Governance

The Melrose Board consists of four executive Directors and six Non-executive Directors who bring a combination of skills, experience and knowledge complementary to the activities of the Company. The roles of each of the Non-executive Chairman, the Executive Vice Chairman and the Chief Executive are, and will remain, separate, in accordance with the Code and the Board policies. The Chairman sets the Board agenda and ensures that adequate time is given to constructive discussions, with effective contributions from the Non-executive Directors, particularly on issues of strategic nature. The Chairman, with the support of the Company Secretary, provides accurate and clear information in a timely manner, and ensures effective communications with shareholders. The Chief Executive is responsible for strategic direction and decisions involving the day-to-day management of the Company.

Through presentations and regular meetings between the executive Directors, analysts and institutional shareholders, including results announcements and trading updates, we seeks to build a mutual understanding of objectives with our shareholders and other stakeholders. Engagement with key shareholders, proxy advisors, employee bodies, ratings agencies (including sustainability ratings agencies) and other governance bodies remains a central part of our approach to stakeholder engagement and governance.

We enforce strong financial and non-financial controls, as well as strong governance backed by internal and, where required, external review of financial and non-financial compliance. Directors, officers, employees and contractors must comply with Melrose’s Code of Ethics and Group compliance policies. You can find the Group Code of Ethics and our compliance policies and statements can be found on our policies page. Implementation of the Group Code of Ethics and compliance policies is supported by risk assessments, audits and reviews and annual compliance certifications, backed by investment in resources and training. 

Our Group sustainability and climate-change governance framework illustrates how we govern the implementation of our overarching Group sustainability strategy, including climate-related risks and opportunities within operations. The framework provides a solid foundation for reviewing progress towards our sustainability targets and commitments. It also facilitates the integration of sustainability into strategic decision-making, as well as an established approach to reporting on ESG KPIs alongside the financial and operational metrics. The Melrose Board of directors has overall responsibility for Group sustainability strategy, including climate-related risks and opportunities, and is supported by the senior management team. 

The Audit Committee is responsible for ensuring we integrate sustainability and climate-change risks into Group risk management. Through its annual risk assessment it allows for a Group-level view of these risks for improved understanding and mitigation measures. The Nomination Committee is responsible for ensuring Board membership and pipelines for succession planning are suitably diverse.

Sustainability is a permanent item on every Board meeting agenda, which provides a platform to update its members on matters relating to the Group sustainability programme and performance topics.

To achieve Net Zero, we need to play our part in accelerating the climate transition beyond our immediate chain of control, and only by engaging with our supply chain can we mitigate the associated risks and act on the opportunities. We have elevated the importance of responsible sourcing as a material sustainability topic and so engaging with our supply chain has received greater attention. We have taken further action to improve the understanding of our key suppliers’ energy consumption and emissions management, and so have set a supply-chain management programme as a running item on our agenda. Our Supply Chain policy sets minimum standards for suppliers in areas such as energy use, emissions-reduction targets, adoption of low-carbon energy sources, water stewardship, biodiversity, waste reduction and resource use. 

To begin to gather supplier climate and other environmental data, and enable efficient tracking of their alignment with Net Zero, last year, we joined the CDP Supply Chain engagement initiative, which provided valuable data for improving our understanding of the nature of Scope 3 emissions and for informing our supplier KPIs. 

We strongly respect privacy and aim to minimise the amount of personal data we collect, as well as to ensuring strict and sufficiently segregated storage of any data we hold. Information security and cyber threats are an increasing priority for all industries globally, and we recognise the need to protect the Group from potential exposures in this area, particularly in light of our size, reach and complexity, and the potential sensitivity of data held in relation to civil aerospace technology and controlled defence contracts.

To achieve our objectives, we need strict policies and appropriate internal control frameworks to ensure we manage our resources properly, and identify and mitigate any key risks. The Board is ultimately responsible for developing the Group’s overall risk-management policies and internal controls, and for reviewing their effectiveness, including determining its risk appetite and ensuring an appropriate culture throughout the organisation. 

We recognise that the systems and processes established by the Board are designed to manage, rather than eliminate, the risk of failing to achieve business objectives and cannot provide absolute assurance against material financial misstatement or loss. However, ongoing monitoring and review ensures the Company can adapt to an evolving risk environment.

We have a comprehensive system for assessing the effectiveness of its internal controls, including strategic business planning and regular monitoring and reporting of ESG data alongside financial and operational performance. This is complemented by reporting protocols to ensure accountability for achieving progress on sustainability and climate-related matters. The quality and accuracy of ESG data is continually improved through taking relevant guidance from prominent international regulatory frameworks and applicable external reporting requirements. The Audit Committee also monitors the effectiveness of the internal-control process by reviewing the key findings presented by the external and internal auditors, and the Melrose senior management team implements the Audit Committee’s recommendations.