Originally published in Lenovo's 2023/24 ESG Report
A statement on oversight and management of Environmental, Social and Governance
NORTHAMPTON, MA / ACCESS Newswire / March 25, 2025 / The oversight of Environmental, Social, and Governance (ESG) programs, and the approach and strategy of Lenovo towards the management of ESG matters was set out in a statement issued by the Board of Directors (the "Board") and management of Lenovo. Details of which are set out below:
ESG governance structure
Board oversight
The Board has the highest level of oversight for ESG programs and reporting and manages this responsibility. The Board's oversight of Lenovo's ESG programs and processes includes support and evaluation of Lenovo's management of and response to key ESG-related risks and opportunities, in the context of strategy, decisions on major transactions, risk management policies, and long-term value-creation across its business operations. Board members are regularly briefed on and have discussions about critical ESG risk areas, opportunities and key ESG practices during Board meetings, and are tasked with approving the ESG Report. ESG-related topics are included in the agenda items of the Board and Board Committee meetings throughout the financial year, and ESG is a standing agenda item at least twice annually. Regular newsletters with updates on ESG issues, including updates on topics discussed by the ESG Executive Oversight Committee (EOC) and ESG developments of Lenovo, are also provided to the Board and its Committees from the Chief Legal & Corporate Responsibility Officer (or her delegates).
ESG oversight is supported through the Nomination and Governance Committee, which oversees the corporate policies and practices regarding governance and compliance with legal and regulatory requirements. The Audit Committee has a complementary role in the effective management of risks and safeguarding Lenovo's resources, through oversight of the Internal Audit and Enterprise Risk Management (ERM) systems, both of which support overall ESG risk management practices. The Audit Committee also has annual review of the adequacy of resources, staff qualifications and experience, training programs, and budget on the Group's ESG performance and reporting. The Chief Legal & Corporate Responsibility Officer provides executive leadership for Lenovo's ESG position and ensures regular reports are made to the Lenovo Executive Committee (LEC), and the Board and its Committees. The LEC consists of senior management who have delegated authority established by the Chief Executive Officer to manage operational performance, including strategic decisions.
In addition, the ESG EOC, chaired by the Chief Legal & Corporate Responsibility Officer, provides strategic direction, and facilitates the coordination of ESG efforts across Lenovo, including proposing recommendations for the effective management of ESG programs. The ESG EOC is comprised of senior management from across the business and functional areas and is chartered to promote a culture that encourages strong ESG performance, including compliance and leadership activities.
The ESG EOC is responsible for:
Monitoring emerging ESG trends, impacts, and opportunities;
Representing the voice of the customer in ESG strategy decisions;
Recommending ESG initiatives, investments, and disclosures to management and the Board;
Ensuring the Group's ESG strategy appropriately addresses risks and obligations;
Evaluating ESG programs and investments for effectiveness;
Supporting ESG disclosure and messaging initiatives;
Acting as executive champions for Lenovo's ESG culture and values.
The Board is aware of the importance of continuous improvement of its own collective performance in the leadership of Lenovo, including addressing climate-related risks and opportunities and the oversight of ESG matters. Through a formal process that is led by the Nomination and Governance Committee, all directors conduct Board evaluation via an online platform, the aim of which is to evaluate and advance the performance and effectiveness of the Board and its committees, including the oversight of ESG matters. This evaluation is conducted every two years or as agreed by the Board members.
As part of the Board's continuous professional development program, Directors from time to time receive training on ESG matters including anti-corruption, climate, water, ESG risks and opportunities, and other relevant topics in the form of presentations from ESG professionals. Directors are also updated on a continuing basis by Lenovo Secretary on ESG news releases by the Hong Kong Stock Exchange and other professional organizations. This facilitates Board members' understanding of Lenovo's ESG practices, supports the continuous development of ESG competencies within the Board's skills matrix, and increases awareness of ESG impacts on Lenovo's operations.
Concentrated discussion on ESG issues, including climate change, assists the Board in making the most appropriate decisions and providing oversight based on the long-term risks and opportunities that impact Lenovo's stakeholders and the business. At least annually, the Board is briefed on Lenovo's ESG Key Performance Indicators (KPIs), including its climate strategy and progress towards its climate change mitigation goals.
ESG management approach
In addition to the responsibilities listed above, the Board, through management process, delegates authority to the ESG EOC for the following ESG oversight activities:
Overseeing the assessment of Lenovo's environmental and social impacts, including Lenovo's annual materiality assessment process;
Ensuring alignment of Lenovo's ESG programs with regulatory requirements and investor expectations;
Understanding the risks of ESG issues on Lenovo's operating model and ensuring that actions taken to address the risks are appropriate and well-followed;
Ensuring that ESG considerations are part of business decision-making processes.
As part of Lenovo's ESG program, a materiality assessment is conducted annually with internal and external stakeholders to identify ESG-related risks and opportunities and their impacts on the business and stakeholders. The results are reviewed and approved by the ESG EOC and included in the ESG Report that is reviewed and approved by the Board. This assessment guides the objectives for Lenovo's ESG programs, including goals and targets, informing the business strategy, targeting communications, and the disclosures in the ESG Report.
Lenovo recognizes that risk management is the responsibility of everyone within the organization, and that risk is best managed when business functions take responsibility and are accountable for them. Rather than being a separate and standalone process, risk management is therefore incorporated as part of Lenovo's annual strategic planning process across all major functions.
Lenovo's official ERM process details various business risks that include environmental, social, and governance risk categories. Annually, Lenovo requires each business unit to identify risks, assess their impacts on executing its strategy, and develop risk mitigation plans. The results of this assessment ensure that effective risk management and internal control systems are in place.
ESG-related information is periodically audited using an internal control framework as part of a broader corporate risk assessment that incorporates audit processes to provide independent and objective assurance that Lenovo's ESG disclosures, statements, and metrics are accurate and aligned with Lenovo's risk management approach. Lenovo has been following a long-standing integrated approach for internal control which is consistent with the Committee of Sponsoring Organizations of the Treadway Commission (COSO) internal control framework. This internal control framework is overseen by the Audit Committee.
Lenovo's ESG disclosures, statements, and metrics are managed by a dedicated team that is focused on monitoring the effectiveness of the ESG initiatives and reporting the organization's progress against the goals and targets.
Review of progress and relevance to the business
The ESG EOC conducts regular meetings to assess the progress of Lenovo's ESG initiatives, including climate change and net-zero targets, their relevance to stakeholder expectations and Lenovo's long-term business strategy, and the direction of and investment in ESG programs.
Lenovo sets targets to address Lenovo's material impacts through a variety of related processes, including Lenovo's ISO 14001:2015 (environmental), ISO 50001:2018 (energy management), ISO 45001:2018 (occupational health and safety), and ISO 9001:2015 (quality) management systems. In addition, relevant teams and departments within Lenovo including Strategy, Human Resources, and others may set KPIs related to their own impacts which may be integrated into the corporate ESG KPIs as appropriate. Lenovo's corporate ESG KPIs are developed with approval from the ESG EOC and supported by the LEC and the Board.
The ESG practices and related goals and targets, KPIs and progress are periodically reviewed by the Board and are aligned with credible industry and science-based standards, and ESG reporting frameworks. Lenovo's progress is disclosed in the ESG Report that is reviewed and approved by the Board.
ESG performance metrics and climate-related considerations are factored into certain executive officer's remuneration policies where KPIs are tied to variable compensation or may result in non-monetary incentive such as recognition including employee awards.
The Board acknowledges that the corporate ESG landscape is evolving, and that the effective governance of ESG matters is fundamental to a company's ESG accountability. As Lenovo regularly evaluates the ESG risks and opportunities faced by the industry and the potential impacts on Lenovo's business continuity plan, the Board strives to strengthen the oversight of ESG programs and practices that will help to build a more resilient future for all.
Ethics and integrity
Ethics and integrity serve as the foundation of all Lenovo business practices. Results from the 2023 'Lenovo Listens' survey highlight one of Lenovo's greatest strengths: ethical business practices. Specifically, 97% of Lenovo's workforce believe Lenovo is ethical in all its business dealings. Lenovo recognizes its success hinges on its steadfast commitment to these values. This commitment is reinforced among the workforce through Lenovo's core values, which emphasize the significance of "Teamwork with Integrity and Trust," one of Lenovo's four fundamental cultural tenets.
Lenovo's Ethics and Compliance Office (ECO) was established to foster a culture that is committed to implementing these values. The ECO works in partnership with stakeholders across the globe to promote legal and ethical operations. The ECO actively raises awareness about the importance of ethical and compliant business practices to Lenovo and serve a critical role in providing employees with the information, resources, and training they need to make informed ethical decisions.
The ECO also oversees Lenovo's Code of Conduct (Code), which establishes clear expectations for employee compliance with its policies related to lawful and ethical business conduct. The Code reflects Lenovo's culture of trust and integrity, holds employees accountable for their behavior, and helps employees determine when and where to seek advice. The Code, policies, and related awareness and training materials are provided electronically and through periodic communications. Specifically, Lenovo's new hires are required to take Code training. In order to successfully complete the training, all employees are required to provide attestation of their adherence to the Code and Lenovo policies. Furthermore, in FY 2023/24, 99.9% of all direct labor employees completed mandatory Code training.
The ECO is supported by the following committees:
Board Committees
The Audit Committee is annually briefed by the ECO on matters including the adequacy of resources for ESG reporting
The Nomination and Governance Committee oversees the corporate policies and practices about governance and compliance with legal and regulatory requirements
Other Committees
The Executive Ethics Committee provides executive-level oversight and guidance to the ECO
The Investigation Oversight Committee works closely with the ECO to oversee the Group's internal investigation process and speak up initiatives
The Regional Ethics and Compliance Committee provides the ECO with global support, perspective, and insight
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SOURCE: Lenovo
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