2015 Corporate Responsibility Report

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Leadership

Priorities

Corporate Responsibility Report Stakeholder Engagement Stakeholder engagement is foundational to our overall success at Northrop Grumman. Our stakeholders reflect a broad range of audiences, each with distinct priorities. We use a variety of methods to engage effectively with our stakeholders and obtain feedback on our performance. That feedback allows us to analyze and prioritize corporate responsibility issues as part of our materiality assessment and reporting methodology process. In part, this information also informs actions and programs we undertake to improve our performance locally and globally. Our process for engaging with stakeholders begins with prioritizing their concerns. We also evaluate the level of each stakeholder relationship to our business and the importance of the issue being raised. Overall, we adapted the content of this report to meet the needs of our stakeholders. For this report, we evaluated our performance based on local input where our facilities are located and from customers, employees, government and industry, shareholders, business partners, professional associations and suppliers.

2015 Key Stakeholder Topics

For 2015 we identified the following key stakeholder topics:

Diversity
• Evaluating current strategies and developing new approaches to ensure adequate sources of diverse talent for current and future hiring requirements.
• Analyzing employment and turnover trends of veterans and people with disabilities to identify programs to improve our standing as an employer of choice for these employees.
• Creating communities for our employees to connect to each other and to contribute through the expansion and leadership of Employee Resource Groups.

Environmental, Health and Safety
• Ensuring compliance with applicable regulations.
• Reducing the frequency of injuries.
• Evaluating current practices to identify and implement measures to further mitigate environmental risks.
• Addressing climate change in accordance with science-based models and aligning Northrop Grumman environmental sustainability goals with customer goals and priorities.
• Strategically planning for water conservation with an emphasis on water availability and risk mitigation.
• Identifying and quantifying the value of waste reduction strategies, including diversion of waste from landfills.

Supplier Responsibility
• Reviewing and ensuring consistency with legislation and trends related to our large supply base.
• Developing program-enhancement strategies.

Corporate Citizenship
• Improving global education, specifically a diverse pipeline of talent in the area of science, technology, engineering and mathematics (STEM).
• Sustaining our commitment to support active-duty military, veterans and their families.

To gather stakeholder feedback on an ongoing basis we utilized:
• Face-to-face meetings, employee surveys and feedback channels, online and social media channels, email, environmental and regulatory audit processes, government policy and legislative engagement, needs-assessment studies to prioritize our community engagement activities, supplier-development activities and assessments, industry councils, and internal working groups.

Other examples of our activities during 2015 include:
• Hosting biweekly environmental sustainability data management team meetings to encourage collaboration and to discuss systems, challenges, opportunities, and expectations.
• Hosting monthly Environmental, Health, and Safety (EHS) regulatory update meetings to discuss trends and determine impacts to Northrop Grumman.
• Hosting quarterly EHS Leadership Council meetings to evaluate internal governance programs and strategic plans, track progress, identify future changes to regulatory policy, and develop health and safety targets.
• Benchmarking environmental goals and performance by evaluating customers, industry, best practice leaders, and peers’ environmental sustainability goals, initiatives, and performance.
• Conducting “lessons learned” meetings with employees, managers, and executives after diversity conference activities to determine optimal levels of participation.
• Consulting our employee resource group PrIDA on lesbian, gay, bisexual, transgender (LGBT) issues and concerns and to collaborate on the Corporate Equality Index survey. Participating in and hosting industry compliance meetings in conjunction with various nonprofit and government organizations including the Equal Employment Advisory Council, National Industry Liaison Board, OFCCP Institute, and National Labor Exchange.

The Frequency of Our Engagement With Stakeholders
During 2015, we met regularly with our various stakeholder groups. Key discussion topics included primary, secondary and university education; informal education; corporate philanthropy; environmental programs in our operating communities; wounded veterans; veteran homelessness; and support to programs in our focus areas. We engaged daily with many different stakeholders, particularly, in the area of support to programs in our focus areas.

Staying Informed
Our stakeholder engagement efforts, and frequency of contact, related to our diversity and inclusion efforts included:
• Diversity and Inclusion Leadership Council meetings: monthly
• Sector Diversity and Inclusion Council meetings: monthly
• Employee Resource Group meetings: monthly
• Individual employee and Employee Resource Group collaboration: daily
• External diversity organizations/partners (Society of Women Engineers, National Society of Black Engineers, US Business Leadership Network, etc.): daily to monthly
• Senior management EEO and diversity metrics review: monthly/quarterly
• Inclusion and Engagement Survey: annually
• Employee focus groups (various): ongoing

We maintain a proactive approach to stakeholder engagement related to Environmental, Health and Safety (EHS) management across the company. For example, externally, we meet with stakeholders regularly and at a frequency appropriate for the depth of the relationship. We engage with internal subject matter experts at least biweekly and sector EHS and executive representatives monthly. At least semiannually, we engage with internal executives, partner organizations and other interested parties. Our engagement strategy includes providing conference briefings and white papers, and engaging in peer-to-peer collaboration via industry association meetings. For a list of engagement activities with various stakeholders, see the relevant sections of this report where those functions and activities are discussed.

In October 2015, the Northrop Grumman leadership team participated in the annual conference of the Society of Women Engineers in Nashville, Tennessee.