2009-2010 Corporate Sustainability Reportmasco.com/pdfs/2009-2010-coporate-sustainability-rep… · · 2014-06-09Masco Corporation 2009 Global Reporting Initiative 3 GRI SectIon

2009-2010Corporate

SustainabilityReport

2 Masco Corporation 2009 Global Reporting Initiative

GRI Content Index The indicators for our sustainability reporting are selected from the G3 Reporting Framework issued by the Global Reporting Initiative (GRI). The GRI is a large multi-stakeholder interna-tional network of thousands of sustainability experts. The GRI G3 Reporting Framework is the most widely accepted global standard for corporate responsibility reporting.

Masco’s GRI index includes the disclosures and indicators that we are reporting. We are currently reporting on 54 out of 79 indicators and we are applying the GRI Reporting Frame-work at Application Level B.

RepoRt AppliCAtion levelS

For more details on the GRI and the Application Level System, please visit www.globalre-porting.org

GRI SectIonG3

DIScloSuReDeScRIptIon paGe

Strategy and Analysis 1.1 Executive statement 7

1.2 Key impacts, risks and opportunities 9

Organizational Profile 2.1 Name of the organization 13

2.2 Primary brands, products and/or services 13

2.3 Operational structure 13

2.4 Location of organization’s headquarters 13

2.5 Countries with major operations 14

2.6 Nature of ownership and legal form 14

2.7 Markets served 14

2.8 Scale of the reporting organization 14

2.9 Significant changes during the reporting period 14

2.10 Awards received in the reporting period 14

NR-Not Reported

Masco Corporation 2009 Global Reporting Initiative 3

GRI SectIonG3


Report Parameters 3.1 Reporting period 17

3.2 Date of most recent previous report 17

3.3 Reporting cycle 17

3.4 Contact point for report 17

3.5 Process for defining report content 17

3.6 Boundaries of the report 17

3.7 Limitations on the report scope or boundary 17

3.8 Basis for reporting on joint ventures, subsidiaries, etc. 18

3.9 Data measurement techniques 18

3.10 Restatements of information 18

3.11 Significant changes from previous reporting periods 18

3.12 GRI Index 18

3.13 External assurance 18

Governance, Commitments and Engagement

4.1 Governance structure of the organization 19

4.2 Chair of the highest governance body 20

4.3 Independent members of highest governance body 20

4.4 Shareholders and employees input to the highest governance body 20

4.5 Compensation link to performance for highest governance body 21

4.6 Conflicts of interest avoidance 21

4.7 Highest governance body qualifications 21

4.8 Mission statement and codes of conduct 21

4.9 Highest governance body to performance oversight 22

4.10 Highest governance body to performance evaluation 23

4.11 Precautionary approach 23

4.12 Endorsement of externally developed principles 23

4.13 Significant association memberships 26

4.14 List of stakeholder groups 26

4.15 Stakeholder identification and selection process 26

4.16 Stakeholder engagement 27

4.17 Key stakeholder issues and concerns 29

Economic MA Management approach 31

EC1 Economic value generated 31

EC2 Financial implications, risks and opportunities of climate change 34

EC3 Coverage of organization’s defined-benefit plan 35

EC4 Financial assistance from government 35

EC5 Standard entry level wage compared to local minimum wage NR

EC6 Spending on locally-based suppliers 36

EC7 Procedures for local hiring 36

EC8 Infrastructure investments and services for public benefit 36

EC9 Indirect economic impacts NR

NR-Not Reported


GRI SectIonG3


Environmental MA Management approach 37

EN1 Materials used by weight or volume NR

EN2 Recycled input materials used 38

EN3 Direct energy consumption 39

EN4 Indirect energy consumption 40

EN5 Energy saved due to conservation and efficiency improvements 40

EN6 Initiatives to provide energy-efficient products and services 41

EN7 Initiatives to reduce indirect energy consumption NR

EN8 Water withdrawal by source 42

EN9 Water sources significantly affected by withdrawal of water 43

EN10 Water recycled and reused NR

EN11 Land adjacent to protected areas 43

EN12 Impacts of activities on biodiversity in protected areas NR

EN13 Habitats protected or restored 43

EN14 Strategies for managing impacts on biodiversity NR

EN15 IUCN Red List species affected by operations NR

EN16 Direct and indirect greenhouse gas emissions 44

EN17 Other relevant indirect greenhouse gas emissions 44

EN18 Initiatives to reduce greenhouse gas emissions 44

EN19 Emissions of ozone-depleting substances 45

EN20 NO, SO and other significant air emissions 45

EN21 Water discharge by quality and destination 47

EN22 Weight of waste by type and disposal method 47

EN23 Significant spills 49

EN24 Transported, imported or exported hazardous waste NR

EN25 Water bodies and habitats affected by water discharge/runoff 49

EN26 Mitigation of environmental impacts of products/services 50

EN27 Products sold and packaging materials reclaimed NR

EN28 Non-compliance with environmental laws and regulations 50

EN29 Environmental impacts of transporting products NR

EN30 Environmental protection expenditures NR

Labor Practices and Decent Work

MA Management approach 53

LA1 Workforce by employment type and region 55

LA2 Employee turnover by age group, gender and region 55

LA3Benefits provided to full-time employees and not provided to temporary or part-time employees

NR

LA4 Collective bargaining agreements NR

LA5 Minimum notice periods regarding operational changes 55

LA6 Management-worker health and safety committees 55

LA7 Rates of injury 56

LA8 Education, training, counseling and prevention programs regarding serious diseases 58

LA9 Health and safety topics covered in formal agreements with trade unions 58

NR-Not Reported


GRI SectIonG3


LA10 Training per year, per employee 58

LA11 Skills management and lifelong learning programs 58

LA12 Performance and career development reviews NR

LA13 Composition of governance bodies and employees according to diversity indicators 59

LA14 Ratio of basic salary of men to women 59

Human Rights MA Management approach 61

HR1 Investment agreements that include human rights clauses 62

HR2 Human rights screening of suppliers and contractors 62

HR3 Human rights policies and procedures training for employees 62

HR4 Incidents of discrimination NR

HR5 Incidents of freedom of association and collective bargaining 63

HR6 Incidents of child labor 63

HR7 Incidents of forced or compulsory labor 63

HR8 Human rights policies and procedures training for security personnel NR

HR9 Incidents of violations involving rights of indigenous people 63

Society MA Management approach 65

SO1 Impacts of operations on communities NR

SO2 Business units analyzed for risks related to corruption 66

SO3 Anti-corruption policies and procedures training for employees 66

SO4 Response to incidents of corruption NR

SO5 Public policy development and lobbying 66

SO6 Financial and in-kind contributions to political parties 67

SO7 Anti-competitive behavior, anti-trust, and monopoly practices NR

SO8 Fines and non-monetary sanctions for non-compliance with laws and regulations NR

Product Responsibility MA Management approach 69

PR1 Health and safety impacts of products and services 69

PR2 Non-compliance concerning health and safety impacts of products and services NR

PR3 Products and service information required by procedures 69

PR4 Non-compliance with regulations concerning product and service information and labeling NR

PR5 Practices related to customer satisfaction 69

PR6 Adherence to laws and standards codes related to marketing communications 70

PR7 Non-compliance with regulations concerning marketing communications NR

PR8 Substantiated complaints regarding breaches of customer privacy 70

PR9 Non-compliance with laws and regulations concerning products and services NR

NR-Not Reported


Strategy and Analysis1.1 Executive statement.

At Masco, our strategic goals are straightforward – we want to be rec-ognized as the global leader in the innovation and marketing of quality building products and services. Indeed, innovation is one of the five core capabilities in our Masco Business System, our framework to consistently develop and execute strategies to win. To us, innovation means the ability to create and deliver unique and compelling customer solutions.

Over the last three years, our markets have been negatively impacted by the worldwide recession, our sales have dropped more than 30 percent, and we’ve undergone business consolidations, plant closures and headcount reductions. We recognize that these mea-sures have significantly impacted the lives of our employees as well as their communities, and we have sought to provide support systems such as outplacement and career transi-tion services. We also have not wavered from our commitment to treat all with respect, provide a safe work environment and stress the importance of ethical behavior from our employees and suppliers around the world.

During this difficult period, we also worked to create a robust pipeline of innovative products and customer solutions. We have promoted innovation through programs such as the Masco In-novation Grant, which encourages business units to explore breakthrough, game-changing innovations with corporate support. We have also sponsored cross-functional, global enter-prise teams that conduct research on a variety of Mega Trends. Mega Trend research helps identify new avenues for sustainable growth for Masco.

We have introduced a number of innovative products, including faucets and showerheads that have earned the WaterSense® label from the U.S. Environmental Protection Agency (EPA) for water conservation; windows that meet the EPA’s ENERGY STAR® requirements; and paints with lower volatile organic compound (VOC) content, among others. For new residential construction, our Environments For Living® program is a leading U.S. turn-key program designed to assist builders in constructing energy-efficient homes. To date, more than 130,000 homes have been built to the program’s standards.

Innovation also carries through in the way we do business at Masco, as we seek continu-ous improvement in the financial, environmental and social sustainability of our Company.

The focus on innovation also aligns with our sustainability goals. To measure our progress, we established concrete goals using 2007 as our baseline. We sell a wide range of prod-ucts and provide services that offer environmental benefits, such as helping conserve en-ergy, water or other natural resources – from low-flow kitchen and bath fixtures to installing insulation. Our goal is to have $2 billion of our annual revenue result from a subset of these products and services, those that meet third party performance criteria, such as ENERGY STAR® or WaterSense™ standards (which this report refers to as green products and


profile


services). We also expect to reduce the CO2 intensity of our facilities by 10 percent; reduce

total waste intensity by 20 percent; reduce, by four million metric tons, CO2 emissions during

the use phase from new homes built to Environments For Living® standards and from exist-ing homes retrofitted with energy efficiency improvements through the WellHomeSM program; and to engage our employees in educational programs focusing on living and working in a more sustainable manner. Our target is to meet these goals by 2015.

This report describes in detail how we are performing against these goals. In sum, we are ahead of schedule on three of our five goals. The one goal in which we have fallen short is attributable to, in large part, the constrained economic climate in which we are operating.

Although our work is far from complete, we have received several recognitions that demon-strate we are on the right track. For example:

•Newsweek’s 2009 green ranking of the S&P 500® included Masco in the top 100, recog-nizing reductions in our environmental footprint.

•The U.S. Environmental Protection Agency (EPA) named our Environments For Living® program as a 2010 ENERGY STARSM for Homes Partner of the Year. Prior to this award, the program received Outstanding Achievement Awards from the EPA in 2003, 2004 and 2005.

•Climate Counts recognized Masco among the top performers in its Home and Office Furni-ture category which includes ready-to-assemble cabinetry.

•Masco was named a MaplecroftTM Climate Innovation Indexes Leader in 2009, ranking 19th out of the 300 largest U.S. companies evaluated for their climate-related innovation and carbon management programs.

Despite the significant economic hurdles and their effect on our business, we understand that success will require continued investment in innovation and a commitment to continuous improvement as we build knowledge and expertise in sustainability. We remain committed to delivering innovative and environmentally friendly products and services to our customers and to being an exceptional corporate citizen within the com-munities in which we do business.

We hope you enjoy reading this report, and we look forward to reporting on our progress in the future.

Timothy Wadhams Donald J. DeMarie, Jr.Presidentand ExecutiveVicePresidentandChiefExecutiveOfficer ChiefOperatingOfficer


1.2 Key impacts, risks and opportunities.

Masco Corporation manufactures, distributes and installs home improvement and building products, with emphasis on brand-name consumer products and services holding leader-ship positions in their markets. We are among the largest manufacturers in North America of a number of home improvement and building products, including faucets, cabinets, archi-tectural coatings and windows, and we are one of the largest installers of insulation for new home construction. We generally provide broad product offerings at various price points and distribute products through multiple channels, including directly to homebuilders and whole-sale and retail channels.

As of December 31, 2009, Masco and its business units had approximately 35,400 employ-ees and more than 62 manufacturing facilities in the United States and 28 in other countries. International operations are located principally in China, Denmark, Germany and the United Kingdom. Approximately 79 percent of our 2009 sales were generated by our North Ameri-can operations.

From a sustainability point of view, there are environmental, economic and social impacts to be considered at every stage of our value chain, which extends from the sourcing of raw materials by our suppliers to the use and ultimate disposal of our products. To prioritize the issues of importance, Masco hired a third party consultant to conduct a materiality study re-lating to our sustainability efforts. Our materiality matrix was prepared by scoring preferences from three sources: Masco’s own documents on sustainability, the Masco 2008 employee survey and documentation on the views of our stakeholders, including North American re-porting authorities and surveys of U.S. environmental attitudes.

Based on this study, the topics of importance to Masco’s sustainability approaches, as viewed by the Company, its employees and its stakeholders are:

•energy usage

•energy-efficient operations

•innovative, environmentally responsible products

•customer relationship management

The Company also focuses on other key sustainability-related issues such as the ethical and responsible sourcing of goods and supplies, the quality and performance of our products, the health and safety of our employees and charitable giving to nonprofit organizations.

Over the past three years, we have experienced a significant downturn in home improve-ment and new home construction industries. The Company successfully offset the effect of a substantial portion of the decrease in sales volume related to the decline in the home im-provement and new home construction markets on our financial results. New product intro-ductions and market share gains added important and profitable sales, while aggressive cost management mitigated the effect of the net decline in our revenues on our operating profit.


CuStomeR FoCuS - LeAN - INNovAtIoN - QuALIty - tALeNt. These are the five core capabilities of the Masco Business System (MBS) – our framework to consistently develop and execute strategies to win. Formalized in 2009, MBS builds, strengthens and im-proves these core capabilities throughout all of our business units by assuring the standard-ization and consistency of how we manage, measure and report our business. Goals are set at the enterprise and business unit level, and sustainability is integrated into the following five core capabilities of the MBS:

•CuStomeR FoCuS – Anticipating customer wants and needs and targeting offerings to meet those expectations is absolutely fundamental to the way we do business. Our corpo-rate office runs a Customer Satisfaction Index initiative across our North American business units to continually capture, evaluate and report on how our channel customers, consum-ers, designers and installers perceive our offerings. In addition, each business unit under-takes qualitative and quantitative “Voice of Customer” market research to guide its develop-ment efforts for new offerings.

•LeAN – Lean is about identifying and pursuing the elimination of all forms of waste. It is a commitment to continuous improvement, and results are achieved by training and deploy-ing teams that follow a rigorous prescribed format known as Kaizen events. Although there are many types of waste, Lean also includes the identification of opportunities to reduce use of energy and water. Business units have been trained in the EcoValuationSM process, a two-and-a-half-day workshop that results in reduced facility energy, water consumption and CO

2 emissions. The evaluation of packaging materials and needs, including green

packaging, has also been reviewed through the Lean process. In October 2009, Masco formed a Green Packaging Council tasked to provide a forum for collaboration and best practices between business units on “reduce, reuse, recycle” packaging practices, among other initiatives.

•INNovAtIoN – Masco believes economic and sustainability challenges can be met through increased innovation. For Masco, innovation is not limited to new products, but encompasses changes in process and manufacturing and different ways to bring our products to market. We can point to many successful commercialized offerings that dem-onstrate how innovation has made a difference. For example, Delta Faucet Company de-veloped a revolutionary lead-free waterway that eliminates several leak-prone connections. These faucets utilize DIAMONDTM Seal Technology which incorporates the hardest sub-stance known – diamond – to coat the moving parts in a way that increases the longevity of their faucets and restricts the amount of lead used in waterways.

•QuALIty – Quality means conforming to customer requirements and ensuring lasting durability in our offerings. Our channel customers and consumers are seeking solutions that meet their requirements for environmental, social and economic performance. There-fore, we are focused on reducing our total cost of quality and ensuring that we meet cus-tomer requirements for sustainable product solutions.


•tALeNt – Talent is a core asset for Masco, and our talent initiatives strengthen our ability to recruit, develop and retain outstanding people. To us, success is ultimately defined by the decisions that prospective and existing employees make about the Company. There-fore, we work to make Masco an employer of choice by maintaining a positive reputation for ethical and sustainable business practices, offering leadership development and award-winning training programs, providing competitive fixed and incentive compensation pro-grams, and achieving a high level of employee engagement. We realize we cannot contin-ue to grow our business in today’s complex business environment without the engagement of our employees. Our philosophy on talent goes beyond our current employees. We know prospective employees will evaluate us, at least in part, on our sustainability beliefs and performance, and we welcome their views and contributions as they join the Company.

Table A summarizes Masco’s sustainability-related goals and our performance to date. (For more detail on both the goals and our performance, see the management disclosure discus-sions for the Economic and Environmental indicators.)

Table a

peRfoRmance aGaInSt SuStaInabIlIty GoalS

taRGet/Goal* peRfoRmance aGaInSt Goal

1. By 2015, have at least $2 billion of our annual revenue result from sales of green products and services, which are those that meet or exceed third party performance criteria such as EPA ENERGY STAR® or WaterSense® standards.

Ahead of schedule

2. By 2015, reduce the CO2 intensity of our facilities by 10 percent. Behind schedule

3. By 2015, reduce, by four million metric tons, CO2 emissions dur-

ing the use phase from new homes built to Environments For Living standards and from existing homes retrofitted with energy efficiency improvements through our WellHome program.

Ahead of schedule

4. By 2015, engage our employees in educational programs and other corporate communications about living and working in a more sustainable manner.

On schedule

5. By 2015, reduce total waste (hazardous, non-hazardous and recycled materials) intensity by 20 percent.

Ahead of schedule

* Goals use 2007 as baseline.

Our Form 10-K, available at http://investors.masco.com/annuals.cfm, as well as our sub-mission to the Carbon Disclosure Project, available at www.cdproject.net, contain details on the business risk factors we face. We, however, look forward to making continued progress on our sustainability goals, and to reporting on that progress in the future.


Our brands

SMSM


organizational Profile 2.1 Name of the organization.

Masco Corporation

2.2 Primary brands, products and/or services.

Masco Corporation is one of the world’s largest manufacturers of brand-name products for the home improvement and new home construction markets. The Company is also a leading provider of a variety of installed products and services, including insulation, for homebuilders. The following are our primary product and service categories.

•CAbINetS ANd ReLAted PRoduCtS: The Company is one of the largest U.S. manufacturers of kitchen and bath cabinetry. This segment includes assembled and ready-to-assemble kitchen and bath cabinets, home office workstations, entertainment centers, storage products, bookcases, and kitchen utility products. (2009 net sales: $1.6 billion, 21 percent of total net sales)

•PLumbING PRoduCtS: Masco has broad channel access globally through our pre-mier plumbing product brands. The Company is a world leader in manufacturing plumbing products, including faucets, plumbing fittings and valves, showerheads and hand showers, bathtubs and shower enclosures, and spas. (2009 net sales: $2.6 billion, 33 percent of total net sales)

•INStALLAtIoN ANd otheR SeRvICeS: This segment includes the sale, installa-tion and distribution of insulation, as well as other building products. The Company is one of the largest providers of a variety of installed products for homebuilders across the United States. (2009 net sales: $1.3 billion, 16 percent of total net sales)

•deCoRAtIve ARChIteCtuRAL PRoduCtS: The Company is one of the largest suppliers of architectural paint and exterior wood care products to the United States and Canadian do-it-yourself segments. This segment also includes cabinet, door, window and other hardware. (2009 net sales: $1.7 billion, 22 percent of total net sales.)

•otheR SPeCIALty PRoduCtS: Masco is one of the leading manufacturers of vinyl and fiberglass windows, principally in the western United States. This segment includes windows, window frame components and patio doors both in the United States and United Kingdom, and staple gun tackers, staples and other fastening tools. (2009 net sales: $0.6 billion, 8 percent of total net sales)

2.3 Operational structure.

Masco’s business units are overseen by three Group Presidents – one each for North Amer-ica Retail/Wholesale, North America Builder and Europe. Masco has a 68 percent controlling interest in Hansgrohe AG, a leading manufacturer of decorative plumbing products. All other business units are wholly owned.

2.4 Location of organization’s headquarters.

Taylor, Michigan


2.5 Countries with major operations.

As of December 31, 2009, Masco had more than 62 manufacturing facilities in the United States and 28 in other countries. International operations are located principally in China, Denmark, Germany and the United Kingdom.

2.6 Nature of ownership and legal form.

Masco is a publicly traded company incorporated in the state of Delaware. Its common stock is traded on the New York Stock Exchange (NYSE) under the symbol MAS.

2.7 Markets served.

Masco provides products and services to the home improvement and new home construc-tion industries. Masco’s North American operations are principally organized by channel customers to ensure customer focus, including delivering on the eco-friendly solutions they demand.

Approximately 79 percent of Masco’s 2009 net sales were generated by operations in North America (primarily in the United States and Canada). International operations comprise the balance and are located principally in China, Denmark, Germany and the United Kingdom.

2.8 Scale of the reporting organization.

Masco’s net sales for 2009 were approximately $7.8 billion. As of December 31, 2009, the Company and its business units had approximately 35,400 employees, and our total debt as a percent of total capitalization was 58 percent.

Additional financial information is included in indicator EC1 and in Form 10-K, available at http://investors.masco.com/annuals.cfm.

2.9 Significant changes during the reporting period.

Since late 2006, Masco has aggressively reduced its cost structure, including closing 19 manufacturing facilities and reducing installation branches by more than 90 locations. In addition, since 2006, our business units have reduced headcount by roughly 27,000 (approxi-mately 50 percent of the North American workforce).

2.10 Awards received in the reporting period.

The following are highlights of key sustainability-related awards that Masco and our business units have received during the reporting period.


awards fOr MascO cOrpOraTiOn

•Newsweek’s 2009 green ranking of the S&P 500® included Masco in the top 100, recog-nizing reductions in our environmental footprint.

•The U.S. Environmental Protection Agency (EPA) named our Environments For Living® program as a 2010 ENERGY STAR® for Homes Partner of the Year. Prior to this award, the program received Outstanding Achievement Awards from the EPA in 2003, 2004 and 2005.

•Climate Counts recognized Masco among the top performers in its furniture manufacturing category which includes ready-to-assemble furniture and cabinetry.

•Masco was named a MaplecroftTM Climate Innovation Indexes Leader in 2009, ranking 19th out of the 300 largest U.S. companies evaluated for their climate-related innovation and carbon management programs.

awards fOr MascO’s business uniTs

•Behr’s introduction of Premium Plus Ultra® interior paint was recognized by The Home Depot as the Innovation of the Year in the United States and Canada. This award is given to the most important innovation across the retailer’s entire product offering.

•In December 2009, Masco Cabinetry, manufacturer of KraftMaid® cabinetry, was one of six organizations to receive the Ohio Environmental Protection Agency’s Award for Outstanding Achievement in Environmental Stewardship. Winners of the award were selected based in part on a sound track record of environmental compliance and a commitment to go above and beyond regulations.

•Masco Cabinetry, manufacturer of Quality Cabinets® products, was honored by the Ken-tucky Department of Environmental Protection with the prestigious Master Level member-ship in its environmental leadership program, KY EXCEL.

•Hansgrohe AG was ranked second in the Corporate Health Award competition. Hansgro-he’s project – called “Miteinander und motiviert mitmachen,” which means “Joining in and getting motivated” – is an initiative for its employees aged 50 and over. This inaugural award is sponsored by the German Federal Ministry of Labor and Social Affairs. A joint initiative of the Handelsblatt newspaper and the companies TÜV SÜD Life Service GmbH and EuPD Research GmbH, the award honors exemplary corporate health concepts.

•In 2009, our Milgard Windows & Doors plant in Portland, Oregon, earned Safety and Health Achievement Recognition Program (SHARP) status from the Occupational Health and Safety Administration. SHARP recognizes employees who operate an exemplary safety and health management system.

•Milgard Windows & Doors received the 2009 Energy Saver award presented by the U.S. Department of Energy for efficiency improvements and energy savings at their Tacoma, Washington, vinyl plant. Milgard was the only window manufacturer honored in 2009.


•In 2008, Watkins Manufacturing received an ENVY award from Indesign (the Institute for In-novative Design) for outstanding efforts in environmentally friendly spa design.

•Also in 2008, Watkins was recognized by Flex Your Power, California’s statewide energy-efficiency campaign, as a leader in energy efficiency.

•In 2009, Moores was the runner-up (with a “highly commended” rating) for the manufactur-ing sector at the Royal Society for the Prevention of Accidents award ceremony in recogni-tion of a culture of health and safety.

•Moores received the Constructing Excellence Legacy Award for sustainability for the York-shire and Humber region of the United Kingdom. The company was judged on environ-mental/sustainability improvements achieved. The award considered more than 20 years of effort at Moores to reduce environmental impacts, including the installation of wood waste boilers to heat the factory, solvent reduction, composting of uncovered medium density fi-berboard (MDF) and the recycling of paper/cardboard, metals, batteries, aerosols, plastics, PVC, lighting, aluminum drink cans, wood and particleboard.


Report Parameters3.1 Reporting period.

This Corporate Sustainability Report focuses on Masco’s economic, social and environmen-tal performance during 2007 through April 2010.

3.2 Date of most recent previous report.

Our most recent report was published in 2006.

3.3 Reporting cycle.

This report is the next in a planned series of biennial reports.

3.4 Contact point for report.

Masco encourages feedback on our Corporate Sustainability Report. If you would like to comment on the report, please e-mail us at [email protected]. Additional information on Masco, our business units and brands is available on our Web site at www.masco.com and in our 2009 Annual Report, which is also available on our Web site.

If you are unable to access these resources or need further information, please contact:Maria C. Duey, Vice President – Investor Relations and Communications Masco Corporation 21001 Van Born Road Taylor, MI 48180, USA 313.792.5500

3.5 Process for defining report content.

To prioritize the issues of most importance to our stakeholders, Masco hired a third-party consultant to conduct a materiality study in 2008. Our materiality matrix was prepared by scoring preferences from three sources: Masco’s own documents on its sustainability strat-egy, the Masco 2008 employee survey and documentation on the views of our stakeholders, including North American reporting authorities and surveys of U.S. environmental attitudes.

In addition, specific comments and suggestions from our principal stakeholders on our 2003/04 and 2006 reports have been influential in determining the structure and content of this report.

3.6 Boundaries of the report.

See Indicator 3.8.

3.7 Limitations on the report scope or boundary.

See Indicator 3.8.


3.8 Basis for reporting on joint ventures, subsidiaries, etc.

This report provides a detailed summary of the sustainability performance and practices of Masco and its consolidated operating businesses. Masco has a 68 percent controlling inter-est in Hansgrohe AG, a leading manufacturer of decorative plumbing products for the kitchen and bathroom, and the information from its operations are included in this report. In addition, Hansgrohe AG has produced its own Sustainability Report covering its facilities in Germany and the United States. The most recent Hansgrohe AG Sustainability Report is available in English (www.hansgrohe.com) and German (www.hansgrohe.de). While Masco does part-ner in other joint ventures, these relationships do not significantly affect comparability of this report from time period to time period and/or between organizations.

3.9 Data measurement techniques.

Our audited, consolidated financial statements comply with Generally Accepted Accounting Principles utilized in the United States. Masco uses the World Business Council for Sustain-able Development/World Resources Institute methodology for calculating annual CO

2 emis-

sions for facilities owned, leased and controlled by Masco.

3.10 Restatements of information.

This report contains a restatement of information relating to Masco’s major financial indicators and environmental data. The amounts shown have been restated to exclude discontinued operations.

3.11 Significant changes from previous reporting periods.

This report does not contain any significant changes in reporting periods, scope, boundary or measurement methods.

3.12 GRI Index.

This report is structured by GRI indicator. The indicators appear in the order given in the GRI’s G3 Sustainability Reporting Guidelines. The GRI Index is shown on pages 2–5 of this Report

3.13 External assurance.

External report assurance was not sought for this report.


Governance, Commitments and engagement4.1 Governance structure of the organization.

Masco’s Corporate Governance Guidelines stipulate three standing Board committees: Audit; Organization and Compensation; and Corporate Governance and Nominating. The standing committees’ charters, responsibilities and reporting may be found on Masco’s Web site (www.masco.com/corporate_information/governance/index.html). All of the members of these committees are independent, per New York Stock Exchange (NYSE) guidelines.

The Audit Committee assists the Board with oversight of the Company’s compliance with legal and regulatory requirements, including environmental, health and safety regulations. The Organization and Compensation Committee is responsible for (among other things) evaluat-ing senior executive performance and compensation. In such evaluation, the Committee may take into account economic, social and environmental criteria, as appropriate.

Masco has an enterprise-wide global sustainability program that challenges all Masco busi-ness units to make sustainability part of their overall business strategy, and integrate a num-ber of established Masco sustainability elements. Green Champions from each business unit, led by the Vice President of Innovation and Sustainability, serve as liaisons and advo-cates for sustainability-related activities and initiatives and form the Green Champion Council, a forum for collaboration and best-practice sharing among Masco’s businesses. This Coun-cil supports activities that help the organization meet its goals of new value creation, cost reduction, environmental footprint reduction and continuously improving Masco’s position as an environmentally responsible corporation.

The following chart shows the ongoing roles and responsibilities within our business units and corporate office. Day-to-day key resources include a corporate Vice President of Innova-tion and Sustainability; a Vice President of Corporate Affairs; professionals from our Masco Business System Office and Health, Safety and Environmental Affairs department; a group of corporate attorneys responsible for counseling in this area; a corporate committee that re-views requests for innovation related to sustainability; a corporate review board that oversees the credibility of green product claims; and business unit Green Champions.

Business units Masco corporate

Execute on sustainability initiatives Define and develop reporting metrics, definitions and systems

Collaborate within product platforms and across the Company as required

Acquire/develop and make available deployment tools, processes, knowledge and/or collaboration systems

Deliver on all performance measurements and reporting requirements

Evaluate and launch any new corporate green innovation platforms

Develop and execute on coordinated government affairs strategies

Develop corporate communications plan

Develop marketing guidelines and messaging framework

4.2 Chair of the highest governance body.

In July 2007, Richard Manoogian transitioned from his role as Chairman of the Board and Chief Executive Officer to Executive Chairman. At that time, Timothy Wadhams, formerly Masco’s Senior Vice President and Chief Financial Officer, was named President and Chief Executive Officer and was elected to Masco’s Board of Directors. In June of 2009, Richard Manoogian retired from his employment with Masco and is now a non-employee Director serving as Chairman of the Board.

4.3 Independent members of highest governance body.

Our Corporate Governance Guidelines require that a majority of Board members qualify as “Independent Directors” under the requirements of applicable laws and NYSE guidelines (see www.masco.com/corporate_information/governance/director_independence.html). Excluding Masco’s Chairman and its President and Chief Executive Officer, all directors are independent under NYSE standards, and all members of the Audit Committee, Organization

and Compensation Committee, and Corporate Governance and Nominating Committee are independent.

4.4 Shareholders and employees input to the highest governance body.

Masco’s Board of Directors has a long-established practice of care-fully considering views and issues raised by shareholders, and have

taken appropriate action when the Board believes such action to be in the best interests of the Company and its shareholders.

Shareholders may contact the Company via e-mail ([email protected]) or by telephone (313-274-7400), and we provide time for shareholder questions at our Annual Meeting of Shareholders. Masco’s executive officers conduct quarterly earnings conference calls that are available to the public either through a telephone or internet connection. In addition, our executive officers present current information about the Company at periodic, one-day investor conferences that are also accessible to the public through webcast technology. These quar-terly earnings calls and investor presentations provide a forum for our

executive officers to update the investment community on current business trends.

The guidelines address Board members’ access to management and auditors.

Since 2004, Masco has maintained an Ethics Hotline which is available to report, on an anonymous and confidential basis, illegal or unethical activity. Calls to the Masco Ethics Hotline are monitored and, when appropriate, investigated and acted upon. In addition, Masco has an “Open Door Policy” which emphasizes communication within the Masco organization and


which recommends that if an employee feels he or she can’t resolve a problem or make a suggestion to his or her supervisor, the employee should communicate directly with the Hu-man Resources department. Material issues, including those involving environmental, eco-nomic or social performance matters, which are raised through either of these processes, may reach the level of the Masco Board of Directors, if appropriate.

4.5 Compensation link to performance for highest governance body.

Our approach to executive compensation emphasizes long-term corporate, rather than individual, performance for our executive management group. We design our incentive compensation programs to correlate the performance criteria used by these programs and the metrics we consider most significant to long-term stockholder value, such as earnings per share and cash flow. These financial measures may be affected by sustainability-related initiatives such as more efficient energy and materials use.

It is Masco’s general policy not to enter into employment contracts with our executive officers that would entitle them to additional compensation (other than qualified and non-qualified retirement benefits) following termination of employment.

4.6 Conflicts of interest avoidance.

Masco’s Code of Business Ethics, which applies globally to all employees, officers and members of the Board of Directors, addresses areas of ethical risk, including conflicts of interest. Section 2 defines and gives examples of conflicts of interest. Section 8 outlines procedures for reporting of any illegal or unethical behavior and complying with the Code. The Code of Business Ethics can be found at: www.masco.com/corporate_information/governance/code_of_conduct.html.

4.7 Highest governance body qualifications.

Masco’s Corporate Governance Guidelines cover the issue of director qualifications. These Guidelines state: “Directors will have such attributes, qualifications and experience as the Corporate Governance and Nominating Committee recommends and the Board has approved as appropriate to enhance the Board’s effectiveness.” The Guidelines also include rules relating to retirement age, service on other boards and changes in primary employment. The Corporate Governance Guidelines can be found at: www.masco.com/corporate_information/governance/guidelines.html.

4.8 Mission statement and codes of conduct.

Masco believes that strong corporate governance practices benefit our shareholders and our business, including our employees, suppliers and customers. To uphold our commitment to these stakeholders, we evaluate, refine and update our corporate governance practices regularly. These practices are defined and summarized in our Corporate Governance Guide-lines and our Code of Business Ethics. They also are reflected in the charters of our Audit, Organization and Compensation, and Corporate Governance and Nominating Committees of the Board of Directors.


The Corporate Governance Guidelines cover compliance with legal and regulatory require-ments and our Code of Business Ethics, director qualifications, responsibilities, access to man-agement and independent auditors, compensation and training, senior management evaluation and succession and Board performance appraisal. Our Corporate Governance Guidelines are online at: www.masco.com/corporate_information/governance/guidelines.html.

The Code of Business Ethics, which applies globally to all employees, officers and members of the Board of Directors, focuses on areas of ethi-cal risk, provides guidance on recognizing and dealing with ethical issues and helps foster Masco’s culture of honesty, accountability and transpar-ency. The Code also serves to satisfy certain requirements of the U.S. Sarbanes-Oxley Act of 2002 relative to Masco’s senior officers.

The code consists of three parts:COMPLIANCE WITH LAWS: The Code includes compliance with all applicable laws in a Masco company’s jurisdiction, and all applicable Masco policies.

AREAS OF ETHICAL RISK: The Code addresses conflicts of interest, corporate opportunity, confidentiality, fair dealing and the protection and proper use of Company assets.

REPORTING: The Code mandates reporting of illegal or unethical behavior and states that there can be no retaliation for making a good faith report. Failure to comply will result in disciplinary action, up to and including termination.

The Code has been translated into 25 languages. It may be found online at: www.masco.com/corporate_information/governance/code_of_conduct.html

Masco also has a number of Legal and Ethical Compliance Policies to assure compliance with applicable legal and ethical requirements, covering topics including antitrust, anticorrup-tion, insider trading and conflicts of interest. These policies encompass both external legal requirements and Masco’s internal standards. The Code of Business Ethics requires that Masco employees be familiar with and comply with the Legal and Ethical Compliance Poli-cies that apply to their jobs.

Our Supplier Business Practices Policy (SBP) formalizes our longstanding commitment to the ethical and responsible sourcing of goods and supplies for Masco’s family of companies. The SBP is discussed in the Human Rights section’s disclosure on management approach.

4.9 Highest governance body to performance oversight.

We evaluate, refine and update our corporate governance practices regularly. These prac-tices are defined and summarized in our Corporate Governance Guidelines and Code of Business Ethics. They also are reflected in the charters of our Audit, Organization and


Compensation, and Corporate Governance and Nominating Committees of the Board of Directors. The standing committees’ charters, responsibilities and reporting may be found at: www.masco.com/corporate_information/governance/index.html.

Masco has an enterprise-wide global sustainability program that challenges all Masco busi-ness units to make sustainability part of their overall business strategy, and integrates a number of established Masco sustainability elements. Green Champions from each business unit, led by the Vice President of Innovation and Sustainability, serve as liaisons and advo-cates for sustainability-related activities and initiatives and form the Green Champion Council, a forum for collaboration and best-practice sharing among Masco’s businesses. This Council supports activities that help the organization meet its goals of new value creation, environ-mental footprint reduction and continuously improving Masco’s position as an environmen-tally responsible corporation. (See Indicator 4.1 for the organizational roles.)

4.10 Highest governance body to performance evaluation.

The Board’s Corporate Governance and Nominating Committee is responsible for overseeing the evaluation of the Board’s performance. Under this committee’s l eadership, the Board conducts an annual self-evaluation to determine whether it and its committees are functioning effectively. Our Corporate Governance Guidelines (www.masco.com/corporate_information/governance/guidelines.html) describe how this self-evaluation is carried out.

4.11 Precautionary approach.

Masco has a formal and ongoing Enterprise Risk and Opportunity Management (EROM) program to anticipate and minimize corporate risk and, where possible, to convert potential risks into business opportunities. This is supported by risk mitigation activities with owner-ship and action plans, allowing us to better manage potential risks. The Audit Committee is responsible for reviewing policies related to risk, but it is the responsibility of the Chief Execu-tive Officer and senior management to determine the appropriate level of risk.

4.12 Endorsement of externally developed principles.

Masco participates in (and in some cases has assisted in the development of) several major external charters and initiatives, including:

•WaterSense, SmartWay, ENERGY STAR, HOME STAR and other voluntary EPA initiatives

•ISO 14001

•OHSAS 18001


•Carbon Disclosure Project

•Standards for sustainable forestry practices, such as the Forest Stewardship Council and Sustainable Forestry Initiative

•Climate Label (Denmark)

The following are specific examples of our involvement with these and other charters and initiatives:

Masco’s Safety Management System is aligned with internationally recognized guidelines such as the Occupational Health and Safety Assessment Series 18001 and the Occupa-tional Safety and Health Administration Voluntary Protection Program. A majority of our manufacturing facilities have their Environmental Management Systems certified to ISO 14001.

Masco is a SmartWay Shipper partner in the U.S. EPA-certified SmartWay Transport Partnership. To qualify, Masco quantified its environmental perfor-mance level using the Freight Logistics Environmen-tal and Energy Tracking (FLEET) performance model and committed to ship at least 50 percent of its goods using SmartWay Transport Carriers. Partners commit to improve their environmental scores over a period of three years through policies such as no idling at docks, evaluating and modifying business practices at distribution centers and warehouses, and using a combination of truck and locomotive transport. Masco was approved by the EPA as a shipper partner in May 2009 and must submit an an-nual update of the FLEET model to the EPA.

All Masco Cabinetry facilities are both ISO 14001 certified and meet the environmental criteria for En-vironmental Stewardship administered by the Kitchen Cabinet Manufacturers Association (KCMA).

Our cabinetry products also strive to promote sound forestry practices. The Masco Kitchen Cabinet Global Forest Policy, an element of Masco’s Environmental Policy (www.masco.com/corporate_information/citizenship/environmental_policy/index.html), was developed to promote the manufacture of cabinets using timber from forests certified by the Forest Stewardship Council (FSC), Sustainable Forestry Initiative, American


Tree Farm System and Canadian Standards Association. Masco expects suppliers to follow good environmental and sustainable forestry practices, and we endeavor to obtain our timber from forestry companies with certified management practices. Moores was awarded FSC Chain of Custody Certification, which means the certified wood for their cabinets comes from responsibly managed sources.

Masco Cabinetry’s Ohio operations have exceeded Indoor Environmental Quality cabinetry requirements with its KraftMaid brand, for inclusion in the Environments For Living Certified Green program. To qualify, cabinetry must be constructed from composite panels that meet both the KCMA Environmental Stewardship program and the Composite Panel Association’s Environmentally Preferable Product (EPP) specifications.

All Tvilum-Scanbirk furniture carries Denmark’s Climate Label and, as of January 1, 2009, all of its products are made from wood from FSC or Programme for the Endorsement of Forest Certification certified sustainable forests. Tvilum-Scanbirk furniture is also tested in its own product safety test center, opened in 2007, to help ensure it complies with European Union safety regulations.

In 2008, Behr’s St. Louis, Missouri, facility was honored as a Certified Advanced Partner in the Missouri Environmental Management Partnership. It was recognized for its commitment to environmental excellence and leadership by implementing a rigorous environmental man-agement system, striving to reduce energy requirements and reducing solid waste.

Masco’s U.K. Window Group has been awarded British Fenestration Rating Council (BFRC) certification for all windows using the Duraflex range of profiles. Only ISO 9000 registered manufacturers and installers that have achieved a BFRC rating of “C” or above are eligible for certification. Only products from certified manufacturers qualify to join the Energy Saving Recommended Scheme and to use the “Energy Saving Recommended” logo.

Watkins Manufacturing was among the first spa manufacturers to meet the stringent Title 20 energy standards established by the California Energy Commission on all spa models.

Moores has been accredited by Club Green, an annual independent external environmental audit; the Energy Efficiency Accreditation Scheme, an independent audit of energy use, for the period from 2007 through 2010; ISO 14001: 2004 since June 2005; the Furniture Indus-try Sustainability Program since May 2006; and the Forest Stewardship Council since June 2006. Moores also has partnered with Carbon Action Yorkshire in joining a voluntary carbon trading scheme in preparation for the forthcoming Carbon Reduction Commitment (2010).

In 2009, the Texas Commission on Environmental Quality awarded BrassCraft’s Lancaster, Texas, facility Bronze level membership in the Clean Texas Program. The program recognizes organizations as leaders among Texas communities and workplaces seeking to achieve sig-


nificant environmental results, create awareness, and protect air, water and land resources in Texas.

4.13 Significant association memberships.

Our numerous affiliations in North America include: American Alliance for Water Efficiency, Architectural Manufacturers Association, Canadian Standards Association, Building Perfor-mance Institute, Home Performance Contractors, Insulation Contractors of North America, Kitchen Cabinet Manufacturers Association, American Coatings Association, Plumbing Manufacturers Institute, U.S. Green Building Council, AliaRSE (promoting Mexican business ethics and environmental responsibility), Society for Human Resource Management, Human Resource Policy Association, Equal Employment Action Committee and National Safety Council.

In Europe, our many affiliations include: Bathroom Manufacturers Association, British Fen-estration Rating Council, Furniture Industry Research Association, German Association for Personnel Management, German Sustainable Building Council and the Royal Society for the Prevention of Accidents.

4.14 List of stakeholder groups.

Our stakeholder groups include the following:

•Employees − As of December 31, 2009, Masco and its business units had approximately 35,400 employees in 30 countries, approximately 74 percent of whom worked in the United States.

•Investors − Masco is a publicly traded company with approximately 6,000 shareholders.

•Customers − Our customers include home center retailers, homebuilders, dealers and other retailers. Our largest customer is The Home Depot, which represents approximately 26 percent of our consolidated 2009 net sales.

•Consumers − The ultimate consumers of our goods include builders, contractors, installers and homeowners.

•Communities − As of December 31, 2009, Masco had more than 62 manufacturing facili-ties in North America and 28 in other countries. Community involvement and good citizen-ship are important parts of the Masco corporate creed, and through its Foundation, the Company has demonstrated its commitment to a variety of arts, cultural and housing-based organizations, such as Habitat for Humanity, serving the communities in which its companies and employees reside.

•Suppliers − Masco buys raw materials and parts for its products from a wide range of sup-plier companies around the world.

4.15 Stakeholder identification and selection process.

Masco views its business – first and foremost – as one that serves people. From our cus-tomers and the communities in which we work and live, to governments, our business partners and our employees, we know our financial and corporate sustainability performance


depends on establishing good relationships with those we serve and rely on. Masco believes in engaging with all of its stakeholders honestly, respectfully and with integrity. Our stakehold-er groups have been identified by a GRI-related study of key issues, a stakeholder study and an employee survey, all conducted in 2008 or 2009.

4.16 Stakeholder engagement.

Although stakeholder engagement was not undertaken specifically in conjunction with the preparation of this report, we routinely seek input on what we make and sell, and how we operate internally and externally through consumer and employee surveys, shareholder meetings, market research and customer satisfaction analyses. The qualitative market re-search studies we conduct typically include questions related to the importance of sustain-ability to customer buying decisions.

Our approach has been to respond to various highly-respected nongovernmental organiza-tion and advocacy group inquiries for information. We also believe that our Sustainability Report is an effective method for providing meaningful communications with our stakehold-ers about our sustainability practices. In addition, Masco interfaces regularly with sustain-ability executives from other companies. This has enabled peer review and learning within a network of trusted professionals. Ad hoc sustainability best-practice exchanges with other companies also have been invaluable.

Masco’s suppliers are engaged through our enterprise-wide Supplier Business Practices Policy and audit process, and each Masco business unit and our corporate office has named a Green Champion, who promotes internal employee engagement in their respective organizations.

The following describes in more detail how we engage with customers and communities.

customersThrough executive interviews, online bulletin boards and focus groups, Masco seeks to get in touch with its customers and build a two-way conversation. This conversation is en-abled by a corporate Customer Satisfaction Index initiative across our North American busi-ness units that continually captures, evaluates and reports on how our channel customers, consumers, designers and installers perceive our offerings. And since we have asked our business units to run their businesses focused on the needs of customers, they undertake qualitative and quantitative “Voice of Customer” market research to guide their development efforts for new offerings. The program is discussed in more detail in response to product responsibility indicator PR5.

In addition, Masco companies are committed to helping builders become more environmen-tally responsible and stay ahead of the challenges through people, products and programs, like Masco Home Services’ Environments For Living program, which assists builders in constructing homes that are more energy efficient, more comfortable and more durable than conventional code-built homes. The program, launched in 2001, provides not only services,


but also an education in building science, helping builders to elevate their knowledge of ad-vanced construction techniques and apply it on the job site.

communitiesOur primary mechanisms for sustaining our nonprofit partners are through cash and product donations, and the widespread support of our employees and their families, who volunteer regularly in the regions where they work and live. Masco corporate-wide charitable giving is derived from a combination of Masco Foundation funds and corporate resources including cash, manufactured product and other services. For 2008 and 2009, Masco’s combined charitable contributions exceeded $16 million.

The Masco Corporation Foundation, established in 1952 and funded exclusively by Masco Corporation, supports a variety of charitable organizations, and places special emphasis on financial support to not-for-profit organizations that promote decent, affordable housing for disadvantaged and low-income families. It also supports a number of specific cultural, envi-ronmental, human service and civic initiatives in the regions where Masco does business.

Beginning in 2010, Masco is offering employees throughout its U.S. business units the op-portunity to participate in matching and volunteer grant programs for the purpose of support-ing the work of charitable organizations across the United States. Within established param-eters and eligibility criteria, Masco’s corporate office will match employees’ gifts to qualified 501(c)3 public charities and educational institutions. In addition, employees who give time and energy to promoting charitable causes will have the opportunity to apply for grants that they may direct to qualified charities of their choice.

On the international front, Masco Europe introduced the “Masco Money Match” program that encourages employee community engagement through team-based charitable undertakings by offering matching grants for funds raised by employees in support of charitable causes.

Masco’s business units actively support charitable organizations in their local communities. These contributions take the form of cash donations, volunteer engagement and the dona-tion of products. Our companies engage in a broad range of youth development and civic initiatives in support of a variety of causes. In 2009, our companies worked actively with Masco’s corporate office to identify and support national opportunities to offer our products

through donation and special pricing initiatives to nonprofit entities hit hard by current eco-nomic conditions. Our business units are the primary source for in-kind product donations to charities.

4.17 Key stakeholder issues and concerns.

Since our 2003/04 and 2006 reports, feedback from our principal stakeholders, particularly those with an interest in sustainability, has been supportive of our reporting approach. Spe-cific comments and suggestions have been influential in determining the structure and con-tent of this report.

To identify the issues most important to our stakeholders, Masco hired a third-party consul-tant to conduct a materiality study in 2008. Our materiality matrix was prepared by scoring preferences from three sources: Masco’s own documents on its sustainability strategy, the Masco 2008 employee survey, and documentation on the views of our stakeholders, includ-ing North American reporting authorities and surveys of U.S. environmental attitudes.

Based on this study, the topics most critical to Masco’s sustainability approaches, as viewed by the Company, its employees and its stakeholders are:

•innovative, environmentally responsible products

•customer relationship management

•energy usage

•energy-efficient operations

As a result, this report pays special attention to these key topics.

Also, after review of our recent peer group ranking from the Carbon Disclosure Project (CDP), we included partial reporting of Scope 3 emissions in our 2010 CDP report.



economicManageMent approach

Masco is one of the world’s leading manufacturers of brand-name prod-ucts and a leading provider of installation services for the home improve-ment and new home construction markets. Our business is linked to the economic context in which we do business. Consumer price conscious-ness, competition and the economic climate may impact our business performance.

Our corporate strategy includes expanding new product development with a focus on tech-nologies that enhance the customer experience.

Masco has set the following economic-related enterprise-wide sustainability goal:

1. By 2015, have at least $2 billion of our annual revenue result from sales of green prod-ucts and services, which are those that meet or exceed third party performance criteria such as EPA ENERGY STAR® or WaterSense® standards.

We sell a wide range of products and provide services that offer environmental benefits, such as helping conserve energy, water or other natural resources – from low-flow kitchen and bath fixtures to installing insulation. Our goal is to have $2 billion of our annual revenue result from a subset of these products and services, those that meet or exceed third party performance criteria. Examples include faucets that meet or exceed the EPA’s WaterSense requirements for water conservation, paints that meet external standards for low volatile organic compounds, and windows that meet the EPA’s ENERGY STAR requirements. In addition, each business unit periodically reviews definitions since external standards change from time to time. At this time, our business units have reported $1.1 billion in annual green product and services sales toward our goal, which are included in our reported revenue numbers. Our performance is exceeding our goal due to a variety of efforts made by our business units to deliver sustainable solutions. We will report our progress in each of our subsequent reports.

Additional information on our economic approach, policies, goals and performance can be found in our Annual Report (http://investors.masco.com/annuals.cfm).

eC1 Economic approach.

Table B provides an overview of Masco’s major financial indicators for the past three years. Financial information is reported in U.S. dollars. Additional financial information is available in our 2009 Annual Report (http://investors.masco.com/annuals.cfm). For the purposes of this report, our 2009 Annual Report is deemed to include the information contained in our current Form 10-K report dated February 16, 2010.

peformanceindicators


Table b

oUR MAJoR FinAnCiAl inDiCAtoRS

(in millions USD − except for dividends declared and paid. Amounts exclude discontinued

operations.)

Direct Economic Value Generated

2007 2008 2009

Revenues $ 11,413 $ 9,484 $ 7,792

Economic Value Distributed Operating Costs Cost of Sales $ 8,280 $ 7,125 $ 5,774 Employee Wages and Benefits No Disclosure*

Payments to Providers of Capital Share Repurchases $ 857 $ 160 $ 11 Dividend Payments $ 347 $ 336 $ 166 Dividends Declared (per share) $ 0.92 $ 0.93 $ 0.30 Cash Dividends Paid (per share) $ 0.91 $ 0.925 $ 0.46 Retirement of Notes $ 1,425 $ 100 – Payment of Debt, Net $ 52 $ 33 $ 11 Payments to Government Income Taxes Paid $ 363 $ 117 $ 25

Economic Value Economic Value Generated $ 11,462 $ 9,485 $ 7,795 Economic Value Distributed $ 11,324 $ 7,891 $ 5,987 Economic Value Retained $ 138 $ 1,614 $ 1,108

* Information on wages and benefits is not available on a consolidated basis. operating companies manage wages and benefits at the local level.

For 2008 and 2009, Masco’s combined charitable contributions exceeded $16 million. Organizations supported by Masco’s Foundation in the past two years include: Habitat for Humanity International, HomeAid, Arab American National Museum, Museum of African-American History, the Holocaust Memorial Center, the Detroit Institute of Arts, Jewish En-semble Theatre, Detroit Public Television, the National Building Museum, University Musical Society, the Eiteljorg Museum of American Indians, the Heat & Warmth Fund, the Make It Right Foundation in New Orleans, a number of symphonies and zoological societies, art and science centers, youth development agencies and civic organizations, energy-efficiency and green building initiatives, and a variety of food pantries, homeless shelters and rescue mis-sions across the United States.


•In 2009, Masco Corporation Foundation offered its business units grants in support of regional charitable organizations devoted to addressing hunger and homelessness. In response, the Foundation supported 37 organizations, including food banks and pantries, shelters and United Way agencies with individual grants totaling $325,000. For example, Milgard Windows & Doors sponsored an $8,000 grant to Helping Hand House, which works to end family homelessness in Tacoma, Washington. Behr sponsored a $5,000 donation to the Roanoke Food Pantry in Texas, where many Behr employees volunteer. Watkins Manufacturing sponsored a grant of $15,000 to help curb hunger and homeless-ness in Vista, California.

•Piquette Square, a housing project in Detroit, Michigan for homeless veterans, provides a dignified place to live, access to support services for reintegration into the community, job training, counseling and skill sets to develop healthier, independent lives in a permanent housing environment. This 100,000-square-foot complex has a number of partners, includ-ing Masco Corporation. In addition to providing our products at discounted prices, Masco donated its Verve™ lighting technology for each of the 150 apartments within the complex.

•As a first step in responding quickly to the 2010 Haiti earthquake relief effort, the Founda-tion made a significant contribution to the American Red Cross International Response Fund to assist with food, water, shelter, medical supplies and general relief operations in Haiti. Our Foundation also made a major donation to Habitat for Humanity International, which expects to help 50,000 families in Haiti over the next five years, including the im-mediate distribution of 10,000 emergency shelter kits, debris recycling and removal, house repairs, transitional shelter, new construction and development of on-the-job training skills in house construction. In addition, the Foundation made a substantial grant to the Haiti Nursing Foundation to support its Nursing School in Leogane, Haiti, and to address future medical care solutions. As of March 2010, our employees had also donated more than $92,000 to the Haiti relief effort through more than 460 individual employee contribu-tions and additional collective gifts from our business units. Masco has matched those donations.

•Partnerships among Masco, Masco Corporation’s Foundation and Habitat for Humanity – internationally, nationally, regionally and locally – continue to deepen, strengthen and grow. Masco continues to support Habitat for Humanity by:

– assisting the U.S. Gulf Coast with recovery from the devastating hurricanes in 2005

– providing funding for the Rosalynn and Jimmy Carter Work Projects in South Africa, Mexico, Canada, Michigan, Los Angeles and, most recently, along America’s Gulf Coast and throughout the Mekong Region

– directing Habitat funds to Armenia and Northern Ireland through the U.S.-based Habitat International

– partnering on national training initiatives using Masco’s Environments For Living program model, helping to make Habitat’s affordable housing energy efficient


– sponsoring a “green training track” at Habitat-Michigan’s 2009 Annual Training Confer-ence and providing scholarship support so that construction managers could attend and learn about an array of leading building and retrofit techniques presented by Ad-vanced Energy Corporation, a nonprofit training consultant

– building two Habitat Women’s Build homes in Detroit to Environments For Living stan-dards with help from employee volunteers from Masco’s corporate office.

In addition, we are proud of the employees of Masco and its business units worldwide who reach out to their communities. Examples include:

– Techniglass’ support of the Samaritans’ “Operation Christmas Child” 2009 appeal through donation of Christmas packages for its U.K.-wide initiative for disadvantaged youth

– Watkins Manufacturing’s support of San Diego’s Community Resource holiday basket campaign to benefit more than 3,000 children of low-income households

– Hueppe Turkey’s contribution of 52 shower enclosures for facilities at the Foundation for Children with Leukemia’s Children’s Village, a campus that includes a health center, rec-reational facilities, a guest house, family dwellings and production workshops

– Masco Asia’s support of students at the Hebu Elementary School in Jiangxi province, one of the most underdeveloped areas in China, with computer equipment, school bags, books, toys, clothes and inspirational messages on the value of making the most of their education. The Masco Asia team also has been involved in earthquake relief, blood drives and orphan charity support.

eC2 Financial implications, risks and opportunities of climate change.

We consider our Company to be moderately exposed to regulatory and other risks relating to climate change. We expect greenhouse gas emissions to become increasingly regulated, which may increase costs of doing business. Although it is unclear what, if any, legislation may be passed by the U.S. Congress, based on the EPA’s plans to institute a mandatory na-tional greenhouse gas registry and activities by various state governments, we anticipate our U.S. locations to become subject to regulation in the near future. (In Europe, our operations are covered by country-specific regulations relating to greenhouse gases, such as the U.K.’s Climate Change Levy.) We also expect that climate change legislation may increase the cost of doing business with our suppliers and increase our transportation costs. To manage these regulatory risks, we have continued to explore ways to reduce our carbon emissions, as described in indicators EN5 and EN18 of this report.

Other risks posed by climate change represent moderate commercial risks to our busi-nesses. Many of our product raw materials are obtained from renewable resources (cabinets − wood) or recycled materials (plumbing – brass; windows – vinyl, glass; insulation – paper). Resource scarcity resulting from climate change and corresponding price increases could potentially affect our businesses.

Consumers and builders are becoming increasingly environmentally conscious and are demanding the environmentally friendly products and services we offer. Therefore, Masco


considers that changes in consumer demand may present significant business opportuni-ties, as well as some risks. Builders and consumers may seek more environmentally friendly products and services to reduce the impact of climate change due to regulatory require-ments. As a leading provider of environmentally friendly products (windows, faucets) and services (Environments For Living program, insulation), Masco anticipates opportunities from such regulatory requirements. However, these opportunities may be offset by potential costs (taxes, capital expenditures) incurred to comply with climate change regulatory requirements. As consumer demand for energy-efficient products (e.g. plumbing, paints, windows, doors and insulation) increases, we will continue to respond with environmentally friendly products and services. Therefore, we continue to believe that climate change will bring commercial opportunities.

For additional discussion of our risks and opportunities relating to climate change, please see our CDP response at www.cdproject.net.

eC3 Coverage of the organization’s defined-benefit plan.

A majority of salaried employees participate in non-contributory profit sharing retirement plans to which payments are determined annually by the Organization and Compensation Commit-tee of the Board of Directors. Masco also sponsors qualified defined-benefit plans (frozen as of January 1, 2010) and most salaried employees in the United States participate in defined-contribution retirement plans. In addition, there are unfunded, non-qualified defined-benefit pension plans covering certain employees.

In March 2009, based on management’s recommendation, the Board of Directors approved a plan to freeze all future benefit accruals under all of our U.S.-qualified and non-qualified defined-benefit pension plans (effective 1/1/10). Additional information is available in Masco’s 2009 Form 10-K.

eC4 Financial assistance from government.

Masco Corporation and its subsidiaries benefit from certain statutory federal and state tax credits that are, by their nature, available to all corporations, partnerships, limited liability companies (LLCs), individuals or any other tax reporting organization. The tax credits re-ceived by Masco Corporation are not material in relation to the Company’s taxes paid.

Masco Corporation receives statutory financial incentives from state and local governments to encourage investment in the respective state and local jurisdictions. Although the dollar amount of the financial incentive is negotiable, the financial incentives, by statute, are avail-able to most corporations, partnerships, limited liability companies (LLCs), or any other tax reporting organization. The amount of any financial incentive received by Masco Corporation and its subsidiaries in any one year is not material.

The federal, state or local governments do not participate in Masco Corporation’s sharehold-er structure.


eC6 Spending on locally-based suppliers.

Where it makes business sense, Masco business units maintain just-in-time supply agree-ments with local vendors for materials and/or packaging used in support of our products. Information about the proportion of spending on local suppliers is not available on a consoli-dated basis.

eC7 Procedures for local hiring.

The common practice of Masco and its business units has been to hire local nationals at all organizational levels, from hourly workers to senior management. Senior management is defined as all corporate officers, business unit chief executives and their direct reports. We estimate more than 90 percent of our senior management is hired as local nationals. We define a local national as a person who legally resides in the same geographic market as the operation.

eC8 Infrastructure investments and services for public benefit.

We do not materially invest in infrastructure projects. Cash and in-kind donations are typically directed to local charities rather than public services. In certain circumstances, Masco pays employees their regular pay to provide pro bono community service. A formal needs assess-ment has not been conducted.


environmentalManageMenT apprOach

At Masco, we are committed to conducting business in a manner that protects the environ-ment. Our companies are sharing best practices among our own teams to build and maintain momentum toward making our products and operations increasingly sustainable.

Within our Company, the Director of Health, Safety and Environmental assists in maintaining our environmental management systems (EMSs) which are administered at the operational level under the guidance of this department. Masco encourages each operating company to engage third-party auditors to certify its EMS to the international ISO 14001 standard. At the end of 2009, 47 facilities had an ISO 14001 certified EMS.

At the request of corporate counsel, an environmental professional at Masco and external consultants regularly conduct compliance audits at our facilities in North America. For facili-ties in Europe and China, environmental compliance audits are conducted by external con-sultants on a regular basis. From the audit results, we generate and communicate areas of improvement, including recommended corrective action plans, and monitor each facility’s progress toward completion.

From 2007 through 2009, our total waste generated, emissions of nitrogen oxide, sulfur diox-ide, and volatile organic compounds to the air were reduced both on an absulute basis and when normalized to net sales. Our CO

2 emissions and water use were both reduced on an

absolute basis. Our focus on reduce, reuse, and recycle initiatives, using raw materials more efficiently and investment in new processes and equipment have all contributed to these reductions. We anticipate that these initiatives and our focus on lean practices will continue to result in further reductions in waste and emissions to the environment.

Our Environmental Policy is available online at

www.masco.com/corporate_information/citizenship/environmental_policy/index.html.

We have set enterprise-wide environmental goals as follows:

1. By 2015, reduce the CO2 intensity of our facilities by 10 percent

We define intensity as metric tons of CO

2 per unit of net sales in U.S. dollars. The scope

includes electricity, natural gas and heating fuel (oil) consumption, as well as fuel use (gasoline, diesel and propane). Standard conversion factors are used to compute CO

2

emissions from energy use. Through the end of 2009, CO2 intensity has remained flat

with 2007 baseline levels. Our performance is behind our goal primarily due to our net sales being reduced.


2. By 2015, reduce, by four million metric tons, CO2 emissions during the use phase from

new homes built to Environments For Living standards and from existing homes retrofitted with energy efficiency improvements through our WellHome program. To date, more than 130,000 homes have been built to the Environments For Living stan-dard which, according to our calculations, translates into a savings of approximately 1.7 million metric tons of CO

2.

3. By 2015, engage our employees in educational programs and other corporate communi-cations about living and working in a more sustainable manner.

4. By 2015, reduce total waste (hazardous waste, non-hazardous waste and recycled ma-terial) intensity by 20 percent. Masco defines total waste as the sum of hazardous, non-hazardous and recycled materi-als, and normalizes its calculations using net sales in millions of U.S. dollars. Total waste is reported in metric tons. Through the end of 2009, total waste was reduced from 2007 levels by 42 percent, which equates to 127,713 total metric tons. Through the end of 2009, our waste intensity has decreased by 15 percent. Our performance is ahead of our goal primarily due to using raw materials more efficiently and establishing reduction targets as part of our ISO 14001 programs.

en2 Recycled input materials used.

Recycled materials play an important role in several of our manufacturing processes. We strive to reuse materials or use recycled or recovered materials in our processes where possible, allowing us to consume fewer raw materials and natural resources. In some cases, our focus on lean manufacturing has resulted in a reduction of materials being available for recycle. Table C below illustrates the percent of recycled inputs within Masco’s portfolio of materials.


Table c

ReCyCleD inpUt MAteRiAlS

mateRIal SeGment 2007 2008 2009

Wood Cabinets and Related Products 41% 50% 47%

Non-Ferrous Metal Plumbing Products 41% 56% 48%

Plastics and Vinyl Plumbing Products 21% 19% 19%

Other Specialty Products (windows) 21% 20% 26%

Glass Other Specialty Products (windows) 15% 21% 15%

Ferrous Metal Plumbing Products 20% 20% 20%

Paper Installation and Other Services 100% 100% 100%

The following are examples of products and packaging that use recycled inputs:

•Tvilum-Scanbirk ready-to-assemble furniture uses only particleboard that contains a mini-mum of 25 percent recycled wood. Cardboard packaging for Tvilum-Scanbirk’s furniture operations is made of 98 percent recycled materials.

•Service Partners distributes residential fiberglass insulation and contractor accessories. In 2009, Service Partners recycled approximately 36 million kilograms of paper products and turned it into energy-saving insulation products. This prevented approximately 91,000 cubic meters of material from entering landfills.

•Masco Cabinetry’s Ohio operations have been certified as a downstream licensed facility of the Composite Panel Association Environmentally Preferable Product (EPP) downstream program. This program requires participants to procure at least 95 percent EPP certified particleboard and use MDF that contains 100 percent recovered or recycled wood fibers.

•At Mirolin, Masco’s Canadian shower and tub maker, all corrugated materials used in pack-aging are made from 100 percent recycled materials.

en3 Direct energy consumption.

Masco’s main sources of energy are the electricity and natural gas supply networks; data for these indirect sources of energy use are included in indicator EN4. Our direct sources include gasoline and diesel in fleet vehicles and generators, propane gas for forklift trucks and, occasionally, for space heating. Data for our direct energy use, by source, is included in Table D that follows. Masco is committed to maximizing energy efficiency.


Table d

All figures are in gigajoules (GJ)

2007 2008 2009

Natural Gas 3,129,094 3,020,223 2,062,072

Diesel 1,139,843 991,621 717,300

Gasoline 866,452 654,117 453,802

Propane 98,144 82,763 77,883

Jet Fuel 74,569 59,070 49,023

Heating Oil 18,971 17,527 12,984

totals 5,327,073 4,825,321 3,373,064

en4 Indirect energy consumption.

Data showing Masco’s indirect energy use is included in Table E below.

Table e

All figures are in gigajoules (GJ)

2007 2008 2009

Electricity 2,964,495 2,649,402 2,211,213

en5 Energy saved due to conservation and efficiency improvements.

Masco uses Lean concepts (Kaizen and Six Sigma® principles) to achieve energy savings and emissions reductions. In 2008, Masco started the EcoValuation program, an initia-tive that looks at facilities’ operational energy, water consumption and waste generation. Throughout 2008 and 2009, the process was introduced at Masco’s North American busi-ness units and several of our European sites. Through the end of 2009, electricity consump-tion was reduced by 39,181,416 kWh (141,053 GJ) and natural gas consumption was re-duced by 140,797 MMBTUs (148,541 GJ). CO

2 emissions were reduced by 30,000 metric

tons.

Masco has saved energy during the reporting period through a wide variety of conservation and efficiency improvement projects. For example:

•Moores reduced electricity consumption from 11,396,261 kWh (41,027 GJ) in 2004 to 8,131,429 kWh (29,273 GJ) in 2008, a decrease of 28 percent. They developed an en-ergy strategy in 2008 with a goal of minimizing GHG emissions by reducing consumption of externally sourced energy across all areas of the business, where cost effective, by at least 10 percent by 2012. Moores uses an automatic monitoring and targeting system to record electrical usage and track production output to highlight inefficient machine use.

•Watkins Manufacturing conducted a series of Kaizen projects targeting efficiencies in compressed air, HVAC, water and motors, cogeneration and solar lighting, with a goal of


attaining at least 15 percent electricity savings. Improvements identified and implemented in 2008 and 2009 will save 632,990 kWh (2,279 GJ) per year and 120 metric tons of CO

2.

Additional improvements that should result in savings of 1,499,571 kWh (5,398 GJ) and 284 metric tons of CO

2 have been identified and are in the process of being implemented.

•In 2008, Watkins Manufacturing was recognized by Flex Your Power, California’s statewide energy-efficiency campaign, as a leader in energy efficiency. The company produces all of its own power with two Waukesha natural gas-fired generators and has achieved an overall reduction of 5.3 million kWh (19,080 GJ) since installation in 2001. High-reflection roofing, upgrades to Watkins’ data center and a new HVAC system brings an estimated annual saving of 198,570 kWh (715 GJ) and a CO

2 emission reduction of 147 metric tons. Water

system level controls also were upgraded and adjusted, resulting in an estimated savings of 1,244,000 U.S. gallons per year and more than 15,000 kWh (54 GJ).

•In 2009, Masco’s corporate office implemented a server virtualization project. This concept allows many servers housing independent operating systems to be replaced by a physi-cal machine with multiple independent operating system environments. These virtualization efforts have saved capital expenditures, but more importantly have contributed toward a 25 percent power reduction.

en6 Initiatives to provide energy-efficient products and services.

We have invested millions of dollars in new product development, creating innovative offer-ings that customers want and that also meet our sustainability goals. Among Masco’s prod-ucts and services that reduce energy use are energy-efficient Milgard® windows and patio doors, low-flow faucets and showerheads (that reduce the energy needed to heat hot water), and residential insulation and weatherization solutions in the new construction and retrofit industries. For example, Milgard Windows & Doors offers an extensive range of ENERGY STAR compliant windows, and in 2009 more than 60 percent of its window sales met the program’s standards. Other examples include:

•Milgard 3D MAX® windows meet ENERGY STAR qualifications and are almost 50 percent more efficient than the ENERGY STAR program requires. Contributing components in a 3D MAX package could include innovative technologies such as SunCoat® glass, SunCoat-MAX® Low-E glass, argon gas and EdgeGard™, and EdgeGardMAX™ spacer technology.

•Masco’s U.K. Window Group also has introduced the Duragreen system. Duragreen win-dows can reduce home energy spend by 20 percent and condensation by 80 percent. The Duragreen system also can save up to 750 kilograms of CO

2 per dwelling, per year.

The Duragreen system is rated “A” by the British Fenestration Rating Council.

•VERVE Living Systems is a revolutionary lighting control system that uses state-of-the-art energy-harvesting technologies to offer self-powered and energy-efficient lighting control. This whole-house system allows homeowners to adjust the lighting throughout their homes with the click of a switch, while reducing construction costs by reducing the need for wiring between light fixtures and switches. The VERVE system, including dimming, occupancy


sensing and outlet control, offers the potential for significant energy savings. Because the system supports switched outlets, it’s easier to turn off energy-draining equipment like tele-visions and stereos.

•Hansgrohe’s Pontos® AquaCycle™ Plus – a grey water recycling system – combines sustainable handling of water as a resource with saving energy and reducing CO

2 emis-

sions. A considerable amount of heat, in the form of warm wastewater from showers and bathtubs, disappears down the drain each day in the average household, unutilized. The Pontos system collects the mildly polluted grey water in tanks, usually in a building’s base-ment. Then, the energy of the still-warm water is used to warm utilizable water, easing the strain on water heaters. By lowering the heating energy requirements of households, the Pontos technology contributes to the ecological and economical sustainable utilization of water as a resource. The pilot system, which has been in operation since November 2008 in student housing in Freiburg, Germany, treats and warms shower and bath water from a total of 30 bathrooms for additional use. Initial measurements indicate potential savings of approximately 20 percent of overall energy requirements per day for the warming of utiliz-able water.

•Masco Home Services’ Environments For Living program assists builders in constructing homes that are more energy efficient, more comfortable and more durable than conven-tional code-built homes. Software simulations developed by a respected third party indi-cate that a program-built home can produce CO

2 savings in the range of 2.7 to 9.0 metric

tons per year. There are over 130,000 homes built to the Environments For Living standard in the United States today.

•Masco Home Services (MHS) recently launched WellHomeSM (www.WellHome.com), a new service offering assessments and comfort and energy efficiency improvement ser-vices for existing homes. The WellHome service is available in a number of cities across the United States. Under the WellHome service, the whole house is treated as a system, which can further be divided into an integrated structure of systems. Their process includes a comprehensive whole-house energy assessment that identifies, quantifies and prioritizes opportunities for energy-performance improvement. Whether it means adding more insula-tion, sealing leaks, troubleshooting HVAC ducts or evaluating heating and cooling systems. This program helps homeowners make informed decisions to improve their home’s perfor-mance. MHS may then complete the home projects needed to improve energy and com-fort performance and backs it up with a whole home energy savings limited guarantee.

en8 Water withdrawal by source.

Masco sources water primarily from municipal water supplies. Withdrawal of water from other sources (surface water, ground water, rainwater and wastewater) is insignificant and not ma-terial. Our water usage decreased by 27.6 percent between 2007 and 2009.

•Delta Faucet Company was able to substantially reduce water used from 2008 to 2009. Water consumption dropped from 102,000 U.S. gallons in 2008 to 69,000 U.S. gallons in


2009. On a per faucet produced basis, water use declined from 19 U.S. gallons in 2008 to 14 U.S. gallons in 2009. These reductions were achieved through the implementation of projects identified during EcoValuation events and other process improvements includ-ing: eliminating excess boiler capacity, utilizing valve controls and automatic shut-off de-vices, repairing leaking tanks, re-use of rinse water and wastewater in tanks and scrubber systems, eliminating wastewater processes due to improvements in finishing and finishing chemistry, optimizing tank maintenance and change-out through the use of chemistry data from each tank, optimizing water chiller systems used in plastic injection-molding machines and shutting off systems when not in use.

•The BrassCraft facility in Lancaster, Texas, installed timers on water lines that go to plating tanks to eliminate continuous flow of water into the tanks. A timer was also installed on the chiller system to ensure that the system only uses water when the plating lines are operat-ing. They have also reduced the amount of water used for landscape irrigation.

en9 Water sources significantly affected by withdrawal of water.

See EN8.

en11 Land adjacent to protected areas.

Masco is not aware of any operational sites that are owned, leased, managed in, located in, adjacent to or that contain protected areas and areas of high biodiversity value outside protected areas.

en13 Habitats protected or restored.

Hansgrohe AG, whose headquarters is located on the banks of the Kinzig River, is working to help return salmon to their natural habitat. Due to their reliance on a high-quality living en-vironment, salmon are considered an indicator of the prevailing water quality. The company assisted in raising funds for a project to breed and re-establish the migratory fish species to the local waters.

0

100

200

300

400

500

600

WATER USEIn Millions of U.S. Gallons

2007 2008 2009

531 508

384


Masco Cabinetry’s Virginia manufacturing facility is participating in an Adopt-a-Stream pro-gram sponsored by the Virginia Department of Conservation and Recreation. Employees at its Mt. Jackson plant volunteered to clean one mile of the bank of the Shenandoah River, which lies only about a mile from the facility.

en16 Direct and indirect greenhouse gas emissions.

Masco’s overall CO2 emissions were reduced by 31 percent between 2007 and 2009. CO

2

intensity remained flat with 2007 baseline levels during this time period. Our performance is behind our CO

2 intensity reduction goal (10 percent by 2015, with a 2007 baseline), primarily

due to our net sales being reduced.

Total direct CO2 emissions for 2009 were 197,975 metric tons. Total indirect CO

2 emissions

were 355,275 metric tons. To better understand our carbon footprint and energy use, since our last Corporate Sustainability Report, Masco participated in the sixth, seventh and eighth Carbon Disclosure Projects (CDP). The current report is available on the Carbon Disclosure Project Web site (www.cdproject.net).

en17 Other relevant indirect greenhouse gas emissions.

In 2009, Masco had CO2 emissions from business travel of 5,040 metric tons. This repre-

sents approximately 70 percent of Masco’s total airline miles traveled.

en18 Initiatives to reduce greenhouse gas emissions.

In 2008, Masco developed the EcoValuation program in partnership with General Electric. This initiative looks at our facilities’ operational energy, water consumption and waste gen-eration. The approach applies tools that are based on lean concepts and targets wasted resources, unnecessary consumption and poor waste management. Throughout 2008 and 2009, the process was introduced at Masco’s North American business units and several of our European sites with impressive results. Approximately 1,000 employees and vendors have participated in the program, and as of December 2009 annual enterprise-wide savings of $6 million have been achieved. To date, the program has reduced Masco’s CO

2 emis-

sions by more than 30,000 metric tons.

0

200,000

400,000

600,000

800,000

1,000,000

CO2 EMISSIONSIn Metric Tons

2007 2008 2009

802,731 716,997

553,250


We have undertaken a wide variety of additional initiatives to reduce greenhouse gas emis-sions. For example:

•At Masco Bath, 29 Kaizen projects have been completed or are underway, including fixing compressed air leaks, installing programmable thermostats, minimizing process heating, disconnecting unnecessary lighting and insulating drafty wall openings. Masco Bath es-timates these projects will yield a reduction in CO

2 emissions of more than 2,900 metric

tons annually.

•In 2009, 46 Kaizen project improvements were implemented at Delta Faucet in Jackson, Tennessee. Savings attained came from correcting compressed air leaks, shutting off mo-tors, lights and other systems not being used at night and on weekends, shutting off water systems when not in use and recirculating some used water, replacing some metal halide lights with new fluorescent fixtures, and making HVAC systems more efficient by running on set schedules.

•In 2009, Watkins Manufacturing transported 185 shipments by rail instead of truck. With an average weight of 5,500 kilograms and an average distance of 2,100 miles, changing to intermodal transportation allowed them to eliminate 358 metric tons of CO

2 emissions.

en19 Emissions of ozone-depleting substances.

Masco does not have significant (if any) emissions of ozone-depleting substances (CFCs, HCFCs, halons and methyl bromide).

en20 NO, SO and other significant air emissions.

The combustion of natural gas from process furnaces, drying ovens and regenerative ther-mal oxidizers at some Masco facilities results in the emission of sulfur dioxide (SO

2 ) and ni-

trogen oxide (NOx). Emissions of SO2 decreased 60 percent between 2007 and 2009, while

NOx emissions decreased almost 44 percent over the same time period.

0

5

10

15

20

SULFUR DIOXIDE EMISSIONSIn Metric Tons

2007 2008 2009

20

15

8


Several Masco facilities are permitted by local regulatory agencies to release regulated con-stituents into the atmosphere within limits established in operating permits and other appli-cable regulatory thresholds. Our facilities endeavor to minimize and reduce the amount and type of constituents released. In the United States, certain facilities are required to report to the EPA’s Toxics Release Inventory (TRI) the emission of certain compounds into the air. From 2007 to 2008, we decreased these emissions by 42 percent.

A decrease of 57 percent in VOC emissions was achieved from 2007 to 2009.

0

200

400

600

800

1,000

TRI RELEASES TO AIR IN UNITED STATES*In Metric Tons

2007

* TRI data is reported annually in July. 2009 data not available at this time.

2008

867

501

0

500

1,000

1,500

2,000

2,500

VOLATILE ORGANIC COMPOUND EMISSIONSIn Metric Tons

2007 2008 2009

2,196

1,540

941

0

50

100

150

200

250

300

NITROGEN OXIDE EMISSIONSIn Metric Tons

2007 2008 2009

251

156 141


en21 Water discharge by quality and destination.

Process water from Masco’s manufacturing locations is discharged to local, publicly-owned treatment works (POTWs). Masco ensures the water discharged from our manufacturing pro-cesses is within acceptable quality parameters. Our policies dictate that we meet or exceed all legal requirements. For example, water from our plating facilities is treated in onsite waste-water treatment plants. The water is then tested for various pollutants to ensure it meets local parameters before it is released to local POTWs. Masco facilities do not discharge untreated process water directly to any surface water (e.g. river, stream, lake).

Transfers of compounds in process waters to POTWs and transfers of compounds in storm waters to surface waters are reported to the EPA by facilities that must report releases to the Toxics Release Inventory. Transfers of TRI chemicals to waters decreased by 46 percent from reporting year 2007 to 2008.

en22 Weight of waste by type and disposal method.

Masco has been able to reduce the amount of waste generated by using raw materials more efficiently and increasing recycling. We continue to improve resource efficiency by investing in new processes and equipment that are more efficient, and by implementing measurement and analysis systems in order to more efficiently manage raw material use. Masco is deter-mined to reuse materials or to use recycled or recovered materials in our processes where

0

50

100

150

200

WASTE WATER DISCHARGEDIn Million Gallons

2007 2008 2009

158

133112

0.000.050.100.150.200.250.300.350.40

TRI TRANSFERS TO WATER IN UNITED STATES*In Metric Tons

2007 2008

0.26

0.14

* TRI data is reported annually in July. 2009 data not available at this time.


reasonably possible, allowing us to consume fewer raw materials and natural resources without affecting product quality.

Masco’s initiatives to reduce, reuse and recycle waste have resulted in a 42 percent reduc-tion (127,713 metric tons) in our total waste generated. Our waste intensity has decreased by 15 percent from 2007 baseline levels through the end of 2009.

Total waste consists of hazardous waste, non-hazardous waste and recycled waste. Haz-ardous waste is primarily disposed through fuels blending, incineration, landfill or recycling. Non-hazardous waste is primarily disposed through landfill. Some non-hazardous waste is also incinerated or sent to a wastewater treatment facility.

Total hazardous waste was reduced by 41 percent (2,675 metric tons) and non-hazardous waste reduced by 54 percent (52,373 metric tons). We increased the percentage of our total waste that is recycled from 66 percent to 72 percent between 2007 and 2009.

Our performance is ahead of our waste intensity reduction goal (20 percent by 2015, with a 2007 baseline) primarily due to using raw materials more efficiently and establishing reduction targets as part of our ISO 14001 programs.

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

TOTAL WASTEIn Metric Tons

2007 2008 2009

303,196

232,153

175,483

0

50,000

100,000

150,000

200,000

HAZARDOUS AND NON-HAZARDOUS WASTE AND RECYCLING

In Metric Tons

2007 2009

non-hazardous hazardous recycling

2008

6,489

97,164

6,495

62,796

199,543

162,862

3,814

44,791

126,878


Our waste reduction, recycling and reuse efforts have included the following:

•The Watkins Manufacturing Green Team has reduced landfill waste per spa produced by 33.9 percent since 2007.

•In 2008, Liberty Hardware recycled 190 metric tons of materials.

•At Tvilum-Scanbirk, all waste particleboard from its production operations is recycled or used for heating its facilities.

•At Moores, disposal of waste to landfills has decreased from 1,112 metric tons in 2003 to 439 metric tons in 2008 – a 61 percent improvement. The gains have been achieved through the installation of wood waste boilers, composting of MDF, aerosol can recovery, waste oil recovery, battery recycling, and the implementation of awareness campaigns and employee training.

•Beginning in 2008, the MascoMex invoicing process became paperless. The initiative will save three metric tons of paper per year.

•Delta and Brizo packaging includes biodegradable molded pulp trays for internal protec-tion of select faucet models. At Delta Faucet, the change has prevented the use of 94,000 kilograms of polystyrene and 538 cubic meters of polyethylene foam that would have been used in packaging. Brizo has eliminated 266 cubic meters of polyethylene foam which would have been used in packaging. The molded pulp trays are biodegradable, 100 per-cent fully recyclable and European Green Dot compliant.

•Watkins Manufacturing receives more than 85,000 requests for printed product brochures each year. In 2009, Watkins began distributing electronic copies of brochures whenever possible. They estimate the change will save more than 14 metric tons of paper a year, not to mention printing and mailing costs and environmental impacts.

•At Mirolin, Masco’s Canadian shower and tub maker, production process improvements have resulted in a significant reduction in waste, including the diversion of more than 90,000 kilograms of acrylic cut-offs from the landfill.

•Masco Onestep PS (public sector) in the United Kingdom collects all waste wood at one of their full-scope customer sites (Hanover Housing Association in Surrey). The waste wood is collected by the National Community Wood Recycling Project (NCWRP), a network of wood recycling projects across the United Kingdom that aims to keep wood scraps out of landfills. The wood is collected, graded and sorted at one of NCWRP’s depots and then recycled or mulched before selling to local power stations for fuel.

en23 Significant spills.

Masco has not had any significant spills during 2007–2009.

en25 Water bodies and habitats affected by water discharge/runoff.

Masco discharges process water from its manufacturing locations to local, publicly owned treatment works (POTWs). We are not aware of any water bodies that are significantly af-fected by our discharges.


en26 Mitigation of environmental impacts of products/services.

Throughout our companies and product lines, we are committed to sustainable product design, production, packaging and delivery. Our energy-efficient products are listed under Indicator EN6; the following are examples of other products that are water efficient and/or have other sustainability benefits.

•Masco has collaborated with the EPA as a WaterSense partner to encourage the efficient use of water resources and actively protect the future of our water supply. The EPA intro-duced WaterSense to raise awareness of the importance of water efficiency. The program currently specifies labeling of high-efficiency toilets and water-conserving bath faucets, which can provide 32 percent water savings, for residential use and that perform better than the industry standard. All products bearing the WaterSense label complete a third-par-ty certification process. Masco’s U.S. plumbing companies Alsons, BrassCraft, Brasstech, Delta Faucet and Hansgrohe U.S.A. are WaterSense partners. Collectively, Masco has more than 250 faucet product families certified as WaterSense compliant. In early 2010, new WaterSense criteria were introduced requiring that showerheads flow at a rate of two gallons per minute or less. More than 50 percent of Delta Faucet Company’s bath suites offer showerheads and handshowers that meet these new criteria.

•The average VOC content (g/l), across all Behr brand products has decreased by nearly 30 percent since 2006. Behr has made great strides in bringing high-performance, lower-VOC products to the market with the introduction of Premium Plus Ultra® exterior paint in 2006 and Premium Plus Ultra interior paint in spring 2009. Both performance paint lines have bases with VOC content less than 50 grams per liter (generally considered low VOC).

•Hansgrohe employs EcoAir technology to deliver shower water savings without sacrific-ing performance. The patented air injection technology enhances flow and volume even though the products use over 30 percent less water.

•Moores has introduced, under its Shades™ brand, a dual-flush system that dramatically reduces water use. With as much as 11,000 liters of water a year going to waste from each person flushing the toilet, this new cistern can reduce water use by up to 50 percent per year, without compromising performance, and meets proposed changes to the U.K.’s building regulations for water efficiency.

•Masco Canada’s commercial Delta DEMD 400 Series electronic wall mount faucets flow at an efficient 0.50 gpm (1.90 l/min), providing 77 percent water savings that can contribute to Leadership in Energy and Environmental Design (LEED) certification. An optional 1.0 gpm (3.8 l/min) aerator also contributes to LEED certification, providing 54 percent water savings.

•Bristan has gained accreditation for 35 products under the Bathroom Manufacturers As-sociation Water Efficient Product Labeling Scheme. These include basin mixers that feature eco-click technology, which automatically uses up to 32 percent less water than a stan-dard tap and 72 percent less water when the lever is positioned in the eco-click mode.

en 28 Non-compliance with environmental laws and regulations.

Masco has not had any significant fines and non-monetary sanctions during 2007-2009.




Labor Practices and decent WorkManageMenT apprOach

Masco, through its various operating companies, is committed to promoting and sustaining the health, safety, skills and potential of our workforce. Our goal is to develop an engaged and connected workforce, where the goals of management and employees are aligned, and workers can be more productive, flexible in the face of change and motivated to embrace and support Company initiatives. We are guided by values that include:

•working together as a team

•focusing on the customer experience

•pursuing excellence in all we do

•a dedication to the safety and well-being of all employees

•a commitment to ethical behavior

•supporting the communities in which we live and work

Within Masco, the Vice President of Human Resources assists the various business units in developing and maintaining sound human resources talent and practices. Each of our business units is free to establish employment policies that are suited to its business and local area and is encouraged to adopt local practices that serve the needs of the business. However, we have established minimum standards that we expect all companies to meet as employers. Masco’s corporate office provides consultative support and guidance with the adoption and implementation of human resource policies, with an emphasis on equal op-portunity, dispute resolution, and workplace violence and harassment prevention. Policies are communicated to employees through handbooks, postings and our intranet site.

At the request of corporate counsel and to help ensure corporate-wide accountability for safety, we regularly audit regulatory compliance and safety management systems in the United States. Masco’s Safety Management System (SMS) is aligned with internationally recognized guidelines such as Occupational Health and Safety Assessment Series (OHSAS) 18001 and the Occupational Safety and Health Administration Voluntary Protection Program (OSHA VPP). The SMS audit assesses key elements of the system, including manage-ment participation, establishing safety goals, employee participation, hazard analysis, hazard reporting, inspection, investigating incidents, health and safety training, emergency prepared-ness and contractor safety. Our operations in Europe and China also are audited for regula-tory compliance. From the audit results, we generate and communicate areas of suggested improvement, including recommended corrective action plans, and monitor each facility’s progress toward completion.

As part of our efforts to continually improve safety performance, we encourage our busi-ness units to obtain third-party certification for the OHSAS 18001 management system. In the United States, currently 16 facilities are OHSAS 18001 certified, including three facilities of Hansgrohe in Alpharetta, Georgia, and 13 facilities of Behr Process Corporation across


the United States. Behr Process Corporation is also preparing five additional facilities for certification in 2010. In Europe, Hansgrohe has certified three sites in Germany, and Bristan has certified its site in the United Kingdom. Moores Furniture Group is preparing for 18001 certification in 2010.

Masco maintains a comprehensive and standard measurement system requiring business units to set targets for maximum injury rates and to complete corrective actions when tar-gets are not met. With guidance from the corporate safety department, each business unit establishes annual targets for the incidence, lost day frequency and lost day severity rates. Performance against each target is tracked monthly.

In order to raise awareness and continue to improve performance, Masco conducts a Safety Excellence Award process. Awards are presented to recognize outstanding safety perfor-mance at business units and facilities. Four metrics are evaluated in the award process: incidence rate, lost day frequency rate, lost day severity rate and excellence in the safety management system. The program also recognizes those business units and facilities dem-onstrating significant improvement in the safety metrics over the previous year.

Training and development opportunities for employees are extensive and, on a corporate-wide basis, we complete a review to assess key employee potential and performance annu-ally. In 2008, Masco established a Corporate Talent Management department that is charged with the development and management of employees across the enterprise. This talent man-agement initiative is complemented by a wide variety of employee assessment and develop-ment tools in use by our business units.

The majority of Masco’s companies offer tuition assistance for full-time employees that sup-ports continuing education and certification. Our corporate learning group, Masco University, provides a variety of educational support programs, from online training courses available to all employees to year-long focused leadership training.

Masco advocates fair and consistent employment practices and holds our companies ac-countable to deliver results that not only benefit our customers and shareholders, but our employees as well. To that end, we always seek to recruit, retain and advance talented and qualified employees. We are committed to ensuring a diverse and representative workforce without discrimination based upon race, color, age, disability, religion, gender, national origin or sexual orientation. Masco adheres to all equal employment opportunity requirements in the countries in which we operate.

Each Masco entity makes compensation decisions in accordance with applicable laws and competitive practices, taking into account local, regional or national compensation data as necessary. Masco does not centrally maintain all compensation-related information. Howev-er, based on auditing, we believe that all of our domestic companies are in compliance with U.S. minimum wage requirements.


lA1 Workforce by employment type and region.

At the end of 2009, Masco employed 35,400 employees in 30 countries. Of these employ-ees 34,060 were full-time and approximately 74 percent worked in the United States. The distribution of our employees by country is shown in Table F.

Table f

lA2 Employee turnover by age group, gender, and region.

Recent economic conditions have required many Masco companies to take difficult mea-sures with respect to its labor force to ensure long-term viability. Since late 2006, the Com-pany has reduced its cost structure, including closing 19 manufacturing facilities, reducing headcount by roughly 27,000 (approximately 50 percent of the North American workforce) and reducing installation branches by more than 90 locations.

lA5 Minimum notice periods regarding operational changes.

When actions such as layoffs and facility closings are required, our priority remains to en-sure that all employees are treated fairly and with respect. Masco complies with, and often exceeds, legal requirements relative to providing notice to employees of layoffs, plant reloca-tions, closings or other major restructuring initiatives.

lA6 Management–worker health and safety committees.

Approximately 87 percent of our employees worldwide are covered by a joint safety commit-tee with membership that includes both management and production employees.

Full-tiMe eMployees By country

Argentina 4 Japan 15

Australia 2 Luxembourg 20

Austria 26 Mexico 184

Belgium 42 Netherlands 101

Canada 885 Poland 53

China 457 Russia 28

Croatia 3 Singapore 27

Cyprus 11 South Africa 50

Czech Republic 38 Spain 93

Denmark 1,304 Sweden 6

France 142 Switzerland 33

Germany 2,583 Taiwan 62

Hungary 22 Turkey 130

India 57 United Kingdom 2,375

Italy 34 United States 25,273


lA7 Rates of injury.

In support of our safety efforts, Masco collects and analyzes injury data centrally. We have historically tracked and reported lost day frequency rates (LDFR) and lost day severity rates (LDSR). LDFR includes all cases that result in one or more days away from work beyond the day of injury or onset of illness. LDSR includes all calendar days away from work. We also track and report incidence rates (IR) for North American facilities. IR includes all cases that result in death, loss of consciousness, days away from work, restriction of work or motion and transfer to another job or medical treatment beyond first aid. Injuries to temporary em-ployees are included in each injury rate. The data for each injury rate includes occupational diseases. An occupational disease rate is not available as a separate metric. Our safety data are reported in the charts below.

It is with sincere regret that we report the fatality of two employees since our 2006 report. In each situation, the Company promptly investigated and responded appropriately.

Note: Industry average for manufacturing: 2007 u.S. bureau of Labor Statistics (bLS) for manufac-turing. Industry average for Installation and other Services: 2007 u.S. bLS for North American Indus-try Classification System (NAICS) 23831 (drywall and Insulation Contractors). Incidence rates are not tracked for european facilities since incidence rates are based on u.S. oShA regulations.

012345678

INCIDENCE RATE (per 100 employees)

Total Recordable Injuries per 200,000 Hours

Manufacturing Installation and Other Services

2007 2008 2009 Industry Average


Note: Industry average for manufacturing: 2007 u.S. bureau of Labor Statistics (bLS) for manufactur-ing. Industry average for Installation and other Services: 2007 u.S. bLS for North American Industry Classification System (NAICS) 23831 (drywall and Insulation Contractors). Industry average for lost day severity rate is not available.

Note: Industry average is not available for comparison with european facilities.

Our efforts to maintain a safe working environment for all of our employees is evident in our safety awards and milestones:

•Alsons achieved more than 450 days without an OSHA recordable injury and more than two years without a lost day injury.

•The BrassCraft plant in Brownstown, Michigan, achieved more than 750 days without an OSHA recordable injury and more than five years without a lost day injury.

•The Masco Cabinetry plant in Duncanville, Texas, was recertified as an OSHA VPP STAR site for 2009.

•The Bristan Groups Gummers facility in the United Kingdom achieved more than two years without a lost day injury.

2007 2008 2009 Industry Average

0.00.51.01.52.02.53.03.54.0

LOST DAY FREQUENCY RATE (per 100 employees)

Cases with one or more days away from work per 200,000 hours

Manufacturing EuropeInstallation andOther Services

0

20

40

60

80

100

120

LOST DAY SEVERITY RATE (per 100 employees)

Total Recordable Injuries per 200,000 Hours

Manufacturing Europe

2007 2008 2009

Installation andOther Services


•The Masco Cabinetry plant in Jackson, Ohio, achieved more than two years without an OSHA recordable injury and more than five years without a lost day injury.

•Hansgrohe AG, located in Alpharetta, Georgia, achieved more than two years without a lost day injury in its components and warehousing facilities.

•Hansgrohe’s Cleopatra facility in the Netherlands achieved more than three years without a lost day injury and their Alpirsbach facility in Germany achieved more than two years without a lost day injury.

•The Milgard Windows & Doors facility in Chandler, Arizona, achieved 529 calendar days without an OSHA recordable injury.

•Tvilum-Scanbirk has halved the rate of lost day accidents every year since 2006, and the severity of accidents has also been reduced significantly through the use of safety assess-ments, campaigns and workshops. Tvilum-Scanbirk has also been working to reduce work-related health problems through workplace assessments, job rotation and ergonomic training.

•MascoMex has implemented the Cero (Zero) Accidents Campaign to target continual improvement in employee health and safety at work and beyond. With this program, the Company reduced its accident rate by 80 percent from 2007 to 2009.

lA8 Education, training, counselling and prevention programs regarding serious diseases.

Masco has taken a proactive approach to public health planning by instituting guidance for emergency and pandemic response plans for all Masco locations. Elements of the plan in-clude voluntary immunization programs, housekeeping and sanitization measures, education communications, health guidance for employees and recommended attendance protocols that encourage ill employees to seek treatment and avoid the workplace.

lA9 Health and safety topics covered in formal agreements with trade unions.

Agreements with trade unions cover a wide variety of health and safety topics. Safety com-mittees, personal protective equipment and audit provisions are common in both union and non-union business units.

lA10 Training per year, per employee.

Masco believes that the professional development of our people is central to improving per-formance and meeting the challenges of our increasingly demanding markets and custom-ers. We are committed to the continuous growth and development of our employees through applied learning processes.

lA11 Skills management and lifelong learning programs.

The following are examples of Masco programs that facilitate skills management and education:

•The Masco Leadership Program in Operations Management, an applied learning program, is designed to engage and challenge our employees in building their leadership capabilities through innovative thinking and operational improvement. Our partnership with Michigan State University’s Eli Broad College of Business has produced a unique, global award-


winning program that combines a solid educational foundation with practical, hands-on applications. Since its inception, the program has graduated 269 participants from North America, Europe and China.

•The Masco Leadership Program – Innovation is an applied learning program designed to offer participants the opportunity to expand their knowledge, capabilities and experience by identifying business opportunities and proposing innovative solutions. These solutions may be products, service offerings or a completely new business model. Teams evaluate the concepts, not only on customer attractiveness, but also on the potential to provide sustain-able products and services. We then offer worthy projects a grant that provides financial support to bring the new offerings to market. Twenty participants have graduated and 20 are nearing the end of their program. These 40 individuals represent 27 business units, including the United States, five European operations and one from Mexico.

•Delta Faucet Company launched Delta University in 2008 to offer a blended approach to learning through classroom activities and online tools focused on professional leadership and career development.

•At MascoMex, employees and family members are encouraged to participate in programs that enhance their training and education. A grant program was established in 2003 and named after Juanita Martin Tovar, one of the company’s first employees. Juanita died of cervical cancer in 2002 and was a single mother with no formal education who struggled to ensure that her children would have access to better education. In 2008, the daughter of a sales manager from Guadalajara finished her college education after being awarded grants from the program each year since 2003.

In addition, it has been Masco’s practice to provide affected employees with a variety of support during business transitions. Masco companies associate with best-in-class out-placement firms to provide employees with career transition services. Services provided may include, but are not limited to, career counseling, training and administrative support.

lA13 Composition of governance bodies and employees according to diversity indicators.

Currently, Masco’s 11-member Board of Directors includes two women and one person of color, and the executive group at world headquarters comprises 18 officers and executives, of which three are women and one person of color. Gender and race data are not available on a consolidated basis for Masco operations worldwide.

lA14 Ratio of basic salary of men to women.

Masco’s corporate office provides consultative support and guidance with the adoption and implementation of human resource policies with emphasis on equal opportunity, dispute resolution, and workplace violence and harassment prevention. We are committed to ensur-ing a diverse and representative workforce without discrimination based upon race, color, age, disability, religion, gender, national origin or sexual orientation. Masco adheres to all equal employment opportunity requirements in the countries in which its companies operate.



human RightsManageMenT apprOach

Masco’s reputation for ethical business practices is an integral part of our corporate culture. A central element of our legal and ethical compliance program is our Code of Business Eth-ics. The Code, which applies globally to all employees, officers and members of the Board of Directors, focuses on areas of ethical risk, provides guidance on recognizing and dealing with ethical issues and helps foster Masco’s culture of honesty, accountability and transparency.

To reinforce our Code of Business Ethics, we have developed mechanisms to communicate requirements, confirm compliance and train employees on broader ethical behaviors and expectations. All executives and key employees are expected to certify their compliance with our Legal and Ethical Standards Compliance Program on an annual basis, and more than 40,000 individual training sessions have been completed online. The General Counsel’s of-fice reviews these certifications via a Web-based certification system.

Presentations also are made periodically on the program to various groups of Masco em-ployees. The Audit Committee of Masco’s Board of Directors is charged with overseeing Masco’s compliance programs in accordance with its charter. Masco’s General Counsel serves as our Chief Ethics Officer, and a member of the legal staff is responsible for the day-to-day operations of the program. Masco’s Vice President of Human Resources assists the various business units with human rights aspects within Masco.

Masco seeks to do 100 percent of our business with companies that honor the same values we uphold and instill in our products and actions day to day, including quality, value, integrity, honesty and ethics. We are opposed to doing business with any company that does not uphold these standards.

Our Supplier Business Practices (SBP) Policy formalizes our longstanding commitment to the ethical and responsible sourcing of goods and supplies for Masco’s family of compa-nies. This policy applies to all suppliers, regardless of whether they are a Masco company, an affiliate or a third party. It can be found at www.mascopurchasing.com. The SBP Policy pledges that Masco will avoid working with suppliers that do not respect our standards and those of our customers. The policy addresses compliance with laws, human rights, labor and employment, environmental and operational issues, including child labor, forced labor, wages and benefits, excessive working hours, corporal punishment, discrimination, safe and clean workplaces and the protection of our confidential and proprietary information.

In addition to auditing our supply base, Masco offers suppliers training on meeting our policy requirements. We have invested significant effort in working with and educating our suppli-ers to help them avoid violations of child and forced labor laws and meet requirements of our policies related to the freedom of association.


HR1 Investment agreements that include human rights clauses.

Masco’s purchasing “Terms and Conditions” require our suppliers to comply with all ap-plicable laws as a condition for doing business with Masco. This requirement in the “Terms and Conditions” is the starting point for assuring that our suppliers are in compliance with Masco’s overall code of conduct. Our Suppliers Business Practices program audits help to assure our suppliers comply with the policies referenced in our “Terms and Conditions.”

HR2 Human rights screening of suppliers and contractors.

We periodically assess our suppliers’ compliance with the SBP Policy through regular au-dits and a comprehensive scoring system, and we investigate all reported noncompliance and take appropriate action to help ensure these standards are observed and upheld. This program is implemented from Masco’s Shenzhen, China, office in conjunction with Masco auditors located in Taiwan and Vietnam. Third-party auditors also are used where necessary.

In September 2009, Masco conducted a two-day training workshop in Shenzhen with 100 representatives from 93 suppliers in attendance. The purpose of this training program was to familiarize our suppliers with Masco’s policy that all goods produced on our behalf are made in facilities that meet both Masco’s and our customers’ specific criteria for human rights, working conditions and protection of the environment. Utilizing a series of training exercises, our suppliers were guided through each element in the policy, best practices were dis-cussed, and specific examples were reviewed.

We will work closely with a supplier that may struggle to meet our policy elements, but we will not hesitate to cease business with those suppliers that do not comply with our policy standards. On several occasions, we have terminated business with suppliers that failed to rehabilitate their programs.

HR3 Human rights policies and procedures training for employees.

To reinforce our Code of Business Ethics, we have developed mechanisms to communicate requirements, confirm compliance and train employees on broader ethical behaviors and expectations. Periodic training is provided in person and through online courses.

All executives and key employees are expected to certify their compliance with our Legal and Ethical Standards Compliance Program on an annual basis, and more than 40,000 individual training sessions have been completed online. The General Counsel’s office reviews these certifications via a Web-based certification system.

More than 79,000 online ethics courses have also been taken by Masco business unit em-ployees since online training began.

In 2009, approximately 10,000 employees worldwide certified that they comply with Masco’s Legal and Ethical Compliance program and that they have reported any actual or suspected violations.


HR5 Incidents of freedom of association and collective bargaining.

Masco operations are located almost exclusively in North America and Europe. We respect workers’ rights to associate freely and we expect our suppliers to do the same. Masco re-spects workers’ rights to form and join organizations of their choice and to bargain collective-ly. We expect our suppliers to respect the right to free association and the right to organize and bargain collectively without lawful interference. Our Supplier Business Practices program helps to assure compliance with freedom of association and collective bargaining laws in both our operations and those of our suppliers.

We do not believe any of our operations are at a significant risk for non-compliance with laws or regulations concerning freedom of association or collective bargaining.

HR6 Incidents of child labor.

Masco operations are located almost exclusively in North America and Europe. Our opera-tions do not employ workers under the minimum age required by law. Masco will not tolerate products or services from suppliers or their subcontractors who use workers who are under the minimum age required by law. Our Supplier Business Practices program helps to assure compliance with child labor laws both in our own operations and at those of our suppliers. We do not believe any of our operations present a significant risk for incidents of child labor.

HR7 Incidents of forced or compulsory labor.

Masco operations will not use nor do we knowingly allow our supply chain to use forced labor including prison labor or personal freedom restrictions, compulsory overtime, the use of deposits and the retention of identification cards in the manufacturing and finishing of our products or services. Our Supplier Business Practices program helps to assure our compli-ance with laws preventing forced labor in both our operations and those of our suppliers. We do not believe that any of our operations present a significant risk of forced labor.

HR9 Incidents of violations involving rights of indigenous people.

Masco operations are located almost exclusively in North America and in Europe. We have no operations on tribal lands and have had no incidents of violating the rights of indigenous peoples.



SocietyManageMenT apprOach

Being a good corporate citizen and active member of the communities in which we operate is important at Masco. We actively promote the social, economic and cultural growth of the communities we serve, and are committed to creating strategic partnerships that support Masco’s corporate goals, objectives and mission.

In addition, Masco adheres to local laws and regulations where we do business and our companies work closely with a variety of government agencies and bodies on a range of business and community issues. Since our 2006 report, Masco and its business units con-tinue to be involved in U.S. public policy issues at the local, state and federal level, principally through committees and leadership positions in trade associations.

The Audit Committee of Masco’s Board of Directors is charged with overseeing Masco’s compliance programs in accordance with its charter. Masco’s General Counsel serves as our Chief Ethics Officer and is responsible for the day-to-day operations of the program. Masco’s Vice President of Corporate Affairs coordinates our involvement in U.S. public policy issues that affect multiple business units or the entire Company, and also serves as the lob-bying agent for Masco at the federal level.

The central element of our legal and compliance program is our Code of Business Ethics. The Code focuses on areas of ethical risk and provides guidance on recognizing and dealing with ethical issues throughout our organization.

Our Legal and Ethical Compliance policies provide information and guidance on specific areas where illegal or unethical activity may be most likely to occur in the workplace. Top-ics include antitrust, anticorruption, insider trading and conflicts of interest. These policies contain both external legal requirements and Masco’s own internal standards. Our Code of Business Ethics requires that Masco employees be familiar with and comply with the Legal and Ethical Compliance Policies that apply to their jobs. Consistent with provisions contained in the U.S. Sarbanes-Oxley Act of 2002, Masco’s Fraud Reporting and Investigation Policy aids the detection and prevention of fraud (including corruption) against Masco Corporation and its business units.

To reinforce our Code of Business Ethics, we have developed mechanisms to communicate requirements, confirm compliance and train employees on broader ethical behaviors and expectations. Presentations also are made periodically on the program to various groups of Masco employees.

Two new ethics training courses were launched in 2009: “Masco Ethics,” which provides an overview of our program and a refresher on key issues, and “Anti-Bribery,” an updated ver-sion of our existing “Foreign Corrupt Practices Act” course. The Masco Ethics course was distributed to all employees in the training program, and Anti-Bribery was delivered to Euro-


pean and Asian employees. The Audit Committee is provided with a quarterly report on the status of ethics training.

The Masco Ethics Hotline provides a confidential, anonymous procedure for employees to report illegal or unethical activity, without fear of retaliation. The hotline was established in January 2004 and is available worldwide. It is staffed by English- and Spanish-speaking rep-resentatives, and translation services are available for other languages, including Chinese, German and French. In 2009, hotline information was given to more than 90 supplier com-panies during our Supplier Business Practices training seminar for Masco Asia suppliers.

So2 Business units analyzed for risks related to corruption.

Masco’s reputation for ethical business practices is an integral part of our corporate culture. A central element of our legal and ethical compliance program is our Code of Business Eth-ics. The Code, which applies globally to all employees, officers and members of the Board of Directors, focuses on areas of ethical risk, provides guidance on recognizing and dealing with ethical issues, and helps foster Masco’s culture of honesty, accountability and transpar-ency. The Code also serves to satisfy certain requirements of the U.S. Sarbanes-Oxley Act of 2002 relative to Masco’s senior officers.

Masco’s Legal and Ethical Compliance Program Certification is a method for the Company to verify that employees are in compliance with the requirements of the program. The Certi-fication outlines areas of legal risk and potentially illegal workplace conduct, and each year is distributed online to individuals performing specified job functions at each division and all personnel at Masco’s corporate office. In 2009, the Certification was sent to approximately 10,000 employees worldwide. Recipients review the Certification, are required to disclose any exceptions, and agree to communicate the program to any employees who report to them. Any reported exceptions are investigated and addressed.

So3 Anti-corruption policies and procedures training for employees.

All executives and key employees are expected to certify their compliance with our Legal and Ethical Standards Compliance Program on an annual basis, and more than 40,000 in-dividual training sessions have been completed online. The General Counsel’s office reviews these certifications via a Web-based certification system.

Approximately 6,900 domestic employees and 950 non-U.S.-based employees, roughly 22 percent of employees, are currently enrolled in the Masco Ethics core curriculum. To date, more than 79,000 courses have been completed by Masco employees.

So5 Public policy development and lobbying.

Where appropriate, Masco’s business unit leaders bring their expertise to public policy initia-tives. For example, the president of WellHome testified before Congress in March 2010 to voice support for the proposed legislation and other initiatives designed to provide rebates and other financial incentives to encourage homeowners to make energy-efficiency improve-


ments to their homes. As part of the coalition, a broad range of industry, labor, energy and environmental organizations supported the legislation to create jobs and drive savings for consumers as well as have a positive impact on the environment.

Other public policy issues that Masco has been involved in or supported include the following:

•Masco has advocated performance-based criteria for incentives where energy savings could be documented and verified; supported programs to train workers in how to make homes more energy efficient; supported public awareness programs to educate homeowners in how to make homes more energy efficient and how to modify their behaviors to cut energy use; supported increased funding for the Federal Weatherization Assistance Program for low-income households; and supported increased funding for the ENERGY STAR program.

•Masco has supported federal legislation to lower the allowable level of lead in faucets in the U.S., based on standards enacted in California and Vermont.

•Masco was involved with the development of the EPA’s WaterSense standards for lavatory faucets and showerheads; supported the development of public awareness programs to reduce water use; supported local government initiatives to explore grey water recycling; and supported incentives for homeowners to improve water efficiency.

•Masco has supported the recently enacted U.S. federal legislation to restrict the allowable level of formaldehyde emissions from composite wood products, including particleboard used in cabinets.

Masco sponsors a State of Michigan Political Action Committee (PAC) and a U.S. federal PAC, and welcomes voluntary contributions from eligible Masco employees for contributions to various campaigns, candidates and causes. Masco complies with all applicable state and U.S. federal campaign financing laws. The U.S. Federal Election Commission’s Web site (www.fec.gov) contains information regarding contributions by the Federal PAC and the State of Michigan PAC (www.michigan.gov/sos).

So6 Financial and in-kind contributions to political parties.

Masco U.S. PAC spending per year: 2007 – Federal $6,000 and State $21,400 2008 – Federal $3,000 and State $22,400 2009 – Federal $1,750 and State $2,675



Product ResponsibilityManageMenT apprOach

At Masco, we make extensive information available to our customers on all of our products and strive to comply with all legal requirements for product labeling. Masco’s Vice President-General Counsel assists our business units with product labeling responsibility aspects.

Our Advertising Policy is available to all employees. This policy requires that all marketing or advertising materials go through the correct legal procedures before publication.

We care greatly about our customers’ wants, needs and viewpoints about our products and our Company, and feel we can create value through a deep understanding of these priorities. We seek to utilize “pull” rather than “push” marketing and to create a customized experience for our customers. Through strong communication, we can fold intuitive design, thoughtful solutions and practical approaches into products that exceed our customers’ sustainability expectations.

Customer privacy is important to Masco and efforts are ongoing to ensure that all business units have the necessary training and data privacy protocols in place.

pR1 Health and safety impacts of products and services.

Masco includes life cycle analysis in its product designs and we continue to monitor the requirements of our channel customers and emerging regulations that may affect those decisions. We have explored various life cycle tools and have plans to enhance our existing enterprise Stage-Gate process to include design-for-the-environment principles.

pR3 Product and service information required by procedures.

Masco makes extensive information available to our customers on all of our products. We make compliance with all legal requirements for product labelling and information a high priority.

pR5 Practices related to customer satisfaction.

We believe that successfully hearing our customers’ voices begins with establishing a com-fortable dialogue. Through executive interviews, online bulletin boards and focus groups, Masco seeks to get in touch with its customers and build a two-way conversation.

We have asked our business units to run their businesses focused on the needs of custom-ers, and they have adopted new business practices to incorporate customer feedback into their decision making. Masco also has adopted an enterprise-wide customer satisfaction research program that measures our progress in improving customer-centricity.


In 2008–2009, we interviewed thousands of trade professionals, homeowners, resellers and builders across nine business unit categories. In 2010, we are expanding this annual pro-gram by interviewing individuals who interact with all U.S.-based business units. Satisfaction is measured along numerous dimensions, along with key drivers of each dimension. These satisfaction dimensions include: product quality, price, style, installation, brand, warranty, customer service and others. In 2011, this research also will be conducted for a majority of our business units in Europe.

In addition, we measure the demand and current performance for Masco brands and for competitors in the following sustainability topics:

•products made from sustainable, reusable or recycled materials

•low or no VOC products

•products that conserve water

•products that are energy efficient or harvest the energy they need from the environment

•products contained in packaging designed to reduce waste

•reusable or recyclable battery-powered products

pR6 Adherence to laws and standards codes related to marketing communications.

The marketing policy requires that all marketing communications are reviewed by our legal department prior to publication.

pR8 Substantiated complaints regarding breaches of customer privacy.

Customer privacy is important to Masco and we have not received any material complaints concerning breaches of customer privacy or losses of customer data. Efforts are ongoing to ensure that all of our business units have the necessary training and data privacy protocols in place.

WaterSense® and eNeRGy StAR® are registered trademarks of the u.S. environmental Protection

2009-2010 Corporate Sustainability Reportmasco.com/pdfs/2009-2010-coporate-sustainability-rep… · · 2014-06-09Masco Corporation 2009 Global Reporting Initiative 3 GRI SectIon

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