Transitioning to ISO 14001:2015 - an aerospace perspective July 27th, 2017

Presenters Nigel Marsh Global Head of E&S Rolls-Royce plc Cindy Klöhn Head of EMS Management Airbus SAS

To ask a question 1. Click on Chat 2. Select Christer Hellstrand 3. Type your question

Agenda Anti Compliance reminder and disclaimer Introduction to IAEG Why an Environmental Management System? ISO 14001 overview Why the IAEG Transition Document? Key Areas Leadership Scope and context Life-Cycle Interested parties Risks & Opportunities Performance Implementation/Transition – Steps to consider © 2017 IAEG®

Disclaimer This WEBINAR is provided by INTERNATIONAL AEROSPACE ENVIRONMENTAL GROUP, INC. (“IAEG”) for informational purposes only.  This WEBINAR represents IAEG thought at the time of presentation; any inaccuracy or omission is not the responsibility of IAEG.  Determination of whether and/or how to use all or any portion of this WEBINAR is to be made in your sole and absolute discretion.  Prior to using this webinar or its contents, you should review it with your own legal counsel.  No part of this webinar constitutes legal advice.  Use of this webinar is voluntary.  IAEG does not make any representations or warranties with respect to this webinar  or its contents.   NOTE: This WEBINAR MAY BE RECORDED BY IAEG.  IAEG RESERVES THE RIGHT TO EDIT THE RECORDING.  © 2017 IAEG®

International Aerospace Environmental Group Trade association formed by major aerospace companies Focused on the multitude of global laws and regulations impacting health and the environment Formed to address the complexity and variability of these requirements and associated impact on the Aerospace industry (Civil & Defense) and its supply chain Seeks to drive continual improvement in the processes used by the industry, thereby delivering consistently high quality products and regulatory compliance with reduced environmental impacts IAEG formally incorporated June 2011 6 6

IAEG in numbers

Members 3M Deutschland GmbH Airbus Airbus Defense & Space Airbus Helicopters Arconic Assent Compliance BAE Systems Bergeson & Campbell, PC Boeing Bollore Logistics Bombardier Aerospace Bureau Veritas Certification France Cobham plc Dassault Aviation Dassault Systemes Enovia Corp Embraer ERM GE Aviation GKN Aerospace Engine Systems Granta Design Ltd Gulfstream Hangsterfer’s Laboratories Inc Harris Corp Hewlett Packard Honeywell Huntsman Advanced Materials iPoint Systems GmbH Israel Aerospace Industry Ltd Lockheed Martin Meggitt PLC Mitsubishi Aircraft Co National Quality Assurance Northrop Grumman Raytheon Rockwell Collins Rolls-Royce SAAB AB SAFECHEM Europe GmbH SAFRAN Socomore Spirit Aero Systems SR Technics Switzerland Ltd STELIA Aerospace SurTec International GmbH Tetra Tech Inc Textron Aviation Thales United Technologies Corporation (UTC) Zaki Surface Treatment Consulting Zodiac Aerospace 8 8

Why have an environmental management system (EMS)? Management tool Framework to ensure effective control over environmental issues Provides structured approach to setting objectives and demonstrating their achievement The Benefits of an effective EMS Helps to ensure and demonstrate compliance with legal requirements and other obligations Helps in reducing potential business risks and delivering an improvement in environmental performance Achieving environmental objectives © 2017 IAEG®

What is ISO 14001? A standard framework Developed by the International Standards Organisation (ISO) Originally launched in 1996, revised in 2004 and 2015 Provides the means for third party certification 300 000 certificates issued globally A common language © 2017 IAEG®

Benefits of ISO 14001 Engaging Top Management Driving improvement Facilitating supply chain collaboration Better understanding of and managing interested parties’ needs and expectations Demonstrating credibility Identifying business opportunity rather than just managing risk Supporting the long term viability of organisations and the industry © 2017 IAEG®

ISO 14001:2015 Key Changes since 2004 Better integration with Business Processes and a greater focus on: Active Leadership commitment and accountability Environmental policy / objectives compatible with the strategic direction of the company Scope & context of the organisation Environmental performance improvements Risks and opportunities (in addition to the environmental aspects assessment) – part of management review Life cycle thinking Determining the needs and expectations of Interested Parties From an ISO focus on Pollution Prevention & Compliance to a Lifecycle approach © 2017 IAEG®

ISO 14001: 2015 Continual Improvement © 2017 IAEG®

IAEG Document: Transitioning to ISO14001:2015 Effective implementation Common interpretation of Scope of EMS Across the life-cycle What is significant, relevant & controllable A robust aerospace industry approach NOTE - internal operations are not addressed Document can be found at iaeg.com Provide aerospace industry with voluntary guidance for transition © 2017 IAEG®

Key Areas: Leadership Scope & Context Life Cycle Interested Parties Transition to ISO 14001:2015 Key Areas: Leadership Scope & Context Life Cycle Interested Parties Risks & Opportunities Performance Reference ISO 14001, 3rd edition 2015-09-15, Environmental management systems - Requirements with guidance for use © 2017 IAEG®

Leadership Extract from ISO 14001: How to involve your leaders Brief them on their role Understand and communicate how environmental management contributes to vision and business objectives Ensure they promote continual improvement and communicate importance of good environmental performance © 2017 IAEG®

Examples of requirements integration Leadership Examples of requirements integration Understanding and communicating how the EMS can contribute to the organisation’s overall business goals Including environmental risks and opportunities as part of the corporate/enterprise risk management process Using communication, sustainability or corporate social responsibility strategies to support the process of identifying interested parties and their needs and expectations Reporting environmental performance alongside financial reporting Developing and reviewing environmental indicators as part of the business performance process © 2017 IAEG®

Consider different levels of the organisation Scope & Context Consider different levels of the organisation Use existing methodologies to understand internal and external issues PESTLE: Political, Economic, Social, Technological, Legal, Environmental issues Gather input from different functions of the organisation Identify internal and external issues Reference ISO 14001, 3rd edition 2015-09-15, Environmental management systems - Requirements with guidance for use © 2017 IAEG®

Life Cycle The revised Standard requires organisations to consider a high level life cycle ‘perspective’ rather than a detailed Life Cycle Assessment (LCA). Source: IAEG – Transitioning to ISO 14001:2015 (iaeg.com) © 2017 IAEG®

From Appendix 2 – Applying a life cycle perspective Life cycle stage Example activity Example aspect(s) Example impact(s) Possible considerations for control or influence? Example risks to the organisation Example opportunities for the organsiation Examples of actions including operational control or influence Supply chain: material/compon ent processing.   Engine Manufacturing (design-build). Material waste, energy consumption, air emissions, water emissions, water consumption. Resource depletion, landfill use, air quality, water quality, climate change. Control over specification. Influence design. Limited influence on supplier’s manufacturing methods. Organisation and engine manufacturer lose out to competitors who are partnering with a more efficient engine manufacturer . Organisation and engine manufacturer increase sales due to more efficient engine design. Organisation and engine manufacturer benefit from lower production costs. Specification from buyer to meet certain standards relating to fuel burn and product weight. Source: IAEG – Transitioning to ISO 14001:2015 (iaeg.com) © 2017 IAEG®

Interested Parties Understanding the needs and expectations of interested parties Identify and use existing interested party processes Identify interested parties relevant to the environmental management / performance Identify relevant needs and expectations Determine compliance obligations (considering risks and opportunities) Document and implement compliance obligations Consider communication requirements in relation to compliance obligations © 2017 IAEG®

From Appendix 3 – Examples of aerospace interested parties Interested party group Examples of interested parties Examples of environmental needs and expectations Examples of compliance obligations Society. Society at large, individual citizens. Industry to consider societal needs (e.g. climate 2°C target). Industry to be innovative to address environmental issues. Corporate responsibility/sustainability reporting. Community and neighbours. Including neighbouring industries. Neighbours are those adjacent to or in close proximity to an aerospace facility. The community includes neighbours but also those who may be subject to associated socioeconomic factors.   The community and neighbours can organise themselves into a group to represent their views, for example an action group or non-governmental organisation (NGO) (see entry below). To some extent the community and neighbours’ requirements are enforced by local agencies and regulators (see entry above). The community and neighbours will have requirements related to their own context and that of the facility but could relate to noise, emissions, odour and parking. The community and neighbours may require financial support, assistance or expertise with an environmental project. Agreement to hold an annual community meeting. Regular reporting of emissions. Regular reporting of noise monitoring data. Providing a dedicated telephone line or email account for enquiries or complaints. Participation in an annual environmental project. Employees of aerospace companies. Employees may be represented by a workers union. Individual employees. Groups of employees (informal). Workers union (formal). Integrity and honesty. Safe and healthy working environment. Communication on environmental performance. Monthly reporting. Substitution of hazardous substances. © 2017 IAEG®

Risks & Opportunities © 2017 IAEG®

From Appendix 5 – Examples of risks and opportunities Risks & Opps From Appendix 5 – Examples of risks and opportunities Internal and external issues Risks Opportunities Actions Climate change. Increased likelihood of flooding at production sites. Disruption to supply chains from increased instances of extreme weather. Design of aircraft will need to change to operate in a changing climate. Increased sales in products adapted to a changing climate. Ensure corporate risk, procurement, material planning, business continuity functions consider impact of a changing climate. Environmental awareness of employees. Literacy levels. Difficult to engage employees or train them on environmental procedures. Difficult to implement culture or behavioural change. If environmental training and communication is enhanced then could result in substantial environmental improvement and cost saving. Training department to advise on how to train and communicate to different audiences on environment. Apprentice training to include environmental awareness. Company restructure/merger with other organisation. EMS suffers from a lack of focus. Time will need to be taken to combine EMS. Morale of employees makes it difficult to obtain engagement on environmental management. Financial resources may not be available during restructure/merger. Opportunity to influence restructure to optimise environmental management. Opportunity to take the ‘best of both’ from the two merging organisations. Ensure that employees/or the department overseeing divestiture and integration consider arrangements for environmental management in their brief.   © 2017 IAEG®

Plan what needs to be monitored and measured Performance Plan what needs to be monitored and measured Identify appropriate indicators Monitoring and measuring Analysing data Evaluating performance Communicating performance ISO 14001:2015 places greater emphasis on evaluating environmental performance rather than simply monitoring and measuring. Reference ISO 14001, 3rd edition 2015-09-15, Environmental management systems - Requirements with guidance for use © 2017 IAEG®

ISO 14001:2015 Steps to consider Complete a gap analysis Raise top management awareness Involve representatives from relevant functions Demonstrate the business value Evaluate third-party certification vs. self-declaration Consider the need for further awareness and/or competency Consider how the changes relate to other management systems Develop an implementation plan © 2017 IAEG®

Key Take Away READ THE DOCUMENT Transitioning to ISO 14001:2015

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