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Why is it important?

Steel is the world's most widely used material and global steelmakers are continuing to make progress in developing technologies to decarbonise the industry. All construction materials have some environmental impact and when assessing sustainability, it is important to measure all of steel's impacts, including the atmosphere, the environment, means of disposal, and durability. Steel manufacturing continues to improve its energy use and levels of greenhouse gas ('GHG') emissions and steel products exhibit a decisive life cycle advantage versus many other construction materials (including concrete) since they can continually be recycled. Our structures can last for many years, making them cost-effective as well as sustainable and since steel is often fabricated off-site, it can reduce on-site labour, cycle time and construction waste. From a sustainability perspective, we believe that steel offers a durable, cost-effective and sustainable choice for construction, and our operational improvement initiatives continue to focus on our environmental impact through our Lean manufacturing techniques and cost and waste reduction programmes.

Notwithstanding this, carbon reduction is an important strategic objective for the Group and our sustainability framework sets out the Group's commitment to protect and enhance the environment, and to limit the environmental impact of our operations on the planet, so it can support the needs of the present and future generations.

Management approach

The Group is fully committed to minimising its impact on climate change and mitigating the business risks that climate change presents and have developed plans to manage them, underpinned by the Group's ISO14001 certified environmental management system. We are also certified to BES 6001 Responsible Sourcing, increasing our rating within the period to 'very good'.

We have embedded our climate-related risks and opportunities into our strategy and business model. The progress we have already made against our ambitious interim sustainability target (to reduce our scope 1 and 2 GHG emissions by 25 per cent by 2025 against a 2018 baseline), and our long-term target (to reach net zero for our scope 1 and 2 carbon emissions by 2040), is set out below.

Our net zero roadmap

This year, we have focused our attention on developing our 'net zero roadmap', which focuses on the strategic priorities we believe are right for the steel industry, the world and for our Group. We engaged extensively with our customers, suppliers, employees and our shareholders to understand what the sustainability priorities of each stakeholder group are.

We are committed to our long-term target to achieve net zero emissions from our operations by 2040, and our roadmap includes a number of milestones along the way, including a short-term target to reduce scope 1 and 2 GHG emissions by 25 per cent by 2025, set against a 2018 baseline. These targets are based on the Paris Agreement, which seeks to limit global warming to below 1.5 degrees Celsius, compared to pre-industrial levels.

The main elements of our roadmap to achieve our targets are set out below. We acknowledge that sustainability matters and reporting are constantly evolving and, consequently, the Group's plan will also continuously develop over the forthcoming years, but our current roadmap is made up of a combination of actions to reduce our emissions and offsetting activities.

Our net zero roadmap identifies the main initiatives and technologies to be explored or implemented in order to achieve our 2040 ambition and illustrates that the Group is on track to achieve its interim target by 2025.

The Group's key initiatives include:

  • Energy saving opportunities scheme ('ESOS') recommendations
  • Implement recommended projects around heating, compressed air, lighting, and machinery.
  • Training
  • Bring awareness on climate-related risks and opportunities to the board.
  • Identify departments that are key to reducing both embodied and operational carbon across the Group and provide specialist training on carbon reduction initiatives.
  • Create and implement a business-wide training programme on our net zero strategy, including focus on behavioural change.
  • Green electricity
  • To switch all wholly owned facilities on to green electricity contracts.
  • Continue to conduct energy audits to ensure reductions in usage are also in progress.
  • Switching gas
  • Switch to green gas contracts at applicable locations.
  • Continue to monitor the potential to introduce gas at locations with no existing gas connection.
  • Plant and equipment
  • Complete a gap analysis of plant across the Group.
  • Implement HVO roll-out across all applicable plant at both facilities and construction sites.
  • Consider alternative power sources, including hybrid and hydrogen, and new technologies in all future investment decisions.
  • Heating
  • Investigate heat recovery using machinery already in situ.
  • Conduct a review of Group-wide heating systems, considering both fuel type and efficiency, and future technologies.

Our progress against our targets

During the year, the Group commenced the process to set science-based emissions reduction targets across our entire value chain. This process can take up to two years and means that we will develop longer-term commitments to make real reductions to our emissions, in line with the objectives of the Paris Agreement to limit global warming to well below two degrees Celsius above pre-industrial levels and pursue efforts to limit warming to 1.5 degrees Celsius. The Group will set verifiable science-based targets through the Science Based Targets initiative ('SBTi'), which independently assesses corporate emissions reduction targets in line with climate science.

Following the acquisitions of Severfield (Nuclear & Infrastructure) (formerly Harry Peers) in October 2019, and DAM Structures in February 2021, we are now able to include them in our carbon accounting. This will allow us to use the FY22 climate-related data to set a new baseline year for our science-based targets that is representative of our growing business. We are on schedule to submit these for validation by the SBTi during 2023.

In August 2021, the Group successfully achieved one of our short-term targets and were accredited as an operationally carbon neutral organisation by the Carbon Trust. We continue to maintain this accreditation, having been certified to the Achilles 'carbon reduce' standard in May 2022. The carbon reduce scheme, is the UK's only accredited GHG certification scheme and maintaining the accreditation is an important step in our sustainability journey towards net zero. Carbon neutral in this context means that we used carbon offsetting to eliminate the combined scope 1, scope 2 and operational scope 3 GHG emissions generated from our manufacturing facilities and construction sites. Projects that benefit from our carbon offsetting include solar power projects in India (chosen because of our existing manufacturing footprint in India), the manufacture of efficient cookstoves in Ghana (chosen because of the air quality issues in Ghana), and the regeneration of degraded lands in Chile (chosen because of the level of innovation associated with this project). In the future, as we reduce our own emissions, we will rely less on offsetting.

Carbon offsetting - Generating clean energy for the grid in India

Supporting the global transition to renewable energy

We selected this renewable energy offsetting project for its significant impact in reducing the carbon intensity of the energy grid in India, where our joint venture, JSSL, is based. This project is also aligned with the Group's strategic initiatives of building value in India and aligns to four of our key UN SDGs.

India has a rapidly growing population, which is increasing the demand for energy throughout the country. 75 per cent of India's energy needs are met through the burning of fossil fuels, meaning greenhouse gas emissions continue to rise.

Since 2013, India has accounted for more than half of the increase in global CO2 output. In order to achieve the goals set out under the Paris Agreement it is vital to reverse this trend, and increase the prevalence of renewable energy generation in India.

The Indian Government has estimated that achieving its Paris emissions reduction pledge will require £2 trillion in carbon finance between now and 2030, from domestic and international sources.

In addition to this, we have made excellent progress in reducing scope 1 and 2 GHG emissions from our operations, with a total reduction of 18 per cent by 26 March 2022, using a market-based approach against a 2018 baseline. This result confirms that we are on track to achieving our interim target to reduce scope 1 and 2 GHG emissions by 25 per cent by 2025. To achieve this, we have:

  • increased the procurement of renewable electricity for all our facilities. We have only one facility to transition to green electricity, which will be completed in 2023,
  • continued to implement Lean ways of working in our construction sites, offices, and factories,
  • started the transition to using hydrotreated vegetable oil ('HVO') across our facilities and construction sites,
  • performed further research into the feasibility of installing renewable energy generation at our facilities,
  • successfully centralised our Group procurement process, to consolidate and streamline our use of energy, materials and supplies,
  • further developed our Group processes to consider energy efficiency and environmental criteria in design, procurement, investment and contracting decisions, including the introduction of an internal carbon calculator,
  • monitored the levels of waste produced during our fabrication and site processes for the second year running, which will allow us to set targets in the next year in order to seek to reduce our waste output, and
  • worked with a number of our key suppliers, engaging on our mutual sustainability strategies and delivering decision-enhancing, transparent carbon reporting on a range of our projects.

As required by Streamlined Energy and Carbon Reporting ('SECR'), we report on our CO2e emissions in accordance with the internationally recognised Greenhouse Gas Protocol and our metrics include scope 1 and scope 2 emissions. During the year, our absolute Group scope 1 and 2 emissions have increased by eight per cent, using a location-based approach, whilst our intensity measurement has decreased by three per cent (21 per cent against a 2018 baseline of 33.5 CO2e/£m revenue). The movement in the year reflects the full-year effect of the acquisition of DAM Structures.

Tonnes of CO2e
GHG emissions from:20222021
Scope 1 – combustion of fuel and operation of facilities7,3596,297
Scope 2 – electricity, heat, steam and cooling purchased for own use3,3743,598
Total CO2e emissions (location-based)10,7339,895
Intensity measurement (location-based):20222021
Absolute tonnes equivalent CO2e per £m of revenue26.627.5

Using a market-based approach, which includes the positive impact of switching to green energy, our absolute scope 1 and 2 GHG emissions have increased by two per cent from the previous year (18 per cent against a 2018 baseline) and our intensity measurement has reduced by 44 per cent against a 2018 baseline of 35.6 CO2e/£m revenue to 19.9 CO2e/£m revenue. For the year ended 26 March 2022, the Group's global GHG emissions, using a market-based approach, were as follows:

Tonnes of CO2e
GHG emissions from:20222021
Scope 1 – combustion of fuel and operation of facilities7,3596,297
Scope 2 – electricity, heat, steam and cooling purchased for own use6711,565
Total CO2e emissions (market-based)8,0307,862
Intensity measurement (market-based):20222021
Absolute tonnes equivalent CO2e per £m of revenue19.921.9

Our scope 1 and scope 2 GHG data is being independently verified by Achilles, in accordance with the international standard ISO 14064-1.

Absolute emissions scope 1 and 2:

Location-based methodology

Market-based methodology

Energy usage from:20222021
Scope 130,41025,452
Scope 216,39715,431
Total MWh46,80740,883

The information in the table above represents absolute energy usage only, irrespective of whether this is from low carbon sources. To see how successful we have been in reducing our GHG emissions from energy, see Building a Responsible and Sustainable Business.

The Group has made good progress during the year in managing its energy, fuel consumption and emissions and we have been recognised as leaders in our sector for our work to date in reducing carbon emissions. For the second year running, we have been included in the Financial Times' listing of Europe's climate leaders, published in May 2022. This highlights the 400 companies that have achieved the greatest reduction in their scope 1 and 2 GHG emissions intensity over a five-year period between 2015 and 2020.

In the prior year, we committed to switch to 100 per cent green electricity across all the Group's wholly owned facilities and, during the year, we have achieved the level of 89 per cent (2021: 73 per cent), with only one facility remaining to switch in 2023.

In 2022, we improved our CDP index rating, achieving an 'A-'. This annual rating is based on CDP's evaluation of the Group's strategy, goals and actual emission reductions as well as transparency and verification of our reported data and assesses the completeness of the Group's measurement and management of our carbon footprint, our risk management process and our sustainability strategy.

During the year, alongside developing the Group's own net zero roadmap, we were also a key contributor to developing the British Constructional Steelwork Association's ('BCSA') UK structural steelwork decarbonisation roadmap. This roadmap sets out the new and developing technologies that will enable the UK structural steelwork sector to decarbonise to meet the UK net zero carbon target by 2050.

We continue to be accredited with the Gold Membership Standard of the Steel Construction Sustainability Charter and maintain our Gold Membership with the Supply Chain Sustainability School, partnering with key clients by completing learning pathways and attending targeted sustainability training.

Scope 3 emissions

During the year, the Group's sustainability strategy and management process has developed to include further detail around our scope 3 emissions. Scope 3 emissions account for all of the other emissions an organisation produces when fossil fuels are burnt within its value chain. The GHG Protocol identifies 15 categories of scope 3 emissions which can be managed by an organisation, and these include both upstream and downstream activities, as well as activities undertaken by the organisation which are not included within scope 1 or scope 2. For many businesses, scope 3 emissions make up a large share of their total emissions, therefore, in the context of the UK government's 2050 net zero target, it could be said to be the most important category to address.

Our verified scope 3 GHG emissions have reduced by 41 per cent to 6,540 CO2e from the prior year (2021: 11,137 CO2e). This significant reduction is largely due to a 55 per cent reduction in transport and distribution-related emissions, owing to the favourable location of the construction sites we have worked on throughout the year to our factories. Waste emissions have reduced slightly due to our increased focus to divert waste from landfill. Following the easing of lockdown restrictions, our colleagues have increased travel to face-to-face meetings, and returned to our offices, in turn increasing both business travel and colleague commuting within the period.

GHG emissions from:Tonnes of CO2e
2022
Tonnes of CO2e
2021
Waste279332
Business travel484246
Colleague commuting1,188404
Transport and distribution4,58910,155
Total verified scope 3 CO2e emissions6,54011,137

Our scope 3 GHG data is being independently verified by Achilles, in accordance with the international standard ISO 14064-1.

Additional scope 3 categories

In order to develop scope 3 targets for the business in line with our ambitious targets for scope 1 and 2 emissions (those we own and have control over), a gap analysis was conducted during the year on the 15 scope 3 categories as defined by the GHG Protocol. Following this value chain mapping exercise, we concluded that our measurement of scope 3 emissions would include eight of the 15 categories of emissions. We have therefore enhanced our reporting of scope 3 emissions, to include the following four categories.

GHG emissions from:Tonnes of
CO2e
2022
Purchased goods and services374,660
Fuel & energy related2,848
End of life treatment166
Investments1,215
Total unverified scope 3 CO2e emissions378,889

As is the case with most businesses in the construction sector, the majority of our GHG emissions are indirect (scope 3), accounting for 98 per cent of total emissions, on a market-based approach. Within scope 3 emissions, purchased goods and services represent 97 per cent of emissions, largely due to the embodied carbon in steel. We are committed to addressing our scope 3 emissions, in particular those from purchased goods and services, in order to achieve our strategic objective of net zero by 2040, this commitment is reflected by the Group signing up to SteelZero.

As we continue to develop our scope 3 reporting and set targets for the Group, we will review the requirement to have further scope 3 categories verified.

2023 areas of focus:

  • We will set new long-term net zero carbon targets for the Group, approved by the SBTi, to further reduce carbon in our operations in line with climate science.
  • Perform more detailed qualitative and quantitative climate scenario analysis in line with the TCFD recommendations.
  • Continue to refine our approach to address the GHG impact in our supply chain and other scope 3 emissions.
  • Following a two-year period of data collection, we will set new diversion from landfill and other waste reduction targets.