Honeywell International : 2024 Report on Due Diligence Processes to Identify and Address Environmental and Social Risks

HONEYWELL DUE DILIGENCE PROCESSES TO IDENTIFY AND ADDRESS ENVIRONMENTAL AND SOCIAL RISK

April 2024

INTRODUCTION

Honeywell takes seriously its commitment to corporate social responsibility, protection of the environment, and creation of sustainable opportunity everywhere it operates. This commitment underlies the principle that good business, economic growth, and social responsibility work together. Honeywell's ESG (environmental, social, and governance) initiatives are aligned with the Company's long-term strategy, both informing and supporting Honeywell's strategic plans.

We also believe that responsible corporate citizenship requires robust and core processes to identify, thoroughly assess, mitigate, and then monitor the potential environmental and social (E&S) impacts of our operations and legacy sites.

This report describes Honeywell's detailed processes to address the E&S impacts of its current operations and legacy sites and to manage all material aspects of potential impacts to the surrounding community while ensuring community engagement. For ongoing operations, the report describes Honeywell's Plan-Do-Check-Act process, which explicitly addresses community outreach. The report also describes the robust communication Processes and Principles that underpin the Company's proactive means for identifying, assessing, and addressing legacy contamination at our former sites with a view toward creating new assets aligned with community priorities where practicable.

This year, we updated this report to discuss ongoing actions to address potential environmental justice considerations in the communities in which we operate. We embrace the spirit of continuous improvement in our environmental justice reporting, and we seek to align our sustainability disclosure with accepted disclosure standards in order to provide shareowners and other stakeholders with consistent, comparable information about our policies, practices, and performance.

Our track record shows strong management of our environmental footprint and how we positively impact the world through our operations, our revitalization of legacy properties, and our products.

CORPORATE GOVERNANCE

The Board of Directors is responsible for overseeing and guiding Honeywell's management team to ensure it operates in the best long-term interests of its stakeholders. The Board's Corporate Governance and Responsibility Committee (CGRC) provides oversight and thought leadership with respect to the company's role as a responsible corporate citizen and has specific oversight responsibility with respect to health, safety, and environmental matters.

The Board's engagement and oversight extends to the E&S impact of our operations in five principal ways:

• The CGRC has primary jurisdiction for managing risks and opportunities associated with E&S, meeting regularly with the Senior Vice President and General Counsel, the Senior Vice President, Government Relations, the Senior Vice President and Chief Human Resources Officer, and other leaders with responsibility for E&S to review and discuss E&S topics.
• The Management Development and Compensation Committee (MDCC) takes into account performance on ESG matters, including health, safety, environmental, and inclusion and diversity, when making compensation decisions.
• The CGRC, Audit Committee, and Board directly engage on E&S risk areas through a robust and comprehensive Enterprise Risk Management (ERM) program. ERM is a key tool for understanding the range of risks facing Honeywell and assessing whether management's processes, procedures, and practices for mitigating those risks are effective. The ERM assessment deployed by management is robust, based on both an enterprise-wide "top down" and "bottom up" view of a comprehensive set of risk factors, and an assessment of the strategies that are in place to mitigate those risks. Key to the ERM program is a commitment to identify and address environmental and social impacts of ongoing operations and legacy responsibilities.
• The Board regularly reviews select E&S topics. In the past 12 months, management has presented to the Board on a variety of E&S initiatives such as inclusion and diversity, safety, business resiliency, and environmental matters.

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• Board members receive feedback through a robust shareowner engagement program. The Board values shareowners' perspectives on corporate responsibility and sustainability, and the Company (oftentimes with our Lead Director, MDCC Chair, or CGRC Chair) engages directly with shareowners throughout the year to discuss activities, goals, and achievements in these areas and to hear shareowners' views and suggestions so that the feedback can be provided to directors.

ENVIRONMENTAL JUSTICE AND FENCELINE COMMUNITIES

Honeywell has implemented a Health, Safety, and Environmental program to identify and address the environmental and social impact of our operations on the surrounding communities and ensure compliance with regulatory standards. Our program calls for safe and responsible environmental stewardship, compliance with applicable laws, and building trust through early and consistent community engagement.

The U.S. Environmental Protection Agency (EPA) defines environmental justice as the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.1 Per the agency, ensuring fair treatment of an environmental justice or fenceline community means working in a way that no group of people bears a disproportionate share of the negative environmental consequences resulting from industrial, governmental, and commercial operations or policies. Meaningfully involving a surrounding community means decision makers seek out and facilitate the involvement of community members potentially affected and provide the opportunity for the community to participate in decisions about activities that may affect their environment and/or health. It also means considering community concerns in the Company's decision-making process such that the community's influence may be evident in the final result.

Protecting the environment and meaningfully engaging the surrounding community have been long-standing hallmarks of Honeywell's commitments and procedures. As discussed in the section titled Honeywell's Environmental and Social Due Diligence Processes starting on page 8, our procedures set out the implementation of these commitments in a multi-step, integrated process that is overseen by management for both the Company's current operations and legacy sites. Our commitment to community engagement is true for impacted fenceline communities, including those that could be categorized as environmental justice communities based on current federal and state regulatory screening tools.

To further advance our environmental justice programs, we are taking the following steps:

• US EPA EJScreen Results for Certain Key Honeywell Locations in the United Statespresents environmental justice results for certain key Honeywell locations in the United States in an interactive graphical format. This compilation of information is sourced from the U.S. Environmental Protection Agency's (EPA) EJScreen. The tool increases visibility to the environmental and demographic indicators for Honeywell locations.
• Environmental Justice Training: We are developing and delivering environmental justice trainings for certain employees. This training is focused on Honeywell's commitment to making science-based decisions that are inclusive of all individuals. The training will delve into the intersection of environmental justice considerations with various resource management topics and will include valuable insights into the tools, strategies, and expertise necessary for promoting just and sustainable development. The training plan will also include panel discussions where subject matter experts will introduce key concepts, offer guidance on identifying and prioritizing environmentally impacted and vulnerable communities, explore mechanisms for enhancing community involvement in the regulatory process, and discuss comprehensive planning to foster equitable development. Moreover, the sessions will highlight the importance of incorporating community engagement outcomes into remediation efforts, followed by a question-and-answer session with participants. We plan to include key stakeholders in the panel discussions to provide their perspective and experience to strengthen our mutual understanding and commitment to environmental justice.
• Climate and Economic Social Screening: We intend to conduct a desktop Social, Climate, and Economic Impact Analysis of our Honeywell locations in the United States to identify communities experiencing burdens in categories such as climate change, energy, health, and more. We are aiming to publish the results of this analysis in fiscal year 2025.

• https://www.epa.gov/environmentaljustice/learn-about-environmental-justice

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CURRENT OPERATIONS

First, by deploying a robust Health, Safety, Environment, Product Stewardship, and Sustainability (HSEPS) Management System, led by the Company's Vice President, Health Safety and Environment, Honeywell prioritizes providing a compliance-centric and safety-focused environment to minimize adverse environmental impacts at and around its facilities. This HSEPS system is based on recognized third-party standards, including ISO 14001, and addresses several key factors that help avoid and minimize adverse environmental impacts on surrounding communities. These key actions include, for example:

• Performing hazard assessments of internal and external aspects that may impact environmental conditions as well as identifying and managing to closure actions determined to reduce any risks.
• Fostering a compliance culture that identifies, reviews, and documents obligations for all applicable HSEPS permits, licenses, and/or required regulatory requirements. Senior leadership reviews compliance obligations monthly and confirms completion of required tasks.
• Remaining current on legal obligations by monitoring the development of emerging issues and reviewing any significant developments annually.
• Assessing impacts of emergency scenarios or credible potential incidents related to natural hazards, human-caused events, events caused by technology, as well as the effects of climate change, and where required, coordinating emergency preparedness and community response plans with local authorities.

Central to Honeywell's HSEPS system is the Plan-Do-Check-Act approach, which ensures compliance with regulatory standards and addresses environmental and social impacts of the Company's operations. Under this rubric, interested parties, such as members of fenceline communities, are identified as those who can affect, be affected by, or perceive themselves to be affected by the plant's HSE operations.

After identifying the internal and external stakeholders our procedures call for the development of communications plans. Where applicable, these plans consider the differences in language, culture, and literacy and are used to communicate with stakeholders about operational controls, emergency preparedness, and response planning. Our procedures also call for the interested parties' comments to be taken into consideration.

The communication plans also can outline ways facilities participate in mutual engagement programs and sharing activities, as well as how communication from interested parties and stakeholders will be managed in order to build and maintain trust with the surrounding community.

In addition, several organizations within Honeywell have received certification through the American Chemistry Council's (ACC) Responsible Care Program, which requires additional requirements for communication and engagement with fenceline communities and stakeholders, including the creation of Community Advisory Panels to build relationships, share information, as well as identify and try to resolve community concerns.

Key to our approach to effective management of our facilities is a Learning Needs Assessment that is conducted at each facility to assess training needs in light of the facility's location, operational controls, and compliance obligations. A Targeted Training Plan builds and reinforces competencies in a way that addresses the unique needs at the site.

Many environmental permitting and zoning processes involve active engagement with and evaluating input from interested parties and members of fenceline communities. Included is an evaluation of the ability to incorporate proposed emissions while remaining within required federal and state regulatory parameters in anticipation of many regulators' goals to address multiple impacts on the surrounding community.

To appropriately manage operations as well as permitted emissions and discharges, HSEPS professionals at the facilities regularly conduct self-assessments as well as subject themselves to third-party audits and management reviews and are required to address concerns by developing and tracking corrective actions. Furthermore, business groups set annual voluntary targets to reduce hazardous waste which are reviewed quarterly.

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LEGACY OPERATIONS

To give new life to sites with complex historic environmental challenges, Honeywell not only relies on sound science and technical excellence but also captures and incorporates community input - including input from fenceline communities - with a view toward creating new assets that are aligned with community priorities. The company does this through utilizing its Processes and Principles engagement construct that prioritizes the core concepts of meaningful EJ engagement. Details for each of these principles is provided in the section titled "Legacy Operations, Processes and Principles" within the "Legacy Operations" section starting on page 12.

Our standard approach calls for applying the Company's engagement construct to legacy sites across Honeywell's footprint, including in communities possessing various environmental justice screening criteria identified by environmental regulators. The process calls for the Company to research the historical background of the fenceline community and then identify and engage key stakeholders to understand the community's desired goals and concerns for the site.

Through its on-the-ground team (where appropriate) and public engagement team, Honeywell facilitates ongoing, two- sided communication to disseminate information and receive input from the community in a timely manner and ensures those priorities are received and considered.

Finally, Honeywell's procedures call for considering the community input received and marrying it with sound science and the technical prowess of its technical team to support the development of a new asset aligned with community's goals and needs. This process has yielded significant success at numerous sites around the country as detailed below in the section titled "Report on Remediation Efforts at Legacy Sites" starting on page 15 and in our Brownfields Report available at investor.honeywell.com ("ESG/ESG Information").

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HEALTH, SAFETY, AND THE ENVIRONMENT

Honeywell's Health, Safety, and Environment (HSE) organization, led by our Vice President, Health, Safety and Environment, comprises functions focused on workplace safety and health, environmental performance, regulatory compliance, and risk, including risk related to climate change. Honeywell's commitment to health, safety, and the environment is outlined in our Sustainable Opportunity Policy available at Honeywell.com ("About Us/Health, Safety, Environment").

Health, safety, and environmental considerations are embedded into every operation within Honeywell via our comprehensive management system based on recognized third-party standards, including ISO 14001 (the international standard that specifies requirements for an effective environmental management system) and ISO 45001 (which specifies requirements for an occupational health and safety management system), as well as industry best practices. All Honeywell sites are required to implement an HSEPS Management System founded on common core principles.

Our HSEPS practices are managed by a global team of more than 800 trained professionals with extensive knowledge and hundreds of years of collective experience in occupational health, chemistry, hydrology, geology, engineering, safety, industrial hygiene, materials management, energy efficiency, and stakeholder engagement.

The HSEPS Management System under which each of our facilities operates follows a Plan-Do-Check-Act approach for identifying and addressing the potential environmental and social impacts of our operations and ensuring compliance with regulatory standards:

• Plan. 360-degree assessment of all aspects of the operation that could result in environmental or social harm (Aspects). The assessment requires evaluation of internal and external stakeholders, including employees and community members.
• Do. Implement training, internal, and external communication, operational controls, emergency preparedness, and response planning to ensure that the facility and its stakeholders have the competency needed to address impacts and ensure compliance.
• Check. Conduct self-assessments, audits, and management reviews to evaluate measures taken to plan for and control potential environmental or social harm.
• Act. Requirement to address all findings by developing and tracking corrective actions, and regularly review the HSEPS Management System program for potential improvements.

Honeywell's HSEPS Management System encompasses 18 core standards that require the Company's businesses to identify HSEPS Aspects, legal requirements, and goals; set clear objectives for improvement; and maintain programs designed to achieve those objectives. In addition, Honeywell has developed detailed operational controls in approximately 90 specific areas that prescribe required management elements. All Honeywell facilities are required to comply with both these operational controls and any applicable legal requirements. Areas in which specific operational controls are required are listed on our website and include safety, industrial hygiene, loss prevention, environment, health, product stewardship, transportation safety, process safety management, construction safety, and remediation. Compliance with standards and regulatory requirements is monitored through a Company-wide audit process. The HSEPS Management System Manual is available at Honeywell.com ("About Us/Health, Safety, Environment").

Our General Counsel, HSEPS monitors emerging developments for climate related risks through a quarterly assessment process. The climate-specific assessment is then evaluated in the context of identifying the Company's material risks for disclosure and enterprise risk management purposes and incorporated into our ERM program. In conjunction with and as part of our HSEPS Management System, we have a process for specifically tracking emerging regulatory changes and their impact on business operations, sales markets, and costs of doing business which includes climate-related impacts.

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Honeywell has built sustainability directly into our operating system, so the tools, personnel, activities, and culture are used to drive sustainability with the same level of focus as applied to propel other critical operational objectives such as quality, delivery, inventory, and cost. This ensures sustainability is an integrated and essential part of the Honeywell work experience every day. In addition, progress on our sustainability program is a factor in determining annual incentive compensation for senior leadership.

HONEYWELL'S ENVIRONMENTAL AND SOCIAL DUE DILIGENCE PROCESSES

Plan-Do-Check-Act Management System

As noted above, each of our facilities operates under a Plan-Do-Check-Act management system for identifying and addressing the applicable environmental and social impacts of our operations and ensuring compliance with regulatory standards. These procedures call for the following details about each component:

The effectiveness of our management system in minimizing environmental impact and compliance risk is demonstrated by the fact that over the last five years, we have paid less than $500K in fines and penalties related to environmental matters. While we strive for zero incidents and compliance with all applicable laws and regulations, the size and complexity of our operations in highly regulated and scrutinized industries makes us subject to frequent interaction with regulatory agencies, meaning there is constant opportunity for them to identify noncompliance if it existed. In this light, our program is very effective.

Process for Identifying Risks

The Plan aspect of the management system begins the process for identifying risks and legal and other requirements. HSEPS first conducts due diligence on all Aspects of an organization that might result in environmental or health-related social impacts, as well as on all legal or other compliance requirements regarding environmental or health and related matters. The team considers new or modified activities, products or services, abnormal conditions, and reasonably foreseeable emergency situations, and potential Aspects or impacts are identified and planned for. In addition, HSEPS identifies interested parties as part of the planning process; interested parties are identified as "person(s) or organization(s) that can affect, be affected by, or perceive itself to be affected by a decision or activity of the HSEPS management system." An example is outlined below for our Baton Rouge and Geismar, Louisiana, facilities. The type of interaction differs depending on the circumstances.

As part of the planning process, compliance obligations are determined, requirements are documented in a centralized online repository for all operations globally, and decisions are often made to "go beyond the law."

For example, the American Chemistry Council (ACC) Responsible Care® Certification, which several organizations within Honeywell have, includes a compliance obligation to communicate and engage with community stakeholders. Honeywell produces a Communication Plan, which includes details to meet this requirement including regular participation in multiple Community Advisory Panels. Every site identifies interested parties and identifies how we will communicate, but ACC adds additional requirements.

Our industrial facilities in the United States that have emissions may require specific environmental permits, such as air emissions and water discharge permits, many of which require us to conduct studies or develop models of the potential impacts of the activities on communities and the environment before permits are issued and at permit renewal. Since any new or continued emission can affect the surrounding area, the permitting processes also include coordination with the local community and allows the opportunity for input from interested parties.

For example, air permitting in the United States typically requires that the proposed emissions be evaluated in the context of the area in which the emissions would occur to ensure that the surrounding area can safely incorporate the proposed emissions while remaining within parameters the federal and state agencies have determined are safe. Similarly, individual permits for wastewater discharges in the United States are evaluated in the context of the existing quality of the waterbody into which they will ultimately flow to protect the beneficial uses of those waters.

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In both cases, the federal and state agencies set limits using the best available science and require that those proposing new or additional emissions and discharges conduct modeling and other studies to evaluate the likely impact. Those studies and models are then reviewed and commented on by the agencies and are also made available to the public before any permit may be issued. These permits have expiration dates, and because communities and standards change, these evaluations are not only conducted before the first issuance of a permit, but also each time a permit is renewed.

Process for Addressing Risk

Once the plan is in place, the team begins the next step of the Plan-Do-Check-Act Management System - the Do: Training and Competence. This includes the development of a Learning Needs Assessment to evaluate the location or organization that may need training and which specific training is needed. Training is then conducted, and a completed Learning Needs Assessment includes the required learnings and competencies for the applicable employees.

The next step is Do: Internal and External HSEPS Communications. Our procedures call for a documented Communications Plan (both internal and external) with details on managing communication to and from interested parties. As noted in the introduction, where applicable, these plans consider the differences in language, culture, and literacy and are used to communicate with stakeholders about operational controls, emergency preparedness, and response planning.

The communication plans also can outline ways facilities participate in mutual engagement programs and sharing activities, as well as how communication from interested parties and stakeholders will be managed in order to build and maintain trust with the surrounding community.

Honeywell employees have daily meetings to discuss relevant events and lessons learned from other sites that they are then able to apply to their work. While the Communications Plan can differ by circumstances, it includes community outreach to nearby neighbors and to the broader community through engagement with interested parties such as Community Advisory Panels, elected officials, fire departments and emergency responders, and Chambers of Commerce. Open houses and tours are often conducted where possible, and relevant information is distributed through social media channels and local newspapers.

An example of such a Communications Plan in action is the active participation at the Ascension Parish and Iberville Parish for Community Advisory Panels (CAPs) where Honeywell site leaders from our Geismar, Louisiana, facility provide regular in person updates on plant activities to the community and interested parties. For Baton Rouge, Louisiana, Honeywell site leaders attend a CAP for North Baton Rouge.

The third step for addressing risks is Do: Operation Controls, which include specific actions to ensure compliance with legal and Honeywell requirements. One of many examples is the requirement that a written procedure for waste management be established, outlining how a site or organization will meet the requirements detailed in "Honeywell - Waste Management Operation Control Procedures - Environmental" that are part of Honeywell's HSEPS management system. All task details, frequency, and due dates are defined and monitored to completion and tracked in the digital system. Honeywell then voluntarily goes beyond regulatory provisions by requiring our business organizations to set annual targets for hazardous waste reduction. Achievement of these voluntary targets is centrally monitored and reported quarterly to Honeywell's CEO and Senior Vice President and General Counsel.

The next step is Do: Incident Reporting, which requires all facilities to report into our central database any incident or "near miss" potentially affecting safety or the environment. Reported incidents undergo rigorous root cause analysis carried out by experienced professionals from the affected facilities and businesses with knowledge of the specific process(es) involved and training specific to environmental incident investigation and root cause analysis. Corrective actions identified as part of incident reviews are assigned and tracked to closure to enhance the effectiveness of our management systems. Updates to our management systems are made as needed, and lessons learned are also communicated more broadly across Honeywell to mitigate the possibility of similar incidents occurring elsewhere, including through our enterprise-wide "HSE Alerts" that are sent for incidents identified as having potential cross- business applicability.

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Next is the Check: Monitor and Improve aspect that includes auditing to plan for and control compliance with legal and Honeywell requirements, and then addressing any audit findings through corrective action. HSEPS Management System requirements are subject to three levels of "Check." First, all organizations maintain self-assessments against requirements. Second, those self-assessments are reviewed by more senior personnel within the organization. Finally, all organizations are audited by third party teams consisting of Honeywell and external experts. Auditors assess conformance to applicable management system compliance obligations; 72 checklists cover more than 1,100 requirements. Subject areas include facility emergency management systems, field work, transportation safety, process safety, and product stewardship to name a few. In addition, there is a communications self-assessment against requirements that requires a process to track to closure if requirements that are sustainable are not fully implemented. Findings and Action Plans are entered into a central repository for monitoring, identifying corrective measures, and tracking to closure.

The final aspect of Plan-Do-Check-Act is Act: Strategic Planning, Common Balanced Scorecard, and Corrective Actions. Under the Act stage of the management system, the identified corrective actions are closed, and the lessons learned are broadly distributed. Key findings are then incorporated back to the first "Plan" stage to provide additional insights to help identify risks in this closed-loop system. This stage also includes maturity planning to track effectiveness of the process and periodic comprehensive reviews to enable continuous improvement. Lagging indicators as well as leading indicators are identified in our Common Balanced Scorecard (CBS). The CBS is published monthly and reviewed quarterly with the CEO.

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