BAE Systems plc · LSE:BA.

BAE Systems — ESG Presentation (October 2022)

76 slides from BAE Systems's sustainability presentation, Oct 18, 2022

Slide 2: Cautionary Statement
2 Cautionary Statement Forward-Looking Statements All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding the financial condition, results, operations and businesses of BAE Systems and its strategy, plans and objectives an
Slide 3: Agenda
3 Agenda ESG - Part 1: 13:00-14:15 • Welcome Sir Roger Carr – Chairman • Case for defence & board overview Sir Roger Carr – Chairman • ESG committee overview Jane Griffiths – Chair of ESG committee • ESG progress against targets Charles Woodburn – CEO • ESG looking forward Karin Hoeing - Group ESG,
Slide 5: Defence and Cyber – helping governments fulfil their primary responsibility
5 Defence and Cyber – helping governments fulfil their primary responsibility Protecting the country and its citizens Acute threat environment – protection offered by defence to wider society provides the basis for sustainability We at BAE Systems Invest in education and Support NATO and Are valuabl
Slide 6: Bringing our Purpose and the Case for Defence to life
6 Bringing our “Purpose” and the “Case for Defence” to life Generate significant Invest in education and skills Are valuable contributors to our economic value to develop and maintain critical skills communities • 2020 - £10bn UK GDP contribution – c.£4bn • 1,100 UK apprentices recruited this year •
Slide 7: Board Level – Corporate Governance Overview
7 Board Level – Corporate Governance Overview Board Stakeholders Committees • Chairman • Remco RemCo Shareholder Contact • CEO / Executive • Informal Board Dinners Nicole Piasecki Government Contact • Regular dialogue with Senior ministers and Political Officials in the UK, US, Australia, KSA and Qa
Slide 8: Board Information - from November 2022
8 Board Information - from November 2022 Independent Non-Executive Directors All Directors - Board Diversity -Board Diversity • Multi- National company leaders • Engineering & Operations 36% Diverse and 50% • Finance Relevant Skills • Artificial Intelligence 50% 64% • Strategy and HR Female Male Fem
Slide 9: Succession Planning – key points
9 Succession Planning – key points • Chair-designate appointed and joins board 1st November – Cressida Hogg Non-Executives • 1 new Non-Executive to join 1st November – Lord Mark Sedwill Succession planning and developing executives a top priority for the Board: • Focusing on an improved balance of a
Slide 10: Board ESG Summary
10 Board ESG Summary ESG important to the Board and company as a whole – progressing well and on track to meet ambitions Long term evolving commitment pan business – critical to recruitment & retention Management committed to putting BAE Systems at the forefront - incentivised to do so – in LTIPs fr
Slide 12: ESG Committee
12 Membership : • Jane Griffiths (Chair) ESG Committee • Nick Anderson • Crystal Ashby • Nicole Piasecki • Chris Grigg (retired from Committee June 2022) The focus for the ESG Committee during 2022 has been: • Assuring the company maintains strong and robust standards of governance • Oversight of: •
Slide 13: ESG & Board Employee Engagement – activity to date 2022
13 ESG & Board Employee Engagement – activity to date 2022 ESG Committee has reviewed safety & wellbeing, Hear from executives on employee matters such Senior diversity & inclusion, environment (net zero), safety, wellbeing, D&I and company decisions that Executives community investment. could impac
Slide 15: ESG integrated into all we do
15 Our vision is to be the premier international defence, ESG integrated into all we do aerospace and security company Our mission is to provide a vital advantage to help our customers protect what really matters Sustainability integrated through Group Strategic framework and core company processes
Slide 16: A responsible defence company
16 A responsible defence company Environment Social Governance How efficient are companies at How do we treat our employees, How are companies managing current & managing natural resources and customers, supply chain, communities future ESG risk? impacts and other stakeholders? Carbon Carbon Corpora
Slide 17: A re-cap – Our Commitments
17 A re-cap – Our Commitments Environment/Net Zero Social Governance UN ‘Race to Zero’ Diversity & Inclusion • 30% women by 2030 (UK) Commitments • Progress Net Zero program, • Exiting white phosphorus • 25% by 2025 female representation embedding into financial on EC • Progressing Real Living Wage
Slide 18: Environment/Net Zero
18 Environment/Net Zero* 2019 2020 2021 C B- B • Reduced CO2 emissions inline with 2030 Net Zero target • 40% of our UK and US sites (incl. manufacturing) using renewable energy • Recycled 83% of waste and 16% of water in 2021 across operations. Zero waste to landfill across Air UK sites since Augus
Slide 19: Social – Safety & Wellbeing
19 Social – Safety* & Wellbeing • Improved (reduced) recordable injuries across all sectors • Focused safety programmes driving improvements through 2021 Leadership engagement and safety reviews key element of 2022 objectives • All-employee safety training scheduled for 2022 with a learner centred a
Slide 20: Social – Diversity, Equity & Inclusion
20 Social –Diversity, Equity & Inclusion * • Increased female representation across all levels and functions; overall 22.6% • Roadmap in place to drive systems integration & accelerate pace • Named a ‘Best Place to Work for LGBTQ Equality’ by the Human Rights Campaign’s Corporate Equality index • Mo
Slide 21: Social – Community, Skills & Education
21 Social – Community, Skills & Education • Strong support through pandemic in local communities and through national programmes • ~ 4,000 young people in learning in the UK in 2021 • Flagship apprentice programmes in UK, KSA and Australia • 1000 applicants for RAF and RN ‘Coding Success’ • Focus on
Slide 22: Governance, Transparency & Disclosure
22 Governance, Transparency & Disclosure* • Maintained MSCI Leader rating • Top quartile in Transparency International Anti Corruption Index • Recognition/proactive engagement from Rating Agencies • Real Living Wage accreditation implementation • Intention to exit smoke mortars containing white phos
Slide 23: Challenges and changes – complex and conflicting stakeholder agendas
23 Challenges and changes – complex and conflicting stakeholder agendas • Conflict in Europe – customers responding to elevated threat environment • Perception of defence – impact of exclusion funds, generational perspectives • EU Taxonomy • Geo-political and economic tensions Gen Z Social Media • E
Slide 25: 4 key themes
25 ESG Agenda evolving and progressing ‘We serve, supply and protect those who serve and protect us, in a corporate culture that is performance driven and values led’ • Environmental stewardship Addressing climate risks • Net Zero Scope 1 &2 • Biodiversity & nature Defence and Cyber: • Innovation in
Slide 26: Engaging our stakeholders
26 Engaging our stakeholders • Strong global narrative • Supporting our purpose & strategy • Excite & involve employees • Integrate into business processes • Defence sector collaboration to drive reputation • Define our role in national agendas • Through collaboration leverage partnerships • Communi
Slide 27: Looking Forward
27 Looking Forward 2022 2023 Progress Net Zero (Scope 1 & 2), site/sector roadmaps, milestones and underpinning 5 year financial plan Establish baseline for Scope 3 (product & supply chain) Deep dives & feasibility assessment of green technology Develop social impact framework (Group Level) Extend t
Slide 28: ESG Case Studies - Bringing our ESG agenda to life
28 ESG Case Studies - “Bringing our ESG agenda to life 1. Addressing Climate Risks • Portsmouth Naval Base 2. Ideas Innovation and Technology • Electrification capability 3. Creating Opportunities for people • Education and skills 4. Future programmes and how ESG fits • Tempest © 2022 BAE Systems. A
Slide 30: Portsmouth Naval Base reducing energy usage and partnering with our customer
30 Portsmouth Naval Base reducing energy usage and partnering with our customer © 2022 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark.
Slide 31: Environmental / Climate management
31 Environmental / Climate management • Green energy sourcing & generation • Designing for environment - state of the art facilities San Diego, CA Samlesbury, UK • Reducing energy use • Site /facility consolidation Austin, TX Cedar Rapids, IA • Technology • Partnering & collaboration Huntsville, AL
Slide 33: Advancing sustainability through electrification across domains
33 Advancing sustainability through electrification across domains Land Maritime Air • Global leader with 25 years of experience • Expanding our clean energy footprint to the • Uniquely positioned in commercial air delivering electric drive systems for hybrid and waterways with electric hybrid, batt
Slide 34: Commercial pathway to zero
34 Commercial pathway to zero – no matter where transit operators are today Near zero – hybrid Full zero REAL Series-E Series-ER Series-H Series-EV Electric Accessories Electric Hybrid Electric Range Hybrid Fuel Cell Electric Battery Electric Our systems are platform agnostic supporting incorporatio
Slide 35: Electrifying the future of aviation
35 Electrifying the future of aviation • Focused on integration of flight controls, power conversion and energy storage technologies into one optimized system • Developing operational prototypes of hybrid- and all-electric systems • Reliably demonstrate performance – across the life cycle • Energy m
Slide 36: Taking hybrid electric propulsion airborne
36 Taking hybrid electric propulsion airborne • Partnered with General Electric and Boeing on the NASA Electrified Powertrain Flight Demonstration (EPFD) project • Objective is to accelerate and introduce Electrified Aircraft Propulsion (EAP) technologies into US aviation fleets • EPFD project inclu
Slide 38: Enabling the combat vehicle force of the future: Hybrid Electric Drive
38 Enabling the combat vehicle force of the future: Integrating Hybrid Electric Drive (HED) technology • HED Systems are essential for a modernized combat vehicle fleet “It is amazingly quiet …. All weapons up, all sensors up, [you can and to meet next-generation vehicle requirements have] seven hou
Slide 39: Electrification is contributing to meeting sustainability goals
39 Electrification is contributing to meeting sustainability goals • Leveraging our know-how, and collaborating with others effectively to make significant advances across land, maritime and air domains • Platform agnostic – supporting our customers’ ambitions across the defense and commercial marke
Slide 41: Supporting skills and education
41 Supporting skills and education Education Programme Schools Roadshow Coding Success STEM Ambassadors Work Experience © 2022 BAE Systems. All Rights Reserved. BAE SYSTEMS is a registered trademark.
Slide 42: Supporting skills and education
42 Supporting skills and education Apprenticeships 95%+ of our apprentices Achieved outstanding rating from complete their course (30% above Ofsted in October 2021 national average). External award wins including: • Princess Royal Training c.3000 apprentices in training, • National Apprenticeship wi
Slide 43: Supporting skills and education in Australia and Saudi Arabia
43 Supporting skills and education in Australia and Saudi Arabia Australia • Creation of a Digital Diploma with Flinders University to upskill our naval shipbuilding workforce on new digital skills; launched in 2019; won national award in 2021 • System engineering apprenticeship model approved at fe
Slide 45: ESG running through the business - Tempest
45 ESG running through the business - Tempest • Technology, defence and multi-nation partnerships • Programme is continually looking to; • develop innovative technologies in collaboration with the supply chain • deliver critical sovereign defence capability for our customers • value and develop its
Slide 46: Closing thoughts
46 Closing thoughts • Defence and Security required for a free and prosperous society • Growing democratic mandate in many countries to increase defence spending in light of elevated threats • Strength of NATO and Nuclear deterrent evident and critical • Defence and security underpins broader ESG ob
Slide 50: Our Purpose
50 Our Purpose At BAE Systems we serve, supply and protect those who serve and protect us, in a corporate culture that is performance driven and values led. We have an important role in society because we: Help our customers to provide security Develop cutting-edge technologies Contribute to the eco
Slide 51: Key ESG data
51 Key ESG data Social Environment Social Health and Safety Scope 1, 2 and business flights from Scope 3 Total Community Investment Programme Decisions (£m) 800 1,400 emissions (ktCO2e) 12 1,200 10 600 Scope 3 1,000 8 400 800 Scope 1 & Scope 2 6 600 200 4 400 200 2 0 0 0 2016 2017 2018 2019 2020 202
Slide 52: Key ESG data
52 Key ESG data People Description 2017 2018 2019 2020 2021 Number of employees ¹ 76,000 78,000 79,000 81,000 82,000 Percentage of women employees ¹ 21 21 22 22 22 Percentage of women on the Board 36 36 33 27 36 Percentage of women senior managers ¹ 14 17 18 20 22 1. Excluding share of equity accoun
Slide 53: Key ESG data
53 Key ESG data Community Description 2017 2018 2019 2020 2021 Total community investment programme donations 11 11 11 10 11 Health and Safety Description 2017 2018 2019 2020 2021 Recordable accident rate (per 100,000 employees) 564 471 470 485 496 Major injuries recorded 28 37 38 37 33 Fatalities 0
Slide 54: Key ESG data
54 Key ESG data Environment (tonnes CO2e) Description 2017 2018 2019 2020 2021 Scope 1 CO2e emissions 525,032 492,673 480,932 151,190 142,241 Scope 2 CO2e emissions (market-based) 592,745 533,031 517,035 413,434 232,856 Scope 2 CO2e emissions (location-based) 582,411 514,187 484,504 336,207 268,735
Slide 55: External Recognition and engagement - examples
55 External Recognition and engagement - examples Rating Agencies/Indices Recognition • MSCI ESG Ratings – AA (leadership rating) since 2019 • Human Rights Campaign Foundation’s 2022 Corporate • Sustainalytics – Top 25% of A&D Companies Equality Index Best Places to Work for LGBTQ+ • Responsibility
Slide 57: Our economic contribution
57 Our economic contribution We have a significant role in helping to keep our country safe and it's something we're extremely proud of. But our impact in the UK goes far beyond defence - we also play a key role in society by helping to grow the UK's national and regional economy and boost prosperit
Slide 58: Our contribution in Barrow-in-Furness
58 Our contribution in Barrow-in- Furness • Key findings from our Social impact report 2020/1 : • 350+ STEM Ambassadors delivered 88 STEM activities that benefited more than 7,000 people at 74 different schools and colleges. These activities included: • Key Stage 1-4 Science, Technology, Engineering
Slide 59: Our contribution in Barrow-in-Furness
59 Our contribution in Barrow-in- Furness’ Key findings from our Social impact report 2020/1 Working with local partners, we successfully applied for government funding towards the creation of a £10.4m Barrow Learning Quarter, with a further £1m of support from us in the next three years. • Sponsore
Slide 60: Controversial Weapons
60 Controversial Weapons Weapon/capability Current BAE Systems position Cluster munitions We do not manufacture or sell cluster munitions banned under the terms of the Convention on Cluster Munitions (Oslo Convention) Anti-personnel mines We do not manufacture or sell Anti-personnel mines banned und
Slide 61: Controversial Weapons Nuclear capability
61 Controversial Weapons Nuclear capability Current BAE Systems nuclear involvement We do not provide or manufacture nuclear weapons: • We are building the Royal Navy’s new Dreadnought submarines which will provide the UK’s continuous sea deterrent for decades to come. We are not involved in manufac
Slide 62: Controversial Weapons Autonomy
62 Controversial Weapons Autonomy Current BAE Systems position • There are a clear range of benefits to unmanned systems. • We are developing a range of autonomous systems and future concepts to enable naval, land and air forces to carry out a diverse range of roles including attack, electronic warf
Slide 63: Sustainability integrated in to governance & operations
63 Sustainability integrated in to governance & operations Board of Directors • The sustainability standards are set at the Group and embedded in ESG Committee Group policies defined within our Operational Framework. Executive Committee • The Sectors are responsible for aligning customer requirement
Slide 64: Governance and Standards
64 Governance and Standards • Our compliance and ethics programme is embedded into our Governance Framework. • The Operational Framework sets out our values, global policies and processes and delegated responsibilities. • The OF includes a Code of Conduct, Responsible Trading Principles, Internal Co
Slide 65: Key Compliance Policies within the Operational Framework
65 Key Compliance Policies within the Operational Framework • Advisers Policy • Lobbying and Political Donations Policy • Community Investment Policy • Offset Policy • Conflicts of Interest Policy • Procurement Policy • Export Control Policy • Product Trading Policy • Facilitation Payments Policy •
Slide 66: Advisers Policy
66 Advisers Policy • Covers appointment and management of third parties engaged to influence, promote or assist our sales and marketing efforts or the strategic development of the Company. • Appointment managed by central Business Conduct Compliance/International Compliance Team. • All Advisers asse
Slide 67: Approach to Trade Controls and Sanctions
67 Approach to Trade Controls and Sanctions • The Company operates in the highly regulated Defence sector. • Even before any consideration of sanctions compliance, there are existing limits on where and with whom the Company can conduct business, such as arms embargoes regulated by the export contro
Slide 68: Approach to Trade Controls and Sanctions
68 Approach to Trade Controls and Sanctions • The Company has a clear management commitment to compliance with trade control laws and regulations and various policies in place to make informed decisions, including: • Pursuit of Export Opportunities Policy: BAE Systems operates a clear decision-makin
Slide 69: Approach to Trade Controls and Sanctions
69 Approach to Trade Controls and Sanctions The Sanctions – Parties and Transactions Screening Procedure mandates sanctions screening: • The Company uses an established sanctions screening tool provider. • Tool searches inputs against a wide range of sanctions lists, other official lists and other e
Slide 70: Response to escalation in sanctions after Russian invasion of Ukraine
70 Response to recent escalation in sanctions related activity as a result of Russian Invasion of Ukraine • Primary response is to continue screening parties and transactions per our Export Control processes, monitor any changes and escalate as required • Enhanced focus on any possible Russia-relate
Slide 71: Product Trading Policy
71 Product Trading Policy • To identify Responsible Trading Risks the Product Trading Policy requires an evaluation on all Products and Trading activities, in line with the Responsible Trading Principles. The process ensures that in addition to commercial assessment, consideration is given to wider
Slide 72: Product Trading Policy
72 Product Trading Policy Evaluation considerations • Does the product fulfil its intended purpose and match the customer’s stated requirement? Policy Applicability • Does the product conform to our product safety policy? When & how to evaluate • Is the product able to distinguish planned from unint
Slide 73: Defence contracting in our primary markets
73 Defence contracting in our primary markets • US contracts either with US DoD or other government agencies • Defence exports subject to • FMS via the US DoD stringent export licence • With other US defence primes (Lockheed, Northrop, Boeing etc) regimes from exporting nations and on component • UK
Slide 74: Ethics Programme
74 Ethics Programme Global Code of Conduct – externally benchmarked, reviewed and updated every 3 years Independent ethics helpline providing 24/7, local language access for employees, suppliers and others working on our sites. Network of over 200 Ethics Officers including, currently, 75 in the US,
Slide 75: Training
75 Training • On induction all employees receive a suite of training including Code of Conduct training, anti-bribery and corruption and trade controls awareness training. • All employees undertake annual face to face Code of Conduct refresher training on ethical issues in the workplace • Depending
Slide 76: BAE Systems IR Contacts
BAE Systems IR Contacts Martin Cooper – Group IR Director General inquiries: Martin.s.cooper@baesystems.com investors@baesystems.com +44 (0) 1252 383455 +44 (0) 1252 383040 Barron Beneski - VP Investor Relations (North America) Barron.beneski2@baesystems.com 571-479-9492 (US) Jennifer Bowden – Inves

BAE Systems — ESG Presentation (October 2022) on 6ix

BAE Systems — ESG Presentation (October 2022)

Slide 1: ESG Update & Digital Intelligence Overview

Slide 2: Cautionary Statement

Slide 3: Agenda

Slide 4: Sir Roger Carr, Chairman

Slide 5: Defence and Cyber – helping governments fulfil their primary responsibility

Slide 6: Bringing our Purpose and the Case for Defence to life

Slide 7: Board Level – Corporate Governance Overview

Slide 8: Board Information - from November 2022

Slide 9: Succession Planning – key points

Slide 10: Board ESG Summary

Slide 11: Dr Jane Griffiths, Chair of ESG Committee

Slide 12: ESG Committee

Slide 13: ESG & Board Employee Engagement – activity to date 2022

Slide 14: ESG - Progress made in last 12 months

Slide 15: ESG integrated into all we do

Slide 16: A responsible defence company

Slide 17: A re-cap – Our Commitments

Slide 18: Environment/Net Zero

Slide 19: Social – Safety & Wellbeing

Slide 20: Social – Diversity, Equity & Inclusion

Slide 21: Social – Community, Skills & Education

Slide 22: Governance, Transparency & Disclosure

Slide 23: Challenges and changes – complex and conflicting stakeholder agendas

Slide 24: Karin Hoeing

Slide 25: 4 key themes

Slide 26: Engaging our stakeholders

Slide 27: Looking Forward

Slide 28: ESG Case Studies - Bringing our ESG agenda to life

Slide 29: Addressing Climate Risks

Slide 30: Portsmouth Naval Base reducing energy usage and partnering with our customer

Slide 31: Environmental / Climate management

Slide 32: Ideas Innovation and Technology

Slide 33: Advancing sustainability through electrification across domains

Slide 34: Commercial pathway to zero

Slide 35: Electrifying the future of aviation

Slide 36: Taking hybrid electric propulsion airborne

Slide 37: Aircraft electrification

Slide 38: Enabling the combat vehicle force of the future: Hybrid Electric Drive

Slide 39: Electrification is contributing to meeting sustainability goals

Slide 40: Creating opportunities for people

Slide 41: Supporting skills and education

Slide 42: Supporting skills and education

Slide 43: Supporting skills and education in Australia and Saudi Arabia

Slide 44: Future programmes – Integrating ESG

Slide 45: ESG running through the business - Tempest

Slide 46: Closing thoughts

Slide 47: Q&A - ESG

Slide 48: Break (20 minutes)

Slide 49: Supplementary Information

Slide 50: Our Purpose

Slide 51: Key ESG data

Slide 52: Key ESG data

Slide 53: Key ESG data

Slide 54: Key ESG data

Slide 55: External Recognition and engagement - examples

Slide 56: BAE Systems and the UN SDGs

Slide 57: Our economic contribution

Slide 58: Our contribution in Barrow-in-Furness

Slide 59: Our contribution in Barrow-in-Furness

Slide 60: Controversial Weapons

Slide 61: Controversial Weapons Nuclear capability

Slide 62: Controversial Weapons Autonomy

Slide 63: Sustainability integrated in to governance & operations

Slide 64: Governance and Standards

Slide 65: Key Compliance Policies within the Operational Framework

Slide 66: Advisers Policy

Slide 67: Approach to Trade Controls and Sanctions

Slide 68: Approach to Trade Controls and Sanctions

Slide 69: Approach to Trade Controls and Sanctions

Slide 70: Response to escalation in sanctions after Russian invasion of Ukraine

Slide 71: Product Trading Policy

Slide 72: Product Trading Policy

Slide 73: Defence contracting in our primary markets

Slide 74: Ethics Programme

Slide 75: Training

Slide 76: BAE Systems IR Contacts