Environmental, Social and Governance

Environmental
Social and Governance

During the year the Group has continued to develop our strategic approach to Environmental, Social and Governance (“ESG”) issues. The Board is aware of the potential impact of our activities on the environment and remains committed to reporting its ESG performance. The Group is aware of and strives to support the 17 United Nations Sustainable Development Goals (”UNSDGs”) wherever the business intersects with these targets.

Highlights FY24

• Completion and publication of the Group’s first Net Zero Transition strategy. Setting a clear path for delivering net zero carbon from operation by 2050 in line with the UK Government targets.
• The Group’s CSR fund raised over £50k for community initiatives championed by our employees.
• The Group achieved a Silver rating from the Supply Chain Sustainability School building on the bronze award achieved in the previous year.
• Planted over 78,000 trees on land owned by the Group. These trees have the ability to extract 1,680kg of carbon per year.

Focus for FY25

• Further development of environmental metrics and targets, to allow for real time monitoring of progress against the Group’s new Net Zero Transition strategy.
• Focus on a data driven solution to identify, measure and report the Social Value impact of the Group in line with the TOMS framework.
• Apply for and achieve a gold award from the Supply Chain Sustainability School.
• Achieve PAS2080 accreditation, which is focused on carbon reduction in the built environment, for our Earthworks operations.

The well-established ESG Working Group (‘ESG Group’), which is chaired by one of the business unit Managing Directors, meets at least quarterly to discuss risks and opportunities which climate change presents as well as the impact the Group’s undertakings has on society and the communities in which it operates.

The ESG Group includes representatives from all areas of the business ensuring that there is appropriate representation in the discussions. The ESG Group reports quarterly to the Audit & Risk Committee, which ensures Board level engagement and facilitates continued awareness of the Group's ESG activities at the highest level. The Audit & Risk Committee believe that this broad representation with the ESG Group is key to delivering optimal solutions to the challenges and opportunities faced and ensures that consideration of environmental, social and governance issues are incorporated into each business unit’s approach when tendering for new business opportunities. This level of representation is also essential to ensure the “buy-in” of wider stakeholders.

The main focus for the ESG Group in the year has been the development of the Group Net Zero Plan. We are delighted to confirm the publication of the Group’s Net Zero Plan, which is available on our website. Our plan details a clear strategy to achieve net zero emissions from corporate activities by 2030 and net zero from all operations by 2050. Moreover, it demonstrates how we are pioneering sustainable earthworks for infrastructure and facilitating renewable energy developments across the UK.

Along with various in-house online training, including Anti-Corruption & Bribery and Information Security, all employees are required to complete online ESG Awareness training.  This training highlights the areas Hargreaves is focussing on to reduce fuel and water usage, waste, and increase levels of recycling. Additionally, the course advises how employees can make small changes in their homes, and the workplace, which can make a meaningful contribution to improving the environment.

Environmental

The ESG Group continues to implement robust measuring systems and appropriate goal setting, tracking and reporting in line with relevant legislation.  Each Business Unit undertakes climate change risk assessments of the impact and potential opportunities of climate change and embeds these results into their risk registers.  These assessments focus on possible impacts within the next five years, which is Hargreaves’ usual planning cycle. Following these assessments, the applicable Group policies are reviewed and amended, where appropriate, in conjunction with the Group General Counsel.

Net Zero Plan

The development and publication of the Group’s Net Zero Plan (“the Plan”) represents a significant step forward in the development of the Group’s carbon strategy. The Plan was developed by the ESG Group taking into account feedback from around the business and from the Board. The Plan sets a clear path to how Hargreaves can achieve Net Zero by 2050 by breaking down emissions created by our operations into manageable segments. Each segment is considered individually, with its own Net Zero target date.

We are proud to have been awarded an ESG A rating by Integrum ESG following an independent assessment in January 2023. Our rating was calculated based on an analysis of procedures in areas of governance, sustainability and impact.  An A rating indicates a ‘very good’ overall approach to ensuring a company acts in line with expected standards for ESG matters.

Hargreaves Sustainability Initiatives

During FY24, the Group achieved Silver status from the Supply Chain Sustainability School (“SCSS”).  The training modules provided by the SCSS increase levels of awareness and collective buy-in from all staff members in many areas such as modern slavery, anti-bribery and corruption, with particular focus on mandatory modules for procurement staff.

The Group’s power supply in the UK is now provided using 25% nuclear and 75% renewable energy, i.e. 100% non-carbon.  In addition, electric vehicle charging points have been installed at our two main office-based facilities in County Durham and Barnsley and other major operational sites, including Unity and Blindwells, and are now standard installations in all of Hargreaves Land's newly constructed industrial buildings.

Hargreaves Land

At Blindwells, our flagship residential site near Edinburgh, we have installed a separate EV Charging Point car park which is for residents and other users who do not have a dedicated charging point at their home. Hargreaves Land also funded and constructed a private residents’ car park and will retain ownership with maintenance and operation in partnership with MER.

Additionally at Blindwells, we are continuing the development of significant amounts of open space, including public parks, much of which is structured landscaping and has included the planting of 40,000 trees with more to come as the development continues.

Our recently completed 191,000 sq ft industrial unit at Unity, Doncaster, recently became the first Hargreaves project to be delivered to BREEAM ‘Very Good’ standard and EPC A rating.  Building Contractor, Caddick Construction, also achieved full marks across the board in the Considerate Constructors Scheme for respect to the community, care for the environment and valuing their workforce. The assessor citing that “the project provides an extensive range of examples of best practice for the industry for which the team should be commended. Although in a relatively discreet location, the social value team appear to have built up some excellent relationships with local charities and support organisations, education organisations and neighbours to the project. All the information continues to be monitored effectively, including an employment and skills plan. There are a number of key elements to the environmental requirements, all of which appear to be managed very effectively using a series of trackers contained within the Smartwaste, Aspects and Impacts and BREEAM requirements. The use of temporary renewables appears to reflect the innovative culture that appears to prevail. Support for the supply chain was evident with regards to both the sustainability and the health and safety agendas.”

During the year, yet more wind farms have come on stream utilising land owned by Hargreaves to deliver clean energy into the national grid. By the end of the year land owned by Hargreaves is helping to enable 216 MW of renewable energy.

SERVICES

Our earthworks operation continues to push the boundaries of what is possible within large scale earthworks operations. During the year we have proudly received the brand new 23-tonne Volvo EC230 electric excavator, Volvo EC’s first fully electric model in the mid-sized excavator category. This groundbreaking machine offers zero-exhaust emissions and quiet operation, extending these benefits to a wider range of large earthworks applications. Powered by lithium-ion batteries, the EC230 electric is designed to operate for a full eight-hour workday, with a quick one-hour recharge during a break. We are proud to be the first operator of this machine, making its debut in the UK construction industry, this environmentally friendly excavator will be tested at Sizewell C on our earthworks projects, underscoring our commitment to sustainability.

Furthermore, the Group has ordered two biomethane gas trucks to supplement the fleet. Each of these trucks will save between 80 and 90 tonnes of carbon compared to a traditional diesel-powered truck. It is expected that they will be in operation before the end of calendar year 2024.

Our land remediation team have improved over 240 acres of land over the last twelve months. This represents land that was previously unable to support tree growth, however, because of our activities the land can now support forestry. To date our in-house team have remediated approximately 2,500 acres of land across five former open-cast mining sites.

The waste solutions team have diverted over 4,000 tonnes of end-of-life tyres from entering land fill through the use of tyre derived fuel. Additionally, the same team have directly prevented around 10,000 tonnes of household waste from entering landfill through our innovative recover and recycling offerings.

The Group is actively engaged in advancing sustainable earthworks, a commitment prominently spearheaded by Managing Director Niall Fraser. In close collaboration with industry peers, Niall has been instrumental in developing the first European Standard on Sustainable Earthworks. This collective initiative, aimed at enhancing the sustainability of earthworks projects, draws on best practices from across Europe and is set to culminate in the publication of a comprehensive new standard. The standard will focus on environmentally friendly methodologies and improved resource management in earthworks, aligning with Blackwell's broader goals of reducing carbon emissions and promoting ecological responsibility in large-scale infrastructure projects like HS2 and Sizewell C​. Recently, Blackwell presented talks on sustainable earthworks at the Institution of Civil Engineers and the British Geotechnical Association lectures and meetings.

No significant environmental incidents were reported in the year within the Group.

FY24 Targets

The Group had set three targets for the year just ended. The targets are as follows:

SECR

The Group’s Scope 1, 2 and 3 emission data is set out in the table below.
^{* based on an average of 10kg of CO2e captured per tree per annum}

The above shows a substantial increase in Scope 1 emissions which reflects the increase in plant activity particularly within the earthworks activities at HS2 and Sizewell C Nuclear Power Station. The group has seen a substantial increase in the hours of plant usage, with an 80% increase within earthworks activities alone. This has affected the emissions per employee metric due to the relative impact of plant operatives compared to other employees.

Total carbon emissions have reduced by over 55% since the year ended 31 May 2020, which was the first year the Group reported under the SECR framework.

The Group does not undertake carbon offsetting, nor does it purchase trees on land owned by third parties. The number of trees planted and the associated offsetting represents physical trees planted by the Group on land owned by the Group. To date this is a total of 171,450 trees.

Methodology

The Group follows ISO14064:1 standard for its reporting and takes the operational control approach to reporting. The conversion of units of fuel used into tonnes of CO₂e has been done utilising the UK Government Conversion Factors 2024.

Scope 1 emissions have been calculated by taking the total number of litres of fuel used in operations during the reporting period and converting them to tonnes of CO₂e using the appropriate conversion factor.

Scope 2 emissions have been calculated by taking the total kWh of electricity and gas used at the Group’s premises during the reporting period and converting them to tonnes of CO₂e using the appropriate conversion factor.

Scope 3 emissions have been calculated by taking the total litres of fuel purchased for business travel as well as an estimate of emissions for business flights and the transmission and distribution impact of the Group’s electricity usage.

The Group uses the emissions per employee as the most meaningful intensity ratio as the Group is predominantly a services operation.

The Board considers that the disclosures above meet the requirements of the Companies Act 2006 sections 414CA and 4141CB (2A) with the exclusion of paragraphs 414CB (2A) (e), (f), (g) and (h) as the Board considers there to be no such material risks.

Social

Employee Wellbeing

We remain committed to employee wellbeing, from ensuring a satisfactory work-life balance, through flexible working and strict adherence to our rigorous policies, to ensuring employees are actively supported through our free of charge Employee Assistance Programme (‘EAP’).  The EAP provides confidential 24/7 online and telephone assistance, to support issues from mental health and physical support to legal and financial advice.  In addition, the business has access to 48 trained Mental Health First Aiders - one for every 29 employees.  These individuals are the first point of contact for an informal chat or to sign post employees to the correct professional advice.

Safety at work

The Board recognises the critical role played by our employees in achieving the strategic objectives of the Group. We are committed to the ongoing physical and mental wellbeing of our colleagues. We are committed to maintaining a safe and secure working environment for all to ensure none of our colleagues are injured during the conduct of our operations. The safety performance of the Group is the first point on the Board agenda at each meeting.

Meanwhile, following an audit by NOSA, our team in South Africa has been awarded a Five Star rating for health and safety management for the 7th consecutive time. Our 2024 score of 97.66% is also an improvement from our 2023 score of 96.73%.

Continuous Support

To help employees budget through the ongoing cost of living crisis, our employees benefit from generous discounts from high street and online retailers via the Hargreaves Rewards platform using their online account or via an app.

In partnership with an external coaching mentor, Hargreaves continues to support potential and existing Line Managers by delivering a Management Development Programme aimed towards actions and behaviours to improve team engagement and business performance.  Course modules cover numerous topics, including customer focus, effective communication, engagement and inclusivity, and coaching and mentoring. To date, 33 individuals have successfully completed the course.

The charts below show the difference in mean (average) hourly rate between men and women. Within the Group, the main areas of work are in logistics, production and industrial services including material handling and maintenance. The majority of roles within these sectors are direct workers i.e. labourers, drivers, machine operators, shift work with irregular working patterns. The mean gender pay gap was 20.4% (2023: 22.1%) The median gender pay gap was 16.9% (2023: 46.0%).

Whilst the hourly rates are higher for males, the median bonus average is higher for females. The percentage of females receiving a bonus was 58% (2023: 49%) which is also greater than the percentage of males receiving a bonus which was 42% (2023: 39%).

The graphical information below illustrates the diverse nature of the Group, identifying the ethnicity and gender split of our workforce. The number of individuals who have identified themselves as disabled is 17.

Social Engagement and Community Support

The Group continues to support local communities, activities and events that employees are actively involved with through its Corporate Social Responsibility Fund (‘CSR Fund’). During the current financial year, we supported a total of 109 (2023: 76) events, donations and initiatives across all areas of the business. These include sponsorship of charity golf days; sponsorship of adult and junior sports teams; employee matched donations of sponsored events; donations to community events and foodbanks; donations to local schools and nurseries; supplied charity events with raffle prizes; donations in memory of an employee or a family member; donations to scout groups; sponsorship of local Christmas trees; and sponsorship of local businesses and attractions, some of which offer staff discounts and benefits, such as Durham Cathedral and Ushaw College.

In addition, we are also proud to have been awarded Gold CSR Accreditation. The accreditation is an effective way to benchmark what the Group does with regard to social responsibility. The process involves the collation, measurement and reporting on a full range of socially responsible activities. Accreditation also provides a roadmap for planning future activity. The application process records activity against the four pillars of Social Responsibility - environment, workplace, community and philanthropy. Each pillar of Social Responsibility is designed for a company to report their impact on areas such as energy performance, recycling, staff engagement, health and wellbeing, community engagement and supporting local and national charities.  The accreditation is for three years and a tree is planted, in our name, as part of the Green Earth Appeal.

For the third consecutive year, we are proud to sponsor the North East England Chamber of Commerce Inspiring Female Awards. During FY24 the Group sponsored and played a role in judging the “Inspiring Female (medium) Award”, which provided to be a difficult decision given the depth of quality in the area. The awards recognise the inspirational and influential women across a range of businesses in our region. In the coming year, Hargreaves is sponsoring the “Community & CSR Business” category.

Hargreaves has supported the development of a new Scout facility in Fife. After a devastating fire to their previous facility in 2019, the 4th Fife Cardenden Scout Group received planning permission for a new hall in 2023.  However, due to rising construction costs were unable to fund the build.  Hargreaves Land and Westfield partner, Brockwell Energy, joined forces to support the project with a joint donation. The project is due to commence shortly, and we look forward to seeing the new Scout hut completed.

	Liam Readle - Hargreaves sponsors the inspirational Liam Readle, son of Billy Readle, Site Manager at Port of Tyne for Industrial Services. Liam has cerebral palsy and began wheelchair basketball at the age of 11 for local club, Tees Valley Titans. During this time, he had trials for Great Britain under 18s and under 25s and went on to represent England North in school games in 2017, where he obtained a gold medal.
Neighbourhood Community Beach Clean Up and Food Angel - Recently, our staff in Asia joined the client and other subcontractors to conduct a clean up exercise at the LKT beach area. Twenty members of staff also helped prepare 2,200 lunchboxes for those in need in the community.
	SMILE Centre - Andy Johnson, Head of Asset Management for Hargreaves Land, pictured with individuals from the Supportive Multi-ability Inter-generational Life Experiences Centre following our donation towards them creating their new outdoor area.
Laybo’s Legacy - Sponsorship for a second year of this suicide prevention charity incorporated following the loss of someone close to an employee.
	Project40Seven - Donations helped to support food collections for those in need in the local community

Governance

Hargreaves is committed to maintaining high standards of corporate governance and has adopted the Quoted Companies Alliance Corporate Governance Code 2018 (‘QCA Code’). The Company complies with each of the ten principles of the QCA Code.

Around the Group, businesses hold various accreditations including ISO45001, ISO9001, ISO14001. During the year the Group have also been successful in achieving ISO27001 accreditation. This demonstrates the importance that the Group places on data security across all of our activities. These internationally recognised accreditations underpin the high standards we continue to achieve.

The Group’s HGV operations hold FORS accreditation. This is a voluntary accreditation scheme for fleet operators which aims to raise the level of quality within fleet operations and demonstrates which operators are achieving exemplary levels of best practice, efficiency and environmental protection.

During the year the Group has amended its approach to risk identification and evaluation. The risk-web approach, which is outlined in detailed within the Audit and Risk Committee Report, allows for a better visual representation of risk. This allows the business to take a more focused approach to the allocation of resource to risk management, a key element to this is the determination of risk appetite.