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2020 Sustainability Report

ESG Report

Governance Overview

ESG Report

We have an unwavering commitment to strong corporate governance, ethics and compliance


At PPG, we hold ourselves to a high standard of integrity and professional conduct. This means not only ensuring compliance with the law, rules and regulations, but also upholding our values, code of business ethics and voluntary commitments.

%

of our Board members are diverse (by gender or racial background)

of 12

Board members are independent*

%

of executive committee members are women

It is imperative that each Board member, employee and business partner knows, understands and fully abides by our commitments. Because we own and operate the vast majority of our global footprint, we have direct control over, and visibility into, our operations. This facilitates our ability to instill an ethical culture and monitor compliance to our codes and policies.

Highlights of our governance approach include:

  • Board accountability for ESG. ESG is overseen by our Board, with support from other Board-level committees depending on the issues and risks involved. The Board engages with management on the broad range of ESG strategy, risks and opportunities. In 2021, the Board conducted a comprehensive review of its oversight of the Company's ESG programs and practices to ensure that the Board or one of its committees has oversight responsibility for each of the ESG programs and practices significant to PPG. As a result of this review, the Board in 2021 revised our Corporate Governance Guidelines and the charters of each committee to more clearly specify the ESG programs and practices overseen by the Board and each of its committees. Our 12-member Board* includes 11 independent members. Currently 42% of our Board members are diverse by gender or racial background.
  • Executive-level oversight and incentives. In 2021, we appointed a vice president of global sustainability to strengthen executive-level oversight and visibility of PPG's ESG efforts. In addition, PPG executive officers have ESG goals included in the individual performance component of their annual incentive plan. Each executive officer has specific DE&I and sustainability and governance goals that are aligned with company strategies and targets.
  • Established robust risk management practices. We are focused on embedding ESG considerations into our broader enterprise risk management (ERM) and business planning processes. For example, our newly appointed vice president of global sustainability is a risk owner within the Enterprise Risk Committee (ERC), which was formed in 2021 and focuses on bringing a holistic approach to managing top-tier ESG risks across PPG.
  • Individual accountability supported by robust policies and a speak-up culture. Through our various policies, such as our Global Code of Ethics, and our established practices and training across human rights, ethics and personal conduct, employees become familiar with how to embed our values and expectations into their day-to-day decision making. We also continue to encourage employees to embrace the right and the responsibility to report any concerns over, or potential violations of, our values or policies without fear of retaliation.
  • Risk-driven supplier management. Globally, we are committed to compliance with evolving regulations that impact the sustainability of our operations, and we expect the same of our suppliers. PPG is committed to ethical business conduct and responsible sourcing, including in areas of conflict minerals and human rights. Learn more about how we prioritize supplier sustainability.

This graphic illustrates the ESG programs and practices overseen by the Board and each of its committees:

Structure

PPG is governed by a 12-member Board of Directors in accordance with our Corporate Governance Guidelines and oversees ethics and compliance through its Audit Committee. The Sustainability and Innovation Committee, formerly the Technology and Environment Committee, of our Board has oversight of the tracking of our sustainability progress, and defining climate-related risks and opportunities. We report sustainability-related progress to the Sustainability and Innovation Board Committee three times per year, and the full Board of Directors one to two times per year.

We continue to seek new opportunities to enhance our ESG corporate governance. The newly formed Sustainability organization is responsible for developing the corporate sustainability strategy and working alongside our businesses and functions to execute that strategy. The organization is focused on reducing PPG's environmental impact through our operational activities, including Scopes 1 and 2 emissions, and working with the businesses and science and technology organization to innovate new product and service solutions to enable customer sustainability (Scope 3).

The company's overall ERM process and annual risk assessment is overseen by the Audit Committee. The ERC is comprised of the Executive Committee and will oversee the active management of risks. The vice president of global sustainability will serve as the risk owner for ESG and will:

  • Work with other risk owners and across the organization to facilitate and drive action on the top-tier ESG risks;
  • Define and monitor appropriate leading and lagging indicators associated with these risks; and
  • Bring other insights that might be considered relevant to the ERC for holistic, integrated management of ESG risk across PPG.

In addition, we maintain an executive-level Global Ethics and Compliance Committee chaired by our CEO, as well as regional committees chaired by our regional business leaders.

Our compliance office is headed by our chief compliance officer (CCO), who directly reports to our senior vice president and general counsel. The CCO also reports progress to the Audit Committee two times per year.

In 2021, we had 24 full-time employees in our global compliance office. Located around the world, these employees oversee general ethics and compliance matters, investigations, export compliance, training and more. They are supported by hundreds of employees worldwide who help implement specific codes, policies and initiatives.

Codes and Policies

The PPG Global Code of Ethics, which is available in 28 languages, sets forth the principles that apply to all employees – everywhere and in every circumstance.

Supplementing the code are specific policies and procedures that include our Global Export Control Policy, Export Compliance Alert, Anti-Corruption, Due Diligence Procedure for Third Party Intermediaries and Denied Country Policy.

In early 2021, we continued making substantial progress on our Anti-Corruption Due Diligence Procedure for Third Party Intermediaries, adding 800 in-scope third parties (including many associated with companies that PPG acquired in 2021) and renewing 167 others through a refreshed due-diligence process.

Other developments during the year included a new workplace policy and training focused on how to protect non-public and proprietary information. An average of 25,000 employees were enrolled in online training on compliance topics.

Legal and Compliance Risk Assessment

We conduct a global legal and compliance risk assessment every two years. We survey more than 200 country, regional and global leaders representing all our functions and business units regarding 44 legal and compliance risks across the following nine risk categories:

  • Anti-corruption;
  • Corporate compliance and culture;
  • Safety and protection of assets;
  • Export practices;
  • Proprietary information;
  • Employee relations;
  • Records management/retention;
  • Data privacy; and
  • Third-party management.

In 2022, we will begin executing risk mitigation plans for the most commonly cited risks from our 2021 assessment across each of the regions.

Training and Communications

Our employees have access to online trainings in multiple languages that cover, among other topics, anti-corruption, competition law, conflicts of interest, export compliance and the PPG Global Code of Ethics. We also deliver in-person training in every region, with particular focus in higher-risk regions and for higher-risk topics.

In 2021, 65% of our employees completed either online or in-person training on ethics and compliance issues. Through PPG's new global training platform, we offered six courses within our ethics and compliance curriculum in 2021. These cover:

Additionally, new employees receive an onboarding curriculum of these trainings each quarter.

We communicate with all employees on ethics and compliance topics throughout the year via:

  • Virtual meetings highlighting ethics and compliance topics;
  • Manager toolkits including presentation materials and discussion points;
  • Topic-specific flyers and materials distributed to U.S. manufacturing locations; and
  • Discussion guides designed to help managers lead brief conversations on ethics and compliance topics.

Additionally, our "Speak Up Challenge" provides a high-level review of our ethics and compliance investigations in the prior period, offers an in-depth look at a specific ethics or compliance issue and encourages employees to report concerns. The 2021 challenges covered diversity, equity and inclusion, and workplace violence/sexual harassment.

In 2021, we conducted two virtual roundtables within each of our businesses to review the status of the business’ ethics and compliance training, ethics investigations, PPG Ethics Helpline activity and third party due-diligence program. We also held virtual roundtables for all of our corporate functions. In addition, our ethics intranet site provides information on policies, procedures and more, as well as an avenue to report ethics and compliance concerns.

Reporting and Investigating

The PPG Ethics Helpline is available for all employees and third parties, including customers and suppliers, to ask ethics and compliance questions or report a concern anonymously.

Individuals also can contact several management resources, including our human resources staff or CCO, to report concerns. It is against PPG policy to retaliate against anyone for making a good-faith report of a violation of law or the PPG Global Code of Ethics.

The helpline is managed by an independent, thirdparty firm with multilingual representatives who are trained to listen carefully, ask questions and document the situation accurately and anonymously.

Our compliance office handles all reported issues, with each taken seriously and appropriately addressed.

Each case is assessed by an appropriately assigned functional or regional investigator or team. Actions include reviewing and preserving relevant documentation, conducting interviews, communicating relevant findings, preparing a final report, and identifying and ensuring the completion of any appropriate corrective actions. Disciplinary actions are the responsibility of the human resources team in conjunction with legal, compliance and the business.

Although the complexity of any allegation may necessitate an extensive investigation, our goal is to close the investigation and case report in a timely manner. The person who reports the issue through the helpline is given a case number to anonymously check the status of their report throughout the process.

Beginning in 2020, we implemented processes to better track post-investigation corrective actions, including piloting a survey to seek feedback from people who reported an issue that was substantiated. In 2021, we reconfigured our survey to focus on understanding complainants' satisfaction with the handling of the investigation process. Specifically, the survey sought to understand if the respondents felt that they were treated with respect in the process and that their concerns were handled in a professional and timely manner. We received 48 responses to this survey. Of the responses we received:

  • 81% of survey participants felt that their investigation was completed in a fair, unbiased and confidential manner;
  • 85% of survey respondents said that they were treated with respect throughout the investigation;
  • 83% of respondents said they were satisfied with the timeliness of the investigation; and
  • 83% of respondents said they would recommend the Helpline to a colleague.

In 2021, we opened 657 investigations encompassing 837 allegations of employee misconduct. We had 49% of these reports come through the PPG Ethics Helpline in the form of both phone and internet submissions. We received the remainder through internal sources, including direct communications to management, human resources and/or the legal and compliance department. Of the allegations closed as of year's end, 56% were substantiated and resulted in 456 disciplinary actions.

We experienced an increase in cases between 2020 and 2021 due to acquisitions and continued efforts to communicate to our employees on the importance of reporting concerns. To encourage involvement and promote transparency, we provide information and data on reported ethics concerns to our employees throughout the year.

Pro-Ethics seal

The Pro-Ethics seal from the Brazil Federal Ministry of Transparency and the Comptroller General of the Union recognizes companies that demonstrate lawful business practices and operate with the highest level of fairness, transparency and integrity.

For the second year in a row, PPG earned this designation and is the only coatings company in Brazil to have this distinction in 2021.

Investigations by Region

 

2019

2020

2021

Asia Pacific

50

56

83

Europe, Middle East and Africa

53

72

74

Latin America

117

120

124

United States and Canada

326

335

376

Total

546

583

657

Previous years' numbers were adjusted due to data cleanup, resulting in more accurate reporting and based on cases that were closed after the reporting cycle.

Disciplinary Actions

 

2019

2020

2021

Warning

175

165

200

Counseling

201

155

119

Financial

16

6

7

Suspension

18

11

3

Termination

94

119

127

A single allegation may be made against multiple individuals and could result in multiple disciplinary actions. The 2021 data include only investigations closed as of Jan. 31, 2022. Previous years' numbers were adjusted due to data cleanup, resulting in more accurate reporting and based on cases that were closed after the reporting cycle.

Substantiation Rate

(Percent)

 

PPG

Benchmark

2020

51

43

2021

56

45

Benchmarks represent comparisons to other manufacturing companies with 50,000+ employees. Data for 2021 are as of Jan. 31, 2022. Previous years' numbers were adjusted based on cases that were closed after the reporting cycle.

Anonymous Reports

(Percent)

 

PPG

Benchmark

2020

40

50

2021

36

47

Benchmarks represent comparisons to other manufacturing companies with 50,000+ employees. Data for 2021 are as of Dec. 31, 2021. Previous years' numbers were adjusted based on cases that were closed after the reporting cycle.

Case Intake Method

 

Helpline

Proxy

2018

282

206

2019

282

268

2020 318 275
2021 326 331

Previous years' numbers were adjusted due to data cleanup, resulting in more accurate reporting and based on cases that were closed after the reporting cycle.

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