02

Continue to invest in and support our businesses as they develop products and services aligned with a net zero future

SM 01 03446SM 01 2 Blur Screen (Custom)

Our objective

  • Support and harness product innovation and quality within our businesses, to help their customers deliver on their commercial and environmental goals and find effective solutions to assist them in addressing climate change
Menu

UN SDG's

SDG 07
SDG 09
SDG 13

By investing in R&D capabilities, we focus on developing sustainable and safer products to facilitate customersā€™ and industriesā€™ transition to Net Zero by 2050.

ā€‹
Over the last three years, the Group invested c.Ā£340 million to back expenditure on climate-related R&D programmes. ā€‹In 2022, this enabled the Group to maintain a good rate of developing new products that contribute to industrial decarbonisation at 44%, positioning the Group well to ensure that 50% of all new products are products that contribute to decarbonisation by 2025.

GKN Automotive

050A0035SM 20 2 (Custom)

GKN Automotiveā€™s Driveline division is a global leader that demonstrates strength in depth and breadth, with an extensive portfolio of drive system products that combine value with technological leadership spanning all light vehicle types, from high-volume low-cost to premium models for both conventional and electrified propulsion systems. The ePowertrain division offers solutions for all electrified vehicles and is a go-to technology partner for Global OEMs with decades of experience. Its ability to fully integrate e-Drive systems derives from its all-wheel drive heritage and leadership.

In 2021, the Driveline division accelerated its shift towards electrification by further adapting its portfolio to match the changing demands of new-energy vehicles. The business completed 48 new programme launches and continued to secure a significant share of new business wins on electrified vehicle platforms, reinforcing the divisionā€™s industry-leading position through its premium core products. The ePowertrain division is increasingly benefitting from light vehicle electrification and delivering impressive growth. In 2021, the business saw the production launch of 12 new programmes across 11 different global brands powered by GKN Automotive technology.

The next generation of e-Drive systems is now in development with a focus on reduced weight and increased efficiency and power density. With deep expertise across all elements of e-Drive, a heritage of manufacturing excellence and a global footprint, ePowertrain is a leading development partner for major leading electrified vehicle manufacturers, featuring components on seven of the top ten global platforms outside of China. New business wins in 2021 included the award of the first fully outsourced 3-in-1 system for one of the major German manufacturers.

Enabling a sustainable transition to Net Zero

Through investing in businesses in traditionally carbon-intensive industries, we indirectly support the decarbonisation of high-carbon impact companies, meaning Melrose is continually targeting areas of the economy that are in need of improvement, investment and support to become more sustainable.

Expected impact on our contribution to Net Zero

Through focused integration of sustainability and climate considerations into our businessesā€™ strategic agendas from early stages in our ownership, we make our businessesā€™ contributions to the decarbonisation of their sectors a priority. With our investment and support, we encourage them to focus on developing and providing low-carbon solutions for their respective markets.


Engaging with our businesses and their value chains

We enable our businesses to influence best practice behaviours across their supply chains, and to accelerate the net zero transition for not only themselves but also the surrounding environments in which they operate. Through policies, best practices and strong governance, we drive our businesses to improve the understanding of their primary suppliersā€™ climate credentials and ultimately improve their Scope 3 carbon footprints.

The Melrose senior management team works closely with each businessā€™s sustainability leads to identify and assess strategic KPIs and targets including for energy use and emissions reduction, aiming to improve their performance and enhance their sustainability reporting which is embedded in their financial and operational reporting cycle.

Climate-related risks and opportunities, as well as relevant ongoing sustainability projects, are discussed regularly amongst the Melrose senior management team to inform the strategies that are chosen for addressing the identified risks and seizing the feasible opportunities.

Ā 

Investing in climate-related R&D and new products commercialisation

We encourage our businesses to continually consider future technology development opportunities and investment through a holistic lens rather than taking a solely immediate demand-driven approach. This encourages them to mitigate the possibility of unsuccessful investment in technologies that are not focused on sustainable long term solutions, or which do not address macro transition challenges.

Encouraging participation in wider industry initiatives towards Net Zero

We recognise that different sectors will decarbonise at different rates, and encourage our businesses to enhance their capabilities and drive up standards for sustainability and climate innovation across their industries.

Our businesses engage in wider industry actions on climate initiatives, for example, GKN Aerospace is collaborating on initiatives such as the FlyZero programme which aims to realise zero carbon emission commercial aviation by 2030, and GKN Automotive runs an advanced research centre to accelerate the UKā€™s electrified future.

Measuring progress

Regular engagement between the Melrose senior management team and the sustainability leads of each business assists in keeping performance in focus. By continuously monitoring progress against our Group climate-related targets, the Melrose senior management team provides the required investment and strategic focus on climate solutions that best meet the emerging transition trends. We require our businesses to use the definitions of the EU Taxonomy for setting the parameters for low-carbon R&D expenditure and new products that contribute to decarbonisation of their sectors. We support and equip our businesses to remain resilient to changing consumer demands and direct their attention to areas where the most impactful decarbonisation opportunities can be realised.

With Melroseā€™s support, each business invests in and implements appropriate systems and processes to manage their impact on the environment, and continually reviews these in line with evolving best practices. Melrose sets a positive example, enabling and empowering 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 CarbonNeutralĀ® company certification since 2019 through a combination of internal energy efficiency initiatives and financing high-quality, high-impact emissions reduction projects in accordance with the CarbonNeutral Protocol. The Melrose corporate office in the US also has the HinesGo (Green Office) designation in recognition of its sustainability practices and energy efficiency performance, among other environmental and wellbeing criteria.

c.10%

reduction in emissions intensity from 2021 against the 20% reduction target by 2025

Enabling a sustainable transition to Net Zero

Helping customers address climate change

Product responsibility is central to the Melrose business model of acquiring and improving underperforming manufacturing businesses and setting them on a positive long-term trajectory. This is grounded in investing in safe and sustainable production practices while a business is under our ownership and promoting sustainable product performance and effective product lifecycle management. Furthermore, we recognise the risks and opportunities that the transition to net zero presents for our businesses and their customers. Despite our businesses often operating in some of the hardest industries to decarbonise, we work closely with them to ensure that they are well positioned to meet emerging regulatory requirements and wider environmental expectations. Climate-related risks and opportunities have a direct impact on product strategy, development and financial planning across all our businesses. Each of them works closely with its customers and world-class research institutions to develop market-leading and cost-effective innovations, delivering solutions that address environmental challenges. Over the last three years, the Group invested c.Ā£340 million to support its businessesā€™ expenditure on climate-related R&D programmes. In 2022, this enabled the Group to maintain a good rate of developing new products that contribute to the decarbonisation of their sectors at 44% on average across the divisions and throughout the year, positioning the Group well to achieve its target of 50% by 2025.

Trees In Forest

Transition Plan

Our Transition Plan sets out the actions we intend to take in the transition to a Net Zero economy, and how we plan to execute on our short and medium-term emissions reduction targets.

Net Zero Transition Plan

Climate disclosures

2022 TCFD Report

The transition and physical effects of climate change continue to accelerate, and impactful action is required to reduce global emissions. We recognise the need for transparency to enable our stakeholders to understand the climate-related risks that we may face as a Group, how we can manage them, and how we support our businesses as they seize opportunities to decarbonise their own operations and their respective sectors.

This second TCFD Report reflects our and our businessesā€™ progress in integrating climate considerations into business strategy and risk management. Being a continual journey, we recognise the opportunity to continue to refine our climate-related disclosures over time, as regulatory requirements and our stakeholdersā€™ expectations evolve, new ways of improving our climate data availability and quality emerge, and our climate analytics capabilities and understanding of implications associated with climate change develop.

Climate Change

Environmental stewardship

Notable examples of climate-related initiatives and activities in 2020 include:

GKN Aerospaceā€™s decision to move to full ā€˜greenā€™ 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 TrollhƤttan site in Sweden, which consumes over 50 gigawatt hours (GWh) of electricity annually and is GKN Aerospaceā€™s largest site in Europe, began purchasing renewable energy from its local hydropower plant. ā€¢ 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. ā€¢ 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 ā€¢ GKN Automotiveā€™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 Kƶping, Sweden site, where 100% of heating is now provided by district heating which is generated from industrial waste heat, waste incineration and biofuels. ā€¢ 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. ā€¢ 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 Ā£304,579(1) on LED lighting retrofits in 2020.

GKN Aerospace ā€“ making zero-emission flight a reality

GKN Aerospace is a world-leading multi-technology manufacturer of airframe and engine structures and electrical interconnection systems for the global aerospace industry, across both civil and defence platforms. With operations in 12 countries, GKN Aerospace is a global leader in technological innovation, advanced processes and engineering excellence, while its products enable aircraft to fly safely and more efficiently. GKN Aerospace is structured according to its three core customer markets ā€“ Civil Airframe, Defence Airframe and Engines. Its technology is used throughout the aerospace industry: from high-use single aisle aircraft and the worldā€™s longest haul passenger planes, through to business jets, helicopters, the worldā€™s most advanced fighter jets and space launchers. Its products help customers build and operate the most innovative, sustainable and affordable aircraft and engines, improving performance and driving the industry towards the next generation of zero-emission flight.

GKN Aerospace is at the forefront of improving the efficiency of existing aircraft, and developing the next generation of greener aircraft, based on technological innovation, advanced processes and engineering excellence. Its network of Global Technology Centres are a key enabler for Melroseā€™s investment in the advancement of this decarbonising technology and capability development, driving collaboration and accelerating technological breakthroughs in the electric and hydrogen aviation sub-sectors.

In 2022, GKN Aerospace continued to advance its contributions to a more sustainable, next-generation aircraft. Industry-leading solutions within its Engines and Structures businesses include additive manufacturing (ā€œAMā€), advanced composites and alternative fuel such as electric, hydrogen and eVTOL. With the newly acquired AM system business Permanova, GKN Aerospace can now reduce material and energy use by up to 80% compared to conventional manufacturing techniques, thus reducing associated emissions to contribute to the industryā€™s Net Zero commitment. Further cementing its sector leadership, GKN Aerospace also continued to support some of the industryā€™s progressive programmes aimed at reducing the carbon footprint of todayā€™s aircraft, including its H2JET programme in Sweden, the European Clean Sky2 programmes and its UK-led H2GEAR project.

In 2023, the business will continue to capitalise on its unique position in the market to benefit from newly created partnerships with leaders in these exciting new markets. Further advancing its own sustainability credentials, GKN Aerospace will work towards delivery of its GHG inventory, inclusive of Scope 3, in preparation for setting emissions targets, engagement with and submission to the SBTi for further validation. GKN Aerospace will also progress an associated roadmap to clearly outline how it intends to achieve Net Zero in line with the international goal to limit increases in global temperature to 1.5Ā°C.

Ā 

External recognition

GKN Aerospace was ranked among the best places to work in the UK by shift workers in 2022 on the job comparison platform Breakroom, ahead of the majority of its peers, based on a range of insights into employeesā€™ management, jobs, pay and benefits over the past year. As well as its role in transforming the aerospace industry towards Net Zero, GKN Aerospace received a Swedish regional Sustainability Award of the Year for pioneering use of green energy, with its facility in TrollhƤttan running on 100% hydro-power from the townā€™s river for more than three years.


Sector leadership

GKN Aerospace continues to invest a significant proportion of its R&D spend each year in enhancing fuel efficiency and reducing emissions within aircraft. Throughout 2022, GKN Aerospace played a leading role towards building a more sustainable aerospace industry for the future. It is a signatory to the Joint Declaration of European Aviation Stakeholders related to Clean Aviation in Horizon Europe, committing to a European Partnership towards achieving the goals of the Paris Agreement. GKN Aerospace has also committed to achieving Net Zero by 2050 and to designing products that will enable its customers to develop aircrafts that produce zero emissions throughout their lifecycle by 2050.

Ā 

Actions to reduce energy consumption and emissions

As part of an ongoing programme to reduce energy consumption and emissions, GKN Aerospace is pursuing a number of reduction actions and initiatives for future implementation, including:

  • Increased energy production across many sites as part of GKN Aerospaceā€™s roadmap to increase its use of renewable electricity, including solar panel system installations.
  • Further capital expenditure proposals for climate control systems currently pending approval, such as investment to upgrade the cooling system for the server room at the Filton, UK site which will help redistribute the heat generated by servers into the surrounding buildings. Implementation is estimated to reduce energy use by 30%, and achieve over 50 tCO2 in emissions savings per year.
  • Completion of LED lighting installations in 2023 across the entire Papendrecht, Netherlands site with the Hoogeveen, Netherlands and Filton, UK sites to follow.
  • Other capital expenditure proposals for building improvements currently pending approval, including roof upgrades with improved insulation and the replacement of insulation on HVAC systems.

GKN Aerospace

Sustainability targets

During 2022, GKN Aerospace made significant progress in technology and product innovations that contribute to the aviation sectorā€™s route to Net Zero. In addition to the Group-level targets and commitments, GKN Aerospace has set further sustainability commitments to drive long-term sustainability performance:

Climate action

Focus on designing products that enable customers to manufacture aircraft that emit zero emissions throughout their lifecycle by 2050.

Prepare for setting a Science-Based Target to reduce GHG emissions and align targets with the country-level Net Zero by 2050 ambition.

Continue to increase the share of renewable sources in energy mix and accelerate energy efficiency.

Environment

Minimise the negative impacts on the environment, conserving natural resources and eradicating hazardous waste to landfill.

Social

Seek to increase the proportion of all under-represented groups across the business.

Governance

Establish sustainability assessment tools in commercial and procurement processes.Ā 

Improve sustainability data collection to drive performance and transparency.Ā 

Helping customers address climate change

We invest in growing R&D capabilities that help unlock opportunities to increase the share of sustainable and safe products that contribute to a low carbon economy across our product portfolio.

We refocus them on helping their customers and wider industries to transition to a net zero economy in a targeted and profitable manner, and enable them to champion the interests, safety and skills development of their employees, and among their supply chains.

Through focused integration of sustainability into our businessesā€™ strategic agendas from early in our ownership, we indirectly contribute to the decarbonisation of their sectors and enable responsible, forward-looking actions that are necessary to achieve Net Zero. This impacts our businessesā€™ customers as we, through our investment, encourage them to focus on developing and providing low carbon solutions for their respective markets.

Product responsibility is central to the Melrose business model of acquiring and improving underperforming manufacturing businesses and setting them on a positive long-term trajectory. This is grounded in investing in safe and sustainable production practices while a business is under our ownership and promoting sustainable product performance and effective product lifecycle management. Furthermore, we recognise the risks and opportunities that the transition to net zero presents for our businesses and their customers.

Climate-related risks and opportunities have a direct impact on our businessesā€™ product strategy, development and financial planning. Despite our businesses often operating in some of the hardest industries to decarbonise, we work closely with them to ensure that they are well positioned to meet emerging regulatory requirements and wider environmental expectations. Each of them also works closely with customers and world-class research institutions to develop market-leading and cost-effective innovations, delivering solutions that address climate challenges.

Over the last three years, the Group invested c.Ā£340 million to support its businessesā€™ expenditure on climate-related R&D programmes. In 2022, this enabled the Group to maintain a good rate of developing new products that contribute to the decarbonisation of their sectors at 44% on average across the divisions and throughout the year, positioning the Group well to achieve its target of 50% by 2025.

c.Ā£340m

Invested in climate-related R&D programmes in the last three years

GKN Aerospace

SM 13 03166SM 13 2 (Custom)

During 2021, GKN Aerospace took a further step forward in its sustainability strategy. Investment was made in technology to support and enable this strategy to achieve reductions in energy, material and waste in its current factories, and to enable improvements in efficiency and revolutionary capabilities in next generation aircraft and engine platforms, which will assist the future of zero emissions flight. At the forefront of this strategy is a new network of Global Technology Centres (ā€œGTCsā€), to develop and demonstrate capability, drive collaboration and accelerate technological breakthroughs in each of its businesses. In 2021 GKN Aerospace opened its Ā£32 million UK GTC in Bristol, as well as its Dutch GTC in Hoogeveen, to complement the Swedish and US hubs that are already established.

GKN Aerospace is now developing the next generation of lighter and more sustainable aerostructures and engine products, as well as lightweight additive manufacturing solutions and future zero-emission propulsion systems. Putting this technology strategy into action, GKN Aerospace established its position at the forefront of four major European propulsion programmes during 2021. Two of these ā€“ the Ā£54 million H2GEAR project in the UK and H2JET in Sweden ā€“ are ground-breaking hydrogen projects aiming to develop propulsion systems to power aircraft using liquid hydrogen, eliminating carbon dioxide emissions.

Through collaboration in the European Clean Sky 2 programme, GKN Aerospace also delivered the first Intermediate Compressor Case for the Rolls-Royce UltraFanā„¢ engine demonstrator, which is expected to achieve significant fuel efficiency improvements compared with current engines.Ā 

There were also notable achievements in developing more sustainable aerostructures solutions. During 2021, GKN Aerospace manufactured and delivered the first fully integrated wings, tail and wiring system for Eviationā€™s Alice electric aircraft, as well as producing and delivering the first composite fixed trailing edge for Airbusā€™ ā€œWing of Tomorrowā€ project, both from its new UK GTC.

Each of the above projects form important ingredients on the sectorā€™s path to achieve net zero Greenhouse gas emissions by 2050 and have helped to establish GKN Aerospaceā€™s position as a sustainability leader in the aviation industry.