Climate Change Data

Environmental Metrics

ESG Focus Areas

• Health and Safety
• Climate Change
• Employee Engagement
• Diversity and Inclusion
• Ethical Supply Chain

Environmental Achievements

• Improved processes for collating environmental and emissions data to reduce impact on climate change and monitor progress towards sustainability objectives
• Overall carbon footprint decreased by 0.4%
• Emissions per £m of revenue reduced by 2%

Social Achievements

• Established a group-wide Health and Safety Committee and implemented several health and safety initiatives
• Carried out an employee engagement survey to monitor the impact on employees and agreed improvement actions in response to feedback
• Reviewed values, purpose and code of business ethics to align them with the revised strategy, following consultation with employees
• Improved processes for collating environmental and emissions data
• Introduced a Group-wide defibrillator policy and initiated mental health first-aider training

Governance Achievements

• Complied with all aspects of the new UK Corporate Governance Code
• Appointed a Workforce Engagement Director
• Extensively engaged with shareholders on the new remuneration policy, which was strongly supported (94% vote in favour)
• Refreshed the capital allocation framework
• Successfully executed the profit improvement programme, delivering annualised benefits of £25.5 million

Climate Goals & Targets

Environmental Challenges

• Challenging macroeconomic backdrop resulting in limited LFL sales growth (0.4%)
• Slowing US industrial production impacting sales
• USA-China tariffs impacting sales
• Lower levels of activity in the metals market
• Uncertainty within the innovator pharmaceutical space due to tighter pricing controls
• Tough year-on-year comparator in automotive
• Slowdown in automotive and industrial markets in Germany and China
• Outsourcing of a significant product line impacting sales
• Customer transition to new digital platform slower than anticipated
• Financial pressure and consolidation amongst customers in the energy sector

Mitigation Strategies

• Greater focus on cost control and successful implementation of an efficiency improvement programme
• Outsourcing of a product line
• Launch of a new digital platform
• Accelerated product refresh programme
• New senior management and strategic review at Concept Life Sciences
• Exit of the environmental analytical laboratories business
• Sale of BTG and EMS Brüel & Kjær joint venture
• New divisional leadership team focusing on improving operational and financial performance
• Realignment of Servomex’s organisational structure and expansion of sales and customer service infrastructure
• Simplification and expansion of Servomex’s product portfolio
• Significant capital investment in Millbrook for electrified powertrain testing
• Implementation of counter-measures to address challenges in the energy sector

Supply Chain Management

Supplier Audits: SA 8000 Social Accountability Standard audits of key suppliers

Responsible Procurement

• Ethical supply chain
• High standards throughout the supply chain

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI, CDP

Certifications: ISO 14001, OHSAS 18001, SA 8000

Third-party Assurance: Ricardo Energy & Environment

Environmental Metrics

ESG Focus Areas

• Climate change
• Employee engagement
• Diversity & Inclusion
• Supply chain sustainability
• Health and Safety

Environmental Achievements

• Year-on-year reduction of 21.9% in LFL scope 1 and 2 (market-based) emissions
• 21% year-on-year improvement in energy efficiency in 2022
• PMS achieved 100% renewable energy in 2022

Social Achievements

• Improved Gallup GrandMean employee engagement score from 3.72 to 3.86
• Launched global leadership development program 'Ascend'
• Implemented a number of high-impact initiatives to improve employee experience
• Launched first online work experience program with The Forage
• Expanded relationships with Society of Women Engineers and Society of Hispanic Professional Engineers

Governance Achievements

• Implemented a £300 million share buyback program
• Introduced non-financial metrics into remuneration structure (emissions reduction and employee engagement)
• Shareholder approval of 2023 Remuneration Policy

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions and significant material inflation
• Geopolitical risks
• Cost of living challenges impacting employees

Mitigation Strategies

• Price increases
• Investment in working capital
• Spectris Business System (SBS) to improve productivity
• Addressing salaries where appropriate
• Cost of living payments to employees

Supply Chain Management

Supplier Audits: 36.5% supplier spend rated via EcoVadis

Responsible Procurement

• EcoVadis assessment
• Code of Business Ethics

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Sea level rises
• Rising mean temperatures

Transition Risks

• Government policy and regulation of carbon
• Changes in market conditions
• Changes in technology

Opportunities

• Reduced operating costs through greater resource efficiency
• Development of new products and services

Reporting Standards

Frameworks Used: TCFD, UN Global Compact, GRI, SASB

Certifications: ISO 45001

Third-party Assurance: Deloitte

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 9 (Industry, innovation and infrastructure)
• Goal 13 (Climate action)

Initiatives contribute to these goals through emissions reduction, renewable energy use, and sustainable product development

Sustainable Products & Innovation

• MintecRobo
• AirSentry II
• DiM250 dynamic simulator
• Fusion and Advantage Data Acquisition offering

Environmental Metrics

ESG Focus Areas

• Business conduct
• Climate change management
• Information security
• Diversity, equity and inclusion
• Health, safety and wellbeing
• Human rights
• Responsible material selection and use
• Sustainable markets and products
• Talent attraction, development and retention
• Waste management, reduction and recycling
• Pollution and water management
• Artificial Intelligence
• Digitisation

Environmental Achievements

• Reduced energy consumption by 5.6% (Electricity -5.5%, Natural gas 1.7%, Fuel oil -0.4%, Steam and other imported energy -12.3%, Other fuels -18.5%, Vehicle energy -0.8%)
• Recycled 86% of 4,083.8 tonnes of waste generated

Social Achievements

• Launched a new Global Supplier Code of Conduct
• No material recalls and none relating to injury or fatality

Governance Achievements

• No cases of non-compliance with relevant laws or regulations

Climate Goals & Targets

Environmental Challenges

• Data suitability presents a challenge given the wide variety of uses and end-markets for many of our products.
• Determining the revenue from renewable energy-related and energy-efficiency-related products presents a challenge due to the nature and complexity of the business.

Mitigation Strategies

• Continuing to work towards being able to calculate revenue from renewable energy-related and energy-efficiency-related products.
• Actively managing the procurement of critical materials and engaging in mitigating activity through strong purchasing and sourcing efforts.

Supply Chain Management

Responsible Procurement

• Global Supplier Code of Conduct
• Supplier codes of conduct that cover material sourcing, including conflict minerals declarations

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI, SASB