Corporate Governance

Corporate Governance 

The Governance of the Group is set out in a formal Operating Agreement. The Group has established its own policies and procedures as well as adopting the pre-existing processes from the shareholders where appropriate. The Group has appropriate internal controls and risk management programs which are subject to shareholder review.

The Companies (Miscellaneous Reporting) Regulations 2018 introduced new statutory reporting requirements for financial years beginning on or after 1 January 2019. Although the Group does not exceed the requirement thresholds, the directors of EthosEnergy have decided to provide a statement in the Report of the Directors stating which corporate governance code if any, EthosEnergy Group followed during the year, how it applied the code and any part of the code it did not follow.

For the financial year ended 31 December 2021, Ethos Energy Group Limited has chosen to report against the Wates Corporate Governance Principle for Large Private Companies, published by the Financial Reporting Council (FRC) in December 2018 and available on the FRC website (the Wates Principles). The disclosures below explain how Ethos Energy Group Limited has reported against the Wates Principles in the context of its corporate governance arrangements.

 

Purpose and leadership 

EthosEnergy Group’s purpose is established by the Board of Directors who provide governance to the CEO and the leadership team. The CEO and executive leadership team continued to implement the new strategy introduced in 2020. The Board continue to be in full support of the transformation which has helped to produce the best financial position in the Group’s history. The CEO and executive leadership team spend significant time on strategic development and planning. They determine the leadership of the Group and continually look into ways to further enhance the performance of the Group.

 

Board Composition 

The Board has currently five directors, comprising the Chairman and four Directors. The names of the current directors and the secretary are shown on page 2.

The Board considers that the Chairman was independent on appointment and individual directors’ continuing contribution to Ethos Energy Group Limited are considered at least annually.

The role of the Chairman is to lead the Board and ensure its overall effectiveness. This is distinct and separate from that of the Chief Executive Officer (CEO) who manages the business day to day.

All directors receive accurate, timely and clear information on relevant matters have access to the advice and services of the Company Secretary.

The Board is structured to ensure that the directors provide Ethos Energy Group Limited with the appropriate balance of skills, experience and knowledge as well as independence. A number of the directors have substantial experience in the industry and this experience brings various insights on how the Group should perform.

The Board monitors the commitment of the Chairman and directors and is satisfied that they are able to allocate sufficient time to enable them to discharge their duties and responsibilities effectively. Any additional external appointments require prior Board approval.

 

Directors’ responsibilities 

All directors receive guidance on their statutory duties under the Companies Act and are supported in the discharge of their duties by the Company Secretary.

The Board is the main decision-making forum for Ethos Energy Group Limited. The Board is collectively responsible for the long-term success of Ethos Energy Group Limited and the delivery of sustainable value to its shareholders. The Board’s role is to provide leadership to the Group, monitoring and maintaining the consistency of the Group’s activities.

The Chairman, CEO and Company Secretary are responsible for the quality and integrity of information provided to the directors. At each scheduled Board meeting the directors receive reports from the CEO, which are prepared by the CEO and the leadership team as appropriate and these members may attend certain Board meetings to provide an opportunity for the Board to engage directly with management on key issues and supports succession planning.

There are quarterly Board meetings each year where the CEO will present the Group’s current financial position, as well as, at the appropriate time each year, the annual budget for the forthcoming year which will be reviewed and approved by the Board. In between these meetings the CEO is in regular contact with the Board, with calls occurring to discuss key specific matters as appropriate.

 

Opportunity and risk 

The role of the Board is to promote the long-term sustainable success of Ethos Energy Group Limited.

The Group’s risk strategy is informed and shaped by an understanding of the risk landscape including a range of significant risks and uncertainties in the external economic, political and regulatory environments. This strategy still considers the impact of COVID 19 across the world and the impact it has had on all industries.

The Board regularly review and identify potential opportunities that will help create and preserve the value of the Group as well as considering any potential risks or issues that may arise which could prevent the continued success of the business.

 

Remuneration 

Executive remuneration structures incentivise individuals to deliver sustainable performance based on strategic objectives for the Group. The approach to performance management provides clarity to employees about how their contribution links to the Group’s ambition and all employees have goals set against different measures. The Group continues to ensure employees are paid fairly for the work they do, and the pay is periodically compared against the external market to ensure that they are competitive.

 

Stakeholders 

For details of the Board’s engagement with the different stakeholders see below in the S172 statement.

 

S172 statement 

This section serves as our section 172 statement and should be read in conjunction with the Strategic report on pages 3 to 5. Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders in their decision making. The Directors continue to have regard to the interests of the Group and Company’s employees and other stakeholders, including the impact of its activities on the community, the environment and the Group’s reputation, when making decisions. Acting in good faith and fairly between members, the Directors consider what is most likely to promote the success of the Company for its members in the long term.

The S172 statement looks into the key matters as noted below:

• Likely consequence of any decision in the long term 

• Employee engagement (including work performed for safety for COVID) 

• Stakeholder and shareholder engagement 

• Community and the environment 

• Impact of strategic decisions 

 

Likely consequence of any decision in the long term 

The Directors understand the business and the evolving environment in which we operate. Based on EthosEnergy’s purpose ‘to make energy affordable and available for everyone, everywhere’, the strategy set by the Board is intended to strengthen our position as a leading Independent Service provider of rotating equipment supporting the Power Generation, Industrial and Oil and Gas sectors while keeping safety and social responsibility fundamental to our business approach.

In 2020, the Group strategy was transformed creating ‘OneEthos’ to help achieve its strategic ambitions and become more self-reliant and a nimbler organisation. This restructure resulted in the Group becoming more focused, allowing for greater co-ordination and teamwork to occur in order to combat the effects of the COVID-19 pandemic and to improve the performance of the Group in certain areas.  This transformation has continued to provide numerous benefits to the Group in the current year including providing good support for the Environmental, Social and Governance (ESG) framework created in the year, reducing the reliance on finance facilities and the ability for the organisation to align effectively with ever changing markets. 

Given the complexity of the energy sector, the Directors have taken the decisions they believe best support EthosEnergy’s strategic ambitions.

 

Employee engagement 

Our employees are fundamental to the delivery of EthosEnergy’s services and therefore to the long-term success of the business. It is important to develop our employees and keep them engaged and motivated. We engage with our workforce so that we can understand and address areas where we need to improve to ensure we deliver rewarding careers and retain our talented people.

Regular contact is provided by the leadership of the Group providing updates on the business performance including significant contract wins, recognising the crucial performance of individuals within the business and detailing the various actions that have been carried out as the ESG framework has been rolled out.

One key aspect defined in the ESG is relating to ‘Inclusion and Diversity’ which the Group continually monitors by reviewing the employee headcount demographic data including the age, gender, colour and national origin of our employees and to ensure that all employees are treated equally in the Group. In 2021, the Group also introduced a women’s support group that allows female employees to openly discuss with each other their experiences whilst working for EthosEnergy

The safety of our employees during the COVID-19 pandemic has been of upmost importance to the Group with a variety of safety protocols utilised throughout the world to ensure any potential risks were minimalised and constant contact was maintained by the Group’s Health and Safety team. New safe working procedures were introduced last year with safe working areas ensuring employees were socially distanced, advanced cleaning procedures and employee temperature checks were performed prior to admission to buildings/workshops.

 

Stakeholder and shareholder engagement 

The Board regularly reviews our principal stakeholders and how we engage with them. The stakeholder voice is brought into the boardroom by regular reporting from our CEO, CFO, and Heads of HSSE (Healthy, Safety, Security & Environment), HR and Legal and the Strategic Business Unit Leaders.   The company has identified 5 Ethos principles (Safety, Service Excellence, People, Financial Responsibility and Integrity), as its driving principles. The Group have identified employees, shareholders and lenders, customers and suppliers as the principal stakeholders in the business. The relevance of each stakeholder group may increase or decrease depending on the matter or issue in question, so the Board seeks to consider the needs and priorities of each stakeholder group during its discussions and as part of its decision making.

The Group understands the importance that our shareholders have confidence in the Group, how it is managed in its strategic objectives to ensure the Group has a stable and long term performance for the shareholders. Details of the work performed by the leadership of the Group in relation to shareholder engagement can be located within the Corporate Governance section above.

The Executive Leadership team and other employees are in regular contact with the lenders to the Group, ensuring they are provided with the up to date financial performance and there are opportunities to discuss any specific areas. This includes any recent meetings with regards to the renewal of the bank facilities for the Group until July 2023.

The Group’s long-term success is underpinned by our customers and the delivery of predictable project outcomes that are aligned to our customers’ requirements. To deliver a great service, we listen to our customers to make sure we are leveraging the full capabilities of our organisation, our global reach and technical depth. This insight from customer engagement helps to inform the Group’s operational, business development and long-term strategic direction.

EthosEnergy also recognise the key role suppliers play in ensuring that EthosEnergy provide a high-quality service to their customers and the Group aims to maintain the strong relationships with their suppliers. The ‘OneEthos’ restructure has helped to build on these relationships with focused targets being provided by supply chain and understanding the full range of services that can be provided by our suppliers. 

Third party suppliers are one of the key aspects defined in the ESG framework as EthosEnergy is continually monitoring the third party supplier spend by country, region and by country including transactions with small businesses, minority owned businesses and disadvantaged owners. This monitoring allows for EthosEnergy to work with our suppliers to ensure good relations are maintained as well as recognising the Group’s responsibility to other businesses.

EthosEnergy has worked closely with both its customers and suppliers to ensure services were still continually being provided when it was possible. This involved maintaining regular contact with customers and suppliers, making special arrangements to ensure safety protocols were being followed and ensured that there were no significant delays to work being performed where it was possible. This regular contact and close working with both customers and suppliers have helped to maintain the strong relations, which the Group look to develop even further in the future.

 

Community and the Environment 

EthosEnergy as a large organisation recognises its duty to help both the community and the environment across the various locations the Group operates in. The Group has considered the positive actions it can perform in order to benefits these stakeholders and is continually challenging itself to make energy affordable and available for everyone.

During the year, the Group introduced the Environmental, Social and Governance (ESG) framework in order to build growth, financial sustainability and deliver long-term value through effective engagement with all stakeholders including the community and environment. The ultimate vision for the ESG framework is to fulfil our purpose; making energy available and affordable for everyone everywhere, thereby supporting the sustainability of the world and ensuring the needs of future generations are not compromised by actions we take today.

Some aspects were introduced last year including the Inclusion and Diversity Council which was introduced in 2020 and is responsible for enforcing the equal opportunities policy within EthosEnergy ensuring all employees are treated in a fair and consistent manner and not to discriminate unlawfully.

The Framework targets a number of wide-ranging initiatives however the Group is specifically focusing on six key areas to launch the ESG journey and these are:

• • Environmental Stewardship
  • Engineering Solutions
  • Inclusion and Diversity
  • Policies and procedures
  • Alliances and partnerships
  • Third party suppliers

 

• Engineered Solutions: As we look to double our business in the next 3 years, we will be challenging ourselves to invest in and develop more sustainable engineering solutions, this may include further technology efficiency improvements, doing more in alternative energy, or investing in clean fuel solutions.

 

• Inclusion and diversity is another major focus area for us. I&D is an important component of the social dimension of ESG. The Inclusion and Diversity Council which was introduced in 2020, is responsible for enforcing the equal opportunities policy within EthosEnergy ensuring all employees are treated in a fair and consistent manner and not to discriminate unlawfully.

 

• We are also focusing on our existing structure of governance. We want to review and update all of our systems, policies, and procedures to ensure they align and support our sustainability journey.

 

• Given our extensive geographic reach, we will continue to look for opportunity to establish alliances and partnerships including potentially in developing or underdeveloped countries.

 

• We also aim to improve our governance by holding all our suppliers around the world to our standard of integrity. A new supplier due diligence program was implemented in 2021.

 

There has been a number of environmental and social community outreach activities initiated in the year and includes donations to local charities throughout the world to help combat poverty, participation in charity races that provide monies for rehabilitation and treatment of sick and disabled children, skydives to raise money for Endometriosis and Green Day initiative which is when employees cleaned up of local areas in their area.

We have made great progress over the years holding a high a standard on environmental compliance and we already undertake many environmental activities in the company globally. Environmental stewardship is a focus area for us. We plan to quantify our global carbon footprint and establish future reduction strategies and targets.

 

Impact of Strategic decisions 

The ‘OneEthos’ structure now utilised by EthosEnergy has allowed for the leadership to of the Group to be transformed, bringing in talent and expertise that has benefited both the short and long term success of the business.