Environmental Resources Management Limited

Gender Pay Gap ReportApril 2018

The Gender Pay data in this report has been validated by Korn Ferry

Introduction

Foreword

ERM fully supports the publication of the gender pay gap report for its UK-based operations. For many years, we have included gender balance in our global annual sustainability targets, and have been making steady progress in this area. We know how important it is that we continue this focus and to promote an inclusive culture in which everyone has equal access to career progression.

This report shows that Environmental Resources Management Limited (our UK entity) has a gender pay gap. As you will also see in this report, we believe that this is attributable to the fact that we have more males than females in senior positions, and this is something that we clearly need to address with more vigour.

Developing women in leadership positions is clearly important, not just in the UK, but across the entire company. This was part of our drive to launch an initiative to build a more inclusive culture across the whole of ERM this past financial year. Our five-year goal is to have our employees reflect the communities in which we work, based not only on gender, but also other diversity measures. We are confident that this will help us reinforce our effort to address some of the findings of this report.

Keryn JamesGroup Chief Executive Officer

Peter RawlingsNorthern Europe Managing Partner

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Company Background

Environmental Resources Management (ERM) is a leading global provider of environmental, health, safety, risk, social consulting and sustainability related services. ERM has operated in the UK since 1971 and employs over 300 people in the UK business and has been at the forefront of environmental and social consultancy. Our services to private and public sector clients offer a rare blend of technical and business management skills ranging from assessing the impacts of major infrastructure projects to carbon footprinting, climate change risk assessment and resource efficiency programmes.

Gender Pay Gap Legislation

The UK Government Equalities Office's Gender Pay Gap reporting regulations came into force in April 2017, and employers in the UK with 250 or more relevant employees are now required to publish mandatory information concerning gender pay.

The regulations require employers to publish their overall mean (average) and median gender pay gaps, gender bonus gaps, gender distribution within salary quartiles and bonus received proportion.

The gender pay gap is a measure of the difference between men's and women's average earnings across an organisation irrespective of their role or seniority, and is expressed as a percentage of men's earnings. An organisation that has more men in senior roles and more women in junior roles is likely to have a gender pay gap.

It is important to note that gender pay is different to equal pay. Equal pay is defined under the Equal Pay Act as work of equal value, or 'like' work which is the same or broadly similar and extends to the full terms and conditions of employment (ie: basic pay, overtime rates, performance related benefits, hours of work, access to pension schemes, non-monetary terms, and annual leave entitlements).

This report provides data on ERM's gender pay gap and describes how the Company is actively taking steps to address the gender pay gap identified.

Population

UK-based organisations of 250 or more employees are required to publish their gender pay gap. Environmental Resources Management Limited is the only UK employing entity that falls into scope and therefore no other ERM companies are covered in this report.

The legislation specifies a 'snapshot date’ which employers must use as the basis for their data reporting. It also provides specific definitions for determining which employees are relevant for reporting purposes (a detailed glossary of definitions and terms is included in the Appendix).

thAs at the snapshot date (5 April 2017), 341 employees fell into the scope of 'full-pay relevant employees' with respect to the calculation of hourly pay, and 358 people were in scope for bonus pay calculations. The difference is due to 17 people being excluded from the hourly pay calculations, as they were not considered as full-pay relevant employees as per the legislation (for example those receiving reduced pay for absence, such as sabbatical, maternity or unpaid leave).

The data contained in this report has been reviewed and validated by a third party, Korn Ferry.

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Employee Distribution

This section refers to the population included in the hourly pay gap calculation, referred to as full-pay relevant employees.

The graphic below shows the overall gender distribution of full-pay relevant employees within Environmental Resources Management Limited.

Full-Pay Relevant Employee Distribution

Overall gender distribution is skewed towards full-pay relevant male employees, noting that 17 females have been excluded as they were not considered full-pay relevant employees as per the regulations (see earlier note).

Hourly Pay - Gender Split by Salary Quartiles

In order to understand ERM’s gender pay gap, it is important to show the proportion of males and females in each pay quartile, presented in the charts below.

The lower and lower-middle pay quartiles see a larger percentage of females than males. This is reversed in the upper-middle and upper pay quartiles. This is broadly comparable with what has been seen in other organisations and is attributable to the fact that males have historically occupied jobs in higher levels.

While the overall gender split is 55:45, the two most senior levels in the Company, (Technical Directors and Partners) are over 80% male, and consequently the proportion of males in the uppermost salary quartile is 74%.

Hourly Pay Gap

FemaleMale Upper pay quartile (75% - 100%)

26% 74%

36% 64%

56% 44%

Lower pay quartile (0% - 25%)

63% 37%

Female Male

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Gender Distribution of Employees by Grouping

The following chart highlights the distribution of full-pay relevant employee gender across the different career levels within ERM.

Proportion of male / female full-pay relevant employees by grouping

Consulting roles: The proportion of females and males is evenly distributed in ERM’s lower career levels (Levels 1 to 3) and skews towards males at Level 4.

Partners and Technical Directors: Technical Director (Level 5) are almost entirely male (90%), with the most senior level (Partner) being two-thirds male.

Professional Support staff: Lower level support staff (Levels 1 and 2) are predominantly female, with higher levels (Levels 3 and 4) more evenly distributed.

Female Male

26.32%

53.74%

81.16%

73.68%

46.26%

18.84%

Hourly Pay Gap

The chart below shows the overall hourly pay rate gap for Environmental Resources Management Limited.

Hourly pay gender gap

The overall hourly pay rate gender gap across all levels is 27.6% (mean) and 29.5% (median), based on a population of 341 relevant employees.

It is important to note that this overall gap should be looked at in the context of the gender distribution analysis, where it is evident that we have significantly more men than women in senior levels (Partners and Technical Directors) and significantly more women in junior support roles in the UK business.

27.6%

29.5%

Mean (Average) Median

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Percentage of Males and Females Receiving a Bonus

The proportion of males and females receiving a bonus is comparable, as shown below.

Employee Distribution

The graphic below shows the overall gender distribution for relevant employees within Environmental Resources Management Limited.

Relevant Employee Distribution

Overall, the gender distribution for bonuses isslightly skewed towards relevant male employeesbonus pay.

FemaleMale

Bonus Pay

FemaleMale

48%52%186 172 of Females received a bonus

of Males received a bonus

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Bonus Pay Gap

The chart below shows the overall bonus pay gap.

The bonus pay gap between males and females (across all levels) is 25.3% (mean) and 31.3% (median).

Again, this reflects the fact that the UK business has significantly more males in senior roles and more women in junior support roles.

Only jobs that received a bonus have been included in the bonus pay gap analysis (i.e. where no bonuses were awarded, this was not taken into consideration for the purposes of calculatingaverage bonuses).

Gender Distribution of Bonus Pay by Grouping

The following chart highlights the number of bonuses paid by gender.

The chart shows that the population that would typically receive higher bonuses due to their level of seniority (Partner and Technical Directors), is mostly populated by males. Consulting staff receiving bonuses are split evenly between male and female and within the support staff population, more women than men received bonuses.

50.33%

49.67%

75.00%

25.00%

26.32%

73.68%

Female Male

25.3%

31.3%

Mean (Average) Median

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The key conclusions of this report are:

There is a pay gap (for hourly and bonus pay) in the UK business, and this gap is higher than the national average according to the Government gender pay gap reporting website

thas at 20 March 2018.

This gap is largely driven by the gender distribution of employees, with more female staff in support roles and more males in senior consulting roles, including at Partner level.

ERM is committed to addressing the gender pay gap and will do so through its broader global commitment to diversity and inclusion, including increasing the number of women in senior leadership roles.

Conclusions & Commitments

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In April 2017, Keryn James was appointed ERM’s Group CEO. Keryn subsequently appointed an Executive Sponsor for Diversity and Inclusion and a Global Inclusion Lead. They have convened our first Inclusion Advisory Group. A key part of ERM's inclusion strategy will be to address gender diversity and inclusion.

Taking Action: Diversity and Inclusion at ERM

Executive Committee

Executive Sponsor

Global Inclusion Lead

Advisory Group

Regions and Business Units support building an inclusive culture by

demonstrating inclusive behaviours

Keryn JamesChief Executive Officer

Together with the Executive Committee, is informed of decisions and provides approval

Walt ShillGlobal Commercial Director

Executive Sponsor - InclusionProvides client focus perspective.Informs ExCom of actions and seeks approval for broader changes

Shané Francis-MylesRegional HR Director, EMEA

Global Inclusion LeadLeads the activities of the Advisory Group and the global implementation of approved actions

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Global Inclusion Action Plan

ERM's Global Inclusion Action Plan will seek to engage and educate people around inclusion. Under the inclusion banner, the UK will roll out initiatives such as:

The implementation of awareness training throughout the organisation for all staff (existing and new)

The development and implementation of a Women in Leadership programme

Development of more gender-balanced recruitment by examining our internal and external recruitment practices, along with any policies and practices to ascertain whether there are any barriers to females progressing

Supporting Women at Work

ERM UK has a flexible working culture and over 95% of formal flexible working requests have

stbeen approved since 1 April 2016. We welcomed back approximately 75% of our maternity

streturners for the financial year 1 April 2016 to stMarch 2017, and 100% from 1 April 2017 to end

of March 2018.

Approximately 17% of our workforce are part-time and enjoy formalised flexible working patterns (as at March 2018). Overall, ERM has a flexible working culture, so where formal arrangements are not in place, there is an emphasis on outcomes rather than hours spent in the office.

Measuring Our Success

ERM UK's gender pay gap will continue to be monitored and published in coming years and the reduction of this gap will be dependent on our goal to secure more women into senior roles.

Securing women in senior roles has been a focus of our sustainability agenda since 2011 and, over the last five years, we have seen an increase in women in senior roles in the UK (Partner and Technical Director level) grow from 14% to 19% (as at April 2017).

We will hold ourselves to account to ensure that:

Our talent management process is inclusive and reflects the diversity of existing employees and the geographical talent markets in which we source candidates

We see annual improvements in our diversity scores in our Employee Survey

We will have collaborative relationships with external organisations which support our diversity and inclusion agenda (i.e. Universities, industry bodies, local communities etc)

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Definitions*

Snapshot date

Gender pay gap calculations are based on figures drawn from a specific date each year called the

th'snapshot date', which is 5 April 2017.

Relevant and full-pay relevant employees

All employees employed by Environmental Resources Management Limited on the snapshot date are referred to as 'relevant employees'.

All employees who were paid their usual full pay in their pay period that included the snapshot date are referred to as 'full-pay relevant employees’.

Ordinary pay

Ordinary pay includes any monetary payment such as:

basic pay

allowances (such as overseas allowance payments)

pay for leave

Gross figures are used:

before tax and any deductions for employee pension contributions

after any deductions for salary sacrifice

Bonus Pay

Bonuses include any rewards related to:

annual performance bonus

ad hoc bonuses, including referral bonuses, global recognition, thank you and service excellence awards

Hourly pay rate

Add together each employee's ordinary pay and any bonus pay that was paid in the April 2017 payroll

Divide the total by the 'appropriate multiplier' – this gives you the employee's average weekly pay

The specific 'appropriate multiplier' for monthly pay periods is 4.35 (30.44 days divided by 7)

Divide the result for each employee by the number of their weekly working hours – this gives you the employee's average hourly pay rate

Mean (Average)

The arithmetic mean obtained by adding several quantities together and dividing the sum by the number of quantities.

Median

50th percentile, which divides the upper 50% from the lower 50% of data.

Proportion of males and females receiving a bonus payment

Number of male relevant employees who received a bonus divided by the total number of male relevant employees. Number of female relevant employees who received a bonus divided by the total number of female relevant employees.

Salary Quartiles

The proportion of male and female full-pay relevant employees in four pay bands.

Full-pay relevant employees are ranked from highest to lowest paid

Divided into four equal parts ('quartiles')

The percentage of men and women is calculated in each of the four parts

Appendix

*These definitions draw upon information provided on the GOV.uk gender pay website. For further details on the methodology used refer to www.gov.uk/guidance/gender-pay-gap-reporting-overview

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