Corporate Responsibility Report

Corporate responsibility is at the heart of Low & Bonar business values and we recognise that many of our stakeholders, from site neighbours and employees through to customers and investors, have rising expectations of our corporate responsibility commitment and performance. Whilst each of our business values has a corporate responsibility context, it is our value of integrity, which we describe as “... maintaining the highest ethical standards wherever we operate. We will ensure the health and safety of all our people and minimise our impact on the environment”, through which we bring corporate responsibility into our day-to-day business operations.

There is already a great deal of valuable activity being undertaken within all of our businesses and across our manufacturing sites. However, we have identified and agreed the need to do more, and in a more focused manner, and we strive to become “best in class” in all of our activities.

Environment

Environmental management is an important area of focus for the Group. We recognise that we have an environmental impact through our use of raw materials, our manufacturing processes and our products. We continually seek to improve in all aspects of our environmental management and regard compliance with environmental regulation as the minimum standard to be achieved.

Our businesses play a key role in environmental management and their environmental impacts are specific to their manufacturing processes and locations as well as their product portfolios. Each business has local environmental policies and improvement plans in place to support the Group environmental policy, and environmental performance metrics form an integral part of management information. This information, along with close customer communication, has supported the development of a number of environmental initiatives, especially with respect to product development.

Divisional environmental overview

Mehler Texnologies is operating its “Eco-care” programme to demonstrate its commitment to environmental issues. The programme has been designed to bring the responsible management of energy and resources, sustainable materials and recycling of coated textiles under one all-embracing label. The Eco-care concept accompanies products throughout their life cycle, including incorporation of ecological criteria in the selection of raw materials, the use of less environmentally harmful production processes, the use of recyclable packaging materials and participation in the development of recycling systems. More information and a brochure on Eco-care can be found at www.mehler-texnologies.com/EN/texnologies/eco-care.php.

Bonar Technical Fabrics focuses its efforts on the use of ‘green’ energy, the reduction of energy use and emissions, the replacement of virgin raw materials by recycled ones where possible and the minimisation of waste. BTF has been certified to the Environmental Management Systems ISO 14001:2004 Certificate since 1998, and recertification was successfully completed in 2011. More information can be found at www.bonartf.com/en/x/108/hse-management.

Colbond is seeking to further develop its leading position in the use of recycled and sustainable raw materials, optimise its manufacturing technologies in order to further reduce the consumption of energy, and is seeking opportunities to switch to clean and renewable energy sources. It is also actively pursuing redirection of waste streams into reuse and recycling alternatives with the elimination of waste as the ultimate goal. Colbond seeks to provide the most ecologically benign product lines available for customers’ applications and to develop solutions that promote environmentally sustainable products within its core markets.

Low & Bonar products

The Group is proud of its many performance material products, which, as well as providing excellent quality and value, often support our customers in reducing the environmental footprint within their supply chain.

Alternative energy infrastructure

Alternative energy is becoming increasingly important, with biogas being a good example. Materials like biogas are highly volatile and explosive, and they must be stored in containers that offer maximum safety. Flexible VALMEX® enviro pro gas tanks, manufactured by Mehler Texnologies, are ideally suited to this application due to their special fabric design achieving satisfaction of the strict safety standards. Further details can be found at www.mehler-texnologies.com/EN/products/environment/index.
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Groundcover materials

Many Bonar Technical Fabrics products are used in applications that support environmental protection. Examples include energy saving screens, weed controlling groundcovers (which reduce or eliminate the need for pesticides), as well as soil stabilising and filtering geotextiles which provide protection against soil erosion and contamination. An important recent addition to our sustainable product range is Duracover. Whilst groundcovers have been commonly used for many years for landscaping and gardening, they were originally made primarily out of polypropylene. For several years, however, awareness had been growing that a more sustainable product was required. In 2010, BTF’s researchers made a breakthrough with the invention of Duracover, a 100% bio-based textile/compostable groundcover earning a 4-star certificate from AIB Vinçotte.1

Artificial grass

Bonar Yarns is a leading manufacturer of artificial grass yarns. The use of artificial grass reduces customer water consumption, along with consequent reductions in energy use and other emissions related to water production. Artificial grass also allows the end user to eliminate completely the use of fossil fuels for lawn or pitch maintenance and to avoid the harmful dispersion of fertilisers and herbicides into the environment.

Green Building infrastructure materials

Colbond has recognised the importance of “Green Building” design and that LEED2 Certification of buildings is becoming increasingly beneficial. A selection of Colbond’s products provide an important aid to architects, landscape architects and engineers to help their buildings achieve LEED Certification. The most common ways Colbond’s products are used to support LEED Certification include green roofs, compliance with minimum energy performance criteria and optimisation of energy performance. It is estimated that Colbond’s products can help some customers to achieve 19 LEED points to support their goal of sustainable buildings and sites.

Raw material usage

Raw material usage is an important impact for all manufacturing businesses. Sourcing and the efficient use of raw material, including, where possible, the use of previously used or recycled material, remain important environmental management activities.

Colbond last year announced the launch of Colback® Green, a high performance carpet backing made of 100% sustainable raw materials. It contains post-consumer recycled polyester and polyamide-6 generated from carpet waste and creates the first recycling loop for the face side of carpet tiles and broadloom carpet.

Colbond has also increased the use of recycled materials in its Colbonddrain® range of products during the year. This is a pre-fabricated vertical drain for accelerating soil consolidation in civil engineering projects which has a patented high performance drainage core made of polyolefin from recycled bottles, caps and labels. Colbond also offers EnkaRetain & Drain® a drainage, protection and insulation layer developed to suit the demands of the growing North American green roof market, with a composite made from post-industrial recycled polypropylene.

Meanwhile Mehler Texnologies is now selling 1.5 million square metres per annum of coated fabric based on recycled material.

Energy management and the use of renewable energy

Energy use is a key manufacturing impact for Low & Bonar, as well as a significant cost. The Group's businesses continually review opportunities to reduce energy use and review the balance of renewable energy in their energy mix.

All electrical consumption across our manufacturing sites in Belgium, equivalent to 6,494 tonnes of CO2 in 2011, is 100% sourced from renewable green energy sources such as wind, geothermal and hydro power, substantially reducing the company’s environmental footprint. Since 2008 Bonar Technical Fabrics has also been working with an energy audit organisation established under the framework of the Kyoto Protocol. BTF’s non-woven and woven production site has been screened for its energy consumption and all significant energy uses in the plant were measured separately, enabling us to take targeted measures where necessary. As a result, the CO2 emission per ton produced has been significantly reduced and further efforts are ongoing. The energy savings plan for the site was last audited externally in 2010.

A project has been initiated at Colbond’s production facility in Arnhem to divide a bonding drum into separate hot and cold sections to produce natural gas savings. The reduction in energy consumption in the standby phase of a fleece line with an ‘eco’ button is under development to reduce consumption of gas and electricity.

In Asheville, USA, a number of energy management projects have been implemented, including the redirection of heat from a thermal bonding machine to provide building heat in winter months, the installation of a small steam boiler, so that larger boilers do not need to be run when demand is low, and the installation of new controls on air compressors, to better match output to demand. Overall, between 2008 and 2011, specific energy consumption has been reduced by 15%.

Waste reduction

Waste generation is also a key environmental impact of our business, as well as a cost, and a waste hierarchy process which starts with avoiding waste production through to reuse and recycle is being adopted throughout our operations.

At MTX, the recycling of PVC waste is key to environmental performance, and MTX is a member of and financially supporting:

http://www.pvc-partner.com/

http://www.aktion-pvc-recycling.de/

http://www.vinyl2010.org/

In seeking to minimise waste for customers, Colbond is taking advantage of its two-step Colback ® manufacturing process which allows production of tailor-made widths. The Detection Cut Compensate (DCC) system on the Colback® fleecing lines reduces length waste.

In Asheville, USA, several waste management projects have been completed. Approximately 10,000 wooden pallets have been diverted from landfill annually by sending them for rebuilding or conversion to energy, and approximately 1,200 polymer super-sacks have been diverted annually from landfill, by re-selling them to a polymer recycler.

Water

Water usage is not a significant environmental impact for the Group due to the nature of our manufacturing operations. However, as an important resource, water usage is tracked and monitored by Group companies.

Waste water management is an important environmental impact for the business, and several improvement projects have been undertaken recently. A programme to separate rainwater from waste water has been completed in Belgium, and a project at Colbond’s site in Asheville, USA, reduced pollutants in waste water to a level below regulatory limits, so that the site is no longer required to operate under a special industrial permit.

Planned environmental activities for 2012

During 2011, it was agreed that new Group environmental performance metrics will be introduced in 2012 to help us better understand our performance and to support goal setting for our businesses. It has also been agreed that during 2012 we will review our Group environmental policy so that we can better communicate our environmental goals and aspirations to our stakeholders.

Management of health and safety

The health and safety of our employees and others who may be affected by the Group's operations, remains a key management responsibility. Our health and safety efforts have been redoubled this year following two fatal accidents last year. We continue to aim for continuous improvement both in our health and safety performance and in our arrangements for managing health and safety.

In the year to 30 November 2011, the Group recorded an accident rate3 of 748, compared to a rate of 1,553 in 2010. This performance represents both a significant improvement over last year’s performance and also good progress towards the recently set interim Group accident rate benchmark of 580 or less, to be reached by 2013. Our current performance compares well to the EU manufacturing sector’s accident rate of 3,6564, based on the same definition of accident rate used by Low & Bonar. However, we are clear that there remains much room for improvement.

A number of initiatives were implemented this year to bring about this improved performance, including the implementation of “Zero Accident” programmes in each business, bespoke to the needs and arrangements within each business.

Technical Coated Fabrics

Across the Hückelhoven, Fulda and Lomnice sites:

  • regular visits to all plants by the leadership team were introduced to identify health and safety improvement opportunities, with any actions being recorded and followed up;
  • a health and safety communication and engagement programme has been established in which specific monthly safety topic discussions are led by the leadership team with all shifts; and
  • the Hückelhoven and Fulda sites have voluntarily made contact with the local health and safety regulator, to obtain additional and independent views on improvement opportunities.

Performance Technical Textiles

Across the Zele and Lokeren sites:

  • a process called “Last Minute Risk Analysis” has been developed and implemented to focus on key inherent risks and risk control measures;
  • a “Task Risk Analysis” programme was also completed, with risk improvement measures now targeted at tasks with an inherent risk score above a specified risk rating;
  • based on detailed accident analysis, a programme of improved personal protective equipment specification has been introduced; and
  • a training and behavioural safety programme will start in 2012.

Across the Asheville, Arnhem, Emmen, Obernburg, Dundee and Abu Dhabi sites:

  • a programme to separate forklift and pedestrian traffic continues, with a hierarchy of controls to be implemented when full separation is not possible;
  • following detailed accident analysis, a prevention of cuts scheme has been implemented primarily focusing on knives and scissors safety;
  • risk assessments of machine/operator interactions, focusing primarily on those interactions that occur during non-standard operations, have been carried out to determine risk improvement opportunities; and
  • a behavioural safety programme has been initiated with a “SafeStart” pilot system in Asheville.

The Group continues to work closely with its insurance risk surveyors and insurance brokers and underwriters, and recognises the important role played by these partners. Risk improvement recommendations made by risk surveyors as a result of site visits also provide valuable information to support risk improvement activities.

A number of other activities have taken place that are key to bringing about sustained improvement to Low & Bonar’s health and safety management. This effort continues to be led by the Environmental, Health and Safety Committee, a sub-committee of the Risk Oversight Committee, and with the strong support of the executive management team and the Board of Directors. To this end, a Global Health and Safety Strategy has been developed by the Committee. The Strategy supports both our Zero Accident Goal and Best in Class aspirations, and will embed a strong and proactive health and safety culture across all aspects of our business. The cornerstones of the strategy encompass improvements to visible leadership, risk based management and health and safety competence and a broader range of metrics will be used to gauge performance.

Responsibility

Colbond’s high-performance sustainable carpet backing

Responsibility

Colback® Green is a range of high performance primary backings developed to enhance the environmental sustainability of the carpet industry.

All Colback® Green non-wovens are made from 100% sustainable raw material, containing post-consumer recycled polyester and polyamide-6 generated from carpet waste. Cutting-edge polymer engineering added to intensive in-house R&D form the foundations of Colback® Green primary carpet backings, which bring the same high performance as virgin content.

1 Worldwide AIB Vinçotte provides more than 130 specialised and independent inspection, monitoring and certification services, analyses and tests for the most wide ranging applications in the field of electricity, hoisting apparatus, pressure equipment, civil engineering, safety in the work place, environmental protection and radiant protection.

2 LEED certification is a recognised standard for measuring building sustainability. The LEED green building rating system, developed and administered by the U.S. Green Building Council, is designed to promote design and construction practices that increase profitability while reducing the negative environmental impacts of buildings and improving occupant health and well-being.

3 Number of accidents at work with more than 3 days’ absence that occurred during the year per 100,000 employees.

4 Based on European Commission Eurostat data for 2007, which is the most up-to-date information available, and currently classified as provisional.

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