Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Management
• Waste and Resources
• Conservation and Biodiversity
• Employee Engagement
• Diversity and Inclusion
• Employee Health Safety & Wellbeing
• Employee Learning and Development
• Employee Reward and Recognition
• Community investment & STEM outreach
• Business Ethics
• Code of Conduct
• Anti-bribery and Corruption
• Tackling Modern Slavery
• Ethical Trading Policy
• Responsible & Sustainable Procurement
• Leadership
• Remuneration
• Integrity

Environmental Achievements

• 28% reduction in Scope 1 & 2 greenhouse gas emissions from FY19 baseline by FY21 (exceeding the 25% target set in FY19)
• Upgrades to air conditioning units on Malvern site increasing efficiency and free cooling
• Programme to remove and replace Sulphur hexafluoride (SF6) in range equipment
• Emptying and moving to background heating in unused buildings to minimize energy use

Social Achievements

• 6% increase in employee engagement
• Increased investment in early careers talent (3.3% of global workforce)
• Launched new global wellbeing strategy focusing on physical health, mental health, personal growth, work environment and financial wellbeing
• Developed a new global wellbeing strategy with five pillars
• Launched new employee networks to broaden diversity focus
• Continued focus on gender balance resulting in “Employer of Choice for Gender Equality” citation in Australia for the third year
• Virtual STEM outreach activities in UK, US, and Australia
• Launched a three-year charity partnership with SSAFA

Governance Achievements

• Introduced a new sustainability-linked performance metric as a key performance indicator
• ESG has become a topic for discussion at main Board level
• Introduced a new Climate Change Steering Committee chaired by the CFO
• Transitioned reporting on CR&S to the Board directly
• No material breaches of anti-bribery and corruption procedures identified

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to COVID-19
• COVID-19 impact on Global Products shipments
• Delays in US contracting due to COVID-19 and change in administration
• Competitive market dynamics in Germany resulting in goodwill impairment
• Potential global economic impacts of the COVID-19 pandemic
• Uncertainty around Brexit ramifications
• Growing stakeholder focus on ESG concerns

Mitigation Strategies

• Implemented short-term temporary actions including salary reductions, stringent cost control, incentives paid in shares, and dividend deferral
• Adapted ways of working to ensure continued delivery for customers while protecting employee health and wellbeing
• Developed specific and ambitious growth strategies for the US and international markets
• Undertaken extensive due diligence for acquisitions
• Created single routes to market to leverage global capabilities
• Maturing global end-to-end processes and systems
• Established a robust CR&S Programme with strong sponsorship from the Global Leadership Team and Board

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct
• Prompt Payment Code signatory
• Focus on paying small suppliers early during COVID-19
• Supplier events to raise awareness of social value and modern slavery

Climate-Related Risks & Opportunities

Physical Risks

• Changes to temperature and precipitation

Transition Risks

• Policy changes
• Disruptive technology

Opportunities

• Development of energy-efficient products (e.g., Modular E-X-Drive)

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 14001, ISO 50001

Third-party Assurance: PwC

Sustainable Products & Innovation

• Modular E-X-Drive transmission

Awards & Recognition

• Gold Award in MOD Defence Employer Recognition Scheme
• Employer of Choice for Gender Equality citation in Australia (three years)

Environmental Metrics

ESG Focus Areas

• Human Rights
• Environmental Sustainability
• Governance
• Diversity and Inclusion
• Supply Chain Responsibility

Environmental Achievements

• Commitment to achieving net-zero emissions by 2050 or sooner. First Aerospace and Defence Company to have Science Based Targets approved in 2022.

Social Achievements

• Commitment to a safe, diverse, and inclusive workplace.
• Commitment to fair pay and the Real Living Wage.
• Encouragement of engagement with diverse suppliers (SMEs).

Governance Achievements

• Zero tolerance approach to bribery and corruption.
• Expectation of suppliers to comply with all relevant laws and regulations.
• Emphasis on information security and protection of personal data.

Climate Goals & Targets

Environmental Challenges

• Risks associated with counterfeit parts.
• Challenges in ensuring responsible sourcing of minerals.
• Managing data protection across multiple jurisdictions.

Mitigation Strategies

• Expectation of suppliers to develop methods to minimize counterfeit parts.
• Requirement for suppliers to establish policies to ensure responsible mineral sourcing.
• Implementation of data protection principles from the UK Data Protection Act 2018 across all entities.

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct
• Sustainable Procurement principles addressing the 5Ps (People, Planet, Peace, Prosperity, Partnership)

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Science Based Targets initiative (SBTi)