Materiality

A Double Materiality Assessment Methodology

Ingersoll Rand reviews Materiality topics at least once a year. The assessment process is conducted based on the principles of double materiality as outlined in the Global Reporting Initiative (GRI). In our approach, we focus on the importance of each topic to stakeholders, long-term shareholder value creation and competitive positioning. We also consider the short-term and long-term impacts, intended and unintended impacts, positive or negative impacts, and reversible and irreversible impacts affecting our financial, organizational, and reputational performance now and in the future. This in-depth analysis helps us identify the most material topics and allows us to arrange the topics in order of significance to stakeholders and impact on Ingersoll Rand.

Material Topics prioritization

We define “material issues” as those issues important to our stakeholders and the success of our business. We assessed these issues to help us dedicate resources to those areas where we have a potentially significant impact on the environment, society and the economy. While all the issues on the Materiality Matrix carry importance, the issues in the upper right quartile were ranked as the most critical to our stakeholders and Ingersoll Rand. This assessment is an input into how we prioritize the issues. We have programs in place to address both the risks and opportunities these issues represent.

We identified 20 material topics categorized in four main categories:

1. Labor and Employee Matters 

Ingersoll Rand values diversity and promotes an equitable and inclusive environment for all employees. Ensuring a “safety first” culture, Ingersoll Rand maintains world-class safety metrics and offers a wide range of training and resources to support employees’ overall health, safety and well-being.

2. Economic Value Creation 

Although Economic Value Creation is one of our top four Material topics, it does not correlate to a UN Sustainable Development Goal.

3. Climate Stewardship

Ingersoll Rand continues to mitigate risks derived from climate change and focuses on improvements in its operations by reducing emissions through energy-efficient projects, installing solar, purchasing hybrid and electric vehicles, and purchasing green energy. 

4. Product Stewardship/New Product Development and Innovation 

Through innovation and new product development, Ingersoll Rand reduces its impact on the environment through emission reduction and water conservation in products and ensures the health and safety of the customers as end-users.

ERM and ongoing monitoring of the impact

We utilize an ERM process that enables us to pursue our strategic imperatives while identifying, controlling, and mitigating risks. This process is based on the COSO Enterprise Risk framework. The Materiality Assessment process is incorporated into the overall ERM process and is used to assess and manage material topics. We continue to monitor and update material issues on an ongoing basis and engage our key stakeholder groups to keep a pulse on any changing environmental, social and economic impacts.

Stakeholders

To ensure a comprehensive understanding of our material topics, we surveyed our employees as well as selected customers, investors and suppliers in various geographies. During the process, we conducted internal interviews, met with focus groups, and conducted an impact assessment of the material topics on our business within our most senior leadership. In the surveys, we asked the stakeholders to rate the topics that Ingersoll Rand should be most concerned about in respect of impacts on the environment, human rights, communities, and the economy. We applied a weighting system that assigned a 50% weighting to external stakeholders and a 50% weighting to internal stakeholders. Our senior leaders along with the Sustainability Committee of our BOD provided final approval of the Materiality Assessment.

The process

Understand

• Review the company’s purpose, values, strategies
• Review types of products, services, customers, and locations
• Review and determine stakeholders and review peer benchmarking 

Identify

• Identify impacts on the economy, environment and people, including impacts on human rights
• Engage with relevant assessments of business relationships such as legal or anti-corruption, etc.
• Determine the population and means of assessments (surveys, focus groups, interviews)

 Assess

• Assess significance of selected topics on environment, people, communities and the economy
• Assess financial, positive or negative impact on business
• Engage stakeholders in the assessment 

Prioritize

• Group the topics based on impacts and test against applicable GRI sector standards to prevent any overlooked topics
• Validation and approval from the highest governance body at Ingersoll Rand

Identifying Material topics

Identifying our material topics was a multi-step process. We first assessed our prior materiality results. This was followed by identifying the material topics that are considered important to the manufacturing industry and assessing these topics against our current strategy, purpose and values. We reviewed the regulatory frameworks, such as GRI, Sustainability Accounting Standards Board (SASB), United Nations SDGs and the Task Force on Climate-Releated Disclosures (TCFD) framework to ensure alignment and completeness of our material topics. The results were 20 material topics that we grouped into the following categories:

• Labor and Employee Matters 
• Economic Value Creation 
• Climate Stewardship 
• Product Stewardship/New Product Development and Innovation