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Our approach to determining where we operate, what we do and who we serve

We support governments in delivering their public policy commitments, often in very sensitive areas. Our role is to deliver specific elements of those policies in the most effective, efficient and caring manner, working with our customers to maximise the value generated for society, in whose best interest those policies are developed.

Everything we do is motivated by our desire to be a trusted partner of governments, delivering superb public services that transform outcomes and make a positive difference for our fellow citizens. However, what we do – including where and how and who we serve – is also carefully governed by Serco – approached with conscience, caution and with uncompromising adherence to our Values and commitment to behave with integrity and treat people with respect.

We work to identify, create and earn business opportunities where we believe we can achieve an optimal balance of sustainable value creation for our stakeholders. Our potential involvement in activities on behalf of our customers is subjected to a rigorous process of review and qualification which seeks to enable transparent and well-informed decision-making, and seeks to ensure compliance with our strategy, Policies and Standards. It also aims to ensure due consideration of salient adverse impact risks, including those from environmental, social and governance (ESG) perspectives.

Our Business Lifecycle

Embedded within the Serco Management System (SMS) is our Business Lifecycle, which describes the core processes that apply throughout every business activity, from the identification of geographies and markets, business development and bidding, through operations and eventual closure of our contracts.

The Serco Business Lifecycle constitutes several stages which follow the maturity of any business opportunity, controlled through a series of ten mandatory governance Gates (Gates 0-9). Each Gate Review represents a key decision point and requires formal assessment and approval by senior management.

A set of governance themes is considered in Gate Reviews, including: material legal, ethical and human rights risks; health, safety and environment risks; and other salient adverse impact risks from an ESG perspective.

The requirements and spirit of the SMS must be met, including Policies, Standards and controls relevant to management of our principal areas of ESG responsibility and sustainability. A business opportunity that cannot satisfy such criteria will not be pursued.

Our Business Lifecycle decision-making governance

Our Business Lifecycle is supported by a robust governance framework and Delegated Authority Matrix which prescribes the level of oversight and approvals required.

Divisional Chief Executives establish a Business Lifecycle Review Team (BLR Team) to review opportunities. The BLR Team provides direction for each opportunity whilst ensuring appropriate governance and Gate authorisation throughout its lifecycle. BLR Teams are led by Divisional Chief Executives and comprise business and functional specialists whose collective experience and expertise seeks to ensure the opportunity is directed to an appropriate outcome, which includes ensuring compliance with Gate governance in accordance with the SMS.

Divisional Executive Management Teams provide oversight of the Business Lifecycle at the Divisional level. BLR Teams are responsible for determining whether a decision exceeds their Limits of Authority and requires scrutiny and oversight by the Investment Committee and/or the Serco Group plc Board.

The Investment Committee comprises the Group Chief Executive, the Group Chief Financial Officer, the Group General Counsel and Company Secretary and other members of the management team. It acts on behalf of the Board to review, monitor and approve bids, mergers, acquisitions and disposals and other corporate activity within specific authority limits delegated by the Board.

Any decision exceeding the authority of the Investment Committee requires Serco Group plc Board review and approval.

Our Business Lifecycle decision-making tools

The SMS features several tools which directly support Business Lifecycle decision-making. These include:

  • Our New Country Due Diligence guidance – which prescribes the extent and depth of due diligence required for entry into a new country based on a range of service, customer and geographical criteria.
  • Our Human Rights Standard and supporting Human Rights Decision Tree procedure – which describes and enables the identification and assessment of any actual or potential Adverse Human Rights Impacts in which Serco might be or become involved, either through its own activities or business relationships.
  • Our Third Party Due Diligence processes and controls – which apply to customers, suppliers, agents and other third parties, and mergers and acquisitions, and enable assessment of whether a third party relationship will increase our exposure to ethical and legal liability.

Rebids, extensions and material contract variations

Decisions made are revisited at natural intervals in the contract lifecycle. Rebids, extensions and material contract variations are approached in the same way as new business opportunities. 

Doing the right thing across a complex global ecosystem of stakeholder dynamics

We are proud of our involvement in the delivery of complex government policy – for example: running prisons to reduce reoffending, supporting individuals seeking asylum through housing and community integration, and strengthening the fulfilment of the UK Government’s nuclear defence policy through our interest in AWE. We believe we have the right combination of experience, expertise and ethos to provide our customers the support they need to fulfil their missions – all of which are considered vital to the sustainable wellbeing of the nations they serve and, in some cases, global society – in areas defined by delicate and constantly shifting stakeholder dynamics.

Doing our job well requires us to balance diverse stakeholder interests. Doing the right thing across a complex global ecosystem of stakeholders is not always comfortable or popular, but it is seeking to deliver consistently and with quality, holding ourselves to account, standing by our Values and heeding our lessons that most clearly defines us today. We continually challenge ourselves to make sure we understand and provide appropriately for what matters most regarding our role in society, the impact that we have and the value we create. We know we work in many difficult areas and we focus on trying to do it well, with respect and with fairness.

In deciding what types of work we should or should not do and where we might do it, we take into account many issues including ESG considerations. There are some countries where the risks are unacceptable, so we decide not to do business or certain types of business in those countries. Even where there are areas in which democratically elected Governments have decided something is acceptable, we may decide that we are uncomfortable doing that particular type of work and do not believe it is in accordance with our Values. There are a number of examples of types of business opportunities in countries and sectors where we have been unable to get ourselves comfortable. In those cases, we have not bid and refused opportunities on ethical grounds or set conditions that would have allowed us to be comfortable that ethical issues would be dealt with, but that have not been accepted by the potential customer. We will continue to do the same in the future.

Our involvement in the UK Atomic Weapons Establishment (AWE)

One area of our work which some stakeholders find challenging is our involvement with AWE, where we oversee maintenance of the UK’s nuclear warhead arsenal. Nobody could be involved in this work without asking themselves questions around the ethics of working on nuclear warheads. The reason why we are proud to be part of the AWE operation is that the UK’s possession of nuclear weapons has been an established part of the country’s defence policy for decades; it has had the support of every Government elected since 1945; it has been repeatedly shown to have the support of the majority of people in the UK; and we believe that we can and do contribute to the safety and efficiency of AWE.

We understand that some people may object to our involvement in this area, but we believe it is appropriate for our Company to work with our largest customer on its most important strategic programme.