UK directors’ report, disclosure of greenhouse gas emissions, climate change disclosures

Renishaw plc – Annual report – 30 June 2019

Industry: manufacturing

Corporate social responsibility (extract)
Environment
We continually try to improve our business and manufacturing processes through energy saving and increased efficiencies. As part of our continued drive for sustainable manufacturing we use our own products and take advantage of the significant efficiencies in manufacturing they provide, thus increasing throughput, reducing energy per manufactured unit and reducing our waste.

Our Group Business Code frames our approach to environmental management and drives our culture of efficiency throughout the Company. It is supported by our environmental and waste policies, with other underlying management controls as necessary. The outcome of these policies is a clear and consistent approach to environmental management that is used across all our locations.

We aim to improve how we approach our environmental responsibilities. As part of these efforts we expect to carry out a materiality assessment to find out which environmental and social issues are important to our stakeholders.

This year, we have increased our internal communications around environmental issues with our people, to ensure they know how sustainability affects their job role.

During 2018/19, we invested in an expanded software package to enable us to more closely identify and monitor our greenhouse gas (GHG) emissions worldwide, and report on a wider array of sustainability initiatives.

We renewed our Carbon Trust Standard certification in the UK and our manufacturing locations in Ireland and India. This certification covers 71% and 48% of our global energy consumption and GHG emissions respectively. It is third-party confirmation of our work to measure, manage and reduce our GHG emissions.

In 2018/19, our normalised statutory emissions have decreased by 37% (location-based calculations) and 15% (market-based calculations), which is based on an absolute reduction in our total GHG emissions of 15% (using market-based calculations). Our statutory emissions are defined by the Greenhouse Gas Protocol as Scopes 1 and 2.

Scope 1 is the direct emissions coming from our sites and vehicles, and Scope 2 is indirect emissions coming from the electricity and heat that we purchase from energy providers. A significant proportion of our GHG emissions, however, falls within the definition of Scope 3 emissions. These are emitted by other organisations on our behalf, for example, emissions from our freight forwarders when transporting our products. Through the continual improvement of our management system and processes, we can report on a wider array of Scope 3 activities, with a view to expanding this in the coming years. The details of our GHG emissions for this year are shown in the charts on page 51 with the relevant data shown on page 144.

To calculate our GHG emissions we have used the GHG Protocol Corporate Accounting and Reporting Standard (revised addition), data gathered for our Carbon Reduction Commitment submission, and the UK Government’s GHG reporting guidance. The emission factors are taken from the DEFRA and IPCC libraries and energy suppliers. Our GHG emissions are based on actual data taken from bills, invoices, meter readings and expense claims wherever possible.

renishaw18

We renewed our Carbon Trust Standard certification in the UK and our manufacturing locations in Ireland and India. This certification covers 71% and 48% of our global energy consumption and GHG emissions respectively. It is third-party confirmation of our work to measure, manage and reduce our GHG emissions.

In 2018/19, our normalised statutory emissions have decreased by 37% (location-based calculations) and 15% (market-based calculations), which is based on an absolute reduction in our total GHG emissions of 15% (using market-based calculations). Our statutory emissions are defined by the Greenhouse Gas Protocol as Scopes 1 and 2.

Scope 1 is the direct emissions coming from our sites and vehicles, and Scope 2 is indirect emissions coming from the electricity and heat that we purchase from energy providers. A significant proportion of our GHG emissions, however, falls within the definition of Scope 3 emissions. These are emitted by other organisations on our behalf, for example, emissions from our freight forwarders when transporting our products. Through the continual improvement of our management system and processes, we can report on a wider array of Scope 3 activities, with a view to expanding this in the coming years. The details of our GHG emissions for this year are shown in the charts on page 51 with the relevant data shown on page 144.

To calculate our GHG emissions we have used the GHG Protocol Corporate Accounting and Reporting Standard (revised addition), data gathered for our Carbon Reduction Commitment submission, and the UK Government’s GHG reporting guidance. The emission factors are taken from the DEFRA and IPCC libraries and energy suppliers. Our GHG emissions are based on actual data taken from bills, invoices, meter readings and expense claims wherever possible.

Pages 143-145
Task Force on Climate-related Financial Disclosures
Renishaw has publicly committed to implementing the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). We recognise climate change as the biggest environmental threat the world faces, and one which could pose challenges to our business including our supply chain and operations. We believe that disclosing these climate related risks is an important step in demonstrating our understanding of these risks and efforts to mitigate them. In addition to enhancing business resilience, it also enables us to take advantage of any opportunities it may offer.

This year represents our first disclosure to address the TCFD recommendations and we expect this to develop and evolve over time to reflect our analysis.

Governance
The Board has appointed Allen Roberts, Group Finance Director, as the Director responsible for CSR. Allen, has in turn, appointed Ben Goodare, Group CSR Manager who chairs the CSR Committee. This Committee is responsible for managing our impacts on climate change, as well as the risks that climate change may pose to our business. The Committee meets six times during the year and receives regular updates on our progress against commitments and performance.

Strategy
Our CSR committee has overall responsibility for CSR strategy within our Group. To better understand the climate related impacts that are material to our business we are undertaking a materiality assessment in the forthcoming year. This will enable us to shape our strategic aims for the short and long term to enable us to mitigate climate risks and take advantage of opportunities.

To shape our materiality assessment, we have used risks and opportunities identified through engagement with employee focus groups and disclosures identified in the GRI (Global Reporting Initiative) standards, the Sustainable Development Goals, the CDP questionnaires and other credible organisations.

This process will enable us to identify our exposure to physical climate risks such as rising temperatures, rising sea levels and extreme weather events. Beyond physical risks, we are also assessing any risks and opportunities arising from a transition to a low-carbon world aligned with the Paris Climate Agreement.

The results of our materiality assessment will inform our short and long term CSR strategy and targets.

Risk management
The identification and management of climate-related risks follows our established risk management process. Key elements of the risk management process are set out on pages 38 and 39.

Metrics and targets
We have reduced the emissions from our operations from 2015/16 levels by 62% to the end of this reporting period, and are on track to achieve a 100% reduction by 2050. To help us meet our targets, we have started to move our purchased electricity to 100% from renewable sources and have invested heavily in solar PV at sites across the UK and our Indian manufacturing site. More details on climate change metrics and targets are disclosed on pages 23, 46 and 50 to 51.

Greenhouse gas emissions

renishaw19

 

a thinkstep was engaged to provide independent limited assurance over the greenhouse gas emissions data from the years 2015/16, 2016/17 and 2017/18. A limited level of assurance was applied. The verification engagement was performed in accordance with the GHG Protocol Corporate Standard (2004) verification requirements and ISO 14064-3. thinkstep has issued an unqualified opinion over the selected data. thinkstep’s full assurance statements are available at: http://www.renishaw.com/CSR.
b 2017/18 figures have been restated due to improvements in our methodology, updated GHG conversion factors and replacing the calculation used for the June 2018 data last year – see footnote d.
c Statutory emissions are Scope 1 and 2 as required by the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013.
d To facilitate the timely capture of information, this disclosure uses internally reported data from July to May and the June data is given as an average of the previous three months. This will be restated next year if a significant difference is seen.
e Renishaw uses the market-based method for calculating Scope 2 emissions for our total emissions to account for our efforts in generating and purchasing low-carbon energy. The location-based method is provided for disclosure only and all intensity, net and gross emissions shown are calculated using scope 2 market-based method.
f Market-based electricity is used where it is available to us. This is currently only within the UK and Europe. Where market-based factors are not available residual grid mix factors and location-based factors are used in their place.
g Well to Tank and Transmission and Distribution losses total, use location-based conversion factors for calculations.
h Raw material purchase figures are based on metal purchased by weight in the UK and office paper purchased across the UK. We are working on how to increase the scope of this data to other raw materials.
i This is based on post and communications used within the UK, we are working on how to increase the scope of this data to overseas operations in the future.

Greenhouse gas verification statement
thinkstep was commissioned by Renishaw plc to verify its greenhouse gas (GHG) data, covering the financial year ended 30 June 2018 (1 July 2017 – 30 June 2018).

The reviewed GHG data includes all scope 1 except Fugitive Emissions and scope 2 emissions as well as limited scope 3 emissions.

The corporate carbon footprint considered all of Renishaw’s material locations around the world. In addition, Renishaw’s scope 3 emissions data from business travel (air travel, rail travel and road travel in employee-owned vehicles) was reviewed. The review considered the greenhouse gases CO2, CH4, N2O, HFCs, PFCs, SF6, and NF3.

The Renishaw GHG inventory calculation followed the “Financial Control” approach (organisational boundary).

A limited level of assurance was applied. The verification engagement was performed in accordance with the GHG Protocol Corporate Standard (2004) verification requirements and ISO 14064-3.

Renishaw was assessed against the GHG Protocol Corporate Standard (2004) reporting requirements (scope 1 and 2 emissions), and the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard.

Assurance Conclusion
Based on the process and procedures conducted, there is no evidence that the Renishaw GHG inventory is not materially correct and is not a fair representation of Renishaw’s GHG data and information, and has not been prepared in accordance with the GHG Protocol:

Scope 1 emissions: 3,834.82 tonnes CO2-equivalent
Scope 2 emissions – Location Based: 8,607.99 tonnes CO2-equivalent
Scope 2 emissions – Market Based: 6,363.57 tonnes CO2-equivalent

Commentary
• The GHG inventory is based on measured and estimated activity data. Estimates are calculated and included where measured data is not available or is not yet available, following the guidance specified in Renishaw’s carbon management documentation.
• Certain minor Renishaw emissions sources were excluded from Renishaw’s reported emissions (e.g. small Renishaw sales offices). This had no material impact on the overall Renishaw emissions profile.

Independence
This is the fourth year that thinkstep has undertaken a verification and provides an opinion statement with regard to Renishaw’s scope 1 and scope 2 GHG emissions data. The staff that have undertaken work on this assurance engagement provide no consultancy services to Renishaw plc. Our processes are designed to ensure that the work we undertake with clients is free from bias and conflict of interest.

Limitations of Assurance Statement
The findings presented here are not intended to be used as advice or as the basis for any decisions, including, without limitation, financial or investment decisions.

Page 46 (extract)
2019 CSR targets and progress (extract)

renishaw20