01 BUY IMPROVE
Respect and protect the environment
- Melrose as a Group will achieve net zero GHG emissions by 2050.
- Through 2021, we will develop a multi-year sustainability action plan to embed sustainable performance targets within our Group and the business structure. We will publish those targets.
Environmental performance in 2020
During 2020, operational energy consumption across the Group decreased by 14%, and between 2019 and 2020 our total Scope 1 and Scope 2 GHG emissions decreased by 11%.
These significant reductions were achieved during a year that saw unprecedented lockdowns and associated working restrictions, which included temporary closures of certain of our businesses’ production. Our businesses were proactive in preserving production capabilities during these times, and ensuring that employees could safely attend their sites at the earliest opportunity to mitigate preventable supply chain disruption.
Although it remains difficult to quantify the precise impact of COVID-19 restrictions on production, we recognise that temporary site closures were reasonably limited in duration, and in their impact on our businesses’ operations.
Most indirect production activities were maintained to preserve site integrity and allow our businesses the ability to ramp up production in response to customer requirements following the lifting of restrictions.
With the full, longer-term impact of COVID-19 still under review across the world, we are pleased to have seen a strong improvement in the Group’s emissions reductions outpacing the expected impact of COVID-19 disruption. This demonstrates our commitment towards driving sustainable production methods and infrastructure, and to minimising the potential negative impact that our businesses may have on the environment over the longer term.
Scope 1 and Scope 2 GHG emissions between 2019 and 2020
Melrose Skills Fund
Melrose Skills Fund
The Melrose Skills Fund was launched in 2019 to provide the financing to develop the capabilities required to build the UK’s industrial base, and is utilised by our GKN Aerospace, GKN Automotive and Brush.
With a commitment to invest £10 million over five years through the creation of STEM programmes, apprenticeships and degrees to invest in manufacturing hubs, digital skills, and employee development, Melrose is helping to equip the UK with the future skills it needs to grow its industrial skillset.
Simon Peckham, Chief Executive
Melrose’s position on climate change
Improving operational efficiency is a key factor that shapes the long-term profitability and sustainability of our businesses and contributes to their compliance with increasing environmental standards and regulation. Our ambition is to achieve net zero GHG emissions in our Group’s operations by 2050 in line with the UK Government’s target, in order to achieve the goals of the Paris Agreement. As part of our evolving sustainability strategy, we aim to identify and implement relevant Group level targets to ensure we meet this goal.
The Group recognises the serious threat posed by climate change and the urgent need for meaningful action. We invest in and encourage our businesses to improve their operations and market offerings to minimise their impact on climate change and make them less vulnerable to climate-related risks, while safeguarding their long-term commercial success.
We are believers in industry, and in the potential of industry, to help solve society’s most pressing needs. We buy high-quality but underperforming industrial businesses, with established positions in their markets.
Inherent in the nature of the manufacturing businesses that we acquire is that they often operate in the industries that are some of the hardest to decarbonise. By investing heavily in research and development, we enable our businesses to develop and provide the innovative and cost-effective solutions that their customers need to help tackle underlying causes of climate change.
Melrose sets a positive example and enables and empowers its businesses to follow its lead. Although the central Melrose carbon footprint is relatively limited, we offset the emissions that we generate. The Melrose corporate offices have attained the CarbonNeutral® company certification for 2019, 2020 and 2021 through a combination of internal energy efficiency initiatives and financing high-quality, high-impact emissions reduction projects in accordance with The CarbonNeutral Protocol(1). The Melrose corporate office in the US has also achieved the HinesGo (Green Office) designation in recognition of its sustainability practices and energy efficiency performance, among other environmental and wellbeing criteria.
(1) Source: https://carbonneutral.com/the-carbonneutralprotocol.
Total waste generated in 2020
For more information about our sustainability performance, please explore our Data Centre.Data Centre
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Managing environmental performance
We are committed to implementing environmental management systems to ensure that good environmental governance directly impacts the highest level of our businesses’ executive decision-making, where it can have the most impact. In line with our decentralised model, our businesses are charged with identifying, monitoring and managing their environmental performance, along with the environmental risks that affect their operating and market environments.
Each business has frameworks in place for identifying principal risks and opportunities appropriate to that business, including climate-related risks. Each business’s executive management team regularly reviews the significant climate-related issues, risks and opportunities related to their business. These reviews recognise both the physical and transition risks related to climate-change, and consider the level of climate-related risk that the business is prepared to take in pursuit of its business strategy and the effectiveness of management controls in place to mitigate climate-related risk. In 2020, each of the businesses carried out a climate change risk assessment, covering 88%(1) of the Group’s operations in total. Any identified material risks are discussed with the Melrose senior management team and escalated to the Board where necessary.
With Melrose support, each business invests in and implements appropriate systems and processes to use energy more efficiently, and manage their impact on the environment, and continually reviews these in line with evolving best practices. At the end of 2020, 131 (81%) sites across our businesses were certified to ISO 14001 standard, and 26 sites (16%) had achieved ISO 50001
certification, in recognition of the businesses’ strong focus on ensuring an efficient and sustainable use and management of energy.
Compliance to the standards is ensured by independent auditing. For example, in GKN Automotive, a full re-certification audit is carried out every three years for all sites by the external certification body SGS. No material environmental fines or penalties were issued against any of the businesses in 2020 or in the previous four years. We and our businesses strive to be open and transparent in our actions. In 2021, we will submit our environmental performance data to the CDP for the first time. This data will be publicly accessible through the CDP website at www.cdp.net.
(1) Data has been collected from 96% (by sites) of the Group.
sites across our businesses were certified to ISO 14001 standard at end of 2020
As part of their improvement plans, our businesses seek to reduce their energy usage and GHG emissions within their operations through more efficient use of electricity, fuel and heat, by increasing the proportion of renewable energy where commercially viable, and by implementing other climate-positive actions such as sustainable transport initiatives for employees. The businesses take an appropriately tailored approach to implementing climate-related initiatives that are most relevant and impactful to improving their business activities and requirements, and their operational and market environments. Each business is at a different stage in their climate strategy depending on their maturity in this area, however we are committed to driving environmental awareness across our businesses to help improve performance.
Notable examples of climate-related initiatives and activities in 2020 include:
GKN Aerospace’s decision to move to full ‘green’ electricity use generated through renewable energy in the Netherlands, with an estimated saving of 12,200 metric tonnes of CO2 annually from 2021. In addition, the Trollhättan site in Sweden, which consumes over 50 gigawatt hours (GWh) of electricity annually and is GKN Aerospace’s largest site in Europe, began purchasing renewable energy from its local hydropower plant. • Approximately 45,000 square metres of efficient LED lighting being installed at certain GKN Aerospace facilities in the US and Mexico, saving approximately 800,000 kWh per year in 2020. • Continued promotion by GKN Aerospace (since 2017) of electric vehicle transportation for its employees. It has installed 26 dual point and 17 single point electric vehicle charging stations across eight of its facilities and shares five stations at a multi-tenant location for a total vehicle charging capacity of 74 vehicles per hour. Sustainability Report Continued • GKN Automotive’s European sites continue to drive energy efficiencies and cost savings with ongoing projects relating to LED lighting installation, improved building insulation, and investment in energy-efficient equipment including air conditioning and heating systems. Notable examples in 2020 include the installation of a roof top solar system at the Pune, India site with anticipated annual energy savings of 1,000,000 kWh, and at the Köping, Sweden site, where 100% of heating is now provided by district heating which is generated from industrial waste heat, waste incineration and biofuels. • Investment in energy-efficient equipment by GKN Powder Metallurgy, with a strong focus given to replacing old and less efficient equipment with LED lighting, compressed air generators, motors and motor convertors. • Nortek Global HVAC provides a bus system for employees to use to and from work at their sites in Mexico. This has eliminated more than 700 vehicle trips per day and their associated emissions. In addition to the business-specific examples, the Group as a whole spent £304,579(1) on LED lighting retrofits in 2020.
We encourage our businesses to reduce water consumption through implementing measures to lessen water use throughout the production process. Our businesses continue to make encouraging steps towards reducing their water use, including:
- GKN Automotive tracking water usage and waste generation as part of its product Life Cycle Assessment.
- GKN Powder Metallurgy is in the process of defining KPIs for water management performance along with annual improvement targets, as it recognises that water management performance is one of the business’s key environmental challenges. Water consumption data is presented in Table 4, showing a 7% decrease compared with 2019. We expect this was partially driven by temporary site shutdowns caused by the pandemic.
Melrose Group water consumption data for the period 1 January 2020 – 31 December 2020(1)
|Freshwater water consumption in operation (m3)||3,880,393||4,165,220||-7%|
|Company's chosen intensity ratio:|
|m3 per £1,000 turnover(2)||0.443||0.380||17%|
(1) Water consumption data was collected from 147 sites (93%) across the Group’s businesses, up from 129 sites (80%) in 2019.
Although a small number of sites did not record their water consumption, to give an indication as to size, these sites accounted for less than 3% of the Group’s total GHG emissions in 2020, and so these omissions are not material.
(2) The turnover figure used does not include any share of revenues from entities in which the Group holds an interest of 50% or less.
Our businesses are actively encouraged to reduce the amount of waste they generate and to divert waste from landfill. An example of a business-specific initiative to reduce waste includes the continued expansion of Nortek Global HVAC’s recycling programme, which has reduced the amount of waste sent to landfill by 25% from 4,530 tonnes in 2019 to 3,425 tonnes in 2020. Key recycling initiatives include its cardboard recycling programme with 1,200 tonnes recycled in 2020 (2019: 253 tonnes) and a new paper recycling programme with 11 tonnes recycled in 2020.
The table below shows the waste generation data for the Group in 2020, showing an overall decrease in the total waste generated, as well as the weight of both the non-hazardous and hazardous waste produced by the Group’s businesses. Similar to the water consumption data reported below, we expect this was partially driven by temporary site shutdowns caused by the pandemic.
Melrose Group waste generation data for the period 1 January 2020 – 31 December 2020(1)
|Weight of total non-hazardous waste (tonnes)||139,388||192,869||-28%|
|Weight of total hazardous waste (tonnes)||11,087||13,983||-21%|
|Total waste generated (tonnes)||150,475||206,852||-27%|
|- Total recycled (tonnes)||121,912||176,463||-31%|
|- Total incineration (tonnes)||9,103||-(2)||-|
|- Total landfill (tonnes)||15,601||8,248||+89%(3)|
|Hazardous waste disposed through legally approved treatment routes (tonnes)(4)||3,859||-(2)||-|
(1) Waste generation data was collected from 136 sites (86%) across the Group in 2020, up from 126 (78%) sites in 2019. Although a small number of sites did not record their waste generation, to give an indication as to size, these sites accounted for less than 3% of the Group’s total GHG emissions in 2020, and so these omissions are not material.
(2) “Total incineration” and “Hazardous waste disposed through legally approved treatment routes” were reported for the first time in these categories in 2020 and therefore no prior year comparison is available. Hazardous waste was reported more generally in 2019, but for 2020 we have the data to provide a detailed breakdown as between the different categories of total waste generated, and feel this provides better disclosure.
(3) Total landfill for 2020 accounted for 10% of total waste generated, and the year-on-year increase was largely driven by a change in the sites included in the data coverage for 2020 compared to 2019. Some of the sites that reported for the first time in 2020 mainly send their waste to landfill, as well as some GKN Automotive sites showing an increase in landfill in 2020. We will look to achieve reductions in this area during 2021.
(4) This figure was calculated on the basis of the guidance published by the EU (see source: https://eur-lex.europa.eu/ legal-content/EN/TXT/?uri=CELEX:02000D0532-20150601), which includes waste from physical and chemical processing of metals that are hazardous to humans and wildlife, oil spills and waste materials containing oil, wastes containing mercury and heavy metals, waste paint, varnish and coatings containing organic solvents and other hazardous substances.