Electrocomponents ESG approach May 2021 - Making amazing happen for a better world
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Electrocomponents ESG approach May 2021 1 Making amazing happen for a better world
Making amazing happen for a better world
Electrocomponents is at the heart of keeping businesses,
critical industries and communities running. We help our
customers develop innovative technologies and
engineering solutions that make amazing happen for a
better world.
We are committed to addressing environmental and social
issues which are critical to our future; from tackling climate
change to helping communities to thrive and championing
diversity and inclusion. We take this responsibility seriously
and that’s why we’re accelerating our efforts to help
create a more sustainable and inclusive world.
“We are proud of the progress we have made to step
change our ESG approach over the last year and we will
continue to evolve and strengthen our commitments in the
year ahead. In doing so, we will deliver greater value for our
stakeholders, realise our Destination 2025 strategy and
make amazing happen for a better world.”
Lindsley Ruth, Chief Executive Officer
2
Overview
Building on our strong track record:
An ESG leader in global industrial distribution, ambition to be top
tier across all sectors*
Strong track record in reducing our environmental impacts – 62%
reduction in tonnes of CO2 since 2014/15**. Electricity from
renewable sources accounts for 67% of Group electricity use
Focus on education programmes to inspire future engineers and
innovative solutions to key global issues
Extensive support for customers, colleagues, suppliers and
communities during COVID-19, embedded into BAU
Four ESG pillars with 2024/25 targets and initiatives identified
Environment
Customers and suppliers
People and health & safety
Community
Underpinned by strong governance, ethics and compliance
Aligned with our purpose and Destination 2025 strategy
ESG mission aligned with our purpose, strategic priorities, Group
targets and key initiatives
Building alignment with strategic investment plans
* See slide 18 for our leadership level performance in key ESG ratings
3 ** Scope 1 and Scope 2 emissions due to premises’ energy use, updated to reflect changes in
reporting methodology and emissions factors
Our ESG approach addresses our most material issues
Buildi
► Materiality assessment conducted in
January 2020 to identify key ESG issues
► Customers, suppliers, our people,
shareholders, regulators, media and NGOs
engaged in the process
► 5 key material issue groupings identified:
• Environment
• Customers and suppliers
• People
• Community
• Governance, ethics & compliance
► The materiality assessment combined with
the UN Sustainable Development Goals
guides our ESG approach, targets, KPIs
and reporting
4
Our ESG approach focuses on four pillars 5
We have a clear focus, 2024/25 targets and key initiatives for each pillar
Environment Customers and suppliers People and health & safety Community
Our focus Proactively address our environmental Work with our suppliers to improve the Build a safe, inclusive and dynamic Enable education and innovation that
impacts to tackle climate change and sustainability of our global value chain culture which enables our people to improve lives and inspire future
ensure our business grows sustainably and deliver innovative and sustainable bring their true self to work and thrive engineers
solutions for our customers
2024/25 Be 50% more sustainable by halving Grow our Group-rolling 12-month Increase our female leader Improve 100,000 lives through our
the intensity of our emissions, Net Promoter Score (NPS) to 70 population 2% year on year from global partnership with The
targets packaging, waste and water 2018/19 baseline of 26% Washing Machine Project
impacts from a 2017/18 baseline Raise employee engagement Our people to volunteer 10,000
score to 77 days annually to have a positive
Reduce our All Accident rate by impact in their communities
30% from the 2017/18 baseline
Key Energy and carbon reduction in Grow sustainable products and solutions Health & safety Global social commitment with The
direct operations and supply chain range Diversity & inclusion Washing Machine Project
initiatives Packaging, waste and water Progress sustainable and ethical Employee engagement Global partnership with Engineers
reduction supply chain – sourcing, Working practices, human rights, Without Borders-International
Transport and logistics optimisation production, certifications, transport fair pay Two paid volunteering days p.a. for
Environmental management and logistics, packaging, labour all employees
systems and compliance standards and human rights Education for future engineers
Supporting
6 SDGS
6
We made good progress against our ESG ambitions in 2020/2021
7
1. Scope 1 and Scope 2 emissions due to premises’ energy use, updated to reflect changes in reporting and emissions factors.
2. At constant exchange rates and updated to reflect changes in reporting methodology.
Environment Our focus Proactively address our environmental impacts to tackle climate change and ensure our business grows sustainably 2024/25 target Be 50% more sustainable by halving the intensity of our emissions, packaging, waste and water impacts from a 2017/18 baseline 8
Environment
Energy and CO2 emissions Current progress
62% reduction in tonnes of CO2 since 2014/15*
Electricity from renewable sources is 67% of total electricity use
Solar panels on new Bad Hersfeld DC – 750 kW capacity
Energy efficiency measures and LED lighting
EV charge points installed in the UK, Americas, France,
Germany and Netherlands
Future focus
Global energy optimisation and decarbonisation strategy for
our 14 DCs, offices, RS Locals, company cars and vans
Transport and logistics optimisation to reduce complexity and
improve sustainability in the end-to-end global supply chain
e.g. optimising transport legs and minimising air freight
Solar panels and automation at Bad Hersfeld
As part of our strategy to build a more scalable, sustainable and
customer-centric supply chain, we have expanded the distribution centre (DC)
in Bad Hersfeld, Germany. The extended state-of-the-art DC, due to open in
Net-zero
autumn 2021, will total 37,600m² and accommodate a product range of over Long-term aim
450,000 products, three times greater than historic levels. We have installed a
major solar energy system on the roof of the extension. The 750 kW capacity
photovoltaic solar panels convert solar radiation directly into electricity,
• Scope 1 and Scope 2 emissions due to premises’ energy use, updated to reflect changes in
providing energy to the RS site and feeding surplus power into the grid. The DC reporting methodology and emissions factors
will have best-in-class automation and technology to increase efficiency and
decrease waste, particularly in packaging and shipping costs.
Environment
Packaging, waste and recycling Packaging Waste and recycling
Current progress Current progress
22% reduction in packaging 40% reduction in waste
intensity since 2014/15* intensity since 2014/15*
Two DCs have automated 76% of our waste is
packaging machines recycled with many key
Optimising packaging weight sites sending no waste to
and volume landfill
Recyclable padded envelopes
used in UK, Ireland, Spain and
Japan
Future focus
Future focus Reduce waste in our
Optimise packaging size and facilities
weight for products/ orders Achieve zero waste to
Increase use of kerb-side landfill at sites where
recyclable packaging alternatives exist
Making our packaging more sustainable More automated packaging Increase recycling and
machines globally, including packaging re-use
We have introduced automated packaging systems at our DCs in Nuneaton, Germany in autumn 2021
UK, and Fort Worth, Americas, and they will be installed in our DC in Germany in Limit single-use plastic
2021. We are focused on optimising packaging size and weight, using Reduce paper used for globally
sustainable materials and increasing use of recyclable packaging. Since June customer orders
2020, we have used 3,458,100 recyclable padded envelopes in our UK *Constant currency basis, updated to reflect changes in reporting
operations which represents 59.7 tonnes of packaging diverted from landfill.Environment
Environmental management systems
Current progress
Certified Emissions Management and Reduction Scheme (CEMARS)
Greenhouse Gas Data Verification standard, ISO 14064-1 UK holders
13 out of 14 DCs have environmental management systems in place -
four are certified to ISO 14001
47 further sites, including the RS Local trade counters, are certified to
ISO 14001 or have internal environmental management systems
By revenue, over 52% of our operations are covered by ISO 14001
Future focus
Further extend coverage of ISO 14001 across Electrocomponents
operations
11Environment
TCFD – 2020/21 progress
Current progress
Early TCFD supporter working towards full disclosure
Governance Strategy Risk management Metrics and targets
• Established cross- • ESG and climate • Group-wide climate- • Delivered 46.8%
functional TCFD change integrated into related risk and reduction in CO2
steering committee the Group’s Destination opportunity assessment intensity against target
• Enhanced reporting 2025 strategy conducted to reduce emissions
to Board and SMT • Increased focus on low- • Enterprise risk
intensity by 50% by 2025
• Appointed VP carbon products management processes (from 2018 baseline);
Social Responsibility • Reorganisation of supply updated and improved • Scored A- in CDP 2020,
and Sustainability to chain to reduce cost to identify and assess placing Group in
oversee ESG and and carbon climate change risks leadership category
climate action plan • Scenario analysis
preparation
12Environment
TCFD – 2021/22 priorities
Future focus
Governance Strategy Risk management Metrics and targets
• Group ESG Leadership • Conduct scenario • Update and expand • Establish baseline
Committee chaired by analysis for 1.5ºC and 4º climate risk and Scope 3 emissions
Board member pathways and integrate opportunity assessments across all relevant
• Further incorporate recommendations into to supply chain and categories
climate considerations future strategy and product portfolio • Develop long-term
into Group policies and financial planning • Further embed climate- net-zero ambition
processes • Develop commercial related risk and and timeline, with
• Climate change opportunities to offer low- opportunity assessment near-term science-
considerations carbon product and into our enterprise risk- based targets
included in executive service solutions to management processes
renumeration customers
13Customers and suppliers
Our focus
Customers
Work with our suppliers to improve the Current progress
sustainability of our global value chain and
deliver innovative and sustainable solutions for Developing a portfolio of value-added service solutions that help our customers
our customers be more sustainable e.g. leveraging IoT capability to connect, monitor, maintain
and improve the efficiency of operations and reduce environmental impacts
2024/25 target Awarded EcoVadis gold medal rating showing we are a trusted partner for
customers and suppliers, prioritising sustainable and ethical business
Grow our Group rolling 12-month Net Promoter
Score (NPS) to 70 85% of our revenue is from sites accredited to ISO9001, the global quality
management standard that helps ensure customers can buy with confidence
Future focus
Develop smart-factory sustainability solutions
Work with suppliers to assess and source new sustainable product ranges with
third-party certifications and promote these through online channels and DCs
Offer green delivery options and improve the sustainability of our packaging
Helping our customers protect the environment
Through RS Monition we offer a service to monitor energy usage at specific points by
installing data-enabled power meters to certain production lines or areas of a plant.
These meters feed their data into the cloud system, enabling managers to understand
the detailed energy intensity of their processes and finished products. The benefits
14 include reduced energy costs due to reduced consumption of electricity and steam
and reduces greenhouse gas emissions as less power needs to be generated.Customers and suppliers
Suppliers
Current progress
Signatories of UN Global Compact confirming our commitment to human rights,
business ethics and the UN SDGs throughout our global value chain
Worked with our suppliers to begin a global programme of sourcing, storing and
delivering products closer to the customer, enabled by our global network of DCs
Switched the delivery of our product replenishments to our Asia Pacific DCs from air to
sea, reducing the associated Scope 3 emissions by c.50%
Reinforced ethical sourcing programme for RS PRO suppliers in Asia Pacific with
approximately 80 audits conducted over the past two years
Incorporated our ethical sourcing policy into new suppliers’ onboarding experience
and embedded ESG clauses into own-brand supplier contracts
Future focus
Work proactively with suppliers to develop more sustainable products, packaging and
delivery options for customers. Leverage our DCs to enable suppliers to showcase the
latest developments to our customers
Continue to advance our programme to source, store and deliver closer to the
customer, thereby cutting costs and carbon from our supply chain
Proactively engage with our suppliers globally to raise awareness and provide
tools and support to advance key ESG issues such as environment, human rights,
15 legal compliance and product standardsPeople and health & safety Our focus Build a safe, inclusive and dynamic culture which enables our people to bring their true self to work and thrive Our 2024/25 targets • Increase our female leader population 2% year on year from a 2018/19 baseline of 26% • 30% reduction in All Accident rate from a 2017/18 baseline • Improve our employee engagement score to 77 16
People and health & safety
Current progress
Employee engagement score increased from 72 to 74 in 2020/21
Four employee inclusion networks established – race, gender, LGBTQ+ and
wellbeing, aligned to our global D&I strategy. Each host inclusion
& wellbeing events, campaigns and training throughout the year
Building future skills - apprenticeship programme; Future Shapers talent
development programme; and Learning Academies in digital and data
Launched a global leadership framework – Amazing Leaders to deliver
Destination 2025
Ongoing development of talent strategy and Future Shapers programme to
identify and accelerate top talent across the business and ensure strong
succession planning
Lateral flow testing
In February 2021, in line with Public Health All Accident frequency rate was down by 36% to 0.44 / 200,000 hours
England (PHE) guidance, we opened
lateral flow test centres on our sites in Health, safety and wellbeing of our people has been top priority during
Corby and Nuneaton in the UK. Testing COVID-19, e.g. Keepconnectedec.com website for employees and their
was up and running within three weeks of families as well as customers and suppliers
gaining approval from PHE to operate the
test centres on our premises. Manned by
volunteers from our DCs and fully trained
Mental health training delivered for over 120 mental health first aiders and
by PHE, we enable the testing of up to commenced for 300 people managers.
500 employees per week across the sites.People and health & safety
Future focus
Increase gender and racial diversity of our senior leadership team
Improve talent acquisition and retention to support greater diversity
across the business
Encourage voluntary disclosure of diversity data where permitted
Increase the priority of race within our D&I strategy
Ensure agility in our D&I strategy to respond to societal influences
DELIVERING CARE THROUGH COVID-19
National lockdowns introduced to limit the spread of COVID-19 Train 300 people managers in mental health awareness
caused significant stress and sudden change in business practices,
locations and protocols. Synovos stayed true to its core values and Focus on inclusion, wellbeing and mental and physical health emerging
delivered individual care packages to all employees and their
from COVID-19 pandemic
families. More than 13,000 n95 masks, 2,000 medical masks and
hundreds of face shields, aprons, disinfectant, towels and gloves
were delivered to employees working at client sites to meet client Focus on safety and avoiding all preventable accidents
safety requirements.
Ensure safety of our people returning to offices post COVID-19
Furthermore, Synovos shipped care packages including face masks,
sanitiser and toilet paper to every employee in the United States,
Puerto Rico, Canada, Mexico, Ireland, Belgium and Singapore. In
total, more than 2,500 shipments were made to support customers
and employees.Community
Our focus
Enable education and innovation that improve Current progress
lives and inspire future engineers Launched our first global social commitment with The Washing Machine Project
to help improve the lives of 100,000 people worldwide
Our 2024/25 targets
• Improve 100,000 lives through our global New global partnership with Engineers Without Borders-International to involve
partnership with The Washing Machine Project 7,000 students in engineering design challenges that address global issues
• Our people to volunteer 10,000 days annually to All our people have two paid volunteering days per annum to have a positive
have a positive impact in their communities impact in their local community
Supported REflect 2020 event, promoting engineering and technology careers
to young people from ethnic minority communities and disadvantaged
backgrounds
STEM educational resources and skills training for students - primary to university
age - during the COVID-19 pandemic. Our support included: lesson plans,
EdTech products and OKdo Kits for Kids; employability skills and hands-on
learning both inside and outside the classroom
Fresh Advisors Board of 15 young people offers ideas and recommendations on
how we can be more relevant and appealing to their generation
Promoting young female engineering talent e.g. supporting GirlCode in South
Africa and sponsoring IET’s Young Woman Engineer of the Year
Awards and accolades from the Elektra awards and The Youth Group
19 200 RS colleagues volunteer as STEM AmbassadorsCommunity
Future focus
Build awareness of our global social partnership with The Washing Machine
Project
Continue to develop educational initiatives and solutions to engage
students of all ages to become future engineers and technologists
Extend the reach of our educational programmes globally
Helping improve the lives of 100,000 people worldwide
g
We have chosen The Washing Machine Project as our
first global social commitment. We wanted to unite our
business around a global cause with an innovative
engineering solution at its heart where we could make
a tangible difference to people’s lives. Our support
includes encouraging the Group’s employees,
customers and suppliers to contribute through
fundraising and volunteering activities, in addition to
Electrocomponents offering match funding up to
£100,000 annually for the three-year partnership.Our ESG approach in action during the COVID-19 pandemic
Major focus on our people’s Continuing to deliver a seamless Helping keep critical industries
safety and wellbeing first class service to our customers running
21 3D printing of visors for frontline staff Supporting ventilator production Kits for Kids – home educationApproach underpinned by strong governance, ethics and compliance
Governance Ethics and compliance
Group ESG Leadership Committee Current progress
chaired by a Board member We have a suite of policies and procedures in place to
maintain the highest ethical standards, covering:
Board and Senior Management Team
Code of conduct for employees
oversight of ESG
New modern slavery policy, modern slavery act
Global ESG team formed to drive and transparency statement, code of conduct
deliver an ambitious ESG plan
Supplier ethical sourcing policy and declarations
Business ethics and human rights
Anti bribery, corruption and competitive behaviour
Privacy, data and cyber security
Future focus
Policy library and data centre
22 Link to ethics & complianceA risk-based approach to data and information security
Data and information security Joseph Da Silva
Cyber security breach / information loss Chief Information Security Officer
is one of our Group’s principal
operational risks
“We recognise that information security is a business
We have a business-focused and risk- issue, not solely a technology-focused one, and
based information security programme equally that it is a fast-moving and constantly evolving
that is aligned with the principles of NIST- area. Our approach reflects this, and we are focused
CSF and ISO 27001 on developing a level of continuous vigilance that is
both business- and customer-focused.
We proactively identify and assess
security threats, performing regular
testing and monitoring of our systems for There is no such thing as 100% secure and, therefore,
security vulnerabilities we follow a pragmatic, risk-based and customer-
focused approach that enables us to do the right thing
We educate our people on an ongoing while balancing our need to innovate.”
basis to make them aware of information
security threats, including in their home
lives, and to understand the role they
play in protecting our company
23ESG ratings and frameworks
Our ESG reporting is informed by best practice standards and we perform strongly in external benchmarks:
Frameworks and standards ESG external ratings
CDP Climate change leadership score: A-
Sustainalytics rating: negligible risk (6.2), 10th/13,494
(all companies), 3rd in sector
MSCI ESG rating: A
EcoVadis rating: gold medal
FTSE4Good Index score: 3.2/5
24ESG is critical to the delivery of our Destination 2025 strategy 25
Our approach is delivered across our global network Our nine brands and 7,500+ people put our purpose and ESG ambition into action globally, having a positive impact across 32 countries. 26
Our future focus
We are on an exciting journey to evolve and strengthen our ESG approach and to continuously
enhance the value we deliver for our stakeholders. Over the next year we will focus on:
Environment Customers and People Community
suppliers
Advancing our actions Building a diverse, Promoting The Washing
to run clean and green Working with our suppliers engaged and dynamic Machine Project to help
business operations to improve the team, reflective of the improve the lives of
and develop our sustainability of our global customers and 100,000 people globally,
long-term plan to be value chain and deliver communities we serve, as well as enabling
net zero innovative and which enables our education that inspires
sustainable solutions for people to thrive the next generation of
our customers engineers
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