2015 Corporate Responsibility Report

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Environmental

EHS Compliance

Inherent in our complex and diverse operations are a multitude of environmental, health and safety risks. Our Environmental, Health and Safety organization leads assessment and risk-mitigation efforts across the company. Compliance is fundamental to our operations. At Northrop Grumman, our objectives are simple:
• Provide a safe and productive work environment to protect our people.
• Strive for environmental compliance and excellence and promote efficiency, affordability, innovation and forward thinking in our operations.
• Integrate environmental sustainability into the way we do business.

Objective To ensure that everyone at Northrop Grumman is able to deliver top performance in a safe workplace that complies with all applicable EHS laws and regulations.

Environmental, health and safety professionals across the company are responsible for implementing programs and practices that support compliance across our diverse operations. They also work with management to provide employees with the resources and support necessary to operate safely and prevent and mitigate environmental impacts.

2015 EHS Compliance Goals & Performance Summary

GOAL To achieve an average score of 90 (out of 100) for completeness and implementation of management systems at audited sites. Evaluation of management systems includes assessments of applicable environmental, health, and safety compliance programs, policies and practices.

PERFORMANCE As part of the audit process, we assessed the degree to which applicable environmental, health and safety program elements were implemented effectively at the site level. We then evaluated and scored each site for management systems maturity. In 2015, our overall score was 93 percent.

EHS Audit Program

Our internal EHS Audit Program supplements our day-to-day compliance management and provides an objective assessment of how effectively we are implementing EHS management system(s) and regulatory compliance programs in our operations. Our policy is to conduct EHS compliance audits at auditable sites every three to five years. The internal EHS audit teams comprise EHS professionals from across the company who are appropriately scheduled to ensure sufficient subject matter expertise and time for review to conduct a thorough evaluation of EHS programs and management at the auditable sites.

The scope of the audits includes federal/national, state and local regulatory requirements, standards organization codes (e.g., fire codes) and company policy and procedures. Management systems assessments are based on the ISO 14001 and OHSAS 18001 standards, as well as industry and EHS management best practices, with an emphasis on effectiveness and integration of management systems fundamentals into day-to-day business operations.

In previous years, we reported results of our internally managed EHS audits; however, in 2015, we initiated a benchmarking and continual improvement assessment of our internal EHS Audit Program. The purpose of the assessment is to evaluate and identify opportunities for improved efficiency and effectiveness. As a result, the program is undergoing systemic updates, including program performance metrics. Therefore, EHS Audit Program results similar to those previously disclosed are not currently available.

Hazardous Waste and Toxics Release Inventory Between 2010 and 2014, we reduced our generation of hazardous waste by more than 72 tons and our use of Toxic Release Inventory (TRI) chemicals by 17 tons. As a Department of Defense contractor, our use of hazardous materials is influenced by emerging technologies, material specifications from our customers, and fluctuations in intensity of demand for our products. While we experience periodic increases in hazardous waste generation and use of TRI chemicals, our use of these chemicals and generation of hazardous waste is trending downward.

2015 Remediation Goals & Performance Summary

GOAL Effectively address environmentally impacted properties in compliance with applicable regulatory requirements. We pursue this goal by seeking to work cooperatively with government agencies, conservation groups, citizen groups and other stakeholders to address the environmental impacts at our remediation sites in a productive manner that protects human health and the environment, is cost- effective and addresses further environmental impact.

PERFORMANCE In 2015, we were involved in approximately 170 environmental remediation projects with an approximate annual remediation budget of $52 million. We continued to seek cost-effective alternatives to traditional resource-intensive remediation practices, which reduce environmental disturbance and energy use and promote ecosystem recovery.

From 2005 to 2015, we successfully completed active remediation at 92 sites and removed them from the company’s portfolio of impacted properties. During the same decade, we also accomplished life-cycle cost reductions exceeding $57 million by using innovative engineering approaches.

Compliance and Sustainability

As a founding member of the International Aerospace Environmental Group (IAEG), a global industry association, we support environmental compliance and sustainability initiatives in collaboration with our peers to address common industry challenges. We engage both at the Board level, supporting the organization’s governance and strategy, as well as at the working-group level, providing subject matter expertise for work groups including Chemical Reporting, Greenhouse Gas (GHG) Accounting and Reporting and Supply Chain Environmental Sustainability Survey Harmonization. Our participation in IAEG demonstrates our commitment to aligning with industry peers to address common challenges and achieve business and environmental objectives.