GRI G4 Material Aspect

Our Materiality Assessment indicates that our success in driving innovation for developing markets is an issue of significant importance to both our stakeholders and Ingersoll Rand. Consequently, one of our core strategies is to increase our exposure to emerging markets.

This strategy has been particularly successful in China, Brazil, Mexico and India, which make up approximately 50 percent of our emerging market revenue. In these four countries, we have established large local teams with full capabilities, manufacturing facilities and strong localized channel partners. Our remaining emerging market sales are highly concentrated, with approximately 25 percent of sales coming from eight other countries or regions.

We are working aggressively to increase our participation in early-stage markets for Ingersoll Rand products. We use a three-step process to prioritize our investments in emerging markets. First, we consider the macroeconomic and geopolitical conditions of an emerging market at the country level. Where these factors are acceptable, we next perform an analytical assessment of the current attractiveness of our business, considering competitors, customers and channels. Finally, we consider how the attractiveness of this business will likely evolve over time.

Using this assessment, we decided to prioritize our heating, ventilating and air conditioning business in Africa. We added a new account structure for Africa including four regional account managers, one distribution leader, one West African service engineer and three sales persons. We added two more account managers in 2015, an additional sales engineer and a service technical support leader. All of the positions are locally based.

The Ingersoll Rand fluids business also used this process to identify and prioritize its expansion efforts in markets where we had inadequate coverage. Based on analytics performed in 2014, the business determined to focus on four new markets, which included three emerging markets: Mexico, Brazil and United Arab Emirates. We have embarked on hiring and training local sales and application resources to improve business and channel development in each of these countries, to achieve aggressive revenue growth targets.

In parallel with these market expansion initiatives, we are developing innovative technologies and products targeted for the unique requirements of developing markets. A key focus is atmospheric water generation to address the global problem of water scarcity.

Water scarcity affects agriculture, food processing, industrial production and basic sanitation. The United Nations Food and Agriculture Organization (FAO) estimates that about 1.2 billion people live in water scarce regions today and this will increase to 1.8 billion by 2025. Many methods are being used to address the water scarcity. Condensate water from air is one of the methods being explored and useful where pure drinking water is difficult or impossible to obtain due to significant contamination of ground water.

Atmospheric water generation (AWG) is the extraction of water vapor from the atmosphere by cooling the air below its dew point, thereby producing potable water. The atmospheric air is a promising alternative, sustainable and ubiquitous water source. AWG not only reduces dependence on rain water, ground water or natural water bodies for water supply, but the water produced is purer than groundwater or supply drawn from natural water bodies. In addition, AWG can eliminate complex water distribution systems as it is deployed at point of use.

Energy efficiency forms the backbone of AWG and more innovations are expected in this domain. Our role as a leading HVAC solutions provider, together with our commitment to global sustainability, strongly position Ingersoll Rand to lead the way in AWG technology research. Our engineering and innovation teams are currently investigating the commercial feasibility of a number of AWG solutions.