A bold and ambitious ESG action plan – For a Better World – is not only ‘the right thing to do’, but it is also key to driving sustainable, future growth. Andrea Barrett, Vice President for Social Responsibility and Sustainability at RS Group, explains how.

Climate change is arguably the most pressing challenge facing our planet today. Social inequality in all its forms is also generating considerable concern globally. RS Group is proud to be one of the global businesses meeting these and other challenges head on through a strong ESG (environmental, social, governance) Action Plan.

Plan to reach net zero emissions across global operations by 2030

We have set ourselves four 2030 ESG goals to support a more sustainable and inclusive world. The first is advancing sustainability with a commitment to reach net zero emissions across our global operations by 2030, and across the wider value chain by 2050. The second is championing education and innovation, with the aims of reaching one million young people with educational technologies, learning content and skills development, and engage with 1.5 million engineers and innovators developing sustainable solutions. Doing business responsibly is our third goal, which involves evaluating our suppliers against high ethical and environmental standards. And finally, empowering our people by working towards a more diverse workforce and increasing employee engagement.

Our action to reduce our carbon footprint started more than a decade ago, having already achieved a 62% reduction in CO2 emissions from premises energy usage between 2014/15 and 2020/21. Our 2030 commitment is to reduce absolute emissions from our own operations by 75%, attaining net zero using science-based targets and supporting gold standard projects to offset residual emissions. This will include our Distribution Centres, offices, and vehicles.
 
Andrea Barrett, Vice President for Social Responsibility and Sustainability at RS Group

Renewable electricity plays a major role

We intend to be operating on 100% renewable electricity by 2025/6, up from 67% in 2020/21. We have added solar panels to the roof of our newly expanded DC in Germany capable of generating 750kW, feeding power to the RS site and surplus energy to the grid. From then on, we will increase renewable electricity generation at our sites.

Packaging can make a significant impact

Packaging is a major issue for us and one where we can make a significant impact. We’re looking to reduce packaging intensity by 30%, reuse more and ensure materials are made with at least 50% recycled content by 2030. We already recycle 75% of our waste and will work towards more than 95% with the aim of sending zero waste to landfill in our direct operations.

Aiming for net zero emissions across the wider value chain by 2050

Our plan is to reach net zero emissions across the wider value chain by 2050. This will involve us working more closely with customers and supplier partners. As a global distributor, transport is a key issue. Our 2030 action is to reduce our scope 3 transport emissions by 25% per tonne of product sold. We have already switched the delivery of product replenishments to our Asia Pacific DCs from air to sea, reducing the associated emissions on these lanes by almost 60%. We will also select carriers investing in green technologies. Our UK carrier is DHL Express which has a strong electric fleet. In Germany, Deutsche Post DHL Group is committed to investing €7bn in green technologies by 2030. We are restructuring our supply chain to source, store and deliver products closer to our suppliers and customers, made possible by our global network of 14 DCs. This an ongoing initiative that not only allows us to cut carbon emissions but also reduce costs while supporting local economies and jobs.

“Of course, we are not the only organisation in our industry on this journey, so we will be partnering with our global supplier community to learn, share and inspire action. Many of them are already engaged and working towards setting science-based carbon reduction goals of their own and we want to learn from them. Meanwhile, our ambition is to engage at least 65% of our top suppliers (by spend) to establish science-based targets by 2025. Our own survey has determined that 78% of suppliers believe that ESG is important to their strategy.” Andrea Barrett, Vice President for Social Responsibility and Sustainability at RS Group

Developing sustainable product and service solutions

Last, but by no means least, is our ability to make a difference by offering customers sustainable product and service solutions. We offer a wide range of products such as variable speed drives, high efficiency motors, energy harvesting and LED lighting which can all be essential to improving energy efficiency while reducing the use of natural resources. We offer tools and service solutions, such as e-procurement, inventory management and predictive maintenance, which, although primarily aimed at optimising operations, increasing efficiency, and cutting costs, have the added benefit of reducing our customers’ environmental impact. Condition monitoring, for example can provide visibility into assets to minimise pollution and waste as well as air, water, and energy leakages.
 
We will partner with our suppliers to bring new sustainable technologies to market and encourage customers to buy greener products. Design for recyclability has obvious benefits, and we will promote more circular solutions.

Championing education and innovation

Our focus is to build skills with young engineers and innovators, as well as foster innovations that improve lives. There is still a significant shortage of digital and engineering skills globally, and we need to inspire and encourage the young to seek careers in this area. The next generation will need to be equipped to meet the environmental challenges that the world faces, as well as helping to ensure that our industry continues to thrive.
 
Our aim is to reach one million young people in education. Already today, RS UK supports more than 200 UK universities, and we will expand our ‘Grass Roots’ programme globally. Meanwhile we are continuing to build digital skills via our OKdo products and learning content, supporting 400,000 students annually. Through RS in the UK, US, South Africa, and Australia we are a partner in Engineers Without Borders which supports 20,000 future engineers annually.

DesignSpark community engages 1.5 million engineers

We are supporting and promoting innovation and emerging technologies that can become product differentiators for our customers and help shape a better future. We are aiming to engage 1.5 million engineers through our DesignSpark community in activist engineering projects that will promote sustainable and socially responsible solutions.

Selectively support of start-up businesses

We will also selectively support start-up businesses that can show they are leading the way in developing sustainable technologies that will make a difference. We are an official partner of WITT Energy, an energy harvesting and portable power generation project. We are providing technical design and test support, as well as products and access to specialist component suppliers and the DesignSpark community.
 
Finally, we will support our global social partner, The Washing Machine Project, to support 100,000 people in hard-hit communities over the next 2.5 years with a manual, off grid, washing machine that will save many back-breaking hours of labour.

Empowering our people

We are committed to creating a safe, inclusive, and dynamic culture where everyone can thrive and grow. To ensure we truly reflect the customers, suppliers, and communities we serve, we are focused on building a truly diverse leadership team and wider organisation. We are working towards 40% of our leaders being women and 25% being ethnically diverse.
 
We have launched a leadership programme for 1600+ people managers globally. We have established employee resource groups and we run cultural campaigns that champion diversity in the workplace. Recently we rolled out inclusion training courses for all our colleagues globally.

“Our amazing team of 7,500 people in 32 countries is the lifeblood of our organisation.” Andrea Barrett, Vice President for Social Responsibility and Sustainability at RS Group

Health and safety and the wellbeing of our people has always been a key priority. For this reason, we were able to react swiftly when the pandemic hit, encouraging and supporting all those who could work from home and providing PPE and adapting operations for our colleagues in our distribution centres. Our track record and continued investment and commitment to inclusion, wellbeing, learning, and development is designed to improve our employee engagement score. In fact, it has been rising steadily in recent years and by 2030 we want to be in the top 10% of the most engaged companies in the world. Employee engagement is critical for motivation and satisfaction and helps ensure a high-performance team that will drive our success. We will be encouraging our colleagues to volunteer to share their skills and make a difference in their communities by giving them two paid days a year.

Doing business responsibly

We are taking action to ensure the highest ethical and environmental standards throughout our business and global value chain. Working with thousands of suppliers around the world, this will be a major challenge which is particularly important to our customers and partners who want reassurance and visibility that their suppliers meet both ethical and quality standards. We all need to source responsibly, ensuring sound working practices, good labour relations and improved environmental standards. We have already increased our activity in this area, becoming signatories to the UN Global Compact, revising our ethical trading declaration, and joining forces with Sedex to improve due diligence and management of our supplier partners. We also conduct on site ethical inspections with our RS PRO suppliers in Asia, completing 89 audits in the past two years.
 
To encourage action in this space from our colleagues and our suppliers partners we will be embedding ESG objectives in employee rewards across all levels and geographies, as well as our supplier partnerships.

Governance

This truly is an Action Plan and not just hollow words. Our senior management team drives our approach across all levels, brands, and geographies. Regular strategy sessions are held together with training on specific ESG issues such as diversity and inclusion and climate change. We set up an ESG Leadership Committee, meeting quarterly, to accelerate our plans. A full climate-related risk assessment is underway and will impact our risk management process.
 
This is an integral part of our Destination 2025 strategy and beyond, and we see the opportunity to leverage our global scale, product and service solutions and differentiated offer to grow stronger, advance sustainability and improve lives. We believe that having a strong ESG action plan is critical for us to become a truly great company and deliver long term value for people, planet and profit.

“Yes, our ESG 2030 Action Plan is ambitious and bold, but it has to make a difference. Working towards a more sustainable and inclusive future is not new to us, but we are stepping up the pace and intend to move forward in the vanguard, along with as many partners, suppliers, customers, and stakeholders as possible.” Andrea Barrett, Vice President for Social Responsibility and Sustainability at RS Group

What is ESG
Environmental, Social and Governance, ESG, is a method of evaluating a firm’s approach to social and environmental factors. First coined in the United Nations’ PRI (Principles for Responsible Investing) back in 2006, its roots go back further. Today, it is gaining considerable traction throughout business globally.
 
Environmental: criteria include energy use, resources required, and waste produced, with consideration of carbon emissions, water and air pollution and other factors potentially influencing climate change.
Social: criteria cover labour relations, working practices, health & safety, and diversity and inclusion, as well as attitudes and relationships with customers and the community at large.
Governance: is the internal system of practices, procedures and controls a company needs to run its business, comply with the law and meet the needs of external stakeholders.
 
Most major institutional investors today equate a high ESG rating with higher potential returns. Recent research has also shown that a strong ESG proposition not only correlates with higher equity returns, but also reduced risk, higher resilience, and greater stability. From a corporate standpoint, the risk to reputation and business of being identified as, for example, a user or supplier of products manufactured using forced labour, or a manufacturer systematically polluting the environment, or continuing to pursue a policy that will further impact climate change, is driving a greater emphasis on ESG at board level.
 
While greater pressure from customers, employees, and society at large on issues, such as climate change, discrimination, and slave labour, is making governments and businesses sit up and take notice, it is probably investors that will do more to drive corporates towards greater ESG accountability.
 
References:
McKinsey: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/five-ways-that-esg-creates-value
OECD: https://www.oecd.org/finance/esg-investing.htm