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ENERGY SAVING INITIATIVES The Group is in the process of implementing a balanced scorecard process called the ‘Company Dashboard’ to measure whether smaller scale operational activities around the Group are aligned with our long term objectives and strategy. The Company Dashboard will be used to monitor energy consumption to ensure the long term objective of reducing overall energy consumption is achieved. Each site will report on electricity, gas, water and process energy use and the results will be included in future versions of this report. By way of example, Hampton Park West (HPW) has focused on its energy consumption in the last year with the following results: · Reducing the delivery pressure of the site’s compressed air system by 1 bar has resulted in an energy saving of about 110,000 kWh per year. It also allowed the site’s large compressor to be switched off and air to be supplied instead via a variable speed compressor, which has led to additional energy savings of around 144,000 kWh per year. · Selectively switching off the main factory overhead lighting in areas where it is not needed has saved around 230,000 kWh per year. For example, the lighting in a storage area can be at lower level, or the lighting in a production area not running 3 shifts can be turned off for part of the time. · Calculations have shown that a steam leak on site as small as 3 mm wide can waste energy. A programme of leak tagging, together with surveys at “quiet times”, when air leaks can be heard, has enabled HPW to identify and correct both air and steam leaks across the site resulting in an energy saving of 342,000 kWh. · In aggregate, HPW’s focus on reducing energy consumption has resulted in an energy saving of around 826,000 kWh in the year, a CO2 emissions reduction of 355 tonnes. |
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The Directors recognise that there is increasing focus in the UK on how businesses take account of their economic, social and environmental impacts in the way they operate, with the aim of addressing their own competitive interests at the same time as those of wider society. The Directors acknowledge that this involves balancing the interests of shareholders, employees, customers, suppliers and the wider communities in which our businesses operate.
Business conduct
The Group’s Policy & Code on Business Conduct (which is in its ninth version this year) requires employees to carry on their business activities in a way which will attract the respect of those we deal with and which will not bring Avon’s reputation into disrepute. This includes complying with the laws and regulations in the countries in which we operate and do business. The Policy & Code also contains guidance on avoiding conflicts of interest and managing relationships with third parties.
Ethics and anti-corruption
Partly in recognition of the Group’s reclassification by the London Stock Exchange from ‘General Industrial’ to ‘Aerospace & Defence’ the latest version of the Policy & Code contains a new section on the prohibition of corrupt practices, based on the European Aerospace & Defence Association’s Common Industry Standards on Anti-Corruption. All agents and third parties who act on behalf of the Group are obliged to comply with the standards, which will be incorporated into all written arrangements. The Policy & Code also contains a whistleblowing procedure which enables any employee or individual working for the Group to raise concerns about a breach of policy or malpractice.
ENVIRONMENT
The Group’s three environmental objectives centre around the activities of:
· Energy consumption
· Waste and recycling
· Supplier environmental development
Our UK production facility at Hampton Park West (HPW) remains the Group’s flagship in terms of environmental improvement activities. During the year the site maintained its certification to the externally accredited Environmental Management Systems standard ISO14001 and the latest Lloyds Register Quality Assurance surveillance visit found no non-conformities with the system or its implementation. Monitoring and measurement includes utility metering (electricity, gas and water), process energy use (including steam) and measuring the percentage of solid waste generated on site that is recycled instead of being sent to landfill. Waste recycling initiatives have continued to result in a significant amount of solid waste being recycled instead of going to landfill. With increasing restrictions on landfill use this is becoming ever more significant. In 2007/08 nearly 89% of solid waste generated at Hampton Park West was recycled. In 2008/09 with a different product mix (less rubber, which is recyclable, and more plastic components which are not) we achieved 83%.
In the last year all US production facilities were in compliance with their State emissions permits and applicable environmental regulations. At our manufacturing facilities in the United States there has historically been less focus on environmental improvements because these sites have a low environmental impact and there is significantly less regulatory pressure in the US to address such issues compared to Europe. However, this has been changing and the Directors are committed to implementing a Group wide environmental policy, using Hampton Park West as the benchmark, in 2010.
Avon Hi-Life in Wisconsin and Avon Engineered Fabrications in Mississippi continued their focus on scrap reduction and recycling to limit the volume of rubber and other waste sent to landfill. Their scrap rubber is shredded and used as garden mulch or as a playground covering.
The environmental performance of the Group’s suppliers is also important and this is taken into account as part of tendering and supplier management processes.
Health and safety
The Board recognises the importance of health and safety to the business. Not only does a safe working environment contribute to employee well being, but the prevention of accidents and personal injury contributes to the running of an efficient business. The Group’s stated policy in this area is that management practices and employee work activity will, so far as is reasonably practicable, ensure the health, safety and welfare at work of its employees, contractors and visitors, together with the health and safety of all other persons affected by the business activities of the Group’s operations.
All of the Group’s businesses maintain health and safety systems that are both compliant with Group policy and appropriate to the business, with the overall objective of providing a safe and healthy working environment. Accident rates are consequently low across the Group:
Accident rates are generally low across the Group.
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TABLE: ACCIDENT RATES ACROSS THE 5 MANUFACTURING SITES DURING 2009
* the number of Occupational Safety and Health Administration (OSHA) recordable injuries per 200,000 man hours worked |
SUPPLIERS
Avon recognises the need to treat its suppliers both fairly and responsibly and this is stated clearly in the Policy & Code.
All tenders for business are treated according to strict and unbiased guidelines. All such tenders are underlined by a legal requirement for an official Request for Quotation, all tenders being reviewed according to the requirements set out in the tender documentation. Where required, Avon will complete a cross-function decision-making worksheet to assess each supplier against agreed criteria.
As part of its top level business philosophy of Total Quality Management, Avon maintains an Approved Suppliers list which categorises each supplier against strict criteria in terms of their own Quality & Environmental Management structure. Approved supplier status is only granted once a cross-functional team has signed off compliance to these requirements.
Avon grades each key supplier on a monthly basis against Parts Per Million (PPM) and On Time In Full (OTIF) targets, encouraging suppliers to submit and agree to their own OTIF performance. This information is shared and discussed with suppliers on a monthly basis.
Avon encourages long term relationships with its supply base through the use of service level agreements, the aim of which is not only to protect Avon in terms of setting agreed guidelines for quality, cost and delivery, but equally to ensure that Avon adheres to its own responsibilities. Examples would be the setting of agreed stock liability and volumes which recognises a supplier’s own material constraints against Avon’s desire for efficiencies and optimum pricing.
COMMUNITY
The Group’s policy is to direct management practices to:
· Good communication and integrity in our dealings with the communities in which we operate;
· Fostering greater understanding between the Group’s businesses and the communities in which they operate;
· Encouraging employees to participate, where appropriate, in the affairs of the community and professional bodies.
As a result, all of the Group’s businesses play an active and prominent role in their local communities.
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UK In the UK the Group maintains a fund with the Community Foundation for Wiltshire and Swindon, a charity dedicated to strengthening local communities. The Foundation targets its grants to make a genuine difference to the lives of local people. This year Avon’s fund provided grants to: · SPLITZ, a service supporting adults and children affected by domestic violence and abuse · Carers Support, who provide a range of services for carers in the district, including holiday activity programmes Hampton Park West held an employee fun day which helped raise funds for the “Help for Heroes” charity and implemented the UK Department for Transport Cycle to Work Scheme. |
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Avon Engineered Fabrications in Picayune, MSi: · supports the local police and sheriff department with financial assistance to provide educational material to prevent drug abuse and improve community safety · employs Picayune Industries, a handicapped employee organisation to provide site services |
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ISI in Lawrenceville, GA: supports the Quinn House, an organisation providing support to families in need. |
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Hi-Life in Johnson Creek, WI: · runs a Christmas neighbour program which involves employees giving gifts and food to needy families in Jefferson County · made donations to help fund local community projects and to local schools to buy books and fund learning programs |
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Avon Protection Systems in Cadillac, MI: · hold a “Blue Jean Day” each Friday, where employees contribute $1 in order to wear jeans to work. Funds collected are donated to a different local charity each month and suggestions are sought annually from employees for local charities to include for the coming year · employees have been involved in fundraising events for the local March of Dimes, American Cancer Society Relay for Life and the Cadillac Area Youth Orchestra |
Miles Ingrey-Counter
Company Secretary
19 January 2010
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