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Environment

As a responsible operator, we aim to take the necessary measures to reduce our environmental impact. 

By assessing energy consumption and carbon emissions across our portfolio, we are developing a Net Zero strategy and beginning to implement decarbonisation initiatives in our venues and offices.

 

Net zero pathway

Rank fully supports the international decarbonisation goal, as set out in the Paris Agreement. In order to meet the 1.5°C global warming target, global carbon emissions should reach net zero around mid-century.

Assessment and targeting

Rank’s long-term goal is to achieve climate neutrality for its entire value chain (Scopes 1,2 & 3) by 2050, or earlier if possible. Meanwhile, an interim target has been set to remove all greenhouse gas (‘GHG’) emissions from an initial boundary by 2035. This boundary extends to all operations and includes Scope 1 and 2 and selected categories of Scope 3.

Work completed to date includes the preparation of an initial carbon baseline for 2021/22 that calculated our existing GHG emissions. The company has been working with specialist third parties to understand emissions, the options to reduce, and the effects of initiatives as they progress: Consultus – for guidance on carbon reporting and reduction initiatives Cloudfm – for detailed monitoring and reporting of actual energy usage.

We have utilised the SECR (Streamlined Energy and Carbon Reporting) report, prepared by Consultus and delivered in July 2022, as the basis for recognising the baseline carbon emissions position of our business. The total baseline position calculated for 2021/22 is 26.8 kT of CO2 emitted.

Initial boundary

All operations, including those in Spain, are encompassed in the scope of the interim net zero 2035 target for Scope 1 and 2 emissions, plus selected voluntary Scope 3 emissions.

The vast majority of these emissions come from electricity and gas, used to operate facilities, and assigned across Scopes 1 and 2. Consultus projections expect this to grow by circa 4% in 2023. Further work will be conducted in Q3/4 of 2023 to embrace the wider extent of Scope 3 emissions – which we we expect to be significant – including the preparation of a baseline assessment of Scope 3 emissions.

Current and proposed pathways

Several initiatives and actions have been identified to reduce the Group’s carbon footprint. Some benefits will be felt as part of pre-existing investment plans, such as background improvements in carbon efficiency through energy contracts, or the considerations of continuing to operate in certain venues. Others will come as a result of internal initiatives planned and implemented by the business.

Energy reporting

We are utilising technology tools to capture facility energy usage data at source. The Mindsett PRISM is an energy management system which provides planned and reactive facilities management from Cloudfm (our energy consultants). It will be implemented over the next three years across Rank UK.

At the end of 2022/23, we began the installation of smart-sensing devices at our top 40 highest energy consuming sites in the UK. The devices now capture data from every asset that is plugged in at these venues, from each individual slot machine through to the heating, ventilation, and air conditioning (‘HVAC’).

The data we are collecting is combined with the metered gas data; this helps us understand the full picture of energy usage at each venue. This information can be accessed through an energy usage dashboard. The platform enables the business to interrogate energy usage across different parameters, such as which equipment is most energy-intensive and whether devices are not being switched off overnight. By gaining a detailed understanding of energy usage in our venues, we can identify where behavioural change can be encouraged to reduce energy consumption. We can then apply these learnings across the entire Group.

A key function of this technology is in enabling predictive maintenance. By continually monitoring the operation of equipment, the platform can distinguish between assets, even if they are the same make and model. It will also be able to create a profile on each asset, whether that be a fridge or a PC.

Owing to the granularity of the performance data captured per asset, the system can predict potential faults. This will allow the business to pivot from reactive maintenance to preventative, which in turn will mean more efficient energy usage and greater uptime of operational and revenue-producing assets.

Additional systems under review include the capture of non-facility data, e.g. vehicles and waste; translation from usage into   a common carbon metric; presentation of a carbon dashboard.

 

Change management

By affecting behavioural change, technology can be used to pursue our decarbonisation objectives. Educating everyone about our net zero ambitions is therefore key and will complement our decarbonisation workstreams. To support the implementation of our plans, we are mobilising the Group to develop positive  culture and processes, deliver practical initiatives to reduce carbon emissions, and introduce reporting mechanisms to demonstrate progress in line with the stated ambition. These include:

  • Environmental champions – motivated and passionate colleagues to advocate climate-positive sentiment and actions in their workplaces.
  • Communications – we have established a communications  plan to inform internal and external communities, and to drive improved behaviours.
  • Incentives and recognition – funding to recognise and reward positive contributions and excellent behaviours. 

Starting with the installation of the PRISM technology in venues, we have established a calendar of engagement for FY 2024. This commenced with training sessions for employees in Summer 2023 on the use of the Mindsett platform. The aim of these sessions was to familiarise colleagues with both how to use the platform and the information that it provides.

We will check in with our employees throughout the year to continue embedding awareness about energy reduction, gather feedback on environmental initiatives, and incentivise positive behavioural change.

Refining our approach

It is a strategic imperative for our business to refine our decarbonisation strategy. As we are now gaining greater understanding  of energy use across the business, we are developing an investment strategy that is informed by robust data and establish a credible pathway to net zero.

The chart (above) maps our current decarbonisation initiatives across the business. With greater understanding of our Scope 1 and 2 emissions, the waterfall currently focuses on initiatives in these areas. The initiatives include: measures that we are already undertaking, such as changes to our venues portfolio; measures which have been identified during site-specific audits, such as upgrading a heating system; measures which can be applied on a national level across similar properties, such as improving internal awareness of energy use; and, lastly, green energy and offsets.

A number of initiatives that we are undertaking will require a degree of investment, however we have calculated a far greater return in cost savings as a result of their implementation.

Of the measures we have set out for FY 2024, entering a renewable electricity power purchase agreement (PPA) represents a significant saving in tonnes of CO2 at the lowest investment cost. Instrumental in reducing our carbon footprint, however, will be measuring and addressing Scope 3 emissions. Supported by our carbon consultants, we are assessing the 15 categories of Scope 3 emissions to better understand this footprint. 

 

Our initial focus is on the areas of greatest spend, with a view to establishing more granular detail on the supply chain in the future. In order to support this process, we are looking into options for a carbon accounting.

With operations in Spain, we recognise the obligations of EU legislation. The Corporate Sustainability Reporting Directive (‘CSRD’) requires companies to report on their Scope 3 emissions by 2025. We are committed to meeting these legislative requirements, but will not limit this exercise to the Spanish business, rather approach Scope 3 reporting from a Group-wide perspective.

Task Force on Climate-related Financial Disclosures ('TCFD') Governance

Board oversight

For effective leadership on climate-related issues, there must be awareness and understanding of these matters from the very top of the organisation. Our Board of Directors are regularly kept appraised of progress on climate-risk considerations, specifically via the ESG Steering Group, who assume executive ownership and accountability for the sustainability strategy. This year, updates given to the Board have focused on specific energy reduction assessments and initiatives to address the decarbonisation agenda, as well as progress against the Group's established non-financial KPIs. (See page 57 of our 2023 Annual Report for organogram.)

The Board has clear oversight of climaterelated matters through its committees The ESG & Safer Gambling Committee in particular is responsible for overseeing the Company’s approach to climate risk, defining strategies and proposed actions. The ESG & Safer Gambling Committee met four times during the year, with climate related matters raised at each meeting.

The Audit Committee is aware of climate risk accounting considerations and the potential impact of climate change on the business. The Risk Committee considers current and future climate-related regulatory requirements and monitors them on an ongoing basis, and climate change is currently considered low risk on the Risk Register. This Group Risk Register is also informed by the risk registers held at business unit level from Mecca, Grosvenor, Rank Interactive and Rank International.

As well as receiving internal information, the Board is given updates by our external consultants and this year received a presentation from ESG specialists on TCFD reporting and net zero planning.

Climate-related issues factor into the Board’s decision-making processes, specifically around the strategic management, operational implementation and requirement for capital expenditure. A significant component of the annual budget is the continued investment into our real estate; current considerations include insulation, lighting, and heating, ventilation and air conditioning control. Climate-related issues will continue to be a matter for the Board in reviewing and guiding performance objectives, monitoring and performance.

Management oversight

The approach taken to managing climaterelated risks and opportunities is not static but reflects continuous monitoring and assessment of these issues, their potential impact upon the business, and the Group’s impact on the environment. The Risk Committee considers current and future climate-related regulatory requirements and monitors them on an ongoing basis. Currently climate change, though an emerging risk, is considered a low physical risk to the Company across all time horizons, and is therefore a low risk on the Risk Register. This Group Risk Register is also informed by the risk registers held at business unit level from Mecca, Grosvenor, Rank Interactive and Rank International.

The Net Zero Working Group continues to assess any vulnerabilities over various time horizons. The key drivers for our recognition of climate change as low risk are principally transition risks. We are mindful that there are also certain physical risks that may impact some of our operating sites. Consideration to address all of these risks is being built into our net zero investment strategy.

The responsibility for both establishing the direction and implementation of our approach to climate-related risk and opportunities sits with our Executive and Management Teams. This year, we established an ESG Steering Group (‘ESG-SG’), led by our Director of IR and ESG. The ESG-SG plays a strategic role by setting out the ESG-related objectives for the Group, which includes climate-related matters. Operationalisation of this strategy is delegated to the ESG Working Group (‘ESG-WG’), led by our ESG Strategic Programme Lead.

In the UK, the executive management teams of the ESG Steering Group, Net Zero Working Group and ESG Working Group are supported by external advisors, specifically relating to our climate-risk reporting and net zero workstreams. The consultants – Consultus, Cloudfm, JustaEnergia and Buchanan – each have unique but complementary skillsets. These skillsets satisfy the multitude of stakeholder requirements that drive operational, financial and commercial success. In Spain, we are in the process of contracting a consultant to support on the development of a country-level net zero strategy. The business is informed by environmental management consultants and other corporate advisors. These include broking, legal and accounting professionals, with information delivered via webinars, publications, one-to-one training sessions, and ongoing internal discussions regarding energy utilisation.

Considerations from multiple segments of the business feed into our assessment of climate-related risks and opportunities, as these risks can impact the business in many different ways. For the Group’s balance sheet, climate-related risk has the potential to impact financial performance and cost base. Regarding investor relations, it is material in the management of Rank’s capital markets profile and awareness of emerging risks and requirements. For our Procurement Team, a key consideration is indirect emissions management within the downstream supply chain in order to meet net zero expectations; and the management of our land-based venues through efficiencies in portfolio management with decarbonisation of our property estate material in reducing our direct emissions.

A holistic approach to decarbonisation can only be achieved by considering climate risk across all locations. The Managing Director in Spain holds ultimate responsibility for a net zero strategy for our land-based Enracha venues, supported by the Head of Transformation in Spain on day-to-day operations. Aligning with the overarching Group net zero strategy, the business is developing a country-specific net zero strategy for our Spanish operations. This will be informed by the energy assessment that we are conducting for the these venues; a pilot programme that is currently underway. To foster awareness for this initiative, a country-wide project was introduced to all employees at the beginning of 2023/24, with involvement from General Managers across all venues.

Strategy

The Net Zero Working Group is defining a comprehensive decarbonisation and investment strategy across the UK portfolio. These investments will support the Group’s stated ambitions, and the upfront capex should positively impact the long-term opex requirement, with the introduction of more energy-efficient and cost-effective solutions. The inclusion of climate assessment criteria into the project approval process for all areas of the business further integrates climate-risk consideration into our operations.

As set out in our net zero pathway above, Rank is to invest £57m in climate-related and aligned initiatives over the next 12 years within the UK. At present, the Board believes that the £57m budget will be allocated in approximately equal tranches over the next 12 years. However, as our understanding of our portfolio improves over the next few years, due to the use of the Mindsett technology, the speed of investment may alter. It’s important that this quantum is allocated and communicated to our stakeholders, but equally we believe these investments should be informed by reliable data. Key functions, such as property, will be the most significant areas for investment. The allocation of capital for projects  supporting our net zero targets will undergo strategic and financial review, inclusive of new PMO screening.

Rank takes into consideration the useful life of the organisation’s assets or infrastructure and the fact that climate-related issues often manifest themselves over the medium and longer terms. In 2021/22, Rank’s accounting team assessed climate-related matters that may impact the Group’s financial statements.

 

Please refer to pages 52 to 71 of our 2023 Annual Report for further details.

 

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