International Distribution Services : RMG ESG Report 2023-24

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ESG Report 2023-24

Royal Mail Group Limited

2 Royal Mail ESG Report 2023-24

ABOUT US

As the UK's sole designated Universal Service Provider, Royal Mail delivers a 'one-price-goes-anywhere' service on a range of letters and parcels to around 32 million addresses across the UK.

Our direct contribution to the UK economy totalled £6 billion last year in terms of gross value added. We are the 8th largest contributor to the UK economy out of all UK corporations.1

Introduction		Taking steps to zero		People at the heart		Operating with integrity

CONTENTS

Royal Mail Group Limited is a subsidiary of International Distribution Services plc (IDS), a UK-listed transport and logistics operator. Royal Mail Group Limited's business includes the two main brands: Royal Mail and Parcelforce Worldwide. For ease, we refer to Royal Mail Group Limited as Royal Mail throughout this report and its associated documents.

Further information on the ESG performance of IDS, including its other main subsidiary GLS Group, is available in the IDS Annual Report and Financial Statements 2023-24, which can be found on our IDS website.

This report is our 22nd annual ESG Report. It details Royal Mail's environmental, social and governance performance for the reporting year 2023-24, which ended on 31 March 2024. Further details on the scope of this report can be found in our ESG Appendix.

NAVIGATING THIS REPORT

Link within this report

Link to external website

Link to external document

In this report, we highlight how our areas of focus, targets and key initiatives are linked to the UN Sustainable Development Goals (UN SDGs).

We have a suite of reporting documents that support this report. All documents can be found here.

INTRODUCTION

2023-24 Highlights	03
Director of Corporate Affairs' Statement	04
Our Approach	05
Stakeholder Engagement and Materiality	06
ESG Key Performance Indicators	07

PEOPLE AT THE HEART

Proud to be Royal Mail	23
Protecting Our People	24
Our Wellbeing Programme	26
A Great Experience Every Day	28
One Royal Mail	30
Reaching Our Potential	33
A Workforce for the Future	34
Ready for the World of Work	35
At the Heart of Our Communities	36
Delivering the Community Hearts Programme	38

TAKING STEPS TO ZERO

UK's Greenest Delivery Company	11
Our Environmental Targets	12
Our 2023-24 Emissions Profile	13
2023-24 Performance	14
Zero-Emission Deliveries	15
Zero-Emission Operations	17
Collaborating for Action	19
Making Circular Happen	20
Environmental Management	21

OPERATING WITH INTEGRITY

Responsible Business Practices	43
Protecting the Mail	45
Working Together with Our Suppliers	47
A Sustainable Accessible Service	50

1 Centre for Economics and Business Research (Cebr) research, conducted for Royal Mail in 2024.

3 Royal Mail ESG Report 2023-24

2023-24

HIGHLIGHTS

UK'S GREENEST DELIVERY COMPANY2

Building on our position as the UK's greenest parcel delivery company, we were delighted to reach two significant milestones in our Steps

Introduction		Taking steps to zero		People at the heart		Operating with integrity

REFORMING THE UNIVERSAL SERVICE

Royal Mail plays a unique and vital role in connecting the nation through the Universal Service -

our legal commitment to deliver a one-price-goes-anywhere service to the UK's 32 million addresses.

The Universal Service has remained largely unchanged for over 20 years and is now unsustainable as letter volumes continue to fall. That is why, following extensive engagement, listening to thousands of customers across the UK, we have put forward a proposal for vital changes to deliver a more efficient, reliable and sustainable Universal Service for years to come.

To read more about our proposal and what this means for our customers, employees and communities, see pages 23 and 50.

to Zero environment strategy this year.

More information can be found on pages 10 to 21 of this report.

SBTi validation

In September, we announced the validation of our Net-Zero and near-term targets by the Science Based Targets initiative (SBTi).

10 million litres of biofuel

We deployed over 10 million litres of Hydrotreated Vegetable Oil (HVO), a low-emissiondrop-in renewable diesel alternative,

at six refuelling locations. Switching from diesel to this fuel type resulted in emission savings of c.30,000 tCO2e.

CARING FOR OUR PEOPLE

We expanded our wellbeing programme and in February 2024, we celebrated the first year of our partnership with British Heart Foundation.

More information can be found on pages 22 to 41 of this report.

141 defibrillators

We funded the installation of 141 community defibrillators in areas with the greatest need.

200k wellbeing hub visits

We launched our new online wellbeing hub providing support across the areas of Mind, Health, Money and Life.

PROMOTING AN INCLUSIVE CULTURE

We took steps to change Royal Mail for the better, to promote an inclusive culture where everyone is treated with dignity and respect.

More information can be found on pages 42 to 51 of this report.

Change for Good

We launched a campaign to reinforce high standards of behaviour at work and build a positive culture.

99% completion rate

9,300 managers completed our annual compliance refresher training, with an overall completion rate of 99%.

2 Based on average gCO2e emissions per parcel delivered by UK parcel operators, as published by Citizens Advice 2023 Parcels League Table.

4 Royal Mail ESG Report 2023-24

Introduction

Taking steps to zero

People at the heart

Operating with integrity

DIRECTOR OF CORPORATE

which offers comprehensive support in areas of Mind,

AFFAIRS' STATEMENT

In July, we launched an enhanced wellbeing programme,

Health, Money and Life, through a new online wellbeing

hub. The expanded provision includes unlimited mental

health consultations for employees and partners and

builds upon the highly competitive employment terms

and benefits we already offer.

We also launched Change for Good, a new campaign to

change Royal Mail for the better by creating an inclusive

culture where everyone is treated with dignity and

respect. This included a relaunch of our Business

delivery model for generations to come, which is why the

Standards, a new tool for raising concerns, and

reforms we've outlined in our recent submission to Ofcom's

delivering training, to help drive colleague and

call for input into the Universal Service are so important.

leadership accountability in this important area.

Also in the year, we are extremely pleased to report

In February, we celebrated the first year of activity in our

that we've already met our 2030 target to reduce waste

four-year partnership with British Heart Foundation.

volumes by 25%, with a 27% reduction on our base year.

Through our efforts to train employees and young people

As we continue to evolve our circularity strategy, I'm

in CPR, we're making a meaningful impact to protect

excited by the new ways we're finding to partner with our

heart health and save lives, and I look forward to seeing

customers to drive our shared goals. For example, in

our partnership develop further.

As we look back on an historic year for Royal Mail,

October we announced a new partnership with Nespresso

Looking ahead

UK to enable coffee capsule collection and recycling for

I am delighted to report strong progress across our

households across the country.

As the provider of one out of every 200 jobs in the UK,

far-reaching ESG agenda.

Royal Mail continues to play a unique and vital role in

Taking steps to zero

Another area of collaboration is our development of a new

connecting the nation through the one-price-goes-

holistic supplier ESG programme for our top 100 most

anywhere Universal Service. As we look ahead, we

We have continued to deliver on our Steps to Zero

significant suppliers. As part of this programme, we will

remain focused on where we must work hard to deliver

environment strategy to achieve Net-Zero by 2040 and

work to identify initiatives that support Steps to Zero and

on our ESG goals and continue our transformation.

further strengthen our position as the UK's greenest parcel

accelerate our decarbonisation process.

Urgent reform to the Universal Service is required to

delivery company3. Our total emissions continued to fall,

8% against our base year and 2% against the prior year,

Finally, we were proud to announce in September that

unlock Royal Mail's full potential. That's why, following

while our average carbon per parcel delivered now stands

our Net-Zero and near-term targets had been externally

extensive engagement and listening to the needs of

at 200gCO2e, a drop of c.10% against the prior year.

validated by the Science Based Targets initiative (SBTi).

thousands of customers and stakeholders, we have put

We achieved this result despite returning to normal levels

This confirms our ambitions are in line with the latest

forward a proposal to deliver a more efficient, reliable and

climate science and marks an important step in our

sustainable Universal Service, with limited changes to

Following extensive engagement and

of activity, following the 18 days of Industrial Action in the

journey towards Net-Zero.

what matters most to customers. We call on Ofcom to act

prior year. It was largely achieved thanks to fuel reductions

People at the heart

swiftly to introduce our proposed reforms by April 2025 at

listening to the needs of thousands of

in our fleet and estate and the deployment of 10 million

the latest given there is no need for legislative change.

customers and stakeholders, we have

litres of biofuel in some of our larger trucks. Today we are

To deliver for our customers and communities, we must

Today we can look forward with confidence at our

proud to have the UK's largest electric vehicle (EV) delivery

be there to support our people. We want to ensure our

put forward a proposal to deliver a

fleet, with c.5,000 EVs deployed, and purchasing only

colleagues are healthy, safe and well at work, and feel

pathway towards greater sustainability for the benefit

more efficient, reliable and sustainable

renewable energy across 100% of our estate. We also

that they can reach their potential.

of our people, customers and communities.

removed flights to Jersey and the Isle of Man to

Universal Service, with limited changes

Our priority in the year has been to rebuild relationships

streamline services, with the added benefit of reducing

to what matters most to customers.

carbon emissions.

with our people and address the impact that the industrial

dispute had on our culture. We are taking action on our

These steps bolster the green benefits our network of

colleagues' feedback through our Company Trust

Jenny Hall

posties has long provided, with more than half of our

and Engagement plan, where we aim to improve the

delivery routes being wholly or partially on foot. It's vital

employee experience.

Director of Corporate Affairs

we protect the integrity of our unique 'feet on the street'

3 Based on average gCO2e emissions per parcel delivered by UK parcel operators, as published by Citizens Advice 2023 Parcels League Table.

5 Royal Mail ESG Report 2023-24

OUR APPROACH

OUR SUSTAINABILITY VISION

As we transform our business and drive towards Net-Zero, we want to be the sustainability leader in our industry - one that is respected by communities in every postcode and valued by our people, customers and wider stakeholders.

THREE KEY PILLARS

TAKING STEPS TO ZERO

PEOPLE AT THE HEART

OPERATING WITH INTEGRITY

OUR VALUES

Be positive

about what we can achieve.

Be brilliant

for our customers.

Be part of it

each one of us is responsible.

Introduction		Taking steps to zero		People at the heart		Operating with integrity

ESG RATINGS

We are independently rated as a leading	Silver	71
responsible business.
ESG ratings allow our investors and other	EcoVadis	S&P Global CSA (DJSI)
stakeholders to compare our ESG performance	4	AA
and disclosure against peers and leading practices.
We use the results of these assessments to
develop targeted improvement plans. The plans	FTSE4Good	MSCI
are shared with internal stakeholders and are
used to guide discussions on reporting and	44.5	B
disclosure best practice. The results are also
used to inform our annual ESG materiality
exercise, which incorporates the views of all	Bloomberg Gender	CDP
our main stakeholder groups.	Equality Index	Climate Change
		Our ESG materiality assessment can		79%	Low risk
		be found on page 6 of this report.
			Workforce Disclosure	Morningstar
				Initiative	Sustainalytics

6 Royal Mail ESG Report 2023-24	Introduction		Taking steps to zero		People at the heart		Operating with integrity

STAKEHOLDER ENGAGEMENT AND MATERIALITY

The support of our stakeholders is crucial to our success and to the ongoing sustainability of our business. We communicate proactively with our stakeholders to seek their views and understand their expectations.

ASSESSING WHAT IS MATERIAL

In addition to regular communication with our stakeholders, we conduct an in-depth materiality assessment every two years to help prioritise the ESG topics that are most important to our business and stakeholders. We review these topics on an annual basis. Our most recent assessment took place early in 2023.

For the first time, our assessment followed a double materiality approach to incorporate both impact materiality (inside-out) and financial materiality (outside-in). This approach aims to provide a more holistic and dynamic view of our material issues and a broader perspective on current and future priorities.

For more information, please see pages 2 to 3 of our ESG Appendix.

OUR 5 MOST MATERIAL ISSUES

1	CLIMATE CHANGE AND
EMISSIONS REDUCTION
Achieving our Net-Zero ambitions

by decarbonising our business and assessing climate risks and opportunities.

2	HEALTH AND SAFETY
	Ensuring a safe and healthy
	work environment for our people,
	while considering the safety of
	our customers and other members
3	of the public.
CUSTOMER SERVICE
	How we deliver fast, convenient and
	environmentally sustainable services,
	offering great quality of service at
	affordable prices.

4 LABOUR STANDARDS AND HUMAN RIGHTS

Safeguarding fair pay and conditions for our people and preventing human rights abuses in our supply chain.

5 SERVICE RESPONSIBILITY

Maintaining a high level of mail integrity, addressing cybersecurity threats and protecting our customers against criminal activity in the postal system.

DOUBLE MATERIALITY MATRIX

impact
Highest		Climate Change &
		Emissions Reduction

								Labour Standards &
								Human Rights
					Stewardship of
					the Environment			Service	Customer
								Responsibility	Service
					Resource			Health & Safety
			Diversity, Equity	Efficiency			Employee Engagement
			& Inclusion
			Community			& Culture4
					Operational Model
					Impacts
					Employee
					Skills &	Corporate
					Development
					Governance
							& Ethics
Impact materiality			Responsible
		Procurement
Financial materiality
				Highest impact
		Key	Environmental	Social	Governance

4 In 2023-24, we reviewed our materiality matrix and adjusted the position of 'Employee Engagement & Culture' to reflect a higher impact on our business. We understand the impact that Industrial Action has had on our employee engagement and that this is a concern for our stakeholders. Details on how we are responding to this can be found on page 28.

7 Royal Mail ESG Report 2023-24	Introduction		Taking steps to zero		People at the heart		Operating with integrity

ESG

KEY PERFORMANCE INDICATORS

The table below sets out Royal Mail's progress against ESG-related key performance indicators (KPIs), which align to our most material issues and the UN SDGs.

These KPIs are essential for the successful delivery of our business strategy and support our sustainability vision.

Environmental performance is tracked year on year against our base year of 2020-21. Social and Governance is assessed as year on year performance, unless otherwise stated.

The performance of a range of ESG-related metrics impact the remuneration of our people, including Executive Directors, through the annual bonus plan. For 2023-24, this included progress towards our commitments to reduce carbon emissions.

ASSURANCE OF	A
MATERIAL DATA

It is important to us that our ESG data is compiled and calculated to a high standard, including for business-wide targets. Data marked with the symbol have been verified by an independent third party.

Our assurance statement and reporting criteria are available on the IDS website.

KPI STATUS KEY

Achieved - goal met or met ahead of time and to be maintained or improved

On track - likely to meet goal on time

Ongoing focus - continued progress toward goal required

Not on track - significant progress required to meet goal

N/A Measure only

	Material issue	SDG	KPI	Goal	2023-24 performance5	Status
E	Climate change			Achieving Net-Zero (%)	Net-Zero by 2040	-8%	See page 12
and emissions
reduction
		Carbon per parcel (gCO2e)	Maintain the lowest recorded	200gCO2e	See page 14
				carbon per parcel
TAKING STEPS
TO ZERO				Zero-emission final mile (%)	100% by 2035	23%	See page 15
				Zero-emission company cars (%)	100% by 2030	64%	See page 19
				Renewable electricity purchased or	100% from 2022	100%	See page 18
				generated from 2022 (%)

Resource	Water consumption (%)	25% reduction by 2030	1% increase
efficiency

  See page 18

Waste generated (%)

25% reduction by 2030

-27%

See page 20

5 2023-24 performance against our 2020-21 base year.

8 Royal Mail ESG Report 2023-24	Introduction		Taking steps to zero		People at the heart		Operating with integrity

ESG

KEY PERFORMANCE INDICATORS

Material issue

SDG

KPI

Goal

2023-24 performance Status

S	Health and
	safety
PEOPLE AT
THE HEART

Lost time accident frequency rate	Reduce the amount of	0.78	See page 24
(per 100,000 hours worked)	time lost to accidents
(number)
Total accident frequency rate	Reduce the number	2.93	See page 24
(number)	of accidents

Fatalities (number)	Eliminate fatalities	1	- Employees
		5	- Third party

  See page 25

Sickness absence (%)

Reduce sickness absence

6.75%

See page 26

Diversity, equity and inclusion

Female representation	25% by 2025	20%	See page 30
(all levels) (%)
Senior female representation	33% by 2025	26%	See page 30
(levels 1-6) (%)
Ethnic minority representation	15% by 2025	13%	See page 30
(all levels) (%)
Senior ethnic minority	11% by 2025	7%	See page 30
representation (levels 1-6) (%)
Youth representation (frontline) (%)	18% by 2025	8%	See page 30

9 Royal Mail ESG Report 2023-24	Introduction		Taking steps to zero		People at the heart		Operating with integrity

ESG

KEY PERFORMANCE INDICATORS

Material issue

SDG

KPI

Goal

2023-24 performance Status

S Employee engagement

	Trust score (out of 100)	Measure only	59	N/A  See page 28

PEOPLE AT	Community
THE HEART
impacts

Total community investment (£)	Measure only	£5 million
(includes cash, time, in-kind and
management cost)

  See page 36

Charity partner fundraising	Aspiration to raise	£463,300	See page 37
(£, since November 2022)	£2 million by 2026

Charity partner awareness raising	Training 100,000 employees 7,251
(number, since November 2022)	in CPR by 2026

  See page 39

Material issue

SDG

KPI

Goal

2023-24 performance Status

G Customer service

OPERATING

WITH INTEGRITY

First Class Quality of Service (%)	93% of First Class items	74.5%	See page 50
	delivered the next
	working day
Customer complaints (number)	Measure only	910,303	N/A  See page 50

Responsible procurement

New contracts awarded to SMEs (%) Measure only

19%

N/A  See page 48

10 Royal Mail ESG Report 2023-24

Introduction

Taking steps to zero

People at the heart

Operating with integrity

TAKING

STEPS TO ZERO

We aim to lead by example in helping tackle the most pressing environmental challenges facing our world. Among these, we recognise climate change as a key global threat, which we seek to address through a comprehensive strategy that prepares our business and our communities for

a low-carbon future.

MATERIAL ISSUES:

Climate change and emissions reduction

Resource efficiency

Stewardship of the environment