Chemring Group fully acknowledges its obligation to ensure the responsible operation of its business at all times.
How we do business
Chemring Group is committed to sound business conduct in the way in which we interact with our key stakeholders, governments, regulators, communities and society, and the environment.
The Group has adopted a Code of Business Principles, which sets out Chemring Group’s commitments in this regard, and which applies to all Group companies. The Code requires our employees, our businesses, and all third parties who act on our behalf to comply with our standards of acceptable business conduct and applicable laws and regulations in all of the countries in which we operate. The managing directors of each business are required to report to the Group Chief Executive on compliance with the Code of Business Principles on an annual basis.
Corporate responsibility and accountability
The Board has overall responsibility for establishing and maintaining the Group’s over-arching policies on all aspects of corporate responsibility. The Group Chief Executive is accountable to the Board for ensuring that the Group’s businesses adhere to these policies.
The managing directors of each business are responsible for enforcing procedures and providing leadership to all employees.
Chemring Group’s approach to responsible operations focuses broadly on three major areas:
- Health and safety
- Ethics and anti-corruption
- The environment
Health and safety
The Board recognises that the highest levels of safety are required in order to protect our employees, whilst achieving growth and maintaining leadership in the Group’s chosen markets. The Board believes that all injuries are preventable and has a zero tolerance of health and safety failures.
We have adopted management systems and a long term strategy to ensure that we continually improve our performance and reduce risk. Our systems are consistent with the guidelines and procedures laid down by the Health and Safety Executive.
The Group Chief Executive has overall responsibility for health, safety and environmental matters across the Group. A Director of Safety was appointed in 2008, who reports directly to the Group Chief Executive, and is responsible for the effective administration and implementation of the Group’s health, safety and environmental strategy.
Strategic direction is considered by the Group’s Risk Management Committee, and the Director of Safety reports to the Group Executive Committee on the performance of the businesses against agreed objectives. The Group Chief Executive reports monthly to the Board on all key health and safety issues.
The Board requires that all businesses systematically:
- manage their health, safety and environment hazards
- set objectives
- monitor progress by regular measurement, audit and review
- take additional action where necessary.
Each managing director is responsible for the management of health, safety and environmental issues within their business and for providing adequate resources to satisfy the Board’s requirements. Managers are required to enforce procedures, and to provide leadership and commitment to promote and embrace a positive health and safety culture. We emphasise the importance of individual responsibility for health and safety at all levels of the organisation. We expect employees to report potential hazards, to be involved in implementing solutions, and to adhere to rules and procedures.
Incident reporting and investigation
We recognise that a key element in the continual improvement of health, safety and environmental management is sharing best practice and lessons learnt from incidents across all of the Group companies. We have therefore adopted a common incident reporting and investigation procedure.
We also operate an “alert” system that formally ensures key findings from incidents are quickly communicated to all operational sites across the Group and actions taken as appropriate. Progress on addressing these actions is monitored by the Group Director of Safety.
All accidents and near misses are investigated.
An annual Group health, safety and environment conference is attended by representatives from all businesses. A Health, Safety and Environment Technical Committee supports continual improvement through the development and promotion of good practice across the Group
Training and support is provided across the Group to develop and promote best practice.
Site certification
We continue our successful implementation of formal management systems across the Group. We now have seven sites validated as compliant with the health and safety management system OHSAS18001. We require all newly-acquired businesses to achieve certification within two years of joining the Group. We expect all other Group companies to have achieved certification by the end of 2009.
We are pleased to report that there have been no serious safety incidents in the last year. Our safety programmes continue to be heavily influenced by the incident which occurred at Simmel Difesa in October 2007, which led to the death of an employee. Following the incident, a formal structured investigation and root cause analysis was undertaken which generated a series of actions which were disseminated and implemented across the Group. We are determined to do all we can to minimise the likelihood of similar incidents in the future.
Lost time incident rate
Added focus on the management of health and safety has resulted in a real improvement in the Group’s lost time performance over the last year. In 2008, the lost time incident rate (calculated using the US OSHA rules) declined from 1.56 to 1.20 incidents per 100 employees.
We have improved performance by implementing structured and formal processes including:
- the development of common safety cultures
- product safety management
- introduction of formal “safety case” processes
- enhanced training
- manufacturing process enhancement
- extended audit programmes
- product safety reviews.
Six of our sites reported no lost work days during 2008, which is an excellent achievement.
A focus on “near misses” during 2008 resulted in 1,332 near misses being formally reported and acted upon. Employees are encouraged to report issues, however small. We then carry out a rigorous investigation and corrective action process.
Common safety culture
In recognition of the need to drive further improvements in the management of health and safety within the Group, last year we embarked upon a project to develop and establish a common safety culture across the Group’s businesses. The project undertook audits and employee culture surveys at most sites in Europe and the US. A number of common themes emerged and we have defined a common approach to health and safety that includes leadership behaviour, training and competence, maintenance management and the implementation of safety case methodology.
The project also included a review of the Group’s health, safety and environment management system, which has been updated and re-published as a result.
Newly-acquired businesses are rapidly introduced to the Group’s safety philosophy. This involves detailed regulatory compliance audits and programme gap analysis. We compile risk registers and businesses are required to reduce their major health and safety risks to as low as reasonably practicable.
In the US, all businesses participated last year in a process safety management workshop, with external speakers, to ensure that a common level of knowledge and awareness was in place and best practice networks established.
The Group has committed to substantial investments in facilities that will improve productivity and the safety of the workforce by reducing the levels of risk.
The Group has also established a relationship with Cranfield University, both for the supply of employee training programmes and for the development of simulation modelling to evaluate blast and thermal effects from the ignition of pyrotechnic materials.
Environment
The Board believes that environmental protection will help to secure the long term future of our business.
Chemring Group’s policy ensures that we control pollution, minimise the quantity of material burnt at each site, consume resources efficiently, and use materials that minimise the environmental impact of our operations where practicable.
Site certification
We currently have ten sites certified to the environmental management system ISO14001. We require all newly-acquired businesses to achieve ISO14001 certification within two years of joining the Group. All other businesses are expected to achieve certification by the end of 2009.
Our ISO14001 programme requires that all sites have their own goals and objectives that focus on local issues and impacts.
Waste management
We are continually improving our waste management and percentage of waste recycled by monitoring key environmental data.
Our total waste volumes are dominated by a caustic etching process at Alloy Surfaces, which prepares metal products for coating. We sell the waste to a third party, who is able to use it as feedstock for waste water treatment. As a result, we have eliminated the discharge of 6,177 tonnes of process water to local sewer systems and significantly reduced the need for the third parties to purchase neutralisation materials.
Our total non-recycled waste on a like for like basis during the year ended 31 October 2008 was as follows:
| Non-hazardous |
1,027 tonnes |
| Hazardous |
1,425 tonnes |
| Total |
2,452 tonnes |
CO2 emissions
Total emissions, on a like for like basis, over the last two financial years have been as follows:
| Source |
2008
tonnes CO2) |
2007
tonnes CO2) |
Electricity |
27,131 |
21,556 |
Gas |
12,384 |
11,931 |
Oil |
2,351 |
2,878 |
| Total |
41,866 |
36,365 |
Total Group CO2 emissions increased by 15%, whilst Group revenue increased by 39% over these two years. We are pleased by the reduction in CO2 intensity and we will continue to increase our efforts in energy conservation.
In order to better understand our sources, the Group monitored car and air travel during 2008 to gauge the size of this impact against the more easily accessible utilities data. The year of data collection revealed that only 2.77% of our total CO2 emissions were generated by travel. As this data capture was difficult and time- consuming, we propose not to collect this data this year but may return and check it again at some stage in the future.
Our major source of CO2 is indirect emission from electrical power generation. All Group businesses now have goals to reduce their future consumption. A breakdown of CO2 emissions is set out below:
Contaminated land issues
During 2008 we acquired Scot, Inc., which is based in Downers Grove, Illinois, USA. We were aware, prior to acquiring the business, that the Downers Grove area has “superfund” status under the US contaminated land (CERCLA) regime, and this was reflected in the price agreed for the business. The Group is carrying is a £5.0 million provision in respect of the pre-acquisition environmental liabilities associated with the site, which the Board considers to be adequate. We are now working with external consultants to ensure that the legal obligations of the business in relation to this matter are fully satisfied.
Ethics and anti-corruption
The Group has committed to adherence with the European Aerospace and Defence Association’s Common Industry Standards on Anti-Corruption. We are currently reviewing all of our business processes across the Group in order to ensure that we achieve full compliance. This involves entering into new arrangements, compliant with the Common Industry Standards, with all of our agents and other third parties who act on behalf of the Group. Our Code of Business Principles has also been updated to incorporate the Common Industry Standards.
Whistleblowing policy
The Group has a whistleblowing policy and procedures in place which enable all employees to raise concerns, in confidence, about possible improprieties. These arrangements now reflect the requirements of the Common Industry Standards.
Our US businesses have adopted an ethical compliance programme to satisfy US Government requirements for ethical training for employees, compliance audits, an employees’ “hotline”, and related investigation procedures. We run a similar ethics and anti-corruption training programme for the management of our businesses outside of the US.
Policy on the Sale of Goods and Services
The Group’s strategy is to become the world leader in the manufacture of energetic material products and countermeasures for the global defence market. We are delivering significant growth in this area though a combination of organic growth and acquisitions.
The scope of the Group’s activities has widened significantly over the last few years, particularly with regards to the supply of components and sub-systems for various types of munitions, and there is increasing demand for the supply to our customers of third party products. Consequently, the Board has adopted a Policy on the Sale of Goods and Services, which provides guidance to all stakeholders on the products and services that the Group will supply and to which customers, and sets out a clear definition of what we will not supply.
Employees
The Board recognises the valuable contribution that the Group’s employees continue to make to its success, and aims to provide a working environment that reflects and rewards this. The Group now has over 3,000 employees in seven countries.
The Group pursues a policy of employee communication through meetings (including team briefings and works councils) and in-house magazines. A Group magazine, The Chemring Eye, was introduced during the year, which is distributed to all our employees on a quarterly basis and has been well-received to date.
Training and development
We provide training and development for employees at all levels within the organisation. We have established a tailored management development programme for senior managers in the Group, delivered by Henley Management College, and are considering how this can be rolled-out to the next tier of management.
Succession planning, human resource requirements and the future organisational structure of the Group as it continues to grow are reviewed on a regular basis by the Board.
Sharesave plans
The Board obtained shareholder approval for the establishment of a savings-related share option scheme at the 2008 Annual General Meeting. The Chemring Group 2008 UK Sharesave Plan was launched for UK employees in July 2008, and The Chemring 2008 US Stock Purchase Plan was launched for US employees in August 2008. The Board is keen to encourage eligible employees to join the schemes in order that they can share in the future success of the Group. We plan to introduce similar schemes in the other countries in which we operate where there is sufficient interest from employees.
Diversity
The Group values diversity in our workforce, and we are committed to equal opportunities for all employees regardless of race, gender, nationality, disability or age.
The Group employs disabled persons wherever circumstances permit, and full and fair consideration is given to applications for employment by disabled persons having regard to their particular aptitudes and disabilities. Martin Electronics received an award in 2008 from its local governor and was recognised as one of Florida’s top employers of persons with development disabilities.
Community involvement
The Board recognises that each of the Group’s businesses has an important role to play in its local community.
We operate a charitable policy, which supports selected charitable causes focused on the military and armed services, and linked to the local communities in which the Group’s businesses operate.
At a Group level, charitable donations are considered on a monthly basis by the Executive Committee, and each business has its own locally held charity budget. Examples of support provided during 2008 include:
- Donations to a range of charities including “Help for Heroes”, the Falklands Veterans’ Association, Wiltshire Air Ambulance, the Salvation Army, various local hospitals and hospices, and ongoing support for the Mary Rose Appeal.
- Sole sponsorship of the 7 Air Assault Battalion Royal Electrical and Mechanical Engineers (REME) Royal Navy Field Gun Crew. The Group is proud to be associated with the 7 Air Assault Battalion who provide support to the vehicles, weapons and aircraft of 16 Air Assault Brigade. The soldiers support aircraft in various areas of conflict around the world.
- Sponsorship of a UK employee in his efforts to compete in his chosen sport of archery at the 2012 Olympics.
The Group also encourages and supports employees who undertake voluntary work in the local community. During 2008, our employees donated their time and services on a wide range of projects, several of which had an educational bias.
Educational initiatives
The Group is involved with a number of educational initiatives, including the sponsorship of various local schools. Each year, Kilgore awards a scholarship to a student graduating from its local high school to enable the student to pursue a college education. Certain businesses assist employees who failed to graduate from senior school to return to academic studies and supplement their vocational training.
The Group has a partnership agreement with Cranfield University, which commits us to provide significant funding for students’ research activities over the next five years. The Group has also instigated a programme to attract new graduates to pursue a career in the Group, and we are now offering gap year placements in the UK.