Improving the quality of life of everyone we touch through our innovative motion systems - Sustainability Report 2021 - Johnson Electric
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Improving the quality of life
of everyone we touch through
our innovative motion systems
Johnson Electric Holdings Limited
(Incorporated in Bermuda with limited liability)
Stock Code: 179
Sustainability Report 2021
Johnson Electric in 2021
Providing
Employing over
motion solutions to over
39,000 people including 1,700 customers
more than
1,500 engineers
Producing over
2.5 million motors
and actuators per day
Operating in Generating Total Sales Revenue of
22 countries US$ 3.2 billion
across
4 continents and Net Income of
US$ 212 million
Contents
2 Improving the quality of life of
everyone we touch since 1959
4 Message from the Chairman and
Chief Executive
6 Sustainable development goals
CO2 intensity
2%
14 Sustainability in our products
dropped by and operations
compared to last year 26 Environmental responsibility
35 Responsibility for our workforce
50 Responsibility for our communities
53 Corporate governance
60 HKEx ESG reporting guide
63 Key performance indicators
66 Verification statement
Total workforce,
by gender 67 About this report
Male Female
59% 41%
Improving the quality of life
of everyone we touch through
our innovative motion systems
Johnson Electric Holdings Limited
(Incorporated in Bermuda with limited liability)
Stock Code: 179
Sustainability Report 2021
Johnson Electric Technical College
more than400 students Sustainable world through a kid’s eyes
– Johnson Electric is an active player in
in Mexico & China
creating a sustainable future for the
world through our innovative motion
solutions and our positive impact on
local communities where we operate.
2 JOHNS ON E L E CTRIC HOL DI NG S L I MI T E D
Improving the quality of life
of everyone we touch
since 1959
When Mr. and Mrs. Wang Seng Liang
founded Johnson Electric in 1959, it was out
of the simple purpose to help make people’s
lives better – through the products we made
and the jobs we created.
Over the next 62 years, this unspoken purpose has remained
our guiding ethos, witnessing the growth of Johnson Electric
from a small Hong Kong business to a multinational company
employing over 39,000 people in 22 countries spanning Asia,
Europe, the Middle East, North America and South America.
Today, Johnson Electric Group is a global leader in the supply
of precision motors, motion subsystems and related electro-
mechanical components to the automotive industry and other
industrial and consumer sectors. Johnson Electric Holdings
Limited, the Group’s parent company, is listed on The Stock
Exchange of Hong Kong.
Stepping up to become an active player in
driving a sustainable future
“Business as usual is no longer sufficient to meet the challenges
of this century, let alone preserve our noble purpose to help
improve people’s lives.” – Dr. Patrick Wang, Chairman and
Chief Executive
Our world is becoming more unpredictable each day –
the emergence of COVID-19 being a prime example. Rapid
economic growth has led to environmental degradation on
a global scale and contentious social issues in many parts of
the world. Johnson Electric believes it is time that we bring our
purpose to the forefront, leveraging our expertise in motion
systems and our experience in serving local communities, to do
good as well as to deliver sustainable value to our stakeholders.
S U S T A I N A B I L I T Y R E P O R T 2021
3
Improving the quality of life of everyone
we touch since 1959
Our Promises
CUSTOMERS LOCAL COMMUNITIES
Making our customers Enriching our local
successful with communities
motion solutions that deliver
more comfortable, safer and Our Vision
healthier products for
To be the world’s definitive
end users
provider of innovative and reliable
motion systems
Our Purpose
To improve the quality of life of
everyone we touch through
our innovative motion systems
EMPLOYEES ENVIRONMENT
Inspiring our employees to Protecting our environment
grow, act with ownership for future generations
and find fulfilment and
meaning in the work they do
SHAREHOLDERS
Maintaining financial strength and
delivering sustainable growth in
profits and cash generation
4 JOHNS ON E L E CTRIC HOL DI NG S L I MI T E D
Message from the
Chairman and Chief Executive
The past 12 months have
been truly extraordinary
for most people and most
businesses worldwide.
For Johnson Electric, with
operations in 22 countries
across four continents,
the onset of the COVID-19
pandemic represented an
enormous risk to the
business and livelihoods
of our people. But our top
priority was and remains
the very practical matter
of keeping our people
safe and well.
Patrick Shui-Chung Wang JP
Chairman and Chief Executive
S U S T A I N A B I L I T Y R E P O R T 2021
5
Message from the Chairman and Chief Executive
Throughout this difficult period, I Committee with a mandate to Our Industry Products Group is also
have seen many instances that give create a disciplined, structured contributing to a more sustainable
me great pride in the people and approach and to ensure support world with products that directly or
culture of Johnson Electric. We for social impact and indirectly address environmental
reacted quickly after the outbreak of sustainability activities around and social needs. As lifestyles
COVID-19, putting the health and the globe became more home-centric in
safety of our employees, customers, response to the pandemic, there
suppliers and the people in our • Updating our MARBLE values to was a surge in demand for products
communities at the forefront. The directly reflect our commitment to to improve the quality of life in the
range of protective actions we “Be sustainable” home. We seized the opportunity to
implemented have so far managed apply our innovative technology and
• Issuing a “green plant” checklist
to prevent any major outbreaks application expertise to offer
for our factories to drive further
among our 39,000 employees attractively priced products. These
improvements in environmental
worldwide. delivered the right functionality to
performance
delight end-users while also being
Focus on sustainability • Setting targets for a 30% durable and energy-efficient.
reduction in our carbon intensity
The pandemic also created an by 2030 and a 15% reduction in In our operations we continue to
environment that encouraged us all the intensity of our purchased focus on automation and digital
to reflect on the need for energy consumption over the technologies to improve quality,
sustainability. It is clear that same period increase speed and reduce cost.
business as usual is no longer We are adapting our global footprint
sufficient to meet the challenges of • Launching a global programme to provide the right balance of
this century, let alone preserve our – JEnerations – empowering global and regional capacity to
noble purpose to help improve employees to reach out to local serve our target markets.
people’s lives. In response, Johnson communities, identify their needs
Electric is stepping up to become and make a difference to Sustainability is integral
an active player in driving a people’s lives
sustainable future. I believe that our stepping up of our
actions and initiatives demonstrate
Consequently, we have taken a JE’s new programme for that sustainability is integral to
number of actions to strengthen our social impact and Johnson Electric’s product,
community outreach
focus on sustainability. These activities
manufacturing and labour
include: strategies. This is not a change in
Innovating for a direction but rather a continuation of
• Publishing a purpose statement our sustainability journey and a
sustainable future
that embodies the values we re-emphasis of who we have always
have pursued since Johnson At the heart of our product strategy, been – a company with a simple
Electric’s foundation, namely “to we aim to provide innovative cost- purpose to help make people’s lives
improve the quality of life of competitive solutions to customers’ better.
everyone we touch through our problems.
innovative motion systems”. This
is underpinned by promises to Our automotive business is
our customers, employees, providing an increasing level of Patrick Shui-Chung WANG JP
shareholders and local content for the electric vehicles that Chairman and Chief Executive
communities, and for will reshape the entire automotive
Hong Kong, August 2021
environmental protection industry over the next ten years. I
am very excited by the product and
• Establishing a Global Social technology line-up that we have in
Impact and Sustainability this space.
6 JOHNS ON E L E CTRIC HOL DI NG S L I MI T E D
Sustainable development goals
Johnson Electric uses the United Nations (“UN”)
Sustainable Development Goals (“SDGs”) as
a framework for determining its sustainability
strategy.
The UN published these 17 SDGs Core SDGs We do not report on progress
in 2015 as part of a development towards the other nine SDGs.
We have prioritized three core
agenda that charts the course Although efforts towards these may
SDGs where we believe we can
towards a more inclusive and contribute towards our success with
sustainable future. The SDGs make the greatest impact and our core SDGs and supporting SDGs,
explicitly call on all businesses to “move the needle”. These goals are they do not provide the same
apply creativity and innovation to closely aligned with our product, opportunity for us to make an impact
solve sustainable development people and manufacturing on a global level.
challenges. strategies. Our core SDGs are:
The SDG Compass, a guide for • SDG 8: Decent Work and Strategies to meet the
businesses to act on the SDGs, Economic Growth goals
encourages companies to define • SDG 9: Industry, Innovation Following the formation of our Global
their priorities, based on an and Infrastructure Social Impact and Sustainability
assessment of the SDGs most • SDG 12: Responsible Committee, we have reviewed and
relevant to the business and its Consumption and Production refreshed our sustainability strategies
stakeholders. This enables and established a structured
businesses to “seize the most sustainability management
Supporting SDGs
important business opportunities framework. Additionally, commencing
presented by the SDGs and reduce We have also identified five 1 April 2021, performance targets
risk”. The SDGs are interconnected Supporting SDGs that give further based on sustainability goals now
– often the key to success in one focus to our activities. Efforts form an element of determining all
will involve tackling issues more towards achieving these goals will individual annual incentive pay,
commonly associated with another. also contribute towards success including the executive management
with our core SDGs. These team.
We monitor the alignment of our supporting SDGs are:
business strategies with the SDGs The specific targets set by the core
and consider the actual and • SDG 3: Good Health and and supporting SDGs most relevant
potential impacts (both positive Well-being to Johnson Electric’s current activities
and negative) of our current • SDG 4: Quality Education and business scope, and our related
activities and scope of business. strategies are set out on the following
• SDG 11: Sustainable Cities and
We also assess which of these pages.
Communities
goals are most important to our
stakeholders in their interactions • SDG 13: Climate Action
with Johnson Electric. This forms • SDG 17: Partnerships for
the basis for defining our priorities. the Goals
S U S T A I N A B I L I T Y R E P O R T 2021
7
Sustainable development goals
Core SDGs
SDG 8 We have identified significant alignment between our purpose to improve the quality
Decent Work of life of everyone we touch through our innovative motion systems and the goals of
and Economic SDG 8. At the heart of our people strategy is the promise to inspire our employees to
Growth grow, act with ownership and find meaning and fulfilment in the work they do.
Our materiality assessment has identified that meaningful work, human and labour
rights, increased productivity and the decoupling of growth from environmental
degradation as key concerns for our management and many of our stakeholders.
Relevant targets set by SDG 8 Related strategies In our report
Achieve higher levels of We are introducing advanced manufacturing technologies to Sustainability in
economic productivity through achieve higher levels of productivity. our products and
diversification, technological operations
upgrading and innovation
Improve progressively, through As a technology leader for lightweight, high-power-density Sustainability in
2030, global resource efficiency motion solutions, we provide energy-efficient products that our products and
in consumption and production reduce emissions, improve fuel consumption, have a longer operations
and endeavour to decouple working life and require fewer resources in their manufacture.
economic growth from
We are committed to improving resource efficiency in Environmental
environmental degradation
production and endeavour to decouple our growth from responsibility
environmental degradation.
Achieve full and productive We provide meaningful, sustainable work with equal Responsibility for
employment and decent work employment opportunity. our workforce
for all women and men
Substantially reduce the In China and Mexico, the Johnson Electric Technical College Responsibility for
proportion of youth (“JETC”) provides a pathway for underprivileged youth to our communities
(aged 15-24 years) not in choose engineering as a viable career option and join the
employment, education Group’s workforce upon graduation. JETC provides a mix of
or training general and technical education over a three-year course. We
operate a similar scheme in Niš, Serbia, working hand-in-hand
with a local technical school. The Group also partners with
schools and universities to support the provision of quality
technical and vocational education.
We offer internships and apprenticeships to youth as routes to
employment.
Take immediate and effective We are committed to the abolition of child labour and Responsibility for
measures to eradicate forced elimination of all forms of forced or compulsory labour. We our workforce /
labour and end child labour in take practical measures to prevent this in our own factories, Sustainability in
all its forms and embed this requirement in our relationships with our products and
suppliers. operations
Protect labour rights and We are committed to respecting the labour and human rights Responsibility for
promote a safe and secure of all our employees and to providing a safe and secure our workforce
working environment for all working environment in which the dignity of every individual is
workers, including migrant respected.
workers
We have embedded employee safety in our operations model Sustainability in
and require every Johnson Electric factory to apply our health our products and
and safety standards. operations /
Responsibility for
our workforce
8 JO H NS ON E L E CTRIC HOL DI NG S L I MI T E D
Sustainable development goals
Core SDGs
SDG 9 Core elements of Johnson Electric’s product and manufacturing strategies are
Industry, closely aligned to the goals of SDG 9. We invest in innovation to provide unique
Innovation motion solutions to customer problems and employ more than 1,500 engineers
and around the world. Our manufacturing strategy includes the strengthening of in-region
Infrastructure fulfilment capabilities. We are introducing advanced resource- and energy-efficient
manufacturing technologies and localizing internal and external supply chains for
our factories in Asia, Europe, North America and South America. Our stakeholders
also express a strong interest in our innovation and in the sustainability of our
manufacturing model.
Relevant targets set by SDG 9 Related strategies In our report
Make industries sustainable, We are introducing advanced resource- and energy-efficient Environmental
with increased resource-use manufacturing technologies to our factories. responsibility
efficiency and greater adoption
of clean and environmentally
sound technologies and
industrial processes
Enhance scientific research We innovate and create the technical capability to provide Sustainability in
and upgrade the technological unique solutions to our customers’ problems. We are our products and
capabilities of industrial sectors introducing advanced resource- and energy-efficient operations
in all countries, in particular, manufacturing technologies to our factories, including sites in
developing countries developing countries.
Support technology We are shaping the Group’s operating footprint to be in closer Sustainability in
development and research and proximity to our customers, building up the capabilities of our our products and
innovation in developing factories in several developing countries, and supporting this operations
countries, including industrial through the localization of supply chains.
diversification and value
addition to commoditiesS U S T A I N A B I L I T Y R E P O R T 2021
9
Sustainable development goals
Core SDGs
SDG 12 Support for responsible consumption is one of the key drivers of our product
Responsible strategy. We are seizing the opportunity to offer lightweight, high-power density
Consumption motion solutions at an attractive price. Many of our products directly target emissions
and reduction and improved energy efficiency. In our factories, we seek to minimize
Production waste and prevent environmental harm from our production processes. Our
materiality assessment has identified that many of our stakeholders are deeply
interested in the opportunities presented by this SDG or concerned by the risks of
unsustainable consumption and production.
Relevant targets set by SDG 12 Related strategies In our report
Sustainable management and As a technology leader for lightweight, high-power density Sustainability in
efficient use of natural motion solutions, we provide attractively priced products that our products and
resources reduce emissions, improve energy and fuel consumption, operations
have a longer working life and require fewer resources in their
manufacture.
We take a systematic approach to resource- and energy- Environmental
efficient production. responsibility
We are exploring ways to increase our involvement in the Environmental
circular economy. responsibility
Environmentally sound We design environmentally friendly products and processes. Environmental
management of chemicals and responsibility
all wastes throughout their life
Some of our products enable the complete replacement of the Sustainability in
cycle, in accordance with
internal combustion energy, while others reduce harmful our products and
agreed international
engine emissions. operations
frameworks, and significant
reductions in their release to air, We take practical steps to protect the environment wherever Environmental
water and soil to minimize their we operate around the world. responsibility
adverse impacts on human
health and the environment
Substantially reduce waste We reduce customers’ waste generation by designing Sustainability in
generation through prevention, products that have a longer working life and require fewer our products and
reduction, recycling and reuse resources in their manufacture. operations
We recycle scrap from our own production processes to Environmental
recover as much of these valuable resources as possible. responsibility
Adopt sustainable practices We take practical steps to protect the environment wherever Environmental
and integrate sustainability we operate. responsibility
information into the reporting
We provide a safe working environment for our employees and Responsibility for
cycle
protect their labour and human rights. our workforce
We monitor our sustainability performance through regular Corporate
management reporting and publish an annual sustainability governance
report.10 JO H NS ON E L E CTRIC HOL DI NG S L I MI T E D
Sustainable development goals
Supporting SDGs
SDG 3 Efforts towards good health and well-being contribute towards success with our core
Good Health SDGs. In particular, our motion-related innovations in the medical field and in active
and Well-being and passive automotive safety functions support our efforts towards achieving
certain of the innovation-related goals in SDG 9: Industry, Innovation and
Infrastructure. Our management of health and safety risks in the workplace provides
additional focus for providing a safe and secure working environment for all workers
to meet the goals of SDG 8: Decent Work and Economic Growth.
Relevant targets set by SDG 3 Related strategies In our report
Reduce the global maternal Johnson MedTech designed electrodes and circuits enable an Sustainability in
mortality ratio and end advanced fetal monitoring patch for higher-risk pregnancies our products and
preventable deaths of and assist doctors in making the best decisions for mother operations
newborns and baby.
Reduce mortality from non- Johnson MedTech designs and delivers innovative technology Sustainability in
communicable diseases solutions for improved patient well-being and better clinical our products and
through prevention and outcomes. operations
treatment
Halve the number of global We meet demands for better road safety with products for Sustainability in
deaths and injuries from road active and passive vehicle safety applications. our products and
traffic accidents operations
Substantially reduce the We ensure that our products are free from harmful chemicals. Sustainability in
number of deaths and illnesses our products and
from hazardous chemicals, and operations
air, water and soil pollution and
We deploy the necessary resources to protect employees’ Responsibility for
contamination
health and safety from hazardous chemicals and processes our workforce
and to prevent pollution.
SDG 4 Our support for quality education in science, technology, engineering and
Quality mathematics (“STEM”) subjects adds focus to our efforts to create Decent Work and
Education Economic Growth, as required by SDG 8. We seek to provide a pathway for youth to
gain the technical and vocational skills to choose engineering as a career.
Relevant targets set by SDG 4 Related strategies In our report
Ensure equal access for all JETC, operating in China and Mexico, assists underprivileged Responsibility for
women and men to affordable youth, providing a mix of general and technical education over our communities
and quality technical, a three-year full-time residential programme. We employ
vocational and tertiary similar educational concepts in Niš, Serbia, working hand-in-
education, including university hand with a local technical school.
The Group also partners with schools and universities to Responsibility for
Substantially increase the
support the provision of quality technical and vocational our communities
number of youth and adults
education. The Group’s Junior Engineer programme
who have relevant technical
encourages children to have an interest in STEM subjects and
and vocational skills, for
allows all employees to become involved in educational
employment and decent jobs
outreach to the community.
We offer internships and apprenticeships to youth, as routes to Responsibility for
employment. our workforceS U S T A I N A B I L I T Y R E P O R T 2021
11
Sustainable development goals
Supporting SDGs
SDG 11 Our efforts to enable cleaner transportation and more sustainable homes and
Sustainable buildings add additional focus to our efforts towards meeting the goals of SDG 12:
Cities and Responsible Consumption and Production, as do our efforts to minimize the
Communities environmental impact of our factories.
Relevant targets set by SDG 11 Related strategies In our report
Reduce the adverse impact of We enable cleaner transportation with products that enable Sustainability in
cities. This includes paying hybrid and all-electric vehicles to supplant conventional our products and
special attention to air quality internal combustion engine vehicles completely, or that operations
and municipal and other waste reduce emissions from internal combustion engines. We offer
management a wide variety of solutions for heating and ventilation systems,
window automation and smart-meter applications for more
sustainable homes and buildings.
We seek to drive down the cost of beneficial products to Sustainability in
enable wider adoption of these technologies. We encourage our products and
customers to switch to products that use fewer resources in operations
their manufacture and last longer in operation, thereby
reducing waste.
We minimize the environmental impact of our factories, Environmental
including air quality and waste reduction and management. responsibility
SDG 13 Our efforts to develop innovative products that reduce emissions and energy
Climate consumption directly support our efforts towards the goals set by SDG 9: Industry,
Action Innovation and Infrastructure and SDG 12: Responsible Consumption and
Production. Our manufacturing strategy also supports these goals as we seek to
reduce carbon emissions arising from our operations.
Relevant targets set by SDG 13 Related strategies In our report
Integrate climate change Support for electric vehicles and energy efficiency are key Sustainability in
measures into policies, elements of our product strategy. our products and
strategies and planning operations
We are introducing advanced resource- and energy-efficient Environmental
manufacturing technologies to our factories and have set a responsibility
clear target for reducing our carbon intensity.
We are reducing CO2 from transportation through closer Sustainability in
proximity with customers and suppliers, and shorter logistics our products and
routes. operations
Improve capacity on climate Our high-precision components for the automotive industry Sustainability in
change mitigation perform mission-critical functions in hybrid and all-electric our products and
vehicles and reduce emissions from internal combustion operations
engine vehicles.
Our Industry Products Group provides solutions that reduce Sustainability in
electricity consumption for hundreds of product applications. our products and
We also enable the complete replacement of the internal operations
combustion engine for a number of outdoor applications.12 JO H NS ON E L E CTRIC HOL DI NG S L I MI T E D
Sustainable development goals
Supporting SDGs
SDG 17 Our partnerships for the goals underpin our efforts on all our Core SDGs and
Partnerships Supporting SDGs. We are part of a complex web, working together with our
for the Goals customers, suppliers, employees and governments and communities where we
operate to achieve the sustainable development goals.
Relevant targets set by SDG 17 Related strategies In our report
Promote the development, We innovate and create the technical capability to provide Sustainability in
transfer, dissemination and unique solutions to our customers’ problems. This includes our products and
diffusion of environmentally both creating capability and solving customers’ problems in operations
sound technologies to developing countries.
developing countries
We are introducing advanced resource- and energy-efficient Environmental
manufacturing technologies to our factories, including our responsibility
factories in developing countries.
Effective and targeted capacity- We are progressively expanding the Group’s operating Sustainability in
building in developing countries footprint with factories in 18 countries, including nine our products and
to implement all the sustainable developing countries1. All Johnson Electric factories are operations /
development goals required to operate according to our standards for Environmental
environmental and health and safety management, protection responsibility /
of human and labour rights, and corporate governance. 100% Responsibility for
of our manufacturing facilities around the world are certified our workforce /
under ISO 14001 for environmental management systems. Corporate
80% of our facilities are certified under ISO 45001:2018 or governance
OHSAS 18001 for occupational health and safety management
systems.
Significantly increase the We have a number of factories in developing countries1 and Sustainability in
exports of developing countries contribute towards the exports of Argentina, Brazil, China, our products and
Hungary, India, Mexico, Poland, Serbia and Turkey. operations
Enhance the global partnership Johnson Electric actively engages with customers, employees, Corporate
for sustainable development, suppliers and communities around the world to fulfil shared governance /
complemented by multi- sustainability goals. These include responsible consumption Responsibility for
stakeholder partnerships that and production, climate action, sustainable cities and our communities
mobilize and share knowledge, communities, good health and well-being, and quality
expertise, technology and education. Our employees are especially proactive in
financial resources, to support organizing regular community outreach activities to engage
the achievement of the with and support the local communities in which we operate.
sustainable development goals
Our place in this global partnership is expressed through our
in all countries, in particular,
purpose statement and promises.
developing countries
1
Developing countries according to the
International Monetary Fund’s World
Economic Outlook Database, April 2021Motivating our life
14 JO H NS ON E L E CTRIC HOL DI NG S L I MI T E D
Sustainability in our products
and operations
Core SDGs Supporting SDGs
Johnson Electric is a leader in the security; superior product We promote brushless motor
supply of precision motors, motion functionality; or ease of use that solutions for demanding
subsystems and related electro- reduces barriers to age, gender applications, where energy
mechanical components. Within and disability equality, Johnson efficiency, continuous variability,
this defined market space we seek Electric delivers. From this, we precision and control, or the
sustainable business growth and develop attractively priced durability to withstand constant use
target segments where “mega- products that offer effective are critical. Our brushless
trends”, regulatory change or solutions to our customers’ electronically commuted motors
technology advancements are have a higher power density for
problems, including the
driving demand. increased energy efficiency and
environmental and social impacts
enjoy a much longer operating life
We work closely with our customers of their business.
than brushed motors. We will
across a diverse range of continue to support brushed-motor
Sustainability is also intrinsic to our
industries and geographies to technology – and innovate for
product development, as a direct
understand their customers’ improved efficiency and increased
result of engineering for efficiency.
requirements and preferences. longevity – to provide a complete
Whether those requirements are for Our engineers strive to “make
product range where customers
better energy efficiency and customers successful and end
require this.
reduced emissions; a cleaner users delighted” with products that
environment; support for the smart consume fewer resources in their Our vertical integration also assists
revolution in the car and home, and manufacture, use less energy to customers in reducing their
the transfer of mundane work to deliver the required performance environmental footprint. Rather than
artificial intelligence; improved and functionality and have a longer simply purchasing a motor from us,
health and well-being; improved operating life. increasingly customers are asking
us to provide a more complete
subsystem, including the motor,
switch, gears and controlling
electronics. This is cost-effective for
the customer, simplifying the
customer’s logistics flow and
reducing the negative
environmental impacts of
transportation and packaging.
Our “Eco Motion” symbol
denotes those products
that improve energy and
fuel efficiency. The green
leaf in the centre is marked
with the Greek letter Eta,
the engineering symbol for
This year, our laboratory in Halver, Germany gained accreditation
efficiency; it is enclosed by
from UL and IEC for testing switches for use in appliances
a circle to represent motionS U S T A I N A B I L I T Y R E P O R T 2021
15
Sustainability in our products
and operations
Automotive
Products Group
The automotive industry enables the high degree of mobility that shapes modern life and
its industry, cities and communities. It provides access to economic opportunities and improved
standards of living. However, this mobility comes with environmental and social impacts, including
climate change, pollution, noise, congestion, road traffic accidents and resource depletion.
We apply our innovative technology to contribute to a more sustainable automotive industry by
tackling some of these environmental and social challenges. We create positive impacts with the
electrification of critical automotive funtions in new energy vehicles (“NEV”) to improve performance
and lengthen the service life of critical components. We also help mitigate the negative impacts of the
internal combustion engine (“ICE”). This represents a significant source of opportunity and growth,
especially as the industry shifts from ICE to NEV to lower carbon emissions and reduce climate
change risks.
The table below shows the typical sustainability benefits for a selection of APG’s products.
New energy vehicle ICE vehicle
Thermal management Increased range Reduced fuel
consumption
Integrated thermal Greater longevity
management system of critical Lower engine
for electric vehicle components emissions
Braking, steering and Generation of Reduced fuel
suspension braking force consumption
without ICE
Electric brake booster Lower engine
provides braking force, emissions
replacing conventional
braking systems
Transmission and Increased range Reduced fuel
driveline consumption
Greater longevity
Electric oil pump of critical Lower engine
for lubricating and components emissions
cooling eAxle16 JO H NS ON E L E CTRIC HOL DI NG S L I MI T E D
Sustainability in our products
and operations
New energy vehicle ICE vehicle
Engine management Reduced fuel
and exhaust treatments consumption
Exhaust gas Lower engine
recirculation motor to emissions
control NOx emissions
from diesel engines
Weight reduction Increased range Reduced fuel
consumption
Powder-metal Better power to
suspension weight ratio Lower engine
components provide emissions
durability and lower
weight than die-cast
parts
Safety Reduced Reduced
frequency and frequency and
Haptic motor to give
severity of road severity of road
driver alerts through
traffic accidents traffic accidents
the seat
Noise and EMI Our products meet Our products
reduction tough noise and meet tough
EMC requirements noise and EMC
Heating, ventilation
requirements
and air-conditioning
actuators for quiet
delivery of air to the
passenger cabin
For more information on APG’s products for NEV, please see our annual investor briefing and our solutions by
automotive segments on www.johnsonelectric.com.S U S T A I N A B I L I T Y R E P O R T 2021
17
Sustainability in our products
and operations
Industry
Products Group
The Industry Products Group (“IPG”) serves a wide range of industrial, professional and
consumer application segments. Many of these segments are undergoing rapid social and
technological change and disruption, arising from a complex mix of demands and priorities that
generate positive and negative impacts on economic, environmental and social development
worldwide.
The increasing variety of devices and equipment that contain electro-mechanical components
benefits social development, improving quality of life and removing barriers to equality as
equipment becomes smaller, lighter and easier to use. However, the trade-off is often
environmental stress from increased demand for energy, as well as increased mining and
processing of raw materials. As long as products with better environmentally friendly
credentials come at a higher cost, the adoption of more environmentally friendly products will
remain slow. Consumers are likely to opt for technologies with a lower cost but a shorter life
cycle or poor energy efficiency.
IPG seizes this opportunity to apply our innovative technology and application expertise to
bring attractively priced products to market. We create positive impacts on sustainability with
products that encourage energy awareness; replace the internal combustion engine especially
in outdoor applications; improve health and well-being with fetal monitoring patches, and
products for medication delivery and surgical automation; and lower barriers to equality. We
mitigate the negative impacts of the consumer economy with products that help our customers
improve energy efficiency, decrease carbon emissions and reduce pollution.
Governments are another key stakeholder influencing demand for energy-efficient
technologies, issuing directives limiting the power consumption of certain types of appliances
or tightening the requirements for energy-efficient buildings. Governments also
influence consumer markets indirectly by means of energy taxes,
energy-efficiency labelling regulations for domestic appliances,
energy awareness campaigns and smart-meter rollouts.
By nature, many of IPG’s products improve sustainability.
The table on the following page shows a typical spread
of sustainability benefits for a selection of products.18 JO H NS ON E L E CTRIC HOL DI NG S L I MI T E D
Sustainability in our products
and operations
Climate
change and
energy Health and Waste
efficiency Noise Equality well-being prevention
Brushless Energy- Quieter than Long life
motors for efficient brushed cycle
power tools motor tools
Window Better No cord Long life
blind management – kid cycle
automation of natural friendly
light and
heat
Smart Increased Designed Long life
meter and consumer for safety cycle
gas valve responsibility first
for energy
choices
Lawn and Direct Low noise is Lighter Chainsaw Long life
garden, replacement a basic and on-off at cycle
agriculture for ICE requirement easier the touch
and mowers and for lawn and to use of a switch
forestry tools garden
Air filtration Energy- Low Improved Long life
system efficient for noise for air quality cycle
all-day use unobtrusive
all-day use
Medication Imperceptible Precise
delivery noise for dosage
system unobtrusive and
all-day use reliability
For more information on IPG’s products and growth trends, please see our annual investor briefing and our solutions
for industry segments on www.johnsonelectric.com.S U S T A I N A B I L I T Y R E P O R T 2021
19
Sustainability in our products
and operations
Building a global-local manufacturing footprint
We aim to support our customers by being close to where they operate and
being able to ensure fast and reliable supply and a highly responsive
service. To execute this strategy, we are strengthening in-region capabilities,
introducing advanced resource- and energy-efficient manufacturing
technologies to our factories across Asia, North America, South America and
Europe, including factories in nine developing countries 1. In support of this,
we are increasingly localizing internal and external supply chains. This is
expected to deliver a number of positive impacts to our sustainability (see
table on next page).
Operating in 22 countries across four continents
Manufacturing
Sales & support office
Engineering
1 We contribute to the exports of Argentina, Brazil, China, Hungary, India, Mexico, Poland, Serbia and Turkey, all listed as developing economies in the International
Monetary Fund’s World Economic Outlook Database, April 202120 JO H NS ON E L E CTRIC HOL DI NG S L I MI T E D
Sustainability in our products
and operations
Positive impacts from closer proximity to customers
Economic Environmental Social
Action impact impact impact Governance impact
Shortening logistics Lower freight Lower CO2 Increased Closer
routes costs emissions from connections to engagement with
transportation local customers
Reduced communities
inventory levels
Swifter response
to changes in
demand
Increasing Lower exposure Reduced Creating local Mitigation of
localization of to tariffs and packaging employment and risks from global
internal and external duties with materials developing trade issues
supply chains increased local technical
content capabilities
Lower exposure
to exchange rate
fluctuations
Strengthening
local economies
Developing a Capacity Disseminating Building a more Increased
diverse building, advanced diverse business
manufacturing including resource- and workforce resilience from
footprint – with the developing energy-efficient reduced reliance
ability to source countries manufacturing Upgrading the on any single
materials and technologies to technical country or
components from Stable spend our factories, capabilities of factory
alternative regions line including our local industrial
– in case of factories in sectors
localized disruption developing
countries
Changes in operations
During FY20/21 we commenced announced plans to cease
manufacturing operations in manufacturing in Newport, Isle of
Jiangmen, China, our digital Wight, United Kingdom; Beihai,
flagship factory. In Zacatecas, China; and Ozd, Hungary.
Mexico, we opened a second Manufacturing operations from
manufacturing floor, expanding these factories will be transferred to
production. We are planning further
other facilities in the Group. Our
expansion of both of these factories
Newport site will continue to host
and will also expand our facilities in
an engineering centre. We will
Niš, Serbia and Changzhou, China.
retain a manufacturing presence in
As part of the optimization of our Hungary through our factory in Changzhou ground-breaking ceremony
operating footprint, we also Hatvan.S U S T A I N A B I L I T Y R E P O R T 2021
21
Sustainability in our products
and operations
Thriving in a digital world
We are transforming our business The lead plant for this digital reskilling employees to take their
through advanced automation and transformation is our next- place in this transformed
digital technology. We are evolving generation manufacturing facility in environment. This year we
from a labour-intensive model to a Jiangmen, China. This is Johnson upgraded this reskilling initiative,
more digitally advanced enterprise. Electric’s first fully integrated digital with the soft-launch of a JE
Our industrial logic requires us to factory, running the latest Baccalaureate programme. This
align our design and production Manufacturing Executions Systems structured three-year internal
processes to reduce cycle times (“MES”), Product Lifecycle training course aims to equip
and is geared towards higher Management (“PLM”) and technical workers with the
volume product segments featuring Enterprise Resource Planning competencies to support our digital
more standardized designs. (“ERP”) systems. transformation and growth.
Through this transformation we aim The structural changes in the way Our transformation to a more
to improve the long-term work is done will have an impact digitally advanced business model
sustainability of our business by: upon the size and profile of our will take some time to complete.
workforce, as processes become Component designs and
• Providing innovative cost- less labour-intensive and require
competitive solutions to manufacturing methods cannot
different skill sets – especially as
customers’ problems always be easily changed in the
repetitive manual tasks shift to
middle of the customer’s product
• Accelerating automation to being performed by artificial
life, especially in the automotive
improve quality, increase intelligence.
segment. Consequently, we need
productivity and manage cost We engage regularly with to continue to work with many of
employees on this topic through our legacy manufacturing lines for
• Improving resource and energy
discussion, training and some time. But, even here, there
efficiency
workshops, and our in-house social are opportunities to apply new
• Reducing space (and land) media platform. Additionally, we technologies, such as machine
requirements for our factories offer a number of courses on our vision, to achieve close-to-zero
in-house training platform aimed at defects and reduce waste.
• Reducing our vulnerability to the
shrinking availability of labour
due to demographic changes
(declining birth rates and ageing
populations) in nearly all major
manufacturing economies
This uplift in our manufacturing and
functional capabilities closely
aligns with the sustainable
development goals of increasing
productivity and decoupling
economic growth from
environmental degradation. It is key
to progress in SDG 8: Decent Work
and Economic Growth, SDG 9:
Industry, Innovation and
Infrastructure, and SDG 12:
Responsible Consumption and Electric vehicle coolant circulation pump production in Shajing, China
Production.22 JO H NS ON E L E CTRIC HOL DI NG S L I MI T E D
Sustainability in our products
and operations
Our operations model
Our operations model is designed • We set the workplace in
to provide customers with value, order for safety and Johnson Electric’s operations model
ensure employee safety and efficiency and measure our
strengthen environmental safety performance Standards
protection, while embracing a
“5S” organized, safe,
quality culture and continuous • We facilitate a quality
clean & efficient workplaces
improvement mindset. Through culture and attitude. Quick
Operator & technician certification
this, we aim to drive consistency response quality control
with one standard approach across and Eight Disciplines of Incoming inspection audits
our global operations. problem solving drive Preventative maintenance
teams to leverage their Standard work
This operations model drives
combined skills and
improvements in our sustainability Quick response action plans &
knowledge to solve Eight Disciplines of problem solving
by:
problems
Pre-launch / process change control plans
Environmental performance – We
Governance performance – Johnson Electric Product
promise to protect the environment Development System
We practice “Plan, Do,
for future generations
Check, Act”, whereby leaders Capable processes
• We measure our environmental drive standards and Layered process audit
performance and drive discipline to achieve Gemba Kaizen
improvement performance targets and
• We design products and
goals
processes to be environmentally • Leaders have clear
friendly responsibilities and Execution
performance targets
• We seek to minimize waste from Leadership
our operations • We ensure consistent Teamwork & collaboration
performance across our Standards
Social performance – We promise
global organization.
to inspire our employees to grow, Skills
Standards are available,
act with ownership and find Discipline
fulfilment and meaning in the work released as control
they do documents, with supporting
work instructions and
• We create a common work training materials in local
culture across the Group with languages Performance
every employee in an operations
Safety
role, direct or indirect, skilled to • We set standards for
behaviour. Our MARBLE Environment
apply standards and empowered
to make decisions. We values are the guiding Quality
encourage team spirit and self- principles and compass for On-time delivery
discipline our business
Productivity
Cost controlS U S T A I N A B I L I T Y R E P O R T 2021
23
Sustainability in our products
and operations
Quality assurance culture and policy
Johnson Electric is committed to simulation and testing, capability 2
These international standards
providing Safe Choice solutions, analysis and safe product launch include:
using superior designs, world-class procedures.
• ISO 9001 for quality
quality systems and controlled management systems
manufacturing processes to meet Continuous improvement
• IATF 16949 (which contains
or exceed our customers’
From humble beginnings as a sector- specific supplemental
requirements. requirements on applying ISO
Hong Kong manufacturer of motors
9001 for the automotive
for toys, Johnson Electric has
industry)
International recognition and become a global leader in motion
compliance • IECQ QC080000 hazardous
systems across a wide range of
substance process
To meet the increasing quality industries. The company has a management system for
requirements demanded by our heritage of setting ambitious hazardous-substance- free
customers and government targets and driving continuous legal and customer
requirements such as RoHS,
regulations, our manufacturing improvement – a heritage
ELV and REACH
facilities and in-house testing engrained in the company values
laboratories are certified under the system. • ISO 13485 quality management
system for meeting regulatory
relevant international standards 2. requirements for the medical
Additionally, our products are Johnson Electric is committed to
devices industry
compliant with the necessary continuous improvement; this and
Making our Customers • ISO 17025 for testing and
health, safety and environmental calibration laboratories
protection requirements as tested Successful, are the basis for
by recognized external testing long-term success in our business
laboratories and bodies. and those stakeholders who
depend on us. Our MARBLE values production quality system. Our
ask every employee to Reach vertical integration business model
Quality assurance in new
Higher and set stretched goals. provides speed and agility to
product development
We strive to Be Sustainable, taking respond immediately to changes in
We are committed to developing into account the long-term social customer and market demand,
and manufacturing innovative and environmental impacts of our identify opportunities to reduce and
market-leading product solutions operations as well as the eliminate waste, while driving the
that deliver high performance, operations of our partners and highest standards in product
superior quality, reliability and suppliers. Our products should quality and process capability. We
safety. The Johnson Electric also contribute to the sustainability are reducing variation and taking a
Product Development System of the planet. We Excel in systematic approach to increasing
(“JEPDS”) combines engineering Execution with Practical the service level provided to our
and manufacturing product quality Solutions to achieve the high customers; this is being achieved
planning methodologies to ensure standards of quality and through business process
the safe and flawless execution of performance expected by our digitization and increased
new product launches. From the customers and stakeholders. We automation.
initial conceptual design, through work not only to meet those
product design verification and expectations, but also to exceed
validation, these methodologies them, through continuous cycles of
include advanced product quality learning, shop-floor practicality and
planning, V-model product a “can-do” mindset.
development, quality function
deployment, simulation-led design, Our connected global
design and process failure mode manufacturing footprint shares a
effects analysis, reliability uniform supply chain and common24 JO H NS ON E L E CTRIC HOL DI NG S L I MI T E D
Sustainability in our products
and operations
Customer feedback handling Every logged complaint is analysed Recall and traceability
system thoroughly, using the Eight In the case of incidents arising from
We log any customer complaint or Disciplines problem-solving customer feedback or internal
warranty claim in our Global 8D methodology and supporting control processes, any issue
Database. This communication analytical tools, such as 5W2H, 5 relating to safety or health will
channel between front-line staff Whys, Fish-Bone Diagrams, Fault- trigger defined product recall
and engineers in our manufacturing Tree Analysis, Design of procedures. Unique product
locations enables a team-approach Experiments, Hypothesis Tests and identifiers and manufacturing
to identifying, correcting and other advanced analytical tools. All execution traceability systems
eliminating problems. A description knowledge gained from enable timely and appropriate
of the problem, details of any understanding the physics of response actions.
containment actions, root cause failure feeds into our new product
analysis and permanent corrective development and continuous-
actions are recorded in the system. improvement systems.
Supply chain sustainability
Our engagement with suppliers is standards such as ISO 9001, ISO suppliers to sign our updated
driven by our focus on Innovation 14001, ISO/TS 16949 and ISO Supplier Code. Suppliers are
and Safe Choice. Our robust 13485. Additionally, we support also required to comply with the
supplier qualification procedures suppliers to strive for continuous US Foreign Corrupt Practices
require due consideration of cost, improvement and better Act, the UK Bribery Act 2010 and
quality, environmental awareness, performance, and encourage the criminal law in their country of
ethical behaviour and social compliance with conflict minerals operations
responsibility before ordering requirements. We have recently
regular supplies from any supplier. signed an agreement with a • Required by the Group’s
We continue to monitor third-party specialist company to purchase terms and conditions to
performance against these streamline and strengthen our adhere to directives set by the
requirements throughout the conflict minerals and cobalt International Labour
business engagement through reporting processes Organization’s “ILO Declaration
annual risk assessments and on Fundamental Principles and
supplier self-assessments. • Required to be committed to Rights at Work” and the United
Ordinarily, we conduct some social and environmental Nations’ “UN Guiding Principles
on-site supplier sustainability responsibility and ethical on Business and Human Rights”.
audits; however this was practices. This year, we updated These set out principles on
suspended during FY20/21 to our Supplier Code of Conduct freedom of association, right of
reduce risk during the COVID-19 (the “Supplier Code”) to collective bargaining, the
pandemic. strengthen our requirements for abolition of child labour and the
suppliers regarding human and elimination of all forms of forced
The Group’s suppliers are: labour rights, the environment or compulsory labour and
and ethics and behaviour. Every discrimination in the workspace
• Contractually required to be supplier is required to comply
certified under relevant with and sign our Supplier Code
international quality and and in the coming year, we plan
environmental management to begin a campaign forCaring for our environment Johnson Electric’s worker bees: A biodiversity project in the grounds of our São Paulo, Brazil factory has attracted Atlantic Forest insects, birds, lizards and small mammals. This gives testimony to the low level of environmental stress at the site
26 JO H NS ON E L E CTRIC HOL DI NG S L I MI T E D
Environmental responsibility
Core SDGs Supporting SDGs
We promise to protect the environment for future
generations.
Our environmental strategy and policies address
climate change risk, the use of natural resources
including water and raw materials, the prevention
of pollution and the minimization of waste wherever 30% by
we operate. We aim to decouple our growth from
environmental degradation. 2 0 3 0
Environmental • Promoting environmental All Johnson Electric sites are
management awareness in our workforce required to apply this EHS
through regular communication management system and track
We take practical steps to protect and training their performance in reaching
the environment wherever we
specific environmental objectives
operate. This includes: • Committing appropriate resources
and leadership to our Global EHS and targets. Furthermore, 100% of
• Complying with applicable management system; and our manufacturing locations have
environmental laws and obtained ISO 14001:2015
regulations • Communicating our environmental certification for their environmental
performance to stakeholders and management systems.
• Designing environmentally seek their involvement wherever
friendly products and processes applicable We identify the most significant
environmental aspects for each
• Continuously improving our Our diverse manufacturing footprint
manufacturing location and set
Global Environment, Health and includes factories in countries with
specific environmental
Safety (“EHS”) management varying regulatory frameworks. Our
performance objectives and
system to set and maintain Global EHS management system
targets. Management reviews then
rigorous standards for managing ensures an uncompromising and
proactive approach to identifying, ensure continuous improvement in
our environmental risk
monitoring, managing and the site’s environmental
• Improving our environmental controlling environmental risks performance. We also require an
management by defining worldwide, regardless of differing environmental assessment for any
appropriate objectives and environmental standards and new construction project or site
targets on a regular basis regulations. expansion.You can also read
