Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental impact
• Employee relations
• Supplier relations

Environmental Achievements

• Reduced international flights through video conferencing
• Replaced alkaline batteries with rechargeable ones
• Used moulded recycled pulp paper instead of expanded polyethylene foam in product packaging

Social Achievements

• Rated as one of the ‘100 Best Small Companies to Work For’ by The Sunday Times for the fourth consecutive year
• Established links with educational establishments for internships
• Implemented employee assessments and an open-door policy

Governance Achievements

• Complied with the QCA Corporate Governance Guidelines
• Established three Board committees (Audit, Remuneration, and Nomination)
• Implemented enhanced internal financial control procedures and monitoring systems

Climate Goals & Targets

Environmental Challenges

• Economic environment fluctuations affecting retail sales
• Technological changes and competition
• Dependence on a small number of suppliers
• Reliance on key resellers and distributors
• Changes in channels to market
• Currency risks
• Scarcity of experienced technical personnel
• Intellectual property and data protection

Mitigation Strategies

• Diversification of products and territories
• Significant investment in R&D and disciplined product introduction process
• Supplier diversification and regular performance reviews
• Maintaining contact with major retailers and credit insurance
• Selling through both 'bricks and mortar' and eCommerce retailers
• Natural hedge for USD transactions and forward exchange contracts for Euro exposure
• Attracting high-quality technical personnel and offering share ownership incentives
• Strong data and IT controls and data protection provisions in employee contracts

Supply Chain Management

Supplier Audits: At least once every three months

Responsible Procurement

• Consideration of social responsibility and sustainability in supplier selection
• Strategic partnership with Geodis for logistics

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: QCA Corporate Governance Guidelines

Awards & Recognition

• Three-star accreditation from Best Companies for four consecutive years
• Inclusion in The Sunday Times 100 Best Small Companies to Work For

Environmental Metrics

ESG Focus Areas

• People
• Planet

Environmental Achievements

• Reduced carbon footprint of Scarlett 2i2 3rd Generation by 27% compared to the previous generation.
• Extended standard warranty to three years across Focusrite and Novation product portfolio to encourage product longevity and less waste.

Social Achievements

• Improved online onboarding process, enhancing the experience for new joiners.
• Invested in e-learning modules, LinkedIn Learning access, training courses, and workshops for employee development.
• Introduced a Leadership Programme for developing leadership skills.
• Continued wellbeing initiatives, including Mental Health First Aiders training.
• Achieved a ‘Best Companies to Work For’ 2 Star rating (‘Outstanding’) for 2020.
• Reduced gender pay gap for the third year in a row.
• Supported 12 placement students.

Governance Achievements

• Increased ESG disclosures.
• Established a Diversity and Inclusion Committee.
• Formed the ‘Focusrite Diversity in Music’ team focusing on Pride in Music, Race and Ethnicity in Music, and Gender Balance in Music.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impacting manufacturing, shipping, and demand for products.
• COVID-19 pandemic negatively affecting Martin Audio's live events business.
• Component shortages.
• Transition from brick and mortar retail to online shopping.

Mitigation Strategies

• Diversified manufacturing between China and Malaysia.
• Leveraged e-commerce capabilities.
• Pivoted marketing plans.
• Focused on at-home production workflows.
• Cost-cutting measures at Martin Audio.
• Increased marketing activities and use of video conferencing.
• Developed alternative sourcing strategies.

Supply Chain Management

Responsible Procurement

• Minimising virgin materials, opting for recycled alternatives, and selecting recyclable substances.
• Quarterly supplier reviews tracking sustainability of materials.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ESOS

Certifications: ISO 9001, ISO 14001, SA 8000, OHSAS 18001

Third-party Assurance: McGrady Clarke Group Limited

Sustainable Products & Innovation

• Scarlett 2i2 3rd Generation audio interface

Awards & Recognition

• Best Support award from a leading industry media title

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Sustainability
• Governance

Environmental Achievements

• Reduced Gross Scope 1 and 2 greenhouse gas emissions by 60% through switching to renewable electricity.
• Achieved Net Scope 1 and 2 emissions of 0 tCO2e through carbon offsets.
• Developed a bespoke product lifecycle assessment (LCA) database to calculate Scope 3 emissions.
• Implemented recycled and bio-based materials into mass production (e.g., PIR aluminium, 85% PCR ABS).

Social Achievements

• Formed the cross-industry environmental working group 'Greening Music Tech', bringing together 63 individuals and 18 companies.
• Planted 85.6k trees, a 58% increase from the previous year.

Governance Achievements

• Established an ESG & Climate Change Committee.
• Improved TCFD disclosure alignment to a minimum level of 3 across all categories.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to potential climate events (e.g., increased storm intensity).
• Securing high-grade PCR aluminium in small batch quantities.
• Reducing emissions from product usage (especially in high-power consumption products).
• Material science advancements needed to replace rare earth elements.

Mitigation Strategies

• Developing alternative sourcing strategies.
• Collaborating with suppliers to source PCR aluminium.
• Exploring battery technology as a replacement for off-grid diesel generators.
• Closely tracking developments in material science.
• Conducting quantitative scenario analysis assessing logistics and financial impacts.

Supply Chain Management

Responsible Procurement

• Using recycled and bio-based materials.
• Collaborating with suppliers to improve sustainability.

Climate-Related Risks & Opportunities

Physical Risks

• Increased storm intensity
• Climate-induced conflict

Transition Risks

• Mineral commodity shifts
• Shipping and logistics challenges
• Movement towards circular economy principles
• Increase in consumer and investor climate consciousness
• Low carbon products

Opportunities

• Movement towards circular economy principles
• Low carbon products
• Increase in consumer and investor climate consciousness
• Shipping and logistics

Reporting Standards

Frameworks Used: TCFD, UK's Climate-related Financial Disclosures (CFD), Greenhouse Gas Protocol Corporate Accounting and Reporting Standard, Defra’s ‘Environmental reporting guidelines

Third-party Assurance: McGrady Clarke (for Scopes 1, 2, and 3); EuGeos (peer review of LCA)

Sustainable Products & Innovation

• Products incorporating recycled and bio-based materials.

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance
• Climate Change

Environmental Achievements

• Achieved Carbon Neutral status for Scope 1 and 2 emissions for a second year.
• Designed a bespoke product lifecycle assessment database to calculate emissions.
• Used 61% post-consumer recycled aluminum in ADAM Audio A Series.

Social Achievements

• Launched ‘Focus RITE for Good’, a local community engagement program.
• Improved employee Net Promoter Score (eNPS) from 18 to 21.
• Revised Diversity & Inclusion plan.

Governance Achievements

• Expanded the Environmental, Social, Governance & Climate Change (ESGCC) Committee to include climate change and TCFD.
• Completed the first mandatory CFD report.
• Updated investor-facing materials and website.

Climate Goals & Targets

Environmental Challenges

• High component costs and rising living costs impacting demand for home recording solutions.
• High inventory levels in the sales channel.
• Industry-wide component shortages.
• Geopolitical risks related to manufacturing in China.
• Climate change risks (Increased Storm Intensity, Shipping & Logistics, Climate Induced Conflict).

Mitigation Strategies

• Pricing actions to protect margins.
• Promotions and marketing campaigns to reduce inventory.
• Diversification of product portfolio and geographic reach.
• Dual sourcing of raw materials and manufacturing services.
• Investing in supply chain resilience and production capabilities.
• Implementing systems to monitor and reduce environmental impact.
• Embedding sustainability criteria in product design.

Supply Chain Management

Supplier Audits: At least annually

Responsible Procurement

• Sustainability requirements
• Dual sourcing strategies

Climate-Related Risks & Opportunities

Physical Risks

• Increased storm intensity
• Climate induced conflict

Transition Risks

• Mineral commodity shifts
• Shipping & Logistics

Opportunities

• Movement towards Circular Economy Principles
• Low-carbon products
• Increase in consumer and investor climate consciousness

Reporting Standards

Frameworks Used: TCFD

Third-party Assurance: McGrady Clarke (for TCFD report), EuGeos (for LCAs)

Sustainable Products & Innovation

• ADAM Audio A Series (61% PCR aluminum)

Awards & Recognition

• Four Sound on Sound Best in Class Awards (2023)
• Optimal Audio wins best manufacture at the AV Awards (2023)
• Music Retailer ‘Recording Equipment Line of the Year’ (2022)
• King’s Awards for Enterprise in Innovation (2023)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Human rights and modern slavery
• Health, safety and wellbeing
• Waste and recycling
• Supplier sustainability
• Product lifecycle management
• Safe and sustainable materials used
• Hazardous substances, chemicals use and pollution
• Product and service innovation
• Sustainable packaging
• Diversity and inclusion
• Talent attraction, retention, motivation and development
• Purpose, culture and mission
• Partnerships and collaborations
• Community engagement

Environmental Achievements

• Released or updated 48 products this year with at least one sustainability initiative.
• Rolled out recycled materials into products such as Scarlett 4th Gen and the new ADAM Audio H200 headphones.
• Third year of carbon neutral operations (Scopes 1 & 2).

Social Achievements

• Employee Net Promoter Score (eNPS) of +33 (FY23: +21).
• Net Promoter Score (NPS) of 70.
• Continued to embed diversity & inclusion strategy within company culture.
• Supported 16 charities through various initiatives.
• Partnered with AFBE to enhance diversity & inclusion initiatives in the UK.

Governance Achievements

• Reviewed the revised QCA Code and took steps to ensure compliance.
• Completed a competitive retendering exercise for the external auditor.

Climate Goals & Targets

Environmental Challenges

• Ongoing inflation impacting consumer confidence and channel de-stocking in Content Creation market.
• Cost-of-living pressures impacting end-consumer demand.
• Reduction of stock in the US reseller channel for Focusrite.
• Delays to the launch of higher-end Scarlett range products.
• Heightened freight rates.
• Supply chain process issues in the US for Audio Reproduction.
• Change in stocking policy by a key reseller impacting sales in the final quarter.
• Global macroeconomic uncertainty relating to cost-inflation.
• Geopolitical uncertainty and global conflicts disrupting supply chains.
• Increased volatility and uncertainty in the international trading environment.
• Increased storm intensity.
• Potential loss of a distributor or contract manufacturer due to increased storm intensity.

Mitigation Strategies

• Launched significant new products to drive future growth.
• Took proactive steps to address channel de-stocking and cost-of-living issues.
• Refined go-to-market approach, moving to direct-to-retailer model in the US for Linea Research and Optimal Audio.
• Established a local team in Japan for Content Creation business.
• Increased user testing and influencer endorsements.
• Developed resilient strategies, processes, and frameworks to grow and protect product portfolio.
• Continuously monitor and assess market access, product demand, sales plans, and geopolitical developments.
• Explore and increase supply chain interchangeability.
• Diversify product portfolio.
• Leverage relationships with logistics partners.
• Implement a business continuity plan.
• Harden existing systems and improve security controls.
• Increase security awareness training.
• Implement AI Governance.
• Promote work-life balance and improve training and development programmes.
• Implement succession planning.
• Manage operations towards a low-carbon future.
• Embed sustainability criteria throughout product design process.
• Develop and submit science-based targets for decarbonisation.
• Increase stock levels in the US.
• Carry an increased stock of components from China and prepare contingency plans to utilise manufacturing services outside of China.

Supply Chain Management

Supplier Audits: On-site visits at least annually; quarterly business reviews covering performance and sustainability issues.

Responsible Procurement

• Working with partners to ensure sustainability is built into design and manufacturing process.
• Establishing long-term partnerships with strategic suppliers.
• Dual sourcing of largest product line in China and Malaysia.

Climate-Related Risks & Opportunities

Physical Risks

• Increased storm intensity

Transition Risks

• Movement towards circular economy principles
• Low-carbon products
• Increase in consumer and investor climate consciousness
• Mineral commodity shifts
• Shipping & logistics

Opportunities

• Movement towards circular economy principles
• Low-carbon products
• Increase in consumer and investor climate consciousness
• Shipping & logistics

Reporting Standards

Frameworks Used: TCFD, CDP, SBTi

Third-party Assurance: McGrady Clarke (Environmental data)

Sustainable Products & Innovation

• Scarlett 4th Gen
• ADAM Audio H200 and D3V
• Novation Launchkey MK4
• Martin Audio products using recycled plastic
• Optimal Audio Cuboid speakers

Awards & Recognition

• King’s Award for Enterprise in Innovation (Linea Research)
• Sonicstate Best of Superbooth 2024 (Oberheim TEO-5)
• Mondo PROJECT Award for ScotiaBank (TiMax SoundHub)
• Installation Magazine ISE 2024 Best of Show (Optimal Audio WebApp/Zone)
• Innovate Award for Best Audio Technology (Optimal Audio WebApp/Zone)