2016 Sustainability Report

2016 Sustainability Report

Business Performance

Business Strategy

Xylem is a world leader in water technology, providing equipment and services for water and wastewater applications with a broad portfolio of products and services that address the full cycle of water with sustainable solutions. We expect global macro trends to fuel demand for our solutions. For example, strengthening global environmental and quality regulations are increasing the need for more efficient solutions. Population growth, urbanization and a growing middle class in emerging markets are boosting demand for clean water while putting strains on aging infrastructure. At the same time, the impacts of climate change are disrupting water supplies with intensifying water scarcity in many parts of the world, as well as flooding from a growing number of extreme weather events.

These factors combine to produce a growing need for water solutions that are modern, efficient and resilient. Xylem is well-positioned to fulfill these long-term needs as our business strategy is built around creating solutions to increase water productivity, water quality and resilience – ultimately creating a more positive handprint in the world. We are optimizing the potential of our business and creating a sustainable enterprise through the following strategies:

  • Accelerating Growth by prioritizing investments in key emerging markets, focused innovation and technology to enable smart infrastructure, strengthening customer relationships to drive commercial leadership and M&A. We focus on investments that will generate long-term, sustainable growth for the benefit of our stakeholders.
  • Driving Continuous Improvement to strengthen our Lean Six Sigma and global procurement capabilities and continue to optimize our cost structure through business simplification by eliminating structural, process and product complexity.
  • Developing Leadership and Talent by focusing on employee development programs at various levels throughout the company. We also will continue to align individual performance to the objectives of the company and our shareholders.
  • Focusing on Execution and Accountability by holding our colleagues accountable and streamlining our performance management and goal deployment systems.

Population growth, urbanization and a growing middle class in emerging markets are boosting demand for clean water while putting strains on aging infrastructure.

Xylem also takes a balanced approach to capital development, managing leverage with investments in growth. We return capital to shareholders via dividend growth in line with earnings and opportunistic share repurchases.

On October 31, 2016, we expanded the scope of our business through the acquisition of Sensus, a leading provider of smart metrology, network communications technologies and advanced data analytics serving water, electric and natural gas utilities. This acquisition was an important milestone in Xylem’s strategy to move our portfolio of solutions up the technology curve. Sensus has more than 80 million metering devices that are used for water, electric and natural gas applications installed globally. The addition of this business is enabling us to work more closely with all types of public service providers and other customers to deliver smarter solutions driven by data. Given that Sensus was part of Xylem for only two months of 2016, the contents of this report do not include results from the Sensus business. We are actively working to include our newly acquired businesses in our Sustainability Report in future years.