By Andrea Barrett, Vice President Social Responsibility and Sustainability, Electrocomponents Group
Climate change is arguably the most pressing challenge facing our planet today. Social inequality in all its forms is also generating considerable concern globally.
We at Electrocomponents Group have set ourselves four 2030 environmental, social and governance (ESG) goals as part of our ESH Action Plan 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, which will include our distribution centres, offices and vehicles.
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 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.
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 new 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.
Teaming on the way
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.
We also work closely with our customers to offer sustainable product and service solutions. 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, such as the Raspberry Pi recycling scheme, OKdo Renew in partnership with Sony TEC, launched in 2021.
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 Components 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 Components in the UK, US, South Africa and Australia we are a partner in Engineers Without Borders which supports 20,000 future engineers annually.
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.
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
Our amazing team of 7,500 people in 32 countries is the lifeblood of our organisation. 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, and established employee resource groups and cultural campaigns that champion diversity in the workplace. Recently we rolled out inclusion training courses for all our colleagues globally.
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. Furthermore, we have modified our £300 million revolving credit facility to link with three of our most material 2030 ESG actions.
This truly is an Action Plan and not just hollow words. 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. It might be 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.
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 and 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.
- The Electrocomponents Group operates in 32 countries, with nine brands, 14 Distribution Centres and 7500 employees.
- It sources over 500,000 electronics and industrial products from more than 2500 suppliers globally.
- It supplies more than one million customers in 80 countries, shipping over 60,000 parcels per day.
- We are determined to bring together our huge global network of suppliers and the millions of engineers, innovators and problem solvers to drive positive change for people and the planet.
- Our ESG ratings include CDP 2020: A; EcoVadis: Gold; MSCI: A; Sustainalytics: negligible risk