Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate change
• Employee well-being
• Safety
• Diversity & Inclusion
• Human Rights
• Responsible business ethics
• Community engagement

Environmental Achievements

• 14% reduction in total carbon emissions since 2018
• 6% reduction in total global energy consumption in 2020 compared with 2019
• 9% reduction in total water consumption since 2018
• 92% of operating facilities achieved or maintained ISO 14001:2015 accreditation

Social Achievements

• Record low recordable injury frequency rate of 2.3 in 2020
• 18% reduction in the number of injuries recorded in 2020
• Generally positive employee feedback from Employee Engagement Groups
• Female representation on the Board: 38%
• Female representation at senior manager level: 30%
• Females represent 18% of the total workforce

Governance Achievements

• Appointment of Kevin Boyd as Non-Executive Director
• Continued focus on succession planning
• Regular review of corporate governance code and guidelines
• Implementation of recommendations from 2018 external Board evaluation

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic and its impact on demand across various market sectors
• Significant revenue decline in several market segments
• Uncertainty around the pace and extent of revenue recovery
• Increased scrutiny regarding emissions and climate change
• Growing importance of ESG criteria for investors and stakeholders

Mitigation Strategies

• Rapid implementation of disaster recovery scenarios and restructuring plans
• Cost reduction measures, including a reduction in FTEs
• Strategic restructuring to align with long-term megatrends
• Investment in growth and localisation opportunities in emerging markets
• Acquisition of Ellison Surface Technologies
• Continuous improvement in the management of corporate responsibility issues
• Proactive carbon reduction initiatives throughout operations

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Code of Conduct
• Supplier sustainability requirements

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Acceleration in the transition to electric vehicles
• Continued environmental activism
• Greater geopolitical risk

Opportunities

• Development of energy-efficient products and processes
• Growth in the electric vehicle market

Reporting Standards

Frameworks Used: TCFD

Certifications: OHSAS 18001, ISO 14001, ISO 9001, Nadcap, IATF 16949, ISO 50001

Third-party Assurance: PricewaterhouseCoopers LLP

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Surface Technology for component reclamation
• Low Pressure Carburising (LPC)
• Corr-I-Dur
• Specialty Stainless Steel Processing (S³P)

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Climate Change
• Safety
• Diversity & Inclusion
• Human Rights
• Responsible Business Ethics

Environmental Achievements

• Total CO2e emissions reduced by 6% from 2021, despite a 21% increase in sales.
• 99% of operating facilities achieved or maintained ISO 14001:2015 accreditation (2021: 97%).
• Science Based Target initiative (SBTi) accepted Bodycote's carbon emission reduction targets (28% reduction of Scope 1 and 2 emissions by 2030).

Social Achievements

• Total Reportable Case (TRC) rate decreased to 2.5 (2021: 2.9), and the Lost Time Injury (LTI) rate decreased to 1.2 (2021: 1.7).
• Continued sponsoring Company-wide fitness initiatives and supporting local fitness activities.
• Promoting total wellbeing through regular communications on managing stress and mental wellbeing.

Governance Achievements

• Significant work undertaken with Senior Management and the Board to challenge the Group’s strategy to ensure it remains sustainable under various future scenarios.
• Board visits to facilities to understand markets, customers, and competitive position.
• Welcomed Cynthia Gordon to the Board.

Climate Goals & Targets

Environmental Challenges

• High volatility of energy prices.
• Cost inflation (energy and labor).
• Supply chain issues (particularly impacting automotive production).
• Geopolitical risks (war in Ukraine, international tensions, trade barriers).
• Potential future pandemics.

Mitigation Strategies

• Passing through energy price increases to customers via nil margin surcharges and contractual indexation.
• Addressing labor inflation through price increases and contractual indexation.
• Implementing energy surcharges (fully recovered in H2 2022).
• Price increases fully recovered general inflation, including wage increases.
• Investing in capacity growth in higher growth markets (Specialist Technologies, Emerging Markets, civil aerospace, electric vehicles).
• Robust business continuity plans in place for all plants.
• Insurance cover, including business interruption cover.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier’s Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Increased severity of extreme weather events
• Changes/extreme variability in weather patterns

Transition Risks

• Increased regulation and pricing of GHG emissions
• Government incentives
• Accelerated transition from ICE to EVs
• Deployment of lower emissions technologies
• Increased pricing of GHG emissions
• Increased regulation of GHG emissions
• Exposure to litigation
• Pressure groups
• Influence of ESG on debt-rating agencies

Opportunities

• Revenue uplift from providing carbon emissions reductions opportunities to customers and increased outsourcing by customers to Bodycote
• Revenue uplift from increased customer outsourcing resulting from the Group’s access to energy tax exemptions from emissions avoidance in certain markets
• Well-positioned to service EV components
• Deployment of lower GHG emissions technologies

Reporting Standards

Frameworks Used: TCFD, SBTi

Certifications: ISO 14001, OHSAS 18001, ISO 9001, Nadcap, IATF 16949, ISO 50001

Third-party Assurance: PricewaterhouseCoopers LLP

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Corr-I-Dur® treatment (sustainable substitute for hard chrome)

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Health and Safety
• People Management
• Diversity, Equity and Inclusion
• Employment Practices
• Decarbonization
• Customer Sustainability
• Ethical Business
• Responsible Supplier Management
• Human Rights
• Modern Slavery

Environmental Achievements

• Reduced absolute Scope 1 and 2 GHG emissions by 2% year-on-year (location-based).
• Improved emissions intensity by 7% compared with 2022.
• Reduced energy consumption by 4.1% in 2023.
• Reduced energy intensity by 9% year-on-year.
• Decreased CO2e emissions by 47% per part processed for a large customer since 2019.
• Achieved ISO 50001 certification at one of its largest sites in China.
• Reduced water withdrawal by 8% compared to 2022.
• Reduced water intensity by 13% compared to 2022.

Social Achievements

• Launched new leading indicators of safety performance in 2023, including an updated ‘safety involvement index’.
• Reported 356 near misses in 2023 (2022: 362).
• Identified 2,454 opportunities for improvement in 2023 (2022: 1,871).
• Introduced a new “Safety Day” for general managers and senior leadership team in UK operations.
• Bodycote employees walked a total of 185 million steps as part of the “Walktober” campaign.
• Established new processes and platforms for cross-divisional and inter-regional collaboration on EHS.
• Introduced a Remote Working Policy in 2022.
• Engaged around 100 colleagues in employee feedback sessions with a Non-Executive Director.

Governance Achievements

• Appointed a dedicated Chief Sustainability Officer.
• ESG metrics are included in the annual bonus scheme.
• 97% completion rate for all interactive ethics training courses.
• All reports made to the whistleblowing helpline in 2023 were resolved without remedial action.

Climate Goals & Targets

Environmental Challenges

• Increase in incidents relating to manual handling of parts, slips, trips and falls, and lifting operations.
• Need to further develop a longer-term decarbonisation strategy and renewable electricity roadmap.
• Refinement of Scope 3 inventory needed for future disclosure.

Mitigation Strategies

• Delivering targeted and timely employee engagement activities.
• Investments in manual handling and material handling improvements.
• Roll-out of new ‘Bodycote Safety Critical Rules’.
• Evolve governance and training processes underpinning health and safety management.
• Implementation of metrics to monitor customer engagement on sustainability-related topics.
• Further development of tools to undertake service carbon footprint calculations and quantify avoided emissions.

Supply Chain Management

Responsible Procurement

• Groupwide Supplier Code of Conduct
• Sustainable Procurement Policy

Climate-Related Risks & Opportunities

Opportunities

• Providing lower-carbon heat treatment services to customers.

Reporting Standards

Frameworks Used: GRI Index, SASB, TCFD

Certifications: ISO 45001, ISO 14001, ISO 50001 (in select locations)

UN Sustainable Development Goals

• SDG 13 (Climate Action)
• SDG 12 (Responsible Consumption and Production)
• SDG 5 (Gender Equality)
• SDG 9 (Industry, Innovation and Infrastructure)
• SDG 10 (Reduced Inequalities)
• SDG 8 (Decent Work and Economic Growth)

Sustainable Products & Innovation

• New furnace equipment enabling up to 50% more parts per cycle, reducing energy consumption by a third.