Board governance, ethics, and management of political influence are essential components of our CSR strategy.
Connie L. Lindsey, Executive Vice President and Head of Corporate Social Responsibility and Global DE&I, is responsible for the design and execution of our comprehensive CSR strategy.
Ms. Lindsey reports directly to Michael G. O'Grady, Chairman, President and CEO of Northern Trust Corporation (Corporation). Ms. Lindsey also chairs the Executive CSR Council, a group of senior employees that enables the implementation of Northern Trust's CSR strategy through the setting and tracking of goals related to material aspects of our CSR strategy, including sustainability initiatives. The Corporation's Board of Directors provides general oversight of Northern Trust's corporate citizenship and social responsibility matters of significance to the Corporation and its subsidiaries.
The Board's Corporate Governance Committee facilitates this oversight. The Board's Business Risk Committee provides oversight of certain financial and operational risks associated with climate change and other environmental risk factors through its oversight of the Corporation's global risk management framework and risk management policies.
We expect all employees to uphold our core values, exercise the highest ethical judgment and comply with the laws and regulations that govern our business. We expect employees to treat all information appropriately based on its classification. Breaches of highly sensitive client or business information may result in disciplinary action. All employees are required to take the following five courses annually: "Anti-Money Laundering (AML) & Economic Sanctions,” "Antibribery, Corruption and Fraud," "Global Privacy and Data Protection," "Information Security,” and "Standards of Conduct.” All employees are also required to certify their compliance with the Code of Business Conduct and Ethics. Each of the training courses was completed by more than 99 percent of assignees in 2020. Additionally, certain employees are required to complete periodic certifications and attestations regarding personal securities transactions, political contributions and the provision of gifts and entertainment. Employees in the APAC and EMEA regions complete expanded AML, conduct and privacy training in accordance with the regulatory characteristics of those respective regions.
Employees in the APAC and EMEA regions complete expanded AML, conduct and privacy training.
Northern Trust concentrates its public policy positions in areas most relevant to its businesses, including U.S. federal, state, municipal and European Union financial regulatory reform efforts. We work with the trade associations of which we are members and meet directly with federal, state and municipal legislators, regulators and other government officials globally to discuss our positions and make recommendations for improved policy and regulation. At the U.S. federal level, we focus on proposed regulatory and policy changes that will affect our businesses through enhancing the safety of client assets, the safety and soundness of the financial system and the strength of the global economy. At the state and municipal levels, we regularly meet with elected and appointed officials to discuss public policy positions that will affect our businesses. In appropriate circumstances, we file comment letters to proposed federal regulations, copies of which are publicly available.
The Corporate Governance Committee of our Board of Directors provides oversight of the political, lobbying, and other public advocacy activities of Northern Trust, including significant trade association memberships.
Northern Trust expects employees to seek guidance and pre-clear certain individual political contributions in accordance with the guidelines set forth in federal, state and municipal "pay-to-play" regulations and internal policies and procedures.
Northern Trust contributes corporate funds to industry trade organizations in support of the corporation’s public policy objectives. Participation in these organizations is important to gaining industry insight, fostering relationships, and developing professional opportunities within the industry. The principal trade associations to which Northern Trust belongs are the American Bankers Association, the Bank Policy Institute, the Investment Company Institute and the Securities Industry and Financial Markets Association. We are also a member of the Illinois Bankers Association, the California Bankers Association and the Florida Bankers Association.
Northern Trust engages in the political process to advance and protect its long-term interests, and it does so without regard to the private political preferences of our executives. Northern Trust does not contribute directly to political parties, committees or candidates for public office. However, it sponsors both a federal-only political action committee (PAC) and a multi-candidate PAC, both of which are permitted to solicit different segments of a restricted class of Northern Trust's U.S. employees for contributions used to fund candidates who support legislation important to Northern Trust. All contributions to the PACs are voluntary; employees are neither favored nor disadvantaged based on their participation. The leadership of each PAC reviews proposed political contributions based on the public policy interests of Northern Trust. Federal lobbying reports may be found at: https://www.northerntrust.com/united-states/about-us/corporate-social-responsibility/policy.
We expect all employees to uphold our core values, exercise the highest ethical judgment and comply with the laws and regulations that govern our business.
Northern Trust engages in the political process to advance and protect its long-term interests
Northern Trust understands that the long-term viability of our business and our clients is tied to the health and well-being of our planet. We therefore commit to protecting the environment and mitigating any negative environmental impacts from our operations.
We align our business with the fundamental principle of sustainability: meeting the needs of the present generation without compromising the abilities of future generations to meet their own needs. We do this by integrating environmental considerations into our company-wide processes, continually improving our business practices and delivering tangible, positive results related to the environment. Northern Trust's Workplace Services manages our real estate portfolio, procurement and facilities services with the objective of reducing the negative environmental impacts of our supply chain. We use energy to power our data centers and facilities, the majority of which are in North America. As a result, the bulk of our greenhouse gas (GHG) emissions come from our North American operations. Since we began tracking our carbon footprint (comprised of the carbon dioxide equivalent of all GHGs produced from our operations), we have improved our data collection processes and calculation methodologies to align with the GHG Protocol.
We commit to mitigating any negative environmental impacts from our operations
Working closely with our building managers, Northern Trust follows the environmentally friendly building strategies and practices outlined by the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) program, which has awarded our offices in North America and APAC one LEED platinum certification, six gold certifications, two silver certifications and one general certification. In addition, we use reliable and sophisticated tracking programs to monitor and manage our environmental performance and calculate our annual carbon footprint.
We recognize that the long-term viability of our business is tied to the health of our planet
After completing a comprehensive emissions study in 2017 that formed our baseline, we set a goal to reduce our total Scope 1, Scope 2 (using the market-based approach) and Scope 3 carbon emissions by 25 percent per full-time employee (FTE) from 2015 levels by 2020. As of December 31, 2020, we have reduced our emissions by more than 62 percent since our 2015 baseline and our energy consumption by over 44 percent. 2020 was an unprecedented time due to the impact of COVID-19. With the vast majority of our staff working from home and significantly reduced business travel, we estimate that the impact of COVID-19 on our global emissions equates to approximately 25 percent reduction. We supplied over 12 percent of our portfolio with a renewable energy electricity supply, with further plans to expand this. We are currently developing our new carbon reduction target and expect to release it by the end of 2021. Meanwhile, we are continuing to reduce our carbon emissions as well as expanding the number of types of emission on which we report (i.e., water and waste emissions).
In 2020, we began to gather data on the water consumption and waste of our buildings. In 2020, 36 percent of our portfolio buildings were able to provide water-use data, representing 104 metric tons of carbon dioxide equivalent (MtonCO2e)/year. Fifty percent of our portfolio buildings provided waste data, representing 3059 MtonCO2e/year. With this baseline, we expect to be able to report on our reduction performance going forward.
Collaboration with non-governmental organizations (NGOs) and advocacy groups allows us to maintain transparency and hold ourselves accountable to our environmental sustainability practices. Northern Trust and our surrounding communities benefit when we publicly report our environmental footprint, such as our GHG emissions, energy use and the risks and opportunities associated with climate change under the supervision and guidelines of reputable third-party organizations. By joining communities of investors who hold the health of our planet in high regard, Northern Trust strives to effect positive change to our environment. The NGOs with which we collaborate include the U.S. Green Building Council, CDP, and the Institutional Investors Group on Climate Change.
The Sustainability Network, Northern Trust’s global employee environmental engagement program, is aimed at increasing awareness of sustainability issues, promoting best practices and unifying environmentally focused business operations. This program conducts celebrations around Earth Hour and Earth Day and facilitates volunteering in local communities. Limited by the unusual circumstances of 2020, it embraced the work-from-home mandates by digitally delivering environmental messages, hosting webinars and celebrating Earth Day through video events. The group also established a “Science Club” newsletter featuring environmental- and science-based educational experiments that employees and their children could conduct at home.
Northern Trust functions as a global citizen whose commitment to building a healthy, sustainable environment involves deep regard for our surrounding communities. We understand our footprint affects the larger ecological system and the lives of community members, and we believe in the power of community-based actions to effect positive change for the good of our planet. Northern Trust commits an array of resources, including capital support and employee volunteerism, to local initiatives and organizations focused on environmental awareness and protection.
As detailed in our Supplier Code of Conduct, Global Procurement Policy and Vendor Management Practice Standards, Northern Trust expects our providers to conduct business in an ethical, legal and socially responsible manner.
We regularly review vendors' adherence to our policies and pursue corrective measures when necessary. We use the U.S. Office of Foreign Assets Control to screen each vendor to ensure compliance with all economic and trade sanctions. Northern Trust is committed to integrating ethical, social and environmental factors into our global procurement policy.
This process maximizes relationships with vendors resulting in ongoing risk mitigation and value delivery. We continue to invest in and review new vendor management techniques and processes that will increase coverage to additional supply categories.
The vendor management program process includes:
Supplier diversity is an essential component of a world-class, global procurement organization. How and with whom we do business reflects our commitment to developing and supporting diverse business owners. Diverse suppliers contribute to our success, foster increased competition and innovation and enhance our ability to provide clients with excellence in service.
Northern Trust collaborates with several organizations to encourage the economic development of our diverse vendors, including the National Minority Supplier Development Council, the Chicago Minority Supplier Development Council, the Women's Business Development Center, Chicago United, Financial Services Roundtable for Supplier Diversity, Disability:IN and the LGBT Chamber of Commerce of Illinois.
Our Supplier Diversity Program engages with companies that provide goods, software, and services to Northern Trust.
We strive to:
• Engage with certified and qualified diverse businesses. • Identify and onboard vendors who bring diversity in thinking, skill sets, and approaches. • Stimulate and promote economic development in the communities in which we work. • Monitor the key characteristics and commitment of all vendors who work with Northern Trust. • Engage with minority, women, veteran, LGBTQ+, disabled, service-disabled veteran and small business enterprises.
Northern Trust’s Supplier Diversity Program includes the measurement and reporting of key aspects of diversity including: the composition of the company’s ownership, leadership, and employees; its philanthropic activities; and its own supplier diversity program.
In addition, our program requires our suppliers to also do business with diverse suppliers and we track and measure this activity. Northern Trust's supplier diversity program is led by a senior-level manager, the Director of Supplier Diversity. In 2020, we spent more than $130 million with minority, women, veteran, LGBTQ+, disabled and small business enterprises. Northern Trust continues to bring diverse suppliers into our supply chain.
