Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Accelerated roll-out of the Transport Integration project making meaningful progress in reducing the Company’s direct GHG emissions and contribution to climate change
• Group procurement initiative in place for all UK sites to be using regranulated polythene packaging manufactured from 100% recycled polythene (machinery permitting)

Social Achievements

• Implementation of recommendations arising from an independent H&S review, and COVID-19 Secure fully implemented with ongoing support and advice
• Increased communication channels, and ‘culture capture’ exercise undertaken
• Implementation of ‘culture capture’ report recommendations, including launch of ‘MyHub’ engagement portal dedicated to providing communications, support, and recognition for employees

Governance Achievements

• Transitioning oversight of the Executive Risk Committee to the Audit Committee
• Published a Materiality Assessment, and forthcoming full ESG Strategy Report in May 2021 to provide a clear roadmap on strategy and responses to key ESG issues

Climate Goals & Targets

Environmental Challenges

• COVID-19 significantly impacted trading in Q2 2020, with temporary closures of the vast majority of operations.
• Supply chain disruptions due to Brexit and potential for extended supply chain timelines.
• Weakened performance of the commercial sector due to COVID-19 related deferrals and reductions in expenditure.

Mitigation Strategies

• Swift decisions and actions taken to keep people safe and support their wellbeing.
• Acceleration of certain projects under the Operational Improvement Programme.
• More centralised approach to the management of costs.
• Improved levels of stakeholder engagement.
• Agreement of DDP terms over a larger proportion of COGs imports from the EU ahead of Brexit.
• Maintaining a significant inventory position to fulfill customer demand.

Supply Chain Management

Responsible Procurement

• Increased partnership approach with suppliers
• Joint business plans with suppliers
• Product-specific tender processes

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 45001:2018

Sustainable Products & Innovation

• Unity range

Environmental Metrics

ESG Focus Areas

• Reduce the Company’s contribution to greenhouse gas emissions and climate change
• Become a more sustainable business, including through cultural development and by increasing oversight of ESG related risks and opportunities
• Increase the sustainability of the overall floorcoverings industry through engagement and example, and support the future transition to a circular economy

Environmental Achievements

• Roll-out of the ‘Transport Integration’ consolidation project resulting in more efficient delivery fleet (commercial vehicle) utilisation, and associated reduction in fleet number
• Increasing the availability of plug-in hybrid and low emission vehicles across non-commercial fleet
• Promotion of less carbon intensive ordering and delivery options (i.e. sales force realignment, online ordering, trade counter network)
• Auditing and upgrading of sites with more energy efficient technologies and equipment
• Using only recycled plastic packaging for product across operations

Social Achievements

• Launching an annual, centrally funded but locally focused community programme
• Moving to one pension for all employees (Master Trust Pension), providing a more generous and flexible contribution structure, and creating consistency and fairness across the group
• Introduced a common approach to bonus provisions for senior management and sales leadership roles, driving a more collaborative and ‘group success’ approach
• Enhanced and harmonised holiday entitlement
• Equal sick pay for all colleagues
• Cost of living pay increase for all employees

Governance Achievements

• Establishment of a new ESG Board Committee in 2022
• Commencement of an engagement programme with suppliers on industry sustainability issues, including on changes to regulation and potential sustainability partnerships
• Contract signed with an independent party to conduct a full Supply Chain Risk Assessment
• Implementation of a Supplier Sustainability Procurement Charter

Climate Goals & Targets

Environmental Challenges

• Industry wide issues including supply issues
• Disruption from the implementation of some of the actions under the business change strategy
• Fire at one of the Company’s sites in December 2021
• Product supply issues during the year led to significant price increases
• COVID-19 related issues
• Supply chain disruption

Mitigation Strategies

• Long-established supplier relationships, and scale
• Business change strategy focused on substantial revenue growth opportunities and efficiency
• Disposal of Swiss operations
• Price increases passed directly into the marketplace
• Maintained inventory position and preserved levels of availability
• Effective operating procedures
• Business continuity planning, and network, systems and collaborative approach
• Engagement programme with key suppliers
• Independent Supply Chain Risk Assessment

Supply Chain Management

Supplier Audits: Top 50 suppliers (accounting for approximately 80% of purchases) assessed under the independent Supply Chain Risk Assessment by the end of 2022

Responsible Procurement

• Supplier Sustainability Procurement Charter

Climate-Related Risks & Opportunities

Physical Risks

• Asset damage
• Supply chain disruption

Transition Risks

• Market
• Policy and Legal: EPR scheme

Opportunities

• Cost savings from efficiency-related ‘change’ projects
• Exclusive sustainable product offerings
• Ability to manage costs due to network and scale
• Being the preferred strategic partner for suppliers and other industry bodies

Reporting Standards

Frameworks Used: SASB, GRI, TCFD

Certifications: ISO 45001

Sustainable Products & Innovation

• Sustainable ‘Wool Britannia’ product range

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Exceeded initial 50% target of UK non-commercial fleet being electric/low emission vehicles (69% achieved)
• Set Net Zero and SBTi aligned interim targets for Scope 1 and 2 emissions
• 44% reduction achieved for UK emissions against 2019 baseline (Scope 1 and 2)

Social Achievements

• Moving to one pension for all colleagues, providing a more generous and flexible contribution structure
• Enhancing and harmonising holiday entitlement, and putting in place equal sick pay for all colleagues
• Targeted pay increases, and ensuring everyone received at least the equivalent of the National Real Living Wage
• Local Communities Programme launched

Governance Achievements

• Executive ESG Committee established assisting the Board on the development of the ESG Strategy
• Independently managed whistleblowing platform put in place, with new ‘Speak Up’ policy
• Investment in IT (resilience, systems, and people), with monthly cyber security training for all colleagues

Climate Goals & Targets

Environmental Challenges

• Transition to a circular economy in the floorcoverings industry due to technical and market challenges
• Limited recycling processes and networks available for flooring products
• Limited feasibility to move the commercial fleet to electric or low carbon alternatives due to technology and/or cost constraints
• Scope 3 emissions far exceed Scope 1 and 2 emissions

Mitigation Strategies

• Working closely with selected suppliers to trial and launch own branded sustainable ranges
• Extensive education of sales representatives to promote sustainable products
• Regular engagement with customers on sustainability requirements
• Support of industry bodies focused on recyclability/recycling of floorcovering products
• Trialling early options for electric/low carbon commercial vehicles
• Increased engagement with suppliers on emissions and Scope 3 emission hotspots
• Anticipating introducing Scope 3 targets in 2025

Supply Chain Management

Responsible Procurement

• Product Legislation and Sourcing
• Sustainability Charter
• Ethical Code of Conduct
• Self-Assessment Questionnaire

Climate-Related Risks & Opportunities

Physical Risks

• Supply chain disruption
• Asset damage

Transition Risks

• Increased costs of operating a sustainable fleet
• Increased capital investment
• Increased operating costs through Extended Producer Responsibility (EPR)
• Reduced demand for current product offering
• Reputational damage due to failure to meet targets

Opportunities

• Greater efficiency leading to lower operating costs
• Increase in large customers attracted by sustainable business practices
• Capture market share by responding to the shift in consumer preferences

Reporting Standards

Frameworks Used: TCFD, SECR

Certifications: ISO 45001, ISO 14001 (target for key sites in 2023)

Sustainable Products & Innovation

• Own branded sustainable ranges (target for launch in second half of 2023)

Awards & Recognition

• Judged to have the best sustainability credentials amongst direct peer group

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Completion of dynamic route planning and rollout of telematics in the commercial fleet, resulting in an estimated 20% mileage reduction and 1300 tonnes of carbon emissions saved annually.
• Rollout of solar panels across 11 of 13 largest sites, resulting in over 25% reduction in electricity consumption.
• Launched 4 sustainable product ranges across 3 own product brands.
• Achieved ISO 14001 environmental certification at key sites (73% of UK purchases).

Social Achievements

• Significant improvement in near miss reporting (more than double the rate of 2022).
• Rollout of Headlam Way strategy and values.
• Created Inclusion and Wellbeing strategy and values.
• Developed induction, leadership and sales training.
• Improved Employee Forum and conducted engagement survey.
• Created consistent expected standards of performance across UK sites.
• Improved retirement planning support for colleagues.

Governance Achievements

• Enhanced IT systems security processes and training.
• Strengthened password setting processes, VPN user access and email access.
• Delivered approximately 150 hours of Security Training to colleagues.
• Improved CDP scores for climate change from D to C.
• Refreshed policies and guidance (reward and pay principles, Inclusion and Respect at Work Policy, Environmental Policy, Grievance policy).

Climate Goals & Targets

Environmental Challenges

• Increase in RIDDOR incidents.
• Need to improve local communications and make colleagues feel their opinions count.
• Need to improve personal development opportunities.
• Need for workforce to better reflect the communities served.
• Uncertainty around the cost of transitioning to a zero-emission HGV fleet.
• Potential for increased operating costs through Extended Producer Responsibility (EPR) for bulky waste.
• Potential reduced demand for current product offerings due to shifting consumer preferences.
• Potential for asset damage and supply chain disruption from extreme weather events.

Mitigation Strategies

• Investment in buildings, manual handling equipment and CCTV.
• Implementation of telematics and WEBFLEET™ for transport safety.
• Partnership with Everymind at Work for mental health support.
• Refreshed Employee Forum for better colleague feedback and communication.
• Implementation of dynamic planning and telematics to increase transport efficiency.
• Ongoing trials of electric commercial vehicles.
• Collaboration with suppliers on new sustainable product launches and take-back schemes.
• Adapting product offerings to reflect consumer preferences.
• Business continuity plans in place to address potential site disruptions.

Supply Chain Management

Supplier Audits: 80% of major factories producing own brand products to have a confirmed ethical audit by the end of 2024.

Responsible Procurement

• Supplier Sustainability Charter
• SMETA audits
• Track Record Global partnership for timber supply chain traceability.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (flooding)

Transition Risks

• New legislation/regulation (including EPR for bulky waste)
• Increased costs of operating a sustainable fleet
• Reduced demand for current product offerings

Opportunities

• Greater efficiency leading to lower operating costs from solar panel installation
• Market opportunities for sustainable products

Reporting Standards

Frameworks Used: Science Based Targets initiative (SBTi), TCFD

Certifications: ISO 14001, ISO 45001, FORS Bronze

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Kingsmead - Econyl Yarn carpet (recycled nylon yarn)
• Fells - Georgetown Elite and Georgetown Supreme (recycled fleece backing and yarn from plastic bottles)
• Tomkinson - Breathing Space (ResilonX Yarn from recycled plastic bottles)
• Runswick Bay (Recycled Wilton carpet from plastic bottles)

Awards & Recognition

• Headlam’s ‘Act sustainably, use less, waste less and give back’ values award