I was reading through the definitive proxy statement of John Bean Technologies Corporation when I encountered an interesting explanation of how the company went about identifying and assessing the environmental, social and governance issues that it determined were most important to its business and stakeholders. I don’t believe that I’ve come across this type of disclosure before leading into the discussion of the specific ESG actions the company has taken during its last completed fiscal year.
As part of its information on its board of directors, the company, like so many others, devotes a separate section to ESG issues:
Our approach on Environmental, Social and Corporate Governance (ESG) issues builds on our culture and long tradition of concern for our employees’ health and safety; partnering with our customers to find ways to make better use of the earth’s precious resources; and working to create a diverse and inclusive culture where our employees can reach their full and unique potential.
Sustainability is not only part of our philosophy, it is something positive for the world and indispensable for our industry as a whole. What we do is reduce waste by increasing yields, increase the recovery of products or by-products and create a more efficient industry. We want to achieve this hand-in-hand with our customers. Our technologies are key to this focus, providing solutions to maximize yield, minimize waste and preserve food in all its forms to increase shelf-life and to get more food to people that need it.
Materiality Assessment
To help us identify and assess the environmental, social and governance issues that are most important to our business and our stakeholders, we completed our first comprehensive materiality assessment in 2020. The information gained from the assessment shapes our reporting strategy and focuses our efforts on where we can make the most meaningful impact. We followed these steps:
Identify Focus Areas – We conducted a gap analysis comparing the priorities of key ESG benchmarks against our current priorities and compiled a list of 24 ESG issues.
Engage Stakeholders – Using a third-party consultant, we collected input on the relative importance of our focus on these issues from our leaders and stakeholders such as customers, employees and investors.
Build a Materiality Matrix – Combining the results of the gap analysis and stakeholder surveys, we created a materiality matrix that shows the environmental, social and governance issues that are a primary focus for our business and stakeholders.
We categorize an issue as material if 1) it could impact our business in terms of costs, growth, risk or reputation or 2) if it is important to our stakeholders. Topics in the “critically important” category are viewed by both JBT leaders and stakeholders as potential big wins/differentiators and/or critical risks.
Based on this assessment, the current issues we have developed focus around are:
Environmental and Social Impact of Products – Managing and mitigating the impact products have on the environment and communities; strategy towards a more environmentally or socially beneficial product portfolio.
Environmental Sustainability and Climate Strategy – JBT’s approach to reducing greenhouse gas (GHG) emissions across operations while managing physical and transition risks related to climate change.
Talent Attraction & Development – Policies and practices that retain, develop and attract top tier talent with the right skills to deliver on current and future business needs.
Diversity, Equity & Inclusion (DEI) – Policies and practices that create a welcoming environment for all employees (regardless of race, color, gender, sexual orientation, backgrounds, beliefs, experiences, etc.) to fulfill their potential.
We plan to periodically update this assessment to reflect our business and our stakeholders’ expectations. These evaluations were further reviewed with the Board’s Nominating and Governance Committee, which has oversight over management’s processes to identify, assess, manage and disclose environmental, social and governance related risks and opportunities.
From there, the company then presents a table highlighting the actions taken with respect to each of five specific areas (Page 8). For example, in the area of ESG Reporting, it accomplished the following:
– We conducted an evaluation of our climate-related risks and opportunities and will share our findings consistent with the Task Force on Climate Related Financial Disclosures (TCFD) framework in our 2021 ESG Report.
– We spent over $29.3 million with 55 confirmed diverse suppliers providing products and services to our North American manufacturing sites.
– We received a Bronze EcoVadis Medal for achieving a higher sustainability performance than 50% assessed companies. We have moved up in rank by 22 percentiles since our assessment in 2017 and continue to use EcoVadis as a benchmark for our performance.
In the governance area, it took the following two steps:
– We appointed our first Chief Ethics and Compliance Officer, who reports to our Executive Vice President and General Counsel.
– We established a cross functional Ethics and Compliance Committee in 2021 to broaden the awareness and increase the integration of our ethics programs in our businesses. In addition, this committee will allow us to more comprehensively evaluate the effectiveness of our ethics and compliance program.
It’s a very effective presentation, especially in walking stakeholders through the mechanics of how it selected its most important ESG issues. Even for a company that doesn’t plan to be that detailed with its disclosure, it’s a useful framework for determining materiality.
— Mark Borges, CompensationStandards.com, May 24, 2022
