Allegion has mobilized a cross-functional ESG Council to support our ongoing commitment to
environmental, social and governance matters.
Allegion strives to create a company where all people feel welcome and valued. We know it's a journey but, together, the people of Allegion are creating a more inclusive workplace and a more equitable, better world. Each section shows the progress of where we've been and the goals for where we are going.
Environmental
In 2021, Allegion was named the Robert W. Campbell Award winner, a prestigious, international award recognizing excellence in environment, health and safety. We continually strive to be better every year in areas such as greenhouse gas (GHG) emissions intensity, water usage, and total waste to landfill.
Environmental Impact
By 2030, we aim to achieve a 25% reduction in GHG emissions intensity0 and 20% reduction in water usage and total waste to landfill (compared to the baseline year 2020).
Allegion aims to achieve carbon neutral emissions globally by 2050, and we support the UN Sustainable Development Goal to take urgent action on climate change. We know that some communities need time to build necessary energy infrastructure to make this vision a reality. In the meantime, our company is pursuing incremental improvement targets, including meeting Allegion’s electricity needs with carbon-free electricity by 2030 (that is, the energy is produced by a non-fossil fuel source that generates no carbon emissions), and achieving carbon neutrality at 50% of our current sites by 2035.
As seen in the table below, in 2022, waste to landfill increased due to one-time activities and insourcing of certain processes which provide additional control of our waste management. We do not expect this to impact achieving our long-term goal.
| Environmental impact, normalized | 2021 v 2020 baseline |
2022 v 2020 baseline |
|---|---|---|
| Water usage*+16 | -4% | -12% |
| Greenhouse gas (GHG) emissions intensity*+2567 | 2% | -20% |
| Waste to landfill*+3568 | 1% | 24% |
| Environmental impact, actuals | 2020 volume79 | 2021 volume79 | 2022 volume |
|---|---|---|---|
| Water usage+1 | 104.2 mil. gallons | 98.8 mil.gallons | 96.2 mil. gallons |
| Greenhouse gas (GHG) emissions^+2567 | 100,618 metric tons (CO2e) | 100,780 metric tons (CO2e) | 83,629 metric tons (CO2e) |
| Waste to landfill+356 | 4.5 mil. pounds | 4.5 mil. pounds | 5.8 mil. pounds |
| Hazardous waste disposed+56 | 0.6 mil. pounds | 1.3 mil. pounds | 1.0 mil. pounds |
| Electricity used+46 | 113.5 mil. KwH | 115.7 mil KwH | 110.3 mil KwH |
| Carbon-free electricity | 2020 % of total | 2021 % of total | 2022 % of total |
|---|---|---|---|
| % of electricity used, carbon-free+456 | 4% | 6% | 14% |
At a country level, as hybrid and electric vehicles become more widely available on the market, more company-owned and leased fleet vehicles are transitioning. Recently, Allegion U.K. converted 50% of its fleet to hybrid vehicles and expects to have 100% converted to hybrid or electric by 2025.
^ This total is calculated by converting greenhouse gas emissions into metric tons (CO2e) using estimates pursuant to the U.S. EPA greenhouse gas equivalencies calculator.
* Data is normalised to hours worked. To the extent actual hours worked are not available for any full-time employee, an average of 40 hours per week is used.
+ Actual data collected for manufacturing facilities and certain warehouses globally. For all other facilities, data is based on certain estimates as indicated below. From Apr. 1, 2020 through Dec. 31, 2021, a 50% reduction was applied to the below estimates for water usage and waste to landfill in office type locations to take into account the remote work environment during the COVID-19 pandemic.
1 Assumes an average of 15 gallons (or 57 litres) of water used per employee per workday.
2 Calculation includes all scope 1 and 2 emissions except for the company vehicle fleet. Where actual data is not collected, assumes an average of 2,000 BTU of gas usage and 0.6 Kilowatt-hours ("KwH") of electricity usage per square footage per month for warehouse locations and 2,700 BTU of gas usage and 1.5 KwH of electricity usage per square footage per month for office type locations.
3 Assumes an average of 40 lbs. (18 kilograms) of non-hazardous waste per employee per month.
4 Assumes an average of 0.6 KwH of electricity usage per square footage per month for warehouse locations and 1.5 KwH of electricity usage per square footage per month for office type locations.
5 Data does not include fleet fuel usage or one-time activities not associated with manufacturing or distribution.
6 Data does not include any metrics associated with the mid-year 2022 acquisition of Stanley Access Technologies.
7 2022 includes 10,000 purchased Emission Free Energy Credits (EFEC).
8 The 2020 and 2021 waste to landfill results were adjusted based on an internal audit conducted in 2023, resulting in a change in the 2021 comparison to baseline year 2020 and it has been adjusted from +3% to +1%.
9 Actual environmental impact numbers for 2020 and 2021 have been adjusted based on an internal audit completed in 2023. The adjustments did not have a significant impact on reported "Environmental Impact (Normalized)" percentages other than for waste to landfill where percentage change from 2021 to 2020 baseline went from 3% to 1%. Water usage was originally reported at 103.5 mil. and 98.3 mil. gallons for 2020 and 2021 respectively; GHG was originally reported at 100.6 metric and 99.6 metric tons for 2020 and 2021 respectively; waste to landfill was originally reported at 4.3 mil. and 4.4 mil. pounds for 2020 and 2021 respectively and electricity used was originally reported at 113.3 mil. and 115.5 mil. KwH for 2020 and 2021 respectively.
0 As of April 2023, the GHG emissions intensity goal has changed from a10% reduction by the year 2030 to a 25% reduction.
Additional environmental management information is found in Allegion’s CDP disclosure reporting.
Environmental management system certifications
By 2030, we will increase the number of sites with ISO 14001:2015 (environmental management system) certification by 50%, focusing on principal production, assembly & distribution sites.
§ Based on the sites listed in "Item1: Business" of the company's Form 10-K for the related year.
Social
Employee Safety
As the 2021 Robert W. Campbell Award winner, Allegion will continue its journey in world-class safety management, as defined by the National Safety Council’s five characteristics: leadership; integrated systems approach; performance measurement; alignment to core organizational initiatives; and corporate citizenship and off-the-job safety.
| Safety incidents | 2020 rate | 2020 vPY | 2021 rate | 2021 vPY | 2022 rate | 2022 vPY |
|---|---|---|---|---|---|---|
| Total Recordable Incident Rate (TRIR)*6 | 0.39 | -9% | 0.38 | -3% | 0.40 | 5% |
| Lost Time Incident Rate (LTIR)*6 | 0.12 | -29% | 0.17 | 42% | 0.12 | -29% |
| Allegion incident rate compared to the reported U.S. industry average for incident rates*~ | 88% better | 88% better | n/a |
* Data is normalised to hours worked. To the extent actual hours worked are not available for any full-time employee, an average of 40 hours per week is used.
~ Based on the latest U.S. average for our general industry (NAICS 332), as reported by the U.S. Bureau of Labor Statistics.
6 Data does not include any metrics associated with the mid-year 2022 acquisition of Stanley Access Technologies.
Safety management system certification
By 2030, we will increase the number of sites with ISO 45001:2018 (safety management system) certification by 50%, focusing on principal production, assembly & distribution sites.
| ISO 45001 (safety management system) certification | 2020 | 2021 | 2022 |
|---|---|---|---|
| # of principal production, assembly & distribution sites § | 30 | 29 | 29 |
| # of principal production, assembly & distribution sites certified § | 8 | 8 | 8 |
| % of sites certified § | 27% | 28% | 28% |
§ Based on the sites listed in "Item1: Business" of the company's Form 10-K for the related year.
Product quality and safety
Allegion continually works to ensure our products are manufactured in a socially responsible manner and comply with all environmental regulations and health and safety standards for the markets we serve.
We are upgrading our global product safety management process for monitoring and reporting product safety-related recalls (as defined by the Consumer Product Safety Commission or equivalent international governing body).
Standards and milestones
Completed a comprehensive review of current processes in order to draft a uniform global product safety recall policy.
Allegion's Global Product Safety & Regulatory Recall Policy established, consolidating country-level policies into one uniform approach.
Regulatory monitoring, combined with expertise and internal procedures, help ensure comprehensive programs are in place to manage requirements, including the EU Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulation, Restriction of Certain Hazardous Substances (RoHS) directive and Waste Framework Directive related to Substances of Concern In Products (WFD-SCIP), California Proposition 65, and to address our expectations related to conflict minerals, anti-slavery and human trafficking.
Supplier management
Allegion is committed to maintaining responsible sourcing standards for supplier selection across all businesses, including to:
- Continually reduce our supplier risk profile through supplier auditing, supplier performance management, supply design development, alternate supplier identification, geographical diversification and monitoring of financial, geopolitical, economic, legal, cybersecurity and other risk categories.
- Improve visibility throughout our supply chain tiers to manage risk and supply continuity, globally.
- Educate managed suppliers and spread awareness of our policies on modern day slavery and anti-human trafficking.
We also proactively assess these factors in their standard audit process and work to reduce the risk profile of those suppliers with self-assessments that place them in a high-risk category.
Standards and milestones
Established a Sourcing Council to govern and manage supplier risk, supply continuity, and mitigating actions, 2020.
Added the cybersecurity risk metric to the supply risk management process (in addition to the financial, geopolitical, economic, material supply, and other risk categories already in place).
Added privacy impact assessments in the standard work for procurement of services that process personal data of our customers or employees.
Supplier diversity
In 2021, Allegion launched its supplier diversity program. We are making progress toward our long-term goal of a best-in-class supplier diversity program and expanding opportunities for qualified minority- and women-owned U.S. suppliers.
Standards and milestones
Established governance and a Supplier Diversity Council, chartered to make our aspirations operational, 2020.
Launched the Supplier Diversity Program in the U.S., 2021.
Board diversity
Diversity is valued in all aspects of our business. The Allegion Board of Directors takes into consideration a broad range of factors such as skills, expertise, business and leadership experience, board experience and viewpoints, including a candidate’s gender, race, ethnicity, geography and other factors that would complement the existing Board and contribute to enhancing the quality of its deliberations and decisions, recognizing that our businesses and operations are diverse and global in nature.
| Board of Directors diversity | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2022 || |
|---|---|---|---|
| Total # of directors | 8 | 9 | 9 |
| Directors, across gender, racial and ethnic diversity | 38% | 44% | 44% |
| Directors, women | 13% | 22% | 22% |
| Directors, racial or ethnic diversity | 25% | 22% | 22% |
|| Board diversity data includes nine directors, one of whom ended their term on December 31, 2022.
Employee engagement and diversity, equity and inclusion (DEI)
Allegion promotes advancement and retention of diverse talent at all levels and is actively working to build the pipeline of available, diverse talent ready for leadership opportunities. To make progress, we are intentionally focusing on expanding diversity of talent in people manager roles, and have set a target of achieving 30% global gender diversity and 20% U.S. racial and ethnic diversity by 2030.
We know that employee engagement has a direct connection to attracting and retaining talent, delivering business results and customer excellence, and we are committed to building a strengths-oriented organization where everyone has the opportunity to do their best. We aspire to be a leader in employee engagement and are striving to reach the top quartile of the overall GrandMean by 2030 (as measured by our global employee census, conducted by Gallup).
| Workforce Diversity ¶ | 2020 | 2021 | 2022 |
|---|---|---|---|
| Gender diversity, global (% of total workforce) | |||
| Senior leadership team#, women | 27% | 30% | 30% |
| Other leaders#, women | 29% | 29% | 23% |
| People managers#, women | 23% | 24% | 25% |
| Individual contributors, women | 37% | 38% | 35% |
| Global workforce, women | 36% | 36% | 34% |
| Racial and ethnic diversity (% of U.S. workforce) | |||
| Senior leadership team, racial and ethnic diversity | 0% | 10% | 0% |
| Other leaders, U.S. | |||
| People of color | 7% | 9% | 9% |
| Black/African American | 2% | 2% | 4% |
| Hispanic non-Caucasian / Latinx | 0% | 2% | 4% |
| Asian | 5% | 5% | 0% |
| Other | 0% | 0% | 0% |
| People managers, U.S. | |||
| People of color | 13% | 13% | 15% |
| Black/African American | 4% | 4% | 4% |
| Hispanic non-Caucasian / Latinx | 5% | 5% | 5% |
| Asian | 3% | 3% | 4% |
| Other | 1% | 1% | 3% |
| Individual contributors, U.S. | |||
| People of color | 35% | 36% | 35% |
| Black/African American | 19% | 18% | 18% |
| Hispanic non-Caucasian / Latinx | 7% | 8% | 9% |
| Asian | 6% | 6% | 6% |
| Other | 3% | 4% | 5% |
| All employees, U.S. | |||
| People of color | 31% | 32% | 32% |
| Black/African American | 16% | 16% | 16% |
| Hispanic non-Caucasian / Latinx | 7% | 7% | 9% |
| Asian | 5% | 5% | 5% |
| Other | 3% | 4% | 5% |
¶ Data as of Sept. 2, 2020, Sept. 2, 2021 and Dec. 31, 2022. For more information on our U.S. workforce, refer to our EEO-1 report..
# 'Senior leadership team' refers to the members of the company's management, i.e. the Executive Leadership Team (ELT). 'Other leaders' refer to those individuals reporting directly to an ELT member. 'People managers' refer to those individuals who have direct reports that they manage.
In the chart below, the blue line shows Allegion's employee engagement ranking expressed as a percentile when its engagement GrandMean is compared to that of all companies in the Gallup database for a given period. The orange line represents Allegion's engagement GrandMean compared to the subset of companies who are in the manufacturing sector. (In Gallup's percentile ranking, a higher number corresponds to higher engagement compared to others.)
Employee engagement GrandMean percentile
Progress toward 75th percentile ‡
Employee participation rate
Allegion engagement census, 2023
Standards and milestones
Employee mentoring and coaching programs are offered globally.
Annual individual performance reviews for all salaried employees.
An open feedback culture supports ongoing dialogue on performance and career development.
Employee feedback is also provided through the employee engagement census.
Governance
Allegion strives to sustain good corporate governance practices that promote the long-term interests of our shareholders, as described in our goals below.
Enterprise risk management
- Maintain Board oversight of our risk management system, including: information technology, cybersecurity, privacy, and disruptive technology matters; our ESG system and issues; and the ethics and compliance program.
- Ensure risk management strategies, programs, and policies are reviewed at least annually.
Standards and milestones
Allegion's cross-functional ESG Council was established, 2020.
The ESG Materiality Matrix, completed in 2021, is based on input from various stakeholders, including investors, customers, suppliers, architects and builders, and community partners.
The Board has an independent chair, separate from the CEO. In addition, all Board committees and committee chairs are independent.
The Board of Directors refreshment plan is reviewed, annually.
Executive leadership team succession plans are reviewed, annually.
As of April 2023, we have achieved 56% diversity across gender, racial and ethnic representation among our Board of Directors; 3 directors are women. See our Board diversity table here
The company's ESG performance will be factored into each executive leadership team member's individual performance assessment, a component of their annual incentive payouts (beginning 2023).
Participation in a number of industry sustainability initiatives to support product design and lifecycle management. See more in the Environment: Sustainable building and CDP report sections or by reviewing the Business model & innovation section of the SASB reference table.
A mature incident and crisis preparedness system is in place, led by the Incident Response Steering Committee.
The Board and its committees have oversight of our risk management system, including: information technology, cybersecurity, privacy, and disruptive technology matters; our ESG system and issues; and the ethics and compliance program.
Allegion conducts periodic enterprise risk management surveys to identify the company’s key risks and resiliency. Subject matter experts from Allegion’s executive leadership team are designated to implement risk monitoring and mitigation strategies and actions for each key risk.
Risk management strategies, programs, and policies are reviewed at least annually.
Ethics, compliance, privacy and cybersecurity management
- Annually deliver code of conduct training to salaried employees.
- Regularly deliver sexual harassment training to salaried employees, consistent with local requirements.
- Encourage all employees, contingent workforce, suppliers and other business partners to report violations of our code and provide multiple means for them to do so, including anonymous reporting in multiple languages.
- Maintain a multi-faceted and comprehensive cybersecurity training program throughout the year, that addresses the needs of all necessary personnel.
- Maintain compliance in the continuously changing environment of global privacy and cybersecurity laws and regulations.
Business ethics, compliance and political influence
Standards and milestones
Our ethics and compliance program extends to all employees, the contingent workforce, and our suppliers and business partners.
We deliver code of conduct training to all salaried employees annually (offered in 9 languages).
We deliver code of conduct training to all new hires.
We deliver harassment and discrimination awareness training to all salaried employees, biennially.
There was a low amount of corporate lobbying expenditures over the past 6 years (2017-2022), less than $150,000 annually.
The Allegion ethics helpline, supported by a third-party, is available 24 hours a day, 7 days a week, and supports 200 languages, and provides the option to report violations of our code anonymously.
For the ethics helpline, we aim to resolve all allegations / complaints in an average of 60 days or less.
We do not tolerate retaliation against anyone who asks questions or raises ethical concerns; legal protection is provided for those who report violations (whistleblowers).
No direct corporate political donations have been made over the past 6 years (2017-2022), and we do not have a political action committee.
As seen in the table below, utilization of the ethics helpline has increased by 58% over the past two years. During 2021 and 2022, we made concerted efforts to drive awareness of the ethics helpline and encourage employees to use this avenue to report suspected violations of our code of conduct. From enacting a whistleblower protection policy and executive videos to ongoing training, a 'What would you do' series, posters and an 'Ethics & Compliance Week' campaign, we reinforce the importance of speaking up.
| Ethics & compliance | 2021 | 2022 |
|---|---|---|
| Code of conduct training, completion rate (salaried employees) | 92% | 98% |
| Code of conduct training, new hire completion rate (salaried employees) | 98% | 98% |
| Harassment and discrimination awareness training, completion rate (salaried employees) | offered biennially | 96% |
| Ethics helpline, # of allegations / complaints | 26 | 41 |
| Ethics helpline, days to resolution of allegations / complaints | n/a | 86 |
Privacy
Standards and milestones
Allegion uses a digital platform to manage our Global Privacy Program to achieve compliance more quickly through automation and enhanced decision-making.
We are using privacy engineering techniques throughout our enterprise systems and our products solutions to drive GDPR and CCPA compliance.
We have integrated privacy-by-design into product development and R&D processes.
