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 our 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 10.

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 55 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

To achieve consistent long-term value creation for our interested parties, we have developed a robust supply chain who deliver best in class products, goods and services. We have over 14,000 supply partners located in 45 countries, of which 6500 are UK based.

We have a clear risk-based supplier segmentation and onboarding process which determines the extent to which each supplier will be reviewed, supported, engaged and developed. Supplier geographical concentration is aligned to our key business activities which supports the delivery of a globally diverse supply chain that mitigates economic, social and environmental risks to enhance Babcock’s overall resilience.

We recognise that our suppliers operate in different geographic and economic environments, we are committed to ensuring that products and services are delivered in an ethical and socially responsible way that supports Babcock’s high standards, contributing to the reputation of Babcock and our customers. Regular supplier performance reviews, supplier audits and other assurance activities allow us to continually monitor against these commitments and continually develop our supply chain.

Babcock is committed to stakeholder value creation and supporting communities by utilising local supply chain opportunities as far as possible. By operating in the community Babcock creates a significant growth opportunity for local suppliers of our products, goods and services.

In late 2021 we developed a Sustainable Procurement Policy that identifies 12 key sustainability themes. This is underpinned by our newly developed Sustainable Procurement Guideline which provides detailed requirements and is supported by our 3-year Sustainable Procurement Strategy.

In recognition of our responsibilities in our value chain, we have launched a number of initiatives to continually monitor all key risk categories and mitigate potential risks within our supply chain. Babcock have invested in an AI Risk monitoring solution that will allow us to fully map our supply chain ecosystem, monitor activities and alert us when hidden risk is exposed in our sub-tier supply chain. This has been rolled out in Q1 2022.

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.

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 on pages 71 and 72).

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 (on page 71). 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 Treasury and Tax, who assumes day to day responsibility in this area.

On an annual basis, the Group Head of Treasury and Tax presents all relevant tax matters to the Board, including:

– 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

At Babcock we uphold the strictest standards. We work closely with our suppliers to ensure the same standards are applied throughout our supply chain. Our Sustainable Procurement Policy supported by the Sustainable Procurement Guideline sets out Environmental requirements and we are actively taking measures to ensure that our suppliers understand and achieve these requirements. Our business is actively working on the enhancement & development of the current business processes required to efficiently assess and Environmental impacts as part of the group P&SC functional strategy with completion scheduled by end of 2022. This will be the enabler to accurately report at group level the outcomes & improvement activities on environmental topics.

We have engaged with our supply chain on environmental matters through our supply chain survey programmes which is supporting our efforts to gather data, identify development opportunities and risks. This approach will be utilised during 2022 to further enhance our understanding of the environmental aspects of our supply chain.

Employment

At Babcock we are guided by our Purpose – creating a safe and secure world together. We are committed to creating an agile business where everyone is included, supported, and empowered to develop their talents to the full.

For more details see the Culture change section of our Annual Report page 18.

It’s important to us to continue to make improvements to our people experience in the moments that matter most to them. Measuring our employee engagement and understanding where we need to focus our efforts to have impact.

We are now moving to a global approach to provide one consistent measure and an overall view, whilst ensuring, a local, by sector and business unit understanding.

Moving to a global approach with emphasis on group and local level actionable insights, will offer us the ability to measure our success, impact and change consistently over time. Communicating the actions taken and demonstrating that we want to engage and enable our people no matter their role or location.

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. 69% 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

In May 2021 Babcock appointed a Global Safety, Health and Environmental Protection Director and a small team to lead improvements in safety performance. The Corporate Safety Leadership Team (CSLT) and a number of Working Groups lead the development and implementation of all policies, standards and processes within Babcock.

The role of the CSLT is to:

Recommend and set the Babcock policy and standards for safety, health and environmental protection 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 Babcock Executive Committee of the delivery of these policies and standards.

Facilitate and enable corporate learning across Babcock by increasing collaboration and developing an open culture where lessons are shared.

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

The CSLT is responsible for driving the generation of the safety strategy and standards for Babcock and adherence of businesses to these. Additionally, there are sector and national-specific industry standards and regulations that must be adhered to, for example Nuclear, Aviation and Product Safety requirements. CSLT work to increase collaboration and share good practice on all aspects of safety, including nuclear, aviation and product safety. The intent is that subject matter experts are retained within the Sectors and Direct Reporting Countries, consequently the CSLTs scope does not seek to replicate specialist sector and industry specific roles.

Our goal is for everyone to go “home safe every day”. Accordingly, safety, health and environmental protection performance receives close and continuous attention and oversight from the senior management team via global visibility on Synergi Life and performance indictors on the Balanced Scorecard. There are specific health, safety and environmental governance structures in place within Business Units as well as forums for sharing information. Education and training programmes for staff as well as corporate communications via the Babcock intranet site aims to raise awareness. Sector and Direct Reporting Country senior leadership teams and the CSLT oversee the implementation of policy, strategy and initiatives across all our businesses through an integrated Improvement Plan. The Babcock Board and Executive Committee receive reviews of health and safety performance on a monthly basis.

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.

Inclusion and Diversity

We see inclusion as an enabler and key to creating the right foundations to attract and retain the best, diverse talent. We recently appointed our first Global Head of Inclusion and Diversity to develop our approach to I&D and review, design and implement activities that enable Babcock to become a more inclusive business that values difference.

Enabling a more equal gender representation remains key to our long-term strategy therefore we continue to work towards achieving our targets:

30% women within senior leadership teams by 2025
30% gender representation at all levels by 2030
80% disclosure of diversity data by 2025

In line with the new approach, this year we reviewed our focus on disability and ethnicity and are setting Group wide targets for our employee base.

We build employee advocacy through our Employee Networks which currently include multi-faith, ethnicity, gender, LGBTQ+ and neurodiversity amongst others along with wider common interest groups.

These groups play a critical role in achieving Babcock’s ambition for a more inclusive business by ensuring we respect and value contributions from our minority communities.

We will be working with our networks across a three-year programme to develop them to a global level, driving a consistent employee experience and deliver greater diversity across the Group.

Non-Discrimination

We have made a public commitment that we will not tolerate any behaviour that intimidates, discriminates or excludes.

Freedom of Association and Collective Bargaining

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 rights of Indigenous peoples and the traditional territories in which we conduct business and acknowledges Traditional Custodians and their intimate connection to the land and water. We also acknowledge the right of Indigenous peoples to freely pursue their social and economic development. To this end we actively pursue partnerships with Indigenous communities, business and other organisation, and we support various charitable organisations, all to improve the social and economic outcomes for Indigenous people, contributing to a more equitable and fair future for all. We will achieve this through building respect and understanding as the foundations for trusted relationships; and, through this create opportunities.

We are proud of the different programs and initiatives underway in a number of the territories in which we operate, including Australasia, Canada and South Africa.

For example, to support Aboriginal and Torres Strait Islander peoples around Australia we partner with organisations such as the Indigenous Defence and Infrastructure Consortium, we provide sponsorship for Yalari students and engage with Indigenous-owned businesses through Supply Nation. In New Zealand, we engage with Māori and Pasifika suppliers through Amotai.

In our Canadian business, we have partnered with the Canadian Council for Aboriginal Business (CCAB) to achieve certification under CCAB’s Progressive Aboriginal Relations Program (PAR). We’ve also entered into partnerships and supply agreements with serval Indigenous businesses. Finally, we support Indigenous skills development and training through Indigenous student scholarships and co-op placements.

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.

In the UK, we expect our suppliers and extended supply base to adhere to the Modern Slavery Act 2015, as we do ourselves. We expect all our overseas suppliers to understand and comply with the intent of the Act. Modern slavery considerations are included as part of our risk management and supplier selection processes. More information about Modern Slavery can be found in the Governance section of our Annual Report on page 69 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

Babcock will continue to engage with young people, their parents, and teachers to ignite interest in studying STEM subjects and pursue a rewarding career in the industry by focusing on our Group-wide strategic objectives around raising awareness of STEM, increasing I&D and supporting schools that are located in deprived areas of the UK.

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 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 our Annual Report on page 156.