Corporate Citizenship

Illinois Tool Works Inc. (ITW) is a diversified manufacturing company with almost 100 years of history, comprised of over 875 decentralized businesses in over 50 countries with a wide variety of processes, products and people. ITW is committed to being a good corporate citizen and is prepared to meet the challenges of managing corporate citizenship throughout our diverse operations. The commitment begins with the men and women who make up the ITW workforce and extends to all of our stakeholders - including our customers, investors, and communities.

ITW endeavors to comply with all applicable local, national and international laws, and regulations to ensure its employees can work safely and efficiently. Concurrently, ITW strives to be a good corporate citizen and places a great deal of emphasis on improving the communities in which our employees live and work. In addition, ITW is committed to environmental responsibility. Through ongoing process and product innovation, we aim to continually reduce our carbon footprint and minimize use of global resources.

We believe that these values of corporate citizenship and environmental responsibility are good for business by increasing efficiency, improving customer and employee satisfaction, and driving innovation.

Environment, Health, Safety and Sustainability

As a core business philosophy, ITW relies on its General Managers (GMs) to manage all aspects of their businesses. Safety and environmental issues are no exception. The ITW corporate office provides broad guidance to the GMs through the ITW Statement of Principles of Conduct, which includes sections on both environmental management and safety in the workplace. In addition, the corporate Environmental, Health, Safety and Sustainability (EHSS) group, provides a number of policies, tools and programs to help management ensure compliance with these broad directives.

These include:

• Environmental and Safety and Sustainability Policies
• Formal Audit Compliance Program
• Facility Compliance Reviews
• Divisional Compliance Audits
• Due Diligence for Acquisitions
• Due Diligence Follow-Up
• Self-Inspections
• Outside Consultants
• Formal Certification Programs
• Sustainability related tools

This information is communicated to the business units a number of ways, including: the ITW Environmental Health and Safety and the ITW Sustainability intranet sites, executive vice president notices, third-party newsletters, ITW environmental and safety help line, presentations, regular safety meetings, and various internal reports.

For example, the ITW Environmental Health and Safety and the ITW Sustainability intranet sites are key means of communicating with a large number of ITW business units located in diverse geographical locations. These intranet sites are secure web sites that can be accessed from any computer at an ITW business unit with internet capabilities. Currently over 1000 ITW users worldwide regularly access the sites for environmental and safety information and guidance. The ITW Environmental Health and Safety site contains content on both domestic and international safety and environmental regulatory programs, sample written Occupational Safety and Health Administration (OSHA) and United States Environmental Protection Agency (US EPA) required plans, checklists for compliance inspections, updates on new regulations, responses to frequently asked questions, an area for business units to pose questions to the corporate EHSS group, a recommended practices area, and links to government, environmental and OSHA agencies and other resources. In addition the ITW Sustainability intranet site allows access to current information on trends in sustainable product design, energy reduction and greenhouse gas emissions regulations. In addition to a place to post questions, users are able to create discussion boards to discuss sustainability related issues, projects and programs.

Current Data Content

The corporate EHSS group collects a number of critical data items for both environmental and safety measurements. The following briefly describes this data set:

• Domestic TRI-Based Air Emissions: From 2004 to 2007, ITW's TRI (Toxic Release Inventory) based toxic air emissions were reduced by 25% during a time when revenues had increased by approximately 35% and the number of business units had grown significantly. This reduction occurred through a variety of mechanisms, including: consolidating operations, installing pollution control equipment, eliminating toxic chemicals, refining air emissions estimates, coating substitutions, and other environmental changes.
• Environmental Compliance Audits: ITW conducted 54 internal environmental compliance audits in 2008, which resulted in 708 issues of non-compliance with 8.3% of these deemed to be serious.
• Safety Compliance Audits: ITW conducted 27 internal safety compliance audits in 2008, which identified 303 issues of non-compliance or unsafe conditions, 33% of which were deemed to be serious. In the area of safety, ITW takes a conservative approach and defines "serious" as any condition that may lead to a recordable injury or an OSHA penalty.
• OSHA Inspections: There were a total of 15 OSHA inspections in 2008 that resulted in penalties of $62,475 with an average fine of approximately $4,165.
• US EPA Inspections: There were 18 US EPA or state-led environmental inspections in 2008, resulting in total penalties of approximately $162,000, with an average fine approximately $9,000.
• Accident Frequency Rates: ITW develops accident frequency data for selected businesses. These businesses had an average incident rate of 3.58 and a DART (Days Away from work and Restricted/job Transfer) rate of 2.57. The (2007) Bureau of Labor Statistics (BLS) rate for all manufacturing showed an average incident rate of 5.6 and an average DART rate of 3.0.
• ISO 14001 Sites: The ISO (International Standards Organization) 14001 standard is an environmental management system used to develop a systematic management approach to an organization's environmental concerns. ITW has more than 40 ISO 14001 facilities with 11 new certifications granted in 2008.
• OSHA VPP Sites: ITW has four OSHA STAR certified facilities and one OSHA Merit certified facility under the Voluntary Protection Program (VPP). Out of 120,000 eligible establishments, there are only 1,500 OSHA STAR sites in the U.S. The VPP STAR certification recognizes a facility for excellence in safety and health management while the VPP Merit certification recognizes marked improvements in safety and health management.
• OHSAS 18001 Sites: OHSAS is an internationally-accepted specification that defines the requirements for establishing, implementing and operating an Occupational Health and Safety Management System. ITW has four certified OHSAS 18001 facilities sites in the U.S.

Current Developments

Although ITW's sustainability program is still in its infancy, ITW continues to have success in reducing its overall impact on the environment. A survey of approximately 10% of ITW's businesses revealed that between 2007 and 2008 over 300 environmental and social responsibility-based projects were completed. The following are several examples:

• ITW Dahti Seating, Rockland, MI: Dahti, a designer and manufacturer of seating components, reduced its annual energy costs by over $19,000. Dahti achieved this reduction by replacing a traditional HVAC unit with a series of heat pumps to capture process-generated heat to cool and heat its facility. Additionally, Dahti installed logic and relay controllers to shut down idle equipment.
• ITW Reddi-Pac, Lake Zurich, IL: A manufacturer of 100% recyclable industrial packaging supplies from 100% recyclable materials, ITW Reddi-Pac began selling back wooden core plugs to mills, resulting in a 75% to 80% reduction in waste.
• ITW Foils, Blaenavon, Pontypool, UK: ITW Foils UK produces pigmented, metallic, diffraction, security and specialty stamping foils and hot ink rollers. ITW Foils UK reduced its energy consumption by nearly 15%, general waste by nearly 40%, CO2 emissions from energy use by 10% and fleet transportation by more than 2%. Additionally, ITW Foils UK earned ISO 14001 certification.
• Bay Area Labels (BAL), San Jose, CA: BAL manufactures graphic overlays, custom labels, membrane switch assemblies and other packaging and tracking solutions. BAL reduced the solvent content in its inks, eliminated waste water discharge from film production and ceased using lead in its products.
• ITW TACC, Rockland, MA: ITW TACC, which manufactures adhesives, joined US EPA�s Smart Way Transport program as a shipper partner to reduce the CO2 emissions in its supply chain. As a result, ITW TACC has raised awareness of its environmental impact and weighs its transportation options before making the final decision.
• ITW Technology Center, Glenview, IL: The ITW Technology Center acts as an internal consulting resource that provides support for ITW Business Units. The ITW Technology Center has been instrumental in helping business units reduce the environmental impact of their products and processes. The following is a sample of ITW Technology Center projects:
  • Assisted a business unit in reducing the material content of its product by more than 35% while increasing its stiffness and improving its performance.
  • Replaced steel in low stress areas of tooling with embedded resin. This weight reduction allowed the end user to operate the final piece of equipment at a higher speed, increasing its efficiency and reducing its energy consumption.
  • Developed a plastic collation strip that holds fasteners together for ease of loading and storage and allows a portion of the strip to be inserted along with the fastener leaving behind very little debris and creating a more secure fit.
  • Created a board from recycled resin that is used to separate building materials. This board has openings that allow for the insertion of tines from a forklift, unlike the wooden boards that it replaced.

Achievements and Awards

Illinois Tool Works: 2008 Keep America Beautiful, Inc.'s Vision for America Award

Keep America Beautiful, Inc. is the nation's largest nonprofit community improvement organization. The award cited ITW's many recycling programs, its enthusiasm for volunteer work and its financial support of environmental organizations. It also saluted ITW's commitment to minimal packaging solutions offered to customers and businesses to protect the environment by reducing packaging waste and material recycling and reuse.

Food Equipment Group (FEG): 2009 Energy Star Partner of the Year

Hobart, Stero, Traulsen, Vulcan, and Wittco are some of the brands that make up ITW FEG. Each of these businesses designs and manufactures commercial foodservice equipment. ITW FEG offers 381 ENERGY STAR qualified products, a 56% increase over its 2008 ENERGY STAR product offerings earning them their second consecutive Energy Star Partner of the Year award.

Community Building

Moving beyond its customers, ITW is committed to reaching out to and strengthening the communities it serves through: The ITW Foundation, Senior Outreach, United Way and Junior Achievement, among other local initiatives.

The ITW Foundation

The ITW Foundation provides financial support to a wide variety of not-for-profit organizations. Our direct-giving program channels donations from our people to hundreds of organizations we support. We offer a three-for-one matching gift program that matches up to $5,000 in donations for a total of $15,000 match per person. The Foundation has supported cultural institutions, contributed to capital campaigns for large medical centers and environmental organizations. In 2008, the ITW Foundation donated nearly $14 million to many worthwhile causes.

Senior Outreach

The ITW Senior Outreach program provides our retirees with valuable opportunities to stay involved in their neighborhoods, offering their time and talents in meaningful ways. In 2008, ITW retiree volunteers gave more than 325 hours of service to local not-for-profit health and human services organizations.

United Way

United Way is ITW's charity of choice. Donations to United Way have supported a wide variety of humanitarian efforts. By partnering with United Way, these dollars go further and have a greater impact in our communities. In 2008, ITW employees and retirees donated $9.5 million to United Way chapters throughout the United States and Canada. Additionally, the retirees who participated in the Senior Outreach program raised over $100,000 for this worthy organization.

Junior Achievement

ITW believes the future lies with America's youth. For over 15 years, ITW has actively participated in Junior Achievement programs, providing basic economic and business classes. In 2008, countless ITW employees volunteered to teach Junior Achievement classes around the country to help prepare today's youth for the future workforce. The 2008 ITW Bowl-A-Thon raised $450,000 to fund Junior Achievement programs nationwide.