2015 Corporate Responsibility Report

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Leadership

Materiality Process

For 2015, per the Global Reporting Initiative (GRI) G4 guidelines, we conducted a materiality assessment to help identify aspects (see chart at right) material to us at Northrop Grumman. Our materiality assessment had three stages.

The first step included research by a consultant to understand reporting and management of peer companies across the aerospace and defense industry, and to inform a "best practices" list of potential material aspects. We also reviewed all previous Northrop Grumman Corporate Responsibility reports and other publicly available documents. In addition, we studied the GRI and Sustainability Accounting Standards Board (SASB) on material aspects common to the industry.

The second step involved facilitating workshops to help our team develop a common understanding of materiality and to align the process for gathering content. We then conducted content-specific workshops with each of our teams:
• Corporate Citizenship
• Diversity and Inclusion/Equal Employment Opportunity
• Environment, Health and Safety
• Ethics
• Governance
• Supply Chain
• Workplace Accommodations

During the workshops, participants considered key challenges and opportunities from both internal and external perspectives within their specific content areas. Our consultant compiled the results from the workshops, presented those results and further refined the takeaways during a final integration workshop (step three).

For step three, participants in the final integration workshop agreed on a short list of material aspects to address in this report. The discussions helped identify potential metrics and any data or information gaps for the 2015 report, as set forth above. Following the workshop, we conducted an exercise to assess the importance of these material aspects to Northrop Grumman stakeholders and the company’s success (consistent with the GRI G4 methodology).

We presented the final results to a management team for review and approval of the material aspects for inclusion in the 2015 report, as set forth above. All these aspects are material across our organization because they each address a significant opportunity for us in our business operations and performance. Additionally, they each have the potential to affect stakeholder actions, decisions and opinions regarding Northrop Grumman. Each of these material aspects is applicable within and outside Northrop Grumman.

In summary, our materiality assessment was instrumental in the development of content and structure for this 2015 report. It is our intention to revisit the assessment regularly to ensure our efforts align with these aspects that are important to our business and our stakeholders.

Per the GRI, material aspects are those that reflect our significant economic, environmental and social impacts at Northrop Grumman, or substantively influence the assessments and decisions of stakeholders.