Our responsibility o our c collolleaeagues, cust gues, customer ommunnities ities omerss - ResponsibilityReports.com
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Royal Mail Group
Corporate Responsibility Report
2011-12
Our responsibility
to our ccoll
ollea
eagues,
gues, cust
customer
omerss
and commu
commun nities
Contents
Contents
For
oreewo
word
rd 4
About Ro
Royal Mail
Mail 6
businesss stra
Our busines strateg
egyy 10
straategy
Our CR str 12
CR governa
governanc
ncee 18
nsparenc
Transparencyy 20
custom
Our cust erss
omer 22
peoplee
Our peopl 28
Our commu
mmun
nities 38
envi
Our envirronmen
onmentt 46
GRI Index 56
assur
Independent assuraance stat
statement
ement 64
This is our tenth Royal Mail Group Corporate Responsibility Report. It covers
our UK operations and includes performance data for the financial year
2011-12. Given the significant improvements that we have made to our
corporate responsibility strategy, the Report also contains reference to events
that have taken place outside of the reporting period. Where that is the
case, we make it explicit. Our last report was published in January 2012 and
covered the financial year 2010-11.
On 1 April 2012, Royal Mail Group and Post Office Limited became sister
companies. We have sought to separate out as much Post Office Limited
data as possible in this Report. However, as Post Office Limited was part of
Royal Mail Group up until the end of the financial year 2011-12, financial
data includes Post Office Limited. In addition, the environmental data we
have disclosed includes our Post Office Limited footprint. Our UK operations,
including Post Office Limited, accounted for over 90 per cent of our employee
base and 84 per cent of our revenues in 2011-12. All other data excludes
Post Office Limited.
Royal Mail Group Royal Mail Group
Corporate Responsibility Report 2011-12 Corporate Responsibility Report 2011-12
Foreword Foreword
Foreword by
Moya Greene, our CEO
Sound footin
footing
g The BITC Index is one good way of assessing the strength of our Our direct economic impact is supported by our active community
sustainability programme. I’m pleased to say that we achieved investment programme. During 2011-12, Royal Mail contributed
I am
am pl
pleased
eased tto
o sa
sayy that
that R
Rooyal Ma
Mail
il has made good progr progresesss in
Platinum, the highest ranking, for the first time in 2012, scoring 96 £10.4 million to charities, good causes and schemes for
our journey tto
owarards
ds sustained profitabilit
profitabilityy. Our new busbusines
inesss
per cent; up from a Silver ranking (87 per cent) in 2010. disadvantaged groups. In addition, our colleagues raised £3 million
strategy is delivering. Our Group
stra Group opera
operating pr ofit1 mar
profit marggin
for many good causes across the country. In fact, the payroll
has improved
improved toto 2.2 per ccent
ent fr
from
om 0.4 per ccentent llast
ast year
year.. The
Our new Corporate Balanced Scorecard, launched in 2011, is generosity of my colleagues has earned us a Guinness World Record.
busines
businesss is cash positive ffor
or the fir
first
st time in ffour
our year
years.
s.
fundamental to our achieving sustained profitability and safeguarding Since 1989 we have donated more than £45 million to 975 charities
the Universal Service. The Scorecard supports the implementation and good causes across the UK.
The past eighteen months have marked an important turnaround
and execution of our business and CR strategies as it is linked to
for the Group. One of the key developments has been the successful
managers’ remuneration right across the business. It consists of Among the highlights of the past year was the creation of a new
passage through Parliament of the Postal Services Act 2011, which
four quadrants which each have equal weighting: People, Customer, Charity of the Year programme. This follows a four-year association
received Royal Assent in June 2011. The Act sets a framework within
Performance and Financial. These four areas are integral to achieving with children’s charity Barnardo’s, during which time we raised
which the Group could secure external capital.
our business and CR strategies. £2.6 million. For the first time, Royal Mail has committed to matching
funds raised by colleagues, penny for penny, up to £1 million a year
Another development was the Pension Solution. On 1 April 2012,
Just as we are improving the quality of our financial reporting, we for each of the two years of the Charity of the Year partnership.
just after the year end, almost all of the pension liabilities and
As the sole provider of pension assets of the Royal Mail Pension Plan were transferred to
are seeking to strengthen our sustainability reporting in our annual
Corporate Responsibility Report. This year, we are reporting against
Our people voted for Prostate Cancer UK, from a shortlist of three,
as our first charity partner under the revamped programme. As
HM Government. We are grateful to the Secretary of State and his
the Universal Service colleagues at the Department for Business, Innovation and Skills for
the Global Reporting Initiative (GRI) Index for the first time. Under the
GRI, we have achieved a B+ rating. We will now seek to build on this
part of our ‘everyone’s a winner’ approach, however, we are also
supporting Alzheimer’s Society and Whizz-Kidz as part of this
in the UK, Royal Mail
their commitment to delivering this milestone.
performance in future years. programme, which runs until autumn 2014.
is proud to connect Finally, on 27 March 2012, again just after the year end, we were
pleased with the introduction of a new regulatory framework.
Our ccontribution
ontribution tto
o the ccommunit
ommunityy Outlook
Outlook
customers, companies Our new regulator, Ofcom, recognised that the prior framework
was not appropriate and that there was a very real risk to the
Royal Mail has a long heritage of contributing to the communities
that we serve. We do this primarily through the Universal Service –
We are in a stronger financial position, but much remains to be done.
Our margin is improving, albeit from a very low base. Our strategies
and communities. We sustainability of the Universal Service. The new regulatory approach
provides us with increased commercial freedom, to better position
connecting millions of customers, businesses, organisations and
communities, including those in the most remote rural areas.
and initiatives are geared towards delivering, in time, a more
commercial margin as compared to other successful postal operators.
deliver six days a week us to earn a reasonable return on the services we deliver. This new
approach underpins the regulator’s primary duty and commitment to Our economic contribution to the UK is significant. In 2012, Royal Very few companies face the prospect of continued change on the
to over 29 million safeguarding the Universal Service in the UK. Mail commissioned the Centre for Economics and Business Research
(CEBR) to quantify our impact on the economy. The study found that
scale that we do. I am very grateful for the continued help and
support we have received from HM Government. I also thank our
addresses. We make Our str
stra
ategic ap
approach
proach we make a major contribution. Our core business ranks as the eighth
largest in the UK in terms of our economic footprint. We contribute
union colleagues for their ongoing engagement and constructive
challenge to ensure our success. And, most of all, I would like to
The objective at the heart of our business strategy and our
commerce happen. corporate responsibility strategy is the same – to ensure a sound and
0.4 per cent to the UK’s total Gross Domestic Product (GDP). Including
our wider economic impacts, that figure rises to 0.7 per cent of GDP,
thank all our colleagues across the Group. I know what we are asking
of them is difficult. I am grateful for their continued dedication, hard
sustainable Universal Service for the benefit of everyone in the UK.
amounting to an annual economic contribution of £9.4 billion. work and commitment. They continue to be the main driver of our
Moya Greene To monitor the successful delivery of our business strategy, we have
success as we look towards a secure and profitable future.
Chief Executive Officer launched a new Strategic Framework. The Framework consists of 24
We directly support around 153,000 full-time equivalent (FTE) jobs in
blocks geared towards strengthening our commercial future and, as
the UK. In addition, a further 83,000 FTE jobs are supported through Royal Mail is not just any company. It occupies a privileged position in
a result, the positive contribution we make to the UK’s economy and
our core business in the wider economy, taking the total jobs impact UK society. And with privilege comes responsibility – to our colleagues,
society.
to around 237,000 full-time posts – or 1 per cent of UK employment. customers and communities..
The study also found that for every £1 paid by Royal Mail in wages,
Corporate responsibility (CR) is one of our strategic imperatives.
an additional 57p is generated elsewhere in the economy.
Our objective is to be independently rated as one of the most
responsible companies in the UK, as measured by the preeminent
We are building on our contribution as an employer by supporting
Business in the Community (BITC) Corporate Responsibility Index.
the Government’s campaign for vocational apprenticeships. We have
In addition, many of the other Strategic Framework blocks contain
several new apprentice schemes that aim to get marginalised young
corporate responsibility objectives, including Customer Interaction,
people into the workplace and to launch their careers. We have also
People Engagement, Reputation Management etc. Moya Greene
introduced, for the first time, the Duke of Edinburgh Gold Award
scheme for apprentices on our Engineering scheme.
1
Financial data included in this Report includes Post Office Limited.
04 Royal Mail Group
Corporate Responsibility Report 2011-12
Royal Mail Group
Corporate Responsibility Report 2011-12 05
About Royal Mail About Royal Mail
About Royal Mail
As the sole provider of the Universal Service
in the UK, Royal Mail reaches everyone.
Who we are GLS delivers high-quality parcel and express Transforming Royal Mail Our future Group structure
services as well as value-added logistics We are in the midst of one of the largest The Postal Services Act 2011 set out
As the sole provider of the Universal
solutions throughout Europe. GLS is one transformation programmes in the UK, as the steps Royal Mail must take to secure
Service in the UK, Royal Mail Group Royal Mail Holdings plc
of the biggest ground-based parcel service we adapt a network traditionally focused external investment. We have made good
reaches everyone. We deliver six days a
providers in Europe today. on letters, to one which handles more and progress restoring the Group to financial
week, to over 29 million addresses across
the UK, at affordable and competitive more parcels. Our strategy is to create a stability, obtained significant deregulation and
Royal Mail Group Ltd and Post Office Limited more customer-focused company, run secured European Commission approval for
prices.
became sister companies just after the on commercial lines, where we convert the transfer of almost all of the Royal Mail Royal Mail Group Ltd2 Post Office Limited
reporting date, on 1 April 2012. In January increases in parcel volumes into profitable Pension Plan’s pension liabilities and pension
Royal Mail is a key component of the UK’s
2012, both companies signed a major growth and manage structural decline in the assets to HM Government.
economic and social infrastructure, providing
commercial agreement, which provides letters business. During this transformation,
services to private individuals, companies and
continuity and a close working relationship we are committed to delivering to high Preparations are now under way for the
communities. Our postmen and women are Royal Mail Investments Limited Royal Mail Estates Limited2
over the long term. Quality of Service standards for our sale of Royal Mail Group. Obtaining external
an important part of their local communities.
As a business, we make a major contribution customers across the UK. capital is a key part of the transformation
to the economy, adding 0.7 per cent to the Where we want to be process as we become a more parcels-
Where we are today. We are one of the Transformation means: focused business and make the investment General Logistics Systems B.V.
UK’s total GDP.†
UK’s most trusted brands. We connect • becoming a more customer-focused in technology to do so. The structure and the
Our businesses customers and communities and make company. timing of the transaction is a matter for the
commerce happen. Government. All options are being considered A new regulatory framework Building a commercial future
Royal Mail has a diversified business model • changing our business to become more of and there can be no certainty about the On 27 March 2012, Ofcom introduced a new After years of regulation that kept Royal Mail
– letters, parcels and data. The Group is a parcels business as online retailing keeps
Why we are changing. The UK postal outcome. regulatory framework. Ofcom recognised that tariffs artificially low, we took the difficult but
organised into two main businesses: UK growing.
Parcels, International and Letters (UKPIL) services market has changed dramatically. the previous framework was not appropriate, necessary steps to increase our prices. The
We are transforming our business to succeed • successfully managing the decline in letters. Recent milestones that price controls had failed and that there increase is helping us to earn a reasonable
and General Logistics Systems (GLS).
in one of the most liberalised and competitive • taking every opportunity to become a was a very real risk to the sustainability of rate of return for the work that we do. It is
markets in the EU. 1. Our pension solution
UKPIL processes and delivers letters and successful and profitable business. the Universal Service. also enabling us to accelerate modernisation,
parcels in line with its Universal Service 2. A new regulatory framework ensure our commercial future and drive
Obligation. It is also the leading provider of We are proud to deliver the Universal After the reporting date, in October 2012, We are now able to compete more effectively. growth through investment in IT and
Service. But, it does require a high fixed-cost we confirmed a £75 million, four-year 3. Building a commercial future The new regulatory approach provides us development of the products and services
collection and delivery services for express
parcels through Parcelforce Worldwide. network. The UK postal services market has expansion programme in Royal Mail’s with increased commercial freedoms, to customers most want. However, we recognise
changed dramatically in recent years. Our UK express parcels business, Parcelforce Our pension solution better position us to earn a reasonable how hard any increase is for households
strategy aims to tackle the key challenges Worldwide. The expansion is expected to Our historic pension deficit was a significant rate of return on the services we deliver. and businesses at a time when economic
facing Royal Mail to build a sustainable, create approximately 1,000 new UK jobs. It financial burden. After the reporting date, on However, there are still some challenges conditions are so difficult. For Christmas
diversified business, secure the future of the will enable UKPIL to increase the number of 1 April 2012, following EU State Aid approval, to be addressed. We continue to work with 2012, we offered stamps to people in low-
Universal Service and attract external capital. express parcels it is able to handle by around we transferred almost all of the historic Ofcom to ensure Royal Mail can compete on income households at 2011-12 prices (see
25 per cent each year, in a market estimated pension liabilities and pension assets of the a level playing field. page 25 for more information).
to be worth £5.8 billion annually. Pension Plan to HM Government. This will 2
The UK Parcels, International and Letters (UKPIL)
improve our future cash generation as we
†
According to research undertaken by the business unit is not a separate legal entity and is
complete our modernisation programme. included within Royal Mail Group Ltd and Royal
Centre for Economics and Business Research.
Mail Estates Limited.
06 Royal Mail Group
Corporate Responsibility Report 2011-12
Royal Mail Group
Corporate Responsibility Report 2011-12 07
About Royal Mail About Royal Mail
Our fina
financial
ncial per
perfforma
orman
nce3
Full year
The Grou
Groupp’s ffina
inanc
ncial
ial perf
performa
ormanc
nce
e
continues to
to str
stre
engthen. All our main To 27 March 2011 To 25 March 2012
businesses
businesses ar
are e pr
profitabl
ofitable.
e. Business unit performance £m £m
Key fina
financial
ncial highlights in the year Group external revenue 9,156 9,532
ended 25 March
March 2012
Operating profit after modernisation costs 39 211
• Gr
Grooup opera
operatin
tingg profit
profit af
aftter modernisa
modernisationtion
costs incr
increased
eased frfrom
om ££39
39 million
million ttoo £211 Free cash inflow/(outflow) (213) 234
million
million..
• UKPIL re
returned to to ooper
peraatin
tingg profit
profit af
aftter
modernisation
modernisa tion ccoosts of £2
£233 million
million • Ext
Externa
ernall re
revenues in UKPIL, our ccoore UK Outlo
Outlook
followin
ollowing
g a loss
loss of £120 millmillion
ion in 2011. business,
busines s, incr
increased
eased fr
from
om £
£6.9
6.9 billion
billion ttoo While our fina
While financia
nciall hea
health
lth has impr
improved
oved
£7.2 billi
billion. substantia
substa ntiallllyy over the last 18 months, there there
• The GrGrou
oupp’s over
overaall ooper
peraatin
tingg profit
profit mar
marggin
• UKPIL
UKPIL’’s domestic par
parccel volu
volumes were
were up is still mor
moree to to do. Accommoda
ommodating ting incr
increasing
easing
aftter modernisa
af modernisation
tion ccoosts (befo
(before other
6 per ccent
ent during the year
year.. Traditiona
aditionall letter parccel tra
par traffic is one of the ke key elements
elements of of
oper
peraating ex
excceptiona
eptionall it
items)
ems) incr
increased
eased from
from
volu
olumes decl
declined
ined 6 per ccent.
ent. our pr
progogrramme. It incl includes
udes becomin
becomingg a
0.4 per ccent
ent in the prprevious
evious year ttoo 2.2 per
much moremore cust customer-f
omer-focused
ocused compa
compan ny an and
d
cent. The mar
margin
gin rremains
emains low co compared
mpared ttoo • UKPIL parparccels re
revenue increased
increased 10 per
generaating pr
gener profitabl
ofitablee gr
grow
owthth acr
acros
osss a ra
range
man
ma ny other major posta
postall opera
operator ors.
s. cent ttoo £2.6 bill
billion,
ion, driven b byy str
strong
ong
of new an and existing products.
products. It is abouaboutt
grow
growthth in onl
online
ine reretail
tailin
ing.
g. Re
Revenues at at
Royal Mail being rru un aallong ccommer
ommercia ciall llines,
ines,
External
External rre
evenue a
and
nd vol
volu
umes GLS,
GL S, our ccontinenta
ontinentall EEu uropean
pean parc
parcels
and investing
investing in new new,, vita
vitall ttechnology
echnology as we
• Gr
Grooup externa
externall rreevenue incr
increased
eased 4 per business,
busines s, incr
increased
eased b byy 5 per ccent
ent ttoo
become
bec ome a more more parcparcels-driven business.
business.
cent ttoo £9.5 bill
billion
ion af
aftter two suc
succcessive £1.6
£1 .6 bill
billion
ion..
Henc
encee our need fo for ext
externa
ernall cap
capital,
ital, which
year
earss of decline
decline.. is centr
centraal ttoo our tr traansf
nsforma
ormationtion pr
proogr
graamme
mme..
So too
too is the succ successful compl
completion
etion of our
modernisation
modernisa tion pro
progrgraamme as we become become a
moree efficient aand
mor nd eff
effective
ective or orga
ganisa
nisation
tion in
everyt
ever hing we do.
ything
3
Financial data includes Post Office Limited.
08 Royal Mail Group
Corporate Responsibility Report 2011-12
Royal Mail Group
Corporate Responsibility Report 2011-12 09
Our business strategy Our business strategy
Our business strategy
Case
Our over
overar
arching
ching goal is simpl
simple
e – tto
o bec
become
ome the best study:
Growing our parcel
deliveryy an
deliver and mark
marketing mail busines
businesss in the UK. business
Royal Mail Group is more than just a
UK-focused, letter delivery business.
We are leveraging our capacity,
reach and expertise to grow
profitable revenue streams in parcel
Overv
Overview Being brillia
brillian
nt a
att the bas
basics
ics Building a ccommer
ommercial
cial ffu
uture Driving pr
pro
ofit
fitabl
able
e gr
gro
owth Three
Three point pl
pla
an delivery, among other services.
Royal Mail has a clear
clear tr
tra
ansf
nsforma
ormation
tion We are implementing a fundamental change Alongside modernising our operations comes The third and final part of our business Theree are
Ther are thr
three
ee main parts
parts ttoo our plan.
plan. The Growing our parcels business is a
stra
strategy in plac
place.
e. It is delivering results.
results. in the way we work across our operations. the need to build a commercial future. strategy is to create profitable revenue first two need ttoo ha
first happ
ppen
en at
at the sasame
me time key part of our strategy as we seek
We arare
e addr
addres
essing
sing the strstruct
uctur
ural
al Our modernisation programme is one of Ofcom’s new regulatory approach, announced growth in marketing mail and parcels to to achieve the third
third one – drive pr profitabl
ofitablee to attract external capital.
decline in the tradi
traditional
tional le
lett
tter
erss mark
market the largest of its kind in the UK. The aim of just after the end of the financial year, is counter the decline in the traditional letters gro
gr owth.
by impr
improving
oving efficienc
efficiencyy acro
across our the process is to make our operations more a key step. The new regulatory approach market. Royal Mail Group currently has a
Our parcels business has three
opera
oper ations a
and
nd ada
adapting
pting our networ
network k efficient: increasing productivity, improving provides us with increased commercial £4.2 billion revenue-generating parcels (1) B
Be
e brillia
brilliant
nt a
att the basics networks in the UK: Royal Mail’s
to acc
accommodat
ommodate the ever-incr
ever-increasing
easing the service our customers receive and freedoms. However, there are still some business that includes UKPIL’s Royal Mail
UK parcels operation, Parcelforce
nu
number
mber of par
parccels bein
being g sent. reducing the cost of the Universal Service. challenges to be addressed. We will work UK network, Parcelforce Worldwide and Stay
tay saf
safee at
at all
all times. This is ou
ourr
Worldwide and Royal Mail Specialist
Modernising means improving every aspect with the Government and Ofcom to ensure GLS. Parcels made up 48 per cent of Group top priority.
priority.
Services. Internationally, it has Royal
Our busines
businesss str
stra
ategy has three
three parts:
parts: of our operation: collections, processing, Royal Mail can operate on a level playing revenue across the year. Our UKPIL parcels
Hit our q
qu
ualit
lity tar
targgets. Mail International (which uses Royal
sorting and delivery. It also means reducing field. We are also focused on the significant business grew its revenue by 10 per cent,
Firstly to be brilliant at the basics.
tly,, to basics. Mail’s UK parcels network) and our
the hours it takes to process and deliver the benefits that the new regulatory framework while GLS’s underlying revenue grew by Modernise our opera
operations.
We need to become more efficient and European parcels operator, General
mail. has provided. 4 per cent..
customer focused. This means completing Offer the right products
Offer products at
at the right price
price in a Logistics Systems (GLS).
the automation of our core letters network, changing
cha nging and
and co
competitive mar
markket.
Managing the changing mail is a key The Postal Services Act, passed in June Growing our parcels business is a key
reducing the hours taken to complete These businesses handled 1.2
part of the modernisation programme. 2011, paved the way for the Post Office strategic priority for us. By 2016, online Wor
orkk ttoogether usin
usingg the World Clas
asss Mail
delivery and getting it right first time, every billion parcels over the last 12
Parcels require more space to process and and the Royal Mail Group to become sister retailing is expected to account for 12 per progr
prograamme ttoo mak makee impr
improvements
ovements aand nd
time. months. This represented a 6 per
transport, and demand more customer companies in April 2012. The two companies cent of the UK’s overall retail spend. In drive up safet
safetyy, cust
customer
omer ser
servic
vice,
e, q
qu
ualit
ityy and
and cent increase in UKPIL domestic
interaction on delivery. We are issuing our have signed a major commercial agreement, addition, UK consumers will buy products productivit
productivityy.
Secondly., bu
building
ilding a commercial future volumes and a 3 per cent increase
postmen and women with handheld Postal which provides continuity and a close online from overseas providers, benefiting
puts the onus on us to use the new in GLS volumes. Total parcel
Digital Assistants to provide track and trace working relationship over the long term. both our parcels and international (2) B
Build
uild a commer
commercial
cial ffu
uture
regulatory framework to earn a reasonable revenues for the year stood at
facilities as part of our service offering. As The mutual commercial success of both businesses. Royal Mail Group is well placed
return for the products and services we offer. Fix our financ
finances
es and
and at
attr
tract
act priva
private approximately £4.2 billion, with GLS
at September 2012, more than 47,000 of companies is best served by Royal Mail and to benefit from these growth trends.
Last year, 80 per cent of our mail revenues cap
capita
itall. generating £1.6 billion.
these devices have been deployed during the the Post Office working closely together for Our parcels businesses are best-in-class
were subject to direct revenue control. Today,
modernisation programme so far. We are the benefit of customers. For our revised operators in their respective markets. Build str
strong
ong rreela
lationships
tionships with our unions
unions so
this figure has fallen to less than 10 per cent. Looking forward, we need to
expecting operational front-line productivity Group structure, see the diagram on page 7. toget
ogether
her we wor
workk ttoo ac
achieve
hieve our p
pla
lan
n. continue to improve customer
improvements of around 2 to 3 per cent We are also developing our marketing mail
Thirdly, we are continuing to respond to experience and increase cost
this year as we continue our modernisation business, which contributed £1.1 billion in Build on our strong
strong bra
brand and
and reputa
reputation.
tion.
changing customer needs, building the efficiency across all our parcel
programme. revenues in 2011-12. The new business,
business outside our traditional revenue businesses. Our strategy is to
MarketReach, was launched in July 2012. (3) Drive pr
profitabl
ofitable
e gr
grow
owth
th
streams to dr
drive
ive profitable growth.
growth. W Wee ar
aree maximise profitable revenue growth
Utilising our own assets, and with the
developing our parcels, marketing mail and Grow
Grow our parc
parcels busines
businesses
ses aand
nd by utilising our multi-network
support of several partners, it offers a
data propositions to contribute to the future provide
provide premier
premier le
letter ser
servic
vicees. parcels platform in the most
full service solution for businesses, large
success of a financially stable, diversified competitive markets. We are also
and small, covering creative development, Grow our rreevenues b
Gro byy sell
selling
ing new aand
nd
Royal Mail. continuing to focus on our presence
production, distribution and customer data improve
improved
d mark
marketing mai
maill servic
services
es.. in the business-to-business market,
management for advertising mail.
Launch new servic
Launch services
es fo
for busines
businesses
ses and
and which is closely linked to GDP
consu
onsumer
merss. growth.
10 Royal Mail Group
Corporate Responsibility Report 2011-12
Royal Mail Group
Corporate Responsibility Report 2011-12 11
Our CR strategy Our CR strategy
Our CR strategy
The objective at the heart of our business strategy
and our corporate responsibility strategy is the
same – to ensure a sound and sustainable Universal
Service for the benefit of everyone in the UK.
Our foundations Our Strategic Framework • Safety – to provide a safe working Our Chief Executive’s Committee reviewed and Our Corporate Balanced Scorecard
The objective at the heart of our business environment for all employees by approved our revised corporate responsibility
Royal Mail has a long heritage of
strategy and our corporate responsibility continuing to promote a zero accident strategy in November 2011. Progress against
contributing to the communities that we Safety First Class retail
strategy is the same – to ensure a sound and culture. our corporate responsibility targets is reported
serve. We do this primarily through the Quality of Service
sustainable Universal Service for the benefit of • People engagement – to improve our to senior management on a monthly basis.
Universal Service – connecting millions of
customers, businesses, organisations and everyone in the UK. To monitor the successful employee engagement index year on year
communities, including those in the most delivery of our business strategy, we have and drive increased employee satisfaction. Our Corporate Balanced Scorecard
remote rural areas. launched a new Strategic Framework. The The new Strategic Framework helps us
Framework consists of 24 blocks geared Our corporate responsibility objective monitor the successful delivery of our Engagement Net customer
towards strengthening our commercial future business strategy. Our Corporate Balanced satisfaction
Our economic contribution to the UK is The BITC Index is one good way of assessing
significant. In 2012, Royal Mail commissioned and, as a result, the positive contribution the strength of our sustainability programme. Scorecard supports the implementation and
the Centre for Economics and Business we make to the UK’s economy and society. Platinum is the highest Index ranking. Our execution of our strategy as it is linked to
Research (CEBR) to quantify our impact on Each block is underpinned by a measurable aim is to maintain our Platinum ranking in managers’ remuneration. It consists of four
key performance indicator (KPI). The Chief quadrants which are integral to achieving our Customer Customer
the economy. The study found that our core the Index. We achieved this for the first time focus complaints
business ranks as the eighth largest in the Executive’s Committee reviews progress in 2012, scoring 96 per cent; up from a Silver business and CR strategies. The quadrants,
UK in terms of our economic footprint. We against all KPIs on a monthly basis. ranking (87 per cent) in 2010. which each have equal weighting, are:
contribute 0.4 per cent to the UK’s total GDP. People – what our people think of our Process Operating
Including our wider economic impacts, that Corporate responsibility is one of our During the reporting period, we concluded a company. sequencing costs
figure rises to 0.7 per cent of GDP, amounting strategic imperatives. Our objective is major review of our corporate responsibility
to an annual economic contribution of £9.4 to be independently rated as one of the and community investment strategies. The Customer – what our customers think of us
billion. most responsible companies in the UK, as new strategies are aligned to our overall and how we deliver for them.
measured by the preeminent Business in the business strategy: to ensure a sound and
Community (BITC) Corporate Responsibility Performance – how well we are Delivery hours Free cash flow
We directly support around 153,000 full-time sustainable Universal Service for the benefit of modernising our operations, including health reduction
equivalent (FTE) jobs in the UK. In addition, Index. In addition, many of the other everyone in the UK.
Strategic Framework blocks include corporate and safety factors.
a further 83,000 FTE jobs are supported
through our core business in the wider responsibility objectives. Examples of these Our revised corporate responsibility strategy Financial – the financial health of the
economy, taking the total jobs impact to include: focuses on: business.
around 237,000 full-time posts – or 1 per • Reputation Management – to ensure • delivering economic and social benefit to the
Group revenue Group operating profit
cent of UK employment. The study also found Royal Mail is seen as a customer, community communities we serve. The Chief Executive’s Committee receives
that for every £1 paid by Royal Mail in wages, and colleague-orientated company. monthly updates against Scorecard criteria.
an additional 57p is generated elsewhere in • managing our modernisation programme The four quadrants above (People, Customer, Performance and Financial) and their respective KPIs reflect
• Deliver what we promise – to increase responsibly. This is helping to drive responsiveness,
the economy. customer satisfaction and advocacy of Royal accountability and alignment for our
our Corporate Balanced Scorecard for the year 2011-12. As the business changes, we may adapt our
• driving colleague advocacy of the Group and KPIs in future years to reflect changing priorities.
Mail. managers throughout the UK.
Our direct economic impact is supported by its community role.
our active community investment programme. • World Class Mail – to reduce our
environmental impact, our property-related • reducing the environmental impact of our
During 2011-12, Royal Mail contributed business operations.
£10.4 million to charities, good causes CO2 emissions and the amount of waste we
and schemes for disadvantaged groups. In send to landfill. • communicating our management of
addition, our colleagues raised £3 million for • Optimise logistics – to optimise our corporate responsibilities openly and
many good causes across the country. fleet and deliver fuel and energy carbon transparently.
reduction initiatives.
12 Royal Mail Group
Corporate Responsibility Report 2011-12
Royal Mail Group
Corporate Responsibility Report 2011-12 13
Our CR strategy Our CR strategy
World Class Mail WCM is structured into ten technical World Class Mail audits
areas, called pillars. These pillars cover all We rigorously audit the implementation
World Class Mail is a key vehicle
our operational activity, such as people of WCM programmes across the business.
for driving our modernisation
development, the environment and cost Audits can also celebrate the success of all
process through the engagement
deployment. Running in parallel to these ten those involved and help colleagues feel proud
and involvement of all our people in
pillars are ten management criteria. These of the new standards for safety, quality and
continuous improvement. It is delivering
include attributes such as management productivity achieved.
improvements in safety, quality and
commitment and organisational competence.
productivity.
Each of the pillars has seven steps which must
be completed in order to reach World Class
Key facts status.
• 42 mail centres have implemented World
Class Mail. These centres process over
Remuneration Communicating our performance • We matched the best-in-sector scores 90 per cent of our mail, meaning a very The 10 pillars of our World Class Mail programme
Remuneration is linked to the achievement Just as we are improving the quality of our for stakeholder engagement, corporate high percentage of our processing units
of Corporate Balanced Scorecard objectives financial reporting, in addition we are seeking citizenship, corporate governance and fuel have high environmental and safety
for all Royal Mail managers, including the to strengthen our sustainability reporting in efficiency. World Class Mail
standards.
senior leadership team. Senior leaders our annual Corporate Responsibility Report. • We also performed strongly in human • The World Class Mail Manufacturing
with specific responsibilities for strands This year, we are reporting against the Global capital development and operational
Quality Control /Customer Satisfaction
Association has recognised the progress
of our sustainability agenda are assessed Reporting Initiative (GRI) Index for the first eco-efficiency. and achievements of our people at eleven
against their performance in those areas. time. Under the GRI, we have achieved a
Autonomous Maintenance
Professional Maintenance
Workplace Organisation
mail centres – Gatwick, Cardiff, Belfast,
Focused Improvement
People Development
This informs their bonus and remuneration B+ rating. We will now seek to build on this Our progress
Cost Development
Bristol, Glasgow, Leeds, Norwich, Greenford,
package. If the measures contained within performance in future years. The GRI table is
Environment
Maintaining our Platinum ranking in BITC’s Heathrow Worldwide Distribution Centre
Logistics
our Corporate Balanced Scorecard are not on page 56.
Safety
CR Index requires us to execute our CR (HWDC), Edinburgh and North West
met, the size of the potential bonus available strategy very well. We will undertake the Midlands – by giving them Bronze awards.
to all managers is reduced. This system helps Benchmarking our performance following steps:
ensure that Royal Mail rewards performances In 2012, after the reporting period, Royal • Improve our disclosure of independently
and behaviours that will advance our key WCM: safety, quality and productivity
Mail voluntarily completed a Company verified social, ethical and environmental
strategies. World Class Mail is a comprehensive system
Sustainability Assessment based on the performance data in our external reports for step-by-step improvement to safety,
Dow Jones Sustainability Index (DJSI) and communications.
Transparency customer service, quality and productivity. It is
methodology. The DJSI benchmarks Commitment Involvement Communication Understanding Management
• Proactively address any gaps in the CR and one of our Strategic Framework blocks. Development Implementation Evaluation Standardisation Documentation
We publish our Scorecard KPIs both in the companies’ sustainability performance in
sustainability benchmarks where we need with Visibility
Annual Report and Accounts and in our economic, social, and environmental criteria
to improve performance and help drive
Corporate Responsibility Report. In addition, compared with peers from around the world.
change in the business.
we publish our performance internally on a The assessment found that Royal Mail Group
monthly basis on our Groupwide intranet. is positioned amongst the leading companies • Engage with external stakeholders, such
All employees can access this information to globally in sustainability. as non-profit organisations and investors,
see how managers are performing against to improve their understanding of our
• As one of the top-scoring companies in our
approach and performance.
Case study:
their targets. Our approach was shortlisted sector, Royal Mail qualified for inclusion in
by the Chartered Institute of Personnel the 2013 ranking and is among the winners
and Development in 2012 as an example of RobecoSAM’s sustainability distinctions.
of excellence in human resources. The full We achieved a bronze medal. World Cl
Class
ass Mail C
Cha
hampions
mpions
Corporate Balanced Scorecard KPIs are set
out on page 17. • Our overall score of 83 per cent ranks
Royal Mail among the DJSI World member The WCM C Cha
hampion
mpion rrol
olee off
offer
erss staff the ooppor
pporttuni
nitty to
to
scores for our Industrial Transportation take on a ma
take mananageria
geriall ro
role aan
nd become
become exexper
pertt in usin
usingg
sector. WCM. The Cha Champions
mpions helhelpp us ensure
ensure we put saf safet
etyy at
at
the ccentr
entree of ever
everyything we do, and and find the best w waays
to cut down on loslosses
ses aan
nd wwaast
stee.
We rec
received
eived nearly
nearly 900 aapplpplica
ications
tions fr
from
om our peopl
peoplee
to bec
become
ome WCM Cha Champions, for just 60 rol
mpions, for roles
es early
early in
succces
2012. All suc essf
sful
ul aappl
pplica
icants
nts rrec
eceived
eived a tten-week
en-week
regiona
gionall trainin
trainingg pro graamme.
progr
14 Royal Mail Group
Corporate Responsibility Report 2011-12
Royal Mail Group
Corporate Responsibility Report 2011-12 15
Our CR strategy Our CR strategy
Key performance
indicators
Stakeholder engagement Royal Mail is also a participating member of The four quadrants below (People, Customer, Performance and Financial) have equal weighting. Together they are integral to achieving our
At Royal Mail, our relationships and business Our values the Public Sector Ethical Trade Working Group, business and CR strategies. We have disclosed progress against these quadrants throughout the Report.
activities touch millions of people across which promotes the observance of human
the UK. These individuals interact with us in • We work safely rights in European public procurement (see
KPI Measured by Key activities in the year
different ways depending on who they are and • We have a passion to deliver for our page 45 for more information).
what they do. We rely on these individuals to customers People
help us grow as a company and succeed in Anti-bribery and corruption
• We have pride and care about what Safety Number of RIDDORsi per 1,000 people Our Zero Accidents Programme, focusing on road safety risks, and our
the future. Listening and responding to their Following the introduction of the Bribery
we do in the UK businesses. basic programmes on slips, trips and falls, continue to drive down the rate
interests and concerns is therefore essential to Act on 1 July 2011, Royal Mail Group has of accidents across our businesses.
our long-term success. • We work together and treat each strengthened its anti-corruption processes.
other fairly Our anti-bribery policy adopts a strict Engagement An annual survey measuring what our
In common with many businesses, we have zero tolerance policy towards bribery and people think about Royal Mail, including
identified and prioritised issues of importance • We are trusted to succeed corruption. Any breach of this policy, or any leadership and strategic direction. Our inaugural Employee Opinion Survey took place in spring 2012, with a
to individuals and organisations that • We act commercially procedure implementing it, will be treated Customer focus An annual survey measuring how 69 per cent response rate.
influence our success, using a stakeholder- as a very serious matter and may result focused our people are on delivering for
based approach. From this process we have in disciplinary action, up to and including our customers.
defined our key stakeholders as Government, termination of employment and reporting to
Responsible Procurement Policy Customer
regulators, employees, unions, customers, the appropriate authorities.
We work to ensure that we engage suppliers
business partners, suppliers, and the First Class Quality of Quality of Service for First Class retail As part of one of the most comprehensive change programmes ever
that act with respect for human rights. Under
communities where we operate. How we Service products, including force majeureii undertaken in the UK, delivery revisions have taken place in 331 delivery
our new Responsible Procurement Policy, we
address individual stakeholder groups and adjustment. offices across the UK. This is about a more efficient and effective Royal Mail.
require all suppliers to meet the ten principles
include their viewpoints within our business
of the United Nations Global Compact. These Net customer Customer satisfaction scores on a A customer satisfaction questionnaire is completed by approximately 700
processes is covered at relevant points
include provisions against labour abuses, such satisfaction number of issues, including price, business customers per month, helping us to identify key areas for action.
throughout this Report.
as forced labour and child labour, as well as service quality and customer experience.
prohibitions against corruption and bribery. Customer Number of complaints captured by our We continue to take action to focus on redelivery, misdelivery, “Something
Human Rights and Code of Business
With respect to human rights specifically, complaints Customer Service team.iii for You” cards and redirections, with considerable progress in redirections
Standards our procurement policy makes mandatory
Human Rights refers to “the basic rights and and redeliveries.
Principles 1 and 2 of the Global Compact for
freedoms to which all humans are entitled”. all suppliers. Businesses should: Performance
After the reporting period, we launched an
updated Code of Business Standards, in Principle 1: support and respect the Group revenue Group revenues. Price increases were implemented across the business, including an 8 per
October 2012, which provides guidance on protection of internationally proclaimed cent increase for letters in April and May 2011. Traditional letter volumes
a variety of core human rights. In addition, human rights within their sphere of declined by 6 per cent during the year, while UKPIL domestic parcel
influence; and volumes increased by 6 per cent in the same period.
human rights are integrated into all other
relevant Groupwide policies. Principle 2: make sure that they are not Delivery hours Percentage year-on-year reduction Delivery revisions were completed in 331 delivery offices during the year,
complicit in human rights abuses. reduction in the gross hours spent on delivery reducing the gross hours spent delivering mail.
Our new Code of Business Standards (the activities.
Code) is a comprehensive set of standards of Process sequencing Percentage of our mail sequenced into 235 new, refurbished or upgraded processing machines were
behaviour that we expect from our people. It delivery order for our postmen and installed during the year.
is based on our six core values. These reflect women.
the principles, beliefs and aspirations that
guide our behaviour and shape our culture. Financial
The Code aims to help employees understand Operating costs Expenditure before modernisation We continued our modernisation programme in our front-line operations
both what is expected of them and what they and other exceptional costs for our UK and completed the reorganisation of Group central functions.
can expect from Royal Mail. All employees businesses.
have a duty to uphold the standards set out
within the Code. To help employees recognise Group operating Group operating profit before An increase in Group operating profit was generated by necessary price
how the standards apply to day-to-day work profit exceptional items. rises and cost reductions.
situations, the Code also includes tools and
checklists to support them in doing the right Free cash flow Free cash flow excluding Royal Mail We focused on delivering the RMPP transfer, the sale of non-core
thing. Pension Plan (RMPP) deficit payments activities and properties, and working capital management.
and finance leases.
i
Reporting of Injuries, Diseases and Dangerous Occurrences Regulations.
ii
This accounts for the impact of factors beyond Royal Mail’s control, such as floods or the Icelandic volcanic eruptions.
iii
We also provide detailed annual disclosure on customer complaints to our regulator, which is publicly available.
16 Royal Mail Group
Corporate Responsibility Report 2011-12
Royal Mail Group
Corporate Responsibility Report 2011-12 17
CR governance CR governance
CR governance
We aim toto ensur
ensuree tha
thatt cco
orpor
rpora
ate rresponsibilit
esponsibilityy
is int
integr
egral
al tto
o the w
waay we do business
business.
In 2011-12, we tooktook some significan
significant • Matthew Lester, Chief Finance Officer, Commun
ommunica
icattions Action Group
Group
step
stepss to
to int
integr
egraate cco
orpor
rpora
ate is responsible for all financial reportinng The Communications Action Group (CAG)
responsibilit
esponsibilityy into
into the waway we do and core sustainability issues, including considers all issues and events that present a
business.
busines s. C
Co
orpor
rporaate rresponsibilit
esponsibilityy is now procurement. Matthew sits on the Royal good opportunity for the Group or that might
embedded in our governanc
governance e struct
structur ures,
es, Mail Group Board. present a reputational risk. Included within
businesss str
busines straategy,
egy, the KPIs we emplo
employ to this remit is responsibility for shaping Royal
drive our busines
businesss per
perfforma
ormanc
nce
e and
and the Royal Mail Gr
Group
oup B
Bo
oard
ard Mail Group’s corporate responsibility strategy
way in which we rre eward all manager
managerss The Royal Mail Group Board reviewed our and consideration of all issues related to
acros
acrosss Ro
Royal Mail.
Mail . new Group Communications strategy in corporate responsibility, including those that
September 2011. Corporate responsibility are related to Royal Mail’s modernisation
Executive
Executive rresponsibilit
esponsibilityy and community investment are integral to programme. Recent papers tabled to the
• Moya Greene, our CEO, is ultimately the Group Communications strategy and both CAG include a review of our performance
responsible for corporate responsibility. were covered in the September presentation in Business in the Community’s CR Index,
• Mark Higson, Managing Director, to the Board. The Royal Mail Group Board and approval to participate in a Company
Operations and Modernisation, is is also presented with monthly health and Sustainability Assessment based on the Dow
responsible for all Environment strands of safety briefings. Additionally, the Board is Jones Sustainability Index. The CAG meets
our corporate responsibility strategy. Mark regularly informed of progress against the monthly and is chaired by our CEO.
sits on the Royal Mail Group Board. Strategic Framework blocks, which includes
corporate responsibility. En
Envi
virronment Governa
vernan
nce Boa
oarrd
• Shane O’Riordain, Managing Director,
The Environment Governance Board is
Strategy and Communications, is Chief Executive
Executive’’s Commit
mmitte
tee
e responsible for driving our environmental
responsible for shaping and implementing
The Chief Executive’s Committee (CEC) strategy, defining targets and ensuring we
our corporate responsibility strategy,
approved our enhanced corporate deliver performance improvements. The
including our community investment
responsibility and community investment Board meets quarterly and is chaired by the
programme. Group Communications
strategies (in October 2011 and November Director of Logistics, Euan McMurdo, who
provides the secretariat for the
2011 respectively). reports to Mark Higson, Managing Director,
Communications Action Group.
Operations and Modernisation. It consists of
• John Duncan, Director of Human All major corporate responsibility and senior managers accountable for functional
Resources, is responsible for all People community investment initiatives are areas that underpin, or are responsible for,
strands of our corporate responsibility reviewed and approved by the CEC on a environmental performance in relation to
strategy. regular basis. material environmental issues.
• Mike Newnham, Chief Customer Officer, is
responsible for all Customer strands of our
corporate responsibility strategy.
18 Royal Mail Group
Corporate Responsibility Report 2011-12
Royal Mail Group
Corporate Responsibility Report 2011-12 19Transparency Transparency
Transparency
We believe it is important to ensure information
on our performance is comprehensible, and
comprehensive, when possible.
Our agenda The majority of items handled by the Centre Our security team proactively uses any Dangerous dog attacks the attack takes place on private property.
are business mail. We store undeliverable, available information to safeguard the Unfortunately, dog attacks are a hazard faced This means that for postmen and women –
Royal Mail is committed to being open
high-value items of mail for up to four integrity of the postal service. For the first by our postmen and women every working who each have to visit hundreds of private
and transparent with our stakeholders.
months. The majority of items handled at the time, we are releasing data on the team’s day. During 2011-12, there were 3,186 addresses on their delivery rounds every
As a public institution we are legally
57%
Centre have no sale value and, if undelivered, investigation into internal and external dog attacks on Royal Mail people. These day – the legal protection against attacks by
obliged to be open about our operations.
are securely disposed of and recycled. crime. The number of investigations into attacks cause great distress and, in too many dogs is limited. The Langley Report calls on
We also feel it is important to ensure
However, if an item is not claimed, and we external crime remained fairly constant from cases, serious injuries. After the reporting Parliament to repeal current legislation and
information on our performance is
can find no address to which to return it, 2010-11, while there was a slight decrease period, the Group Chairman, Donald Brydon, provide a new statute which removes this
comprehensible, and comprehensive,
and the item has some value, we put it out in the number of new internal crime launched an independent inquiry into the loophole, enabling criminal sanctions to be
when possible.
to auction. All the proceeds, minus a market investigations. prevalence and consequences of dog attacks taken against owners of dogs which attack
rate commission for the auction house, are in the UK. The findings of the inquiry, led by people, wherever the attack takes place.
Freedom of information requests
used to partially offset the considerable cost former High Court Judge Sir Gordon Langley, It also makes two key recommendations
Every day, Royal Mail receives questions We answered 57 per cent of FOI involved in seeking to reunite customers with Mail security 2011 2012 related to Royal Mail, which we are now
requests either in full or in part last year were published in November 2012. The
about diverse aspects of our business. items of undeliverable mail. acting on. These are:
report highlights that the legal sanctions
While we make every effort to respond to Number of prosecutions 312 301
currently available in England and Wales • taking a more robust approach to
all requests fully, this is not always possible. Mail security
Returned letters Full criminal investigations 993 771 when dogs attack people on private property suspension of delivery for any addresses
As a commercial operation, we must decline
We are serious about the security of every into internal crime raised are largely limited. Tougher measures are where dog attacks occur; and
some requests for information since answers The overwhelming majority of all mail items
item of mail we collect and deliver. Our available under existing law against owners
could compromise competitiveness. Nor are we handle are delivered safely to the correct Full criminal investigations 193 194 • actively pursuing legal action – or
security team works round the clock to whose dogs attack people in public places.
we permitted to release any information that address. A very modest proportion prove into external crime raised supporting our people in taking legal action
identify any threats to the network and we But, these sanctions cannot be applied where
would be in breach of the Data Protection to be undeliverable for a variety of reasons – against the owners of dangerous dogs.
Act. In other cases, we do not hold the data outside our control. These reasons include have robust measures in place to deal with
requested. incomplete addresses, recipients who have any breaches.
moved without leaving a forwarding address,
Last year, 604 requests were referred to our and the lack of return addresses. For these Royal Mail Group will prosecute anyone
central Information Rights team. Of those, types of mail, we hold information on the found to be stealing or interfering with mail
236 requests were answered in full and amount of mail processed at the National in England and Wales. The Procurator Fiscal
a further 111 requests were answered in Returns Centre in Belfast. deals with cases in Scotland. In Northern
part. There were 170 requests where the Ireland, this is the responsibility of the Public
information requested was not provided Our National Returns Centre employs Prosecution Service. During 2011-12, 301
because, for example, it would have damaged 140 people dedicated to either returning former employees of Royal Mail Group
commercial interests or breached principles undeliverable items of mail to the sender or, were prosecuted in the UK. There are over
of the Data Protection Act. In another if this is not possible, securely disposing of 150,000 UK employees and the number of
87 cases, the information requested was undeliverable mail. In 2011-12, the Centre prosecutions needs to be understood in this
not held by us. These figures are broadly processed 21.1 million items. That should context.
comparable to those from 2010-11. be set against the total of some 15 billion
inland addressed items of mail we handled in
2011-12.
20 Royal Mail Group
Corporate Responsibility Report 2011-12
Royal Mail Group
Corporate Responsibility Report 2011-12 21You can also read
