The financial news app reported that recently, Johnson Elec H. (00179) released its "Sustainable Development Report 2024", which outlines the company's economic, environmental, and social performance in all major operating regions globally from April 1, 2023 to March 31, 2024.

Looking back at the past year, Johnson Elec H. has made encouraging progress in achieving its sustainable development goals. This includes: receiving a silver medal from EcoVadis (ranking in the top 15% of over 100,000 companies in 175 countries and ranking in the top 3% in industry environmental practices); improving its rating in CDP climate change to a "B". In addition, its "Sustainable product design - product carbon footprint and life cycle assessment" project was also selected for the "ESG Leading Enterprise Award 2023" and the "Leading Environmental Protection Project 2023".

The ESG report shows that Johnson Elec H. has established a sustainable development governance system. The board of directors is primarily responsible for sustainable development matters, including ensuring that sustainable development is an integral part of the company's strategic goals, approving sustainable development goals, and monitoring the company's ESG performance. At the same time, the company maintains connections with its customers, employees, suppliers, shareholders, investors, and the communities where it operates through various channels.

In terms of the environment, in the 23/24 fiscal year, Johnson Elec H.'s carbon emissions (scope one and two) were 146,073 metric tons of CO2 equivalent, a 40.4% decrease from last year. The carbon emissions from scope two were reduced by 46.5% compared to last year, as more and more of the company's factories use renewable energy. The use of renewable energy doubled from last year's 21.6% and reached 43.9%. In addition, in 17 operating sites in 12 countries, Johnson Elec H. uses 100% renewable energy, and new solar panels are installed at the Sakatecas factory in Mexico. The company stated that it is strengthening its strategy to achieve carbon neutrality by 2050 by using a higher proportion of renewable energy.

Electricity accounts for 83% of Johnson Elec H.'s energy consumption and is mainly used for assembly and component production, as well as auxiliary production systems such as air conditioning and compressed air systems. In the 23/24 fiscal year, renewable electricity accounted for 44% of total energy consumption, and the energy consumption intensity was 809 energy consumption (in gigajoules) per million US dollars in sales, a decrease of 0.4% from last year. By the end of the reporting period, Johnson Elec H. uses 100% renewable energy in 17 operating sites in 12 countries.

During the reporting period, the amount of waste generated by Johnson Elec H. decreased by 1.5% from last year to 108.5 thousand metric tons, and hazardous waste accounted for 7.8% of the total waste generated, an absolute value decrease of 10.9% from last year. In addition, 93.4% of waste was recycled.

Employees are the cornerstone of Johnson Elec H.'s success, and the company provides employees with rich training and career development opportunities. During the reporting period, the company promoted cooperation and learning among engineers through the "Engineer International Exchange Program" and "JE Technology Day" activities; launched the "Leader Element Course" professional development plan to improve the leadership ability of managers; and promoted digital transformation with the "Johnson Electric Digital Transformation Trophy", training employees' digital capabilities and sponsoring their on-the-job learning, as well as training and exam costs. In the 23/24 fiscal year, the company's total training hours were 114,721, and the average training hours per employee were 3.4 hours.

At the same time, Johnson Elec H. strengthened and promoted safety and compliance with strict health and safety standards at each business location to protect the health, safety, and well-being of every employee. In the 23/24 fiscal year, the company launched the comprehensive plan "Healthy@JE" to promote global well-being and held over 100 activities during safety and well-being month.

As a global manufacturer, Johnson Elec H. provides services to different product markets around the world. At the same time, it has established trusted partnerships with approximately 2,000 direct material suppliers. It is reported that suppliers contracting with Johnson Elec H. must be certified according to relevant international quality and environmental management standards, such as ISO 9001, ISO 14001, ISO/TS 16949, and ISO 13485.

Among them, Johnson Elec H.'s sustainable procurement policy defines specific ESG requirements for potential suppliers and sets key performance indicators (KPIs) related to ESG for the procurement team. The company cooperates with third-party professional companies to evaluate the ESG performance of its top 300 major suppliers based on sustainable development priorities of commodities, expenditure levels, national sustainable development priorities, and the importance of materials supplied. In addition, Johnson Elec H. has identified key issues consistent with its supply chain sustainable development framework, which will be included in supplier ESG assessments.

In 2023/24, Dechang Electric Machine held a supplier training event for its top 300 suppliers, outlining Dechang Electric Machine's operations, sustainable development policies, and expectations for suppliers. At the same time, the training procurement team worked effectively with suppliers to improve the sustainable development performance of the company's supply chain. Dechang Electric Machine stated that it is developing its group's operational footprint, shortening the distance with customers, enhancing its strength in factories in several developing countries, and supporting the localization of the supply chain.

Looking ahead, Dechang Electric Machine aims to develop new products with optimized first-class LCA/PCF/EPD (life cycle assessment, product carbon footprint, and environmental product declaration) to improve the company's sustainable development performance and make important contributions to its customers' sustainable supply chain goals and commitments.

(Link to ESG researcher Deng Shixia)