RS : ESG Report

TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES(TCFD)

2022/23 UPDATE

INTRODUCTION		FOUR PILLARS OF TCFD
		GOVERNANCE	STRATEGY	RISK	METRICS AND TARGETS

Introduction

FUTURE PLANS

LISTING RULE:

In this report we have included climate-related financial disclosures that are consistent with the TCFD recommendations across its four pillars and 11 recommendations and the requirements of Listing Rule 9.8.6R.

Where possible, we have made use of the TCFD Final Report and Annexes (October 2021), and technical supplements for our quantitative modelling and

Governance

scenario analysis. We will continue to use these resources to strengthen our disclosure in the future.

Strategy

Governance

Risks

Strategy

Targets

and metrics

Risks

Metrics

and targets

In 2021/22 we published our first TCFD disclosure which was consistent with the

11 recommendations and was well received by our stakeholders. Our 2022/23 disclosure builds on this and reflects our progress, specifically in relation to the quantitative modelling of our climate-related risks and opportunities (CRROs).

Through our ongoing work in 2022/23, we identified five key CRROs:

Transition:

1. Changes in market demand and customer segments (risk/opportunity)
2. 1. Opportunity: growth in customer segments linked
      to the low carbon economy (e.g. renewables or electric vehicles) and product categories that enable the net zero transition e.g. automation and control products that reduce energy consumption
   2. Risk: decline in traditional customer segments reliant on fossil fuels and product categories that aren't required in the low carbon economy
3. Logistics decarbonisation (risk)
4. 1. Risk: increased costs associated with carbon freight taxes and low carbon technologies
5. Reduced emissions and energy costs by installing solar panels at our distribution centres (DCs) (opportunity)

Physical:

1. Impact of extreme heat on our DCs (risk)
2. Impact of extreme weather (storms / floods / landslides) on DCs (risk)

01 RS Group plc Task Force on Climate-Related Financial Disclosures (TCFD) 2022/23 update

INTRODUCTION

FOUR PILLARS OF TCFD

GOVERNANCE	STRATEGY	RISK	METRICS AND TARGETS

FUTURE PLANS

Enhancing our climate action and disclosure

GOVERNANCE

The Board and Audit Committee have oversight of our CRROs. The Senior Management Team (SMT) oversee the Group's approach to identifying, assessing and managing CRROs.

OUR GOVERNANCE STRUCTURE

THE BOARD

Strategic oversight of the Group's CRROs, 2030 ESG action plan, five climate-related metrics and TCFD action plans and progress.

AUDIT COMMITTEE			REMUNERATION COMMITTEE
Review CRROs, quantitative climate modelling and progress			Agree climate-related KPIs that apply to executive
against the 11 recommendations of TCFD annually.			remuneration and wider employee rewards.

SMT

Oversee the Group's approach to identifying, assessing and managing CRROs.

ESG COMMITTEE

Review climate-scenario analysis and net zero plan and monitor performance against our key metrics and targets quarterly.

RISK COMMITTEE

Review principal and emerging risks, including climate change and ensure controls are embedded.

TCFD STEERING GROUP

Conduct climate-scenario analysis, assess CRROs, develop and execute the TCFD action and disclosure plan to ensure compliance with its 11 recommendations.

NET ZERO STEERING GROUP

Lead and coordinates global decarbonisation and net zero initiatives across our operations.

02 RS Group plc Task Force on Climate-Related Financial Disclosures (TCFD) 2022/23 update

INTRODUCTION		FOUR PILLARS OF TCFD
		GOVERNANCE	STRATEGY	RISK	METRICS AND TARGETS

Enhancing our climate action and disclosure

GOVERNANCE CONTINUED.

FUTURE PLANS

TCFD RECOMMENDED DISCLOSURES

1. Describe the Board's oversight of CRROs

DESCRIPTION

The Board has strategic oversight of the Group's CRROs, 2030 ESG action plan, five climate-related metrics (see page 17) and TCFD action plans and progress.

We have at least one overarching ESG strategy session each year with the Board, supported by deep dive sessions on key ESG topics and performance updates and reviews.

The Audit Committee review CRROs, quantitative climate modelling and progress against the 11 recommendations of TCFD annually. They also ensure fair and effective integration into financial disclosures and review and recommend the annual TCFD disclosure to the Board for approval.

2022/23 HIGHLIGHTS	MORE INFORMATION
- ESG solutions function formed which is focused on broadening the ESG solutions we offer to our customers	Annual Report and
	Accounts page 56
- Better World product range launched in the UK and Republic of Ireland	Annual Report and
	Accounts page 56
- Five ESG sessions held with the Board and Audit Committee in 2022/23, covering ESG solutions, launch of Better World	Annual Report and
products, 2030 ESG action plan, TCFD quantitative climate-scenario analysis, actions, disclosures and results and ESG	Accounts pages 69,
performance reporting	94, 97
- Strategic ESG solutions session with SMT and Board to support development of Better World products and new sustainability	Annual Report and
solutions for customers, and review net zero delivery progress and future initiatives	Accounts page 69

	- Audit Committee reviewed progress against the 11 TCFD recommendations and financial quantification of CRROs under three	Annual Report and
	climate scenarios. They also reviewed the 2022/23 TCFD disclosure and recommended it to the Board for approval	Accounts
		pages 69, 94 and
		104
	- Remuneration Committee agreed annual incentive linked to climate change goals	Annual Report and
		Accounts
		page 112

03 RS Group plc Task Force on Climate-Related Financial Disclosures (TCFD) 2022/23 update

INTRODUCTION		FOUR PILLARS OF TCFD
		GOVERNANCE	STRATEGY	RISK	METRICS AND TARGETS

Enhancing our climate action and disclosure

GOVERNANCE CONTINUED.

FUTURE PLANS

TCFD RECOMMENDED DISCLOSURES

DESCRIPTION

2022/23 HIGHLIGHTS

MORE INFORMATION

1. Describe management's role in assessing and managing CRROs

The SMT is responsible for overseeing the Group's approach to identifying, assessing and managing CRROs.

Our ESG Committee review climate-scenario analysis and net zero plan and monitors performance against our key metrics and targets quarterly.

Our TCFD steering group, supported by the internal audit and risk team, conduct climate-scenario analysis, assess CRROs, develop and execute the TCFD action and disclosure plan to ensure compliance with its 11 recommendations.

The TCFD steering group is chaired by our Vice President (VP) Social Responsibility and Sustainability and members include senior leaders from risk, finance, environment, ESG and product and supply chain (P&SC). It is responsible for key areas of our climate strategy, e.g. Better World products, packaging, transport, supply chain etc.

We also have a net zero steering group, sponsored by our senior VP Operations, which is attended by operational leads from our main sites. It is designed to lead and coordinate global decarbonisation and net zero initiatives across our operations.

Management is driving the strategy and initiatives to leverage the opportunity around Better World products and developing new sustainability solutions for our customers.

- TCFD session held with the SMT and key functional management teams e.g. P&SC leadership team and ESG solutions team,	Annual Report and
to further embed awareness, ownership and action related to our CRROs	Accounts
	page 69
- Formalisation of a net zero steering group to lead and coordinate global decarbonisation and net zero delivery across our	Annual Report and
operations. £3.7 million investment approved to begin decarbonisation at DC in Beauvais, France, including energy efficiency	Accounts
measures, installing solar panels on the roof and heat pumps for space heating. A further investment proposal for scoping of	page 51
decarbonisation at DC in Nuneaton, UK, has also been approved
- ESG workstream incorporated at due diligence and integration stage of new acquisitions including Risoul y Cia, S.A. de C.V.	N/A
(Risoul), and domnick hunter-RL (Thailand) Co., Ltd. (DH) to establish ESG and climate-related data reporting, policies, processes
and delivery initiatives. Net zero initiatives and investment lines have been added to integration plans

04 RS Group plc Task Force on Climate-Related Financial Disclosures (TCFD) 2022/23 update