A Focus on Materiality*

In creating this report, our goal is to address sustainability issues that have the most significant and material impact on our company’s business performance and are important to our stakeholders — in particular, our customers, employees, shareholders, local communities and the broader society in which we operate. While there are many important issues outlined by the Global Reporting Initiative (GRI), we believe that providing greater insight and transparency about the issues that are most relevant to Xylem’s business and the impact we have on the world — through relevant stories, leadership messages and videos — will enhance our stakeholders’ understanding of our business, our commitments and our progress.

In order to identify those significant issues, we collected and assessed data and other input from a variety of internal and external sources. Our internal stakeholders included key senior business and functional leaders, the Xylem Sustainability Steering Committee and our Environment, Health, Safety & Sustainability (EHS&S) team. We also relied on input from a cross-section of external stakeholders, including the investment community, NGOs, customers and partners, and community leaders. We then evaluated GRI’s G4 indicators through three different lenses — the collective stakeholder feedback, Xylem’s strategic priorities and our enterprise risk management factors — to determine both their relative impact on our business and importance to stakeholders.

This robust analysis produced 17 material issues that we have organized into five categories: Strategic Business Model, External Engagement, Environmental Stewardship, Our People, and Governance. Each material issue that we mapped onto our Materiality Matrix encompasses multiple G4 indicators, that we have listed in the chart here. The 17 material issues are:

Strategic Business Model

  • Economic Value Creation
  • Innovation
  • Sustainable Products & Services
  • Community Impact

External Engagement

  • Water Thought Leadership
  • Global & Local Citizenship

Environmental Stewardship

  • Product Materials
  • Energy Efficiency of Our Facilities
  • Climate Change Mitigation
  • Water Stewardship
  • Biodiversity
  • Packaging & Waste

Our People

  • EHS&S at Xylem
  • Talent Development
  • Global Workforce

Governance

  • Integrity & Transparency
  • Responsible Supply Chain

We will continue to collect input from internal and external stakeholders about these issues, their potential impact on Xylem’s business now and in the future and their relative importance to our business and stakeholders. If necessary, we will adjust our materiality matrix to reflect any substantive changes.

*Materiality covers aspects that reflect Xylem’s significant economic, environmental and social impacts as defined by the Global Reporting Initiative (GRI).  It does not address requirements set forth by the International Integrated Reporting Council (IIRC) or the Sustainability Accounting Standards Board (SASB).

2016 Xylem Materiality Matrix

Strategic Business Model

External Engagement

Environmental Stewardship

Our People

Governance

All Criteria and Indicators

Impact to business: Xylem analysis across (1) Strategic Priorities and (2) Enterprise Risk Management (ERM) Priorities.

Importance to stakeholders: Xylem analysis across five key stakeholder groups, (1) Customers and end users, (2) Employees (3) Shareholders, (4) Suppliers, and (5) Local Communities.

Strategic Business Model

1. Economic Value Creation

  • Xylem’s financial results
  • Strategic growth priorities, including Emerging Market growth

2. Innovation

  • Innovation in products, services and business models
  • R&D expenditures
  • R&D partnerships/collaboration
  • Essence of Life

3. Sustainable Products & Services

  • Environmental impact of Xylem’s products and services
  • Helping customers to improve the sustainability of their operations
  • Safety impact of Xylem’s products and services
  • Truth in labeling
  • Overall customer satisfaction

4. Community Impact

  • Impact of Xylem’s activities on local economy (employment, wages, infrastructure, local suppliers)

External Engagement

5. Water Thought Leadership

  • Water industry leadership
  • Forge partnerships to accelerate research and innovation
  • Advance public dialogue on water issues

6. Global & Local Citizenship

  • Engagement via Xylem Watermark
  • Other local citizenship initiatives

Environmental Stewardship

7. Product Materials

  • Materials and components for products, including recycled materials

8. Energy Efficiency of Our Facilities

  • Energy consumption
  • Energy efficiency initiatives

9. Climate Change Mitigation

  • Total greenhouse gas emissions from Xylem operations, including transportation
  • Advocacy for science-based mitigation measures

10. Water Stewardship

  • Xylem’s own water consumption and management

11. Biodiversity

  • Impact of Xylem’s activities on local biodiversity and ecosystems

12. Packaging & Waste

  • Recycling and reuse of packaging and transportation materials
  • Total waste generated by Xylem activities

Our People

13. EHS&S at Xylem

  • Occupational health and safety practices at Xylem facilities

14. Talent Development

  • Training and education for Xylem employees

15. Global Workforce

  • Foster workforce diversity, inclusive policies and equality across Xylem

Governance

16. Integrity & Transparency

  • Commitment to human rights
  • Anti-corruption policies
  • Anti-trust policies
  • Compliance with all applicable laws, regulations and ordinances

17. Responsible Supply Chain

  • Select and assess sustainable practices of top tier suppliers