Management Response

Find out more about our management approach and evaluation to topics

Babcock’s management procedures to address the sustainability topics important for the Group are detailed below.

The structure and content outlined below are based on the guidelines for reporting – standard GRI 103 – Management Approach.


GRI 200: Economic


Economic Performance

The Board, the Executive Committee and management teams at Sector / Business Unit / Functional level review performance at their meetings, tracking relevant performance indicators and annual operating plans. Details of financial KPIs are in the Annual Report.

Where necessary, we adapt our programmes versus agreed strategy in response to external factors.


Market Presence

Defence markets offer significant resilience and long term potential, both in terms of increased spend in our current markets and expansion into new markets and our bid pipeline includes many opportunities.

For further details of our growth opportunities see the Strategic report section of our Annual Report on page 16.


Indirect Economic Impacts

As a global business operating in numerous locations, Babcock activities have a significant impact on society and the communities in which we operate. We are focussing on issues that matter most to our stakeholders as outlined in our Materiality Assessment on page 64 of our Annual Report.

Indirect economic impacts are reviewed as part of strategy development and bid opportunities and are reported to the Executive Committee and the Board.


Procurement Practices

Suppliers are evaluated against a broad range of criteria dependent on the activity required and in some cases specific requirements are flowed down from our customers. For strategic suppliers we ask that they complete due diligence via Joscar which is a specific aerospace, defence and security industry register used by most UK Defence primes and the MOD.

Ongoing performance against contract and service levels is managed within local Business Units.

All Procurement & Supply Chain staff undertake mandatory Anti-Bribery & Corruption and Modern Slavery trainings.

More details on our Procurement Practices can be found on our website here.


Anti-Corruption

The controls that we have in place form an integral part of our risk management arrangements and include the training of employees, regular risk assessments throughout the business and whistleblowing hotlines. We implement and observe appropriate training and procedures designed to ensure that we and others working for us understand what our Code of Business Conduct and our Suppliers’ Code of Business Conduct means for them in practice (see our Annual Report and Financial Statements 2021 on pages 77 and 78).

To protect the Company and reduce risks, we have set out a policy on how we should conduct business, which we summarise in the form of the Babcock Code of Business Conduct (page 77). Compliance with this policy is compulsory for our employees, business advisors and business partners (or, in the case of business advisors and partners, they must have equivalent standards and procedures in their own businesses). This Ethics Policy comprises a detailed manual, available on the Group’s website and intranet, containing guidelines, authorisation and other procedures aimed at identifying and reducing ethical risks. These include extensive policies around anti-bribery and competition law prohibitions that clearly show our zero tolerance for any form of bribery or anti-competitive behaviour.


Anti-competitive behaviour

We have an Anti-Trust (Competition) Guidelines and Merger Control Policy, which are available to the business through our intranet. Top down control is in place as, in addition to the standard internal reporting requirements, every year we ask our Sector and Country MDs to confirm that their business is operating in line with our policies. Bottom up monitoring is through our whistleblowing hotline.

We encourage all employees to report any non-compliance on our whistleblowing line. All reports go directly to the Company Secretary, who is responsible for their investigation. The Company Secretary sends all reports to the Board on a quarterly basis along with a description of the investigation done and the results of that investigation.


Tax

The Board of Directors of Babcock International Group PLC has ultimate responsibility for the tax strategy of the Group. Responsibility for implementation of / continued compliance with this strategy lies with the Group CFO, who is supported by the Group Head of Tax, who assumes day to day responsibility in this area.

On an annual basis, the Head of Tax gives a full tax presentation to the Board, which will include:

– A summary of the Group’s tax strategy.

– A summary of the Group’s level of compliance with tax laws in all relevant jurisdictions (including timely tax filings and tax payment processes).

This will normally take place in the fourth quarter of the accounting period.


GRI 300: Environmental


Materials

Across the organisation we use a wide range of materials to deliver our products and services. We are working to develop a comprehensive understanding of our consumptions so we can identify hotspots within our operation and opportunities to reduce our impacts.


Energy

We have developed a comprehensive approach to energy management across the organisation which is implemented by the Corporate ESG Committee through the Group Environment Team. We operate a range of sophisticated energy management systems and we have established a central energy management bureau which ensures we gain cost efficiency within our energy purchasing.

Within our Plan Zero 40 Carbon Strategy, we have plans to reduce the energy consumptions and carbon emissions across our estate, assets and operations and we strive to follow the energy hierarchy where feasible. We have committed to purchasing renewable energy for our UK operations and are aiming to reach 100% renewable energy across our global operations.


Water and Effluents

Water is managed at a local level within our Environmental Management Systems which are accredited to ISO14001 (or working towards accreditation). We have a wide range of targets and water reduction initiatives within our businesses which address local material issues. We are developing our Environmental Strategy to ensure we have a comprehensive understanding of our consumptions so we can reduce our impacts and support sustainable growth.


Biodiversity

Across the organisation our operations interact with a diverse range of eco-systems and our environmental aspects and impacts are managed at a local level through our Environmental Management Systems which are accredited to ISO14001 (or working towards accreditation). We are developing our Group Environmental Strategy to ensure we have a comprehensive understanding of our interaction with nature and appropriate plans to reduce our impacts.


Emissions

Babcock is fully committed to playing our part in addressing the global climate crisis. ‘Plan Zero 40’ is our Group-wide Carbon Strategy which will drive an extensive decarbonisation programme across our estate, assets and operations. Plan Zero 40 commits us to ambitious Science Based Targets in line with a 1.5°C limit to global warming and to deliver Net Zero by 2040.

Given the diversity of our operations, there is no fixed approach to decarbonisation which can be adopted across Babcock; therefore we are adopting a ’Top Down, Bottom Up’ approach. Our ‘Top Down’ approach establishes the governance, policy and strategic direction for Babcock. It also creates a framework within which our Businesses and individual sites will, as appropriate, develop supporting ‘Bottom Up’ Strategies specific to their estate, assets, and operations as well as contractual and stakeholder requirements.


Waste

Waste is managed at a local level within our Environmental Management Systems which are accredited to ISO14001 (or working towards accreditation). Where possible we strive to follow the waste hierarchy and across our operations we have a range of targets and waste reduction initiatives which address local material issues. We are developing our Environmental Strategy to ensure we have a comprehensive understanding of our consumptions so we can reduce our impacts and support sustainable growth.


Environmental Compliance

Compliance with legal and regulatory obligations is a priority across our operations and mandated thorough our Environmental Policy. Our Corporate ESG Committee, through the Group Environment Team oversee the implementation of the Environmental Policy across the organisation.

We are committed to the highest levels of environmental protection but unfortunately environmental grievances occasionally occur. We have a comprehensive management and reporting system which is managed by our Senior Leadership Team to ensure any impacts are addressed and remediated as appropriate.


Supplier Environmental Assessment

We are working to engage with our supply chain on environmental matters and are investigating a range of opportunities. Within our Plan Zero 40 Carbon Strategy we are working to complete a significant supplier engagement programme to establish our Scope 3 GHG inventory.


GRI 400: Social


Employment

Babcock measures employee engagement at a local level through employee surveys that are administered by their sector or business unit, these cover >70% of the workforce. The largest population is within our Marine sector which covers 26% of the overall workforce; the average engagement score in that business area is 7.8 on a 10 point scale, and our eNPS score for that population is 20.

In addition to surveys we have significantly increased and improved employee communications to enhance and improve employee engagement. These included a weekly CEO Vlog and “Ask David” e-mail address for employee to write directly to the Group CEO, as well as the launch of a Babcock app allowing more employees to access communication content. We have also continued to engage employees through our collective bargaining units and non-unionised areas of our business through our employee forum.


Labour/Management Relations

We have a strong commitment to dialogue with all our people, including those who are represented through a trade union or works council. We respect our employees’ choice to join or not join a trade union or other organisations and provide them with a forum to bargain collectively in support of their mutual interests. 53% of employees are represented by an independent trade union or covered by collective bargaining agreements.

The interests of employees who sit outside of our formal collective groups are represented through our employee forum.

We also expect our suppliers to uphold and protect the human rights of employees, as outlined in our supplier code of conduct. We stipulate a number of requirements such as treating workers equally, ensuring work is performed on a voluntary basis, having reasonable working hours, ensuring workers are of an appropriate age, paying fair wages, protecting health and safety, and having fair procedures and remedies and allowing freedom of association.


Occupational Health & Safety

The Corporate Safety Leadership Team (CSLT) leads the development and implementation of all policies, standards and expectations for Health, Safety and Environmental (HSE) issues within Babcock.

The role of the CSLT is to:

– Recommend and set the Group policy and standards for health, safety and environment relating to all matters relevant to the protection of the environment and the health & safety of the Group’s employees and any other persons affected by the Group’s undertakings.

– Assure the Group Executive Committee of the delivery of these policies and standards.

– Facilitate and enable corporate learning around the Group raising awareness of health, safety and environmental topics throughout the business.

– Own and deliver Group wide health, safety and environmental culture initiatives and projects.

The CSLT is responsible for driving the generation of the safety strategy and standards for the Group and adherence of businesses to these. Additionally there are sector-specific industry standards and regulations that must be adhered to, for example Nuclear, Aviation and Product Safety. The expectation is that subject matter experts are retained within the Sectors and consequently the CSLTs remit / scope does not seek to replicate specialist sector specific roles.

Our goal is for everyone to go “home safe every day”. Accordingly, health, safety and environmental performance receives close and continuous attention and oversight from the senior management team.

We have specific health, safety and environmental governance structures in place as well as education and training programmes for staff. Sector safety leadership teams and the Corporate Safety Leadership Team (CSLT) oversee the implementation of policy, strategy and initiatives across all our businesses. The Board and Group Executive Committee receive reviews of health and safety performance on a monthly basis (see pages 73 and 74 of our Annual Report).


Training and Education

Maintaining and developing the capability and skills of our workforce is important to Babcock to ensure we deliver on our contractual and operational commitments.

To ensure we have a sound baseline of current and future requirements we have implemented a robust Strategic Workforce Planning Process (SWFP). To satisfy the requirements identified through our SWFP we source and develop talent through a number of routes. We bring experienced talent into the business through our experienced hire and contingent labour programmes, we bring new talent in through our early careers programmes and we develop our existing workforce through our learning and development offerings.

To develop our leadership capability we re-launched the Babcock Academy this year. The academy provides development from team leader to senior leader within the business. To date we have had around 50 employees start the team and operational leadership programmes and around 60 employees start the senior leader programmes leading to an MSc or MBA qualification.

For our early careers we run extensive apprenticeship and graduate development programmes across the business.

We recruited over 300 apprentices onto our apprenticeship programmes during the year. The majority of these were new starters on level two and three programmes, which create entry level opportunities to join the workforce.

We recruited over 250 graduates onto our graduate development programme this year, our largest intake to date. We have implemented a new behavioural programme for all graduates across the Group which has been developed following extensive research involving our current graduates, their managers and mentors and a range of senior leaders.


Diversity and Equal Opportunities

We have seen improvements over the year in our efforts to build an inclusive and diverse organisation that more accurately represents the communities and countries in which we operate. This has included the addition of new networks including BAME and Multifaith, along with the growth of existing networks that have collaborated and worked together to lead a number of initiatives across the business. Our vision for Babcock is that we are a company where people can bring their whole selves to work and feel proud to be part of an organisation where everyone feels respected, included and supported.

At Babcock we recognise the value for our people of working in an inclusive environment where differences are valued, where everyone can thrive, give their best and fulfil their potential. We are committed to being a workforce that reflects the rich diversity of wider society and to be a business that inspires and shapes the communities in which we operate. We also recognise the importance of diverse thinking in the development of solutions for customers and our ambition is to become an employer of choice for diverse candidates, attracting and nurturing the best talent, that will enable us to deliver exceptional business outcomes.

Our Diversity & Inclusion focus areas for the year ahead are: harnessing our data to drive insight and measure results; strengthening and broadening our employee networks; transforming our key people processes; creating a culture of wellbeing; and celebrating inclusion and diversity as our key differentiating strength.

To monitor progress in these areas we will focus on enhanced data collection and measure ourselves against three targets:

– 80% disclosure of diversity data within 18 months.

– 30% women within senior leadership teams by 2025. Senior managers are defined as employees (excluding Executive Directors) who have responsibility for planning, directing or controlling the activities of the Group (ExCo) or a strategically significant part of the Group (Sector/Functional leadership teams) and/ or who are directors of subsidiary business units (BU leadership).

– 30% gender representation at all levels by 2030.

Along with these commitments, we are also actively working on meeting the recommendations of the Parker Review as we support increasing the representation of ethnicity on UK boards.


Non-Discrimination

Discrimination in the workplace is not tolerated at Babcock. Over the reporting period we had eight cases of alleged discrimination reported through our independent whistleblowing process, all cases have been investigated and appropriate remediation plans implemented.


Freedom of Association and Collective Bargaining

We have a strong commitment to dialogue with all our people, including those who are represented through a trade union or works council. We respect our employees’ choice to join or not join a trade union or other organisations and provide them with a forum to bargain collectively in support of their mutual interests. 53% of employees are represented by an independent trade union or covered by collective bargaining agreements.

The interests of employees who sit outside of our formal collective groups are represented through our employee forum.

We also expect our suppliers to allow free association and the opportunity to communicate directly with management without fear of intimidation or reprisal, as outlined in our supplier code of conduct.


Child Labour

The Board undertakes and annual ethics review, seeking assurance that the Group’s anti-bribery and corruption/Ethical policy, which includes our Code of Conduct, is understood and complied with across the Group.

We continue to raise awareness of Modern Slavery within our Procurement and Supply Chain function. As procurement professionals, we understand what modern slavery is, what the key identifiers are and how proactively to address and manage this risk.

Our Supplier Code of Conduct mandates that no underage workers are to be employed either directly or indirectly.


Forced or Compulsory Labour

The Board undertakes an annual ethics review, seeking assurance that the Group’s anti-bribery and corruption/Ethical policy, which includes our Code of Conduct, is understood and complied with across the Group.

At Babcock, we ensure that all employees can make a free choice about their employment and there should be no illegal, forced, bonded, involuntary or exploited labour. Our commitment is to:

– Ensure there is no involvement in human trafficking or involuntary movement of people.

– Ensure employees do not work hours in excess of the limitations set by relevant local and national laws and regulations.


Rights of Indigenous Peoples

Babcock recognises and respects the Traditional Custodians of our land and acknowledges their intimate connection to the Land and Water. We support various charitable organisations to improve social and economic outcomes for Indigenous peoples to create a more equitable and fair future for all. We will achieve this through building respect, understanding and the foundations for trusted relationships; and, through this, create opportunities.

We are proud of the different programs and initiatives underway in a number of our territories, such as Canada, South Africa, and Australasia.

For example, to support Aboriginal and Torres Strait Islander peoples around Australia we have partnered with other across industry and charities such as; Indigenous Defence and Infrastructure Consortium, Yalari Foundation, and Port Adelaide Football Club. And in our Canadian business; partnering with the Canadian Council for Aboriginal Business (CCAB) and sponsoring the First Nations Technical Institute (FNTI). FNTI is an Indigenous-owned and governed post-secondary institute located on the Tyendinaga Mohawk Territory.


Human Rights Assessment

At Babcock we are committed to conducting our dealings, whether with customers, suppliers, employees or the communities in which we are based, with the utmost integrity and as such we are steadfast in our support for the elimination of modern slavery in all its forms. All our businesses, wherever they are located and wherever they have dealings in the world, are required to respect people and to value their diversity.

Our aim is to create an inclusive organisation where everyone’s skills and contributions are welcomed and valued. This approach is enshrined in our Babcock Code of Conduct.

Modern slavery falls within the governance pillar of our ESG programme, more information about which can be found in our Annual Report and on our website.

While we continue to believe that due to the nature of our business our exposure to the risk of human rights abuses and modern slavery is low within our own business and supply chain, we welcome the opportunity to contribute positively to global efforts to ensure that human rights are understood and observed. Our modern slavery statement, which is available on our website, explains the steps Babcock is undertaking to prevent, detect and respond to modern slavery within our business and supply chains.


Local Communities

We, like the whole STEM sector, need significant numbers of individuals with STEM backgrounds now, and in the future. The challenge we face is that not enough young people are studying the STEM subjects which will equip them with the knowledge to pursue a career in this area. By engaging with young people, their parents and teachers we seek to spark an interest in studying STEM subjects and pursuing a rewarding career in the industry.

We believe that igniting an interest in STEM subjects should start early. The 5E model, developed by Plymouth City Council and adopted by Babcock, shows how we tailor our engagement to meet the needs of young people as they progress through the education system and towards employment.


Supplier Social Assessment

Babcock’s Supplier Code of Conduct sets our guidelines, and other procedures aimed at effectively providing ethical and socially responsible delivery. While we recognise that our suppliers operate in different geographic and economic environments, we expect that products and services are delivered in a way that support Babcock’s high standards and contribute to the reputation of Babcock and our customers.

To view our Supplier Code of Conduct click here; for more information on Sustainable Business click here and for further details on Supply Chain Responsibility click here.


Public Policy

As an international aerospace, defence and security company, our main customers are governments. We regularly engage with political stakeholders in our priority markets either directly or through trade bodies and representative organisations. We also respond to government consultations and calls for evidence. Babcock does not make any political donations, either in cash or in kind to any party or organisation.

Our business requires us to maintain the highest ethical standards in our engagements with governments around the world and we will always comply with local laws and practice on lobbying and transparency. We have clear guidelines and ethical policies which can be easily found and read in full on our website here.


Customer Privacy

Babcock holds personal data about employees, suppliers, customers and other individuals, including prospective and former employees.

Babcock’s Data Protection Policy sets out our commitment to comply with Data Protection Laws as regards personal information that we handle in our business activities. This policy also sets out the way in which employees must deal with Personally Identifiable Information to ensure that Babcock does not breach its obligations under the Data Protection Laws. Our Information Security Policy and Cyber Security set out how we handle data in line with data protection laws. We have mandatory training on data privacy.

Babcock has appointed Data Protection Officers to help it comply with its obligations under the Data Protection Laws. Issues can be raised through our Whistleblowing helpline, via line managers, Legal representatives or Human Resources.


Socioeconomic Compliance

Babcock has a sound corporate structure producing robust governance. We provide mandatory training on key governance issues, including Anti-Bribery and Corruption, Data Protection, Trade Sanctions.

For more details, see our website and the Financial Statements section of the Annual Report on page 163.