Sustainability & Commitment to the Environment

TransDigm operates in a decentralized manner through 50 operating units with over 100 sites around the world. These operating units design and make components and small systems predominantly for aerospace and defense. The manufacturing process of these parts undertaken at our facilities involves typical manufacturing and assembly; we engage in little heavy manufacturing. We sell products primarily to original equipment manufacturers, sub-tier suppliers, distributors and end-users of aerospace and defense products. We typically rely on commercial shipping options, as opposed to company-owned vehicles, to ship our products because our customers are distributed around the world and shipping volumes tend to be small. Our Scope 1 emissions are believed to be low for these reasons.

We recognize, however, that pollution, natural resource scarcity and climate change are serious issues facing our industry. These issues require credible actions and global solutions. Therefore, the Company is adopting a more proactive approach to environmental matters. While the Company has historically embarked on activities to expand its conservation efforts, additional actions and goals must be pursued. Our approach will continue to evolve as we look for opportunities to expand and obtain more visibility into the operating units’ sustainability efforts. Specifically, we have chosen to measure our energy consumption as a baseline in fiscal 2020 and will report on it in our 2021 proxy, as well as consider goals in relation thereto. We will also report on our water usage and will consider whether goals related thereto are appropriate. We have adopted other goals with respect to specific sustainability practices as well, as further described below.
Governance related to sustainability issues

In the ordinary course of the Company’s business, productivity decisions by the various operating units incorporate sustainability initiatives. Capital expenditure budgets are approved by the Board of Directors and productivity initiatives and capital expenditures are reported to the Board of Directors regularly. Beyond that, we are considering whether sustainability and climate issues are likely to present any material risk and/or opportunity for the Company and, in conjunction therewith, the Board of Directors will consider the role of the Board in overseeing climate-related issues and the scope of that oversight.

Our assessment of sustainability risks

At present, it is not clear how the climate will change in the future or what the response from regulatory agencies or customers will be. We are beginning the process of evaluating short-, medium- and long-term risks related to climate change.

To date, we have identified “flight shaming” – by business jet or even commercial transport - as a potential risk. While it is a smaller part of our business, a decrease in business jet travel could have an impact on our business. Air passenger miles have decreased in some European countries in the last year. While there is no evidence that this is attributable to environmental activism, there is a sentiment among some analysts that this is the case. To the extent possible with our components, we work with commercial aircraft manufacturers as they work to mitigate this risk by developing more fuel efficient airplanes and planes that use alternative fuel sources. As a whole, because our manufacturing facilities primarily engage in assembly and light manufacturing and because we primarily rely on commercial shipping, our emissions primarily fall into Scope 2 and Scope 3 emissions. Accordingly, we do not anticipate any material adverse impact from increased carbon regulation. Further, because of our wide portfolio of hundreds of thousands of products and numerous suppliers, we do not anticipate any material adverse impact from the reliance on a supplier or group of suppliers which may be subject to sustainability or climate risks.

Some of our manufacturing facilities are located in regions that may be impacted by severe weather events, such as increased storm frequency or severity in the Atlantic and fires in hotter drier climates. These could result in potential damage to our physical assets as well as disruptions in manufacturing activities. Some of our manufacturing facilities are located in areas that may be at risk due to rising sea levels. Moreover, some of our manufacturing facilities are located in areas that could experience decreased access to water due to climate issues.

Our corporate-driven sustainability initiatives in 2019 and projected 2020 measurements

The Company has conducted a high level survey of our manufacturing locations practices with regarding to sustainability, climate issues and environmental, health and safety issues. While we believe we are taking several good measures for the environment, as detailed below, we believe some increased direction or corporate oversight, along with the adoption of impact goals, would be prudent. Improvements in these areas are good business and reflect our strong environmental commitment.

We have goals to increase use of energy reduction infrastructure enhancements and to increase recycling. In addition, we have adopted a corporate-wide environmental policy. The policy specifically provides, among other things, that as a company we seek to manage energy consumption, conserve water, increase energy efficiencies, and manage waste and hazardous materials.

As stated above, we recognize that pollution, natural resource scarcity and climate change are serious issues that require credible actions and global solutions. However, our greenhouse gas emissions, while believed to be low, are not consistently measured by all manufacturing facilities in the ordinary course of their businesses. Therefore, we have chosen to measure and report on our energy consumption as a baseline next year in 2021 and will consider goals in relation thereto. The Company will also report on its water usage and will consider whether goals related thereto are appropriate.

Our stewardship

We believe we are good stewards of the environment and contribute to our communities and sustainability and climate issues in several ways. Our operating units employ a variety of productivity measures that have positive sustainability impacts. These activities vary depending on several factors, including location and products manufactured. For instance, Nordisk Aviation Products obtains almost 100% of its power needs from hydropower because of its location in Norway. Some of our sites in warm climates with low humidity use evaporative cooling to cool their buildings which emits less CO2 and uses less power than air conditioners. Our decentralized structure enables our operating units to identify productivity measures that are tailored to their operations and have a positive impact on the environment. Other examples of our environmental contributions include:

Infrastructure improvements to reduce energy usage

  • Many of our facilities have replaced heating and/or air conditioning units with higher efficiency units and installed air compressor systems, as well as energy efficient manufacturing equipment.
  • Several of our facilities have also recently installed energy efficient windows, stucco coatings, improved insulation and/or programmable thermostats to reduce heating/cooling costs.
  • More than 80% of our operating units use LED lights in their facilities.
  • The majority of our business utilize motion-sensing lights to reduce energy usage.
  • Our businesses use a variety of renewable energy sources including hydropower, solar, nuclear, and wind power.
  • Other efforts to reduce energy usage include:

    o Employing shutdown procedures for portions of facilities in low occupancy or usage areas,
    o Reducing the number of work shifts;
    o Conducting energy audits to identify opportunities to reduce energy consumption,
    o Installing sky lights to reduce need for artificial light, and
    o Tinting windows to reduce cooling costs

We continuously look for opportunities to expand sustainable capacity by increasing energy efficiency and enhancing energy conservation through the incorporation of LED lighting, motion sensors, higher efficiency air conditioning units, air compressor systems, energy efficient manufacturing equipment, energy storage, and other energy reduction efforts.

Waste and water reduction efforts

  • Our businesses reduce waste through recycling. Nearly all of our operating units recycle metal. Over 80% recycle paper and cardboard. The majority of our businesses recycle plastic, used batteries, and used oil.
  • Our business use a variety of methods for managing and reducing waste streams including waste reduction programs and using more environmentally-friendly compounds in their manufacturing processes.
  • We are committed to minimizing our waste, with recent improvements including separating oil and water to eliminate oil waste, using low-phosphorus detergent to wash hardware, deploying activated carbon filtration in ventilation systems to reduce poisonous liquid and gas emission, and implementing a dust filtration system.
  • Some of our facilities have water reduction programs to aid in water conservation efforts.

Again, we intend to monitor these improvements more closely and increase our waste reduction efforts.

Our products in action

  • A number of our business units are engaged in efforts to reduce the weight of their products in order to enhance aircraft fuel efficiency.