Environment
2012
Sustainable
Development
Report
Social GRI IndexEnvironment Social GRI Index 2. Organizational Profile 17 3. Reporting Parameters 24
4. Governance, Commitments and Engagement 28
5. Economic Disclosures 39 6. Environmental Disclosures 49 7. Social Disclosures 82 Labor 86 Human Rights 98 Society 105 Product Responsibility 113 GRI Index 119
Forward Looking Statement
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from the projections or estimates contained in the forward-looking statements. The company assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A (Risk Factors) in the company’s Form 10-K and 10-Q reports filed with the SEC which should be reviewed carefully. Please consider the company’s forward-looking statements in light of those risks.
Environment Social GRI Index 2010 2011 Economic Sales $ million $10,116 $11,252
Capital expenditures $ million $1,388 $1,797
Adjusted operating profit1 $ million $2,167 $2,469
Adjusted net income – Praxair, Inc.1 $million $1,476 $1,666
Adjusted diluted earnings per share1 actual dollars $4.74 $5.43
Productivity savings $ million $400 $375
After-tax return on capital2 percentage 14.4% 14.7%
Return on equity2 percentage 26.4% 28.2%
Payments to vendors $ million $5,054 $5,600
Donations and other community investments $ million $4.3 $4.5
Environment
Electrical energy intensity/product vs. 2009 (100) MM MWh per unit 97.4 96.8
Indirect GHG intensity ASU product vs. 2009 (100) MT CO2e per unit, baseline 100 in 2009 98.1 96.1
Direct GHG intensity /H2 product vs. 2009 (100) MT CO2 per unit, baseline 100 in 2009 99.2 98
Distribution GHG intensity vs. 2009 MT CO2e per unit product delivered in truck 96.3 95
Water use intensity vs. 2009 M3 per unit, baseline of 2009 94.8 93.9
NOx emissions MT 1,770 1745
Environmental fines actual dollars $27,021.00 $35,562
R&D: revenue from “eco-portfolio” percent 23% 26%
Social
Total employees 26,261 26,184
Employee engagement results of biennial survey 88%
-Worldwide employee diversity - male/female ratio, 82%/18% 82%/18%
Board diversity percent of women or U.S. minority or non-U.S. 50% 50%
Executive leadership diversity percent of women or U.S. minority or non-U.S. 57% 51%
Emerging country leadership diversity national or regional 92% 92%
Lost workday case rate Praxair per 200,000 hours worked 0.04 0.05
Lost workday case rate contractors per 200,000 hours worked 0.10 0.08
Recordable injury rate Praxair per 200,000 hours worked 0.51 0.40
Recordable injury rate contractors per 200,000 hours worked 0.40 0.16
Fatalities employees 0 0
Fatalities contractors 1 1
Worldwide vehicle accident rate Praxair drivers per million miles 3.25 2.76
Worldwide vehicle accident rate contractors per million miles 3.52 2.87
Vendor scorecard visits to key suppliers percentage 100% 100%
Community engagement: Number of people benefitting 140,000 275,000
Community engagement: Percent of employees involved 29% 40%
Note 1: Adjusted amounts are non-GAAP measures. 2011 adjustment amounts exclude the impact of a gain from an acquisition and charges relating to a cost reduction program. 2010 adjusted amounts exclude the impact of the Spain income tax settlement, U.S. homecare divestiture, repatriation tax benefit andVenezuela currency devaluation. Adjusted amounts are reconciled to reported amounts in the "Non-GAAP Financial Measures" section in Item 7 of the 2011 Annual Report.
Note 2: After-tax return on capital and return on equity are non-GAAP measures defined in the “Non-GAAP Financial Measures” section in Item 7 of the 2011 Annual Report.” Table 1.1 (1) Key Figures 2011
Environment Social GRI Index Hydrogen Plants: 4% intensity improvement by 2020 vs. 2009 baseline (0.4% per year)
Capital Projects:An average of at least 1% annual energy intensity improvement for ASU plants in our design portfolio
Eco-Productivity:Document environmental savings from productivity Offices:20% reduction in emissions by 2012
Targets
Results
and applications when commercializedReport eco-portfolio:Percent of revenue from applications that bring environmental advantage Work with customers & regulators to develop green technologies ASUs Percentage Improvement vs. 2009 2010 2011 1.9 3.2 Target 2012 3 Target (1% improvement/year) Bulk Distribution 2010 3 2011 5 Target 2012 4.5
Target (1.5% improvement/year) Target (2MM MT CO2e avoided/year when applications are commercialized)
Oxygen used to make steel enables 8.7 million MT CO2e to be avoided. Krypton used for thermal insulation enables 1.1 million MT CO2e to be avoided. These two applications avoid almost as much CO2e as is emitted from all Praxair air separation activity.
Hydrogen used to make ultra-low sulfur diesel and driven with a diesel particulate filter results in nearly three times more GHG avoided than is emitted in all of Praxair’s H2 production.
Packaged Gas Distribution
2010 2 2011 4 Target 2012 4.5 Target (1.5% improvement/year)
Innovation Carbon Productivity: O2 & Kr
2010 2011
2 MM 2 MM
CO2e
emissions CO2eGross avoided CO2e emissions Gross CO2e avoided 10.9 -9.8 Carbon Productivity: H2 -12.8 4.4 Target (4% improvement by 2020) H2 Plants Percentage Improvement vs. 2009 20100.8 2011 2 Target 2012 1.2 Capital Projects Percentage Improvement vs. 2009 1 2 3 100 25 20 Offices Percentage Improvement vs. 2009 Cost-Savings from Eco-Productivity
Eco-Portfolio 2009 22% 2010 23% 2011 26% 32.9 62
Percent of revenue from applications that bring environmental advantage
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Dear Friends,
At Praxair, Making our planet more productive is
more than a slogan – it demonstrates how well we
provide efficiency, energy, environmental, economic
and social advantages to our customers and our
planet. We believe that our mission and business
model work together to help address some of the
world’s greatest energy and environmental
challenges. We create technology, products and
services that help sustain and protect our planet.
What do we mean by Making our planet more
productive?
Praxair’s growth strategy is primarily in energy
markets, emerging economies and environmental
applications. Overall, 26 percent of Praxair’s 2011
revenue was generated from applications
technologies that help customers reduce operating
costs, increase process efficiencies and improve
their environmental performance. If we include our
healthcare business, 34 percent of our revenue
came from environmental and social solutions.
In the area of greenhouse gases (GHG), for
example, we evaluated the carbon productivity of
just three applications, together worth 11 percent
of revenue. Chart 1.1 (1) shows that in 2011 they
allowed our customers – and the planet – to avoid
23 million metric tons (MT) of GHG emissions.
That’s seven million MT more GHG avoided than
our total GHG emissions.
Making our planet more productive means maintaining
strong business results. During 2011, the Praxair
team brought in new business and managed costs
record earnings per share, and in early January
2012, announced the 19th consecutive annual
increase in Praxair’s dividend.
It means focusing on our core values and standards
of compliance, ethics and integrity, results, customer
focus, employee excellence, safety and
environmental awareness. We had our best-ever
safety performance in 2011 with worldwide
recordable injuries down 22 percent and serious
vehicle accidents down 26 percent from an already
outstanding base. Praxair invested more than 1.3
million hours in safety training for employees and
contractors.
Making our planet more productive means constantly
focusing on a culture of operational excellence and
resource optimization. Strong financial discipline
has consistently produced outstanding return on
capital and shareholder value.
Making our planet more productive means establishing
a culture of 100 percent compliance, zero accidents,
and zero waste. We are increasingly linking
sustainability and productivity. In 2011, we
reported 967 projects that produced $62 million of
eco-productivity savings within our $375 million
productivity savings. Employee environmental
awareness and enthusiasm is evident everywhere.
We launched a Zero Waste initiative in 2011 and
achieved zero waste at 10 global sites. Our site
participation in Earth Day has doubled each year
since 2009, and in 2011, over 250 sites were
involved.
We are committed to improving the global
communities where we live and work. We hire and
promote local talent and leadership. We expect
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environmental responsibility – and invest in training
to ensure they exceed expectations. We invest in
Praxair Foundation grants and employee energy to
support initiatives in social capacity-building and
environmental stewardship.
Praxair’s sustainability reporting has been guided by
the Global Reporting Initiative (GRI) framework
since 2008. For the 2012 Sustainable Development
Report, the GRI confirmed that Praxair’s
sustainability reporting fulfills the expanded GRI
I am proud to be part of Praxair’s highly skilled,
innovative global team that consistently
demonstrates our mission of Making our planet
more productive. This is what sustainable
development means to us. Together, we are making
a difference, one customer, one person, one
community at a time.
Steve Angel
Chairman and CEO
Chart 1.1 (2): Praxair’s Carbon Footprint
Praxair’s carbon productivity was calculated for three signature Praxair products in three markets: hydrogen sold to make ultra-low sulfur diesel fuel, which is driven by trucks fitted with diesel particulate filters; krypton sold to insulate thermal windows; and oxygen sold to optimize combustion in steelmaking. In 2011, these markets contributed some 11 percent of sales. Praxair applications enabled customers to avoid 23 million MT CO2e – an amount that exceeded all Praxair GHG emissions by seven million MT. More
information on our methodology and an external audit of results can be found on our website atless carbon more green.
15MM 10 MM 5 MM 0 MM -5 MM
Praxair’s CO2e Emissions
16 million MT CO2e
Praxair’s CO2e Avoided
23 million MT CO2e
Net Benefit:
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The table above demonstrates that Praxair’s Sustainable DevelopmentVision 2015 is fully integrated into our business drivers, goals and vision. It maps the sustainable development themes of economic, environmental and social value
(presented in this report in blue, green and gold) against Praxair’s four secular business drivers: growth in energy and environmental solutions, growth in emerging economies and productivity through operational excellence and execution. The vision is supported by goals, targets and key performance indicators (KPIs) in each area. These are reported in this chapter and at the introduction to the following sections on economic, environmental and social themes.
Praxair’s Sustainable DevelopmentVision 2015 was first presented in Praxair’s 2011 Sustainable Development Report and confirms our corporate goal: to embed sustainable development across the organization. We created a platform for this in 2010 with Praxair’s second-generation GHG goals and targets. These included targets for improving our GHG intensity in our operations: air separation, hydrogen production, distribution, capital projects and offices; and in customer carbon productivity: showing the environmental value Praxair applications brought to customers and the planet. We introduced new environmental targets to reduce energy use and nitrogen oxide (NOx) emissions from vehicles
and to launch a Zero Waste program. In this report, we introduce our Sustainable Development Materiality
Assessment (SDMA), and announce several new or improved targets.
Praxair determines its key impacts on sustainability and related challenges and opportunities, as well as its approach to prioritizing them, in its SDMA process and conclusions. Summary data is provided in Table 1.1(1). A summary table is provided in Table 1.2(2). Praxair’s strong emphasis on compliance, ethics and integrity ensures that stakeholders’ rights are respected and protected in this regard. Praxair also references a range of internationally-agreed standards and norms (see 4.12).
In 2011-2012, Praxair prepared a SDMA. Praxair’s SDMA is the first step in Praxair’s Sustainable Development
Management System (SDMS) process, as shown in Chart 1.2(1) following.
1 For the purposes of this report, the words “material” and “materiality” are not meant
to describe materiality for the purposes of financial reporting, but rather refer to the relevance of sustainability issues to Praxair.
Strategic Platforms Earnings Growth & Customer Sustainable Employee Return on Capital Satisfaction Development Engagement CompanyVision: Be the best-performing industrial gases company in the world as determined by our customers, shareholders,
suppliers, employees and the communities in which we operate.
Corporate Goal: Embed sustainable development across the value chain.
Business Drivers Economic Environmental Social
Energy Enable affordable, reliable, Support renewable Protect health & the environment efficient solutions energy technologies
Environment Widen opportunities from emerging Demonstrate customer Ensure safety, health, security & engagement regulations & innovations carbon productivity
Emerging Economies Invest in growth & innovation Promote eco-efficiency Develop local talent and partnerships
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The SDMA defines the material sustainable development issues for Praxair. The SDMA process illustrates how
stakeholder issues are met and, as appropriate, integrated into sustainability governance. Sustainable development KPIs, including Environmental Key Performance Indicators (EKPIs) are selected based on business priorities and current and emerging internal and external considerations. Our SDMS elements help achieve a solid process to implement the KPIs. Performance targets are developed and are cross-referenced to the SDMA. The selection of SD KPIs and EKPIs is reviewed annually within the SDMS management review cycle.
The SDMA follows these steps:
1. Identify a broad universe of externally perceived sustainability risks and opportunities. We pooled the indicators of the GRI, together with other relevant sets of international recommendations and guidelines, such as those published by the American Chemistry Council (ACC)
Responsible Care Management System®(RCMS®)
initiative, the Carbon Disclosure Project (CDP) climate change and water programs and the Dow Jones Sustainability Index (DJSI). Together, these external
frameworks represent the views of regulators, communities,
investor groups (SRIs) who raised issues in inquiries sent directly to Praxair, and all customer requests for sustainability information. Employee priorities and
concerns were gleaned from the 2010 employee survey and from the internal business sustainable development
coordinators. These were ranked based on relevance of the questionnaire (for example, key customers and key
sustainability standards and rankings rated higher) and frequency of request. This list of potentially significant sustainability issues is provided in the full SDMA. 2. Overlay these external issues with Praxair business
priorities. These were determined from Praxair’s mission, vision, values and strategy; key business drivers and growth platforms; and key business risks; as well as our
commitment to sustainable development.
3. Map stakeholder issues that emerged from this process to the economic (including governance), environmental and social components of sustainable development. This internal process involved consolidating issues, promoting and demoting others and seeking to create a finite and credible set of indicators that evenly covered the three elements of SDMA • Stakeholder SDMA SDMS Process SD & EKPIs • EKPI Reporting Principles documents + EKPIs • (other SD KPIs)** • Policy • SOPs • Reporting Schedule • Approval Schedule • Roles & Responsibilities • Data mgt. system • Training • Document control
• Goals & Targets • Action Plans • SD dashboard • Monthly business mgt. reports • Quarterly reports to OOC • Annual mgt. review • Annual report to OOC • Annual report to board • Annual SD report • SD highlights • CDP GHG report • CE Highlights Identify Key Issues Measure Manage Define Performance ManagementReport to Report Externally
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Health & Safety
Environmental Issues
Economic & Governmental Issues
Social Issues 1st Priority 2nd Priority 3rd Priority GHG Emissions Energy Resource Optimization Integrity, Ethics Earnings Growth & Return on Capital
Air Emissions
Transport
Talent Development & Diversity
Compliance Eco-Productivity
Costs of Compliance
Customer Carbon & Environmental Productivity
Emerging Markets Product Stewardship
Supplier Sustainability Management
Organizational Brand Alignment
Impact to Praxair Impor tant to Stak eholders
This matrix arranges Praxair sustainable development priorities and those of its stakeholders. Key Stakeholders: investors, customers, employees, regulators, and communities.
1st and 2nd priority items are subjects of Praxair Sustainable Development action plans and targets. This matrix is a summary; it does not represent the full range of issues considered.
Stakeholder Engagement
Relative Repor
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Each of the 18 priorities was used to confirm or improve programs and/or goals and targets in the Sustainable Development Action Plan (SDAP). In line with the SDMS process, the full set of potentially significant sustainability issues will be annually reviewed and improved.
Praxair’s SDAP was originally created in 2008. Five-year goals were developed for each sustainable development principle. Annually, targets are set to move toward or support the goals at the corporate level and in each of the businesses. The director of sustainable development reports on performance against this plan monthly to senior management and the executive team. At the corporate level, the plan is
implemented through the various corporate functions. For example, the chief compliance officer manages the goal to maintain compliance with the law and our Standards of Business Integrity, and the chief technology officer manages the goal of demonstrating the environmental value of Praxair products across their life cycle. Each business has a parallel action plan, with annual targets that relate to issues specific to the particular business but that support the corporate plan. Targets: Summary and Next Steps
Table 1.2 (2) maps targets against Praxair’s KPIs, as identified in our SDMA, and shows how activity and accountability are embedded in the organization. In 2011 Praxair achieved all these targets. Following is a summary of performance against targets, challenges and next steps.
1. An annual management system review process will allow for the periodic review, confirmation and/or improvement of standard operating procedures (SOPs), roles and responsibilities, training, communication, targets and other management system elements, including better automation of environmental data and reporting.
2. Eco-productivity has become an important initiative with executive leadership. This reports cost savings from sustainability initiatives in the productivity and in procurement.
3. We have issued a new target in the social area: measure supplier sustainability management. The Global
Procurement and Materials Management (GPMM) Economic & Governance
• Integrity & Ethics
• Earnings Growth & Return on Capital • Compliance • Costs of Compliance • Eco-Productivity • Emerging Markets Environment • Energy
• Customer Carbon & Environmental Productivity • GHG Emissions
• Resource Optimization • Air Emissions
• Transport Social
• Health & Safety
• Talent Development & Diversity • Stakeholder Engagement • Product Stewardship
• Supplier Sustainability Management • Organizational Brand Alignment
Table 1.2 (1): Praxair Sustainable
Development Priorities
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5. In 2011, we had a target to launch a Zero Waste program. This was accomplished and 10 sites achieved this status. A new target was created to achieve 50 Zero Waste sites in 2012.
6. In Praxair’s carbon productivity targets, we added a third market application that brings a net carbon dioxide equivalent emissions (CO2e) avoided in use: krypton is used to improve thermal window insulation and save energy. We added this to Chart 1.1 (1), and show that the GHG emissions avoided by just three of Praxair’s market applications more than exceed our total GHG emissions. 7. Praxair’s GHG innovation target, that our applications
under development should be worth a potential 2 million MT CO2e avoided, will be closed at the end of 2011. The other GHG innovation targets are maintained.
8. The office GHG reduction target was met and is complete. We are considering other programs that will maintain the momentum built up in this program.
9. In 2011, we exceeded our target of 0.4 percent per annum GHG intensity improvement target in our hydrogen business that operates and steam methane reformers (SMSs). We will retain this target for 2012, but this may need to be reviewed.
10. Many of Praxair’s GHG intensity improvement targets are annual improvement targets. The question has been asked how long this can be sustained. For the most part, Praxair does not foresee a short-term concern, but we will continue to monitor this.
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SDMA KPI Target 2011 Status/Results GRI
Indicator
Economic Integrity, Ethics Compliance,
Costs of Compliance
Maintain global standards of corporate governance,
compliance, ethics, integrity, accountability & human rights 100% employees certifiedthat they read and understood Praxair Standards of Business Integrity
4.1 – 4.10
Earnings Growth & ROC Achieve continuous growth in earnings per share (EPS) and
industry-leading return on capital (ROC) Annual ROC: 14.7%Growth in EPS: 15% EC 1
Eco-Productivity Document environmental savings from productivity $62 million EC 2
Emerging Markets Enable delivery of safe drinking water to millions of
consumers, particularly in China 30 million people served EC 8 Achieve 45 percent global sales from emerging economies by
2015 39%
Source 50 percent applications development from emerging
economies by 2016 23%
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Energy Achieve a minimum energy savings of 1.8 million MWh of electricity & 2.5 million MMBtu of natural gas, delivering anticipated savings > $100 million by 2020 vs. 2009
Savings achieved of 0.6 million MWh and 1.4 million MMBtu
EN 3 EN 4 Average of at least 1% annual energy intensity improvement
for ASU plants in our design portfolio 3.8% improvement vs. 2009 EN 4
Customer Carbon & Environmental Productivity
Increase revenue from environmental applications
(“eco-portfolio”) 26% EC2EN 26
Projects in commercial pipeline will annually avoid 2 million
metric tons CO2e Achieved
Measure and validate carbon productivity for key Praxair
products & applications GHG avoided exceeds GHGemissions by 7 million MT
GHG Emissions ASUs: 1% annual GHG emissions intensity improvement per
unit produced 3.2% improvement vs. 2009 EN 16
Hydrogen: 4% GHG emissions intensity improvement, 2009 –
2020 (0.4% per year) 2% improvement vs. 2009 EN 16
Offices: 20% reduction in GHG emissions by 2012 20% improvement vs. 2009 EN 17
Resource Optimization Install WBCSD Global Water Tool Water tool installed EN 9
Environment Social GRI Index Indicator Social
Health & Safety Continuously improve safety performance 22% improvement in
recordable injuries LA 7 - 8 Talent Development &
Diversity Source and retain top talent, particularly in emergingeconomies 92% emerging economyleadership are local nationals LA 1, 2,10, 14, 14 Stakeholder Engagement Launch facility Zero Waste initiative 10 sites achieved Zero Waste
2012 target: 50 sites BoxEN26(3) Continue to improve levels of employee satisfaction in
employee survey (Target: 86%) 86% achieved (2010)Biennial survey 4.16 Demonstrate value of community engagement to our
communities, businesses, employees Number of beneficiaries:277,000 Percent reporting that community engagement improved Praxair reputation: 70%
4.16 SO 1
Work with customers & regulators to develop green
technologies See SO5 SO5
Supplier Sustainability
Management Measure sustainable development in our supply chain See EN DMA and boxes atEN 26 ENDMA EN26 Product Stewardship Track trends & respond to customer interest in sustainable
development issues CDP supply chain requests: 8 4.11,4.16,
PR 1, 3, 6, 9 Organizational Brand
Alignment Embed sustainable development into businesses and functions:Increase Earth Day participation 251 sites participate 1.1, 1.2,2.10 Continue to be recognized by external stakeholders as a
leader in sustainable development See 2.10
KeyThemes
There were several themes in our sustainability efforts in 2011 that align with our strategy and business drivers: • Energy: Provide bold solutions to global energy challenges.
• Environment: Demonstrate that environmental management brings both revenue and margin. • Emerging economies: Promote employee environmental and community engagement. • Execution/Operational Excellence: Develop our SDMS and dashboard.
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As a large energy user, Praxair faces interest from investors and the sustainability community concerning our investment in renewable energy sources. Stakeholders such as the CDP, DJSI and socially responsible investors provide positive ratings to firms that can show reductions in their own energy use and net GHG emissions, and that are investing in renewable energy to bring these reductions. Praxair actively and frequently considers proposals for these investments, but requires that these projects meet our normal investment hurdle rates for capital spend. In 2011-2012, and in response to external and internal stakeholder interest, Praxair prepared an energy return on investment (ROI) evaluation (see Chart 1.2 (3)). The results show that Praxair investments in
improving the energy efficiency of its plants provides a far better return for the planet and for our shareholders than any current renewable energy alternative. Praxair sees market opportunity in clean technology and renewable energy, and we continue to provide innovative applications in this area. See Chart 1.2 (3).
A comparative energy ROI was conducted between Praxair’s own investments in improving the energy efficiency of our plants and a range of alternatives for purchasing renewable energy. Energy efficiency is the best investment we can make to reduce our global energy footprint and reduce natural resource consumption. Praxair’s energy efficiency program returns are 12 times those of typical solar projects and more than twice the energy ROI of wind alternatives.
• For each $1,000 invested, Praxair’s energy efficiency program reduced demand by 0.59 kW versus 0.18 kW for solar PV.
• Many renewable energy solutions depend on the wind or sun and run at less than 100 percent capacity. In terms of energy saved or produced, Praxair’s energy efficiency program is 12 times more effective than solar, when adjusted for capacity factors (three times more when unadjusted).
• Energy efficiency is consistent with Praxair’s ongoing business model and value proposition. Chart 1.2(3): Energy Efficiency vs. Renewable Energy: Comparing the Energy ROI
Solar PV Distributed (scale) 0.0 -0.20 0.20 0.40 0.60 Solar PV Biomass Geothermal Wind (off-shore) Wind (100-1,000 kW) New Hydro MSW-Landfill gases Wind (>1,000 kW) Praxair Energy Efficiency Projects kW/$1,000
adjusted for capacity factor kW/$1,000
adjusted for capacity factor Praxair
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Does a focus on the “triple bottom line” (economic, environmental and social issues) bring value? This remains the central challenge and opportunity for sustainable development. Praxair’s business model is focused on
environmental innovation as a source of revenue, savings and margin improvement, which all result in earnings growth. Four examples are provided:
• Enabling customers to reduce energy and environmental emissions. Praxair produced an updated 2011 Carbon Footprint chart (Chart 1.1 (2)) to show that GHG avoided through customer use of our products and applications exceed our GHG emissions. In addition, Praxair has several goals and targets for customer carbon productivity. 2011 performance against these targets is reported in Table 1.2 (2).Environmental productivity is both a source of revenue and a source of cost savings and earnings growth. On the revenue side, environmental innovation is built into our business model. In the energy sector, hydrogen volumes for our refining customers are expected to increase at about 20 percent annually. Hydrogen is essential to the production of cleaner-burning transportation fuels that meet air quality regulations and reduce sulfur emissions. In the cement and steel sectors, atmospheric gas applications improve the energy efficiency of industrial processes. Praxair gases are also components of several clean and/or renewable energy solutions such as solar panels. Krypton, for example, is used in thermal window insulation. In 2011, the use of Praxair krypton conserved the energy equivalent of over one million tons of CO2e.
• Contributing to clean and renewable energy solutions. Praxair is a significant industrial gas supplier to the polysilicon market, and currently serves more than 50 photovoltaic manufacturing facilities worldwide. Praxair was recently named the “Star Performer” among suppliers to Tata India Solar, one of the biggest solar companies in the world. Industrial gases are crucial ingredients in second-generation biofuels such as jet fuel produced from non-food animal fat.
• Maximizing environmental productivity as a source of margin. Margin improvement is the goal of Praxair’s Productivity and Lean Six Sigma organization, which since 2007 has delivered a five percent reduction in Praxair’s cost stack each year. Since 2010, Praxair has reported environmental savings from cost reduction, or eco-efficiency. In 2011, $62 million of productivity savings was achieved from
environmental savings. The energy, air emissions and fuel associated with this was equivalent to 300,000 MT CO2e. See Chart 1.2 (4).
Elsewhere in this Report we show value (revenue and cost savings) from social investments and from supplier
sustainability management. Value from employee
environmental engagement is referenced in item 3 below and in the Social Disclosures (SO) section. Value from supplier sustainability management is reported in Boxes EN 2, EN 26 (1), EN 26 (3), and EN 26 (4).
2008
Chart 1.2 (4): Eco-efficiency Savings from Eco-Productivity Productivity Annual Savings Eco- Productivity Savings
In Millions - Percent of Cost Stack
5% $320 2009 7% $450 2010 7% $400 2011 6% $375 > $60 million saved >300,000 MT CO2e Equivalent to the annual CO2 emissions from electricity use at 35,000 homes (U.S.)
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Praxair earns 39 percent of revenue from emerging markets (up from 36 percent in 2010). As we grow globally and compete to source and retain talent, employee engagement and employee community engagement are key elements of establishing our corporate culture and community license to operate.
Praxair’s emphasis on improving global brand identity and on our environmental strategy will work only if employees are fully engaged and understand their role in bringing the brand, Making our planet more productive, to life. Employee
engagement is well recognized as a key element in building a company culture and in retaining talent. Employees are a vital component of Praxair’s environmental mission and sustainable development goals and initiatives. The key to achieving successful employee engagement was to identify and recognize multiple individual and site accomplishments that resulted in environmental benefits (2009-2010) and then to align these accomplishments with the business mission to show that there is business and environmental value and senior management support.
over 1,500 employees from around the world submitted narratives of what they had done at home, at work, on the road, or in the community, in recognition of Earth Day. Increasing employee environmental engagement drives additional engagement (see section SO1) as employees make the connections between living the Praxair brand and their activity at work, at home and in the community. In addition, this trend has been strong in our emerging economy
countries. This is bringing multiple business benefits: Examples are provided at Box EN26 (3) and BOX EN26 (2).
Employee engagement in our communities is a leadership activity at Praxair, and participation in this area has escalated from individual-led initiatives to becoming integrated into the corporate culture. Many of the site Earth Day activities were also site community engagement activities. Since the
inception of the Praxair CEO Award for site- or business-level engagement in 2009, Praxair’s global community engagement program now has 40 percent employee participation and collects metrics to measure value. Praxair appointed a new Leader of Community Engagement at the start of 2012 to ensure that our global engagement programs were well aligned with the Praxair Foundation and our brand mission and to help develop a culture of sustainable development. More information is provided at SO1.
4.Execution: Develop our SDMS and dashboard The SDMS was launched in 2011 and has brought a new rigor and focus to Praxair’s environmental reporting. The function of the SDMS is to maintain the Sustainable Development Dashboard and report performance against targets on a monthly basis to the director, sustainable development; on a quarterly basis to the Office of the Chairman; and at least annually to the Board. This includes results of performance against Praxair’s GHG targets (for air separation, hydrogen, distribution and office greening); eco-productivity and zero waste; as well as related programs, such as the global rollout 250 300 200 150 100 0
Chart 1.2 (5): Earth Week celebrations
Number of sites participating
2009 8 2010 41 2011 104 2012 251
Praxair has a range of meaningful programs to achieve a strong culture of employee environmental engagement. This report contains multiple case studies of employee
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The most senior body responsible for sustainable
development at Praxair is the company's Board of Directors via its Governance and Nominating Committee. This committee has oversight responsibility for, among other things, the company's responses to broad public policy issues in the areas of corporate social responsibility, corporate citizenship and sustainable development. The director of sustainable development presents at least annually to the Board on these issues. The director also creates and leads the corporate sustainability strategy and drives functional alignment and awareness throughout the organization. A senior vice president in conjunction with the Office of the Chairman is responsible for oversight of sustainable development plans and goals and business performance against goals.
The director, sustainable development, chairs the Corporate Sustainable Development Council, which ensures alignment with the business strategy and functions. Members are executives from the corporate functions responsible for implementing the sustainable development strategy, including: Governance and Integrity, Risk Management, Strategy, Finance, Sales, Investor Relations, Investment, Legal, Sourcing, Energy, Capital Projects, Research and Development (R&D), Operations, Productivity, Safety and Environment, Human Resources, Marketing and Business Development, Corporate Communications, Mergers and Acquisitions, Government Relations, Information Technology Services and the Praxair Foundation. It is the responsibility of the Council to stay current with emerging issues that pertain to sustainable development.
The council meets at least quarterly and is tasked to: 1. Maintain a process to define the content and quality of
Praxair’s sustainable development activity and reporting, including an assessment of what issues should be given priority; identification of relevant stakeholder concerns and confirmation that suitable responses have been made; and confirmation that sustainable development reporting covers all relevant issues.
sustainable development (in line with the scope of Praxair’s Board Committee oversight). Ensure that responses are in place to address material issues.
3. Develop and maintain the corporate sustainable development strategy and action plan.
4. Ensure business alignment.
5. Understand, analyze and propose to the Office of the Chairman specific emerging issues in the sustainability area that require dedicated functional and/or cross-business attention (such as the existing GHG Strategy Team).
The director, sustainable development, leads the SDMS and is accountable the achievement of the corporate sustainable development targets and continued progress in community engagement.
At the business/segment level, each business president chairs a Sustainable Development Council for his/her business and each functional vice president is represented on the
corporate Sustainable Development Councils. Each business unit has a dedicated sustainable development coordinator, who leads their business council, arranges quarterly meetings and reports on its action plans and progress on the SDMS work areas and targets. Some segments, such as Asia, have appointed coordinators at the country level as well. Coordination of the work of the business sustainable
development coordinators is through the director, sustainable development. This group meets monthly via teleconference and periodically in person as time and budget permit.
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2.1 Name of the Organization Praxair, Inc.
2.2 Primary brands, products, and/or services 2.3 Operational structure of the organization Praxair, Inc. (Praxair or the company) was founded in 1907 and became an independent publicly traded company in 1992. Praxair was the first company in the United States to produce oxygen from air using a cryogenic process and continues to be a major technological innovator in the industrial gases industry. Praxair is the largest industrial gas supplier in North and South America, is rapidly growing in Asia and has strong, well-established businesses in Europe. Praxair’s primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon and rare gases, including krypton) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). The company also designs, engineers, builds and operates equipment that produces industrial gases. The company’s surface technologies segment, operated through Praxair Surface Technologies, Inc., supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders.
Industrial Gases Products and Manufacturing Processes
Atmospheric gases are the highest volume products produced by Praxair. Using air as its raw material, Praxair produces oxygen, nitrogen and argon through several air separation processes of which cryogenic air separation is the most prevalent. As a pioneer in the industrial gases industry, Praxair is a leader in developing a wide range of proprietary and patented applications and supply systems technology. Praxair also led the development and commercialization of non-cryogenic air separation technologies for the production of industrial gases. These technologies open important new markets and optimize production capacity for the company by
Process gases, including carbon dioxide, hydrogen, carbon monoxide, helium, specialty gases and acetylene, are produced by methods other than air separation. Most carbon dioxide is purchased from byproduct sources, including chemical plants, refineries and industrial processes and is recovered from carbon dioxide wells. Carbon dioxide is processed in Praxair’s plants to produce commercial and food-grade carbon dioxide. Hydrogen and carbon monoxide are produced by either steam methane reforming of natural gas or by purifying byproduct sources obtained from the chemical and petrochemical industries. Most of the helium sold by Praxair is sourced from certain helium-rich natural gas streams in the United States, with additional supplies being acquired from outside the United States. Acetylene is typically produced from calcium carbide and water or purchased as a chemical byproduct.
Industrial Gases Distribution
There are three basic distribution methods for industrial gases: (1) on-site or tonnage; (2) merchant liquid; and (3) packaged or cylinder gases. These distribution methods are often integrated, with products from all three supply modes coming from the same plant. The method of supply is generally determined by the lowest cost means of meeting the customer’s needs, depending upon factors such as volume requirements, purity, pattern of usage and the form in which the product is used (as a gas or as a cryogenic liquid). On-site. Customers that require the largest volumes of product (typically oxygen, nitrogen and hydrogen) and that have a relatively constant demand pattern are supplied by cryogenic and process gas on-site plants. Praxair constructs plants on or adjacent to these customers’ sites and supplies the product directly to customers by pipeline. On-site product supply contracts generally are total requirement contracts with terms typically ranging from 10-20 years and containing minimum purchase requirements and price
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requirement contracts with terms typically ranging from 5-15 years.
Merchant. The merchant business is generally associated with distributable liquid oxygen, nitrogen, argon, carbon dioxide, hydrogen and helium. The deliveries generally are made from Praxair’s plants by tanker trucks to storage containers owned or leased and maintained by Praxair at the customer’s site. Due to distribution cost, merchant oxygen and nitrogen generally have a relatively small distribution radius from the plants at which they are produced. Merchant argon, hydrogen and helium can be shipped much longer distances. The agreements used in the merchant business are usually 3-5 year requirement contracts.
Packaged Gases. Customers requiring small volumes are supplied products in metal containers called cylinders, under medium to high pressure. Packaged gases include atmospheric gases, carbon dioxide, hydrogen, helium and acetylene. Praxair also produces and distributes a wide range of specialty gases and mixtures in cylinders. Cylinders may be delivered to the customer’s site or picked up by the customer at a packaging facility or retail store. Packaged gases are generally sold by purchase orders.
Praxair’s packaged gas operations also distribute welding equipment purchased from independent manufacturers. Over time, Praxair has acquired a number of independent industrial gases and welding products distributors at various locations in the United States and continues to sell merchant gases to other independent distributors. Between its own distribution business, joint ventures and sales to independent distributors, Praxair is represented in 48 states, the District of Columbia and Puerto Rico.
SurfaceTechnologies
Praxair’s surface technologies segment supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders to the aircraft, energy, printing, textile, plastics, primary metals, petrochemical and other industries. It also manufactures a complete line of electric arc,
wear-resistant coatings. The coatings extend wear life and are applied at Praxair’s facilities using a variety of thermal spray coatings processes. The coated parts are finished to the customer’s precise specifications before shipment.
Inventories – Praxair carries inventories of merchant and cylinder gases, hardgoods and coatings materials to supply products to its customers on a reasonable delivery schedule. On-site plants and pipeline complexes have limited inventory. Inventory obsolescence is not material to Praxair’s business. 2.4 Location of organization's headquarters
Praxair’s worldwide headquarters is located in leased office space in Danbury, Conn. Other principal administrative offices are owned in Tonawanda, NY, and leased in Rio de Janeiro, Brazil; Shanghai, China; and Madrid, Spain.
2.5 Countries where the organization operates Praxair is a global enterprise with approximately 63 percent of its 2011 sales outside of the United States. It conducts industrial gases business through consolidated companies in Argentina, Bahrain, Belgium, Bolivia, Brazil, Canada, Chile, China, Colombia, Costa Rica, Denmark, Dominican Republic, France, Germany, India, Italy, Japan, South Korea, Malaysia, Mexico, the Netherlands, Norway, Paraguay, Peru, Portugal, Puerto Rico, Russia, Saudi Arabia, Spain, Sweden, Taiwan, Thailand, United Arab Emirates, Uruguay andVenezuela. Societa Italiana Acetilene & Derivati S.p.A. (S.I.A.D.), an Italian company accounted for as an equity company, also has established positions in Austria, Bosnia, Bulgaria, Croatia, the Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Ukraine. Refrigeration and Oxygen Company Limited (ROC), a Middle Eastern company accounted for as an equity company, has operations in the United Arab Emirates, Kuwait and Qatar. Praxair’s surface technologies segment has operations in Brazil, Canada, China, France, Germany, India, Italy, Japan, Singapore, South Korea, Switzerland and the United Kingdom.
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does not provide regional or country-specific details. These can be obtained from Praxair’s Sustainable Development Quarterly and Praxair White Martins region-specific GRI-based sustainability report. All of these can be viewed on our
website atPraxair’s sustainability reports.
2.6 Nature of ownership and legal form
Praxair is a publicly traded company. As of January 31, 2012, there were 298,410,216 shares of common stock of Praxair, Inc. outstanding.
2.7 Markets served
Praxair serves approximately 25 industries as diverse as healthcare and petroleum refining; computer-chip
manufacturing and beverage carbonation; fiber-optics and steel making; and aerospace, chemicals and water treatment. In 2011, 94 percent of sales were generated in four geographic segments (North America, Europe, South America and Asia), primarily from the sale of industrial gases, with the balance generated from the surface technologies segment. See Chart 2.8 (1). Praxair provides a competitive advantage to its customers in a range of market sectors by continuously developing new products and applications that allow them to improve their productivity, energy efficiency and
environmental performance. See Chart 2.8 (2). 2.8 Scale of the reporting organization
As of December 31, 2011, Praxair had 26,184 employees worldwide. Net sales were $11,252 million.
Praxair designs, engineers, constructs and operates facilities that produce and distribute industrial gases. These industrial gas production facilities and certain components are designed and/or manufactured at its facilities in Tonawanda, NewYork; Burr Ridge, Illinois; Rio de Janeiro, Brazil; Monterrey, Mexico; Shanghai, China; and Bangalore, India. Praxair’s Italian equity
a description of production facilities for Praxair by segment. No significant portion of these assets was leased at
December 31, 2011. Generally, these facilities are fully utilized and are sufficient to meet our manufacturing needs.
North America: The North America segment operates production facilities in the United States, Canada and Mexico, approximately 245 of which are cryogenic air separation plants, hydrogen plants and carbon dioxide plants. There are five major pipeline complexes in North America located in Northern Indiana, Houston, along the Gulf Coast of Texas, Detroit and Louisiana. Also located throughout North America are packaged gas facilities, specialty gas plants, helium plants and other smaller plant facilities.
Europe: The Europe segment has production facilities primarily in Italy, Spain, Germany, the Benelux region, France and Scandinavia, which include more than 55 cryogenic air separation plants. There are three major pipeline complexes in Europe located in Northern Spain and the Rhine and Saar regions of Germany. These pipeline complexes are primarily supplied by cryogenic air separation plants.Also located throughout Europe are specialty gas plants, packaged gas facilities and other smaller plant facilities.
South America: The South America segment operates more than 45 cryogenic air separation plants, primarily located in Brazil. Many of these plants support a major pipeline complex in Southern Brazil. Also located throughout South America are carbon dioxide plants, packaged gas facilities and other smaller plant facilities.
Asia: The Asia segment has production facilities located primarily in China, Korea, India and Thailand, approximately 40 of which are cryogenic air separation plants. Also located throughout Asia are noncryogenic air separation, carbon dioxide, hydrogen, packaged gas and other production facilities.
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The following changes were reported in Praxair's 2011 Annual Report, page 20:
Gain on Acquisition: During the fourth quarter of 2011, Praxair increased ownership in itsYara Praxair Holding AS (“Yara Praxair”) joint venture in Scandinavia from 50 to 66 percent and consolidated the company. Previously, Praxair accounted for its 50 percent ownership interest in the joint venture as an equity method investment.
Cost Reduction Program: In the fourth quarter 2011, Praxair recorded pre-tax charges totaling $40 million ($31 million net income – Praxair, Inc.), relating to severance and business restructuring actions primarily in Europe within the industrial gases and surface technologies businesses. The cost reduction program was initiated primarily in response to the continuing economic downturn in Europe.
U.S. Homecare Divestiture: During the fourth quarter 2010, the company announced its intent to sell the U.S. homecare portion of its North American healthcare business and recorded a pre-tax charge of $58 million ($40 million after tax) representing an adjustment to estimated fair value. On February 2, 2011, the company announced that it had entered into a definitive agreement for sale of the U.S. homecare business to Apria Healthcare Group, Inc. The sale was finalized on March 4, 2011.
Chart 2.8 (1): 2011 Sales by Business Segments
North America South America Asia Europe PST 20% 49% 6% 13% 12%
Chart 2.8 (2): End Markets
Manufacturing Metals Energy Other Chemical Electronics Healthcare Food & Beverage 24% 18% 11% 11% 10% 9%8% 6%
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The following are selected awards earned and received by Praxair in 2011. A more comprehensive list of recognition for sustainable
development excellence is maintained on our website,www.praxair.com
Recognition Criteria
September 2011 - Praxair was selected as a component of the 2011-2012 Dow Jones Sustainability World Index and is the only U.S.-based company in the chemical sector selected for the World Index for nine consecutive years. Membership in the World Index ranks Praxair among the top 10 chemical companies worldwide in terms of sustainability leadership. Praxair is also a member of the Dow Jones Sustainability North America Index, a subset of the World Index, which places it among the top 20 percent of companies in its sector in North America.
Launched in 1999, the Dow Jones Sustainability Index was the first equity benchmark to track the sustainability performance of leading corporations. Corporations are selected for the index based on a wide range of economic, environmental and social criteria.Among the areas evaluated are corporate governance, environmental performance, risk management, supply-chain standards and labor practices.
September 2011 - Praxair was included in the Carbon Disclosure Project (CDP) Global Carbon Disclosure Leadership Index (CDLI), one of only 10 companies to have achieved this distinction for four consecutive years. With a disclosure score of 93, Praxair is ranked the 23rd best performing company in the world for carbon disclosure and the ninth best performing among the S&P 500. The CDLI is comprised of the leading 52 companies among 500 of the world’s largest corporations. The disclosure index recognizes the quality and completeness of the selected companies’ reporting on carbon management.
April 2012 - Maplecroft Climate Innovation Indexes (CIIs). This index, published by the risk analysis company Maplecroft, has determined that Praxair, Inc. (NYSE:PX) is one of the top ten leaders among the 360 largest U.S. companies in the innovation of clean-tech solutions and new products, the mitigation of climate-change-related risks and the management of carbon emissions. This is the third consecutive year that Praxair has been listed in the top 10.
• World Index
• North American Index
• Global Carbon Disclosure Leadership Index (CDLI) • Global Carbon Performance
Leadership Index (CDPI) • S&P 500 CDLI, CDPI
February 2012 - The SAM annual Corporate SustainabilityYearbook, authored by Pricewaterhouse Coopers and the Sustainability Asset Management (SAM) Group, is based on economic, environmental and social dimensions. SAM’s approach goes beyond the conventional framework and includes other
Environment Social GRI Index Report Profile 2 3.1 Reporting period January1, 2011 to December 31, 2011.
3.2 Date of most recent previous report 2011 (2010 data)
3.3 Reporting cycle Annual
3.4 Contact point
Riva Krut, Director, Sustainable Development, Praxair
Email:[email protected]or[email protected]
Tel: 203-837-2337
Reporting Scope and Boundary
3.5 Process for defining report content
Report content is identified and prioritized by Praxair’s director, sustainable development, using the SDMA process described in the Strategy and Analysis chapter. The SDMA describes the process for determining materiality, maps issues according to their importance to Praxair and to external stakeholders. The SDMA also identifies the key stakeholders that Praxair engages with and expects to use this report. This year, Praxair has chosen to report its issues in the same order as presented in the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines 3.1. This is to facilitate finding and comparing information on our performance against others in our sector as recommended by our annual audit team from Boston University School of Management, who reviews this report against the GRI Guidelines. Since Praxair does not prioritize its issues in the same order as GRI, the Strategy and Analysis chapter provides information on the
• Integrity, Ethics (Economic) • Energy (Environment) • Health and Safety (Social)
The list of material issues on which Praxair reports is validated by the Sustainable Development Council (senior managers from all corporate functions) and the business sustainable development coordinators. A review of the report occurs each year along with the review of our SDMS. The findings inform and contribute to the identification step in the next reporting cycle. This process for defining report content is repeated annually.
3.6, 3.7, 3.8 Reporting boundaries and basis for reporting
The Praxair Sustainable Development Report 2012 integrates sustainability aspects of our processes and business
operations in each section. It includes quantitative and qualitative information relating to calendar year 2011 and comparative data for 2010, 2009 and 2008. It reports consolidated data from entities where Praxair is the majority shareholder (more than 50 percent) and joint ventures where we have management control. We exclude all data from entities where we have minority ownership or no management control.
Specific Praxair sustainability indicators in this report are those that are reported under the internal SDMS: operational energy and environmental performance, including eco-productivity, marketplace customer eco-efficiency targets, and employee environmental and community engagement. 3.9 Data measurement techniques and the bases of
calculations
Various databases are managed across Praxair to accurately capture and aggregate data. This is separated by function. Safety data, safety and environmental compliance data, and product safety data are collected monthly from the businesses by the Safety and Environmental Services (S&ES) organization. Human Resources (HR) data is collected by that organization.
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which is described in the Strategy and Analysis and the Environment Disclosures chapter. This draws on data from the Environmental Key Performance Indicator (EKPI) database, which tracks all environmental data; from the Productivity database that tracks sustainable development results of productivity projects; and from spreadsheets reporting into the SDMS for the Water Tool, for zero waste and for Earth Week activities. Community engagement activity is tracked with a global survey tool and exported into a spreadsheet for analysis. Sustainable development metrics for the R&D organization are integrated into the R&D database and management system.
SOPs are in place to define the scope and boundary of a particular measure. For the S&ES management system and SDMS, SOPs are maintained within their respective intranet sites. Performance is monitored and reported to ensure consistent performance that meets targets.
3.10 Explanation of the effect of any re-statements and the reasons
Several changes and corrections are reported [seeTable 3.10 (1)]. 3.11 Significant changes from previous reporting
periods
There were no other significant changes from previous reporting periods in terms of these issues.
3.12 Location of the standard disclosures
Praxair’s GRI Index is located in an Annex to this report. • This Praxair Sustainable Development Report 2012 (2011
data) is based on GRI 3.1. It presents our sustainability reporting and is addressed to readers interested in sustainable development reporting, particularly the socially responsible investment (SRI) community and the
sustainability rating community. GRI elements within the themes of economic, environmental and social are referenced by GRI number.
• For the general reader,Praxair’s Sustainable Development
Reportswebsite provides a Sustainable Development Highlights document, a Diversity Highlights document and a Community Engagement Highlights document.
• Country GRI Reports: Praxair Mexico and Praxair Brazil produced country sustainable development reports, both based on GRI 3.1. Praxair’s White Martins Sustainability Report for South America was issued in the first quarter of 2012 and reported 2010 data. It will be produced biennially.
Table 3.10 (1): Sustainable Development Report Re-statements 2010-2011
Restatements
from 2010 Change Reason
Water use Water use in 2010 was reported as 45.6 million MT. In 2011, was corrected to 39.8. We found some double-counting as we improved reporting in this area. Waste Waste was reported in 2010 as 68,521 MT. In 2011, this was corrected to 60,366. We found some double-counting as we
improved reporting in this area. Compliance 2010 penalties were reported as $24,521. In 2011, this was corrected to $27,021. We found a minor accounting error. Environment Indirect GHG intensity/ASU product was reported in 2010 as 97.7 MT Co2e per unit. This was corrected to We found a minor reporting error.
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3.13 External assurance
The reporting period is 2011. Data has primarily been obtained from a number of corporate databases and management systems, including our financial management reporting systems, corporate HR information management systems, corporate compliance information reporting systems, the corporate safety and environmental compliance management system and the Praxair SDMS, which is fed from environmental corporate reporting databases. Each has associated approval and verification processes. We are confident in the overall reliability of the data reported, but recognize that, in some cases, there is a level of uncertainty and limitation associated with some of the assumptions and calculations. Functional executives approved the content and the quantitative data in this report that relates to their areas of responsibility.
• Praxair's Annual Report was externally audited by independent auditors. Some of this information is reproduced in this report. • Selected environmental data (air emissions, energy, fuel, water, GHG, GHG from contractor driving) received an independent
Limited Assurance from CarbonVerification Services.
Global Reporting Initiative™ (GRI) Application Level: A+
GRI’s Report Services has reviewed our 2011 disclosures against the GRI 3.1 Guidelines and concluded that the report fulfills the requirement of Application Level A+. The details of how our 2011 disclosures address the GRI 3.1 Guidelines are further defined in the GRI Index table, found at the back of this report.
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Governance4.1 Governance structure of the organization The ultimate authority to manage Praxair rests with the Board of Directors, whose role is to effectively govern the affairs of the company for the benefit of its stockholders in consideration of other constituencies, including employees, customers, suppliers and the communities in which it does business. The Board appoints the company’s officers, assigns them responsibility for management of the company’s operations and reviews their performance. A full description of the Board’s responsibilities is provided in the Corporate Governance and Board Practices section of our website.
Board of Directors is responsible for periodically reviewing these guidelines and practices, monitoring legislative and best practice developments in corporate governance and
recommending governance changes as circumstances warrant. In addition, this committee sponsors an annual board self-assessment in which directors are encouraged to comment upon the effectiveness of the board in fulfilling its
responsibilities. In 2009, Praxair appointed a chief compliance officer to advise senior management and the Board on governance matters, to assist the Board in monitoring legislative and best practice developments in corporate governance and to recommend appropriate responses. Praxair’s Board diversity is provided at LA13.
Table 4.1 (1): Board Committees at a Glance, including oversight of sustainable development
Meetings Summary Responsibilities
Audit Committee Meetings in 2011: 5 Number of Members: 5 Percent Non-Executive: 100%
The Audit Committee assists the Board in its oversight of (a) the independence, qualifications and performance of Praxair’s independent auditor; (b) the integrity of Praxair’s financial statements; (c) the performance of Praxair’s internal audit function; and (d) Praxair’s compliance with legal and regulatory requirements.
Compensation and Management Development Committee Meetings in 2011: 4
Number of Members: 4 Percent Non-Executive: 100%
The Compensation and Management Development Committee assists the Board in its oversight of (a) Praxair’s compensation and incentive policies and programs; and (b) management development and succession, in both cases particularly as they apply to Praxair’s executive officers.
Governance and Nominating Committee Meetings in 2011: 5
Number of Members: 5 Percent Non-Executive: 100%
The Governance and Nominating Committee assists the Board in its oversight of (a) the selection, qualifications, compensation and performance of Praxair’s directors; (b) Praxair’s governance, including the practices and effectiveness of the Board; and (c) various important public policy concerns that affect the company. In furtherance of these responsibilities, the Governance and Nominating Committee, among other duties: reviews Praxair’s policies and responses to broad public policy issues such as social responsibility, corporate citizenship, charitable contributions, sustainable development, legislative issues and important shareholder issues, including management and shareholder proposals offered for shareholder approval.
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The Board has adoptedindependence standards(on our
website) for service on Praxair’s Board of Directors. The Board has applied these standards to all of the non-management directors (all directors are non-non-management except for Steve Angel, the company’s chairman and CEO), and has determined that each qualifies as independent. The Board is not otherwise aware of any relationship with the company or its management that could potentially impair the independent judgment of these directors. See also related information in the Proxy Statement under the caption “Certain Relationships and Transactions.”
4.3 For organizations that have a unitary board structure, state the number and gender of
members of the highest governance body that are independent and/or non-executive members Praxair has a unitary board structure with one executive member; the rest are independent. Two of the 11 board
members are female.Independence standardsare defined on
the Praxair website.
4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body
Praxair’s Corporate Governance and Board Practices include its policy for communications with the Board. The Board has established procedures to enable a shareholder or other interested party to direct a communication to the Board of Directors. Such communications may be confidential or anonymous and may be communicated by mail, e-mail, through itsInvestor Relations Departmentor by telephone. Information
on how to submitcommunications to the Board, and how they
will be handled, is included on Praxair’s website.
4.5 Linkage between compensation for members of the highest governance body, senior managers and
executives, and the organization's performance Praxair’s 2012 Proxy Statement page 35, Alignment of Executive Compensation Programs with Praxair Business Objectives outlines
environmental performance: The Compensation Committee seeks to achieve its executive compensation objectives by utilizing best practices to align the design of its compensation programs with the company's business objectives.
• Business Objective: Achieve sustained growth in profitability and shareholder return, resulting in a robust cash flow to fund capital investment opportunities and dividends. • Business Objective: Maintain world-class standards in safety,
environmental responsibility, global compliance, productivity, talent management and financial controls.
• Business Objective: Attract and retain executives who thrive in a performance-driven culture.
Executive and senior management compensation includes strong retention incentives, such as vesting stock options and stock grants. These are described in the 2012 Proxy Statement, pages 33-64.
4.6 Processes in place for the highest governance body to ensure conflicts of interest are avoided A comprehensive process for ensuring the avoidance of conflicts of interest is provided in Praxair’s 2012 Proxy Statement, pages 16 and following. Potential conflicts of interest can be self-identified by the director or executive officer or may arise from internal audits, the integrity hotline or other referrals, or through periodic due diligence
conducted by the Corporate Secretary's office. The Governance and Nominating Committee then examines the facts and circumstances of each matter referred to it and makes a final determination as to appropriate action. 4.7 Process for determining the composition,
qualifications and expertise of the members of the highest governance body and its committees Praxair’s 2012 Proxy Statement, page 25, outlines the process for determining qualifications for members of the Board of Directors. The process is open to shareholder
