Greenhouse Gas and Energy Inventory Protocol 19 May 2015 TABLE OF CONTENTS 1.0 Introduction 2.0 Inventory Scope 3.0 Inventory Detail 4.0 Calculations & Emissions Factors 5.0 Quality Assurance REVISION HISTORY Rev Orig Date 19 May 2015 Description Initial Release Approved By E. Rankin 1. INTRODUCTION This Greenhouse Gas (“GHG”) and Energy Inventory Protocol (“GHG Inventory”) is modeled after the World Resources Institute/World Business Council for Sustainable Development (“WRI/WBCSD”) Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition (2004) (the “Protocol”). For its operational inventory, Ingersoll Rand Company (“Ingersoll Rand”) follows the ‘financial control’ approach and includes GHG emissions from sources over which it has financial control. The Protocol identifies three scope categories: • Scope 1 includes direct GHG emissions from sources that are owned or controlled by the reporting company; • Scope 2 includes indirect emissions associated with the generation of imported/purchased electricity, steam, hot water or chilled water; • Scope 3 allows for other indirect emissions that are consequences of the activities of the company but occur from sources owned or controlled by another entity. According to the Protocol, Scopes 1 and 2 must be accounted for. Accounting for Scope 3, however, is optional. 2. INVENTORY SCOPE Each year, Ingersoll Rand evaluates all owned and leased facilities on a global basis to determine and potentially adjust our inventory scope. Under the financial control approach, Ingersoll Rand reports on all owned facilities and operations in which it has financial control within Scope 1 and Scope 2 emissions. The current GHG Inventory for Scope 1 and Scope 2 includes data from over 70 individual facilities -- primarily manufacturing but also includes warehouse, Company-owned offices, and research and development (“R&D”) facilities. In accordance with the WRI/WBCSD Greenhouse Gas Protocol, GHG emissions associated with leased facilities that have operating leases are estimated on annual basis by using their location and size of each leased facility. These include over 500+ leased facilities and are included in Scope 3 emissions. The GHG Inventory scope also includes GHG emissions from fleet vehicles, Company-owned vehicles driven on Company business and Company-owned aircraft that Ingersoll Rand operates for its own use. These emissions are included in Scope 1. The total number of sites changes each year as sites are added or removed for various reasons. Sites are added to the inventory if they are acquired, newly established or newly determined to be within the boundaries of the inventory and removed if they were divested, closed or newly determined to be outside the boundaries of inventory during the course of the year. Emissions associated with acquisitions and/or divestures are either added or removed from the historic baselines while emissions from new operations or closed operations will not be reflected in historical baselines. 3. INVENTORY DETAIL 1. Manufacturing, Warehouse, Large Corporate Office locations, and Corporate R&D facilities Ingersoll Rand Company “GHG and Energy Inventory Protocol” 1|P a g e • Manufacturing facilities range in size from small (of typically less than 100,000 square feet [“sq ft”]) to large (of greater than 1,000,000 sq ft) and are located around the world. • Distribution/Warehouse/Logistic facilities that are operated by Ingersoll Rand. • Large Corporate Office Locations – Several large corporate and business unit office locations that are home to Ingersoll Rand employees. • Corporate R&D Facilities – Several large corporate and business unit research and development facilities around the world. The following data is collected and used to calculate GHG emissions associated with these sites: • Actual electricity usage obtained from invoices; • Actual natural gas usage obtained from invoices; • Actual propane usage obtained from invoices; • Gasoline - Locations using more than 1,000 gallons; • Diesel - Locations using more than 1,000 gallons; • Volatile Organic Compounds (“VOCs”) that are used in operations and are released to the atmosphere; • Refrigerant released to the atmosphere during servicing of Ingersoll Rand-owned heating, ventilating, and air conditioning (“HVAC”) equipment and losses related to product charging; and, • Refrigerant released to the atmosphere during foam blowing operations. 2. Sales Offices, Service Centers and Part Stores • The 2014 GHG Inventory was comprised of over 500 leased facilities. Each of these leases is an operating lease and, as such, the GHG emissions from these facilities are estimated and included in our inventory as Scope 3. • Diesel and gasoline usage associated with mobile sources is collected through GE Fleet services used throughout the United States and Canada. Outside the United States, usage is estimated based upon the number of Sales and Service technicians. The GHG emissions associated with mobile sources is appropriately counted as Scope 1 emissions. 4. CALCULATIONS & EMISSSION FACTORS Ingersoll Rand created a GHG Inventory database in Gensuite® (“Gensuite”), a web-based EHS management system, to collect the necessary detailed inventory data. The GHG Inventory database allows each site to enter the quantity of electricity and fuel used (by fuel type) and the unit of measure based on its own electricity and fuel purchase and/or combustion records as well as data on emissions of other GHGs. Gensuite® calculates the emissions, in metric tons of CO2 equivalents, for each emission category as well as a total for all emission categories. Ingersoll Rand Company “GHG and Energy Inventory Protocol” 2|P a g e Ingersoll Rand uses emission factors primarily obtained from the United States Environmental Protection Agency (“USEPA”) Mandatory GHG Reporting Rule (40 CFR Part 98) to calculate CO2 emissions for the fuel types that are included in their GHG Inventory. Other emission factors were obtained from WRI and IPCC documents when USEPA factors were not available. USEPA’s Emissions & Generation Resource Integrated Database (“eGRID”) sub-regional average emission factors were used to calculate indirect emissions resulting from the purchase of electricity in the United States. Indirect emissions resulting from the purchase of electricity outside of the United States were calculated using country-wide average factors obtained from the International Energy Agency (“IEA”). Emissions for other GHGs were calculated based on process data. The 100-year global warming potential (“GWP”) for CH4, N2O, HFCs, SF6, and PFCs were obtained from the USEPA Mandatory GHG Reporting Rule (40 CFR Part 98). Emissions of CH4 and N2O from the combustion of fuels are calculated using emissions factors obtained from USEPA Climate Leaders program documents. Gensuite® calculates direct-combustion emissions by multiplying a given quantity of fuel by an emission factor. As with direct fuel-combustion emissions, Gensuite® also calculates indirect emissions for electricity that was purchased by multiplying a given quantity of electricity by an emission factor. The following GHG operational emission sources were not included in this GHG Inventory because the emissions from the sources were expected to be insignificant: • • • Remediation operations that are operationally controlled by Ingersoll Rand; CO2 and other shielding gases related to welding and brazing operations; and, Operations that use less than 1,000 gallons of diesel and gasoline. 5. QUALITY ASSURANCE Ingersoll Rand continues to increase the accuracy of its GHG Inventory. The data collection process has been improved and streamlined. Numerous guidance documents, an internal guidance website and extensive training on the inventory and on the use of Gensuite® have been developed and provided to its employees. Finally, Ingersoll Rand has performed extensive data-quality reviews on the GHG inventories, including side-by-side comparisons of GHG emissions to identify and understand the reasons for significant differences (i.e., changes in production, fuel, manufacturing processes, etc.). As a result of these reviews, a number of data quality issues were identified, analyzed and corrected, where necessary, through this process. Ingersoll Rand Company “GHG and Energy Inventory Protocol” 3|P a g e