Chairman's statement 2022
A focus on sustainability
2022 has been a further significant step in the execution of our Group sustainability strategy.
I am pleased to report that the Board adopted Melrose’s inaugural Net Zero Transition Plan in 2022. Through this, we provide our stakeholders with clarity around the actions we intend to take in the transition to a net zero economy, and how we plan to execute on our interim and long-term emissions reduction targets. Our established Group environmental sustainability targets include reduction of Greenhouse Gas (“GHG”) emissions, growth of renewable electricity within the energy mix of each of our businesses, increase in the percentage of solid non-hazardous waste diverted from landfill, and reduction in water withdrawal that will help drive the sustainability of their operations. Sustainability is embedded in each business’s operational excellence, innovative climate-focused R&D, and in their respective product ranges that seek to help decarbonise their sectors, accelerating the global move towards Net Zero.
We have prepared our second annual disclosures in line with the latest recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”)(1) and the Financial Reporting Council’s (“FRC”) thematic review of climate-related considerations(2). Key updates include initial qualitative disclosures relating to the quantification of the financial impacts of climate-related risks, articulation of our Group sustainability and climate governance framework, and building on our climate scenario analysis to inform additional detail on the Group’s approach to identification, assessment and management of climate transition risks and opportunities.
Implementing our Group sustainability priorities is an important part of our “Buy, Improve, Sell” strategy, and is embedded within our efforts to improve returns for our shareholders as we address the material sustainability topics that are of most concern to our stakeholders. Last year, Responsible Sourcing and Water were elevated in our review of the Melrose Group materiality matrix. In 2022, we took proactive steps to address these topics across the Group. To further embed Responsible Sourcing within our businesses, we launched a Group Supply Chain Management programme which included the development of a Group Supply Chain policy and expanded our visibility of Scope 3 emissions attributable to each business through the participation in the Carbon Disclosure Project (“CDP”) Supply Chain engagement initiative.
In seeking to help address global water challenges, we implemented our first Group Water Stewardship Programme across our businesses, set a Group-level water withdrawal reduction target, launched our first Group Water policy, and made our inaugural CDP Water Security submission. Looking towards nature-related risks and opportunities as an emerging focus for the global business community, we also adopted a foundational Group Biodiversity policy. We recognise the importance of encouraging good governance practices within each of our businesses and seek to play our part in protecting the natural world.
Although climate change and other environmental topics remain a priority, this is not to the exclusion of societal factors. Providing a safe and supportive working environment, access to learning and development opportunities, and encouraging diversity and inclusion at all levels, will help our businesses continue to attract and retain the best talent. Whilst it is pleasing to note that in line with our Group target, we have achieved a Lost Time Accident (“LTA”) frequency rate of below 0.1, we continue to prioritise continuous health and safety improvements across each of our businesses in the push for a LTA frequency rate of zero.
Our businesses are also encouraged to support the local communities which they are part of through charitable and community projects. In 2022, this included our businesses’ involvement in community initiatives towards humanitarian action in Ukraine.
We realise that building strong sustainable businesses is a long-term journey, and whilst there remains plenty for us to deliver, it has been promising to see our improvement to date being recognised by several of the key ESG benchmarking agencies, including MSCI providing Melrose with an ‘A’ rating, and Sustainalytics who have reduced our risk rating from ‘high’ to ‘medium’ and placed us in the top 10% of our peers.