Creating a sustainable future

Climate change

We recognise that climate change poses both risks and opportunities for our business. We have seen a growing mandate from our stakeholders for meaningful action on climate change and to tackle our greenhouse gas emissions. Recognising this, climate change is included within our “Macroeconomic, political and environmental” principal risk. As society transitions towards a net zero future, we are well positioned to make an increasing contribution to society’s climate objectives through our products and services.

Sustainability objectives:

Our progress against our sustainability objectives for 2023 are outlined below, along with our next steps for 2024.

Engage with key customers to better understand their climate ambitions and to communicate our strategy.

We are continuing to proactively engage with our customers who are committed to reducing their climate impact, most notably among our Retail and Hybrid customers with science-based targets or net zero commitments. In collaboration with a key Retail customer, efforts are underway through the Manufacture 2030 programme to reduce our greenhouse gas emissions and enhance product sustainability. Furthermore, the demand for insights into our carbon management strategies has started to gather momentum with some of our professional wholesalers.

In the Professional Projects sector, sustainability criteria are increasingly integral to the lighting project specifications and the tendering process, with rising requests for detailed data on product carbon footprint and circularity via TM65 and TM66 calculations. In response, we have completed TM65 and TM66 assessments for specific product lines and the more detailed Environmental Product Declarations (“EPDs”) are being developed as we anticipate demand for these more detailed assessments could increase.

Undertake detailed energy audits of UK operations as part of the Energy Savings Opportunity Scheme (“ESOS”).

We are on track to deliver ESOS compliance and undertake detailed energy audits in line with the extended deadline of 5 June 2024 (previously 5 December 2023). The scheme administrators, the Environment Agency, have moved to strengthen the requirements of ESOS, including the development of an implementation plan following the completion of the current phase. We will use the energy-saving recommendations from the audits to help deliver progress against our Scope 1 and 2 target.

Develop a research and development roadmap over the short, medium and long term that will help us deliver our Scope 3 science-based target.

We will continue to drive innovation to meet customer needs, designing more efficient and functional products. These efforts will play an important role in delivering our Scope 3 science-based target. Over the short and medium term, we will continue to focus on improving the efficiency of our LED lighting products and reducing the standby power and losses of EV chargers, wiring accessories and cable reels. The integration or pairing of our products with greater controls and smart functionality can reduce the amount of time our products are in use, helping to cut both costs and emissions. Over the long term, our attention will turn towards integrating a higher degree of circularity into our products, to ultimately lower the embodied emissions.

Begin work to develop a set of product design criteria that help to improve the sustainability of our products.

As part of our drive to enhancing the sustainability of our products we are initially focusing on LED lighting, as this is where we are seeing the most interest from our customers. The first step towards improving the sustainability of our products is to understand the embodied carbon within. We are increasing our use of TM65 calculations to provide customers, particularly from the Professional Projects segment, with an understanding of the embodied carbon within our internal LED lighting product ranges. This helps our customers make more informed choices as they have a better understanding of the whole-life carbon impact of our products, and we can use this information to make more informed choices within product development. We are also working to develop EPDs, which are a more detailed form of TM65 calculation, for two internal LED lighting products to develop our capabilities in this area.

Across external lighting products, the focus from customers has been on the circularity of products and the use of the TM66 Circular Economy Assessment Method which assesses circularity across product design, manufacturing, materials and service delivery. This assessment provides the depth of detail required to create products that are aligned with a circular economy and the TM66 methodology forms part of our design brief.

Next steps

The actions that we have taken to embed the TCFD recommendations within our business have helped build climate resilience into our business strategy. We will continue our efforts to develop our approach as regulatory requirements evolve and the challenges of climate change become more pronounced. As we look towards 2024, we have set the following sustainability objectives:

• Begin the process of aligning our annual reporting with the new IFRS S2 Climate‑related Disclosures Standard and the development of a detailed transition plan to meet our targets
• Start the development of a detailed transition plan to meet our science-based targets
• Seek third-party independent verification of our Scope 1 and 2 emissions and work towards more accurate calculations for Scope 3 categories such as purchased goods and services, and transportation and distribution
• Development of TM65 lifecycle carbon footprint assessments for all new Luceco project luminaries by the end of 2024