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CSR Report 2003
Engaging with our stakeholders
| Corporate Social Responsibility Report 2003 | |
| Stakeholder feedback | |
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Engaging with our stakeholders “I think it is always a losing proposition for companies to tout their morals too much. Having said that, just adhering to the rules is a weak message since the rules are an ethical boundary drawn by someone else.” Regulator (in response to questions on the responsibilities of a defence company) There are many different views on what CSR means for our industry and how we, as a defence company, should manage ethical, social and environmental issues. We want to be open with our stakeholders and understand their views. We are keen to engage in the debate about our role in society and to report our progress on addressing stakeholder concerns. We encourage dialogue and open communication with our stakeholders including employees and their families, trade unions, shareholders, customers, business partners, suppliers, competitors, governments and local communities. Much of this engagement takes place in the normal course of business. We also communicate specifically on our CSR performance through this report, our website and personal contact, both formal and informal. We meet regularly with investors, including the socially responsible investment (SRI) community, to discuss CSR issues. Our sector is seen as controversial by some of these investors. We aim to learn more about their concerns and communicate what we do and how we work. 
In 2003 we became the first defence company to be included in the Dow Jones Sustainability Index. This reflects the progress we have made in communicating our corporate governance performance and responsible business practices.
Several specialist SRI research agencies assessed how well we manage risks arising from environmental, social, employment and ethical impacts. Morley Fund Management improved their rating of BAE Systems’ risk management, policy and practice from level 3 to level 2 as a result of their assessment. The Ethical Investment Research Service (EIRIS) assessment identified strengths, such as our anti-corruption measures and our environmental management system, as well as potential challenges for the Company. We also participated in the first Corporate Responsibility Index launched by Business in the Community, a UK charity. More than 160 FTSE 250 companies participated and we were ranked in the 2nd quintile. This reflects the progress we have made and the improvements we still need to implement. Feedback We welcome feedback on any of the issues covered in this report. Comments can be sent to csrfeedback@baesystems.com. “Your CSR policy seems to be well thought through but you have not stated any procedures by which you attempt to fulfil your commitments. If you do not act on your principles how can you claim to uphold them?” Gareth Hume, by email Issues raised Many of the issues raised by our stakeholders relate to our particular responsibilities as a manufacturer of defence equipment. While issues such as regulatory compliance, ethical business conduct and product stewardship are important to all business sectors, the nature of our products means that responsible management is particularly essential. We strive to meet all regulatory requirements and have internal procedures to ensure compliance. Ethical business conduct is fundamental to BAE Systems and the standards we demand of our employees are detailed within our Ethics Policy (see below). Managing CSR Social, ethical and environmental issues are important to our business performance, posing both risks and opportunities. It is essential that we manage these issues well. BAE Systems’ Operational Framework includes our business principles, code of behaviour, detailed corporate governance policies and policies governing CSR issues. It is regularly reviewed, with the next update scheduled for 2004. Our management structure has clear responsibilities through operational line management on business integrity, people issues, safety, health and the environment and community, reporting through the Chief Executive to the Board of Directors. Complementing this structure, we have the necessary systems to ensure flight, explosive and nuclear safety. These involve line-management and our relevant technical experts. Effective management starts with the senior management team that provides strong leadership and is clearly accountable. Our Operational and Risk Management Frameworks control the group’s activities and are underpinned by requirements on behaviour, ethics and policy compliance. We are transparent about our business performance and publish a detailed report to shareholders. We also publish annual and half yearly accounts that are available on our website. Ethics Policy “Arms are perfectly legal and necessary, but the company making and selling them has to have principles. The more dangerous your products, the more important it is to have values and principles.” Human rights campaigner We have an Ethics Policy governing our operations in the US and UK. This sets out the standards of behaviour we expect employees to meet in their work and dealings with each other, customers and our stakeholders. During 2004 this policy will be extended to cover our Australian operations. Employees in the US and UK can discuss ethical concerns, get advice or report possible breaches of our standards via an independent hotline. In 2003 the US hotline received 167 calls, primarily relating to human resource issues and grievance procedures. The UK hotline received 39 calls in 2003, of which two-thirds related to human resource issues. An Ethics Review Committee of senior executives meets quarterly to review details of all contacts with the hotline and ensure that action is taken to resolve issues where necessary. The Committee is chaired by the Audit Director, who monitors compliance with the policy. Ethical business conduct policy In all aspects of doing business, we will behave ethically. What do we mean by behaving ethically? Each of us has an idea of what ethical behaviour means in our daily lives. In our work for the company, behaving ethically means:
Product Stewardship Ensuring that our products are safe to use is a key responsibility. We also need to make weapon systems as accurate as possible, and minimise the potential impact of our products on the environment. Our managing directors are responsible for implementing our product safety policy in their Business Units, by setting up product safety management systems. Product safety is a key responsibility of the Engineering Council led by our Chief Operating Officer, Mark Ronald. A Product Safety & Environmental Focus Group has been set up with representatives from each major business. The group provides specialist advice on product safety management, raises awareness of product safety issues and regulation, and promotes the spread of good practice across the company. This includes providing training material on product safety for the Engineering Developing You framework and organising regular Product Safety Forums for employees. We aim to design products that are safe to handle and transport. For example, RO Defence, a BAE Systems company, has developed a range of insensitive munitions, using new explosives that are significantly less likely to explode in an accident. Lead used in ammunition can harm the environment and pose a risk to people. Our RO Defence site at Radway Green is developing lead-free ammunition which will be available in 2005. There have been concerns that the use of depleted uranium in weapons may cause harm. In 2003, we stopped using depleted uranium in our products. Our depleted uranium manufacturing facility at Featherstone is being decommissioned in compliance with UK standards. |
