Corporate Responsibility

Whilst Melrose supports and monitors the corporate social responsibility policies, practices and initiatives across its businesses, the Group operates on a decentralised basis.

Consequently, responsibility for the adoption of policies, practices and initiatives sits at a local business unit level. This ensures that rigorous and targeted policies and procedures are implemented that meet local regulatory requirements and guidance, whilst also taking into account the size and nature of the businesses.

Employment policies

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“The Group recognises its responsibilities for the fair treatment of all its current and potential employees.”

The Group recognises its responsibilities for the fair treatment of all its current and potential employees, in accordance with legislation applicable to the territories within which it operates, together with relevant guidance on good practice where appropriate.

As part of the Group’s decentralised approach, each of Melrose’s businesses is responsible for setting and measuring its own employment and employee-related KPIs and, as such, these can vary throughout the Group. However, such measurements will generally include absenteeism, punctuality, headcount and employee relations issues. Any concerns or adverse trends are responded to in a timely manner.

Equal opportunities for appropriate training, career development and promotion are available to all employees within the Group regardless of any disability, gender, religion, race, nationality, sexual orientation or age.

Applications for employment by disabled persons are always fully and fairly considered by the Group and are considered on merit, with regard only to the job-specific requirements and the relevant applicant’s aptitude and ability to carry out the role.

Where reasonable to do so, arrangements will be made to enable disabled persons to carry out a specific role. Furthermore, as a Group-wide policy and so far as particular disabilities permit, Melrose and each of its businesses will, where practicable, make every effort to provide continued employment in the same role for employees who are disabled during their period of employment or, where necessary, provide such employees with a suitable alternative role, together with appropriate training.

It is the Group’s policy that in recruitment, training, career development and promotion, the treatment of disabled persons should, as far as possible, be identical to that of other employees. Melrose is proud to be a member of the Business Disability Forum, a not-for-profit member organisation that works with the business community to understand the changes required in the workplace in order that disabled persons are treated fairly, so that they can contribute to business success, to society and to economic growth.

Employee involvement, consultation and development

The Group places great importance on good labour relations, employee engagement and employee development. The responsibility for the implementation and management of employment practices rests with local management, in a manner appropriate to each business.

A culture of clear communication and employee consultation and engagement is inherent across the Group. Employee briefing sessions with employee representatives are held on a regular basis to communicate strategy, key changes, financial results, achievements and other important issues to employees, and to receive feedback from them on these issues. Regular appraisals, employee surveys, notice boards, team meetings, suggestion boxes and newsletters are also used to communicate and engage with employees, and to solicit their feedback on issues of concern to them.

Extensive training is available to all staff and is actively encouraged to ensure that a high standard of skill is maintained across the Group. Inter-departmental training programmes are also put in place across the Group to ensure that skills are shared between operations. The importance of training extends beyond on-the-job training and also focuses on enhancing personal development. In addition, apprenticeship programmes help to assist with training a new generation of employees and to ensure knowledge is retained within the businesses. Employees across the Group are encouraged to think innovatively and to have regard for both financial and economic factors affecting the Group.

The Group regards employee training and advancement as an essential element of industrial relations.

Employee initiatives

During 2015, Brush implemented a range of employee-related initiatives. Some of these are listed below:

- Brush US initiated a Tuition Reimbursement Program to all full-time employees. The Group believes that by supporting its employees in self-development and educational efforts, through partial reimbursements for expenses associated with continuing education courses through accredited institutions of learning or certificated programmes, it will help to secure increased responsibility and growth within an individual’s professional career, as well as enhancing the business’s ability to meet customer needs. An employee is eligible for participation in this programme providing they have completed at least six full-time months of employment and the courses are job and/or industry-related.

- Brush US also introduced inter-departmental training throughout the business. Among other things, the training covers: operations, human resources, project management and health and safety. Through this training, employees have the opportunity to increase their knowledge of the whole of the business, which assists with inter-departmental communication. It also affords employees the opportunity to apply for vacancies within other departments or divisions.

- Brush UK has continued to invest in its apprentice programme, with 41 apprentices taken on during 2015. The business has concentrated on enhancing the development of its apprentices by working in partnership with the Prince’s Trust. The apprentices were asked to raise funds for the Prince’s Trust through a project management orientated initiative which resulted in them raising around £2,000. This initiative assisted with their personal development and leadership skills as well as raising the profile of Brush and the Prince’s Trust.

- Following the launch in 2014 of the Brush Leadership and Development Programme, accredited to the Institute of Leadership & Management (ILM), Brush UK decided to build on this success by running the programme again in 2015. The programme was delivered across the business and included qualifications such as: Level 2 Certificate in Leadership and Team Skills, Level 3 Certificate in Leadership and Management and the Level 4 Diploma in Leadership and Management.

- During 2015, Brush UK continued to raise the profile of its graduate scheme by reviewing and refining its existing programme and attending an increased number of graduate fairs.

- Brush takes the health and well-being of its employees very seriously and has continued to develop and enhance its Occupational Health Service, which is available to employees five days a week. The service can make referrals to doctors, physiotherapists or counselling services, as required, ensuring that the business supports its employees throughout any periods of absence or illness. Health promotion is a key feature of the service, which is continually developing through awareness campaigns and has had a positive impact on both the employees and the business as a whole.

Gender diversity

Employee

The Board continues to pursue diversity, including gender diversity, throughout the Group. However, given the Group’s strategic business model and the frequent turnover of businesses, the Group does not think that setting and committing to specific diversity targets in relation to the composition of the Board, senior management and the workforce in the Group’s businesses is correct for Melrose. The utmost priority, across the Group, is to ensure both Melrose and its businesses employ the best person for each role.

The charts below show the total number of males and females working within the Group as at 31 December 2015.

Diversity Pie

Health & Safety

The Board is committed to minimising the health and safety risks that each Group employee is exposed to by promoting the effective use and management of business-specific policies and procedures.

The Group has a policy to ensure that the Directors are made aware of any serious health and safety incidents, wherever they occur in the world, without delay, to ensure that suitable investigations and corrective action can be organised. Current events and issues relating to health and safety matters are also discussed within the Group at quarterly Board meetings of the Company.

Brush is responsible for setting its own detailed arrangements concerning health and safety policies and procedures, in accordance with local health and safety legislation. As a general rule, Brush strives to achieve best practice in terms of what is suitable and practical for the size and nature of its operations. Defined and business-specific health and safety key performance indicators are also used. Reports detailing Brush’s performance in relation to three health and safety KPIs (major accident frequency rate, accident frequency rate and accident severity rate) are presented to the Melrose Board and reviewed at each quarterly Board meeting. There were no issues or concerns identified by the Board during 2015. While no corrective measures were deemed necessary, the Board continues to encourage management to remain vigilant where employee and third-party safety is concerned.

For more information on Brush’s health and safety KPIs, see the key performance indicators section on page 19 of the 2015 Annual Report.

Brush’s manufacturing locations in both the UK and the Czech Republic hold ISO 18001 certification, the internationally-recognised assessment standard for occupational health and safety management systems, with the Netherlands plant hoping to achieve certification in 2016. Divisional managers within Brush are responsible for ensuring that health and safety remains a key focus and that active procedures and monitoring systems are in place. Detailed health and safety plans are set by Brush management each year to determine annual targets and improvement initiatives. Since commencement of operations in March 2015, Brush’s factory in China has operated with zero lost time incidents.

Brush also has health and safety committees, which meet on a regular basis and are made up of representatives from both management and shop floor level personnel. Each of the committees has wide-ranging responsibilities which vary between operations and include the review of reported incidents and the monitoring of incident trends. These committees are also responsible for ensuring that corrective measures are implemented when accidents occur and that all incidents, whether or not they are deemed reportable under local legislation, are given due attention.

One of the key responsibilities for these committees is to carry out regular tours of the premises in which they operate, in order to ensure compliance with local policies and procedures. These tours also identify potential hazards, for which counter-measures can be identified to prevent accidents from happening. Each committee recommendation is followed up at the next divisional board meeting to ensure that issues are resolved. Additionally, operations are audited by the committees at least annually and reports of performance and recommended improvements are prepared and circulated to the divisional senior management teams. Divisional managers are provided with detailed health and safety reports on a frequent basis to ensure that such matters are given high visibility and that improvements are authorised and implemented quickly.

Health and safety initiatives

During 2015, Brush implemented a range of health and safety initiatives, some of which are listed below:

- During 2015, the behavioural safety programme implemented by Brush UK in 2014 continued to improve the already strong health and safety culture within the business. The programme focuses on developing a proactive approach among Brush employees so that they increase their responsibility and accountability for their own, and their working group’s, actions while ensuring they intervene at the earliest opportunity to stop hazardous acts or correct any unsafe condition.

- During 2015, Brush’s operations in the Czech Republic focused its health and safety efforts on working at heights. It installed a fall protection system onto crane runways and thereby significantly decreased the dangers associated with falls during regular maintenance activities. In total, Brush’s operations in the Czech Republic implemented more than 100 health and safety improvements during the year.

Following these initiatives, among others, Brush has recognised the following benefits:

- a 40% reduction in accident frequency rate (based upon the number of all lost time accidents per 200,000 hours worked) compared to 2014, with the accident severity rate (based on the average number of days employees have taken off work following work-related accidents) also being reduced by 40% over the year;

- a workforce engaged in matters relating to health and safety;

- a clear demonstration of the Brush management’s intentions to continually improve the standard of health and safety within the business;and

- a recognition that a strong health and safety culture can have a positive impact on the growth and brand value of the business.

The Environment

The Melrose Board fully understands the importance of the Group’s environmental responsibilities and is committed to ensuring that operations have the minimum possible adverse effect on the environment.

Although there are no standardised environmental KPIs currently used within the Group, the Group ensures businesses understand the importance of monitoring the impact of their operations on the environment. A range of KPIs are used as environmental measures, including energy consumption, CO2 emissions, water consumption, water contamination, waste disposal, solid and liquid waste generation, recycling and volatile organic compound emissions. These KPIs are then used to plan for ongoing improvements.

During the year, the Company continued to comply with the ongoing annual reporting requirements of the UK’s Carbon Reduction Commitment Energy Efficiency Scheme.

Environmental Initiatives

During 2015, Brush implemented a range of environmental improvement initiatives. Some of these are listed below:

  • - Brush UK focused on making further energy savings, including in gas and electricity consumption. Lighting initiatives across the Loughborough site have continued to generate savings in certain working facilities.
     
  • - Brush UK introduced the use of reusable plastic pallets to minimise the use of wooden pallets, packaging and waste disposal.

Greenhouse gas emissions

The Group is required to measure and report its direct and indirect greenhouse gas (“GHG”) emissions pursuant to the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013.

The GHG reporting period is aligned to the Company’s financial reporting year.

The data has been prepared in accordance with the principles and requirements of the Greenhouse Gas Protocol, Corporate Accounting and Reporting Standard (Revised Edition) 2004 for Scope 1 and Scope 2 emissions and the Department for Environment, Food & Rural Affairs (“DEFRA”) guidance on how to measure and report on greenhouse gas emissions, as first published in 2013 and subsequently updated.

We have reported on all emission sources required under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013. These emission sources fall within our consolidated financial statements.

The reported emissions cover all continuing operations of the Group as at 31 December 2015. Emissions from entities disposed of during the financial year ended 31 December 2015 are not accounted for in the reported GHG data. Therefore, for example, the data from the Elster business has not been included within the reported GHG data, as this business was divested during the year.

All material emissions from within the organisational and operational scope and boundaries of the Group are reported. The emissions from owned vehicle transport (i.e. Group-owned cars and vans, lorries and fork lift trucks) and the emissions associated with refrigeration have been excluded from the report on a de minimis basis. The GHG emissions from these sources have been estimated to account for less than 1% of the total Melrose Group emissions reported on an individual basis and as a combined total to account for less than 2% of the total Melrose Group GHG emissions reported.

The financial reporting year of 2014 was the second year in which the Company had been required to disclose its GHG emissions data within the Annual Report and represents the baseline against which subsequent emission data sets are expected to be based. The main change in the data compared to the baseline data, as presented in the table above, is due to the divestment of the Elster business units in 2015. The Elster group represented approximately 52% of the total GHG emissions previously reported in the Annual Report for the year ended 31 December 2014. Other, smaller, changes have resulted from the closure and relocation of activities from some sites and general efficiency savings and improvements at a number of other sites.

Given that the Melrose business model is to acquire and divest businesses over a three-to-five-year time frame, there may be significant year-on-year changes in the reported emissions data which may not reflect the underlying GHG performance of the Group’s businesses.

Global GHG Emissions data (tonnes CO2e(1))

Emissions sources:Year ended 31 December 2015(2)Year ended 31 December 2015(2)Change
Combustion of fuel & operation of facilities 8,825 11,351 (22)%
Electricity, heat and steam purchased for own use 4,053 5,119 (21)%
Overseas electricity(2) 8,719 9,002 (3)%
Company’s chosen intensity measurement:
Emissions reported above normalised to tonnes per £1,000 turnover
0.083 0.079 5%

(1) CO2e – carbon dioxide equivalent, this figure includes greenhouse gases in addition to carbon dioxide.

(2) Excluding emissions from discontinued operations

(3) The emissions associated with overseas electricity are presented in tonnes carbon dioxide only as per the DEFRA guidance.

Energy Savings Opportunity Scheme

Article 8 of the EU Energy Efficiency Directive (“EED”) 2012/27/EU requires ‘large’ organisations to carry out energy audits at least once every four years to help achieve the EU’s target of 20% improvement in energy efficiency by 2020.

In the UK, Article 8 of the EED was transposed into the Energy Savings Opportunity Scheme (“ESOS”) Regulations 2014, which came into force on 17 July 2014 and which require qualifying organisations to measure energy consumption, evaluate energy efficiency, identify management opportunities, store data and confirm to the UK Environment Agency by 5 December 2015 that an ESOS compliance audit has been completed. Other EU Member states have imposed their own interpretations of Article 8, but generally have similar requirements.

During 2015, Melrose worked with a specialist energy consultancy, CMR Consultants Limited, to ensure that the Group fully complied with its EU EED Article 8 obligations. Energy audits were carried out at Group sites across Europe and compliance was achieved through submission of reports, data and information to the relevant authorities, as appropriate.

Supply chain assurance

Owing to the geographical and operational diversity of Melrose and Brush, and therefore its supplier base, there is no single over-arching Group policy currently in use in relation to suppliers.

However, the security, assurance and ethical compliance of business supply chains is very important to Melrose. Responsibility for the implementation and management of all supplier-related policies rests with local management. Such policies are used in a manner appropriate to the size and complexity of the business and also take into account the nature and geographical representation of key suppliers. A supplier approval process exists within Brush, which is linked to specific and tailored supplier assessments and due diligence requirements.

Human rights and ethical standards

The decentralised nature of the Group means there is no single over-arching policy currently in place with regard to human rights.

However, sound business ethics and integrity are core to the Group’s values and a high importance is placed on dealings with all employees, customers, suppliers and other stakeholders. Melrose is committed to good practice in respect of human rights.

Employees across the Group are required, at all times, to exhibit the highest levels of integrity and to maintain the highest ethical standards in business affairs. The full text of the Melrose Code of Ethics, which all employees of the Group are required to familiarise themselves with, can be found on the Company’s website at www.melroseplc.net/about-us/code-of-ethics.

In addition to the Melrose Code of Ethics, each Group business is expected to have its own code of ethics dealing with matters such as human rights. All business-specific employee policies are prepared locally within each business in order to ensure compliance with local laws and standards as a minimum. Responsibility for the communication and implementation of such policies rests with the relevant senior managers within the Group’s businesses.

Finally, in advance of the need for the Company to report in accordance with the Modern Slavery Act 2015, the Group is taking steps to put in place effective and proportionate procedures to ensure that there are no forms of modern slavery in the Group’s business or supply chains. It is expected that a full statement will be prepared and published on the Group’s website following the end of the current financial year.

 

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