Sustainability Governance

The Lockheed Martin sustainability governance structure is comprised of the Nominating and Corporate Governance Committee chartered by the Board of Directors, the Executive Leadership Team, the Sustainability Leadership Council and the Sustainability Management Team.

Our Senior Vice President, Ethics and Enterprise Assurance leads all sustainability programs and serves as Lockheed Martin’s Chief Sustainability Officer. This role reports directly to the Chairman, President and Chief Executive Officer, and provides regular updates to the Nominating and Corporate Governance Committee.

We link incentive compensation for Lockheed Martin executives to performance on certain sustainability factors. See our 2022 Proxy Statement for more information.

Our Sustainability Governance Structure

The Nexus of Sustainability and Enterprise Risk Management

Prior to 2017, our enterprise risk management and sustainability programs reported through different functional leadership and followed distinct processes. As the programs matured, and with executive insight, it became apparent that the two functions ultimately sought to achieve a central goal, which could be enhanced under a single reporting structure to maximize efficiencies and to enable collaboration on shared outcomes. Our currently integrated Enterprise Risk and Sustainability organization reports to the Senior Vice President, Ethics and Enterprise Assurance and receives oversight from our Board of Directors.

Lockheed Martin’s enterprise risk management program includes completion of two key risk assessments. Annually, we conduct an enterprise risk assessment to determine the most critical operational, growth and strategic risks to Lockheed Martin and its global operations. This assessment is based on independent feedback gathered from the Executive Leadership Team, the Corporate Internal Audit organization and surveys of more than 1,500 senior leaders from across our business.

Every other year, we conduct a compliance risk assessment. The risk universe of this assessment focuses on compliance and regulatory topics. This assessment is based on independent feedback gathered from the Corporate Internal Audit organization, our Ethics and Business Conduct organization and surveys of compliance subject matter experts from across our business.

Similarly, the completion of a core issues assessment is foundational to our sustainability program. Our sustainability core issues assessment is conducted every five years by engaging internal and external stakeholders to determine the most relevant sustainability issues to our business.

The results of each of these assessments are compared for common themes and trends. Two examples include:

• Chemical Stewardship: As the global chemical landscape changes and materials are restricted and/or banned, companies face increased regulatory pressure and costs associated with replacement materials. They may also face supply chain risks if suppliers stop producing certain products or pass along increased compliance costs. Proactively researching sustainable alternatives and replacing hazardous materials can help us avoid and mitigate these risks.
• Supply Chain Vulnerability: Supplier facilities like Lockheed Martin’s may face increased frequency and intensity of physical climate events, such as hurricanes and floods, depending on their geographic location. A supplier’s ability to mitigate associated risks and quickly recover directly impacts a company’s ability to deliver quality products on time to its customers.

Leveraging our integrated enterprise risk management and sustainability programs, we are well positioned to identify and understand such overlapping risks, evaluate and monitor mitigation strategies and report on performance through our governance structure.