CEO statement

 Royal Mail Group is changing. Corporate responsibility is integral to this change.

Our Transformation

Royal Mail Group is changing. Corporate responsibility is integral to this change. For us, corporate responsibility is now as much about how we generate our revenues as how we spend the cash that we earn. Our foremost responsibility - to all of our stakeholders - is to return Royal Mail Group to financial viability on a sustained basis. This will ensure that:

• We continue to deliver the six-days-a-week, one-price-goes anywhere Universal Service – one of the highest quality service specifications in the European postal market.
• We continue to be an integral part of the UK economic and social landscape, connecting customers, companies and communities across the country.
• We continue to offer secure employment to as many of our people as possible.
• We are no longer reliant upon the UK taxpayer.

In October 2011, outside of the relevant financial year, we launched our new corporate scorecard for all managers.(1)

Our new scorecard is focused on delivering sustainable business performance and it emphasises the integration between our corporate responsibilities and our business strategy.

Four key areas are measured by our new scorecard.

1. 1 What our customers think of us and how we deliver for them.
2. 2 What our people think of our company.
3. 3 How well we are modernising our operations.
4. 4 The financial health of the business.

The Past Year

The 2010/11 financial year was challenging. The mails market is in significant decline. We anticipate that total mail volumes will continue to decline by around 5% a year for the foreseeable future. We have to adapt to this changing market. Whilst we have made some good progress, as demonstrated by our interim results which were published in November 2011, much remains to be done to improve our financial position. We must continue to modernise our operations. This involves significant investment in new equipment and processes and in improving the working conditions of our people. We must continue to innovate to meet the needs of our customers and generate additional revenues to offset the decline in earnings. We need to attract private capital in order to invest in our future.

Good Foundations

As this report sets out, despite the financial challenges that we face, our commitment to corporate responsibility continues. We can do better but we have good foundations on which to improve our record. Our people are committed and highly valued. Every day, they help connect customers, companies and communities across the UK. Our economy and society both rely upon these connections. Both would be weaker without them. This report promotes and celebrates the great efforts of our people. Royal Mail Group has a good corporate responsibility track record. We achieved Gold status for the first time in the 2011 Business in the Community (BITC) Corporate Responsibility Index. We are a signatory to the United Nations Global Compact and are working to meet its principles. We use the principles of the Global Reporting Initiative (GRI) to guide our reporting.(2). Many of the measures that we are taking to address the challenges we face also enhance our corporate responsibility. For example:

• Our continued focus on resource efficiency is positively benefitting our bottom line, as well as reducing our negative environmental impact.
• Our continued investment in health and safety for our people helps save costs, in addition to ensuring that our people feel well looked after and valued.
• Our enhanced focus on learning and development is helping address the company’s skills gaps, whilst also improving staff retention rates.

Our Governance

We have strengthened our corporate responsibility governance arrangements. Whilst these changes occurred within the relevant financial year the benefits will be fully realised over the next 12 months.

I chair the Chief Executive’s Committee (CEC), Royal Mail’s executive committee. Amongst a range of other key business activities, the CEC is responsible for reviewing our corporate responsibilities strategies and how we implement them.

Shane O’Riordain, Director of Communications, is responsible for shaping and implementing our corporate responsibility strategy and reports directly to me. The Audit and Risk Committee (ARC), one of the main Board committees, has reviewed this report in detail.

Our Changing Agenda

We know that there remains a great deal of work to do to improve our corporate responsibility record. Royal Mail occupies a unique position in the UK society and economy. We need to leverage this for the benefit of Royal Mail Group and all of its stakeholders. This is why we have recently completed a major review of our corporate responsibility and community investment strategies. These strategies now reflect the fact that our corporate responsibility activity must be focused on improving our financial performance, as well as our social and environmental impact. These strategies are also much more aligned to and integrated within our overall business strategy. They will inform all corporate responsibility activity in the financial year 2011/12.

Our new strategies were approved by the CEC in October and November 2011, outside this reporting period. However, the review process informed the content and focus of this report. We will continue to use the Business in the Community (BITC) impact area framework – workplace, marketplace, communities and environment – to guide our corporate responsibility strategy and reporting. This will ensure that there is continuity between this and our former corporate responsibility strategies.

Our New Strategy

Our five new corporate responsibility objectives are:

1. 1 Deliver a market-leading corporate responsibility programme.
2. 2 Drive up colleague advocacy for our corporate responsibility programme, including community investment.
3. 3 Be seen by our external stakeholders to be one of the best corporate citizens in the UK.
4. 4 Ensure our corporate responsibility strategy is integral to our business strategy and corporate narrative.
5. 5 Ensure that our reporting and data collection is of the same standard as a major LC.

A feature of future corporate responsibility reporting, including this year’s report, will be that we will be more explicit about the areas in which we need to improve and what we are doing to address these. A full list of our current and future corporate responsibility activities is provided in the ‘Our corporate responsibility’ section of this report.

Summary

I am committed to ensuring that Royal Mail Group is a corporate responsibility leader. This report sets out how we are beginning to improve but it is just the start.

Stakeholder engagement will be an important focus. In the near future, I plan to host an event which brings together all Royal Mail Group stakeholders with an interest in corporate responsibility. In particular, I wish to continue to engage with Royal Mail Group colleagues and unions.

If you have any further thoughts on Royal Mail Group’s Corporate Responsibility Strategy, please do get in touch. I would be delighted to hear from you.               

In summary, Royal Mail Group plays a role in the lives of almost every UK resident. Our people live and work in almost every UK community. We occupy a privileged position in UK society. We are conscious of our responsibilities to our colleagues, customers and communities.

Moya Greene

Group Chief Executive

January 2012

Email: corporateresponsibility@royalmail.com

(1)Bonuses for Royal Mail managers will be linked to the achievement of these scorecard metrics.

(2)Two Tomorrows use the GRI Quality of Information Principles as criteria for evaluating Royal Mail Group’s Corporate Responsibility Report.