and other workers, suppliers and collaborators, and local communities. In 2013, the Group's Risk Management Department conducted our first materiality assessment according to GRI G4 guidelines. Material ESG factors were identified and responsibilities for management and reporting were assigned to each material factor owner. The material factors were mapped onto the key business risks of the Group to ensure completeness and a clear understanding of the risks each material factor posed. In 2015, the key business risks and material factors were reviewed and revisions were made where relevant. In 2019, the Group’s material ESG factors were reorganised into ten areas for greater focus and clarity. They were mapped into Environmental, Social and Governance categories and aligned with the UN SDGs. Due to the evolving business environment and the recent reorganisation in 2021, the Group will conduct a review of its material ESG factors in 2022. Low Medium High STAKEHOLDER INFLUENCE ECONOMIC, ENVIRONMENTAL & SOCIAL IMPACT Low Medium High Supplier Assessment Local Communities Environmental Products & Services Non-Discrimination Compliance (Products & Services) Procurement Practices Labour Management Relations Occupational Health & Safety Anti-Corruption Training & Education Economic Performance Energy & Greenhouse Gas Emissions Freedom of Association & Collective Bargaining Customer Health & Safety Employment Labour Practices & Grievances Mechanism Governance 10 Ethical Business & Regulatory Compliance Environmental 1 Environmental Protection 2 Productivity 3 Green Products & Services Social 4 Economic Performance 5 Quality Products & Services 6 People Excellence 7 Total Workplace Safety & Health 8 Responsible Procurement 9 Corporate Community Contributions OUR SUSTAINABILITY APPROACH MATERIALITY ASSESSMENT 11 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
ST Engineering is committed to providing a balanced and accurate sustainability report. The information disclosed is compiled from the submissions of our business entities worldwide. Our Group Risk & Assurance team verified this report from two perspectives: 1. At the process level, to ensure that it is robust and comprehensive 2. At the data level, to ensure that it is accurate and supported by proper documentation The GHG emissions data reported by our Singapore entities are verified under ISO 14064-1:2006 – Greenhouse Gases by Lloyd’s Register Quality Assurance Ltd (LRQA). For 2021, all Singapore entities are consolidated under a single statement. We are extending external verification for GHG emissions to all our material entities worldwide progressively over the next 2 years. We will also be transitioning in 2022 to the ISO 14064-1:2018 - Greenhouse Gases standard. Our intention is for the external verification and assurance of our Sustainability Report to be done progressively in stages. OUR SUSTAINABILITY APPROACH ASSURANCE & VERIFICATION 12 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
The effects of climate change have become increasingly pronounced. ST Engineering is aligned with our stakeholders' efforts to act responsibly and combat climate change. This includes implementing TCFD recommendations. In 2021, we joined the Singapore Low Carbon Network (SLCN) as an inaugural member. The SLCN aims to advance the sharing of best practices and insights on key carbon measurement and decarbonisation topics. Governance The Board provides oversight on all sustainability matters, including climate-related risks and opportunities. Briefing sessions on climate-related topics are conducted periodically for the Board, while detailed discussions on actions to be taken, are carried out by the Board’s Risk and Sustainability Committee. The EXCO is accountable to the Board for the implementation of these climate-related strategies and directions. Business leaders at all levels are responsible for addressing the risks and opportunities in their respective business areas. Plans and actions needed are discussed at various management fora and incorporated into the strategic planning and annual budgeting processes. The Group Chief Strategy & Sustainability Officer assists the EXCO in ensuring that the impact of climate change is taken into consideration in all business strategies and plans. Various committees, working groups and focus teams across the Group and its business areas support the execution of these plans. In particular, the Operational Excellence Steering Committee (OESC), comprising the global operations leaders across all our business areas, is a key platform for integrating and executing these efforts. Strategy We identify sustainability-related risks and opportunities as part of our annual five-year strategic plan review. This is discussed and endorsed by the Board’s Strategy and Finance Committee, and forms the foundation for initiatives relating to climate change in subsequent years. Risk Management A preliminary Physical Climate Risk Assessment was carried out for our major operating sites across the world in 2021. An in-depth climate risk assessment for key vulnerable locations will follow in 2022. We will also be examining our transition risks as we move into low carbon products and operational processes, including more detailed studies on the supply chains of our business areas. Metrics & Targets We have identified relevant climate-related metrics and targets, and these are elaborated under the respective material ESG factors in this report. OUR SUSTAINABILITY APPROACH CLIMATE CHANGE 13 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
OUR SUSTAINABILITY APPROACH Why it is Material How We Manage It UN SDGs ENVIRONMENT Environmental Protection Climate change is an issue of urgency and importance. A low carbon business strategy is not only good for the environment, but also enables us to better respond to climate change related regulations and price volatilities of hydrocarbon resources. Environmental efforts are coordinated by the Environment Committee. All our material business units in Singapore are certified ISO 14001 Environmental Management Systems. Our global operations abide by relevant environmental regulations and requirements. Productivity Staying lean, efficient and effective in our systems and process, optimises the use of our resources and is fundamental to maintaining our competitive edge. Productivity efforts are coordinated by the Continuous Improvement Committee. Initiatives such as Kaizen, quality action teams and value innovation teams are embedded into day-to-day operations. We empower employees to identify and eliminate waste and also recognise exemplary contributions. Green Products & Services Cities and organisations around the world are looking to minimise their carbon footprint while reducing operating costs. Our technology community actively looks into the design and development of products that are more sustainable. Our engineers incorporate green considerations not just into end products, but also into responsible production and through-life support. Through these efforts, we are able to empower and enable our customers to become more sustainable. SOCIAL People Excellence We are only as strong as our people. With a capable, motivated and agile workforce, we are able to strengthen our talent pipeline to pursue sustainable growth. Our people and culture strategy seeks to enhance our capability and capacity for growth, build a passionate and engaged workforce, and position us at the forefront of people practices. This proposition is realised through talent attraction and management, career development, diversity and inclusion, a fair reward system, work-life integration and harmonious union relations. Total Workplace Safety & Health We are committed to “Safety Before Profit”. A safe and healthy workplace protects workers from injury, stress and illness, and also reduces absenteeism and turnover. It also increases productivity and raises employee morale. This duty of care extends to our visitors and contractors working within our premises. Workplace safety and health efforts are coordinated by the Workplace Safety & Health Committee. All our material business units in Singapore are certified ISO 45001 Occupational Health and Safety Management Systems. Our global operations abide by relevant workplace safety regulations and requirements. Quality Products & Services Customers rely on us to meet their operational needs. Our products must be compliant with all relevant regulations and be safe to produce, operate and maintain. It must also be reliable over the product’s lifecycle. In addition, our services must meet our customers’ requirements and be delivered at the promised quality and within the committed turnaround time. Our quality efforts are coordinated by the Quality Committee. The majority of our operations are certified ISO 9001 Quality Management Systems or equivalent. We design, manufacture and service our products in accordance with industry standards and meet all regulatory requirements. In addition, we actively work with our suppliers and collaborators to ensure that we provide high quality bought-in parts and services. We also regularly seek feedback from our customers to continuously improve our products and services. Responsible Procurement We depend on a resilient and sustainable supply of goods and services to meet our business needs. We are committed to managing our suppliers ethically and working with them to ensure a responsible supply chain. Our procurement community champions the effective management of our suppliers to align business behaviours, drive greater efficiencies, streamline processes and build greater resilience. We work with our suppliers to embed responsible procurement principles into our processes. Economic Performance Inclusive growth and value creation for our stakeholders are key to our long-term viability. We are committed to delivering a sustainable and balanced triple bottom line of “People, Planet, Profit.” Our strategic planning community reviews the Group’s strategy in the context of global trends and developments. Our operations and support function teams focus on operational excellence to ensure that we continue to add value to our stakeholders and impact our communities in a positive manner. Corporate Community Contributions We are committed to being a good corporate citizen in the places where we operate. Making a positive impact in our host communities is aligned with our core value of compassion. Corporate community contributions are coordinated by the Corporate Social Responsibility Committee. We measure, report and communicate our corporate community investments and philanthropy efforts. GOVERNANCE Ethical Business & Regulatory Compliance We comply with applicable laws and regulations in the jurisdictions where we operate. We have zero tolerance for fraud and corrupt practices. In addition, we actively protect our data and those entrusted to us by our stakeholders. The Risk & Assurance function oversees matters relating to governance, risk and compliance. It has put in place a regulatory compliance framework to continually train our global workforce on our Code of Business Conduct and Ethics. The department also works with relevant functions and operations to strengthen compliance. MATERIAL ESG FACTORS OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX 14 ST ENGINEERING SUSTAINABILITY REPORT 2021
GHG EMISSIONS, RENEWABLES AND ENERGY EFFICIENCY In 2021, the Group achieved a 30% absolute reduction of GHG emissions with 2010 as the base year. This translated to a 46% reduction in intensity. While there was a slight increase in emissions as operations recovered from 2020 the Group is still on track to achieve the target of a 50% absolute reduction by 2030. Our Singapore operations consolidated their efforts into a single GHG emissions assurance statement. Our GHG emissions were verified in accordance with ISO 14064-1:2006 Greenhouse Gases. In 2022, we plan for the external assurance process to be aligned with ISO 14064-1:2018. We continued our roll out of solar photovoltaic (PV) systems across our global operations to increase the proportion of renewables in our energy mix. We added about 44,000m2 of solar panels in Singapore, bringing the total to 110,000m2. This increased the number of buildings with solar panels deployed to 39, compared with 24 in 2020. In our Singapore operations, the solar PV systems generated 8% of the total electricity used. This was the same proportion as in 2020, as our businesses ramped up from a lower production rate. Our business units in Singapore initiated the use of electric vehicles with a pilot of eight vehicles and two charging stations. We intend to replace the current fleet of internal combustion engine vehicles in phases over the next few years. Our businesses continue to replace production equipment and cooling systems to reduce GHG emissions. ENVIRONMENTAL → ENERGY CONSUMPTION Consumption ('000GJ) 559 480 549 744 739 778 Direct Indirect 1,400 1,200 1,000 800 600 400 200 0 2019 2020 2021 → GHG EMISSIONS Scope 1+2 Scope 3 Emissions ('000tCO2e) 113 18 117 2.6 119 1.9 200 150 100 50 0 2019 2020 2021 We recognise the impact of climate change and the importance of addressing it. We believe in conserving resources and conducting our operations more efficiently to minimise GHG emissions and reduce pollution and waste. → → Set a new GHG emissions target for our global operations: 50% absolute reduction by 2030, compared with 2010 → Expanded data reporting to include U.S. and Europe operations WHAT WE ACHIEVED IN 2021 ENVIRONMENTAL PROTECTION 15 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
→ Continue to reduce absolute GHG emissions and expand initiatives globally, especially in renewable energy use → Continue to reduce waste generation from operations and maintain waste recycling at 50% or better KEY GOALS FOR 2022 Notes: 1. SGP: Material Singapore operations. 2. Scope 1: Direct GHG emissions from sources owned or controlled by the Group. 3. Scope 2: Indirect GHG emissions from the generation of purchased electricity consumed. 4. Scope 3: Indirect GHG emissions from business travel by air. 5. 2021 figures have been internally verified. ENVIRONMENTAL → Environmental Protection WATER CONSUMPTION AND CONSERVATION In 2021, our water consumption intensity decreased by 15% compared to the intensity in our 2015 base year. We introduced initiatives including a water harvesting pilot where we collected and reused rain water for aircraft washing at our hangars, and stepped up communication efforts to heighten awareness and shape behaviour towards water conservation. WASTE MANAGEMENT AND RECYCLING In 2021, our Singapore operations recycled 78% of 5,900 tonnes of waste generated. The recyclables included metal, wood, batteries and paper products. FINES We had no significant fines or non-monetary sanctions related to environmental issues in 2021. → WATER CONSUMPTION1 Consumption ('000m3) 656 717 638 1,200 900 600 300 0 2019 2020 2021 → WASTE RECYCLED1 (%) Metal 73 Wood 18 Batteries 7 Paper 2 16 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
MANAGEMENT APPROACH ST Engineering’s Board, EXCO and senior management are committed to a pathway towards net zero. In addition, stewardship of resources, including energy, water, and non-renewables are essential to the competitiveness of the Group. Commitment In 2021, we set a new target to achieve a 50% absolute Scope 1 and 2 GHG emissions reduction by 2030 compared to a 2010 base year. We will also continue to track overall emissions intensity for the Group. Over the next three years, we will also be expanding the tracking and disclosure of Scope 3 GHG emissions. The goal is to have a comprehensive global GHG emissions inventory by 2024, and to subsequently have the data externally verified under ISO 14064-1:2006 - Greenhouse Gases. With our commitment to the TCFD journey, the Group has begun to report on both risks and opportunities from climate change, and will expand this reporting over the next 2 years. Our integrated Environment, Health and Safety (EHS) policy and Environmental Pledge sets out our environmental expectations and standards. ENVIRONMENTAL → Environmental Protection Governance and Organisation The Group integrated multiple operations optimisation efforts into the Operational Excellence Steering Committee (OESC) in 2020. This comprises the operations leaders of each business area. In 2021, the OESC's Environment Committee was formed comprising representatives from each business area to focus on data gathering, reporting and initiatives for: • GHG emissions • Energy (fuel, electricity, heating, cooling) • Water (including recycling) • Waste (including recycling) The Environment Committee also advises the respective business area management teams and project manages key environmental initiatives across the Group. More details on our TCFD efforts are available on page 13 Emissions In 2014, the Group set a target for its Singapore operations to reduce GHG intensity by 16% by 2025, compared to a 2010 base year. This target was raised in 2018 to 36% by 2030, in alignment with Singapore’s Nationally Determined Contribution pledge. This was met in 2019 and in 2021 we committed to achieve a 50% absolute Scope 1 and 2 GHG emissions reduction by 2030 compared to a 2010 base year. Our material Singapore business units' GHG emissions are validated in accordance with ISO 14064-1:2006 - Greenhouse Gases by a reputable third party auditor. We continue to reduce our emissions through the following: • Optimising the energy efficiency of workplace processes and replace existing equipment with more energy efficient models when due for replacement • Preventing the contamination of surrounding air using air pollution control equipment such as scrubbers and spray booth exhausts • Monitoring and minimising stack emissions and the level of air pollutants • Reducing Scope 1 emissions by optimising our operational activities such as delivery runs, engine test cell usage and vehicle testing • Reducing Scope 2 emissions by installing solar PV systems across our global sites • Reducing Scope 3 emissions by reducing air travel and conducting virtual meetings where possible 17 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
ENVIRONMENTAL → Environmental Protection Sources of Conversion Factors, Methodology, and Calculation Tools: Density of Aviation Kerosene Environmental Technology Centre, Environment Canada Acetylene Emission Factor Acetylene Emission Factor Singapore Grid Electricity Emission Factor Energy Market Authority - Singapore Density of Motor Gasoline and Diesel The Engineering ToolBox Emission factors and Net Calorific Values (NCV) for Aviation Gasoline, Motor Gasoline, Diesel, LPG and CNG 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 Density of Natural Gas The Engineering ToolBox Global Warming Potential Values GHG Protocol The following gases are included in our computation for conversion to CO2 equivalent – CO2, CH4, N2O, PFC5, HFC5 and SF6. The base year for GHG emissions calculations is 2010, as the Group established its initial GHG inventory process in 2009 for Singapore operations. The GHG emissions data collection widened to include our global businesses and acquisitions. The base year emission was recalculated, where applicable, or estimated using proxies. As of end-2021, our 2010 base year GHG emissions is estimated to be 170,000tCO2e. Energy Efficiency We do our part in mitigating and adapting to the effects of climate change by implementing initiatives that enable energy efficiency and efficient resource management. Our efforts include: • Acquire equipment that are certified to be energy efficient • Install additional solar PV systems on our premises • Use energy efficient lighting and replacing legacy lighting systems • Conduct energy audits and improve production energy efficiency Water Management & Conservation Our businesses use water from municipal sources in their facilities mainly for cooling, cleaning, general sanitation and operational activities, such as aircraft and vehicle washing. In 2016, we set a water usage intensity reduction target of 15% on a business-as-usual basis by 2025 with 2015 as base year for our Singapore operations. We continue to: • Install smart water meters at more locations to enhance tracking • Install water saving devices such as water thimbles and flow reducing valves • Promote water conservation awareness through toolbox briefings and campaigns • Perform regular checks to detect leakages in pipes and faucets • Optimise our operations to reduce usage of water Waste & Effluent Management We regularly promote 3R (Reduce, Reuse and Recycle) initiatives to help with the following: • Reduce the use of materials and consumables • Reduce the use of paper • Reuse existing resources such as wooden pallets • Recycle waste oil, manufacturing materials, paper and e-waste To manage our toxic waste and effluent, we do the following: • Optimise processes to reduce the generation of toxic waste and effluent • Consolidate toxic waste at designated points for collection by licensed toxic waste collectors • Ensure that necessary licensing is obtained and effluent discharge criteria are all met before discharging into the waterways and sewage systems • Comply fully with national/local regulatory requirements (e.g. Singapore National Environment Agency - NEA) regarding the safe handling of radioactive materials used in non-destructive testing Noise Certain segments of our operations generate noise and we strive to be a good neighbour in the communities where we operate. Our measures include: • Monitor and review noise emission levels from our operations • Keep all noise within legal limits and within permitted hours • Replace noisy equipment with quieter models and provide sound insulation where applicable • Conduct boundary noise checks in accordance with regulatory guidelines 18 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
GROUP-WIDE ECO-INITIATIVES ENVIRONMENTAL → Environmental Protection 1) Conserve We focus on using only what resources we need and are constantly looking for ways to reduce our environmental footprint. Many business units across the Group have installed energy efficient fittings such as smart lighting and motion sensor water taps to conserve electricity and water. Units also renewed their conservation publicity drives to remind all staff to switch off lights when not in use. Other efforts implemented include: • Installation of smart meters to detect water leakage and provide data on the consumption profile, which is analysed to help develop more targeted initiatives • Use of data analytics to optimise the energy consumption of building cooling systems • Digitalisation (e.g. QR codes in offices, sites and at events to reduce the use of paper) 2) Bring-Your-Own Across the world, our units are phasing out the use of single-use plastics, including styrofoam packaging and bottled water at our canteens and meeting rooms. We provide environmentally friendly alternatives to plastic disposable cups in meeting rooms, while others bring their own mugs. Our colleagues bring their own F&B containers for takeaway, and many of the units have pantries where dishware and utensils are available. ST Engineering expects our employees across our global business units to be responsible for sustainability. In 2021, we launched the Group-wide Eco-Initiatives to enhance eco-consciousness and reinforce the existing ecopractices across our global operations. This focused on three areas of stewardship, attitudes and actions. 3) Recycle We are streamlining the way we track the waste we generate. Where possible, we reuse and recycle. This is part of our commitment to a circular economy approach to our business operations – doing our part for our planet and communities, while improving our cost efficiencies. We carried out two e-waste initiatives: • Collection and consolidation of used company and employees’ electronics in Singapore and Thailand – We donated more than 1,000 decommissioned laptops to Engineering Good, an NGO in Singapore and to Mirror Foundation, an NGO in Thailand; – Laptops are refurbished and will be distributed to school children from low-income families and to other charitable causes. • Facilitation of recycling used electronics – Provision of segregated e-waste receptacles across our sites in Singapore; – E-waste brought by employees was sent for recycling together with our appointed waste collection vendor; – More than 1.5 metric tons of e-waste recycled. 19 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
ENVIRONMENTAL Continuous Improvement (CI) is at the heart of our engineering heritage. Over the years, our CI initiatives have enabled us to work smarter and more efficiently. Our budgeting tool allows for seamless collaboration across business functions while improving data accuracy and visibility. We introduced self-service online portals for our employees to request for mid- to back-office support. These service portals are capable of performance measurement and analytics that generate insights on areas for improvement. In addition, we recognise the importance of upskilling our staff through CI training. While 5S, Kaizen and Root Cause Analysis are key tools used to improve work processes, we continue to grow our library of e-learning modules to ensure our staff are well trained on topics including problem-solving tools such as Value Stream Mapping (VSM) and Lean Management. The Group achieved realised productivity savings of $23.5m from continuous improvement projects. This does not include realised savings from the Group’s Central Procurement initiatives, which saved another $85.2m. We achieved a value added per employment cost of 1.53 for our global operations. In 2021, four additional continuous improvement e-learning courses were deployed. Consolidating all e-learning courses into a single platform has improved their accessibility and usability. Fifteen teams participated in the first ST Engineering Best-of-Best CI Award and showcased their accomplishments in value creation and productivity enhancements through the creative use of technology, innovation and CI tools. Cash prizes and sponsorships for a CI benchmark tour to share best practices with other business units were given to the winning team to recognise and leverage their achievements. Harnessing technology and innovation to improve our processes and promoting skills upgrading are key drivers of the Group's productivity drive. By optimising resource efficiency, we minimise our environmental footprint. → → Achieved $23.5m of realised productivity savings from continuous improvement programmes → Rolled out continuous improvement programmes to business units in the U.S. and Europe WHAT WE ACHIEVED IN 2021 PRODUCTIVITY We set up a Group Continuous Improvement and Innovation framework which focuses on CI across our businesses. Our business units welcomed the introduction of this framework and are committed to promote CI culture across our global operations. 20 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
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