Audit programme and performance measurement
We measure up well against objectives described in last year's Report and Accounts. For example, in line with our aims of setting reduction targets for aspects of environmental performance by 2002, we expect to sign up to the UK government's Making a Corporate Commitment Campaign by the end of 2001. Also, we successfully introduced a system of environmental metrics last year to enable us to measure performance in many areas – including environmental expenditure/cost savings, greenhouse gas emissions, water, waste, energy, and hazardous substances. We are now upgrading this for reissue at the end of 2001, and extending it to cover businesses acquired during the year.

Our group Environmental Manager and an external consultancy completed the site audits scheduled for the year – starting with the major European businesses and extending to North American facilities. This brings the number of such audits to more than 70 over the past two years. Action plans have been developed for each facility audited and a database is maintained to track the implementation of these actions. During this programme, we also piloted our new company Environmental Standards to meet our objective of establishing controls and best practice in environmental management in 2001.

Working towards our goal of improving environmental awareness and knowledge of company staff, 21 environmental co-ordinators completed a certified foundation course in environmental management, and 12 product designers took part in a workshop examining the implications on our business of European product take-back and recycling legislation.

Sharing best practice and attaining ISO 14001
We continue to develop our culture of sharing best practice through conferences, training events, demonstration projects and site visits. At our Environment Conference, directors, managers and other staff from UK businesses generated ideas for shaping environmental management to meet the demands of our global operations, and these will be explored further in future events.

We also set up two, 18 month demonstration projects geared to collective learning and developing common approaches to implementing ISO 14001 and to minimising waste. Each involves five companies, and the waste minimisation project includes two of our largest consumers of energy in the UK, Smiths Aerospace at Cheltenham and Smiths Medical (Portex) at Hythe. With some 28% of our manufacturing sites certified under ISO 14001, our enlarged organisation now has considerable experience and materials to share across the group. This will help us to reach our target of all our major manufacturing facilities achieving certification to ISO 14001 by the end of 2003. To date, 36 businesses worldwide have achieved ISO 14001 certification.

Product stewardship
We continue to integrate environmental considerations with product development. For example, we are working to reduce fugitive emissions in the process industries through sealing solutions; we have developed fuel-saving on-board systems for aircraft (such as the Queen's Award-winning Electrical Load Management System) and energy-efficient fans from Vent-Axia (Lo-Watt range). Within our Industrial activities, the Interconnect businesses are researching options for phasing out the use of lead (in solder and elsewhere) ahead of European Union Directives. However, we recognise that these are merely first steps, and will undertake further work to spread such initiatives more widely.

Future commitments
In addition to the on-going programmes described above, we are taking a number of important steps to improve environmental management capability across the group and communicate our achievements.

One important aim is to have web-based resources for environmental management in place by the end of 2001, after which we will continue to develop and update the information in line with changes in legislation, technology, and know-how. In the light of this year's audit findings, we are also revising the company Environmental Standards for the year ahead, and providing a package of ISO 14001 support measures for businesses – including training, advice, and the sharing of tools and approaches to implementing the standard. By 2003 we will have sufficient consistent data to be able to publish an environmental report for the group.

Positive force for success
We see our progress in each of these areas – human resources, H&S, and environmental issues – as a positive force for commercial success, and the integration of best practice into everyday operations is gaining momentum. In particular, we are meeting the challenge of our global dimension with a strong focus on retaining and managing knowledge and key skills. This includes the international succession-planning programme through which we will benefit fully from developing the talents and entrepreneurial outlook of high-calibre people within the group.