Evolving for All 2021 Sustainability Report - BorgWarner
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Evolving for All 2021 Sustainability Report
Contents
4 A Letter From Our President and CEO
5 BorgWarner at a Glance
6 Electrification Is at the Forefront of Our Strategy
8 Our Approach to Sustainability
11 About This Report
12 Working Together to Respond to COVID-19
14 Environmental Stewardship: Create a cleaner, more energy-efficient world
Driving Clean Mobility
Operations
23 Social Responsibility: Live the BorgWarner Beliefs
Embracing Diversity, Equity & Inclusion
Employee Engagement and Retention
Safety
Giving Back to Our Communities
38 Governance: Partner with and Report to Stakeholders
Ethics and Integrity
Data Privacy and Cybersecurity
Product Quality
Supply Chain Management
46 Appendix
TCFD Index
Performance Data and SASB Index
U.S. EEO-1 Data
GRI Index
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 2
Statements in this report may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act that are based on management’s current outlook, expectations, estimates and projections. Words such as “anticipates,” “believes,” “continues,” “could,” “designed,” “effect,” “estimates (including instances where “E” immediately precedes a year),” “evaluates,” “ex- pects,” “forecasts,” “goal,” “guidance,” “initiative,” “intends,” “may,” “outlook,” “plans,” “potential,” “predicts,” “project,” “pursue,” “seek,” “should,” “target,” “when,” “will,” “would,” and variations of such words and similar expressions are intended to identify such forward looking statements. Further, all statements, other than statements of historical fact contained or incorporated by reference in this re- port that we expect or anticipate will or may occur in the future regarding our financial position, business strategy and measures to im- plement that strategy, including changes to operations, competitive strengths, goals, expansion and growth of our business and opera- tions, plans, references to future success and other such matters, are forward-looking statements. Accounting estimates, such as those described under the heading “Critical Accounting Policies” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 (“Form 10-K”), are inherently forward-looking. All forward-looking statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. Forward-looking statements are not guarantees of performance, and the Company’s actual results may differ materially from those expressed, projected or implied in or by the forward looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Forward looking statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking state- ments. These risks and uncertainties, among others, include: the difficulty in forecasting demand for electric vehicles and our EV revenue growth to 2030; the ability to identify targets and consummate acquisitions on acceptable terms; failure to realize the ex- pected benefits of acquisitions; the ability to identify appropriate combustion portfolio businesses for disposition and consummate planned dispositions on acceptable terms; competitive challenges from existing and new competitors including OEM customers; the challenges associated with rapidly-changing technologies, particularly as relates to electric vehicles, and our ability to innovate in response; uncertainties regarding the extent and duration of impacts of matters associated with COVID-19/coronavirus pandemic, including additional production disruptions; the failure to realize the expected benefits of the acquisition of Delphi Technologies PLC that the Company completed on October 1, 2020; the failure to realize the expected benefits of the recent acquisition of AKASOL AG or a delay in the ability to realize those benefits; the failure to successfully execute on a timely basis our taking private strategy with respect to AKASOL; the failure to promptly and effectively integrate acquired businesses; the potential for unknown or inesti- mable liabilities relating to the acquired businesses; our dependence on automotive and truck production, both of which are highly cyclical; our reliance on major OEM customers; commodities availability and pricing; supply disruptions; the uncertainty of the global economic environment; future changes in laws and regulations, including, by way of example, tariffs, in the countries in which we operate; and the other risks noted in reports that we file with the Securities and Exchange Commission, including Item 1A, “Risk Factors” in our most recently-filed Annual Report on Form 10-K and/or Quarterly Report on Form 10-Q. We do not undertake any obligation to update or announce publicly any updates to or revisions to any of the forward-looking statements in this report to re- flect any change in our expectations or any change in events, conditions, circumstances, or assumptions underlying the statements. BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 3
A Letter From Our President and CEO
At BorgWarner, we are committed to helping
foster sustainable transportation, which is why
we have accelerated our shift to electrification.
This acceleration is a logical extension of what we have been building over the
past years. To reflect this focus, we launched a new mission in 2021 – we deliver
innovative and sustainable mobility solutions for the vehicle market. Our vision –
a clean, energy-efficient world – is not changing. It continues to be a good vision
for us, guiding our company. As part of our transformation, we have committed
to the goal to be carbon neutral in our operations – our Scope 1 and Scope 2
emissions – by 2035.
To achieve our mission and our vision, we are guided by our BorgWarner Beliefs.
They are at the core of how we operate as an organization and how we deliver
value for our stakeholders. Our Beliefs also provide us strength when we are
challenged. As our company grows, our commitment to inclusion, integrity,
excellence, responsibility and collaboration will continue to guide us.
“As our Rising personal mobility and more stringent environmental regulations around
the world make our products, our innovation and our scale more critical than
ever. Our acquisition of Delphi Technologies in 2020 was an exciting next step
company grows, in BorgWarner’s mission. It strengthens our electric and hybrid position and
advances our emissions-reducing and fuel-efficient combustion offering.
our commitment To be successful and to deliver value over the long term, we must be resilient.
to inclusion, Responding to the challenges of the COVID-19 pandemic demonstrated our
strength, both as a business and as individuals. Our plants in China and Japan were
integrity,
impacted early on by the virus, and our employees there were integral in helping
us identify and share best practices, from safety to supply chain sourcing, to help
our facilities around the world restart safely.
excellence, Each of our approximately 50,000 global employees plays a part in achieving our
responsibility sustainability goals by supporting our vision of a clean, energy-efficient world,
living the BorgWarner Beliefs and partnering with and reporting to stakeholders.
and collaboration I am incredibly proud of the strides the company has made and continues to make
in delivering our commitment to sustainability.
will continue
to guide us.”
Frédéric Lissalde
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BorgWarner Inc. World Headquarters
Auburn Hills, Michigan
June 2021
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 4
BorgWarner at a Glance
BorgWarner is delivering on our vision of a clean, energy-efficient
world. We made that commitment decades ago and have since been
creating technologies to improve efficiency, emissions and performance $10.2 2020 Sales
of all types of vehicles. Our proven track record demonstrates our BILLION (consolidated)
industry leadership in clean, efficient technology solutions for
combustion, hybrid and electric vehicles. To deliver our vision, we
embody our Beliefs in every aspect of our operations. These are values
Worldwide
that we live by, instill in our employees and uphold in partnership with
our customers, suppliers and communities.
~50,000 employees
Who we are
We are a global product leader in sustainable mobility solutions for
the vehicle market. Our products help improve vehicle performance, 99 In 24
LOCATIONS countries
propulsion efficiency, stability and air quality. We manufacture and
sell these products worldwide, primarily to original equipment
manufacturers (OEMs) of passenger cars, SUVs, vans and light trucks.
The Company’s products are also sold to OEMs of commercial vehicles Light vehicles,
and off-highway vehicles. Additionally, we manufacture and sell our 4 commercial
products to certain Tier One vehicle systems suppliers and into the VEHICLE vehicles,
MARKETS off-highway,
aftermarket for light, commercial and off-highway vehicles. We are an SERVED
aftermarket
original equipment supplier to nearly every major automotive OEM in
the world and operate manufacturing facilities, serving customers in
Europe, the Americas and Asia.
Our Vision:
A clean, energy-efficient world
Our Mission:
We deliver innovative and sustainable
mobility solutions for the vehicle market
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 5
Electrification Is at the Forefront
of Our Strategy
Accelerating toward electrification with ~45% EV product sales by 2030
Electric Vehicles (% Sales)
~45%
>25%
EV Product Portfolio
Integrated Drive Module:
Our fully Integrated Drive Module (iDM) products massively
simplify the design of pure electric and hybrid passenger
cars and light commercial vehicles by giving OEMs access to
primary or secondary propulsion modules based on a common
architecture and integrated power electronics.
Power Electronics:
Inverters and converters work together to manage a vehicle's
electric drive and accessory systems. By combining both
elements into one compact component we're meeting
manufacturers' demands.
Coolant Heater:
BorgWarner’s specially developed high-voltage coolant heaters
have been developed to keep the core components of hybrid and
pure electric vehicles at temperatures that facilitate maximum
charging efficiency, durability and driving range.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 7
Our Approach to Sustainability
To us, sustainability means driving Environmental, Social and Governance (ESG) initiatives to deliver value to all stakeholders, both
for today and tomorrow. We are guided by our Beliefs and committed to achieving our vision of a clean, energy-efficient world.
Our sustainability strategy and goals are reviewed and approved by our executive management team (Strategy Board), with
our Board of Directors (Board) maintaining ultimate oversight. Guiding our approach is our Sustainability Steering Committee,
a cross-functional team of BorgWarner leadership. Our policies and systems provide the framework in which we operate to
achieve our sustainability goals.
Identifying material ESG priorities ESG Priorities at a Glance
In 2021, we undertook a new materiality assessment prior
to issuing this report (our last materiality report was done Environmental
in 2018). This year, we wanted to update the assessment
Emissions (Scopes 1, 2 & 3)
to include the changes in the industry with the shift to
electrification, as well our response to events, including Energy Usage
the COVID-19 pandemic and demonstrations in support Waste Reduction (Resource Efficiency)
of racial justice.
Water Quality & Consumption
For the assessment, a third party used our previous Environmental Management System
material topics as a starting point. Research was
performed to create a list of ESG topics for consideration
by reviewing industry peers, sustainability rating Social
organizations and common sustainability reporting Diversity, Equity & Inclusion
standards. Using Global Reporting Initiative guidance, we
Health & Safety
identified pertinent stakeholder groups to help identify our
material topics: customers, suppliers, employees, investors Education & Development
and other stakeholders. We collected input from these Employee Engagement
groups through interviews, focus groups, surveys and
Human/Labor Rights
publicly available data. Finally, we held meetings with the
BorgWarner Strategy Board and Sustainability Steering Talent Acquisition & Retention
Committee members to create our topic prioritization for
BorgWarner.
Governance
The output of this assessment ranks the importance of Advancing Innovation
different ESG topics by importance to our stakeholders Supply Chain Management
versus the impact to BorgWarner. Our next steps will be
to translate the results into our sustainability strategy Compliance with Laws/Regulations
and reporting. We are pleased to see that many of the Product Safety & Quality
sustainability topics we focus on today were reaffirmed Ethical Conduct
by this assessment.
Data Privacy & Cybersecurity
Customer Satisfaction
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 8
S U S TA I N A B I L I T Y S T R AT E G Y
Create a cleaner, more Live the Partner with and report
energy-efficient world BorgWarner Beliefs to stakeholders
Product Offerings for Improved
Efficiency and Reduced Emissions Employee Health & Safety Stakeholder Assessments
Continue
in Combustion, Hybrid and Electric Community Investment Governance & Compliance
Propulsion Architectures
Accelerate Offerings for Goal Setting & Metrics
Hybrid & Electric Vehicles Diversity, Equity & Inclusion
Advance Active Communication
Environmental Aspects of Engagement & Sentiment
Operations Sustainable Value Chain
Create a cleaner, more Partner with and report
energy-efficient world to stakeholders
Our products, which span across vehicle markets, are at the We are committed to engaging with our stakeholders
heart of our mission of enabling sustainable mobility. Our and being transparent in our impacts, our goals and our
acquisition of Delphi Technologies and the integration of their performance. We conducted a new materiality assessment
products into our portfolio expand our ability to play a critical this year to understand the sustainability priorities of
role in reducing emissions, while providing more mobility to our stakeholders. The results reaffirmed our focus on the
the world. We have reduced our carbon intensity by 28% since emissions impacts of our products and operations, diversity,
2015 within our operations prior to the Delphi Technologies equity and inclusion, health and safety, and advancing
acquisition (the reduction is 17% against our updated baseline innovation as key priorities for our business and our
to account for our acquisition of Delphi Technologies). We stakeholders.
continue to make strong progress toward meeting our interim
target of cutting our emissions intensity 50% by 2030, and on We are also driving our sustainability commitment in
our way to carbon neutrality in 2035. our supply chain: our target is to have at least 80% of
our high-risk and high-impact suppliers complete the
Sustainability Self-assessment Questionnaire for automotive
Live the BorgWarner Beliefs sector suppliers on an ongoing basis, so we can review the
performance of our suppliers on environmental, social and
We are guided by our Beliefs as individuals, as a team and as
governance topics.
a company. We are committed to promoting and nurturing
a diverse and inclusive environment, honoring integrity,
striving for excellence, committing to responsibility for our
communities and the environment, and building on the
power of collaboration.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 9
S U S TA I N A B I L I T Y K E Y P E R F O R M A N C E I N D I C AT O R S A N D G O A L S
2017 2018 2019 2020 Goal
CREATE A CLEAN, ENERGY-EFFICIENT WORLD
Maintain majority of revenue from clean
Revenue from fuel-efficient and lower-emission products (%) – 84% 83% 85% and emissions-reducing products
Greenhouse gas emissions (kt CO2e)1 348 350 325 343
Energy consumption (GWh)1 923 964 911 969
50% GHG intensity reduction
% GHG intensity reduction (2015 baseline)1 9% 13% 15% 17% relative to sales by 2030
37% energy intensity reduction
% energy intensity reduction (2015 baseline)1 9% 11% 10% 12% relative to sales by 2030
ISO 14001 environmental management-certified facilities (%)2 – 100% 100% 100% Maintain 100%
LIVE THE BORGWARNER BELIEFS
Total recordable incident rate (per 200,000 hours worked) 0.62 0.56 0.46 0.44
Women in salaried workforce (%) 21.7% 22.0% 22.4% 22.1%
Women in leadership (%) 12.7% 13.9% 14.1% 14.6%
Employee turnover rate (%) 14.5% 17.6% 18.5% 14.8%
40,000 employee volunteer
Employee volunteer hours 28,538 54,250 62,890 18,7933 hours in 2021
PARTNER WITH AND REPORT TO STAKEHOLDERS
IATF 16949/ISO 9001 quality management-certified facilities (%)2 – 100% 100% 100% Maintain 100%
High-impact and high-risk suppliers completed At least 80% of high-risk and
– – – 24.1%4 high-impact suppliers complete survey
sustainability questionnaire (%)
1 ) Our environmental baselines were updated to include our acquisition of Delphi Technologies. Energy use and emissions data reporting represents approximately 94% of our facilities by total square footage.
2) "Facilities" for these performance indicators is defined as manufacturing locations that supply directly to original equipment manufacturers.
3) Employee volunteer hours were impacted by COVID-19.
4) Survey conducted in Q1 2021 for high-risk and high-impact suppliers from 2020.
BorgWarner Inc. | 2020
2021 SUSTAINABILITY
SUSTAINABILITYREPORT
REPORT 10About This Report
This report showcases many facets of our commitment In addition to describing the investments and resources
to being a sector leader in sustainability and provides an that are critical to the long-term sustainability of our
overview of our governance, oversight, policies, programs business, this report also reflects feedback received from our
and performance around the issues material to the customers, employees, investors and other key stakeholders.
sustainability of our company.
We report using the Sustainability Accounting Standards
Unless otherwise specifically stated, this report covers Board (SASB), Task Force on Climate-related Financial
BorgWarner’s performance in 2020, with the inclusion of Disclosure (TCFD) and Global Reporting Initiative (GRI)
Delphi Technologies from the close of our acquisition in frameworks that are most relevant to our business and our
October 2020. stakeholders. We also consider industry association guidance
from the Automotive Industry Action Group (AIAG).
AWA R D S & R E CO G N ITIO N
2020 Best Employers for Diversity List
Top Employers China 2020
2020 CLEPA Award (EU association of automotive suppliers)
for 800 volts silicon carbide inverter technologies
Great Place to Work-Certified™ – Mexico Great Place to Work-Certified™ – USA
2021 Bloomberg Gender-Equality Index recognition General Motors Supplier of the Year – awarded in 2020
Newsweek’s America’s Most Responsible Companies 2021 Human Rights Campaign Foundation’s Corporate
Equality Index 2021 score of 75 out of 100
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 11Working Together to Respond
to COVID-19
The ongoing COVID-19 pandemic has created unprecedented challenges
for both our company and our society. Collaboration among our Critical
Event Management Team, health and safety experts, human resources and
leadership led to the implementation of numerous protocols and safety
measures to help ensure the protection of our employees. We worked
closely both with the health authorities in regions where we operate and
Around the world,
with peers across our industry to ensure our people had the protective our employees stepped up to support
equipment and operating procedures in place to work safely. first responders and their local
communities. We are proud of our
Supporting our employees and communities people who made face shields and
sewed face masks from home and
To support our employees through these difficult times, we took a number donated this critical personal protective
of employee-centric measures, including: equipment (PPE) to local hospitals.
Implementing a global policy enabling an agile workplace for remote As a company, BorgWarner donated
working and flexible hours $100,000 to the Business Roundtable’s
Project Hope Campaign in the U.S.
Proactively communicating safe behaviors and personal health guidance and to other organizations around the
world, providing PPE to those at the
Extending benefits during temporary furloughs
front line of the health crisis.
To mitigate the financial impact to the business, early on we made decisions
affecting compensation: our Strategy Board executives took a temporary
20% reduction in their base salaries, as did our Board of Directors in their
annual cash retainer. In addition, approximately 400 company leaders took
a temporary 10% base pay reduction, and other salaried employees took a
smaller pay reduction or a temporary layoff. Merit increases for all salaried
employees were delayed five months, with the exception of where we were
required to pay due to statutory requirements.
Reopening safely
Before reopening our facilities, we established a Safe Restart Task Force to identify critical processes and disseminate
return-to-work procedures. This group of cross-functional leaders across BorgWarner continues to gather lessons learned
and quickly deploy best practices to benefit our employees, across our global organization.
Supply chain resilience
The global impact of the pandemic initially put a strain on some aspects of our supply chain, but, overall, we were able to
navigate the challenges well. One of the actions we took to enhance the continued strength of our sourcing ability was to
create a Supply Chain Risk Council. This council guides us in identifying potential risk in our supply chain, such as geographic
or political conflicts that are adverse to our business interests. This strategy allows us to generate additional layers of support
and resilience to help meet the needs of our customers.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 12COVID-19 Response
Plasma donations at our Romania plant. Employees at our Piracicaba location donated PPE to local
hospitals, food and supplies to local nursing homes, and food
to support families that lost their jobs.
Distribution of antiviral masks to workers at our Seixal plant. Our Blois employees donated old, unused computers to
schools and children in need.
Mother’s Day mask donation by our Itatiba employees.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 13Environmental Stewardship: Create a
cleaner, more energy-efficient world
Driving Clean Mobility
World-changing product leadership 85%
There are few challenges as important today as creating of revenue from clean and
solutions that support a cleaner, more energy-efficient world.
This requires a commitment to constantly innovating and
emissions-reducing products
improving mobility. We at BorgWarner made that commitment in 2020
decades ago and have since been creating technologies
to improve efficiency, emissions and performance across
multiple vehicle platforms. Our proven track record has
made us a global product leader in delivering innovative and
2%
sustainable mobility solutions for the vehicle market. We are
ever cognizant of strong trends and utilize smart science and
technology to address a future marked by a myriad of complex
regulations, consumer demands and automaker requirements.
7%
Revenue from electric and 14%
fuel-efficient products
We earned 85% of our revenue in 2020 from electric and 1%
emissions-reducing hybrid and combustion products,
such as power electronics, turbochargers and Exhaust Gas
Recirculation (EGR) valves and coolers. Our other products
include components such as starters, alternators and transfer 76%
cases. These are core vehicle technologies not directly
targeting fuel consumption. Our advanced versions of these
components do, however, result in reduced fuel consumption
and emissions.
Revenue from hybrid and electric products grew from
6% in 2019 to 10% in 2020. Our acquisition of Delphi
Technologies strengthens our scale and expertise in Electric – 2%
electrification. Delphi Technologies’ product portfolio,
Hybrid: Emissions-reducing – 7%
including its leadership in the inverter space as the last
piece to our integrated drive module, complements and Combustion: Emissions-reducing – 76%
expands our power electronic offerings. Hybrid: Non-emissions reducing – 1%
Combustion: Non-emissions reducing – 14%
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 14R&D investments will play a major role in
advancing our electrification strategy
We expect a significant growth opportunity through the adoption of electric and hybrid vehicles, which we believe offer higher
content opportunity for our technologies. To maintain our position as a technology leader, we invested 4.7% of revenue in research
and development (R&D) in 2020 and expect that number to be over 5% in the future.
We plan to increase our R&D spending on electrified vehicle technologies. We believe combined R&D and capital spending for
eProducts will be greater than $3 billion over the next five years, with eProducts approaching 50% of R&D before acquisitions
by 2025.
As of year-end 2020, we had 9,834 (6,026 BorgWarner + 3,808 Delphi Technologies) active domestic and foreign patents and
patent applications pending or under preparation.
Positioning for an electrified future
We expect our exposure to electrified vehicle technologies to increase significantly in the near future. We project over 25% of our
revenue will be from electrified vehicle parts by 2025, and approximately 45% by 2030.
Expected Revenue Mix
$22B+
~$18B
~$15B1
Electric
Vehicles
Electric
Vehicles
~45%
>25%
2021 2025 2030
Electric Light Vehicle Electric Commercial Vehicle Combustion-Based Aftermarket & Other
1) Estimate at the midpoint of FY 21 guidance Source: BorgWarner March 2021 Investor Day estimate
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 15Scope 3: Understanding and reducing our indirect
carbon impacts
Scope 3 product-in-use emissions
We are focused on understanding and reducing the carbon footprint of our products across their entire life cycle, including
during end-user vehicle use. Scope 3 greenhouse gas emissions are all emissions indirectly impacted by BorgWarner, such as
supply chain purchases and product-in-use emissions. We estimate that, based on the average of our parts content per vehicle
and well-to-wheel emissions for different vehicle types, the lifetime product-in-use emissions apportioned to our 2020 light
vehicle parts is approximately 12 million metric tons of carbon dioxide equivalents (CO2e).
We believe the acceleration of our electrification strategy will help reduce product-in-use emissions. Based on our expected
share of electric vehicle parts and greening of the electric grid, we believe our Scope 3 light vehicle product-in-use emissions
will decline by 23% in 2030, while intensity relative to sales will fall an even steeper 56%.
Evolution of our Scope 3 light vehicle product-in-use emissions
with our shift to electric
Acceleration of our electrification strategy will cut …and reduce Scope 3 carbon emissions intensity
product-in-use emissions 23% through 2030… relative to sales 56%.
1.7
Million MT CO2e
MT CO2e / $ revenue
1.5
1.2
1.0
0.7
0.5
0.2
0
2020 2021 2022
We are committed to partnering with vehicle manufacturers, our customers, in reducing emissions up and down the value
chain. While we design and produce the components, it is only when our customers integrate them into their vehicles that
the reductions are realized.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 16Reducing carbon emissions through fuel-saving parts BorgWarner is a recognized leader in designing and building systems and components that enable vehicles to save fuel and operate more efficiently. We are proud of the role we play in the industry and that so much of what we do – 85% of our revenue in 2020 came from our electric and emissions-reducing parts – contributes to decreasing carbon emissions and other pollutants. Gasoline wastegate turbocharger 15 million metric tons of CO2 avoided across 2020 products’ lifetimes Turbochargers can boost gasoline vehicle fuel efficiency around 9% by harnessing exhaust gas energy. BorgWarner produced 6.1 million gasoline wastegate turbochargers in 2020 that powered approximately 5.3 million cars. Based on the turbocharger’s share of a vehicle’s air system, our turbochargers produced in 2020 will save approximately 15 million metric tons of carbon over the average lifetime of a vehicle. Inverter 300,000 metric tons of CO2 avoided, rising to 4 million metric tons in 2025 with greater EV adoption Inverters are one of the three main components enabling battery electric vehicles. They efficiently convert direct current from the battery into alternating current, powering the vehicle. We produced 88,000 inverters in 2020, which will contribute to saving around 300,000 metric tons of CO2 over the vehicles’ lives. As electric vehicle adoption accelerates, we expect our inverter production in 2025 to increase significantly, leading to emission savings of 4.1 million metric tons of CO2 over their lifetimes. Variable cam timing 10 million metric tons of CO2 avoided across 2020 products’ lifetimes BorgWarner’s variable cam timing (VCT) technologies improve engine emissions, performance and fuel economy. We estimate that our variable cam timing products produced in 2020 will allow the engines in which they are installed to avoid approximately 10 million metric tons of CO2 over their lifetime. BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 17
Lowering life cycle emissions of existing vehicles
Aftermarket: lowering emissions
of existing vehicles
Our aftermarket parts and accessories help existing vehicles electronics, plus training, diagnostics and test equipment. The
improve their fuel efficiency and meet the latest emissions combined expertise of our brands, including BERU, Delco Remy
standards, as well as extend their life. Our aftermarket portfolio and, our newest addition, Delphi Technologies, makes us uniquely
includes boosting technologies, diesel and gasoline fuel systems, equipped to service aftermarket customers around the world.
maintenance solutions, engine management and vehicle
Remanufacturing: supporting
a circular economy
For nearly 30 years, BorgWarner has remanufactured Now with our expanded business in remanufacturing and
products for reuse, including turbochargers, alternators, aftermarket with the acquisition of Delphi Technologies, we
generators and exhaust gas recirculating valves. During have an even greater opportunity to offer environmentally
this time, we saved over 16,000 metric tons of cast beneficial remanufactured products.
iron and 4,000 metric tons of aluminum by reusing 5
million housings – turbine, bearing and compressor Most importantly, to enable successful remanufacturing of
housings. Compared to new replacement products, our products, we must design for remanufacturing and, by
these remanufactured original equipment parts are a extension, design for the environment. In addition to the
sustainable, environmentally friendly and cost-effective environmental benefits of supporting a circular economy,
solution for vehicles in a later stage of life. remanufacturing capabilities are important to many of our
customers to facilitate their economic and sustainability goals.
BEFORE AFTER
Used Turbocharger REMAN Turbocharger
Bio-based materials Materials and packaging initiatives
In early 2020, we were approached by a supplier to consider the We have undertaken a number of innovative programs to
use of a plastic material produced from biomass (HGR3). HGR3 reduce raw materials use. For example, we reduced the copper
was specifically developed for additional performance and cost and heavy metals content in our Delphi Technologies brake
improvements. The low-friction material helps lower carbon pads years ahead of the U.S. EPA’s initiative to reduce copper in
emissions, and the bio-content provides an additional benefit motor vehicle brake pads by 2025.
related to sustainability.
More recently, we removed all plastic shrink-wrap from our
Our first use of this biomaterial will be in the manufacture of brake pads, with the aim of saving around 33 metric tons of
timing drive components in internal combustion engines. We are plastic per year and, in 2020, we reconfigured our brake disc/
looking for additional opportunities to work with our customers rotor packaging to further save 19.5 metric tons of cardboard
to introduce this biomaterial to new and existing programs. per year.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 18Operations
We are committed to operating efficiently and responsibly. In our operations, we established sector-leading carbon
Our Environmental Policy sets out our objectives to identify, reduction goals to reduce our Scope 1 and Scope 2
monitor, reduce and disclose our environmental impacts. All greenhouse gas emissions intensity 50% by 2030 versus
of our manufacturing facilities are ISO 14001 certified for their 2015. In the last five years, we achieved a reduction of 17%
environmental management systems, with strict standards (28% for our legacy BorgWarner operations).
and programs for monitoring and minimizing the impact
of operations. To ensure compliance, we carry out regular This year, we accelerated our commitment even further by
environmental, health and safety audits – in 2020, we undertook committing to the goal of being carbon neutral by 2035 in
13 such audits. our operations – our Scope 1 and Scope 2 emissions. We will
pursue this goal through investing in both energy-efficient
Addressing climate change processes in our plants and renewable energy sources.
Climate change has had a significant impact on the automotive We also assess the physical risks of climate change. We
sector with the industry’s transition to clean mobility. monitor impact, frequency and severity of risks, such as
BorgWarner is committed to becoming a leader in offering natural disasters to our infrastructure and supply chain, as
electrified solutions across light and commercial vehicles to part of our strategic risk management process. In the past,
enable the transition. This balanced strategy positioned us well we relocated specific facilities to mitigate the physical risk
to now accelerate toward electrification. Our Strategy Board of flooding. On the other end of the spectrum, changes in
and Board of Directors monitor the low-carbon transition weather and precipitation patterns that result in extreme
closely because the market, regulatory and reputational risks droughts could cause inadequate and unreliable water
can impact our business. supplies at our operations in water-stressed regions.
Committed to the goal of being
carbon neutral in our Scope 1
and Scope 2 emissions by 2035
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 19Aligning our business strategy for Promoting energy efficiency
a net-zero carbon emissions future We are focused on achieving our goal of reducing our energy
intensity 37% by 2030 from our 2015 baseline. To further our
There are few challenges as important today as creating solutions
energy-saving efforts, in 2021 we planned a new initiative
that support achieving a net-zero carbon emissions future.
for energy efficiency audits at our manufacturing facilities.
This will require a commitment to constantly improving the
Prioritizing our facilities with the largest energy usage, our
transportation of people and goods.
plan includes goals to identify new technologies and make
Our stated business strategy is to increase production of electric investments that can reduce energy use and save money.
and other vehicle parts that enable zero- and lower-emissions The program includes assessing the feasibility of both
transportation. We believe our product mix and flexibility on- and off-site renewable energy use.
allow us to successfully support the low-carbon transition.
Our enterprise-wide Conservation Coalition identifies and
This strategy enables us to address a future based on varying
shares best practices for saving energy and resources
regulations, consumer demands and automaker requirements –
across our facilities. Efforts include energy efficiency and
including a future of net-zero carbon emissions by 2050.
carbon-reduction initiatives, such as installing solar panels,
Our strategic planning for net-zero carbon emissions extends to solar water heaters, solar tube lighting, and rainwater
our operations and to our recently announced goal of becoming collection systems and achieving Leadership in Energy and
carbon neutral by 2035 in Scope 1 and Scope 2 emissions. As our Environmental Design (LEED) certification. This program
business grows, we add new or expand existing facilities with leverages the global insight available across our operations to
environmental sustainability in mind, while we invest in updating disseminate proven practices and techniques.
more mature facilities to meet our goals. Our goal to eliminate
or offset Scope 1 and Scope 2 carbon emissions positions us to Waste management and recycling
achieve significant, continuous carbon emissions reductions.
Running efficient, sustainable operations that are good for the Maximizing resource-use efficiency is important to our
environment is not only good for business – it is a natural part of business and environmental goals. All of our manufacturing
what we do. facilities have established waste recycling programs. As part
of our future environmental goals, we plan to benchmark
and disclose our overall waste generation and establish a
diversion goal in 2021.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 20Managing water risk
Our manufacturing processes are not water intensive, but we recognize that water risks need to be considered through a local
lens. We undertook water risk assessments at all of our manufacturing, technical and assembly facilities: 10 facilities are in
“high” or “extremely high” water-scarce regions as designated by the World Resources Institute (WRI) Aqueduct Water Risk
Atlas’s baseline water depletion metrics. We set a goal of undertaking annual water risk assessments of our facilities and target
high-risk locations for water-use reductions.
Environmental performance
Year Water Energy Greenhouse Gas (Scopes 1 + 2)
kgal kgal/$m sales mwh mwh/$m sales t CO2e tCO2e/$m sales
2015 874,720 109.0 328,203 40.9
2016 307,466 33.9 898,594 99.1 336,623 37.1
2017 311,165 31.8 923,416 94.2 348,266 35.5
2018 321,238 30.5 964,281 91.6 350,021 33.2
2019 302,071 29.7 910,532 89.5 324,903 32.0
20201 294,451 26.1 968,891 85.9 342,520 30.4
1 ) Data reporting represents approximately 94% of our facilities by total square footage. Data includes legacy BorgWarner for the whole period, plus legacy Delphi Technologies
from Q4 2020.
Progress against our greenhouse gas and energy goals
Greenhouse Gas Intensity Reduction Performance, Energy Intensity Reduction Performance,
Relative to Sales: Goal of 50% by 2030 Relative to Sales: Goal of 37% by 2030
100% 100%
94.0%
94.0%
91.3% 90.9% 90.5%
89.1%
90.7% 86.6% 85.3% 90.9%
82.6%
86.9%
86.4% 88.0%
84.0%
81.3% 82.1%
78.1%
72.2% 76.4%
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
Legacy BorgWarner Legacy BorgWarner
New baseline BorgWarner + Delphi Technologies New baseline BorgWarner + Delphi Technologies
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 21Energy Efficiency
Improving energy efficiency by 50% Reducing effluent discharge
Our Eumsung plant has improved energy efficiency over 50% Our Ningbo WOFE plant invested in new equipment to
by upgrading equipment and lighting. improve wastewater treatment. The upgraded equipment
allows rainwater to be safely discharged into the
environment, while operational effluent is safely sent to a
municipal sewage treatment facility.
Zero Landfill project Going green is clutch
Our Piracicaba facility was invited to present its Zero Landfill Through creative innovation, BorgWarner friction clutch
project at the Brazilian auto parts association Sindipeças plants were able to reduce more than 16 metric tons of waste
Sustainability Forum. The facility achieved zero waste to going to landfill in 2020. This reduction was accomplished by
landfill in 2020 through its recycling program, organic waste utilizing more efficient production methods and collaborative
composting and waste-to-energy collaboration. global thinking across our clutch manufacturing locations by
eliminating waste throughout the entire process.
Seven LEED-certified facilities
BorgWarner is committed to designing and building
efficient facilities. We have seven Leadership in Energy and
Environmental Design (LEED)-certified facilities.
Rooftop solar generation
Suzhou, China
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 22Social Responsibility: Live the BorgWarner Beliefs Our Beliefs support our vision for a clean, energy-efficient world. They shape our culture. They shape who we are, both as a company and as groups of individuals working together. We refreshed our Beliefs in 2020 to help ensure everyone at our organization understands what drives us. We introduced our updated BorgWarner Beliefs across the company to help ensure awareness of our corporate culture and company values. In 2020, these Beliefs proved to be our directional beacon light of motivation, determination and hope, as we worked through the COVID-19 pandemic, prepared for the acquisition of Delphi Technologies and managed unexpected natural disasters, such as the tornado that hit our Seneca plant. We are guided by our Beliefs as individuals, both as a team and as a company. BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 23
Embracing Diversity, Equity & Inclusion Refreshed BorgWarner Beliefs To help introduce our updated BorgWarner Beliefs, we held a number of employee-focused events to create engagement across the company. BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 24
Inclusion
Here at BorgWarner, we strive to foster an inclusive policies and programs. Ultimate responsibility for diversity at
environment. To be inclusive, we must first accept and BorgWarner lies with our CEO, and the Board monitors
embrace diversity. Accepting and embracing diversity our initiatives and performance.
means respecting and honoring differences – in
perspective, appearance, experience, culture – the list is During 2020, we maintained our focus on three key
unlimited. pillars of Diversity, Equity and Inclusion:
To attract and retain the highest caliber of talent, we
Embracing Diversity, Equity and Inclusion
understand the importance of providing our employees
We are working to ensure that team members
with a workplace experience focused on physical and
understand and act in ways that are aligned with our
psychological safety, where there is a strong spirit of
Beliefs. We continued to expand our Unconscious
inclusion and a deep sense of belonging as a result of Bias Awareness training across the leaders in our
living our Beliefs. We aim to cultivate a culture where workforce in 2020, and plan an additional rollout to all
employees are treated with dignity and their differences employees in 2021.
are celebrated, supporting employees to feel comfortable
Ensuring employee diversity
bringing their authentic selves to work. This is fostered
in an environment that is collaborative and focused We focus on attracting, developing and retaining
on continuous learning, where every employee feels talented employees from diverse backgrounds and
unleashed to thrive. experiences. We provide them with experiences that
harness the best of their talents and skills by placing
Create a sense of belonging them in roles where they can learn and create business
value.
Our Chief Human Resources Officer, a member of our Strategy
Promoting an inclusive work environment
Board, has executive responsibility for the success of our
extensive employee engagement, development and diversity We promote Employee Belonging Groups focused on
inclusion and which foster belonging in our company. We
are developing our multiyear plan to support the launch
of additional Employee Belonging Groups by 2025.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 25Integrating Delphi Technologies employees
into BorgWarner
On October 1, 2020, we acquired Delphi Technologies, which was the most expansive acquisition in the Company’s history. With the
onboarding of our new colleagues, our workforce increased from approximately 29,000 to approximately 50,000 employees. We
learned from past acquisitions that an essential key to success is providing immediate integration opportunities and training so that
new colleagues can better understand our culture and quickly feel like a part of the combined company team. To help merge our
operations and cultures, we implemented various employee-focused initiatives, both on Welcome Day and throughout the year.
Integration Operating Model
Ambassadors Champions
Designated employees from both Key BorgWarner employees assisted
companies were chosen as ambassadors former Delphi Technologies employees
to champion and encourage colleagues in learning and applying BorgWarner’s
to share information and work together. business operations model.
Pulse Surveys Code of Ethics
Employee surveys were conducted to The Welcome Day onboarding
assess the success of our integration process included a presentation of the
efforts: 73% of employees stated they BorgWarner code of ethical conduct,
had positive experiences. which contains contact information for
questions or reporting concerns.
BorgWarner Beliefs Welcome Day Events
Through internal and external A unique approach was used to
communication initiatives, we presented welcome new employees to the
our Beliefs to help enhance a shared company in a virtual environment.
culture that guides us as a company.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 26Promoting an inclusive work environment – Employee Belonging Groups
Our Employee Belonging Groups celebrate diversity and promote inclusion through encouraging networking, professional
development and cultural awareness.
SPECTRUM
is BorgWarner’s’ LGBTQ+ Group that celebrates diversity with people who identify as LGBTQ+ or are allies
of the community. BorgWarner provides a safe place and supports all identities. SPECTRUM will continue
event engagement by participating in global Pride Month activities, supporting Motor City Pride and other
LGBTQ+-related events.
Great Place to Work
fosters and promotes a positive sense of community in the workplace. Many BorgWarner locations have
committees of volunteers that support a host of activities related to community, wellness and recognition events.
Women in Leadership Program (WIL)
focuses on supporting women to build and develop their BorgWarner careers. Women have the opportunity
to come together collectively to share and learn from one another. The goal for WIL is to continue to grow
women’s networks, both within the company and externally.
Women in Science and Engineering (WISE)
supports the personal and professional growth of women employees in the science, technology, engineering
and mathematics (STEM) fields. WISE promotes learning events, with a focus on women in the workplace.
This group is also involved in university recruitment efforts in which they conduct information sessions for
the Society of Women Engineers chapter of colleges and universities. WISE also attends events and conducts
sessions that focus on STEM, for both high school and elementary school students.
BorgWarner Inc. | 2020
2021 SUSTAINABILITY
SUSTAINABILITYREPORT
REPORT 27Leadership Diversity
22.2% 22.2%
of Board members of Board members
are minorities. are women.
23.1% 38.5% 23.1%
of Strategy Board of Strategy Board of Strategy Board
members are members have international members are
minorities. backgrounds. women.
13.9% 14.6%
of U.S. leaders of leaders are
are minorities. women.
Based on our pay equity survey, women earned compensation 98.7% of that
received by men. An annual salary review process is in place to evaluate and
address discrepancies in pay, if identified.
Diversity data shown is as of December 31, 2020; Board of Directors and Strategy Board demographics reflect current members, as of June 2021.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 28Employee Diversity
NEW HIRES SALARIED NEW HIRES SALARIED
33.2% 21.1% 24.7 %
17.3%
75.3% 82.7%
66.8% TOTAL
77.9% TOTAL U.S.
WORKFORCE WORKFORCE
25.6 % 21.2 %
Women Minorities
89.7% 2020
2020 85.4% 81.1% 86.1%
10.3% 14.6% 18.9% 13.9%
ENGINEERING LEADERSHIP (MIP) ENGINEERING LEADERSHIP (MIP)
See the appendix for our full U.S. EEO-1 diversity data
Employee Annual Turnover
16%
14% 2017
12% 2018
Employee Annual Turnover (%)
10% 2019
2020
8%
6%
10.6 12.8 11.6 9.1 12.1 14.5 12.7 9.6 7.6 9.6 9.4 8.0
4%
2%
0%
Overall Voluntary Hourly Voluntary Salaried Voluntary
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 29Pay equity
Results of our pay equity analysis
BorgWarner is committed to the principle of equal pay for Pay Equity
equal work and seeks to ensure employees are paid equitably Result
for substantially similar work. As part of this commitment, we
Women's pay relative to men's pay 98.7%
worked with a third-party consultant to conduct an independent
pay equity analysis in 2020 of our legacy BorgWarner Black pay relative to White pay (U.S. only) 99.9%
workforce. Our global gender pay equity analysis identified
that, on average, women received compensation 98.7% of that Hispanic pay relative to White pay (U.S. only) 99.8%
received by men. In the U.S., minorities received compensation
99.8%+ of that received by non-minorities. An annual salary Asian pay relative to White pay (U.S. only) 101.8%
review process is in place to evaluate and address discrepancies The pay equity study was conducted in 2020 on compensation
in pay, if identified. as of 12/31/2019. The analysis included employees from salaried
early-in-career through Vice President roles.
Employee engagement and retention
We strive to make the employee experience a priority every day. All salaried employees and team leader hourly employees
Our employees have reported positive experiences with their participate in a formal, annual review process, in accordance with
coworkers, leaders and their jobs. These results are important to collective bargaining agreements, where applicable. In 2020,
us, because we know that when our employees have a high-trust we launched Giving and Receiving Feedback training, as well as
experience every day, they are more productive, drive better a 360-degree feedback program, where employees can request
business results and make a difference to our customers. feedback from their managers, peers and work partners.
To foster employee development and retention, employees In 2021, we will launch our new Employee Engagement and
work with their managers to create annual business and Sentiment strategy. This will broaden our employee feedback
professional development goals. These goals are crafted to processes to more holistically include moments that matter across
help employees ultimately drive progress along their chosen the employee life cycle, with short pulse surveys throughout
career path. Every employee has a personal profile where they the year that will supplement our biennial in-depth employee
can document their career interests, recent accomplishments, engagement surveys.
desire or willingness to work in other locations and record
external training and certifications.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 30Training and development Developing our future leaders
Our Global Talent Development Process is a strategic, We identified competencies for managing the development
long-term approach to ensure our employees have the skills and movement of people to build a strong leadership pipeline
to succeed. This integrated process of understanding the and to foster the growth of our technical talent. For each
organization’s short- and long-term talent needs is designed of these leadership competencies, we developed a range
to align with our company strategy and BorgWarner Beliefs. of training programs and approaches, both independently
and in partnership with learning institutions, to help our
Typically, we offer training programs ranging from in-person employees develop the skills needed to succeed. Examples
workshops to one-on-one coaching to self-paced online of our leadership training programs include LevelUP, a
learning. With the impact of COVID-19, we transitioned to blended leadership program for those in their early-to-mid
virtual learning. We also introduced numerous new e-learning career, Boost Your Growth, a two-year course to help build
programs, focusing on topics such as self-care and leading our pipeline of senior leaders and Leadership Forward, our
remotely. executive development program aimed at the top 200 leaders
in our organization.
Women Rising Women in Leadership Mentoring
Our Women Rising program focuses on building a Women in Leadership Mentoring is a one-year
foundation for ongoing professional growth and program for early-in-career, high-potential women.
development for women earlier in their career. With a Mentees partner with highly regarded male and
combination of workshops and virtual coaching, this female mentors inside our organization to network,
four-month program helps participants explore the build relationships and explore career growth.
differences in how men and women lead. Each woman
develops a deeper understanding of her personal style, Women’s Executive Forum
how to leverage strengths and incorporate habits that At the senior management level, candidates are invited
support career success. to the Forum where high-profile women across industries
share experiences of leadership success and failure.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT
312020 Talent Development Highlights
Average of
56,700 29% 709 70%
HOURS OF TRAINING INCREASE CURRENT OR FUTURE OF LEADERSHIP ROLES
provided to salaried in employees that leaders impacted by filled via internal promotions
employees in 2020 received training training investment over the past five years
Compensation, Benefits and Well-being
Our compensation and benefits plans are created to attract, by BorgWarner leaders and validated by external experts
motivate, reward and retain a highly qualified, globally as aligned to high-performing organizations. In 2021,
diverse workforce. While our benefit plans vary depending these six core competencies will be replaced and directly
on geographical location, they are always designed to help aligned to our Beliefs of inclusion, integrity, excellence,
support our employees’ health, development and long-term responsibility and collaboration. This change will help us to
financial success. further communicate the importance of demonstrating the
BorgWarner Beliefs every day, in every interaction, and will
To attract and retain the best talent, we reward employees be part of the year-end performance review process.
based on their contributions and our company’s overall
success. Virtually all legacy BorgWarner employees (90.9%
Benefits available to all employees
of our global workforce) receive variable, performance-based
pay linked to achieving corporate goals. As of the end of We believe that healthy employees are happier and more
2020, inclusive of our new employees who joined from Delphi satisfied employees – therefore, a healthy workforce is a more
Technologies, 63.1% of our global workforce receives variable, productive workforce. We are committed to providing our
performance-based pay. Over the course of 2021, we will be team with quality and competitive benefit programs, health
looking at the harmonization of our incentive plans. and wellness resources, decision-support tools, family-centric
policies and an agile workplace program. All full- and
Our variable pay component is focused on short-term
part-time employees globally are eligible to participate in our
annual objectives that demonstrate the strength of the
health, welfare and retirement plans, where not precluded by
business over the long term. Employees are rated on the
collective bargaining agreements or national statutory plans.
what and the how. The what refers to the progress made
Plans are benchmarked annually for competitiveness and
toward achieving business goals, aligned to higher level
value. Locations also provide a variety of well-being programs,
organizational strategies. In 2020, the how was related to
including fitness opportunities, medical checkups, parental
six core competencies. These competencies were selected
leave and volunteering options.
BorgWarner Inc. | 2021 SUSTAINABILITY REPORT 32You can also read
