Approach - Drax
Our approach

Through our integrated value chain and flexible lower-carbon energy proposition, we are supporting the UK’s electricity revolution.

“Our flexible, low-carbon and customer-focused approach will deliver high quality earnings and opportunities for growth.”

Philip Cox CBE, Chairman, Drax Group

Our approach to sustainability

Drax’s purpose is to help change the way energy is generated, supplied and used for a better future.

Our Group strategy positions Drax as a leading low-carbon energy company in the UK, and broadens our earnings base to protect long-term returns to shareholders. As a result, the business is focused on: Pellet Production, Power Generation and B2B Energy Supply.

Our strategy is underpinned by safety, sustainability, operational excellence and expertise across our markets.

We are making strong progress while creating value for our shareholders and stakeholders over the long term, investing in research and innovation, providing jobs and sustainable business growth in the years to come.

Our aim is to build a sustainable business and improved environment, social and governance (ESG) performance is a prerequisite for this. We provide a summary of our Group ESG progress and performance for the 2017 financial year against six themes.

Governance of sustainability

We have policies and procedures in place to manage sustainability and a strong governance structure ensures these are followed.

Our governance structure

The Board has ultimate responsibility for the Group’s sustainability performance. The Executive Committee, chaired by the Group Chief Executive, directs sustainability and oversees performance. Biomass sustainability performance and progress is reviewed formally by the Board and the Audit Committee, once a year. In addition to this formal review, supplementary papers are submitted as required.

The Executive Committee reviews sustainability performance and progress. As required, sustainability issues are referred by the Executive Committee to the Board.

The Group Director of Corporate Affairs leads Drax’s sustainability programme and is a member of the Executive Committee.

The Executive Committee has oversight of risk, ethics and business conduct for the Group. This responsibility is discharged through the risk management framework, as described in the principal risks and uncertainties section in our Annual Report and Accounts 2017.

Renumeration and incentives

Total Recordable Injury Rate (TRIR) is included in the Group scorecard of strategic and Business Plan measures. Scorecard performance is one measure of our long-term incentive plan.

Stakeholder engagement

We engage with a range of people and organisations that are directly or indirectly involved in our business and affected by what we do.

Identifying stakeholders

Like many businesses, we have a diverse group of stakeholders who are affected by our activities across the United Kingdom, Europe and the US. These include our shareholders, employees, customers, suppliers, communities, government regulators and policymakers, academia, non-governmental organisations (NGOs), opinion formers and the media.

We communicate with different audiences regularly and keep track of stakeholder relationships. We use stakeholder feedback to inform the planning and delivery of our business activities.

We conduct an ongoing mapping exercise to assess how the stakeholder landscape is developing and to ensure we are recognising the expectations of a broad range of stakeholders and to ensure that across our businesses we do the right thing every day.

Public affairs

It is vital to our business that we develop and maintain good relationships with governments, regulators and individuals in public life.

No party political donations were made in the UK or elsewhere in 2017 (2016: nil) and our interactions with those engaged in the political arena were aimed solely at the promotion of the Group’s business interests.

What counts as political expenditure within the EU encompasses a wide range of activities, many of which would not be considered as political in the normal sense. For that reason, in order to avoid inadvertently breaching EU legislation, Drax seeks shareholders’ approval at its Annual General Meeting for expenditure of up to £100,000 by the Company and its subsidiaries.

Communicating with stakeholders

Communicating effectively is a vital aspect of being a successful business. Honesty is one of the Drax core values and we aim to be transparent and open.

Drax has a long history of engaging with people, businesses and local authorities. We engage with stakeholders and partner with other organisations to make progress on many topics throughout the year. We use the most appropriate communication channels to listen to our stakeholders and ensure they can access the information they need about our policies, practices and strategic direction.

 

A table within our annual report (link below) summarises our key stakeholder engagement activities in 2017 and the topics raised.

Ethics and integrity

At Drax Group we believe in doing the right thing. We are committed to conducting business with honesty and integrity, and we comply with all relevant laws and regulations. We do not tolerate any form of bribery, corruption or improper business conduct.

Our compliance framework sets out the ethical principles that our people must uphold, as outlined in the Group ethics guide, Doing the Right Thing. The framework was reviewed and updated in 2017 to reflect new legislation and to encourage whistleblowing in all appropriate circumstances.

The framework is underpinned by policies and procedures. Our principles regarding ethics, integrity and anti-bribery and corruption are supported by the Group corporate crime policy.

The ethical principles apply to all employees, temporary employees and contractors and are part of our terms of employment. Doing the Right Thing is available on both the Group intranet and internet for employees to reference whenever required. Teams that are exposed to higher risk receive classroom-based training on an annual basis. In 2018, we plan to roll out a video to accompany our handbook, Doing the Right Thing. This will be used as part of our induction programme for new employees and annual compliance refresher training across the Group.

Responsibility for ethics

The Group Ethics and Business Conduct Committee (EBCC) meets quarterly and oversees compliance, chaired by the Chief Financial Officer. Managers and senior managers across the business are responsible for showing leadership on ethical matters and supporting teams to apply our principles. Senior managers report to the Executive Committee and Drax Group’s Board of directors.

Audit procedures monitor compliance with our ethical principles. Our internal and external audits cover Bribery Act compliance and Corporate Compliance carries out an annual audit of the gift and hospitality records across the Group. Audit results and any compliance-related investigations conducted during the year are reported annually to both the EBCC and the Audit Committee.

Corporate Compliance also conducts an annual Bribery Act risk assessment to ensure adequate procedures remain fit for purpose and to recommend any new mitigation measures. The results are presented annually to the EBCC.

Working with others

Our commitment to safeguard human rights includes not tolerating the use of underage workers or forced labour. This is captured in our handbook Doing the Right Thing, in our corporate crime policy and our corporate social responsibility (CSR) statement.

We expect the same high standards from everyone we work with in the United Kingdom, United States and elsewhere. Our CSR statement outlines the standard of ethical business conduct we expect from suppliers. This statement, or equivalent, forms part of all our procurement and fuel supply agreements. We work with third parties whose standards are consistent with our own, as outlined in Doing the Right Thing, our corporate crime policy and other policies. This includes suppliers, partners, agents, intermediaries, contractors and consultants.

Third parties are subject to our due diligence checks at the time of contracting and on an ongoing basis through continual monitoring, via our third party due diligence solution. In cases where a red flag is raised, we follow an EBCC-approved escalation protocol. Dependent on the nature of the flag, we may decide to terminate the relationship or work with the counterparty to implement remedial actions.

Anti-bribery and anti-corruption

Our internal processes ensure consistency with our zero tolerance approach to bribery and corruption. Prior to counterparty due diligence being carried out, we must assess the level of risk associated with the geographies in which the counterparty is incorporated or operates. The country risk process is managed by the Drax Power Risk team, supplemented by a third party country check solution. Poor-scoring countries are reviewed by the Currency and Commodity Risk Management Committee. Once a country is approved, counterparties incorporated or operating in that country can then be put forward for our due diligence process. Due diligence information for high-risk counterparties is refreshed on an annual basis and all other counterparties are evaluated every three years. We are benchmarking our due diligence solution to optimise consistency and efficiency across the Group.

In 2017, Drax Group was not involved in any legal cases related to corruption and bribery.

Whistleblowing

We encourage anyone with a concern to speak out and report concerns through our whistleblowing procedure. Employees can raise issues through managers, a member of the Compliance team or directly with the EBCC. An independently operated third-party anonymous hotline is also available to internal and external stakeholders. Corporate Human Resources records all hotline reports received and will raise bribery and corruption-related matters with Corporate Compliance, which maintains an investigations log. Where required, the EBCC and Group Counsel are consulted and a course of action agreed. Should concerns be raised, we have a strict non-retaliation policy.

During 2017 there was one whistleblowing case, which was raised.  Two investigations were carried out, one by the local business and one by the Group team, with neither finding any evidence that Company policy and procedures had been breached.

Looking ahead
  • Further strengthen the governance of corporate sustainability
  • Further strengthen external reporting and assurance