CORPORATE SUSTAINABILITY2018 REPORT
1 CORPORATE SUSTAINABILITY REPORT FEATURED PRODUCTS Cover: Kichler® Lighting Page 2: Liberty® Hardware 2 CORPORATE SUSTAINABILITY REPORT 2018 MASCO SUSTAINABILITY REPORT TABLE OF CONTENTS
EXECUTIVE MESSAGE...... 7
CORPORATE...... 8
Ethics and integrity...... 8
Code of Ethics...... 8
Governance...... 9
Structure...... 9
Precautionary principle...... 10
Data protection...... 10
Endorsements...... 10
Profile...... 11
Organization...... 11
Brands, products and markets...... 11
Significant changes...... 12
Scale...... 13
Operations...... 13
Workforce...... 13
Collective bargaining...... 13
Supply chain...... 14
Memberships...... 14
ECONOMIC...... 16
Economic performance...... 16
Core financials...... 16
Revenue from sustainable products...... 16
Revenue from products meeting VOC emissions and content standards...... 16
Innovation...... 17
Vitality ...... 17
Intellectual property...... 17
3 CORPORATE SUSTAINABILITY REPORT ENVIRONMENT...... 19
Energy...... 19
Energy consumption...... 19
Air ...... 19
CO2 intensity...... 19 Water...... 20
Water use...... 20
Water use in stressed locations...... 20
Water risk management...... 20
Wood...... 21
Wood fiber purchased...... 21
Wood from certified forestlands...... 21
Waste...... 21
Waste intensity...... 21
Product lifecycle management...... 21
SOCIAL...... 23
Community...... 23
Volunteerism...... 23
Philanthropy...... 23
Health and safety...... 24
Incident rate...... 24
Lost day frequency rate...... 24
Labor policy...... 24
Chemical responsibility...... 26
Managing product risk...... 26
Managing emerging concerns...... 26
Human capital...... 27
Leadership ...... 27
Diversity and inclusion...... 28
Future Workforce...... 29
Employee engagement...... 29
Employee retention...... 29
4 CORPORATE SUSTAINABILITY REPORT REPORTING...... 31
Materiality...... 31
Entities...... 31
Defining report content...... 31
Material aspects and boundaries...... 32
Significant changes...... 32
Stakeholder engagement...... 32
Groups ...... 32
Selection...... 33
Approach...... 33
Concerns...... 33
Reporting profile...... 33
Reporting period...... 33
External assurance...... 33
Date of previous report...... 33
Reporting cycle...... 33
Report contact...... 33
GRI, UNSDG, and SASB index...... 34
5 CORPORATE SUSTAINABILITY REPORT 6 CORPORATE SUSTAINABILITY REPORT EXECUTIVE MESSAGE
TO OUR STAKEHOLDERS
At Masco, our goal is to make everything we touch better. Every day we strive to provide quality products that create better living spaces for our customers. We strive to make better work environments for our valued employees and we constantly work to better the communities where we live, work and do business. That continuous improvement mindset is applied to KEITH ALLMAN our sustainability efforts and I am pleased to share with you, in the attached President and CEO report, the progress we made in 2018 in our approach to sustainability, as well as how we manage and measure our performance.
Among other data and information in the report, you will read how our new product innovations continue to drive our growth. You’ll learn about our efforts to continue to reduce our own carbon footprint and improve our operational performance in ways that respect people, their safety and our environment. And, you’ll read stories of how we are using our financial resources and our employees’ skills and passions to help build thriving communities.
Being a good corporate citizen is part of Masco’s DNA and our employees across our business units and around the globe are constantly looking for opportunities to leverage our scale and resources for positive, sustainable change. We are pleased with our progress, but we recognize that we can always do more. Thank you for your interest in Masco and for joining us on our ongoing journey of continuous improvement, innovation, sustainability and growth.
Keith Allman President and Chief Executive Officer
7 CORPORATE SUSTAINABILITY REPORT CORPORATE
ETHICS AND INTEGRITY
Maintaining the highest standard of ethics in the conduct of our business is our corporate policy and is the foundation of our company’s culture. We have built a strong reputation for ethical business practices and this reputation is one of our most valued assets.
ETHICS AND COMPLIANCE PROGRAM Masco’s Ethics and Compliance Program supports our culture of integrity, and consists of a number of elements designed to help our employees, officers and directors understand our commitment to ethical business practices. Our program includes our Code of Ethics, the Masco Ethics Hotline, ethics training and employee certification of compliance with our Code of Ethics. Our Code of Ethics requires that all Masco employees, officers and directors comply with our company policies and procedures and follow the laws that apply where we do business. We have policies that address bribery and corruption, antitrust and fair competition, conflicts of interest and gifts and entertainment, health and safety, financial reporting, insider trading, data privacy, discrimination and other areas of concern. We communicate our program through multiple channels, and our Code of Ethics, policies and training materials are translated into multiple languages. Our employees are encouraged to report activity they believe to be illegal or unethical. We will not retaliate against reports made in good faith. Our Code of Ethics is available on our website at www.masco.com/about/corporate-governance/.
8 CORPORATE SUSTAINABILITY REPORT GOVERNANCE
STRUCTURE The standing committees of our Board are our Audit Committee, our Organization and Compensation Committee and our Corporate Governance and Nominating Committee, and each functions pursuant to a written charter adopted by our Board. The members of these three committees qualify under the independence and experience requirements applicable to us, including requirements of the New York Stock Exchange. Following is information about each committee, subject to any changes that our Board may make from time to time:
AUDIT COMMITTEE All members are independent and financially literate.
Our Audit Committee’s responsibilities include assisting our Board in its oversight of: • the integrity of our financial statements; • the effectiveness of our internal controls over financial reporting; • the qualifications, independence and performance of our independent auditors; • the performance of our internal audit function; and • our compliance with legal and regulatory requirements, including our employees’ compliance with our Code of Ethics.
Additionally, our Audit Committee reviews and discusses with management certain financial and non-financial risks.
ORGANIZATION AND COMPENSATION COMMITTEE CORPORATE GOVERNANCE AND NOMINATING All members are independent. COMMITTEE All members are independent. Our Organization and Compensation Committee is responsible for: Our Corporate Governance and Nominating Committee • determining the compensation paid to our executive is responsible for: officers; • advising our Board on the governance structure and • evaluating the performance of our senior conduct of our Board; executives; • developing and recommending to our Board • determining and administering restricted stock appropriate corporate governance guidelines and awards and options granted under our stock policies; incentive plan; • Board succession planning, including reviewing our • administering our annual and long-term Board’s structure and composition and the tenure performance compensation programs; and of our directors; • reviewing our management succession plan, • identifying and recommending qualified individuals including periodically reviewing our CEO’s evaluation for nomination and re-nomination to our Board; and recommendation of potential successors. • recommending directors for appointment and re- appointment to Board committees; and In addition, our Organization and Compensation • reviewing and recommending to the Board our Committee evaluates risks arising from our director compensation. compensation policies and practices, and has determined that such risks are not reasonably likely For additional details regarding Masco’s governance to have a material adverse effect on us. Our executive structure, go to officers and other members of management report www.masco.com/about/corporate-governance/. to the Organization and Compensation Committee on executive compensation programs at our business units to assess whether these programs or practices expose us to excessive risk.
9 CORPORATE SUSTAINABILITY REPORT PRECAUTIONARY PRINCIPLE Masco has a formal Enterprise Risk Management (ERM) process to anticipate and manage corporate risk and, where possible, to convert potential risks into business opportunities. This process is supported by risk mitigation activities with ownership and action plans, allowing us to better manage potential risks. Our Board performs an annual review and discussion of a comprehensive analysis prepared by management on material risks facing the Company and related mitigating activities. Our Audit Committee is responsible for reviewing policies related to risk, but it is the responsibility of the Chief Executive Officer and senior management to determine the appropriate level of risk.
DATA PROTECTION Masco Corporation and all its subsidiaries (“Masco”) are committed to privacy and security of our own information and of the information of our employees, suppliers, customers, and consumers. Masco is in line with applicable domestic and international data protection legal requirements, including the EU General Data Protection Regulations (GDPR). Masco continuously monitors its information technology systems, and its cybersecurity and data privacy responsibility for Data Protection Compliance.
ENDORSEMENTS Masco participates in and, in some cases, has assisted in the development of several major external charters and initiatives, including:
• WaterSense®, ENERGY STAR®, and other voluntary EPA initiatives • ISO 14001 • OHSAS 18001 • Carbon Disclosure Project (CDP) • Global Reporting Initiative (GRI) • Sustainability Accounting Standards Board (SASB) • United Nations Sustainable Development Goals (UNSDG) • Standards for sustainable forestry practices, such as the Forest Stewardship Council (FSC) and Sustainable Forestry Initiative (SFI)
10 CORPORATE SUSTAINABILITY REPORT PROFILE
ORGANIZATION Headquartered in Livonia, Michigan, Masco Corporation is a publicly-traded company incorporated in the state of Delaware. Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol MAS. WOOD FIBER PURCHASE Masco Corporation has a facility in Luxembourg that serves as a headquarters for most of our foreign operations. 50 Some of our business units operate from locations in other countries. For example, Hansgrohe and Hüppe operate 40 business unit headquarters in Germany. In 2018, the UK Windows Group and The Bristan Group both operated their 30
business unit headquarters in the United Kingdom. 20 METRIC TONS
10
0 BRANDS, PRODUCTS AND MARKETS 2016 2017 Masco Corporation is a global leader in the design, manufacture and distribution of branded home improvement and building products. In 2018, our portfolio of industry-leading brands included BEHR® paint; DELTA® and HANSGROHE®ENERGY CONSUMPTION CERTIFIED FORESTRY SOURCES faucets and bath and shower fixtures; KRAFTMAID® and MERILLAT® cabinets; MILGARD® windows and doors; KICHLER® WATER CONSUMPTION 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION decorative and outdoor lighting; and HOTSPRING® spas. We leverage our powerful brands across product categories, 1.42 1,068,000 2016 1200 1,068 1,103 1,102 sales channels and geographies to create value for our customers and shareholders. 1.48 1000
ELECTRICITY 1,047,000 2017 United Kingdom 1.44 800
0 300 600 900 1200 1500 600 1.33 116,000 GERMANY 46,000 UK TOTAL
55% 82% CUBIC METERS (000’S) 400 1.30 2017 2018 GAS MILLIONS 200 Plumbing Products: We are a leader in manufactured 1.26 26,000 EMPLOYEES IN 31 COUNTRIES
0 plumbing products, with broad distribution channels 2016 2017 2018 .54 2018 worldwide. Through our premier brands, we offer an array *In 2016, 11 additional sites began reporting water consumption .45 2017 THER 7.37 7.37 of products, including faucets, plumbing O fittings and % 22% 41% 52% 52% 75% 84% 8 .26 2016 OTHER valves, showerheads and handheld showers, bathtubs 67 51 MANUFACTURING WAREHOUSES AND 0.00.3 0.60.9 1.21.5 PROPERTIES DISTRIBUTION and shower enclosures, toilets, spas, exercise pools and PROPERTIES fitness systems, and water handling systems. MILLION GIGAJOULES OF ENERGY CONSUMED % 49 C0 INTENSITY ELECTRICITY 2 5 43% Axor® Heritage™ 4.33 8.61 2.5 WASTE INTENSITY BrassCraft® HotSpring® 3.96 60% 12% 7% 4 Brasstech® Hüppe® 48% 11% USA GERMANY UK 2.5 TOTAL NET TOTAL NET 2.03 2.0 Bristan™ Master Plumber® SALES SALES 3.28 1.89 INCIDENT RATE 2.0 3 Brizo® Mercury Plastics® 1.58 NATURAL GAS 2016 3.0 1.5 Cadence™ Mirolin® 1.5 GE* STE / $NET SALES (X10-5) ERA 1.0
2017 2.5 AV 2
CalderaSpas® Newport Brass®
Cobra® Peerless® 0.5
2018 1.7 INDUST RY 1.0
Delta® Plumb Shop® METRIC TONNE WA 9% 32% 43% 41% METRIC TONNE CO2 / $NET SALES (10-5) 1 TOTAL NET TOTAL NET ELECTRICITY NATURAL GAS 0.0 2016 2017 2018 Endless Pools® Waltec® SALES SALES 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 0.5 Fantasy Spas® PER 100 EMPLOYEES 0 Freeflow Spas® 2016 2017 2018
Ginger® 0.0 Hansgrohe® LOST DAY FREQUENCY RATE 16% OTHER 2016 0.5 GE* ERA AV
2017 0.5
2018 INDUST RY 0.5
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
PER 100 EMPLOYEES
11 CORPORATE SUSTAINABILITY REPORT WOOD FIBER PURCHASE
50
40
30
20 METRIC TONS
10
0 2016 2017
ENERGY CONSUMPTION CERTIFIED FORESTRY SOURCES WATER CONSUMPTION 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION 1.42 1,068,000 2016 1200 1,068 1,103 1,102
1.48 1000
ELECTRICITY 1,047,000 2017 United Kingdom 1.44 800
0 300 600 900 1200 1500 600 1.33 116,000 GERMANY 46,000 UK TOTAL
55% 82% CUBIC METERS (000’S) 400 1.30 2017 2018 GAS MILLIONS 1.26 26,000 EMPLOYEES IN 31 COUNTRIES 200
0 2016 2017 2018 .54 2018 *In 2016, 11 additional sites began reporting water consumption .45 2017 THER 7.37 7.37 O % WOOD FIBER PURCHASE 22% 41% 52% 52% 75% 84% 8 .26 2016 OTHER 50 67 51 MANUFACTURING WAREHOUSES AND 0.00.3 0.60.9 1.21.5 PROPERTIES DISTRIBUTION PROPERTIES 40 MILLION GIGAJOULES OF ENERGY CONSUMED
% 30 49 C0 INTENSITY ELECTRICITY Decorative Architectural Products: We are one of the 2 5 43% 20 largest suppliers of architectural paint and exterior woodMETRIC TONS 4.33 8.61 2.5 WASTE INTENSITY care products to the United States and Canadian do- 10 3.96 60% 12% 7% 4 48% 11% USA GERMANY UK 2.5 it-yourself channels. This segment also includesTOTAL NET glass 0 TOTAL NET 2016 2017 2.03 2.0 SALES SALES 3.28 1.89 shower doors, shower accessories, decorative and INCIDENT RATE 2.0 3 outdoor lighting, cabinet, door and window hardware, and WOOD FIBER PURCHASE 1.58 NATURAL GAS 2016 3.0 1.5 CERTIFIED FORESTRY SOURCES 1.5 ENERGY CONSUMPTION functional hardware. 50 GE* STE / $NET SALES (X10-5)
ERA WATER CONSUMPTION 1.0
2017 2.5 AV 2 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION 40 1.42 1,068,000 2016 1200 1,068 1,103 1,102 Behr® Kichler® 0.5
2018 1.7 INDUST RY 1.0 1.48 30
1000 METRIC TONNE WA Brainerd® Kilz®9 % 32% 43% 41% METRIC TONNE CO2 / $NET SALES (10-5) 1 ELECTRICITY 1,047,000 2017 TOTAL NET TOTAL NET ELECTRICITY NATURAL GAS 0.0 United Kingdom 1.44 2016 2017 2018 SALES SALES 0.0 0.5 1.0 1.5 20 2.0 2.5 3.0 3.5 8004.0 Élan® Liberty® METRIC TONS 0.5 Franklin 0Brass® 300 600 900 1200 1500 PER 100 EMPLOYEES 10 600 0 1.33 2016 2017 2018 116,000 GERMANY 46,000 UK TOTAL
55% 82% 0 CUBIC METERS (000’S) 400 1.30 2017 2018 2016 2017 GAS 0.0 MILLIONS 200 1.26 26,000 EMPLOYEES IN 31 COUNTRIES LOST DAY FREQUENCY RATE 16% OTHER 2016 0.5 0 ENERGY CONSUMPTION CERTIFIED FORESTRY SOURCES 2016 2017 2018
.54 GE* 2018 WATER CONSUMPTION Cabinetry Products: We are one of the largest ERA *In 2016, 11 additional sites began AV 2017 0.5 reporting water consumption 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION .45 2017 1,068,000 THER 1.42 2016 7.37 7.37 1,068 1,103 1,102 manufacturers of kitchenO and bath cabinetry in the 1200 8% 22% 41% 52% 52% 75% 84% .26 2016 2018 INDUST RY 0.5 OTHER United States. This segment includes assembled 1.48 51 1000 67 WAREHOUSES AND ELECTRICITY 1,047,000 2017 MANUFACTURING 0.00.3 0.60.9 United1.21 Kingdom.5 PROPERTIES DISTRIBUTION cabinetry for kitchen, bath, storage, home office and 1.44 PROPERTIES 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 800 home entertainment applications.MILLION GIGAJOULES OF ENERGY CONSUMED 0 300 600 900 1200 1500 600 % PER 100 EMPLOYEES 49 1.33 C0 INTENSITY ELECTRICITY 116,000 GERMANY 46,000 UK TOTAL 2 5 55% 82% CUBIC METERS (000’S) 400 43% 1.30 2017 2018 GAS Cardell® Merillat® 4.33 8.61 2.5 MILLIONS 200 1.26 26,000 EMPLOYEES IN 31 COUNTRIES WASTE INTENSITY KraftMaid® Quality Cabinets® 3.96 60% 12% 7% 4 % 2.5 0 48% 11 USA GERMANY UK 2016 2017 2018 TOTAL NET TOTAL NET .54 2.03 2018 2.0 SALES SALES 3.28 1.89 *In 2016, 11 additional sites began 2.0 INCIDENT RATE reporting water consumption .45 2017 3 THER 7.37 7.37 O 1.58 NATURAL GAS % 3.0 22% 41% 52% 52% 1.5 75% 84% 8 .26 2016 2016 OTHER 1.5 GE* 51 67 WAREHOUSES AND STE / $NET SALES (X10-5) MANUFACTURING ERA 1.0 PROPERTIES DISTRIBUTION 0.00.3 0.602017 .9 1.21.5 2.5 AV 2 PROPERTIES
MILLION GIGAJOULES OF ENERGY CONSUMED 0.5
2018 1.7 INDUST RY 1.0 49%
METRIC TONNE WA C0 INTENSITY
% METRIC TONNE CO2 / $NET SALES (10-5) 9 32% ELECTRICITY 43% 41% 1 2 TOTAL NET TOTAL NET ELECTRICITY NATURAL GAS 0.0 5 % 2016 2017 2018 SALES 43 SALES 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Windows and Other Specialty Products: In 2018, we 4.33 2.5 0.5 8.61 PER 100 EMPLOYEES WASTE INTENSITY were one of the leading manufacturers of vinyl and 0 3.96 60% 12% 7% 2016 2017 2018 4 fiberglass windows in the western United 48States.% This 11% USA GERMANY UK 2.5 TOTAL NET TOTAL NET 2.03 2.0 segment included windows, window frame SALEScomponents SALES 3.28 0.1.890 LOST DAY FREQUENCY RATE INCIDENT RATE 2.0 and patio doors, both in the United States and the 3 16% 1.58 NATURAL GAS 2016 3.0 1.5 United Kingdom. OTHER 2016 0.5 1.5 GE* GE* STE / $NET SALES (X10-5) ERA
ERA 1.0
2017 2.5 AV 2
AV
2017 0.5
Duraflex™ Milgard® 0.5
INDUST RY 1.0
INDUST RY 2018 1.7 2018 0.5 METRIC TONNE WA Evolution™ Premier™ 9% 32% 43% 41% METRIC TONNE CO2 / $NET SALES (10-5) 1 TOTAL NET TOTAL NET ELECTRICITY NATURAL GAS 0.0 2016 2017 2018 Griffin™ SALES SALES 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.5 PER 100 EMPLOYEES PER 100 EMPLOYEES 0 2016 2017 2018
0.0 LOST DAY FREQUENCY RATE 16% OTHER 2016 0.5 GE* ERA AV SIGNIFICANT CHANGES 2017 0.5 During 2018, we acquired the assets of Kichler Lighting, a leader in decorative residential and light commercial 2018 INDUST RY 0.5 lighting products, ceiling fans and LED lighting systems across both consumer and professional distribution channels. Kichler Lighting is now part of our Decorative Architectural Products segment. In 2019, we sold our UK Window Group 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
business and announced our planned divestiture of our Milgard Windows business. PER 100 EMPLOYEES
12 CORPORATE SUSTAINABILITY REPORT WOOD FIBER PURCHASE
50
40
30
20 METRIC TONS
10
0 2016 2017
ENERGY CONSUMPTION CERTIFIED FORESTRY SOURCES WATER CONSUMPTION 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION 1.42 1,068,000 2016 1200 1,068 1,103 1,102 WOOD FIBER PURCHASE 1.48 50 1000
ELECTRICITY 1,047,000 2017 SCALE United Kingdom 1.44 40 800 OPERATIONS
In 2018, we operated 118 principle properties worldwide. We had significant30 operations in North America, China, 0 300 600 900 1200 1500 600 1.33 Germany and the United Kingdom.
116,000 GERMANY 46,000 UK TOTAL 20 METRIC TONS 55% 82% CUBIC METERS (000’S) 400 1.30 2017 2018 Most of our facilities range from single warehouse buildings (32 in North America and 19 internationally) to complex GAS 10 MILLIONS manufacturing facilities (48 in North America and 19 internationally). We lease our corporate headquarters in Livonia, 1.26 26,000 EMPLOYEES IN 31 COUNTRIES 200 Michigan, and we own a building in Taylor, Michigan that is used by our Masco Technical Services (research and 0 2016 2017 development) department. We continue to lease an office facility in Luxembourg, which serves as a headquarters0 for most of our foreign operations. 2016 2017 2018 .54 2018 *In 2016, 11 additional sites began CERTIFIED FORESTRY SOURCES reporting water consumption .45 2017 ENERGY CONSUMPTION THER 7.37 7.37 O WATER CONSUMPTION % 22% 41% 52% 52% 75% 84% 8 .26 2016 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION OTHER 1.42 1,068,000 201667 51 1200 1,068 1,103 1,102 MANUFACTURING WAREHOUSES AND 0.00.3 0.60.9 1.21.5 1.48 PROPERTIES DISTRIBUTION PROPERTIES 1000
ELECTRICITY 1,047,000 2017 MILLION GIGAJOULES OF ENERGY CONSUMED United Kingdom 1.44 800 % 49 0 300 600 900 1200 1500 C0 INTENSITY ELECTRICITY 2 600 1.33 5 % 116,000 GERMANY 46,000 UK TOTAL 43 55% 82% CUBIC METERS (000’S) 400 1.30 2017 2018 GAS 4.33 8.61 2.5 MILLIONS WASTE INTENSITY 200 1.26 26,000 EMPLOYEES IN 31 COUNTRIES 3.96 60% 12% 7% 4 % USA GERMANY UK WORKFORCE 2.5 0 48% 11 2016 2017 2018 TOTAL NET TOTAL NET .54 In 2018, Masco employed approximately 2018 2.03 2.0 SALES SALES 3.28 1.89 *In 2016, 11 additional sites began 26,000 employees in 31 countries. Of these 2.0 reporting water consumption .45 INCIDENT RATE 2017 THER 7.37 7.37 O 3 employees, approximately 60 percent worked % 22% 41% 52% 52% 75% 1.58 84% NATURAL GAS 8 .26 3.02016 in the United States. OTHER 2016 1.5 67 51 MANUFACTURING WAREHOUSES AND 1.5 0.00.3 0.60.9 1.21GE* .5 PROPERTIES DISTRIBUTION
STE / $NET SALES (X10-5) PROPERTIES ERA 1.0
2017 2.5 AV 2 MILLION GIGAJOULES OF ENERGY CONSUMED
49% 0.5 C02 INTENSITY
ELECTRICITY INDUST RY 1.0 2018 1.7 5 % 43 METRIC TONNE WA 9% 32% 43% 41% METRIC TONNE CO2 / $NET SALES (10-5) 1 4.33 2.5 TOTAL NET TOTAL NET ELECTRICITY NATURAL GAS 0.0 8.61 2016 2017 2018 WASTE INTENSITY SALES SALES 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 3.96 60% 12% 7% 4 % 2.5 0.5 48% PER 100 EMPLOYEES11 USA GERMANY UK TOTAL NET TOTAL NET 0 2.03 2.0 SALES SALES 2016 2017 2018 3.28 1.89 INCIDENT RATE 2.0 COLLECTIVE BARGAINING 3 1.58 NATURAL GAS In 2018, approximately one percent of our workforce in the U.S. was covered2016 by a collective bargaining agreement. 3.0 1.5 0.0 1.5 Outside of the U.S., that number is higher. For example, at Hansgrohe and Hüppe, that number is 60 and 92 percent, GE*
LOST DAY FREQUENCY RATE STE / $NET SALES (X10-5) ERA 1.0
respectively. 2017 2.5 AV 2 16% OTHER 2016 0.5 0.5
INDUST RY 1.0 GE* 2018 1.7 METRIC TONNE WA ERA 9% 32% 43% 41% METRIC TONNE CO2 / $NET SALES (10-5) 1
AV 0.0 2017 TOTAL NET TOT AL 0.5NET ELECTRICITY NATURAL GAS 2016 2017 2018 SALES SALES 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 0.5 PER 100 EMPLOYEES 2018 INDUST RY 0.5 0 2016 2017 2018 13 CORPORATE SUSTAINABILITY REPORT 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.0 LOST DAY FREQUENCY RATE PER 100 EMPLOYEES 16% OTHER 2016 0.5 GE* ERA AV
2017 0.5
2018 INDUST RY 0.5
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
PER 100 EMPLOYEES SUPPLY CHAIN We partner with a global supply base to manufacture and distribute products to our customers and channel partners. In 2018, our more than 26,000 global suppliers provided us with raw materials, components, sub-assemblies, manufacturing services, finished goods, and indirect goods and services. Many of the suppliers upon whom we rely are located in foreign countries. The differences in business practices, shipping and delivery requirements, and laws and regulations have increased the complexity of our supply chain logistics and the potential for interruptions in our production scheduling. Therefore, we have continued to seek and realize supply chain efficiencies through strategic sourcing. We also have agreements with certain significant suppliers to help ensure continued availability.
MEMBERSHIPS In 2018, Masco was involved with various associations and national or international advocacy organizations, whether through memberships, governance, participation in projects or committees, funding beyond routine dues, or other strategic forms of involvement. These memberships include:
U.S. AND INTERNATIONAL
• AliaRSE (promoting Mexican business ethics and environmental • Conflict Free Sourcing Initiative responsibility) • Employers Group • American Alliance for Water Efficiency • Equal Employment Action Committee • American Chemical Society • Green Chemistry and Commerce Council • American Coatings Association • Home Performance Contractors • American Society for Metals • Human Resource Policy Association • American Society for Microbiology • Industrial Associate of the Montana State University Center for • American Society for Testing and Materials (ASTM) Biofilm Engineering • American Society of Safety Engineers • International Wood Products Association • American Water Works Association (AWWA) • Kitchen Cabinet Manufacturers Association • Association of Training and Development • Manufacturers Alliance for Productivity and Innovation (MAPI) • Architectural Manufacturers Association • National Safety Council • Board of Certified Safety Professionals (BCSP) • North County Personnel Association • Builders Hardware Manufacturers Association • Plastics Pipe Institute • Canadian Institute of Plumbing and Heating • Plumbing Manufacturers Institute • Canadian Paint and Coatings Association • Society for Human Resource Management • Composite Panel Association • Society for Industrial Microbiology and Biotechnology • U.S. Green Building Council
EUROPE
• Association of German Engineers (VDI) • German Association for Personnel Management • Association for Occupational Safety (VSW) • German Sustainable Building Council • Association for Solar Energy (DGNB) • Industry Design Forum (Industrie Design Forum) • Alliance for Sustainability (Allianz pro Nachhaltigkeit) • Institute for Building and Environment (IBU) • Bathroom Manufacturers Association • International Controller Association (ICV) • British Fenestration Rating Council • WRAS - Technical Advisory Group • British Plastics Federation • Institute of Chemical Engineering (IChemE) • Employers’ Association • Institute of Occupational Health and Safety (IOSH) • Furniture Industry Research Association • Institute for Environmental Management and Assessment (IEMA)
14 CORPORATE SUSTAINABILITY REPORT FEATURED PRODUCT Endless Pools® 15 CORPORATE SUSTAINABILITY REPORT WOOD FIBER PURCHASE
50
40
30
20 METRIC TONS
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0 2016 2017 ECONOMIC
CERTIFIED FORESTRY SOURCES ENERGY CONSUMPTION ECONOMIC PERFORMANCE WATER CONSUMPTION
CORE FINANCIALS 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION 1.42 1,068,000 2016 1200 1,068 1,103 1,102 Masco’s net sales for 2018 were approximately $8.4 billion. Additional information about our financial performance can be found in our 2018 Annual Report (which includes our Form 10-K), available at 1.48 1000 http://investor.masco.com/investor-relations/financial-information/annual-reports/. ELECTRICITY 1,047,000 2017 United Kingdom 1.44 800
0 300 600 900 1200 1500 600 1.33 REVENUE FROM SUSTAINABLE PRODUCTS 116,000 GERMANY 46,000 UK TOTAL A number of Masco’s companies track the percentage of revenue they generated from the sale of sustainable 55% 82% CUBIC METERS (000’S) 400 1.30 products.2017 Those sustainable2018 products included, for example, paints that meet the GreenGuard® certification, GAS MILLIONS taps and mixer products that meet water flow rates in standards such as Water Sense® and the European 26,000 EMPLOYEES IN 31 COUNTRIES 200 1.26 Water Label and Building Research Establishment Environmental Assessment Method, and windows that meet Energy Star®. In 2018, those percentages of revenue generated from the sale of sustainable products were: 0 2016 2017 2018 .54 2018 *In 2016, 11 additional sites began reporting water consumption .45 2017 THER 7.37 7.37 O % 22% 41% 52% 52% 75% 84% 8 .26 2016 OTHER 67 51 MANUFACTURING WAREHOUSES AND 0.00.3 0.60.9 1.21.5 PROPERTIES DISTRIBUTION PROPERTIES
MILLION GIGAJOULES OF ENERGY CONSUMED % 49 C0 INTENSITY ELECTRICITY 2 5 43% REVENUE FROM PRODUCTS MEETING VOC 4.33 2.5 EMISSIONS AND CONTENT STANDARDS 8.61 WASTE INTENSITY In 2018, revenue from the sale of products meeting 3.96 4 60% 12% 7% Volatile Organic Compounds (VOC) emissions and content 48% 11% USA GERMANY UK 2.5 TOTAL NET standards was only material for Behr Paint Company, with TOTAL NET 2.03 2.0 SALES SALES 100 percent of Behr’s revenue generated from the sale of 3.28 1.89 2.0 INCIDENT RATEsustainable coating products, which are either verified by 3 UL Environment to meet the UL Greenguard® Certification 1.58 NATURAL GAS 2016 or certified by 3.0Master Painters Institute (MPI) to meet 1.5 1.5
an MPI Green PerformanceGE* Standard®, or both. These STE / $NET SALES (X10-5) certifications focus onERA indoor air emissions, durability and 1.0
2017 2.5 AV 2 chemical composition.
0.5
2018 1.7 WaterSense® and EnergyINDUST RY Star® are registered trademarks of the 1.0
Environmental Protection Agency. UL Greenguard® is a registered METRIC TONNE WA 9% 32% 43% 41% METRIC TONNE CO2 / $NET SALES (10-5) 1 TOTAL NET TOTAL NET ELECTRICITY NATURAL GAS trademark of UL LLC. MPI Green Performance Standard® is a 0.0 2016 2017 2018 SALES SALES 0.0 0.5 1.0 1.5 2.0 2.5registered trademark3.0 of3.5 Master Painters4.0 Institute Inc. 0.5 PER 100 EMPLOYEES 16 CORPORATE SUSTAINABILITY REPORT 0 2016 2017 2018
0.0 LOST DAY FREQUENCY RATE 16% OTHER 2016 0.5 GE* ERA AV
2017 0.5
2018 INDUST RY 0.5
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
PER 100 EMPLOYEES INNOVATION
VITALITY New product innovation has been the hallmark of our success and continues to drive our growth, with approximately 26 percent of our sales in 2018 coming from new products introduced in the prior three years.
Masco’s focus on innovation continued to differentiate us to our customers and end consumers. Delta Faucet Company recently introduced ShieldSpray® Technology, which is available on its pull-down kitchen faucets and provides a concentrated jet of water that powers away stubborn messes with less splatter than a standard spray. Our great customer partnership with The Home Depot carried over to Liberty Hardware, which was named The Home Depot Vendor of the Year in the Kitchen and Bath Department.
INTELLECTUAL PROPERTY Protecting our intellectual property is important to our growth and innovation efforts. We own a number of patents, trade names, brand names and other forms of intellectual property in our products and manufacturing processes throughout the world. In 2018, 1,061 patents and trademarks were granted to Masco worldwide.
The total number of patent and trademark applications that we filed during 2018 was 1,491. Foreign grants and filings accounted for 74 percent and 71 percent, respectively, of the total grants and filings.
17 CORPORATE SUSTAINABILITY REPORT FEATURED PRODUCT Peerless® 18 CORPORATE SUSTAINABILITY REPORT WOOD FIBER PURCHASE
50
40
30
20 METRIC TONS
10
0 2016 2017
ENERGY CONSUMPTION CERTIFIED FORESTRY SOURCES WATER CONSUMPTION 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION 1.42 1,068,000 2016 1200 1,068 1,103 1,102
1.48 1000
ELECTRICITY 1,047,000 2017 United Kingdom 1.44 800
0 300 600 900 1200 1500 600 1.33 116,000 GERMANY 46,000 UK TOTAL
55% 82% CUBIC METERS (000’S) 400 1.30 2017 2018 GAS MILLIONS 1.26 26,000 EMPLOYEES IN 31 COUNTRIES 200
0 2016 2017 2018 .54 2018 *In 2016, 11 additional sites began reporting water consumption ENVIRONMENT.45 2017 THER 7.37 7.37 O % 22% 41% 52% 52% 75% 84% 8 .26 2016 OTHER WOOD FIBER PURCHASE 67 51 WOOD FIBER PURCHASE MANUFACTURING WAREHOUSES AND 0.00.3 0.60.9 1.21.5 50 PROPERTIES DISTRIBUTION 50 PROPERTIES
ENERGY MILLION GIGAJOULES OF ENERGY CONSUMED 40
% 40 49 C0 INTENSITY ELECTRICITY 30 2 ENERGY CONSUMPTION 5 43% 30 Our total energy consumption reported in 2018 was 3.29 million gigajoules (GJ). Of that, 43 percent was electricity;20 METRIC TONS 4.33 8.61 2.5 20 41 percent was natural gas; and the remaining 16 percent was diesel, gasoline, propane, and renewables (wood waste WASTE INTENSITY METRIC TONS 10 3.96 60% 12% 7% 4 and biodiesels). Also in 2018, 99 percent of% electricity we consumed was purchasedUSA from theGERMANY grid and 1 percentUK of 2.5 10 48% 11 TOTAL NET 0 electricity weTOT consumedAL NET was self-generated via combustion of natural gas. 2016 2017 2.03 2.0 SALES SALES 3.28 1.89 2.0 0 INCIDENT RATE 2016 2017 3 1.58 NATURAL GAS 3.0 CERTIFIED FORESTRY SOURCES2016 1.5 ENERGY CONSUMPTION 1.5 GE* WATER CONSUMPTION STE / $NET SALES (X10-5) ERA 1.0
CERTIFIED FORESTRY SOURCES 2017 2.5 100 MANUFAV ACTURING AND WAREHOUSE/DISTRIBUTION 2 ENERGY CONSUMPTION 1.42 1,068,000 2016 1,068 1,103 1,102 WATER CONSUMPTION 1200 1.48 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION 0.5 2018 1.7 INDUST RY 1000 1.0 1.42 1,068,000 2016 1,068 1,103 1,102 ELECTRICITY 1,047,000 2017 1200 METRIC TONNE WA United Kingdom 9% % % % METRIC TONNE CO2 / $NET SALES (10-5) 32 1.44 43 41 1 TOTAL NET TOTAL NET ELECTRICITY NATURAL GAS 800 0.0 1.48 2016 2017 2018 SALES SALES 1000 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
ELECTRICITY 1,047,000 2017 0 300 600 900 1200 1500 600 United Kingdom 1.44 0.5 1.33 800 PER 100 EMPLOYEES 116,000 GERMANY 46,000 UK TOTAL 0 55% 82% CUBIC METERS (000’S) 400 1.30 2017 2018 2016 2017 2018 0 300 600 900 1200 1500 GAS 600 1.33 MILLIONS 200 116,000 GERMANY 46,000 UK TOTAL 1.26 26,000 EMPLOYEES IN 31 COUNTRIES 0.0
55% 82% CUBIC METERS (000’S) 400 1.30 2017 2018 LOST DAY FREQUENCY RATE 0 GAS 2016 2017 2018 MILLIONS .54 % 26,000 EMPLOYEES IN 31 COUNTRIES 2018 16 200 1.26 OTHER 2016 0.5 *In 2016, 11 additional sites began .45 reporting water consumption 2017 GE* THER 7.37 7.37 O 0 % 22% 2016 41%2017 2018 52% 52% 75% ERA 84% AV .54 8 .26 2016 2017 0.5 2018 OTHER *In 2016, 11 additional sites began 67 51 MANUFACTURING WAREHOUSES AND .45 0.00.3 0.60.9 1.21.5 reporting water consumption PROPERTIES DISTRIBUTION
2017 INDUST RY THER 7.37 7.37 PROPERTIES
O 2018 0.5 % 22% 41% 52% MILLION GIGAJOULES52% OF ENERGY75% CONSUMED 84% 8 .26 2016 OTHER 49% 51 67 WAREHOUSES AND C0 INTENSITY ELECTRICITY MANUFACTURING 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 2 0.00.3 0.60.9 1.21.5 PROPERTIES DISTRIBUTION 5 43% PROPERTIES PER 100 EMPLOYEES MILLION GIGAJOULES OF ENERGY CONSUMED 4.33 8.61 2.5 WASTE INTENSITY 49% 3.96 C0 INTENSITY 4 ELECTRICITY 60% 12% 2 7% AIR 48% 11% USA 5 GERMANY UK 2.5 TOTAL NET 43% TOTAL NET 2.03 2.0 SALES 3.28 SALES 4.33 2.5 1.89 INCIDENT RATE 8.61 2.0 CO INTENSITY WASTE INTENSITY 3 2 3.96 1.58 60% 12% NA7%TURAL GAS 4 2016 3.0 1.5 % 11% USA GERMANY UK We define our CO2 intensity as metric tons of CO2 per unit 2.5 1.5 48 GE* TOTAL NET STE / $NET SALES (X10-5) TOTAL NET 2.03 ERA 2.0 of net sales in U.S. dollars. In computing CO2, we include 1.0 SALES 3.28 2017 1.89 2.5 AV 2 SALES our consumptionINCIDENT of RAelectricity,TE natural gas, propane and 2.0 3 0.5 heating fuel (oil), as well as fuel use (gasoline, diesel 2018 1.71.58 INDUST RY 1.0 NATURAL GAS 2016 3.0 1.5 METRIC TONNE WA
% METRIC TONNE CO2 / $NET SALES (10-5) 9 32% 43% 41% 1 1.5 and propane).TOTAL NET Standard conversionTOTAL factors NETGE* are used to ELECTRICITY NATURAL GAS 0.0 2016 2017 2018 STE / $NET SALES (X10-5)
SALES ERA 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 SALES 1.0
2017 2.5 AV 2 compute CO emissions from energy use. 2 0.5 PER 100 EMPLOYEES 0 0.5 2016 2017 2018 2018 1.7 INDUST RY 1.0 In 2018, our CO2 intensity per U.S. dollar of net sales METRIC TONNE WA 9% 32% 43% 41% METRIC TONNE CO2 / $NET SALES (10-5) 1 TOTAL NET TOTAL NET ELECTRICITY NATURAL GAS decreased by 17 percent over 2017. This was attributable 0.0 0.0 2016 2017 2018 SALES 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 SALES to a 10 percent decrease in CO emissions and 9 percent LOST DAY FREQUENCY RATE 2 % 0.5 PER 100 EMPLOYEES 16 OTHER increase in our net sales. 0 2016 0.5
2016 2017 2018 GE* ERA AV
2017 0.5 0.0
LOST DAY FREQUENCY RATE 2018 INDUST RY 0.5 16% 19 OTHER 2016 0.5 CORPORATE SUSTAINABILITY REPORT
GE* 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 ERA AV
2017 0.5 PER 100 EMPLOYEES
2018 INDUST RY 0.5
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
PER 100 EMPLOYEES WOOD FIBER PURCHASE
50
40
30
20 METRIC TONS
10
0 2016 2017
WATER ENERGY CONSUMPTION CERTIFIED FORESTRY SOURCES WATER USE WATER CONSUMPTION 100 MANUFACTURINGOur total ANDwater WAREHOUSE/DISTRIBUTION consumption in 2018 was approximately 1.42 1,068,000 2016 1,102,000 cubic meters (M3). 1200 1,068 1,103 1,102
1.48 1000
ELECTRICITY 1,047,000 2017 WATER USE IN STRESSED LOCATIONS United Kingdom 1.44 In 2018, 27 percent of Masco’s total water consumption 800 was by companies who reported the use of water in areas 0 300 600 900 1200 1500 the World Resource Institute defines as having high or 600 1.33 116,000 GERMANY 46,000 UK TOTAL extremely high baseline water stress.
55% 82% CUBIC METERS (000’S) 400 1.30 2017 2018 GAS MILLIONS 1.26 26,000 EMPLOYEES IN 31 COUNTRIES 200
0 2016 2017 2018 .54 2018 *In 2016, 11 additional sites began reporting water consumption .45 2017 THER 7.37 7.37 O % 22% 41% 52% 52% 75% 84% 8 .26 2016 WATER RISK MANAGEMENT OTHER 67 51We are committed to reducing our impact on water MANUFACTURING WAREHOUSES AND 0.00.3 0.60.9 1.21.5 PROPERTIES DISTRIBUTIONresources company-wide. Efforts are in place to PROPERTIES reduce the amount of water used in product design MILLION GIGAJOULES OF ENERGY CONSUMED and manufacturing processes. For example, we have % 49 C0 INTENSITY collaborated with the EPA as a WaterSense® partner ELECTRICITY 2 5 to encourage the efficient use of water resources and 43% actively protect the future of the world’s water supply. 4.33 The WaterSense® program currently specifies labeling 8.61 2.5 WASTE INTENSITY 3.96 of high-efficiency toilets and water-conserving bath 60% 12% 7% 4 faucets, which can provide 30 percent water savings 48% 11% USA GERMANY UK 2.5 TOTAL NET for residential use and perform better than the industry TOTAL NET 2.03 2.0 SALES SALES 3.28 standard. Additionally, Bristan has worked1.89 to reduce 2.0 INCIDENT RATE environmental impact by responsibly disposing of water, 3 achieving a water recycle rate of roughly 70 percent1.58 in NATURAL GAS 2016 3.0 1.5 its laboratories when performing endurance testing. 1.5 GE* Masco also works to reduce environmental impact STE / $NET SALES (X10-5) ERA 1.0
2017 2.5 AV 2 by responsibly disposing of water. Masco discharges
process water from its manufacturing locations to local, publicly-owned treatment works.0.5 We are not aware of 2018 1.7 INDUST RY 1.0 any bodies of water that are significantly affected by our METRIC TONNE WA 9% 32% 43% 41% METRIC TONNE CO2 / $NET SALES (10-5) 1 TOTAL NET TOTAL NET ELECTRICITY NATURAL GAS discharges. 0.0 2016 2017 2018 SALES SALES 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 0.5 PER 100 EMPLOYEES 0 2016 2017 2018
0.0 LOST DAY FREQUENCY RATE 16% OTHER 2016 0.5 20 GE* CORPORATE SUSTAINABILITY REPORT ERA AV
2017 0.5
2018 INDUST RY 0.5
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
PER 100 EMPLOYEES WOOD FIBER PURCHASE
50
40
30
20 METRIC TONS WOOD FIBER PURCHASE
10 50
0 2016 2017 40
30 ENERGY CONSUMPTION CERTIFIED FORESTRY SOURCES 20 WATER CONSUMPTION 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION METRIC TONS 1.42 1,068,000 2016 1200 1,068 1,103 1,102 10
1.48 1000
ELECTRICITY 1,047,000 2017 0 United Kingdom 1.44 800 2016 2017
0 300 600 900 1200 1500 600 1.33 116,000 GERMANY 46,000 UK TOTAL 55% 82% WOOD CUBIC METERS (000’S) 400 CERTIFIED FORESTRY SOURCES 1.30 2017 2018ENERGY CONSUMPTION GAS MILLIONS WOOD FIBER PURCHASED WATER CONSUMPTION 1.26 26,000 EMPLOYEES IN 31 COUNTRIES 200 The total amount of wood fiber purchased during 2018 was 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION 1,068,000 1.42 approximately 47,8462016 metric tons (MT). 1,068 1,103 1,102 0 1200 2016 2017 2018 .54 2018 1.48 *In 2016, 11 additional sites began 1000 WOOD FROM CERTIFIED FORESTLANDS ELECTRICITY 1,047,000 2017 reporting water consumption .45 2017 THER United Kingdom Masco is committed to responsible sourcing of wood 7.37 7.37 O 1.44 % 22% 41% 52% 52% 75% 84% materials. Our business unit that achieved the highest 800 8 .26 2016 OTHER percentage of wood consumed from certified forestry 67sources in 2018 was Bristan, at 82 percent.51 0 300 600MANUFACTURING900 1200 150WA0REHOUSES AND 600 0.00.3 0.60.9 1.21.5 PROPERTIES DISTRIBUTION 1.33 PROPERTIES 116,000 GERMANY 46,000 UK TOTAL
MILLION GIGAJOULES OF ENERGY CONSUMED 55% 82% CUBIC METERS (000’S) 400 1.30 2017 2018
% GAS 49 C0 INTENSITY ELECTRICITY MILLIONS 2 1.26 26,000 EMPLO5 YEES IN 31 COUNTRIES 200 43% WASTE 4.33 2.5 8.61 0 WASTE INTENSITY WASTE INTENSITY 2016 2017 2018 .54 We define our waste3.96 intensity as metric tons of waste 60% 12% 7% 2018 4 48% 11% USA GERMANY UK per unit of net sales in U.S. dollars. Total waste consists 2.5 *In 2016, 11 additional sites began TOTAL NET of hazardous waste, non-hazardous waste and recycled reporting water consumption TOTAL NET .45 2017 2.03 2.0 SALES THER 3.28 1.89 7.37 7.37 SALES O waste. Hazardous waste is primarily disposed through fuels 2.0 % INCIDENT RATE blending, incineration, landfill or recycling. Non-hazardous 22% 41% 52% 52% 75% 84% 8 .26 2016 3 OTHER waste is primarily disposed through landfill and recycling. 1.58 NATURAL GAS 3.0 1.5 67 51 2016 Some non-hazardous waste is also incinerated or sent to a MANUFACTURING WAREHOUSES AND 1.5 DISTRIBUTION 0.00.3 0.60.9 1.21GE* .5 wastewater treatment facility. Recycled waste is kept out of PROPERTIES PROPERTIES STE / $NET SALES (X10-5)
ERA landfills by changing some of our process and construction 1.0
2017 2.5 AV 2 MILLION GIGAJOULES OF ENERGY CONSUMED waste materials into new products.
49% In 2018, our waste intensity per U.S. dollar of net sales 0.5 INDUST RY 1.0 2018 1.7 C02 INTENSITY ELECTRICITY decreased by 16 percent over 2017. This was attributable to METRIC TONNE WA 9% % % % METRIC TONNE CO2 / $NET SALES (10-5) 1 5 32 43 41 a 9 percent increase in our net sales and an approximately 9 TOTAL NET 43TOTAL% NET ELECTRICITY NATURAL GAS 0.0 2016 2017 2018 SALES SALES 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 percent decrease in our total waste volume. 4.33 8.61 2.5 0.5 WASTE INTENSITY PER 100 EMPLOYEES 3.96 0 60% 12%2016 2017 7%2018 4 48% 11% USA GERMANY UK 2.5 TOTAL NET TOTAL NET PRODUCT LIFECYCLE MANAGEMENT 2.03 2.0 SALES SALES We are committed to sustainable product design, production, packaging and delivery, which may include product 0.0 3.28 1.89 LOST DAY FREQUENCY RATE lifecycle evaluation for environmental impacts and product sustainability. We collaborate with many third-partyINCIDENT business RATE 2.0 16% partners to reduce the environmental impact of our products, such as reducing water use and carbon intensity, as 3 well as using sustainable materials in product development. For example, Behr Paint Company developed a lifecycle 1.58 NATURALOTHER GAS 2016 0.5 2016 3.0 1.5 assessment of its entire paint manufacturing and distribution process, further enabling increases in efficiency, GE* 1.5 decreases in impacts, and declarations related to product environmental and health considerations. GE* ERA STE / $NET SALES (X10-5) ERA AV 2017 0.5 1.0
2017 2.5 AV 2
2018 INDUST RY 0.5 0.5
INDUST RY 1.0 21 2018 1.7 CORPORATE SUSTAINABILITY REPORT METRIC TONNE WA 9% 32% 43% 41% METRIC TONNE CO2 / $NET SALES (10-5) 1 0.0 TOTAL0.1 NET 0.2 0.3 0.4 TOT0.5AL NET 0.6 0.7 0.8 ELECTRICITY NATURAL GAS 0.0 2016 2017 2018 SALES SALES 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 PER 100 EMPLOYEES 0.5 PER 100 EMPLOYEES 0 2016 2017 2018
0.0 LOST DAY FREQUENCY RATE 16% OTHER 2016 0.5 GE* ERA AV
2017 0.5
2018 INDUST RY 0.5
0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
PER 100 EMPLOYEES FEATURED PRODUCT HotSpring® Spa 22 CORPORATE SUSTAINABILITY REPORT SOCIAL
COMMUNITY VOLUNTEERISM
We engage in a broad range of civic initiatives in support Across our enterprise, Masco employees spend of a variety of causes, including Housing; Diversity, Equity thousands of hours volunteering in the community each & Inclusion; and Community Development. Between year. Employees participate in a variety of community sending teams to 5Ks to raise money for health research, service events, ranging from volunteering with Habitat for volunteering with youth development organizations, Humanity to online tutoring of students in under-resourced and partnering with nonprofits to help first graders stay schools to packing Thanksgiving meals for low-income on track with reading, our employees are passionately families. Additionally, each year full-time employees are involved in the communities where we live, work and eligible to designate $250 to the charity of their choice do business. Furthermore, our companies work actively upon completion of 25 hours of volunteering in the with Masco’s corporate office to identify and support community, up to $500 per year. opportunities to offer our products through donation and special pricing initiatives to nonprofit entities. Our business units are the primary source for in-kind product donations to charities, donating over $1 million in inventory in 2018.
PHILANTHROPY
We are committed to supporting both local and national organizations through monetary and in-kind donations. Masco’s corporate-wide charitable contributions in 2018 exceeded $5 million and were derived from a combination of Masco Foundation funds and corporate resources, including cash and in-kind product donations. Organizations supported by Masco and its Foundation during 2018 included: Habitat for Humanity International, HomeAid, City of Hope, Detroit Institute of Arts, The Henry Ford, Detroit Symphony Orchestra, Detroit Public Television, Detroit Zoological Society and many other local and national organizations. In addition to manufactured product donations by our business units, our employees raised and donated hundreds of thousands of dollars for local charities.
We also encourage our employees to make their own personal donations to nonprofit organizations by offering all U.S. employees the opportunity to double their impact through a matching gift program. Through this program, we match employee charitable gifts up to $5,000 per employee per year to any approved 501(c)(3) organization.
23 CORPORATE SUSTAINABILITY REPORT WOOD FIBER PURCHASE
50
40
30WOOD FIBER PURCHASE
50 20 METRIC TONS
40 10
30 0 2016 2017
20 METRIC TONS
10 ENERGY CONSUMPTION CERTIFIED FORESTRY SOURCES WATER CONSUMPTION 0 2016 2017 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION 1.42 1,068,000 2016 1200 1,068 1,103 1,102
1.48 1000
ELECTRICITY 1,047,000 2017 ENERGY CONSUMPTION CERTIFIED FORESTRY SOURCES United Kingdom 1.44 800 WATER CONSUMPTION 100 MANUFACTURING AND WAREHOUSE/DISTRIBUTION 1,068,000 1.42 0 300 600 900 20161200 1500 1200600 1,068 1,103 1,102 To1.33 prevent discrimination, including but not limited to LGBTQ, our philanthropic guidelines state that organizations 116,000 GERMANY 46,000 UK TOTAL 1.48 55% 82% CUBIC METERS (000’S) 1000400 1.30that discriminate in their provision of goods and services based on race,2017 color, religion,2018 gender, gender identity or
ELECTRICITY 1,047,000
GAS 2017 United Kingdom 1.44 MILLIONS 800 1.26expression, ethnicity, sexual26,000 orientation, EMPLOYEES IN 31 national COUNTRIES origin, physical or intellectual ability, age or status as a protected 200 0 300 600 900 1200 1500 veteran are not eligible. 6000 1.33 2016 2017 2018 .54 116,000 GERMANY 46,000 UK TOTAL 2018 55% 82% CUBIC METERS (000’S) 400 *In 2016, 11 additional sites began 1.30 2017 2018
GAS reporting water consumption .45 2017 THER 7.37 7.37 MILLIONS O 200 % 1.26 26,000 EMPLOYEES IN 31 COUNTRIES 22% 41% 52% 52% 75% 84% 8 .26 2016 OTHER 67 51 0 MANUFACTURING WAREHOUSES AND 2016 2017 2018 DISTRIBUTION 0.00.3 .54 0.60.9 1.21.5 PROPERTIES 2018 PROPERTIES *In 2016, 11 additional sites began MILLION GIGAJOULES OF ENERGY CONSUMED reporting water consumption .45 2017 THER 7.37 7.37 % O % 49 22% 41% 52% 52% 75% 84% C0 INTENSITY 8 ELECTRICITY .26 2016 2 5 43% OTHER 67 51 MANUFACTURING WAREHOUSES AND 0.00.3 0.60.9 1.21.5 PROPERTIES 4.33 DISTRIBUTION 2.5 PROPERTIES 8.61 HEALTH & SAFETY WASTE INTENSITY MILLION GIGAJOULES OF ENERGY CONSUMED 3.96 60% 12% 7% 4 % 2.5 49% 48% 11 USA GERMANY UK TOTAL NET C0 INTENSITY ELECTRICITY TOTAL NET 2 2.03 2.0 SALES INCIDENT RATE 5 % SALES 3.28 1.89 43 INCIDENT RATE 2.0 3 The safety of our employees is integral to our company 4.33 8.61 2.5 1.58 NATURAL GAS 3.0 WASTE INTENSITY 2016 3.96 1.5 and is handled responsibly and quickly. In support of our 4 1.5
60% 12% 7% GE* % USA GERMANY UK 2.5 % 11 STE / $NET SALES (X10-5) 48 ERA 1.0
TOTAL NET safety efforts, Masco identifies, assesses and investigates 2017 2.5 AV 2 TOTAL NET 2.03 2.0 SALES SALES 3.28 1.89 incident and injury data centrally, and each year sets a INCIDENT RATE 2.0 3 0.5 2018 1.7 INDUST RY 1.0 1.58
NATURAL GAS goal to improve key safety performance indicators by at 3.0 METRIC TONNE WA 9% 32% 43% 41% 2016 METRIC TONNE CO2 / $NET SALES (10-5) 1 1.5 TOTAL NET TOTAL NET ELECTRICITY NATURAL GAS 0.0 1.5 GE* 2016 2017 2018 SALES least 10 percent. Masco trains, promotes, consults and 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 SALES STE / $NET SALES (X10-5) ERA 1.0
2017 2.5 AV 2 0.5 communicates with our workforce in this process. Masco PER 100 EMPLOYEES 0 2016 2017 2018 0.5 again achieved this goal in 2018, with an incident rate of 2018 1.7 INDUST RY 1.0 METRIC TONNE WA 9% 32% 43% 41% METRIC TONNE CO2 / $NET SALES (10-5) 1 TOTAL NET TOTAL NET 1.7 per one hundredELECTRICITY employees. NATURAL GAS 0.0 0.0 2016 2017 2018 SALES SALES 0.0 0.5 1.0 LOST1.5 DAY FREQUENCY2.0 2.5 RATE3.0 3.5 4.0 0.5 16% PER 100 EMPLOYEES OTHER 2016 0.5 0 2016 2017 2018 GE* ERA AV 2017 0.5 0.0 LOST DAY FREQUENCY RATE LOST DAY FREQUENCY RATE16% 2018 INDUST RY 0.5 OTHER 2016 0.5
Masco works to maximize company-wide efficiency through GE*
0.0 0.1 0.2 0.3 0.4 0.5ERA 0.6 0.7 0.8 AV limiting lost days and encouraging a high standard of safety 2017 0.5 PER 100 EMPLOYEES
within the workplace. Masco’s lost day frequency rate was INDUST RY 2018 0.5 0.5 per hundred employees for 2018. Additionally, Masco has had no work-related fatalities in the last 3 years. 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
PER 100 EMPLOYEES
*The Bureau of Labor Statistics incidence rates of nonfatal occupational injuries and illnesses for Industry “Manufacturing”, 2017
LABOR POLICY Masco prides itself on its reputation for honesty, integrity and excellence in everything that we do. We therefore expect and require that all goods produced on our behalf or on behalf of any of the brands in the Masco family be made in facilities that meet specific criteria for human rights, working conditions and protection of the environment.
24 CORPORATE SUSTAINABILITY REPORT SUPPLIER BUSINESS PRACTICES POLICY Our selection and continued use of our suppliers is based on the following standards with respect to all goods that we purchase:
1. Comply with all applicable laws and regulations 7. Protect against unlawful discrimination against 2. Protect against the use of workers younger than workers and encourage employment based on the minimum age required by law ability 3. Protect against the use of forced labor (including 8. Respect workers’ rights to associate freely slavery and human trafficking) 9. Maintain safe and clean workplaces, including any 4. Provide appropriate wages and benefits as residential facilities, in compliance with the law required by law 10. Protect our confidential and proprietary 5. Protect against excessive working hours that information exceed local laws or business customs 11. Provide us all requested information regarding 6. Protect against physical and mental punishment Conflict Minerals as set forth below of workers
In accordance with the SEC’s Conflict Minerals Rule, we have implemented processes to identify whether tin, tantalum, tungsten and gold (“Conflict Minerals”) are contained in our products and, if so, whether the Conflict Minerals may originate from sources that directly or indirectly finance or benefit armed groups operating in the Democratic Republic of the Congo and surrounding countries. We expect our suppliers to source Conflict Minerals from suppliers who meet our Supplier Business Practices Policy requirements, to implement traceability measures for Conflict Minerals, and to provide us with all requested information, including information about all suppliers in their supply chains, so that we can comply with the SEC’s Conflict Minerals Rule.
We do not discourage our suppliers from sourcing Conflict Minerals from the Covered Countries. Rather, we encourage our suppliers to source these minerals from smelters and refiners verified as compliant with the Conflict-Free Sourcing Program (CFSP) or a similar program whether or not in a Covered Country. We continue to support responsible in-region mineral sourcing from the DRC and adjoining countries.
We will not knowingly work with suppliers that do not respect these standards and those of our customers. We periodically assess our suppliers’ compliance with these standards and those of our customers. Any reported noncompliance is investigated, and appropriate action is taken. These standards apply whether the supplier is a Masco company, an affiliate or a third party.
Masco Corporation audits our supply base to ensure compliance with our Supplier Business Practices Policy. We use a risk-based approach to determine which suppliers will be audited in any given year, and then conduct audits using dedicated staff personnel and third-party resources. We conduct approximately 125 audits per year and maintain the results of all completed audits. We execute corrective action plans following the completion of each audit to drive continued improvement in our supply base.
Our Supplier Business Practices Policy can be found at http://masco.com/suppliers-policy/.
25 CORPORATE SUSTAINABILITY REPORT CHEMICAL RESPONSIBILITY
MANAGING PRODUCT RISK By utilizing various environmental, health and safety (EHS) tools to analyze the hazards of chemicals and ensure their proper handling, labeling, use and waste treatment, we strive to keep our employees and customers safe from potentially harmful chemicals. Our program to mitigate risks to our employees as well as our customers starts when a chemical is first considered for use in our products or processes. Each new chemical must be reviewed and approved, including meeting REACH regulations in Europe, where applicable, before it may be brought on site and used in our products or processes.
For example, at Bristan, all new suppliers are issued a REACH Declaration of Substances of Very High Concern (SVHC) and asked to sign a statement disclosing the presence or absence of SVHCs in their products or packaging and committing to provide relevant updates when necessary.
MANAGING EMERGING CONCERNS Masco follows strict regulations through software identification and requests from suppliers to constantly equip employees and customers to deal with emerging chemicals of concern. Before approving suppliers, business units that may use emerging chemicals of concern require suppliers to declare whether their products or packaging contain Substances of Very High Concern (SVHCs). For instance, Behr works closely with coating associations in both the United States and Canada to keep abreast of new regulations regarding chemicals used in its products. Bristan personnel attend technical meetings of the Bathroom Manufacturers Association, where amendments to the SVHC list are often discussed. Hansgrohe uses “REACH Radar” to identify SVHCs. When products or packaging are deemed to contain SVHCs, they are dealt with in a safe manner, according to regulation.
26 CORPORATE SUSTAINABILITY REPORT HUMAN CAPITAL
Masco Corporation and its business units have a strong focus on human capital, consistently working to attract, select, develop, engage and retain strong, diverse talent. Our talent practices align with our continuous improvement culture, in which we focus on ‘getting better every day’. In 2018, we identified opportunities to further strengthen and leverage the enterprise to improve our approach to human capital, which included a new enterprise Talent Strategy. We defined three key strategic talent priorities:
STRATEGIC TALENT PRIORITIES STRATEGIC OUTCOMES
Leadership: Build more great leaders, faster at Leadership: Strong bench of leaders who can all levels. win increasingly more complex, competitive and ever-changing situations. Diversity & Inclusion: Integrate D&I into who are and how we work. Diversity & Inclusion: Inclusive workplace that leverages diverse backgrounds and Future Workforce: Find, grow and engage a perspectives to help us keep innovating, problem-solving, creative, agile, team-focused enhance our culture, positively impact our workforce. communities and advance the business.
Future Workforce: Workforce with the right capabilities in the right roles to position us for the future.
LEADERSHIP
Our philosophy is that everyone in our organization is and can be a leader in their own way. We’ve focused on designing new approaches to support the selection, development and engagement of our employees.
Our Leadership Framework: We designed a new leadership framework that serves as the foundation for how we select, develop and measure the performance of our leaders. This framework includes clearly defined behaviors that differentiate good from great leadership and proven practices that accelerate growth. Experiential, interactive sessions and tools were developed for deployment throughout the organization.
Continuous Development: We began implementing a new and innovative approach to development that is continuous and “closer to the job” instead of simply relying on formal training. This approach is based on leveraging heat experiences; diverse, supportive networks; and reflection to embed learnings. Our approach starts with our top leaders as role models, followed by our leaders and employees learning and helping each other increase their performance, development and engagement every day.
Building a Coaching Culture: We’ve placed a specific focus on helping people have honest, two-way coaching and feedback discussions about performance and development. We have implemented practices to help us do this regularly and in various forums. We have tools in place to support our people in how best to engage with each other, and we work to reward, recognize, select and promote people who excel at these practices.
27 CORPORATE SUSTAINABILITY REPORT DIVERSITY AND INCLUSION Over the last three years, we’ve activated a company-wide conversation around what diversity and inclusion is, why it matters to Masco, and what it means to our employees. Our approach to D&I focuses on:
Our People & Culture: We know that creating an environment where all people, from all backgrounds, feel like they belong and can bring their authentic self to work is central to helping our workforce thrive. We’re working to enable this culture through a variety of methods. We’ve created ongoing forums to help our people have difficult discussions that may take them outside their comfort zone. Together we’re learning to listen more, be more empathetic and better understand each other’s differences as well as how we’re similar. Some examples of the types of forums include hosting Day of Understanding discussions across our businesses as part of our commitment to the CEO Action coalition. We’re also partnering with organizations such as the Human Library to create immersive experiences for our people to have a direct conversation with people experiencing stigma, discrimination or prejudice because of their differences. To move the needle, we know it takes more than conversations – it takes additional focused actions. We have improved our talent processes to help ensure we hire and promote more diverse talent and mitigate unconscious biases in our decision-making. We’ve established intersectional D&I teams that are leader and employee-led to steward this work in a way that is meaningful to the business.
Our Marketplace: Our products are in the homes of people in more than 140 countries across the globe, representing all different backgrounds and ways of life. We work each day to ensure our products not only meet our consumers’ needs but demonstrate an understanding of who they are, what they care about and what they truly want. We also welcome partnerships with businesses that reflect both the diversity of our employees and of the communities in which we live and work.
KEY NATIONAL PARTNERS Our Communities: Through our “Million Differences” campaign, Masco has pledged $1 million of our annual philanthropic contributions to organizations that provide programs and services dedicated to overcoming barriers to workplace inclusion. This effort allows us to not only give funding to support organizations with strong missions, but also serves as a platform for our employees to give their time and energy. More importantly, this creates powerful learning opportunities and exposure to different people and backgrounds while having a positive impact.
28 CORPORATE SUSTAINABILITY REPORT FUTURE WORKFORCE In support of our continuous improvement culture, we are building new capabilities to ensure our employees and our organization are positioned to win in the future. Each year, as part of our strategic, long-range planning processes, our businesses identify critical capabilities our organization and our people need to help us achieve our goals. Once identified, we put structured teams, plans and measures in place to ensure we’re building these capabilities, while also managing our short-term priorities. Some examples include capabilities related to commercial and operational excellence as well as problem-solving skills and using fact-based decision- making. We provide tools and training to help our people build these new and important skills. We also use Kaizen events as a core engine of our business to create engaging, effective forums for continuous improvement and capability building.
EMPLOYEE ENGAGEMENT In addition to building key capabilities, we are consistently focused on enhancing our employees’ overall experience. This goes beyond just understanding the level of employee engagement and retention levels. Our approach is holistic, and we’re implementing a variety of methods to listen to our employees and capture their feedback, including surveys, focus groups, employee and manager forums and town halls. We capture key insights, share them with our employees, identify critical gaps, and integrate the most impactful actions into our strategies and plans. In 2019, we plan to implement a more consistent approach across our business to enable more common measurement of key performance indicators.
EMPLOYEE RETENTION We remain focused on understanding and ensuring we are retaining our talent. In 2018, our rate of voluntary turnover in the U.S. was approximately 18 percent. Internationally, that rate was about 3 percent.
29 CORPORATE SUSTAINABILITY REPORT FEATURED PRODUCT Newport Brass® 30 CORPORATE SUSTAINABILITY REPORT REPORTING
MATERIALITY
ENTITIES All of Masco’s business units are wholly owned, directly or indirectly, except for Hansgrohe SE, and all are included in both this CSR and financial reports. Masco owns 68 percent of Hansgrohe SE.
DEFINING REPORT CONTENT To prioritize the issues of most importance to our stakeholders, we hired a third-party consultant to assist our Sustainability Steering Committee (SSC) in assessing disclosure topics. Our assessment focused on identifying, prioritizing and validating aspects from the following key sources: Masco’s own documents on its sustainability strategy; feedback from the SSC, SSC Working and Advisory Groups, and employees; feedback directly from our shareholders and other stakeholders; initiatives from recognized industry organizations such as the Sustainability Accounting Standards Board, Global Reporting Initiative, Carbon Disclosure Project and the United Nations; documentation on the views of our stakeholders, including North American reporting authorities and surveys of U.S. environmental attitudes; and findings from peer benchmarking studies. In addition, specific comments and suggestions from stakeholders regarding our previously published sustainability reports have been influential in determining the structure and content of this report. From the content determined to be significant, we then identified the subset of content that would be appropriate to report, such as content with available data and without competitive risk. Finally, for each topic, we determined the boundary of applicability. For example, when considering Volatile Organic Compounds (VOCs) in regards to chemicals in our products, our boundary included relevant companies such as Behr Process Corporation.
31 CORPORATE SUSTAINABILITY REPORT MATERIAL ASPECTS AND BOUNDARIES Following is a list of topics Masco identified in the process of defining its 2018 CSR content, organized to align with the categories of the Global Reporting Initiative and other standards:
Corporate: Ethics and Integrity, Governance Environmental: Sustainable Products and Services, Structure, Brands, Products and Services, Energy, Materials, Water, Biodiversity, Emissions, Markets Served, Facilities, Countries of Operation, Effluents and Waste Workforce, Collective Bargaining, Supply Chain, Stakeholder Engagement, Data Protection Social: Community Engagement, Occupational Health and Safety, Training and Education, Economic: Economic Performance, Revenue from Employment, Non-Discrimination, Child Labor, Sustainable Products, Innovation Forced or Compulsory Labor
This report provides a summary of the sustainability performance and practices of Masco and its consolidated operating businesses as of December 31, 2018.
While included in this report, Hansgrohe has also produced its own Sustainability Report covering its facilities. The most recent Hansgrohe Sustainability Report is available in English (www.hansgrohe.com) and German (www.hansgrohe.de).
SIGNIFICANT CHANGES While Masco’s organizational profile changed in 2018, this report does not contain any significant changes in scope, boundary or measurement methods as compared to the 2017 CSR. This report does not contain a restatement of information relating to Masco’s major financial indicators and environmental data.
STAKEHOLDER ENGAGEMENT
GROUPS Our stakeholder groups, as of December 31, 2018, include the following:
• Employees: Masco and its business units had • Consumers: The ultimate consumers of our goods approximately 26,000 employees in 31 countries, include builders, contractors, designers, installers and approximately 61 percent of whom worked in the homeowners. United States. • Communities: Masco’s principal North American • Investors: Masco is a publicly-traded company and facilities consist of 48 manufacturing facilities and had approximately 3,300 shareholders of record. 32 distribution and warehouse facilities, and its principle facilities outside North America consists of • Customers: Our customers include home center 19 manufacturing facilities and 19 distribution and retailers, other retailers, dealers, distributors and warehouse facilities. homebuilders. Our largest customer is The Home Depot, which represented approximately 32 percent of • Suppliers: Masco buys raw materials, parts for its our consolidated 2018 net sales. products and finished goods from a wide range of suppliers around the world.
32 CORPORATE SUSTAINABILITY REPORT SELECTION Masco views its business–first and foremost–as one that serves its stakeholders. From our shareholders to our customers to our business partners to our employees, we know our financial and corporate sustainability performance depends on establishing good relationships with those we serve and rely on in the communities in which we work and live. We believe in engaging with all of our stakeholders honestly, respectfully and with integrity. Our stakeholder groups have been identified through a number of processes, namely feedback from Masco’s SSC, SSC Working and Advisory Groups and employees, as well as feedback directly from our shareholders and other stakeholders, studies from recognized industry organizations and evaluation of peer benchmark studies.
APPROACH We routinely seek input on what we make and sell, and how we operate internally and externally through employee surveys, shareholder meetings, market research and customer satisfaction analyses. The qualitative market research studies we conduct typically include questions related to the importance of sustainability to customer buying decisions.
Our approach has been to respond to various investor, highly-respected non-governmental organization and advocacy group inquiries for information. We also believe that our Corporate Sustainability Report is an effective method for providing meaningful communications with our stakeholders about our sustainability practices. In addition, Masco interfaces regularly with sustainability executives from other companies. This has enabled peer review and learning within a network of trusted professionals. We also engage in sustainability best-practice exchanges with other companies.
Masco’s suppliers are engaged through our enterprise-wide Supplier Business Practices Policy and audit process, and each Masco business unit has one or more managers or groups responsible for ensuring employee engagement in their respective organizations.
Through executive interviews, online bulletin boards and focus groups, Masco seeks to connect with its customers and build a two-way conversation. This conversation is enabled by a corporate Customer Satisfaction Index initiative across our North American business units that continually captures, evaluates and reports on how our channel customers, consumers, designers and installers perceive our product offerings. Our business units undertake qualitative and quantitative “Voice of Customer” market research to guide their development efforts for new products focused on the needs of their customers.
CONCERNS This report pays special attention to the topics of greatest concern to our principal stakeholders. These topics include innovative and sustainable products, energy usage and social responsibility.
REPORTING PROFILE
REPORTING PERIOD REPORTING CYCLE This Corporate Sustainability Report (CSR) focuses on This report is planned to be published at least biennially. Masco’s corporate governance, reporting approach, and economic, social and environmental performance during REPORT CONTACT 2018. Masco encourages feedback on its Corporate Sustainability Report. If you would like to comment on the report, please EXTERNAL ASSURANCE e-mail us at [email protected]. Additional External report assurance was not sought for this report. information about Masco, our business units and brands is available on our website at www.masco.com and in DATE OF PREVIOUS REPORT our 2018 Annual Report, which is also available on our Our most recent report was for 2017. website. 33 CORPORATE SUSTAINABILITY REPORT GRI AND SASB INDEX
2018 CSR 2018 GRI Standard Disclosure Title GRI UNSDG Goal UNSDG # SASB Disclosure SASB Sub-Section CSR Standard (in 2018) Discl. ID Page Discl. # (2018 CSR) # Executive Message 7 Statement from senior 102-14 decision-maker Ethics and Integrity 8 Values, principles, 102-16 16. Promote peaceful and 16.30 standards, and norms of inclusive societies for behavior sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels Structure 9 Governance structure 102-18 Precautionary 10 Precautionary Principle or 102-11 Principle approach Data Protection 10 Explanation of the material 103-1 16. Promote peaceful and 16.10 topic and its Boundary 418-1 inclusive societies for Substantial complaints sustainable development, concerning breaches provide access to justice of customer privacy and for all and build effective, losses of customer data accountable and inclusive institutions at all levels Endorsements 11 External initiatives 102-12 Organization 11 "Name of the organization 102-1 Location of headquarters 102-3 Ownership and legal form 102-5 Brands, Products, 11 "Activities, brands, 102-2 and Markets products, and services 102-6 Markets served" Significant Changes 12 "Significant changes to the 102-10 organization and its supply 102-49 chain Changes in reporting Operations 13 Location of operations 102-4 Area of CG-BF-000.B Scale of organization 102-7 manufacturing facilities
Workforce 13 Information on employees 102-8 10. Reduce inequality 10.3 and other workers within and among countries Collective Bargaining 12 Collective bargaining 102-41 8. Promote sustained, 8.8 agreements inclusive and sustainable economic growth, full and productive employment and decent work for all Supply chain 13 Supply chain 102-9 Memberships 14 Membership of 102-13 associations Core Financials 16 Direct economic value 201-1 8. Promote sustained, 8.10 Annual Production CG-BF-000.A generated and distributed inclusive and sustainable economic growth, full and productive employment and decent work for all
34 CORPORATE SUSTAINABILITY REPORT 2018 CSR 2018 GRI Standard Disclosure Title GRI UNSDG Goal UNSDG # SASB Disclosure SASB Sub-Section CSR Standard (in 2018) Discl. ID Page Discl. # (2018 CSR) # Revenue from 16 Direct economic value 201-1 8. Promote sustained, 8.10 Revenue from CG-HP- Sustainable generated and distributed 201-2 inclusive and sustainable 13.1 products designed 250a.4 Products Financial implications economic growth, full and with green chemistry and other risks and productive employment principles opportunities due to and decent work for all climate change 13. Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries Revenue from 16 Financial implications 201-2 13.1 Strengthen 13.10 Percentage of CG-BF-250a.2 Products Meeting and other risks and 305-7 resilience and adaptive eligible products VOC Emissions and opportunities due to capacity to climate- meeting volatile Content Standards climate change related hazards and organic compound Nitrogen oxides (NOX), natural disasters in all (VOC) emissions and sulfur oxides (SOX), countries content standards and other significant air emissions 12. Ensure sustainable consumption and production patterns Vitality 17 Direct economic value 201-1 8. Promote sustained, 8.10 generated and distributed 201-2 inclusive and sustainable 13.1 Financial implications economic growth, full and and other risks and productive employment opportunities due to and decent work for all climate change 13. Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries" Intellectual Property 17 Financial implications 201-2 13. Take urgent action to 13.1 and other risks and combat climate change opportunities due to and its impacts. climate change Acknowledging that the United Nations Framework Convention on Climate Change is the primary international, intergovernmental forum for negotiating the global response to climate change. Energy Consumption 19 Energy consumption within 302-1 7. Ensure access to 7.2 Total energy CG-BF-130a.1 the organization affordable, reliable, consumed, sustainable and modern percentage energy for all grid electricity, percentage renewable CO2 Intensity 19 Direct (Scope 1) GHG 305-1 Ensure sustainable 12.4 emissions 305-2 consumption and Energy indirect (Scope 2) 305-3 production patterns GHG emissions 305-4 Other indirect (Scope 3) GHG emissions GHG emissions intensity Water Use 20 Total water CG-HP- withdrawn 140a.1
35 CORPORATE SUSTAINABILITY REPORT 2018 CSR 2018 GRI Standard Disclosure Title GRI UNSDG Goal UNSDG # SASB Disclosure SASB Sub-Section CSR Standard (in 2018) Discl. ID Page Discl. # (2018 CSR) # Water Use in 20 Percentage of each CG-HP- Stressed Locations in regions with high 140a.1 to extremely high baseline water stress Water Risk 20 The management 103-2 Description of efforts CG-BF-410a.1 Management approach and its to manage product components lifecycle impacts and meet demand for sustainable products Wood Fiber 21 Financial implications 201-2 12. Ensure sustainable 12.2 Total weight of wood CG-BF-430a.1 Purchased and other risks and 301-1 consumption and 13.1 fiber materials opportunities due to 304-2 production patterns 15.1 purchased climate change 304-3 Materials used by weight 13. Take urgent action to or volume combat climate change and its impacts** Significant impact of Acknowledging that activities, products, and the United Nations services on biodiversity Framework Convention Habitats protected or on Climate Change is restored the primary international, intergovernmental forum for negotiating the global response to climate change.
15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss Wood from Certified 21 Materials used by weight 301-1 12. Ensure sustainable 12.2 Percentage from CG-BF-430a.1 Forestlands or volume 304-2 consumption and 15.1 third-party certified 304-3 production patterns forestlands, Significant impact of percentage by activities, products, and 15. Protect, restore and standard, and services on biodiversity promote sustainable percentage certified Habitats protected or use of terrestrial to other wood restored ecosystems, sustainably fiber standards, manage forests, combat percentage by desertification, and standard halt and reverse land degradation and halt biodiversity loss
36 CORPORATE SUSTAINABILITY REPORT 2018 CSR 2018 GRI Standard Disclosure Title GRI UNSDG Goal UNSDG # SASB Disclosure SASB Sub-Section CSR Standard (in 2018) Discl. ID Page Discl. # (2018 CSR) # Waste Intensity 21 Financial implications 201-2 13. Take urgent action to 13.1 and other risks and 306-2 combat climate change 12.5 opportunities due to and its impacts** climate change Acknowledging that the United Nations Waste by type and Framework Convention disposal method on Climate Change is the primary international, intergovernmental forum for negotiating the global response to climate change.
12. Ensure sustainable consumption and production patterns Product Lifecycle 21 The management 103-2 Description of efforts CG-BF-410a.1 Management approach and its to manage product components lifecycle impacts and meet demand for sustainable products Volunteerism 23 The management 103-2 approach and its components Philanthropy 23 Direct economic value 201-1 8. Promote sustained, 8.1 generated and distributed inclusive and sustainable economic growth, full and productive employment and decent work for all Incident Rate 24 8. Promote sustained, 8.1 inclusive and sustainable economic growth, full and productive employment and decent work for all Labor Policy 24 Operations and suppliers 408-1 8. Promote sustained, 8.7 at significant risk for 409-1 inclusive and sustainable 16.2 incidents of child labor economic growth, full and productive employment Operations and suppliers and decent work for all at significant risk for incidents of forced or 16. Promote peaceful and compulsory labor inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
Managing Product 26 The management 103-2 Discussion of CG-BF-250a.1 Risk approach and its processes to assess components and manage risks and/or hazards associated with chemicals in products Managing Emerging 26 The management 103-2 Concerns approach and its components
37 CORPORATE SUSTAINABILITY REPORT 2018 CSR 2018 GRI Standard Disclosure Title GRI UNSDG Goal UNSDG # SASB Disclosure SASB Sub-Section CSR Standard (in 2018) Discl. ID Page Discl. # (2018 CSR) # Human Capital 27 Average hours of training 404-1 4. Ensure inclusive 4.3 per year per employee 404-2 and equitable quality 8.2 Programs for upgrading 404-3 education and promote 8.5 employee skills and 405-1 lifelong learning 16.b transition assistance 405-2 opportunities for all programs 406-1 8. Promote sustained, Percentage of employees inclusive and sustainable receiving regular economic growth, full and performance and career productive employment development reviews and decent work for all Diversity of governance bodies and employees 16. Promote peaceful and Ratio of basic salary and inclusive societies for renumeration of women sustainable development, to men provide access to justice for all and build effective, Incidents of discrimination accountable and inclusive and corrective actions institutions at all levels taken Diversity and 28 Incidents of discrimination 406-1 16. Promote peaceful and 16.b Inclusion and corrective actions inclusive societies for taken sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels Employee 29 - - - - Engagement Employee Retention 29 New employee hires and 401-1 8. Promote sustained, 8.5 employee turnover inclusive and sustainable economic growth, full and productive employment and decent work for all Employee 31 New employee hires and 401-1 8. Promote sustained, 8.5 Satisfaction employee turnover inclusive and sustainable economic growth, full and productive employment and decent work for all Entities 31 Entities included in the 102-45 consolidated financial statements Defining Report 32 Defining report content 102-46 Content and topic Boundaries Material Aspects 32 List of material topics 102-47 and Boundaries 103-1 Explanation of the material topic and its Boundary Significant Changes 32 Restatements of 102-48 information Groups 33 List of stakeholder groups 102-40 "Selection 33 Identifying and selecting 104-42 Approach" stakeholders 104-43
Approach to stakeholder engagement
38 CORPORATE SUSTAINABILITY REPORT 2018 CSR 2018 GRI Standard Disclosure Title GRI UNSDG Goal UNSDG # SASB Disclosure SASB Sub-Section CSR Standard (in 2018) Discl. ID Page Discl. # (2018 CSR) # Concerns 33 Key topics and concerns 102-44 raised Reporting Period 33 Reporting period 102-50 External Assurance 33 External assurance 102-56 Date of Previous 33 Date of most recent report 102-51 Report Reporting Cycle 33 Reporting cycle 102-52 Report Contact 33 Contact point for 102-53 questions regarding the report GRI, UNSDG, SASB 34 GRI content index 102-55 Index
39 CORPORATE SUSTAINABILITY REPORT