Victoria : ESG Report 2023

Environmental, Social and Governance Report 2023

www.victoriaplc.com

stock code: VCP

Environmental, Social and

Governance Report

OVERVIEW

Victoria advocates sustainable practices, prioritising waste reduction, operational efficiency, and the well-being of our workforce as fundamental pillars of our success as a Group.

Our commitment to sustainable operational improvements has played a pivotal role in driving the growth and advancement of our business. An excellent recent example of this is the consolidation of part of our Balta acquisition into our UK carpet manufacturing and logistics operations (see adjacent box).

OUR APPROACH TO ESG

We continue to develop our Environmental, Social and Governance (ESG) strategy to ensure that sustainability issues are effectively managed, data collection is streamlined, and progress reporting is cohesive throughout the entire Group. In FY24 we will establish a set of ESG targets, and Key Performance Indicators (KPIs) to showcase how we will measure performance over time, that we expect to publish in our next Annual Report. This year's report references the primary ESG challenges that we first detailed in the 2022 Annual Report and discusses our ongoing achievements in the current year against them.

The achievements detailed throughout this year's report demonstrate that we continue to make significant progress and in line with our reporting requirements we will include the necessary Task Force on Climate related Financial Disclosures (TCFD) in next year's Annual Report. This disclosure will include some of

the targets and key performance indicators (KPIs) for the significant ESG topics. The robust action plans we are developing seek to ensure the successful achievement of these targets, whilst remaining true to the group's wider business strategy that delivers our ongoing success.

CONSOLIDATION OF OUR BALTA CARPET MANUFACTURING & DISTRIBUTION

In the past we've previously detailed how the consolidation of our UK carpet operations has been done in such a way that we have been able to make more carpet at a higher quality with less waste and lower overheads.

Using the knowledge gained from these previous integrations we are now in the process of consolidating some of the manufacturing and distribution of our newly acquired Balta subsidiary into our manufacturing plant in Newport, Wales. We expect this project to lead to numerous benefits from a sustainability perspective. With most customers being based in the UK we will be able to produce the goods closer to the point of consumption, reducing the emissions associated with distribution of the product. Our expectation is this will more than offset the small increase in distance we will incur from the supply chain.

In addition, we expect the wind down of activity in the previous factory to lead to an overall decrease in emissions as the production is integrated into our existing UK facilities.

Our previous consolidation activity meant less power usage and reduced carbon emissions per square meter of carpet produced and our expectation is this project will repeat this trend.

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Victoria PLC Environmental, Social and Governance Report 2023

Stock Code: VCP

Environmental, Social and Governance Report

OUR SIGNIFICANT ESG TOPICS

Below we present a table outlining what we consider to be the significant ESG topics associated with each aspect of our operations, along with their respective priorities.

These topics were first disclosed in 2022 and represent the outcome of work performed alongside a leading ESG consultancy to understand our ESG risks, mitigating activities and opportunities. The activity was a Group wide review involving many stakeholder

interviews and significant research into both the sector and territories we operate in. This review, detailing the factors that impact Victoria specifically and the flooring industry in general, were a key input into a management assessment that concluded on these topics and their corresponding priorities.

These ESG topic areas, and their priority, will be re-assessed annually. The current period assessment has resulted in no change.

The prioritisation of specific topics across the Group is contingent upon the nature of their operations (for instance, the priorities associated with soft flooring manufacturing may differ substantially from those related to ceramic tile manufacturing). Consequently, certain topics may represent a higher or lower priority for different parts of the Group.

Operational Area

	Soft Flooring	Ceramic Tile	Distribution /
ESG Topic	Manufacturing	Manufacturing	Logistics
	Environmental
Energy management	•	•	•
Carbon Emissions	•	•	•
Waste and Water management	•	•	-
Product lifecycle	•	•	-
Chemicals Management	•	•	-
	Social
Attracting, Developing and Retaining Talent	•	•	•
Diversity & Inclusion	•	•	•
Health Safety and Wellbeing	•	•	•
Responsible Sourcing	•	•	•
Human Rights and Modern Slavery	•	•	•
	Governance
Reporting, Disclosure and Transparency	•	•	•

ESG Risk Priority

• Low Priority • Medium Priority • High Priority

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ENVIRONMENT

Managing our energy usage & our carbon emissions

We review our Greenhouse Gas (GHG) footprint through the Streamlined Energy and Carbon Reporting (SECR) process. This data enables us to identify the areas of our business which produce the most emissions and take significant, direct action to reduce our energy usage and carbon emissions.

Streamlined Energy and Carbon Reporting

The section below presents the energy usage and associated carbon dioxide emissions for Victoria's global operations. This section has been prepared in compliance to the SECR Framework as implemented in the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.

GHG Emission		UK & Europe
(1st April 2022 to 31st March 2023)	Units	soft flooring	Australia	Ceramics	North America	Total
Emissions from combustion of gas (Scope 1)	tCO2e	20,368	2,899	206,284	72	229,623
Emissions from combustion of fuel for transport
purposes (Scope 1)	tCO2e	13,003	368	3,062	83	16,517
Emissions from purchased electricity (Scope 2)	tCO2e	31,545	5,220	31,447	120	68,332
Emissions from business travel in rental cars or
employee-owned vehicles where company is
responsible for purchasing the fuel (Scope 3)	tCO2e	35	-	14	-	49
Total Gross emissions	tCO2e	64,951	8,487	240,808	274	314,521
Energy consumption used to calculate above
emissions	kWh	283,907,776	24,327,609	1,248,088,386	1,000,947	1,557,324,718
Total Gas Usage	kWh	115,040,948	15,737,729	1,130,042,689	379,410	1,261,200,777
Total Electricity Usage	kWh	118,122,602	7,008,294	105,362,031	306,595	230,799,523
Total Transport Usage	kWh	48,098,591	1,581,585	12,683,665	313,134	62,676,976

Within the UK, the total Gross emissions for the year were 24,292 tCO2e (previous year 26,259 tCO2e) and total associated energy consumption was 116,649,642 kWh (previous year 126,414,714 kWh).

The total Global Gross emissions for the year were 314,521 tCO2e (previous year 303,717 tCO2e) and total associated energy consumption was 1,557,324,718 kWh (previous year 1,548,654,291 kWh). Excluding the emissions and energy consumption of our acquisitions our total Global Gross emissions for the year were 280,636 tCO2e and total associated energy consumption was 1,412,054,924 kWh, a like for like decrease in the current period.

The intensity ratios have been calculated for the four reporting divisions. These have been calculated from sales volumes for each division and include all energy usage and emissions stated within the above emissions figures and the methodology.

Emissions		UK & Europe
(1st April 2022 to 31st March 2023)	Units	soft flooring	Australia	Ceramics	North America	Total
Intensity Ratios	tCO2e/ 1000m2	0.388	0.367	4.472	0.045	1.257
Previous year intensity ratio	tCO2e/ 1000m2	0.332	0.393	4.887	0.004	1.660

Note that Graniser was excluded from the Ceramics intensity metric reported in last year's annual report because it was acquired towards the end of the period and so this same treatment has been carried forward into the previous year intensity ratio reported in the table above.

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Victoria PLC Environmental, Social and Governance Report 2023

Stock Code: VCP

Environmental, Social and Governance Report

Methodology

Victoria have followed the 2019 HM Government Environmental Reporting Guidelines and report in alignment with relevant aspects of the GHG Protocol. Emissions factors used are tonnes of CO2 equivalent and data has been calculated using the 2022 UK Government's Conversion Factors for Company Reporting,

for all UK electricity and global fuels data. The Australian Government National Greenhouse Accounts Factors, International Energy Agency, Association of Issuing Bodies and the Environmental Protection Agency have been used for all remaining geographical electricity conversion factors for location-based reporting.

Scope 1 emissions relate to on-site gas usage and emissions from Company owned and long-term lease vehicles.

Scope 2 emissions relate to on-site imported electricity usage and CO2e emissions calculated are associated to generation only and do not include Scope 3 Transmission and Distribution losses.

The Scope 3 emissions relate to grey fleet. A grey fleet vehicle is one owned and driven by an employee for business purposes. This also includes fuel use for any vehicles which have been rented short term, for an employee to travel for business purposes. We do not currently include other Scope 3 emissions including, but not limited to, those associated with purchased goods and services, the upstream emissions of the fuel and electricity we consume and employee commuting.

Where there is a Combined Heat and Power (Cogeneration) plant operated on site, the emissions reported have been associated and calculated from the natural gas input.

The primary source for energy consumption data is supplier consumption data, metering data with some limited estimated data. Most of the transport usage has been calculated from records of litres used. The remainder of the transport data has been taken from mileage records, some of which have been estimated where records did not exist. Estimated data makes up less than 5% of reported emissions.

The usage and emissions presented align with monthly supplier invoices and are calculated and presented for 1st April 2022 to 31st March 2023. Companies acquired during the Financial Year have been included from the start of the next month after the acquisition.

The emissions reporting includes all of Victoria's sites globally, this reflects the activities and financial information presented within the financial reporting. There has been no de minimis applied and all Victoria companies with a physical presence have been included.

Energy management and carbon emissions

Continuing volatility in global energy prices has meant our ongoing strategy to invest in sustainable, eco-friendly, and reliable energy solutions has never been more important. The diverse nature of the Group means we have an opportunity to achieve this in a variety of ways with the most common being the use of solar photovoltaic (PV) panels in several locations. Historically several Group entities have benefitted from this technology and in the current financial year specifically we have invested further with two of our Australian subsidiaries and our UK logistics operation benefitted from new solar panel installations.

At our ceramic tile facilities across Europe we continue, as in previous years, to harness the heat generated from our spray driers. Through co- generation plants, we utilise this heat to generate electricity. This approach allows us to reduce our environmental impact and contribute to a more sustainable energy consumption model.

Our carpet manufacturing operation in Newport, Wales has for a number of years benefitted from a nearby wind turbine providing up to 40% of our electricity needs at this site. At several of our locations we take the opportunity at times of low demand to sell the surplus renewable energy we produce back to the national grid. Similarly at several of our subsidiaries we procure the additional energy we require from renewable providers.

We recognise that whilst it is important to ensure that wherever possible the energy we consume is renewable it is also vital that we make every effort to reduce our consumption.

In response to this our artificial grass business has this year managed to reduce carbon emissions through the development of an innovative new polyurethane coating for use in its product. This method not only eliminates water usage but also requires approximately 70% less gas to produce, significantly reducing our emissions.

At a number of our subsidiaries we have undertaken projects to closely monitor our gas and electricity usage via sub metering. Initiatives such as these have allowed us to implement a significant number of energy saving measures this year that have ranged from the launch of "switch it off" campaigns, the replacement of high energy usage components with more modern and efficient models, LED lighting installation schemes as well as using alternate, less carbon-

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