amrcenvironment

Environment

Improving the environmental performance of our operations contributes to profitable growth.

Our environmental strategy reflects our main focus of investment and effort, concentrating on three areas:

1. Supporting our customers by further reducing the environmental impact of our products and services.

2. Developing new technology for future low emission products.

3. Maintaining our drive to reduce the environmental impact of our business activities.

Our Global HS&E policy sets out the commitments we have made. Our vision is to be known for the excellence in our HS&E performance in all our business activities, and our products.

Compliance

We are committed to full compliance with all relevant legal requirements and we continually monitor performance in all our businesses.

We have standards and guidance notes in place for identifying mandatory requirements and for the evaluation of legal compliance. This forms a key aspect of our HS&E management system framework that meets the requirements of the environmental management systems standard ISO 14001.

We have global certification to international environmental management standard ISO 14001 across our manufacturing facilities.

In 2013 we had a total of four environmental incidents. Three of these related to discharges to sewers which exceeded consented levels. The fourth was a near miss related to equipment failure that had the potential to flood our site with trade effluent.

There were no prosecutions or enforcement action against the Group in 2013 for environmental non-compliance.

We continue to invest in improving the operational performance of our facilities, both production and office environments, and our process with the intent of building a better business.

The figures referenced in this section do not include emissions associated with Rolls-Royce Power Stems. We expect to integrate this subsidiary into our reporting process during 2014.

Energy

We have set a three year target to reduce our energy consumption by 10 per cent by the end of 2015, with 2012 as the baseline year, excluding product test and development, and normalised by revenue.

Our energy use increased slightly in 2013, reflecting our increased levels of activity, but we are on track to reduce our overall emissions of greenhouse gases.

Our energy use intensity continued to decline in 2013, falling by five per cent to 109 MWh/£m from 115 MWh/£m in 2012.

We continue to invest in new facilities and improvements to existing facilities. In 2013 our expenditure on property, plant and equipment amounted to £687 million. £3 million was spent on energy efficiency improvements, upgrading compressed air systems, LED lighting systems and controls, and additional energy monitoring capability.

We are also seeking to make wider use of more sustainable energy sources, where cost effective and practical to do so.

Greenhouse gas emissions

We have introduced a longer term greenhouse gas (GHG) target over 10 years, aimed at reducing absolute emissions by 17 per cent by the end of 2022, with 2012 as the baseline year excluding product test and development.

In 2013, our total greenhouse gas emissions from our facilities, processes and product test and development was 520 kilotonnes carbon dioxide equivalent (ktCO2e). This is a reduction of nine per cent compared with 572 ktCO2e in 2009. This reduction has been achieved, despite a growth in our global facilities footprint, through a sustained investment in new and more efficient manufacturing facilities.

Water

We use water for our manufacturing, repair and overhaul services, and for certain product testing activities.

We have completed a detailed global review of our water footprint, using the Global Water Tool from the World Business Council for Sustainable Development. This has helped us to identify regions of higher water stress. This means we can take local water availability into consideration when making decisions on future site locations and targeted investments to reduce water use at existing sites.

We have also sought opportunities to reduce our water use in key processing areas. Our largest water use is in wet processing, such as component clean and surface plating. We invest in equipment to counter-flow rinse and extend bath lives, significantly reducing our water consumption.

We are also introducing rainwater harvesting in some of our new build facilities for use in non-process or non-potable applications.

As a result of these and other initiatives, our consumption of water (absolute) has reduced by 47 per cent, from 8,192,000m3 in 1998, to 4,302,000m3 in 2013.

Waste

Our rate of waste production continued to decline in 2013, falling by eight per cent to 3.89 tonnes/£m from 4.25 tonnes/£m in 2012.

We are ahead of our target to reduce waste by seven per cent by the end of 2015, based at 2012 and normalised by turnover.

The total amount of waste produced in 2013 was 49,316 tonnes. Since 2003 our rate of waste production has fallen by 40 per cent.

The four principal waste streams that contribute to our waste production are:

• Recyclable solid wastes

• Liquid wastes sent for disposal

• Recyclable metals

• Solid wastes sent to landfill

Together, these account for 84 per cent of our total waste production.

We have initiated a global improvement Waste Action Programme this year to drive efficiencies and cost reduction across the business.

Recycling

Our recycling rate of solid waste was 70 per cent in 2013, unchanged from 2012.

Recycling of metals accounted for 28 per cent of the total, followed by other recyclable wastes at 22 per cent and the packaging waste stream (cardboard, plastic and wood) at a combined 19 per cent.

The amount of metal waste produced in 2013 fell by 15 per cent and led to a three per cent fall in our overall recycling rate. This fall was offset by increases in other recyclable wastes.

We are committed to optimising material and resource efficiency. We are working to manage the use of chemicals in our processes, and to phase out substances that are considered dangerous to the environment or harmful to health.

REACH

We comply with the EU regulation known as REACH (Registration, Evaluation and Authorisation of Chemicals), which apply to substances manufactured or imported into the EU in quantities of one tonne or more per year.

We apply stringent rules and processes in the use of all chemicals in the workplace and ensure any hazards are appropriately minimised and controlled. Some of the materials covered by the REACH legislation are critical in enabling our high technology products to work in a safe and efficient manner. We will not compromise our product safety.

We work with industry partners and qualify alternatives for use in new production and aftermarket applications. In the meantime, we are also actively seeking authorisations to ensure product integrity and supply continuity.

In 2013 we were the first company to make an application to ECHA (the European Chemicals Agency) under REACH for a substance that is critical to the manufacture of our wide chord fan blades. These blades and their manufacturing method are vital for the efficient and safe operation of our wide chord fan blade family of aero-engines.

We also continue to provide active support to our suppliers, assisting them in meeting their obligations under the REACH regulations.

Conflict minerals

Minerals such as Tin, Tungsten, Tantalum and Gold are important in many of our products.

Rolls-Royce is developing a global programme team to make sure that our supply chain is free of conflict minerals. The Organisation for Economic and Cooperative Development (OECD) provides the framework used for our programme. This will involve the review of existing processes and supplier code of conduct, risk assessment, contract updates, oversight checks and third party audit where required.

Although it is early in our review we have found no evidence of conflict minerals in our supply chain.