General Disclosures 2016

Babcock International Group PLC

Babcock is an international aerospace, defence and security company with a leading naval business and provides value add services across our main markets of the UK, France, Canada, Australasia and South Africa. We also operate in and export to additional markets.

For further details see pages 4 and 5 of our Annual Report.

Babcock International Group PLC
33 Wigmore Street
London
W1U 1QX
UK

See response to GRI 102-02

Babcock International Group PLC, registered in England and Wales number 02342138 as a public limited company and listed on the London Stock Exchange.

Defence is our largest market and at the heart of what we do. We have a crucial role in delivering critical defence services in the UK, France, Canada, Australia and New Zealand and we make products for several other nations including the USA and Korea.

For further details see pages 4 and 5 of our Annual Report.

As of March 2021, Babcock employs over 29,000 people in 17 countries.

In FY21 the Group earned revenue of £4.2 billion. Further details of the Group’s capital structure can be found in notes 23 (page 247) and 27 (page 252) of the Annual Report. Details of the Group’s financial performance can be found in pages 30 to 49 of the Annual Report.

The majority of staff who work for Babcock are permanent employees. However, we do engage temporary resource to bring difficult to recruit skills into the business and meet resource demand at times of peak workload.

Click here to view employees by gender, and by employment contract type.

Click here to view employees by region.

No assumptions have been applied to this data, the data source for this is our core HR system holding data submitted by our employees.

We buy a wide range of goods and services from over 14,000 suppliers (of which 6,500 are UK-based) from over 40 countries.

Details of how we work with our suppliers are included in the Governance – Diverse and Robust Supply Chain section on page 78 of our Annual Report.

There were no material acquisitions or disposals for the year ended 31 March 2021, and there were no changes in share capital structure.

There were no material changes to the overall location of suppliers, structure of the supply chain, or our relationships with suppliers during this reporting period. Our supply base remains stable, although we have had organic changes to suppliers which is to be expected given the nature of the business and size of operations.

See the Governance – Diverse and Robust Supply Chain section on page 78 of our Annual Report which references our current structure.

The imports of materials / goods from outside UK unlikely was not adversely impacted by any long-term Brexit issues and those risks are being continually reviewed and managed.

Babcock’s approach to environmental risk management adopts the precautionary principle. We seek to develop and adopt ‘evidence-based’ policy and we take a proactive stance to reduce harm to the environment.

Babcock is signed up to the Social Mobility Pledge and 14 of our Legal Entities are signed up to the Prompt Payment Code. We have submitted our business ambition pledge for 1.5 degrees and joined the UNFCCC Race to Zero. Babcock have also committed to setting Science Based Targets.

We are members of several associations, including:

• ADS
• CBI
• Make UK
• Canada UK Chamber of Commerce
• Team Defence Information
• Defence Growth Partnership
• Tech UK
• Mari-UK
• Society of Maritime Industries
• RAeS – UK
• AEI – Italy
• Confindustria (Lecco-Sondrio and Rome) – Italy
• Assolombarda – Italy
• Unindustria – Italy
• Women in Science and Engineering
• Make UK
• 5% Club
• Institute of Student Employers
• Whitehall and Industry Group
• Stonewall

The increasing importance of sustainability to our strategy is highlighted in the CEO Review on pages 12 to 15 in our Annual Report.

Those impacts, risks and opportunities considered most material from both a financial and non-financial perspective are included in our Annual Report, see pages 2 to 99. As of this year, we have highlighted climate change and associated risk within our Sustainable Business review.

There are currently eight principles that make up ‘being Babcock’:

• Respect;
• Building great relationships that are based on trust;
• Never compromise on health and safety;
• Trust our people to deliver;
• Thrive on complexity;
• Safeguard customer reputations;
• Challenge ourselves and each other; and
• Always strive to deliver.

The Babcock Code of Business Conduct («the Code») sets out how we should conduct business to ensure the highest level of honesty and integrity. The Code is underpinned by a number of global policies, guidelines and procedures covering specific business activities. The Code is reviewed on a regular basis to ensure that we take account of any changes in our external environment and update them accordingly. The Code can be found on our website and it is compulsory for each employee to sign up to this code.

Our Code of Conduct and Supplier Code of Conduct and related guidance provide practical guidance to our employees and others connected to our business on how to conduct business in an ethically sound way in line with our purpose and principles. These are supported by employee training. For more information see page 108 of the Annual Report.

However, where any employee or person connected to our business has any concern that our Codes of Conduct or associated guidance are not being followed, they can contact a confidential whistleblowing hotline, without fear of unfavourable consequences for themselves. This service is available 24 hours a day, 365 days a year, in local languages and is accessible by telephone or at www.babcockinternational.ethicspoint.com. It is managed by an external company, independent of Babcock, with staff trained to deal with reports. The hotline sends all reports received to the Company Secretary, who sends it to the person with the appropriate experience and training to investigate the report properly. He submits a report to the Board of all the investigations and their result.

Babcock’s governance structure is included in the Governance section of the Annual Report on page 108 including the Corporate ESG Committee responsible for environmental, social and governance topics.

Further information on the role of the Board and its Committees can be found on our website https://www.babcockinternational.com/who-we-are/leadership-and-governance/.

The Board delegates to management by way of a delegation of authority matrix, most often to the Executive Directors who in turn delegate to management committees or managers. See page 108 of our Annual Report.

The Board is ultimately accountable for economic, social and governance topics and delegates to our Chief Executive Officer, David Lockwood for their management. Responsibility for component parts of our ESG programme is shared by members of Babcock’s Executive Committee, all of whom report to the CEO.

Feedback on stakeholder engagement is provided to the Executive Committee and the Board as appropriate.

See Stakeholder Engagement section on page 114 of our Annual Report.

See the Governance section of our Annual Report from page 100.

The Board chair is a non-executive director and, in accordance with the UK Corporate Governance Code, was independent on appointment.

The Nominations Committee of the Board, which comprises all the independent non-executive directors and the Chair of the Company, is responsible for keeping the composition of the Board under review and succession planning for the Board and senior leadership of the Group. Criteria for selecting candidates for Board appointments include skills, knowledge, experience, diversity and independence.

For more information see the Nominations committee report in our Annual Report pages 117 to 118.

Our Code of Conduct references how potential conflicts of interests are to be managed. The Board has adopted a formal procedure for the disclosure, review, authorisation and management of Directors’ actual and potential conflicts of interest.

More information is included in the Governance statement on our Annual Report on page 110. External interests of the Directors are provided on pages 104 to 105. Major shareholders as at 31 March 2021, none of whom have an interest in more than 10% of the Company, are detailed on page 154 of the Annual Report and Related Party disclosures on page 262.

The Board’s role is to lead the Group with a view to the creation of strong, sustainable financial performance and long-term shareholder value, to review and approve the Group’s strategic plan and to supervise the conduct of the Group’s activities within a framework of prudent and effective internal controls. This is underpinned by a clear purpose and principles by which we do business, enshrined in our Code of Conduct, all kept under review by the Board.

Further information on the Board’s role in developing the purpose, values, strategies, policies and goals related to economic, environmental and social topics can be found throughout the Strategic report on pages 2 to 97 of the Annual Report and in the Governance section on pages 100 to 159.

The Group Head of Sustainability regularly reports to Board meetings and ESG matters are now an integral part of Board strategic discussions.

Our Chair, Ruth Cairnie, is Patron of Women in Defence Charter and the Chair of POWERful Women, an initiative to advance gender diversity within the energy sector.

Non-Executive Director, Lord Parker, appointed in November 2020, has been appointed as Non-Executive Director responsible for workforce engagement.

During the year ending 31 March 2021 the Board underwent an independent, externally led evaluation of its performance which included economic, environmental and social topics integral to our Strategy.

For more information see page 111 of the Annual Report.

The Executive Committee is responsible for identifying and managing economic, environmental, and social topics and their impacts, risks, and opportunities as outlined in GRI 102-20. Our Sustainability Strategy has been approved by the Board and regular updates are given on key topics including carbon strategy, climate risk, community engagement and inclusion and diversity. See page 115 to 116 of the Annual Report.

As noted in the ESG Strategy – Materiality Assessment section of our Annual Report (see page 64), we are focusing on issues that matter most to our stakeholders and to Babcock and this will help influence our sustainability agenda and our priorities.

This year we have set out our material issues and explained why they matter. We did this by reviewing the list of topics from our 2019 stakeholder engagement, assessing our impact across the value chain and versus global standards.

The Board is responsible for the Group’s risk management and internal control systems and delegates certain risk management activities to the Audit Committee, including the annual review of the systems’ effectiveness.

Details of the Group’s risk management processes can be found in the Annual Report on page 131.

The Audit Committee reviews aspects of the risk management and control system at its meetings, at least four times a year, and Executive Committee reviews quarterly principal risks, emerging risks and mitigations.

Our Annual Report, including the ESG strategy section, is approved by the Board.

Our principal risks and how we manage them to ensure that critical concerns reach the Board in a timely fashion are detailed on pages 85 and 131 of our Annual Report.

 

Our principal risks with details of how we mitigate against them can be found on pages 87 to 95 of our Annual Report.

The Remuneration Committee report in the Annual Report, pages 132 to 153, includes our remuneration policy. As explained in that report, remuneration is driven by both financial and non-financial metrics, which in some cases include environmental as well as economic goals.

The Remuneration Committee is responsible for recommending the remuneration of the Directors and other Senior Executives.

More information is available in the Remuneration Committee report on pages 132 to 153 of the Annual Report. Details of independent third-party remuneration consultants are on page 143.

During the year the Chair of the Remuneration Committee, Kjersti Wiklund, engaged with the Company’s top shareholders in connection with the Company’s new Remuneration Policy. The policy was approved at the Annual General Meeting on a poll with 99.48% of votes cast for the resolution.

Our policy regarding consideration of employee and shareholder views in connection with Executive Directors’ remuneration can be found on page 142 of the Annual Report.

We disclose the ratio between the CEO’s salary and total remuneration and that of the lower quartile, median and upper quartile UK-based employee in the Annual Report on page 150.

Omission: data by country.

We disclose the percentage change in remuneration from the prior year for the CEO compared to the average UK employee in the Annual Report on page 149.

Omission: data by country.

We engage with internal and external stakeholders on a regular basis, ranging from customers, investors, employees, regulators, suppliers and communities. A list of key stakeholders is included on our website and in the Stakeholder engagement section, on page 114 of our Annual Report.

53% of Babcock’s employees are covered by collective bargaining agreements (the remainder are represented through our employee forum)

Our stakeholders are identified as all those who affect, are affected or could be affected by Babcock’s business. Babcock is committed to proactively engaging with groups that fit this criteria to ensure that our values remain consistent with theirs and to place an appropriate level of focus on shared key issues. We engage a range of external stakeholders, including customers, investors, employees, regulatory and industry bodies, our supply chain and local communities to understand how they view our activities, and how they consider our performance and reputation economically, socially and environmentally.

For example, it was identified that all of our stakeholders are placing an increasing emphasis on the global sustainability agenda and in response we implemented a new Group-wide environmental, social and governance (ESG) strategy in 2020.

We engage a range of external stakeholders, including customers, investors, employees, regulatory and industry bodies, our supply chain and local communities to understand how they view our activities. As set out in the Stakeholder engagement section on pages 58 to 61 of our Annual Report, the method of communication and therefore frequency of communication varies depending on how Babcock best engages with each stakeholder.

During the Covid pandemic we significantly increased and improved employee communications to enhance and improve employee engagement. These included a weekly CEO and senior leadership Vlog and “Ask David” initiative which encourages all employees to contact the CEO directly as well as the launch of a Babcock app allowing more employees to access communication content that they could previously only access on Babcock devices. Content includes corporate communications, wellbeing content and a forum for employees to interact with one another.

Based on the outcomes of our employee engagement focus groups, employee surveys and listening forums we have been focussing on the topics that employees have highlighted as a priority, those being; communication, pay and reward, leadership and career development. Examples of our work to improve across these areas are the introduction of our BIG Benefits platform and the development of the Babcock Academy. During FY22 we will be moving to a consistent approach to measuring employee engagement across the Group.

Our Financial statements can be found in our Annual Report from page 174. Please refer to the Group entities listed in note 38 on page 264 of the Annual Report.

Through stakeholder and financial analysis, we have identified the Environmental, Social and Governance issues most material to Babcock and most important to Babcock’s stakeholders. At a minimum our reporting includes these issues.

See response to items GRI 101-01 to 101-10 for how we have implemented the reporting principles for defining report content.

For a list of material topics see page 64 of the Sustainability Section of the Annual Report.

We determined these topics by reviewing the list of topics from our 2019 Stakeholder engagement, assessing our impact across the value chain and versus global standards.

If required, Babcock would restate environmental data for the baseline year and intervening years to reflect any changes in the Group structure arising from mergers and acquisitions, changes to the base year, the nature of the business or measurement methods to ensure accuracy, consistency and relevance of the reported information to enable a full and accurate year-on-year comparison. No material restatements have been required for the year ended 31 March 2021, however where appropriate we will adjust prior year figures to include data unavailable last year. Figures for the year ended 31 March 2021 include an element of estimated data.

Not applicable for the year ended 31 March 2021, as this is the first year we are making the Global Reporting Initiative disclosures.

Year ended 31 March 2021.

30 July 2021

Annual

Babcock International Group PLC
33 Wigmore Street
London
W1U 1QX
UK

[email protected]

We have prepared this report in accordance with the GRI Standards: Core option.
Refer to the table on page 80 of our Annual Report and in the ESG Reporting page.

This index serves as the GRI content index and is summarised by the content index on page 80 of our Annual Report and on our website.

The Group is committed to reporting accurate and reliable non-financial information, and the information reported is subject to detailed and thorough internal review. For the year ended 31 March 2021 the Group has not sought external assurance for the Sustainable Business section of the Annual Report.