2023
ESG REPORT
TABLE OF
CONTENTS
About this ESG Report | 03 |
Message from the President & CEO | 04 |
Company Overview | 05 |
Metal Coatings Segment | 05 |
About AZZ Inc | 07 |
Operations | 08 |
Precoat Metals | 08 |
Metal Coatings | 11 |
Our Culture | 14 |
Operations Map | 15 |
Membership Associations | 16 |
ESG Oversight Structure | 17 |
ESG Strategy & Near-Term ESG | |
Priorities | 18 |
ESG Targets | 20 |
Environmental Stewardship | 21 |
Commitment to Human Capital | |
Management | 22 |
Governance | 23 |
Board Membership, Composition & Diversity | 23 |
Board Oversight of Risk Management | 26 |
Communicating with the Board | 26 |
Executive Compensation | 27 |
Ethics Alertline | 27 |
Corporate Policies | 27 |
Code of Conduct & Vendor Code of Business | |
Conduct | 28 |
Anti-Corruption Policy | 28 |
Political Contributions | 28 |
Human Rights | 28 |
Cybersecurity & InformationTechnology | 29 |
Risk Management | 30 |
Environmental | 33 |
Energy Usage & Intensity | 35 |
Emissions | 37 |
Water Usage | 39 |
Waste Streams | 40 |
Recycling Zinc Compounds | 42 |
Environmental Management System | 44 |
Research & Development | 45 |
Supply Chain | 47 |
Social | 48 |
Employees | 48 |
Diversity, Equity & Inclusion | 50 |
Growth,Talent Development, and Succession | |
Planning | 51 |
Health & Safety | 52 |
AZZ Cares Foundation | 54 |
Community Involvement | 55 |
Stakeholder Engagement | 58 |
GRI Index | 60 |
SASB Index | 64 |
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ABOUT THIS
ESG REPORT
This is AZZ Inc.'s ("AZZ" or the "Company") 2023 Environmental, Social and Governance Report ("ESG Report"), which provides its stakeholders with an overview of its corporate sustainability initiatives and progress. This report provides sustainability data on AZZ's fiscal year 2023 ("FY2023"), which includes the period from March 1, 2022 to February 28, 2023 as compared to the previous two years, unless otherwise indicated. Going forward, AZZ will continue to refine its data collection and expand on its sustainability disclosures to provide additional details on its methodology, performance goals, targets and strategy for achievement.
On May 13, 2022, AZZ completed the acquisition of the Precoat Metals business from Sequa Corporation, a portfolio company owned by Carlyle, a global private equity firm. On September 30, 2022, AZZ divested its controlling interest in the Infrastructure Solutions segment pursunt to a joint venture agreement between AZZ and Fernweh Group LLC ("Fernweh") (the "AIS Divestiture"). Pursuant to the AIS Divestiture agreement with Fernweh, AZZ contributed 60% of its ownership interest in the Infrastructure Solutions business segment to AIS Investment Holdings LLC, a subsidiary of Ferweh, and the Company retained the remaining 40% interest. These transactions represent AZZ's strategic transition from a diverse holding company to a focused metal coatings solutions company.
As a result of the AIS Divestiture and the acquisition of Precoat Metals, FY2023 data was included in this ESG Report for the Precoat Metals segment, but excluded for the Infrastructure Solutions segment, as it is not a part of AZZ's continuing operations.
The data contained in this ESG Report includes AZZ's U.S. and Canadian locations. In preparing this ESG Report we referenced the Global Reporting Initiative ("GRI") Sustainability Reporting Standards and the Sustainability Accounting Standards Board ("SASB") Standards for the Industrial Machinery and Goods Industry, as relevant to AZZ's operations for the period covered by this ESG Report. An index for AZZ's GRI and SASB disclosures can be found beginning on page 60.
The content in this ESG Report was reviewed and approved by AZZ's Chief Executive Officer, executive leadership team, Sustainability Council, as well as by the Company's Nominating and Corporate Governance Committee of the Board of Directors (the "Board"). The Company's ESG progress is reviewed and discussed each quarter at each of the Nominating and Corporate Governance Committee meetings of the Board.
For questions or comments about this ESG Report, please contact Tara D. Mackey, Chief Legal Officer and Corporate Secretary or Kevin Lyons, Director, Analytics and ESG/Sustainability at:
AZZ Inc.
One Museum Place
3100 West 7th Street, Suite 500 Fort Worth, TX 76107 Telephone: 817-810-0095 Email: info@azz.com
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MESSAGE
FROMTHE PRESIDENT & CEO
Tom Ferguson
AZZ CEO & President
DearValued Stakeholders:
Across AZZ,we are dedicated to progressing our Environmental, Social and Governance initiatives for the benefit of our stakeholders. As industry leaders, we recognize our vital role in contributing to a more sustainable world.
AZZ is pleased to share with you our Environmental, Social and Governance Report ("ESG Report") for fiscal year 2023 ("FY2023") which was an outstanding year for AZZ, both strategically and financially. We successfully completed the acquisition of Precoat Metals from Sequa Corporation on May 13, 2022, followed by the divestiture of the majority interest in our Infrastructure Solutions segment into a joint venture with Fernweh Group LLC on September 30, 2022. These two transactions finalized AZZ's strategic transition from a diverse holding company into a focused metal coatings solutions company. Collectively, our Metal Coatings and Precoat Metals business segments provide sustainable,unmatched metal coating solutions that enhance the longevity and appearance of buildings, products and infrastructure that are essential to everyday life. We also increased our FY2023 annual sales by 20.5% to $1.3 billion, as compared to the prior year, and returned cash to shareholders through cash dividend payments totaling $22.7 million.
Because we are committed to advancing ESG as a strategic priority across our entire organization,we immediately began
integrating Precoat Metals into our sustainability initiatives and engaged a third-party consultant to assist AZZ with conducting a materiality assessment across our Company's operations to further develop and refine AZZ's near-term ESG strategies for performance improvements and provide assistance to AZZ in setting it's initial ESG targets. As a result of this strategic engagement, we began (i) executing on our updated key performance indicators, (ii) establishing initial internal and external ESG targets, (iii) assessing various Scope 3 emissions data and analytics, and (iv) evaluating our existing and future clean technology investment and sales opportunities consistent with our corporate strategy.
We believe we are making meaningful progress on our sustainability journey in better understanding and managing our impact on the environment and continually learning and adapting along the way.As we proceed into fiscal year 2024, we have begun implementing quarterly internal tracking and reporting of critical sustainability metrics to better measure our progress against our ESG targets and monitor trends. This will provide us the ability to proactively address any issues that may surface.
We remain dedicated to building a brighter future for our business and continuing to invest in our people and the communities in which we live and work, by incorporating sustainability into our supply chain, charitable giving, volunteering and inclusive hiring practices.
Tom
President and Chief Executive Officer
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OUR HISTORY
1956 | Aztec Manufacturing establishes its headquarters | |
in Fort Worth, Texas | ||
Aztec Manufacturing designs and distributes steel, iron, | ||
metal and plastic products for the oil field industry. | ||
Galvanizing expands Aztec's portfolio | 1966 | |
Aztec builds its first hot-dip galvanizing plant in Crowley, | ||
Texas. | ||
1970-85 | Galvanizing provides a strong base for growth | |
Additional state-of-the-art galvanizing facilities are built in: | ||
• | Jackson, Mississippi (1970) | |
• | Houston, Texas (1975) | |
• | Waskom, Texas (1982) | |
• Moss Point, Mississippi (1985) | ||
A new direction leads to new acquisition | 1990 | |
Seeking to expand into adjacent industries, Aztec acquires | ||
Rig-A-Lite Inc., a leading manufacturer of industrial lighting | ||
for oil, gas and other hazardous environments. | ||
The Calvert Company becomes part of Aztec's | ||
growth plan | ||
Acquisition of The Calvert Company takes Aztec into the field | ||
of electrical bus duct systems design and installation. | ||
1993 | The Electrical Product Platform is born | |
By combining Atkinson, Calvert and Rig-A-Lite Inc., The | ||
Electrical Products Platform is formed and Aztec moves into | ||
fabricated enclosure systems. | ||
Expansion and consolidation spur growth | 1994-96 | |
With a total of eight hot-dip galvanizing operations, Aztec | ||
establishes itself as the largest galvanizing company in the U.S. | ||
1997 | and changes its name to | |
Aztec is listed on the NYSE | ||
AZZ Incorporated | ||
Compressed Gas Insulated Transmission (CGIT) | 1999 | |
business takes AZZ into new territory | ||
AZZ acquires a CGIT business and becomes involved in long- | ||
distance power transmission. | ||
2001 | Central Electric Manufacturing is added to AZZ's | |
portfolio | ||
With the acquisition of Central Electric Manufacturing, AZZ | ||
adds metal-clad switchgear to its growing electrical product | ||
portfolio. | ||
Galvanizing operations continue to grow | 2010 | |
AZZ acquires North American Galvanizing Company which | ||
operates 11 facilities in eight states. | ||
2012-13 | AZZ hot-dip galvanizing locations increase to 36 and | |
becomes the largest galvanizer in North America |
Galvcast Manufacturing and G3 Galvanizing along with
Galvan Metal of Quebec is added to the AZZ portfolio.
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Nuclear solutions are added to AZZ's service offering | 2012 |
Nuclear Logistics Inc., the leading supplier of parts and | |
services to the nuclear power industry, is acquired by AZZ. | |
2013 | Welding strengthens AZZ's portfolio |
AZZ acquires Aquilex SRO; adds Welding Services Inc (WSI) and | |
Southeastern Mechanical Service (SMS), two leading providers | |
of machine weld overlay, to its growing portfolio. | |
AZZ Enclosure Systems LLC is formed | 2016 |
AZZ acquires Maryland-based Power Electronics Inc, | |
strengthening its position in the fabrication of custom | |
electrical enclosures and forms AZZ Enclosure Systems LLC. | |
2017 | AZZ expands Metal Coatings Solutions |
AZZ opens first powder coating operation in Crowley, Texas | |
and strategically expands its metal coatings product portfolio | |
beyond galvanizing. | |
Switchgear offering bolstered with the acquisition of | |
Powergrid Solutions Inc. | |
Strategic acquisition expands AZZ's switchgear portfolio, | |
manufacturing capacity and market reach. | |
Enhanced Powder Coating Ltd. is acquired | |
AZZ acquired Enhanced Powder Coating Ltd (EPC), a | |
NADCAP certified provider of powder coating, plating and | |
anodizing services based in Gainesville, Texas. | |
AZZ Enclosure Systems - Chattanooga LLC is formed | 2018 |
AZZ acquires certain assets of Tennessee-based Lectrus | |
Corporation, strengthening its position in the fabrication of | |
custom electrical enclosures and forms AZZ Enclosure Systems | |
- Chattanooga LLC. | |
2018-19 | Galvanizing operations are acquired in Northern |
Illinois and Chattanooga | |
AZZ Surface Technologies adds locations | |
AZZ Surface Technologies acquires K2 Partners, Inc., NucZinc, | |
LLC., and Preferred Industries, Ltd. expanding the number of | |
locations in Dallas-Fort Worth to six and one in Tampa, FL. | |
AZZ Divests Nuclear Logistics LLC | 2020 |
AZZ, seeking to focus on its core business units, sells Nuclear | |
Logistics LLC to Paragon Energy Solutions. | |
2021 | Acme Galvanizing acquisition adds Milwaukee, WI |
location to its footprint | |
AZZ Galvanizing further extends its | 2022 |
operations in the Southeast Region of the US | |
AZZ acquires Steel Creek Galvanizing and renamed | |
as AZZ Galvanizing - South Carolina | |
Strategic Acquisition Expands AZZ's Metal Coatings | |
Capabilities into Western Canada | |
AZZ adds DAAM Galvanizing in Western Canada. | |
AZZ Expands its Metal Coatings Offering | |
The acquisition of Precoat Metals broadens AZZ's breadth of metal | |
coatings solutions to the North American steel and aluminum markets. | |
AZZ becomes a Metal Coatings Company | |
AZZ divests majority stake in the Infrastructure Solutions segment to | |
further transform into a pure-play metal coatings company. |
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- Non-GAAPMeasure. Information about Non-GAAP measures, including a reconciliation to the most comparable GAAP measure, is
available on page 31 of AZZ's Annual Report on Form 10-K filed with the SEC on April 25, 2023.
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OPERATIONS
PRECOAT METALS
North America's Leading Provider in Metal Coil Coating Solutions
The Precoat Metals segment engages in the advanced application of protective and decorative coatings and related value-added services for steel and aluminum coil primarily serving the construction; appliance; heating, ventilation and air conditioning (HVAC); container; transportation; and other end markets. Precoat Metals has approximately 1,100 employees and operates a network of 13 strategically located manufacturing facilities with 15 coating lines and 17 value-added processing lines.
The Precoat Metals segment generated 52% of AZZ's annual sales in FY2023 based on partial FY2023 results.
On November 11, 2022, AZZ announced its plan to construct a new aluminum coil coating facility, complete with value-added down and up stream processing, near St. Louis, Missouri. The 25-acre facility will be located in the new Oldenburg Industrial Park in Washington, Missouri and is expected to generate over 80 skilled jobs when it becomes operational in 2025.The addition of the Washington coil coating facility with state-of-the-art equipment and technology will strengthen AZZ's position to effectively serve the growing aluminum market.
In constructing the greenfield Washington facility, AZZ is incorporating a number of features designed to enhance energy efficiency and minimize waste streams, including:
- highest efficiency drying oven among Precoat facilities as well as use of high efficiency electrical drives and controls in all areas of the facility;
- the installation of 100% LED lighting complemented by a translucent panel that runs the perimeter of the building allowing natural light during the day time;
- the installation of a 100% capture volatile organic compounds (VOC) oxidizer system;
• the use of high efficiency equipment to minimize water usage will eliminate the need for a waste treatment plant and the associated hazardous waste disposal;
- the implementation of an innovative process to substitute paper core for metal coils with recyclable steel and aluminum cores; and
- the installation of equipment throughout the new Washington facility to maximize the recycling of metal and the recycling or re-use of waste, byproducts and pallets to divert these waste streams from landfill. All aluminum scrap will be recycled back to customers.
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OPERATIONS
Coil Coating Industry
Using prepainted metal in the manufacture of products provides environmental benefits on many levels.
First, tests have shown that prepainted metal products can have a longer service life and often are up to 100 percent recyclable at the end of their service life. That means recycled prepainted metal is transformed into a new product instead of contributing to the volume of waste being delivered to overburdened landfills. The steel or aluminum used in prepainted metal is often made of fully or partially recycled metal in the first place, creating a sustainable life cycle.
Another green benefit inherent in prepainting metal is the manufacturing process itself. By centralizing paint operations from many locations to high-tech coil coating lines, a host of green benefits are realized. The coil coating industry has pioneered controlled processes that focus on reducing VOC emissions, lowering energy use with efficient curing processes and maximizing resource usage. Prepainting also results in the use of less paint while achieving better performance compared with other painting methods.
The coil coating process is the method of choice for today's most advanced metal coatings, producing even additional green benefits. For example,"cool metal roofing" systems feature coatings specifically designed to reflect heat, helping to reduce energy needs and mitigate environmental problems like urban heat islands (UHI) and smog. The latest state-of-the-art architectural coatings are applied using the coil coating process as well. These include new self-cleaning,smog-eating coatings for buildings; solar panel coatings; and color-changing coatings that help store and reflect heat.
In addition, products manufactured from prepainted metal do not "leach" or emit harmful substances into the air, an important benefit for indoor consumer goods.
The coil coating process itself is an environmentally responsible method to apply paint to steel and aluminum substrate:
- VOC Capture: Coil coating is a highly efficient "closed loop" process, meaning that the coating curing ovens burn the harmful VOCs, using them as fuel, saving energy and eliminating pollutants. Coil coating achieves a high rate of VOC capture and destruction, eliminating toxic air pollutants that would otherwise be released into the air.
- Centralized Operations: By centralizing paint operations, moving them from manufacturers' inefficient in-house paint shops to coil coaters' high-tech coating lines, environmental issues are concentrated, better controlled and in some cases even eliminated.
- Recyclable & Recycled: The end products are green, too. Prepainted metal is often fully recyclable, and coil coated products are often made of recycled content.
Reference Materials
- National Coil Coating Association (NCCA)
- Environmental Product Declaration (EPD) - Roll Formed Metal Wall and Roof Panels
- Video on Energy & Environmental Benefits of Prepaint (NCCA)
- Metal Building Life Cycle Assessment (MBMA)
- Steel Sustainability in Recycling Fact Sheet
- Steel Sustainability in Construction Fact Sheet
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OPERATIONS
FEATURED STORY
Precoat Metals: New Precoat Facility inWashington, Missouri
On November 11, 2022, AZZ announced its plan to construct a new aluminum coil coating facility, complete with value- added downstream processing, near St. Louis, Missouri.The 25-acre facility will be located in the new Oldenburg Industrial Park in Washington, Missouri and is expected to generate over 80 skilled jobs when it becomes operational in 2025.The addition of theWashington coil coating facility with state-of-the-art equipment and technology will strengthen AZZ's position to effectively serve the growing aluminum market.
FEATURED STORY
Precoat Metals: Championing Sustainable Construction with Metal Building Supply
In the evolving landscape of residential construction, sustainability and energy efficiency have become paramount. Our Precoat Metals segment collaborates closely with Metal Building Supply to meet this demand, leveraging cool pigmentation technologies in partnership with leading paint companies.
Jose Mendoza, the President of Metal Building Supply, shares, "Increasingly, homeowners and roofing contractors are seeking information about reflectivity and want to understand how their
coating and substrate choices impact the insulation requirements and utility demands to heat and cool their homes. Our partnership with Precoat Metals and paint companies enables us to offer products that not only align with the aesthetic preferences of homeowners but also advocate for a sustainable future through energy-efficient solutions."
Thanks to Precoat Metal's coil coating process, Metal Building Supply and the paint companies working to offer cool pigmentation, roofing contractors can now offer enhanced solar reflectivity and emissivity of metal building products to homeowners. This critical factor not only reduces energy costs and the carbon footprint of residential buildings, but also educates customers on the environmental benefits of sustainable choices, fostering a community conscious of its impact on the environment.
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Disclaimer
AZZ Inc. published this content on 30 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 October 2023 21:38:47 UTC.