Pursuing Sustainability at Johnson Controls

Pursuing Sustainability
at Johnson Controls
Case Study

This case study is one in a series
of fi ve resulting from the fi ndings
of a recent Accenture study
Driving Value from Integrated Sustainability:
High Performance Lessons from the Leaders, which
analyzed performance data of 275 global Fortune
1000 companies and examined the quantitative
and qualitative effects of sustainability strategies
and initiatives on business success. Find out more
at www.accenture.com/sustainability

Between 2001 and 2006, Johnson
Controls delivered market value
growth that outpaced the Dow Jones
Industrial Average by a factor of 25:
Dow companies realized an average
increase of 8 percent, while Johnson
Controls saw a market value increase
of more than 200 percent.
Though economic cycles and
changes in the automotive and
building industries accounted
for part of that success, Johnson
Controls’ fundamental business
strategies—which have long included
a commitment to sustainability—had
undoubtedly driven signifi cant growth.
Because of its technological focus,
Johnson Controls, which provides energyeffi
cient equipment, control systems
and energy services to the building
construction and operations industry,
and products such as seats and batteries
to the automotive industry, was naturally
steeped in such “green” disciplines as
energy savings, weight reduction of
its products and effi cient use of power.
Indeed, the company was promoting
the benefi ts of what is now referred
to as “sustainability” decades before
the trend was even acknowledged by
mainstream industries. But as the rest
of the world began to catch up in the
early 2000s, the company faced the
possibility that its lead could erode
if it wasn’t further developed and
leveraged.
By 2006, investing in sustainability
had become an imperative for many
organizations; energy prices were
spiking, prompting companies to invest
in energy effi ciency across their
operations. The green building boom
was beginning, and the demand for
products and services like those offered
by Johnson Controls was increasing.
In addition, Johnson Controls’ customers
were beginning to express a preference
for companies that valued diversity
among their suppliers—a signifi cant
emphasis at Johnson Controls.
Company leadership acknowledged
the need to stay out in front of the
emerging green opportunities. “In 2006,
our mission—to continuously exceed
customers’ increasing expectations—
was focused on engaging with our
stakeholders and providing them with a
unique experience,” says Chuck Harvey,
vice president of Diversity and Public
Affairs. But Harvey and others felt this
mission might prove “a bit too narrow in
terms of where the future was headed.”
In 2007, soon after naming Stephen Roell
CEO, the company embarked on a
thorough reexamination of its mission
and strategy. Tim Lafond, executive
director of Environmental Engineering
and Risk Management, Power Solutions,
recalls, “There was a rebirth process.
The new leadership agreed that we
had to change. The world had changed.
2

We realized our evolving customer
base and new dependencies required
a different level of engagement by
the entire team.” The result was a
new vision for continued growth,
based on the ideals of sustainable
development: “Creating a more
comfortable, safe and sustainable
world.”
Consequently, Johnson Controls
incorporated sustainability into
its set of core values and began
cascading that new focus throughout
the company’s diverse business units,
functions and geographic locations.
The company quickly began executing
its sustainability strategy by leveraging
the best aspects of centralized
oversight and decentralized autonomy.
Specifi cally, Johnson Controls took
three signifi cant organizational
actions: It made employees in its
Milwaukee headquarters accountable
for internal reporting and external
communications of sustainability
progress; it established a governance
board, which eventually became the
Global Environmental Sustainability
Council in November 2008, to set
and drive sustainability strategy
for the company; and it placed fi nal
accountability for achieving its
sustainability goals in the hands of
its three business-unit leads. (See the
sidebar “The Global Environmental
Sustainability Council.”)
Johnson Controls’ range of sustainability
efforts map very clearly to Accenture’s
proven high-performance business
model. As defi ned by Accenture, a highperformance
business demonstrates
quantitative superiority along fi ve
key dimensions:
Growth—as measured by
revenue expansion
Profi tability—as measured by
the spread between the return
on capital and the cost of capital
Positioning for the future—
as represented by the portion
of share price not explained by
current earnings (what Accenture
3
calls “future value”) and by the
portion of the industry total a
company’s future value represents
Consistency—as measured by the
number of years (out of seven) the peer
set median in profi tability, growth and
positioning for the future was beaten
Longevity—as measured by the
duration of out-performance in
total return to shareholders
Following a brief overview of
Johnson Controls’ history, this case
will examine how the company’s
sustainability initiatives have performed
along these fi ve dimensions of highperformance
business.
Company history
Founded in 1885 by Warren Johnson,
a Wisconsin professor with a fl air
for mechanical and electric controls,
the company now known as Johnson
Controls pioneered the building control
industry. With a patent for the fi rst
electric room thermostat and a willing
group of Milwaukee investors, Johnson
established a company to manufacture,
install and service automatic
temperature regulation systems
for buildings.
Throughout the twentieth century the
company kept pace with innovative
control technologies, developing products
aimed at helping clients more effi ciently
manage increasingly larger and more
complex facilities and environments.
In the 1950s, the company introduced
its Pneumatic Control Center, enabling
building operators to monitor and
operate all of a facility’s various
temperature control devices from a
single location. By 1965 the company
was listed on the New York Stock
Exchange, and in 1968 it became
a Fortune 500 company.
The company is decentralized, with three
separate business units: Automotive
Experience, which includes seating
manufacture and other interior
components such as mirrors, headliners
and door trims; Building Effi ciency,
which provides products and services
to manage comfort, energy, safety and
security in buildings; Power Solutions,
which includes the automotive battery
and energy storage group. 1 The company
reported 2008 sales of $38 billion:
Automotive Experience sales were
$18.1 billion, Building Effi ciency
$14.1 billion and Power Solutions
$5.8 billion. 2 The company employs
approximately 140,000 employees
worldwide across more than
1,300 locations.
Innovations are a continuing hallmark
of the company’s growth. In 1972
Johnson Controls introduced the fi rst
minicomputer designed to control
building systems. This minicomputer
became the precursor for the Metasys
Facilities Management System—an
industry-wide breakthrough—launched
in the 1990s. Acquisitions from the
1960s into the twenty-fi rst century have
expanded the company’s product and
service offerings as well: Penn Control,
acquired in 1968, added refrigeration
and gas heating control; Globe Union,
acquired in 1978, put Johnson Controls
in the battery business; Hoover Universal,
a 1985 acquisition, formed the core
of the company’s automotive seating
and plastics machinery businesses;
and Pan Am World Services, acquired in
1989, marked the company’s entry into
the facilities management business.
Continued acquisitions in the global
automotive seating and interior supply
markets secured the company a
leadership position in the industry.
The company’s acquisitions of
Cardkey integrated security solutions
(1998), and York International (2005),
a global supplier of heating,
ventilation, air-conditioning and
refrigeration equipment and services,
solidifi ed Johnson Controls’ position
as a global leader in the buildingeffi
ciency market as well.
Over Johnson Controls’ century of
growth and evolution, attention to
sustainability and diversity had become
integral elements of the company’s
identity. In 1996, the company was
recognized by IndustryWeek as one

of the “100 Best-Managed Companies
in the World,” and in 1999 it won the
Nelson Mandela International Award
for Enhancing Diversity Practice as
well as General Motors’ “Corporation
of the Year” award. In 2004,
Johnson Controls received the World
Environment Center’s Gold Medal for
International Corporate Achievement
in Sustainable Development.
In 2008, Citigroup named Johnson
Controls one of 12 companies most
likely to be able to continue to prosper
in a climate-constrained world. The
company is listed on many sustainability
indices, including the Dow Jones
Sustainability World Index and the
FTSE4Good Index Series.
With a commitment to sustainability
embedded in its new vision, Johnson
Controls is clear about its priorities:
“Our commitment to sustainability
drives our environmental stewardship,
good corporate citizenship in our
workplaces and communities, and
the products and services we provide
to customers.” 3
Growth
Johnson Controls leverages its
sustainability strategy to drive
business growth by providing the
right sustainability services at the
right time; aligning its sustainability
offerings with its desired sales
outcomes; participating in a variety
of associations; and bringing new,
energy-effi cient products to market.
Providing the right sustainability
services at the right time
Johnson Controls’ Building Effi ciency
business provides mechanical equipment
and systems that control heating,
ventilating, air-conditioning (HVAC),
lighting, security and fi re management
in nonresidential buildings, as well
as services to monitor these systems.
Increased market interest in improving
building effi ciency—for both energy and
cost savings—has been a great boon to
this business, and Johnson Controls is
well positioned to provide services to
the US Government and to companies
seeking ways to green their buildings.
Indeed, Johnson Controls was recently
awarded two federal contracts that
could result in more than $5 billion
in revenue over the next fi ve years. 4
Aligning sustainability offerings with
desired sales outcomes
The company’s concentrated expertise
and service offerings make it possible
to provide customers with integrated
solutions across a broad spectrum.
“Most organizations must go to
different sources to get services
to measure, manage and improve
the energy effi ciency of their built
environment,” says Iain Campbell,
vice president of North America
Service and Global Workplace
Solutions. “What we can do is help
them with ways to reduce demandside
energy consumption. We can
execute those projects and guarantee
outcomes.” Johnson Controls’ end-toend
execution capability means Fortune
500 customers can rely on them to put
programs in place across diverse global
facilities footprints—everything from
providing greenhouse gas tracking
tools and construction services, to
retrofi tting buildings, to guiding clients
on decisions about renewable energy.
“Our clients don’t have to go and fi nd
different providers in different countries
around the world,” says Campbell.
“Johnson Controls can provide the full
complement of products and services
they need to achieve state-of-theindustry
effi ciencies in their facilities.”
Participating in a variety
of associations
A growing awareness of the role
that a variety of entities, ranging
from trade associations to nongovernmental
organizations
(NGOs), are playing in shaping the
sustainability landscape has prompted
Johnson Controls to commit resources
and personnel to forming strong
relationships with these groups.
The company seeks to help shape
industry standards and policy
4

5
through participation in these types
of associations. Indeed, the company’s
very early participation in the Clinton
Climate Initiative as well as its
participation in the Carbon Disclosure
Project’s Supply Chain Leadership
Collaboration has led to several
important business opportunities.
In 2003, Johnson Controls became a
member of the Billion Dollar Roundtable,
an organization created in 2001 to
recognize companies that annually
spend at least $1 billion with minority-
and woman-owned suppliers. The
organization, which has 15 members
ranging from AT&T to Wal-Mart,
encourages US corporations to grow
their supplier diversity programs by
increasing commitment and spending
levels each year. Johnson Controls
purchases goods and services from
more than 1,000 diverse suppliers
and, from 2003 to 2008, had increased
its spending on diverse suppliers by 70
percent. “We’ve grown our companywide
supplier spending to $1.7 billion,”
says Mike Bartschat, group vice president
and general manager of Global
Purchasing. “We do it because it’s
good for society and for all minorities,
because our customers are interested
in our having more minority sourcing
and because it helps us potentially
sell more goods and services. It’s a
win-win situation.” Harvey agrees:
“It has been a great value proposition
for us. It distinguishes us from our
competition. It’s an opportunity to
add additional revenue and to be
considered socially responsible for
trying to broaden the actual pool of
opportunity versus just engage in a
market share fi ght.”
Joining the Billion Dollar Roundtable
has also enhanced Johnson Controls’
reputation as an inclusive employer.
“Often we hear people say they want
to be a part of our organization
because they’ve heard we have an
inclusive atmosphere,” says Harvey.
“That’s very much a part of what we
think is a sustainable environment.
If you can attract the best talent that
want to come to work and be a part
of what you’re trying to accomplish,
these are differentiators.”
Bringing new, energy-effi cient
solutions to market
Pressure from both customers and
government regulators has pushed
Johnson Controls and its competitors
to continuously reduce the weight of
their automotive products. Innovating
with these increasing restrictions in
mind has led to new opportunities
for Johnson Controls. Charlie Baker,
group vice president of Engineering,
Automotive Experience, explains:
“We recently won new business with
one of the preeminent Japanese auto
manufacturers to make their seats.
This company has an in-house seating
company, which traditionally had a
large advantage over outside seating
vendors. But the bottom line comes
down to cost and technology. We are
able to make a lighter-weight and
more cost-effi cient product because
we relentlessly focus on both cost
and weight in the seat manufacture
process. When we hear we have an
advantage over our closest competition
here, we can say it’s not only the right
thing to do for sustainability but also
the right thing for the business.”
The company’s ability to bring new,
energy-effi cient products to market has
allowed Johnson Controls to earn wins
in the automotive battery business as
well. The company recognized early
on that lithium ion battery sales would
likely grow exponentially as automakers
strove to increase their products’ fuel
effi ciency. As Lafond says, “The car of
the future will have a lead acid battery,
but it will also have a lithium ion battery.
That means we’ll have 100 percent more
product opportunity in every vehicle.”
Rather than waiting for its own
technology to be ready to go to
market, the company saw that an
early partnership with Saft, a global
leader in advanced technology
batteries, would allow it quicker entry
into the lithium ion market. The Saft

Johnson Controls is leveraging its sustainability strategy
to drive profi tability through actively promoting leadbattery
recycling and through employing sustainability
as a platform to encourage cross-unit collaboration.
Both actions are leading to shared best practices
and lower costs.
partnership is clearly paying dividends.
In February 2009, Ford Motor Company
awarded a fi ve-year contract to the
Johnson Controls-Saft joint venture
to supply the complete battery system
for Ford’s fi rst plug-in hybrid electric
vehicle, slated for launch in 2012. 5
Partnerships in other areas have offered
similar rewards. “We’ve always been
very open to working with partners,”
Campbell notes, “particularly on
the technology side of our business.”
In some of its largest energy retrofi t
projects, for example, Johnson
Controls does not actually install any
of its own products. “We’re open to
using the best available technology
that’s cost-effective,” he adds. “We
will often work at very early stages
with new technology to do pilots
and test solutions in real commercial
building environments. We can then
make sure the technology is proven
and reliable. That’s important since
we guarantee the cost savings. Once
proven, we can bring that technology
into the buildings and the market. At
one point, we were the largest lighting
contractor in the country, and we
don’t even make lightbulbs. But since
we install a lot of lightbulbs, we
have partnerships with the leading
technology providers in this space.”
Profi tability
Johnson Controls is leveraging
its sustainability strategy to drive
profi tability through actively
promoting lead-battery recycling
and through employing sustainability
as a platform to encourage crossunit
collaboration. Both actions are
leading to shared best practices and
lower costs.
Actively promoting
lead-battery recycling
In the lead acid battery business,
participation in recycling efforts isn’t
just good for the environment; it can
also drive down the price of lead acid.
“There are fi nancial benefi ts not just
to selling the batteries but also to
getting the used lead acid batteries
back,” says Lafond. “Since lead is a
non-degradable material, we wanted
to make sure that used batteries came
back to us.” The company partnered
with big-box retailers such as Wal-Mart,
Sears and Kmart, offering incentives to
encourage consumers to return their
old batteries when they came to these
stores to purchase new ones. Johnson
Controls estimates that the incentive
program has saved as much as $500
per ton of lead by using recycled
material from used batteries instead
of buying and converting virgin lead.
6

The savings go beyond the cost of raw
materials. The same truck that delivers
the new batteries also picks up the
old batteries, so no extra transportation
costs are incurred. Additionally, the
truck drivers are trained in transporting
hazardous materials, so the liability
of handling these hazardous materials
is not extended to other parties.
By relying on recycled lead, the
company also contributes to more
environmentally sound practices for
sourcing lead. Less mining and less
smelting means fewer greenhouse
gas emissions—a desirable virtuous
cycle of materials usage.
Employing sustainability as a
platform to encourage crossbusiness
unit participation
For Johnson Controls, the sustainability
drive has been a true ‘game changing’
phenomenon. “Sustainability is a
platform all three of our businesses
can collaborate on,” says Lafond.
Early on the company discovered
that managing its own resources
in sustainable ways could reduce
costs and drive more effi cient use
of company resources.
For example, a close analysis of how
to manage energy resources more
effectively across its own buildings
led to cost savings across its global
enterprise. Discoveries such as these
are now aggressively and systematically
shared among business units. This
focus often allows Johnson Controls
to serve as its own “beta site.” The
Building Effi ciency business manages
these projects on a global basis to
meet those goals. “We work to get
the reductions, track, measure, verify
and report on our own buildings. And
those are the exact same services that we
provide to our customers,” Clay Nesler,
vice president of Global Energy and
Sustainability in the Building Effi ciency
unit, explains. Collaboration across
the three units has led to a standard
procedure whereby the Building
Effi ciency group assists the other units
in their internal sustainability efforts,
leading to signifi cant operating cost
reductions.
7
Positioning for the future
Johnson Controls is using its
sustainability strategy to earn a
leadership position in the world’s
efforts to move to a low-carbon
economy. Specifi cally, the company
has developed a relationship with the
Chinese government to assist China
in its efforts to develop its own lead
battery recycling approach. In other
efforts, Johnson Controls is working
alongside its peers to infl uence the
emerging environmental regulations
in the United States and abroad.
Assisting China
In December 2008, Johnson Controls
announced plans to invest $90 million
to build a lead acid battery production
facility in China. This investment further
strengthens Johnson Controls’ growing
relationship with China. Opportunities
there stem from the Chinese
government’s interest in the United
States’ efforts to recycle lead acid
batteries. “The Chinese are absolutely
in love with, and exploding their use
of, the automobile,” explains Lafond.
“And their government is very interested
in our recycling expertise.”
In the summer of 2007, Johnson
Controls gave several Chinese offi cials
a ten-day tour of the company’s lead
acid battery recycling operations in
the United States. The tour came
about because China does not have
a centralized collection system for
recycling; instead, used lead batteries
are collected by dispersed mom-and-pop
operations. These batteries are then
cut open, the acid dumped, the lead
extracted to smelt—typically on the
spot in small amounts—and then
sold. Lafond says: “China has a huge
lead-pollution problem. They see
our performance and say, ‘You are a
company we can use as a benchmark
to make sure that we are on a level
playing fi eld with the rest of the
world.’”
Construction of the Johnson
Controls lead acid battery plant,
located in China’s green-power
energy industrial center in the
Zhejiang province, began in January
2009 and is expected to have an
annual production capacity of four
million automotive batteries. The
batteries will be manufactured using
Johnson Controls’ PowerFrame
grid technology. Used for making
the batteries’ positive metal grids,
PowerFrame reduces pollutant
emissions, improves the quality and
performance of the batteries, cuts
lead emissions and consumes 20
percent to 30 percent less energy
than similar manufacturing processes.
Infl uencing emerging
environmental regulations
Johnson Controls is also playing a
signifi cant role in infl uencing the
direction of future regulations in the
US and abroad. “When it comes to
government regulation,” warns Baker,
“if you don’t invite yourself to lunch,
you risk being on the menu. We
need to make sure that the policies
considered are reasonable, that they
are a good value, that they are right
for society. And then we can absolutely
craft a business around that.”
The company’s involvement in the early
infrastructure of China’s battery-industry
recycling efforts has highlighted its
expertise in these critical areas, and
encouraged its increased involvement
in both US and international trade
associations and policy councils. As
one Johnson Controls executive says,
“We’re encouraging regulation both
because it’s the right thing to do and
because it will accelerate what we’re
doing already.”
In February 2009, for example,
Campbell testifi ed before Congress
at a House Subcommittee on
Energy and Environment hearing
to share Johnson Controls’ views
on energy effi ciency. Campbell also
made a host of recommendations
to the subcommittee, including the
suggestion of recruiting and training
workers to improve energy effi ciency
within buildings and adopting an
Energy Effi ciency Resource Standard.
“Johnson Controls supports a

comprehensive federal policy approach
to reducing global climate risks,”
Campbell said at the hearing. “We
strongly believe in the need to increase
the nation’s focus and investment in
energy effi ciency. Energy effi ciency
should be the fi rst priority in addressing
climate change as a way of containing
the cost of climate protection policies
and creating new jobs.”
Consistency
Johnson Controls is using its
sustainability strategy to consistently
outperform its peers through three
traditional approaches: by earning
the support of institutional investors,
by managing its risk exposure to
sustainability-related performance
surprises, and by regularly measuring
and managing its sustainability
initiatives.
Earning the support of
institutional investors
The company is dedicated to
increasing the percent of its stock
held by sustainability-conscious
institutional investors. Because they
tend to have a longer time horizon,
these types of investors also add
much-desired stability to Johnson
Control’s market value. The company
has dedicated resources to ensure
that Johnson Controls appears on
numerous sustainability-focused
stock indexes. Mark Chatelain, senior
environmental safety, health and
sustainability adviser and chair of the
Global Environmental Sustainability
Council, explains:
“A stronger rating with the social
responsibility indices and other
institutional investors gives us an idea
about how well we’re communicating
to the public and to our stakeholders.
If you are on these lists, it doesn’t mean
you’re great, but it benchmarks you
with respect to other corporations.
We become attractive to some of
the larger pension funds rather than
day traders, and we therefore have a
bigger stockholder base that’s more
engaged and longer term, which
helps stabilize the volatility inherent
to the market.”
Managing risk exposure
to sustainability-related
performance surprises
Johnson Controls actively engages
with NGOs as a demonstration of the
company’s commitment to operating
transparently. Along with the
opportunity to infl uence local policy,
engaging with NGOs and professional/
trade organizations enables the
company to gain access to knowledge
of potential risks throughout their
operations.
When Johnson Controls wanted to
learn more about the role sustainability
played in its lines of business, the
company engaged with business
associations and policy councils. The
fi rst and most infl uential of these was
the Interfaith Center for Corporate
Responsibility (ICCR). Chatelain
acknowledges that some at Johnson
Controls were skeptical at fi rst: “We
were nervous about the interaction,
and not sure of the advantages.”
Chatelain continues: “But once the
ICCR explained their agenda and we
communicated ours, we all began to
understand the value of routine dialogue.
It opened our eyes to their concerns,
and provided [to us] a completely
different perspective about some of our
activities, such as managing our supply
chain. We now understand the value
of ongoing dialogues with the ICCR;
we talk with the ICCR several times
a year.” The company requests and
reviews ICCR feedback and uses it
to improve the transparency of its
sustainability reporting.
8

Regularly measuring and managing
sustainability initiatives
Johnson Controls has publicly committed
to reducing its greenhouse gases by
30 percent per dollar of revenue from
2002 to 2012. Regular board reviews
and quarterly progress reports to the
CEO speak to the high priority and
visibility this commitment receives.
The pursuit of this target requires
continual cooperation among the
company’s business units to devise
ways to effectively reach this goal.
Encouraging the business units to
collaborate has increased both the level
and the pace of emission reductions. For
example, a company-wide perspective
allows facility managers to learn from
one another and to implement upgrades
simultaneously rather than in stages.
Nesler explains: “Taking a programmatic
approach to improvements in our
facilities and plants is a best practice
for us. Instead of waiting for individual
projects to bubble up, get approval and
9
funding, we collect a number of energyeffi
ciency projects across an entire
business. We get approval to do lighting
retrofi ts in all of our plants rather than
waiting for approval at each individual
plant level. This allows us to make very
signifi cant reductions and since they
are large investments they get attention
and approval from senior leadership.”
Gaining expertise in cross-facility
coordination has subsequently helped
Johnson Controls provide improved
building effi ciency guidance to its many
global Fortune 100 customers as well.
The Global Environmental
Sustainability Council
Johnson Controls develops and maintains
environmental sustainability strategy
through its Global Environmental
Sustainability Council. Chaired by
Mark Chatelain, senior environmental
safety, health and sustainability adviser
at Johnson Controls, the Global
Environmental Sustainability Council
has four responsibilities:
Figure 1. Sustainability strategy development and execution at Johnson Controls
Automotive
Experience
Building
Effi ciency
Power
Solutions
Corporate
Global Environmental
Sustainability Council
• Owned operations
• Environmental sustainability
strategy development
• Development and
maintenance of sustainability
progress tracking standards
• Stakeholder relations
• Internal communication
of environmental
sustainability strategy
and progress
Executive Operating Team
Global Purchasing
Council
• Non-owned operations
• Development and
maintenance of supplier
code of conduct
• Share best practices
with suppliers
• Supplier auditing and
remediation
• Develop supplier diversity
• Support continued recognition by
stakeholders (employees, shareholders,
NGOs, communities) of the Company’s
leadership in environmental
sustainability as measured by progress
towards achievement of the “Ten-
Year Markers”—a series of eight
vision statements outlining what
success would look like in ten years;
• Work with the Presidents to
assure that plans are in place and
organizational owners identifi ed to
achieve environmental sustainability
goals and commitments;
• Support the development of crossbusiness
policies, plans and platforms
to support environmental sustainability
performance measurement, tracking,
reporting and project execution;
• Take a leadership role in promoting
environmental sustainability as a
core value and driver of innovation
and continuous improvement across
the company.
• Execution
• Innovation
• Execution
• Innovation
• Execution
• Innovation
• Social Investments
• Sustainability Reporting
• Stakeholder Relations

The Global Environmental
Sustainability Council, which meets
monthly, was formed to ensure that
Johnson Controls’ environmental
sustainability efforts benefi t from
regular senior leadership oversight of
goals and progress. To this point, the
Global Environmental Sustainability
Council reports to Johnson Controls’
executive operating team, which
consists of the company’s CEO,
corporate offi cers and business
presidents. (See Figure 1.)
The Global Environmental Sustainability
Council brings together representatives
from all three of Johnson Controls’
business units as well as employees from
Johnson Controls’ corporate team to
develop and manage the company’s
environmental sustainability efforts
throughout its owned operations. The
company also has another council called
the Global Purchasing Council, which
focuses on enhancing suppliers’ business
performance and sustainability efforts.
To ensure that environmental
sustainability receives the right
amount of corporate attention, the
Global Environmental Sustainability
Council focuses on shaping and
maintaining the company’s
environmental sustainability
strategy. Johnson Controls’ business
units are responsible for executing
the sustainability strategy, while
the Public Affairs team, based in the
corporate offi ce, focuses on Johnson
Controls’ social efforts and sustainability
progress tracking and reporting. The
business units and the corporate
offi ce share responsibility for external
stakeholder relations, including the
company’s relationships with prominent
NGOs, such as the Interfaith Center on
Corporate Responsibility.
The Global Environmental
Sustainability Council consists of
four subcommittees, each geared
toward a component of the Global
Environmental Sustainability Council’s
charter and meeting at least once a
month:
Environmental Scorecard
and Project Tracking
• Coordinate development and
implementation of environmental
footprint metrics, goals/targets,
policies, and platforms to support
implementation of a company-wide
environmental scorecard;
• Support identifi cation, execution
and tracking of projects and
programs to achieve environmental
footprint sustainability goals
through innovation, continuous
improvement and sharing of best
business practices.
Design for Sustainability
• Develop and implement enhancements
to Johnson Controls’ plus development
process to incorporate the question
of sustainability. Specifi cally we will
deliver:
– A set of sustainability metrics
that are relevant to the product
and process development activity
of the three businesses;
– An approach to leverage these
metrics, evaluate and understand
the impact on the project;
– A process to bring visibility to
the trade-offs for management
awareness, direction and sign-off.
Environmental Compliance
• Ensure environmental sustainability
related systems (metrics, data
gathering, strategic plans, policies,
programs, resources, oversight/audit,
goals, etc.) are in place to minimize
risk and drive continuous improvement
company-wide.
Public Affairs
• Support continued recognition
by stakeholders of the Company’s
leadership in environmental
sustainability. Create tools
to enable more effi cient and
effective communication of our
environmental sustainability efforts
both internally and externally.
10

The company’s sustainability leadership
is also exemplifi ed in its continuous
“tweaking” of ongoing initiatives,
according to Chatelain. For example,
communication about the company’s
sustainability and human rights
activities has benefi ted from constant
improvement efforts. Johnson Controls
regularly produced an environmental
and safety report “but not in a
lingo that others understood,” says
Chatelain. The report was subsequently
transformed into a sustainability
report, and when the Global Reporting
Initiative Guidelines were released,
the company adapted its reports
further. Chatelain explains how
company leaders changed their
approach:
“We have a culture where we really take
pride in doing the right things, but we
learned that we often weren’t taking a
leadership role; we tended to wait to
hear from our customers. When we
became a Fortune 100 company [in
2003], we realized we had to get more
involved. So we joined environmental
groups such as the EPA’s Climate Leaders,
the Global Environmental Management
Initiative and the Business Roundtable’s
Climate RESOLVE, to name a few. Our
participation in these groups gives us
ideas on best practices and has helped
us to understand the importance of
being more transparent. We realized
we have a responsibility to set an
example and now have some infl uence
to impact things as well as communicate
to our stakeholders what we’re doing
on many different sustainability fronts.”
Longevity
Johnson Controls’ approach to longterm
success integrates all of the
above experiences and subsequent
improvements. It involves integrating
sustainability into its overall strategy,
embedding sustainability into the
fabric of the company’s daily activities,
and incorporating sustainability into
all talent management activities.
11
Integrating sustainability into
the company’s overall strategy
When the fi rm retooled its vision
in 2007, it developed what it called
“Ten-Year Markers”—a series of eight
vision statements outlining what
success would look like in ten years.
The company identifi ed these eight
markers in order to focus and drive
the business. Sustainability, one of the
markers, is identifi ed as a key driver
of investment and growth. “This focus
[on sustainability] has been cascaded
throughout the organization by all
company leaders in various parts of the
world,” says Harvey. “We make sure that
the other markers and sustainability
become central to how we put together
our strategic plans going forward.”
These objectives and measures are part
of the fi rm’s operational reviews and
are aligned with how the organization
recruits and retains employees as well.
“It has been a monumental effort to
look at ourselves through the lens of
creating a more comfortable, safe and
sustainable world and to understand
how we have to change as an
organization,” notes Harvey.
Embedding sustainability
into daily company activities
Johnson Controls executes sustainability
initiatives across the organization
by embedding responsibility for it
throughout the enterprise. As Baker
puts it, “Sustainability has to be part
of your day-to-day strategy.” Across
the three business units, the approach
to cost, effi ciencies, innovation and
growth all include sustainability as
a core element—not an ancillary.
“It’s dangerous to just attend to
sustainability on Thursdays at 1 p.m.,”
Baker says. “I don’t like to separate
it out as a sustainability strategy
because it’s risky to leave it out there
[especially during a downturn] and not
integrated into the fabric of how the
company lives and breathes.”
The company faces a continuous
challenge in the trade-off between
using the most cost-effi cient versus
the most environmentally conscious
materials. But as an example of how
embedded sustainability is within daily
business decisions, Johnson Controls
is steadfastly committed to striking
the right balance between innovation,
sustainability and cost-effective
manufacturing. “There is a cost tradeoff
in terms of the use of natural
materials,” Baker explains. “You have
to fi nd those customers who are willing
to make a cost trade-off in order to
market the product and leverage the
green aspects of it, and give them the
opportunity to say they’re the green
customers and that they’re leading in
implementation of natural materials.”
Incorporating sustainability into
talent management activities
Sustainability, fi nally, plays an
important role in the company’s talent
management strategies. Specifi cally,
the fi rm leverages its commitment to
sustainability in its recruiting, training,
engagement and retention efforts.
As Harvey says, “Candidates for
employment have heard we have a
great culture and that we are socially
responsible, in addition to being a
great place to work. They want to be
part of an organization that’s focused
on improving the environment. This
is a decision point for them.” Lafond
elaborates: “When we recruit people,
we’re using green-collar, sustainability
language and incentives to say,
‘Come join us. This is what we are
doing. We’re going to build the hybrid
battery of the car of the future.’ That
helps us attract the best talent. They
want to work here and be a part of
what we’re all trying to accomplish.”
With signifi cant demand for energy
engineers, mechanical technicians and
electronics and computer technicians,
Nesler notes, “we continue to talk
about and promote our sustainability
initiatives to help those people fi nd us.”

Interest in sustainability among
newly minted MBAs has aided
Johnson Controls’ retention efforts.
“The next generation is looking for an
employer that really walks the talk in
the area of sustainability,” says Mike
Bartschat, group vice president of
Global Purchasing for the Automotive
Experience business. “It helps us get
these high-potential prospective
employees interested in our company.
And it also helps us retain them
once they see the extent of Johnson
Controls’ investments and efforts.”
The company invests in employee
training to embed the fi rm’s approach
to sustainability into the business
culture across units. An online
sustainable energy and environmental
communications program, was
developed for internal employee
education and communications.
Interested Johnson Control employees
take an online self-test, review the
course material, and then take another
test to measure what they’ve learned.
“And that helps to grow and maintain
awareness,” says Nesler.
In 2008, as part of the company’s
Vision Week, Johnson Controls created
and distributed an online card game
called the “Personal Sustainability
Navigator” to employees across the
globe. The game’s focus was to increase
employees’ adoption of sustainability
practices at home and work. It
detailed 30 best practices that people
could implement to reduce their
environmental footprint. The game
was translated into 20 languages,
with more than 100,000 sets of
cards distributed to employees
around the world.
Indeed, with 140,000 employees across
the globe, Johnson Controls recognizes
the opportunity to have a greater
impact on sustainability practices
beyond its own operations—taking
its approach out into the homes and
communities of its workers and their
families. It tries to help employees
transfer and apply their awareness,
expanding the company’s infl uence
and improving relationships within
the communities in which it operates.
Examples of these activities include
the Blue Sky Involve program, the
Conservation Leadership Corps
program and the Igniting Creative
Energy program.
The Blue Sky Involve program, Johnson
Controls’ global employee volunteer
program, provides employees around
the world with the opportunity to
participate in philanthropic projects
and provides $1,000 grants directly to
the nonprofi t partner organizations. 6
Blue Sky Involve started in 2006 with
150 locations worldwide. Jennifer
Mattes, the director of Global Public
Affairs, says, “Last year we set forth
the challenge to have over 500
participants, which we exceeded.
Each of those entities will have
employees volunteering, so in total
we’ll have about 13,000 employees
and over 110,000 hours dedicated
to local community initiatives.”
Conservation Leadership Corps,
part of the fi rm’s global philanthropy
program, provides opportunities
for young people to learn about
sustainability by working in parks
or public natural spaces to make
them more sustainable. As Mattes
says, “Conservation Leadership Corps
is a program that synthesizes our
values of environmental stewardship,
leadership development and
inclusion.” Conservation Leadership
Corps was launched in Milwaukee
in 2006 and expanded to Baltimore
in 2007 and Detroit in 2008. “We
believe that Conservation Leadership
Corps provides a service to these cities
because the projects would otherwise
not happen due to local budget cuts,”
says Mattes.
Every year, employees from the
Building Effi ciency business run the
Igniting Creative Energy program,
where students in grade school
through high school are encouraged
to do science projects that enrich their
understanding of energy conservation
and the environment. The company
chooses one winner per state, and
local employees then partner with
the winner’s school to do a followon
project with the students, often a
volunteer project run through Johnson
Controls’ Blue Sky Involve program.
“Our employees look to extend the
relationship through volunteering
because the school system sees the
added value that they’re getting
from Johnson Controls’ expertise as
a leader in sustainability,” explains
Mattes. “Our employees are working
with those schools to help educate
students about sustainability and
energy effi ciency and what they can
do at home. And the kids are going
home to their parents and telling
them about what they learned from
Johnson Controls that day.”
Harvey explains the benefi ts of
programs like Blue Sky, Conservation
Leadership Corps and Igniting Creative
Energy: “Employee volunteering can
help manage and improve customer
relations in those areas and certainly
within the communities that we
already have a presence in and in
communities where we want to
grow our business. Collectively,this
involvement demonstrates that we
are a valuable partner.”
Campbell agrees: “Environmental
and social responsibility are key parts
of the value proposition we take to
our client base, and we really do view
that as a differentiator for us in today’s
marketplace.”
12

Further Reading
Accenture Sustainability Services recently
teamed up with the Accenture Institute for High
Performance Business to analyze performance
data of 275 global Fortune 1000 companies and
examine the quantitative and qualitative effects of
sustainability strategies and initiatives on business
success. Five companies were selected for greater
scrutiny; Diageo, Hewlett-Packard, Iberdrola,
Johnson Controls, and J.P. Morgan. This case
study is one of fi ve resulting from the fi ndings.
The goal of the research was to; identify
sustainability leaders, better understand the
actions they have taken to integrate sustainability
across their operations and to draw conclusions
that can help other organizations derive
optimal value from an integrated approach
to sustainability.
13
Driving Value from
Integrated Sustainability
High Performance Lessons
from the Leaders
The research report Driving Value from Integrated
Sustainability: High Performance Lessons from
the Leaders provides tangible lessons of how
leaders are managing the complexity that prevents
many of their peers from gaining traction in the
area of sustainability. These lessons—valuable in
their own right—have infl uenced the development
of the Accenture Sustainability Framework, which
helps companies in various industries integrate
sustainability across their organizations
and accelerate the delivery of sustainable
and long-lasting value. Find out more at
www.accenture.com/sustainability

Notes
1. Johnson Controls Fact Sheet, http://
www.johnsoncontrols.com/publish/etc/
medialib/jci/corporate/investors.Par.
69333.File.dat/fact_sheet.pdf, accessed
February 11, 2009.
2. Ibid.
3. Ibid.
4. “Johnson Controls Addressing
Energy Effi ciency, Renewable Energy,
and Water Conservation at Federal
Facilities,” http://www.bdcnetwork.
com/article/CA6643869.html (accessed
April 14, 2009).
5. Ford Motor Company, “Ford Motor
Company Awards Johnson Controls-Saft
the Battery Contract for Its First Plug-In
Hybrid Electric Vehicle,” press release,
February 3, 2009.
6. Johnson Controls, “The Sky’s the
Limit,” http://www.johnsoncontrols.
com/publish/us/en/sustainability/
working_towards_a/the_sky_s_the_
limit.html (accessed April 14, 2009).
14

About Accenture
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Sustainability Services
We help organizations achieve substantial
improvement in performance and value
for their stakeholders by leveraging their
assets and capabilities to drive innovation
and profi table growth while striving for
a positive economic, environmental and
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as a commercial opportunity and as an
extension of our stewardship role in
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We work with clients across industries and
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operating models and critical processes.
Our holistic approach encompasses
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enhance brand, reputation and intangible
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visit www.accenture.com/sustainability or
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