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Environmental Policy

Headlam Group plc (‘Headlam’ or the ‘Company’) is Europe’s leading floorcoverings distributor.  The Company’s major customer segments are retail businesses and contractors sourcing flooring products and expertise for residential and commercial end-consumers across the UK and certain Continental European countries (France and The Netherlands). The Company sources products from suppliers across the globe manufacturing a diverse range of floorcovering products.

Headlam is committed to reducing its direct and indirect impact on the environment, and to publicly updating on its actions and progress.

Through collaborating and working with its colleagues and external stakeholders, the Company is focused on:

  1. reducing its contribution to Greenhouse Gas (‘GHG’) emissions and climate change;
  2. becoming a more sustainable business;
  3. increasing the sustainability of the floorcoverings industry as a whole, through engagement and example, and supporting the future transition to a circular economy; and
  4. continual improvement across all aspects of environmental management.

This Environmental Policy (the ‘Policy’) describes the approach and actions Headlam is taking with its colleagues and external stakeholders and within the commercial and operational areas of its business that have been identified as having the greatest environmental impact.

Policy Implementation

Direct impact

The Company has identified the most material aspects of its own operations which have a negative effect on the environment, and is focused on transitioning them to more sustainable methods and practices. These are:

  • Internal GHG emissions - carbon emissions from fuel and energy sources used in transport and operations
  • Product packaging and waste - protective packaging is a necessary component in securing the quality of products and maintaining that while in transit through the distribution network  

Internal emissions

As disclosed within the Streamlined Energy and Carbon Reporting (‘SECR’) disclosure within its Annual Reports, over 80% of the Company’s internal emissions arise from fuel sources used in its transportation activities (both commercial and non-commercial fleet), with the remainder mainly accounted for by natural gas usage and electricity consumption at sites.

The following table outlines the actions and processes being taken to reduce the Company’s internal emissions.

Focus area Action(s)
Commercial fleet (delivery vehicle) emissions
  • Ensure all commercial vehicles are compliant with the latest Euro 6 emission standards
  • More efficient delivery fleet utilisation and associated reduction in fleet number through the Transport Integration project. Project to be completed in 2022, with use of KPIs to measure progress and performance and focus on continually improvement
  • Focus on good driver behaviours, including through dashboard training to review behaviours
  • Further applications of FORS accreditation, with the voluntary FORS Scheme demonstrating which fleet operators are achieving exemplary levels of best practice, including in efficiency and environmental protection  
Non-commercial fleet (company car) emissions
  • Moving towards Company-wide availability of plug-in hybrid and low emission vehicles upon fleet renewals, and provision of EV charging points across the Company’s network to support
  • Preparatory work being undertaken to implement a future Whole Life Cost (‘WLC’) policy to expediate full move to a sustainable fleet
  • Reduction in fleet number due to sales force realignment completed in 2021
Office and warehouse emissions (including natural gas combustion)
  • Promotion of energy saving actions (‘good energy behaviours’) across all sites through an internal communications and engagement plan to be fully implemented from 2022
  • Auditing of sites, and upgrading of sites with more energy efficient technologies and equipment
  • Progressing of work towards achieving ISO 14001 environmental accreditation in 2022

 

Product packaging and waste

Plastic packaging, cardboard poles and wooden pallets make up the bulk of the waste arising from Headlam’s operations.  The following table outlines the approach Headlam is taking in relation to this waste.

Focus area

Action(s)

Plastic packaging

  • Using only recycled plastic packaging across operations - all locations using regranulated polythene packaging manufactured from 100% recycled polythene

Carboard poles and wooden pallets

  • Incentive in place for colleagues to collect poles from customers for reuse
  • Reuse of wooden pallets retained

General office waste

  • Review of office waste management options across the group

Allied with the actions above, it is the Company’s policy that all colleagues take accountability for reducing the Company’s internal emissions and waste in the areas they are able to influence.

Indirect impact - Supporting increased sustainability in the floorcoverings industry

The Company’s principal actions to support increased sustainability in the floorcoverings industry, and lessen its indirect impact on the environment, are:

  • Working with suppliers to improve supply chain efficiencies;
  • Working with suppliers to promote more sustainable products;
  • Supporting and engaging with industry bodies and suppliers focused on the recyclability / recycling of floorcovering products, and reduction of floorcovering waste to landfill; and
  • Engaging with customers to better understand their sustainability requirements and preferences, and respond accordingly.

The transition to a circular economy is a longer term challenge for the industry as there are both technical and market dynamic obstacles to overcome. The majority of flooring product categories are made up of several layered materials, with plastic used in the manufacturing processes of most. The difficulty of separating these layers, and the limited recycling processes and networks available, leads to limited viable recycling solutions currently. Additionally, a large proportion of the market and customer base is yet to assign a premium to recyclable products, with low interest, particularly among residential sector customers, in paying a premium for sustainable flooring options.

Scope 3 emissions

Scope 3 emissions are GHG emissions that Headlam is indirectly responsible for outside its own operations - from the goods the Company purchases to the disposal of floorcoverings once sold.

In early 2021, Headlam conducted its first Scope 3 emissions assessment following the GHG Protocol Corporate Value Chain (Scope 3) Accounting Standard methodology in conjunction with its top 15 suppliers. The assessment is available to view at https://www.headlam.com/environmental-social-and-governance-esg/esg-report/esg-strategy-report/; and estimated that the sources of its indirect GHG emissions were: 1) Manufacture of purchased goods and services (71.3%); 2) End-of-life sold products (22.5%); and 3) Other (6.2%). From the assessment, Headlam’s indirect emissions far exceed its direct internal emissions (Scope 3: 97.5% of total emissions; Scope 1 and 2: 2.5% of total emissions).

Engagement with suppliers

The Company will next engage with suppliers on a Scope 3 emissions assessment in late 2022, and this will be performed annually thereafter. Undertaking this work is a valuable tool to understand supply chain emissions, and importantly engage with individual suppliers on their own environmental / sustainability ambitions and supply chain efficiencies. It serves as an important framework, amongst other forms of engagement, to deepen the partnership approach with suppliers most able to demonstrate responsible business conduct and supply chain efficiencies.

Building on this work, the Company is developing a ‘Supplier Sustainability Procurement Charter’ for implementation in 2022. It will define a common set of minimum standards and principles that Headlam will mandate from its suppliers, and will identify those areas where Headlam wishes to work more closely with suppliers to increase overall sustainability and mitigate any risk from emerging new regulations / legislation.

Actions to reduce indirect impact

Below are the Company’s current principal actions to reduce indirect emissions and support increased industry sustainability:

Focus area

Action(s)

Supplier emissions and sustainability

  •  Engagement with suppliers on their Scope 1 and 2 emissions, and sustainability actions and ambitions
  • Work in partnership with suppliers to increase supply chain efficiencies, including through joint business plans, improved production scheduling, buying and deliveries
  •  Supplier Sustainability Procurement Charter

Sustainable products

  • Work in partnership with suppliers to support the innovation, development, production and marketing of sustainable and recyclable products into the marketplace

End-of-life treatment of sold products

  • Supporting and engaging with industry bodies and suppliers focused on the recyclability / recycling of floorcovering products, and reduction of floorcovering waste to landfill

Customer Engagement

  • Bi-annual survey to better understand customers sustainability requirements and preferences
  • Promotion of less carbon intensive ordering and delivery options
  • Promotion of sustainable products, as a point of differentiation in the industry

As the industry moves towards a more sustainable position driven by engagement and the external factors of i) regulation / legislation; ii) growing interest and preference for sustainable floorcovering options by customers / end-consumers; and iii) technological solutions, the Company will prioritise engagement with those external stakeholders who are focused on improving the sustainability performance of the industry.

Disclosure and Regulation

Headlam is committed to adhering to all regulation and regulatory reporting requirements, and disclosing transparently on the Company’s emissions, actions and strategy being taken to reduce its contribution to climate change, and those actions and strategy to support reducing the overall impact of the industry. The Company publishes a publicly available ESG (‘Environmental, Social and Governance’) update on a bi-annual basis, which incorporates the information within this Policy. The Company is supported in its environmental strategy and reporting by two specialist consultancies.

At the time of its next ESG update, the publication of its 2021 Annual Report in March 2022, the Company will publish a full form ESG Report aligned with both the Task Force on Climate-related Financial Disclosures (‘TCFD’) and the Sustainability Accounting Standards Board (‘SASB’). To provide a tool to measure the Company’s progress, KPIs and targets for certain environmental related actions will begin to be introduced from March 2022.

This Policy is publicly available on the Company’s website (www.headlam.com) and accessible to all colleagues via its intranet and communications portal. Any enquiries regarding this Policy and the Company’s environmental actions can be emailed to headlamgroup@headlam.com.

External Certification

This Policy forms part of the Company’s environmental management system and ESG strategy to comply with the requirements of the International Standard ISO 14001.

Governance

The Board of Headlam is committed to developing the Company’s ESG strategy and performance and has primary oversight of ESG, including environmental approach and actions. The Environmental Policy is a matter reserved for the Board’s approval. All colleagues and external stakeholders of Headlam are expected to uphold and adhere to the principles, commitments and actions set out in this Policy, where they are able to discharge them.

This Policy is subject to annual review and approval by the Directors of Headlam, and was last approved on 6 December 2021 and signed on its behalf by

Chris Payne
Executive Director