International Distribution Services : RMG ESG Reporting Criteria 2023-24

Royal Mail Group Ltd

ESG REPORTING CRITERIA 2023-24

OUR GENERAL REPORTING PRINCIPLES

The reporting of reliable, transparent and meaningful data is of the utmost importance to us. We have engaged Bureau Veritas UK Limited ('Bureau Veritas') to provide limited assurance over selected information within the 2023-24 Royal Mail Group Ltd Environment Social Governance (ESG) Report ('the Report'). Bureau Veritas' assurance statement is available at: https://www.internationaldistributionservices.com/en/sustainability/reporting-and-performance

This document aligns to the metrics that Bureau Veritas provided assurance over. It sets out the principles and methodologies that we applied in reporting our performance of these indicators. We have prepared this document to align with the ISAE3000/(Revised) reporting standard.

We aim to ensure that the data we report is an accurate reflection of our performance and meets the needs of the report's users. We take care to report data in line with the definitions, scope and boundaries stated in this reporting criteria. Any specific, material exclusions are stated and explained within this document. We also make our reporting boundaries clear within the report itself. We use consistent methodologies year to year wherever possible to allow for performance comparison over time; any material changes in measurement methodologies versus the previous reporting year are made clear. We report transparently such that the report's users can have confidence in the integrity of the data and information we publish.

REPORTING BOUNDARIES AND MATERIALITY THRESHOLDS

The report covers the period 1 April 2023 to 31 March 2024. Unless otherwise stated, all assured metrics cover this period. Our ESG reporting boundary uses the financial control approach and covers all non-dormant operating subsidiaries, and joint ventures of Royal Mail Group Ltd. Associated Companies/Investments are not within our reporting boundary.

Our ESG metrics operate to a materiality threshold of 5%. On this basis some subsidiaries within our boundary are not reported on grounds of immateriality and we state clearly any data not reported on basis of immateriality for each metric below. Our operating subsidiaries are:

• Royal Mail Pensions Trustees Ltd
• RMCPP Trustees Ltd
• RMSEPP Pensions Trustees Ltd
• RM2022 Limited
• Storefeeder Limited
• Intersoft Systems and Programming Ltd
• Royal Mail Courier Services Ltd
• Revisecatch Limited
• Royal Mail Estates Limited
• Angard Staffing Solutions Limited

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Royal Mail ESG Reporting Criteria 2023-24

• Nine Elms Parkside Estate Management Company Limited
• RM Property and Facilities Solutions Limited
• Romec Enterprises Limited
• EBP Consultancy Co. Ltd

Associated Investments and Companies excluded from our reporting boundary are:

• Charac Ltd (33% investment)
• JICMAIL Ltd (20% investment)

NEW ACQUISITIONS AND DISPOSALS

Where business entities are acquired during the reporting year, data is excluded, and explanatory footnotes are included within the main report. We aim to include new acquisitions within the scope of our reporting within one year, or as soon as appropriate processes and systems are implemented to enable consistent data collation and group level consolidation.

Where data is extracted as a 'snapshot' for reporting on the last day of the reporting period, for example, Gender distribution, this would only include information relating to business entities that are still within International Distributions Services plc ownership or control at that point. Data that is reported as an accumulation of the year's performance, for example, carbon emissions, would include the outputs of any business entities up until the date of disposal.

FACILITIES OR PREMISES

New facilities or premises are included within our reporting from the date of acquisition. Any premises disposed of during the reporting year are removed from our portfolio from the date of disposal.

UNCERTAINTY, ESTIMATES AND ASSUMPTIONS

Every effort is made to capture all relevant data for our reporting. Where estimates and assumptions apply, these have been noted in the specific criteria for each indicator where appropriate.

RESTATEMENT OF REPORTED DATA

We restate prior year and base year data in the subsequent reporting year where a single or combined variance of 5% is observed. Reported data for years in between prior year and base year may be restated at the discretion of management. The reasons for restatement are:

• Actual data has been received which replaces previously modelled and estimated data,
• Actual data previously supplied has been re-submitted with changes from latency or collection error, or
• Errors in methodology or in calculation are subsequently discovered.

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Royal Mail ESG Reporting Criteria 2023-24

ENVIRONMENT

Due to the nature of environmental data and the availability of utility invoices, all environmental metrics are reported on a 12-month basis. This covers 1 April 2023- 31 March 2024. We define 'GHG emissions' in this report as tonnes of carbon dioxide equivalent (CO2e), which includes carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O), exclusions to this are explicitly stated throughout.

Assured

environment

Definition

Scope

Units

Method

Source

KPI

Scope 1 and 2

Scope 1 (direct) GHG

As defined above in 'Reporting boundary

Tonnes of

Our GHG emissions are calculated

Royal Mail UK

GHG emissions

emissions are from

and materiality thresholds'

carbon dioxide

by applying publicly available

environmental reporting

sources that are

One leased office for Royal Mail Pension

equivalent

emission factors (UK Government

system (Greenstone+):

owned or controlled

(CO2e)

GHG conversion factors for

by Royal Mail UK.

Trustees Limited and one leased office

company reporting 2023) to

Energy Bureau (Mitie)

Scope 2 (indirect)

for Intersoft Systems and Programming

amounts of electricity use,

Ltd have not been reported due to

refrigerant use and fuel

Royal Mail Fleet Fuel

GHG emissions from

immateriality.

consumption data (a 'location-

Management System &

the consumption of

based' approach).

Alternative Fuel

purchased energy

providers

calculated using both

(a) Direct energy by primary energy

the location-based

source (kWh, tonnes & litres); and,

Direct from provider

and market-based

(Solar PV)

approach.

(b) Indirect energy consumption by

primary source (kWh, Litres &

Direct from 3rd Party

KMs).

Freight provider (Rail)

Scope 2 GHG emissions are also

calculated using supplier emission

factors based on the renewable

and non-renewable components of

the supply (a 'market-based'

approach).

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Royal Mail ESG Reporting Criteria 2023-24

The methodology aligns to the

Greenhouse Gas Protocol,

Corporate Accounting and

Reporting Standard, March 2004.

Where there is missing electricity consumption data from our sources, estimates are modelled using three possible methods, in order of preference:

Option 1: Previous year's data This option requires actual consumption data to be available from the prior year's period, which is used as a modelled value for the current period.

Option 2: 12 month rolling average This option requires actual consumption available for at least 7 periods in the prior 12 months. In this case the modelled value is the average of the prior 12 months, and where the variance calculated does not exceed 50%.

Option 3: Normalised intensity factor

If option 1 and 2 are not possible, then option 3 is used. This option requires actual consumption data for one period in the prior 12 months and recorded (m2) floor area data. In this case the modelled value is a 6-month running average

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Royal Mail ESG Reporting Criteria 2023-24

						intensity factor which is calculated
						and stored against that month.
						Then the average of those intensity
						factors is calculated over the last 12
						months and multiplied by floor
						area.
	Royal Mail UK	Scope 3 emissions are	This metric includes GHG emissions from	Tonnes of	The methodology aligns to the	Royal Mail
	Scope 3 GHG	the reported indirect	all relevant 'value-chain' emission	carbon dioxide	Greenhouse Gas Protocol,	environmental reporting
	emissions	greenhouse gas	categories within our reporting	equivalent	Corporate Accounting and	system (Greenstone+):
		(GHG) emissions	boundary. These are:	(CO2e)	Reporting Standard, March 2004.
		associated with Royal	1. Purchased Goods and Services: all		Purchased Goods and Services and	Energy Bureau (Mitie)
		Mail operations that		operational goods and services		Royal Mail Fleet Fuel
		are not covered in		procured which are not accounted		Capital Goods emissions are
		Scope 1 or 2, for			calculated using business spend	Management System
			for in Scope 1,2 or other Scope 3
		example transport			data and the USEEIO Supply Chain
			categories (e.g. business travel
		related activities in			emission factors without margins;	Direct from provider
			expenditure is not included in
		vehicles not owned			'Supply Chain Greenhouse Gas	(Solar PV)
		by Royal Mail.		purchased goods because it is		Emission Factors for US Industries	Direct from 3rd Party
				calculated in Scope 3 - category 6).		and Commodities v1.1' (2016). The
			2.	Capital Goods: all goods and		HMRC annual average conversion	Freight providers (Air,
				services procured through capital		factor as of December of the	Road and Rail)
					relevant reporting year is used to
				expenditure which are not		Travel Provider's System
					convert business spend data from
				accounted for in Scope 1,2 or other
					GBP to USD to aligning with	(Capita/Agiito)
				Scope 3 categories.
					USEEIO.
			3. Fuel and Energy related activities:		Fuel and Energy related emissions	RM HR Systems
				the electricity transmission and
				distribution (T&D) losses and 'well-		are calculated by applying publicly	RM Procurement systems
				to-tank' (WTT) emissions of fuel and		available WTT and T&D loss	(SAP Business
					emission factors (UK Government	Warehouse)
				electricity that are not included in
					GHG conversion factors for
				Scope 1 and Scope 2.
					company reporting 2023), to	Waste broker data
			4.	Upstream transportation and
				amounts of electricity use, fuel
				distribution: GHG emissions from		consumption and distance data	Waste contractor data
						provided in Scope 1 and 2.
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				third-party road and air (both		Upstream transportation and	RM Product Weight and
				domestic and international), and		distribution emissions are	Sales
				private vehicle deliveries including		calculated by applying publicly
					available freight emission factors	Direct emission reports
				couriers and owner drivers.
					(UK Government GHG conversion	or revenue reports from
			5.	Waste Disposal: GHG emissions
				factors for company reporting	Associated Companies
				from waste disposal route.
					2023), to weights and/or distance
			6.	Business Travel: GHG emissions		of goods through our network or by
				associated with business travel of		transport mode and vehicle type.
				employees by road, air and ferry		Waste disposal emissions are
				(excluding travel or season passes)
					calculated by applying publicly
				and hotel stays.
					available waste emission factors
			7.	Employee Commute: GHG emissions
				(UK Government GHG conversion
				associated with employee commute
					factors for company reporting
				and working from home.		2023), to weights estimated from
			9.	Downstream transportation and		volume information (detail
				distribution: GHG emissions		provided in 'total waste generated'
				associated with international		KPI).
				delivery partners (e.g. international		Business travel emissions are
				parcels delivered from airport to
					calculated by applying publicly
				door by another national postal
					available freight emission factors
				operator).		(UK Government GHG conversion
			12.	End-of-life treatment of sold		factors for company reporting
				products: GHG emissions associated		2023), to travel booking data from
					rail, road, ferry, air and for hotel
				with the disposal of sold/gifted
					stays.
				products including stamps, labels
				and packaging.		Employee commute emissions are
			15.	Investments: GHG emissions		modelled using annual FTE
				relating to activities from associate		employees and commuting
				investments and any other relevant		averages from the UK National
				investments as they may arise.		Travel Survey (NTS) to determine
					commute kilometres per transport
						mode. UK Government GHG
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Royal Mail report all relevant categories in the Scope 3 emissions inventory. The following five categories are not disclosed as they do not apply to current Royal Mail activities; upstream and downstream leased assets, processing and use of sold products and franchises. These categories will be reviewed annually and will be included in future reports if emissions are identified.

conversion factors (2023) are applied to calculate total emissions. Work from home emissions are also calculated using estimates from employee surveys and embedded into the commute calculation above.

Downstream transportation and distribution emissions are calculated by applying the Royal Mail data on parcel volumes delivered internationally and an average emission factor per parcel of 539gCO2e, the average of International Post Corporation (IPC) parcel sustainability measures (SMMS) for 2023.

End-of-life treatment of sold product emissions are calculated using the weight, material and product sales volumes, alongside UK Government waste destination statistics (2021) and UK Government GHG conversion factors (2023) for waste disposal.

Investment emissions are calculated using actual Scope 1-2emission data from the reported company, divided by the % shareholding of that company. Where this data is unavailable it is estimated based on revenue.

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Royal Mail ESG Reporting Criteria 2023-24

	Outside of	Outside of Scopes	This metric includes GHG emissions from	Tonnes of	Our Outside of Scopes emissions	Royal Mail
	Scopes	emissions are	all relevant gas or liquid based biofuels.	carbon dioxide	are calculated by applying publicly	environmental reporting
	emissions	reported in-line with	Biofuels used include:	equivalent	available outside of scopes biogenic	system (Greenstone+)
		the GHG Protocol	- Hydrotreated Vegetable Oil (HVO)	(CO2e)	emission factors (UK Government
		Corporate Standard	- Bio-CNG		GHG conversion factors for
		to account for the	- Average biofuel blend diesel or		company reporting 2023) to
		biogenic emissions		amounts of biofuels used.
		petrol such as B7 & B10 from
		associated with the		The methodology aligns to the
		forecourts
		combustion of biogas		Greenhouse Gas Protocol,
		and biofuel. We	Outside of Scopes emissions are		Corporate Accounting and
		expect further GHG		Reporting Standard, March 2004.
		reported outside of the gross emission
		Protocol reporting
		total as the Scope 1 impact of these
		guidance to be issued
		fuels has been determined to be a net
		on this topic in 2024.
		'0' since the fuel source itself absorbs an
			equivalent amount of CO2 during the
			growth phase as the amount of CO2
			released through combustion.
	Carbon	Emissions intensity	This metric only includes emissions	Grams of	The activity data supplied for	Royal Mail UK
	emissions per	per parcel is based on	associated with Royal Mail Group Ltd	carbon dioxide	'Scope 1, 2 and 3' GHG emission	environmental reporting
	parcel (Royal	Scope 1 (direct)	mail delivery operations and excludes	equivalent	calculations is also used to derive	system (Greenstone+):
	Mail)	emissions for mail	other brands such as Parcelforce and E-	(CO2e) per	the greenhouse gas (GHG)
		transport, Scope 2	courier data.	Royal Mail UK	emissions intensity per parcel.	Energy Bureau (Mitie)
		(indirect) for mail		parcel	The Scope 1, 2 and 3 emissions	Royal Mail Fleet Fuel
		transport and all
		properties and Scope			associated with Royal Mail Group	Management System &
		3 (indirect)			Ltd mail delivery operations is	Alternative Fuel
		greenhouse gas			totalled and then apportioned	providers
		(GHG) emissions			based on Royal Mail parcel	Direct from provider
		related to domestic			revenue. The apportioned amount
		upstream			is then divided by the total Royal	(Solar PV)
		transportation only.			Mail annual parcel volume to	Direct from 3rd Party
		We use Royal Mail			calculate the average greenhouse
		parcel volumes and			gas (GHG) emissions intensity per	Freight provider (Air,
		revenue data			parcel.	Road and Rail)
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		alongside the GHG
		inventory to calculate
		a per item intensity
		for an average parcel.
	Carbon	Emissions intensity	This metric only includes emissions		Grams of	The activity data supplied for	Royal Mail UK
	emissions per	per letter is based on	associated with Royal Mail Group Ltd		carbon dioxide	'Scope 1, 2 and 3' GHG emission	environmental reporting
	letter (Royal	Scope 1 (direct)	mail delivery operations and excludes		equivalent	calculations is also used to derive	system (Greenstone+):
	Mail)	emissions for mail	other brands such as Parcelforce and E-		(CO2e) per	the greenhouse gas (GHG)
		transport, Scope 2	courier data.		Royal Mail UK	emissions intensity per parcel.	Energy Bureau (Mitie)
		(indirect) for mail			letter	The Scope 1, 2 and 3 emissions	Royal Mail Fleet Fuel
		transport and all				associated with Royal Mail Group
		properties and Scope				Ltd mail delivery operations is	Management System &
		3 (indirect)				totalled and then apportioned	Alternative Fuel
		greenhouse gas				based on Royal Mail letter revenue.	providers
		(GHG) emissions				The apportioned amount is then	Direct from provider
		related to domestic				divided by the total Royal Mail
		upstream				annual letter volume to calculate	(Solar PV)
		transportation only.				the average greenhouse gas (GHG)	Direct from 3rd Party
		We use Royal Mail				emissions intensity per parcel.
		letter volumes and					Freight provider (Air,
		revenue data					Road and Rail)
		alongside the GHG
		inventory to calculate
		a per item intensity
		for an average letter.
	Carbon	Emissions intensity	This metric follows the reporting		Grams of	The activity data supplied for	Royal Mail UK
	emissions per	per parcel based on	boundary as defined at the front of		carbon dioxide	'Scope 1, 2 and 3' GHG emission	environmental reporting
	parcel (Royal	Scope 1 (direct)	these reporting guidelines.		equivalent	calculations is also used to derive	system (Greenstone+):
	Mail &	emissions for mail			(CO2e) per	the greenhouse gas (GHG)
	Parcelforce	transport, Scope 2			Royal Mail	emissions intensity per parcel.	Energy Bureau (Mitie)
	Worldwide)	(indirect) for mail			Group Ltd
		transport and all			parcel
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		properties and Scope				The Scope 1, 2 and 3 emissions	Royal Mail Fleet Fuel
		3 (indirect)				associated with Royal Mail Group	Management System &
		greenhouse gas				Ltd mail delivery operations is	Alternative Fuel
		(GHG) emissions for				totalled and then apportioned	providers
		domestic upstream				based on Royal Mail & Parcelforce	Direct from provider
		transportation only.				Worldwide parcel revenue. The
		We use Royal Mail &				apportioned amount is then	(Solar PV)
		Parcelforce				divided by the total Royal Mail &	Direct from 3rd Party
		Worldwide parcel				Parcelforce Worldwide annual
		volumes and revenue				parcel volume to calculate the	Freight provider (Air,
		data alongside the				average greenhouse gas (GHG)	Road and Rail)
		GHG inventory to				emissions intensity per parcel.
		calculate a per item
		intensity for an
		average parcel.
	Total energy	Total energy	This metric follows the reporting		kWh	The electricity data supplied for	Royal Mail UK
	consumption by	consumption from all	boundary as defined at the front of			'Scope 1 and 2' and 'Scope 3' GHG	environmental reporting
	primary source	energy sources in our	these reporting guidelines.			emission calculations is also used to	system (Greenstone+):
		value chain, such as				derive the total energy	Energy Bureau (Mitie)
		aviation fuel and				consumption across all energy
		supply chain diesel				sources in our value chain.	Royal Mail Fleet Fuel
		use, property estate
		and electric van fleet					Management System &
		electricity					Alternative Fuel
		consumption,					providers
		compliant to the GRI					Direct from provider
		reporting of energy.
							(Solar PV)
							Direct from 3rd Party
							Freight provider (Air,
							Road and Rail)
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Classified: RMG - Public					Royal Mail ESG Reporting Criteria 2023-24