Our Demonstrated Commitment to the Highest Level of Ethical Conduct
ITW’s commitment to strong corporate governance, ethical conduct and compliance is rooted in our core values and sets the foundation for how we operate our business every day. Driven by our management team and Board of Directors, this commitment is ingrained in our culture and all ITW colleagues understand the top-down expectation to uphold our values, and adhere to policies and practices related to fair, ethical and honest business dealings, robust governance, and compliance with applicable laws. These areas are a priority as we recognize governance and ethics play an essential role in ensuring our business resiliency and enabling our company to achieve its full potential.
Board Oversight of Sustainability
The Board has direct oversight of the company’s environmental, social and governance (ESG) strategy. ITW’s approach to sustainability is key to the company successfully executing our enterprise strategy and as such is viewed as a core responsibility of the entire Board. Additional responsibilities related to sustainability are carried out by Board committees, company leadership and subject matter experts throughout ITW.
Overall Sustainability: The Board plays an active role in the oversight of the company’s sustainability strategy, including annual review and approval of the ESG strategy. The Board receives periodic updates from management regarding ESG initiatives and progress, which may include, for example, discussions relating to talent management, succession planning, diversity and inclusion (D&I), climate change and ESG risks, priorities and reporting. Additionally, the committees of the Board may review components of the ESG strategy that fall within their purview.
Enterprise Risk Management: The Board is responsible for overall risk oversight of the company and focuses on the most significant risks facing the company. The Board executes on its risk oversight responsibilities through the full Board and Committees, building upon management’s annual enterprise risk assessment. The Board has a formal process to review each of these risks annually or more frequently, as appropriate.
Cybersecurity: The Board annually reviews and evaluates the company’s cybersecurity policies and practices with respect to risk management as well as steps taken by management to monitor and control such exposures. In addition, the Audit Committee receives quarterly cybersecurity reports from management. ITW also has a cross-functional cybersecurity team, which reviews overall risks, discusses mitigation opportunities and engages in scenario planning exercises to further harden ITW’s protection against possible cyber breaches.
ITW has built a fit-for-purpose framework that is based on the National Institute of Standards and Technology (NIST) framework and is required to be followed by all ITW locations. All ITW locations have advanced endpoint protection software, awareness training, phish testing and vulnerability scanning (includes identification and prioritization of cyber risks), backup and recovery mechanisms, and periodic tabletop testing. The increased investment ITW has made relative to cybersecurity recognizes that this risk continues to evolve, and we are taking appropriate actions to mitigate it.
Human Capital: The Board oversees the development of executive talent and planning for the effective succession of the company’s CEO and executive leadership team. It also regularly consults with the CEO and Chief Human Resources Officer on the company’s organizational needs, its talent pipeline and D&I strategies, and the succession plans for critical leadership positions. On an annual basis, the Board conducts a detailed review of the company’s overall needs for human capital, including executive succession plans, compensation and benefits to attract a workforce with skills and capabilities needed to execute our strategy, addressing the company’s talent management initiatives, and discussing individuals who are considered potential future senior executives of the company.
Read more about our Board composition and oversight role as well as our strong governance profile in our 2023 Proxy Statement.
Our Policies Reinforce Our Commitment to Ethical Conduct
Rooted in our core values, we set high ethical standards for our company and partners that help us deliver best-in-class performance and create value for our stakeholders. We regularly review and update, as appropriate, our policies governing ethical conduct and responsible behavior.
Key policies include:
- Corporate Governance Guidelines ensure the company is governed in a manner that serves the interests of our shareholders, colleagues and other stakeholders.
- ITW Code of Conduct, which is reviewed annually and updated as needed, reinforces ITW’s commitment to the highest level of ethical conduct and describes the standards of behavior governing all ITW colleagues, directors, businesses and subsidiaries around the globe. ITW’s core values are the foundation of the Code, which also applies to ITW’s suppliers through our Supplier Code of Conduct and in our standard purchase order terms and conditions. The Code also outlines our commitment to compliance with human rights, anti-corruption and data protection and privacy laws, as well as fair and honest competition and all applicable trade laws and restrictions.
- Code of Ethics outlines ITW’s principles regarding fair, ethical and honest business dealings, full and fair disclosure, and compliance with applicable laws for our CEO, Vice Chairman, CFO and all key financial personnel.
- Environmental & Sustainability Policy reinforces ITW’s commitment to global environmental sustainability reflected in the following priorities: improving our environmental performance on an ongoing basis, working with suppliers who operate with similar dedication to global environmental sustainability, and partnering with our customers in innovating solutions that address their needs for environmentally responsible products.
- Human Rights Policy reinforces our commitment to demonstrating respect for human rights at ITW and throughout our supply chain, and it applies to all ITW colleagues and locations worldwide and to others who may act on ITW’s behalf.
- Privacy Statement describes the information we collect, how we use and share it, and user rights with respect to the information. Our systems are designed to ensure colleagues have access to the minimum amount of sensitive information required to carry out their responsibilities.