Board committees

The Board hereby resolves to establish a Committee of the Board, in accordance with the articles of association of the Company, to be known as the Audit Committee, to assist the Board in fulfilling its oversight responsibilities as set out in these terms of reference.

1. Members of the Committee shall be appointed by the Board on the recommendation of the Nominations Committee in consultation with the Chairman of the Audit Committee and shall comprise at least three members The Committee shall include at least one member of the Remuneration Committee. Members of the Committee shall be appointed by the Board, on the recommendation of the Nominations Committee in consultation with the Chairman of the Audit Committee;
2. All members of the Committee shall be non-executive directors who are independent in the opinion of the Board (in accordance with the Code);
3. At least one member of the Committee should, in the opinion of the Board, have significant, recent and relevant financial experience and the Committee as a whole shall have competence relevant to the sector in which the Company operates;
4. The Chairman of the Board shall not be a member of the Committee. The Chairman of the Committee shall be appointed by the Board and the Board may appoint a deputy. In the absence of the Committee Chairman (and, if applicable, any duly appointed deputy), the members of the Committee present shall elect one of their number to chair the meeting.

The Company Secretary shall be the secretary of the Committee.

The quorum shall be two members of the Committee. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

1. Except as otherwise provided, no one other than the Committee members shall be entitled to attend Committee meetings;
2. The Committee shall have the discretion to decide who, other that its members, shall attend its meetings;
3. The Chairman of the Board, other non-executive directors, CEO, CFO, Executive Committee members, Senior Management, representatives of internal audit, representatives of the external auditors, or other persons shall attend all or part of the meeting (as appropriate) at the invitation of the Committee and with the agreement of the Committee Chair; and
4. There should be at least one meeting per year, or part thereof, where the Committee meets the external and internal auditors without executive Board members present. This need not be the same meeting.

1. Meetings shall be held not less than four times per year (to coincide with key dates in the Company’s financial reporting cycle);
2. The Committee may meet at other times during the year as agreed between the members of the Committee; and
3. Outside of the formal meeting programme, the Committee Chairman will maintain a dialogue with key individuals involved in the Company’s governance, including the Board Chairman, the CEO, the CFO, the external audit lead partner and the internal audit lead partner.

1. Decisions of the Committee will be made by majority vote. Each member of the Committee shall have one vote which may be cast on matters considered at the meeting.  

2. If a matter that is considered by the Committee is one where a member of the Committee, either directly or indirectly has a personal interest, that member shall not be permitted to vote at the meeting.

3. In the event of any equality of votes, save where he/she has a personal interest, the Chair of the Committee will have a second or casting vote.
 

1. Meetings of the Committee shall be called by the Company Secretary at the request of any of its members or at the request of the external audit lead partner or the internal audit lead partner, if they consider it necessary;
2. Unless otherwise agreed, notice of each meeting confirming the venue, time and date, together with an agenda of the items to be discussed, shall be forwarded to each member of the Committee and any other person required to attend, no later than three working days before the date of the meeting. Any supporting papers shall be sent to Committee members and to other attendees (as appropriate) at the same time and notices, agendas and supporting papers can be sent in electronic form where the recipient has agreed to receive documents in such a way.
3. Meetings may, particularly if required on short notice, be held by telephone or any other method of communication approved by the Chairman of the Committee.

1. The Company Secretary shall minute the proceedings and resolutions of all meetings of the Committee, including recording the names of those present and in attendance; and
2. Draft minutes of Committee meetings shall be circulated promptly to all members of the Committee and, once agreed, to all members of the Board, unless the Chairman of the Committee and the Chairman of the Board agree otherwise.

The Chairman of the Committee shall attend the annual general meeting and be available to respond to any shareholder questions.

The Committee should carry out the duties below for the parent Company, major subsidiary undertakings and the group as a whole, as appropriate.

11.1 Financial reporting

1. The Committee shall monitor the integrity of the financial statements of the Company and recommend to the Board the approval of such financial statements, including its statutory annual audit report and half-yearly review and related report, and any preliminary announcement or other formal announcement relating to its financial performance, reviewing and reporting to the Board on significant financial reporting issues and judgements which they contain having regard to matters communicated to it by the auditor.
2. In particular, the Committee shall review and challenge where necessary:
   1. the application of significant accounting policies and any changes to them.
   2. the methods used to account for significant or unusual transactions where different approaches are possible;
   3. whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor;
   4. the clarity and completeness of disclosure in the Company’s financial reports and the context in which statements are made; and
   5. all material information presented with the financial statements, such as the business review and the corporate governance statements relating to the audit and to risk management.
3. The Committee shall review any other statements requiring Board approval which contain financial information first, where to carry out a review prior to Board approval would be practicable and consistent with any prompt reporting requirements under any law or regulation including the Listing Rules or Disclosure Guidance and Transparency Rules sourcebook.
4. Where the Committee is not satisfied with any aspect of the proposed financial reporting by the Company, it shall report its views to the Board.

11.2 Narrative reporting

Where requested by the Board, the Committee should review the content of the annual report and accounts and advise the Board on whether, taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy and whether it informs the Board’s statement in the Annual Report on these matters that is required under the Code.

11.3 Internal controls and risk management systems

The Committee shall:

1. on behalf of the Board (which retains overall responsibility for risk management), keep under review and monitor the adequacy and effectiveness of the Company’s internal financial controls and internal control and risk management systems;
2. where requested by the Board, ensure a robust assessment of the emerging and principal risks facing the Company has been undertaken and that procedures are in place to identify emerging risks and provide advice on the management and mitigation of those risks;
3. review and approve the statements to be included in the annual report concerning internal controls and risk management, including but not limited to any viability statement;
4. to provide oversight of the risk management controls of the Company having due regard to the Company's risk appetite, tolerance and strategy as set by the Board, and to provide oversight to ensure that these controls are proper and effective and in accordance with the statutory and regulatory requirements and relevant guidance;
5. to provide oversight of the process for identifying and managing risks and amending the process as required;
6. ensure that effective and robust risk management is an integral part of Grainger’s strategy setting, business planning and decision-making process;
7. to consider the incidence of risks that arise and to provide the necessary oversight to adapt/adjust controls to improve effectiveness as recommended by management; and
8. to consider what external audit/verification should be undertaken to give comfort on correct operations of risk controls.

11.4 Compliance, whistleblowing and fraud

The Committee shall:

1. review the adequacy and security of the Company’s arrangements for its workforce to raise concerns, in confidence and anonymously, about possible wrongdoing in financial reporting or other matters. The Committee shall ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action;
2. annually review the Company’s procedures for detecting fraud; and
3. review the Company’s systems and controls for the prevention of bribery and receive reports on non-compliance.

11.5 Internal audit

The Committee shall:

1. approve the appointment or termination of appointment of the internal audit lead partner;
2. review and approve the charter of the internal audit function and ensure the function has the necessary resources and access to information to enable it to fulfil its mandate, and is equipped to perform in accordance with appropriate professional standards for internal auditors;
3. ensure the internal auditor has direct access to the Board Chairman and to the Committee Chairman, and is accountable to the Committee;
4. review and assess the annual internal audit work plan;
5. receive a report on the results of the internal auditor’s work on a periodic basis;
6. review and monitor management’s responsiveness to the internal auditor’s findings and recommendations;
7. meet with the internal audit lead partner at least once a year without the presence of management; and
8. monitor and review the effectiveness of the Company’s internal audit function, in the context of the Company’s overall risk management system and review and monitor management’s responsiveness to the internal auditors’ findings and recommendations; and
9. consider whether an independent, third party review of internal auditor effectiveness and process is required.

11.6 External audit

The Committee shall:

The Committee shall also:

1. consider and make recommendations to the Board, to be put to shareholders for approval at the AGM, in relation to the appointment, re-appointment and removal of the Company’s external auditor;
2. ensure that at least once every ten years the audit services contract is put out to tender to enable the Committee to compare the quality and effectiveness of the services provided by the incumbent auditor with those of other audit firms; and in respect of such tender, conduct such tender process and oversee the selection process and ensure that all tendering firms have such access as is necessary to information and individuals during the duration of the tendering process;
3. if an auditor resigns, investigate the issues leading to this and decide whether any action is required;
4. oversee the relationship with the external auditor including (but not limited to):
   1. recommendations on their remuneration, including both fees for audit and non-audit services, and that the level of fees is appropriate to enable an effective and high quality audit to be conducted;
   2. approval of their terms of engagement, including any engagement letter issued at the start of each audit and the scope of the audit;
   3. assessing annually their independence and objectivity taking into account relevant professional and regulatory requirements and the relationship with the auditor as a whole, including the monitoring the appropriateness of provision of any non-audit services;
   4. satisfying itself that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the Company (other than in the ordinary course of business) which could adversely affect the auditor’s independence and objectivity;
   5. agreeing with the Board a policy on the employment of former employees of the Company’s auditor, and monitoring the implementation of this policy;
   6. monitoring the auditor’s compliance with relevant ethical and professional guidance on the rotation of audit partner, the level of fees paid by the Company compared to the overall fee income of the firm, office and partner and other related requirements;
   7. assessing annually the qualifications, expertise and resources of the auditor and the effectiveness of the audit process, which shall include a report from the external auditor on their own internal quality procedures taking into consideration relevant professional and regulatory requirements;
   8. seeking to ensure co-ordination with the activities of the internal audit function; and
   9. evaluating the risks to the quality and effectiveness of the financial reporting process and consideration of the need to include the risk of the withdrawal of their auditor from the market in that evaluation.
5. meet regularly with the external auditor (including once at the planning stage before the audit and once after the audit at the reporting stage) and at least once a year, without management being present, to discuss the auditor’s remit and any issues arising from the audit;
6. review and approve the annual audit plan and ensure that it is consistent with the scope of the audit engagement, having regard to the seniority, expertise and experience of the audit team; and
7. review the findings of the audit with the external auditor. This shall include but not be limited to, the following:
   1. a discussion of any major issues which arose during the audit;
   2. key accounting and audit judgements;
   3. levels of errors identified during the audit; and
   4. the effectiveness of the audit process.
8. review any representation letter(s) requested by the external auditor before they are signed by management;
9. review the management letter and management’s response to the auditor’s findings and recommendations; and
10. develop and recommend to the Board and implement the Company’s formal policy on the supply of non-audit services by the external auditor, including the Committee’s approval of non-audit services and the types of non-audit services to be pre-approved and assessment of whether non- audit services have a direct or material effect on the audited financial statements. The Committee will also ensure that the provision of non-audit services does not impair the external auditor’s independence or objectivity, satisfying itself that there are no relationships between the auditor and the Company outside the ordinary course of business (including the level of non-audit fees) that could adversely affect the auditor’s independence and objectivity, or the audit process.

1. The Committee Chairman shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities and shall also formally report to the Board on how it has discharged its responsibilities. This report shall include:
   1. the significant issues that it considered in relation to the financial statements (required under paragraph 11.1.1) and how these were addressed and in particular information on the outcome of the statutory audit and explain how the statutory audit contributed to the integrity of financial reporting and the Committee’s role in that process;
   2. its assessment of the independence and effectiveness of the external audit process (required under paragraph 11.6.4.7) and its recommendation on the appointment or reappointment of the external auditor; and
   3. any other issues on which the Board has requested the Committee’s opinion including any matters in relation to the policy on non-audit services.
2. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed;
3. The Committee shall compile a report on its activities and how the Committee has discharged its responsibilities to be included in the Company’s annual report. The report should include a summary of how the Committee’s performance evaluation has been conducted, its principal risks, the procedures in place to identify emerging risks and an explanation as to how they are being managed and mitigated, an explanation of how the Committee has addressed the independence and effectiveness of the external audit process (including the provision of non-audit services and an explanation of how, if the auditors provide non-audit services to the Company and the Group, auditor objectivity and independence is safeguarded), the significant issues that the Committee considered in relation to the financial statements and how these issues were addressed, having regard to matters communicated to it by the auditor; any proposed re-tendering of external audit services; and all other information requirements set out in the Code; and
4. In compiling the reports referred to in 12.1 and 12.3, the Committee should exercise judgement in deciding which of the issues it considers in relation to the financial statements are significant but should include at least those matters that have informed the Board’s assessment of whether the Company is a going concern and the viability statement. The report to shareholders need not repeat information disclosed elsewhere in the annual report and accounts but could provide cross-references to that information.

The Committee shall:

1. have access to sufficient resources in order to carry out its duties, including access to the Company secretariat for assistance as required;
2. be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members;
3. give due consideration to all relevant laws and regulations, the provisions of the Code and the requirements of the UK Listing Authority’s Listing, Prospectus and Disclosure Guidance and Transparency Rules and any other applicable rules, as appropriate;
4. be responsible for co-ordination of the internal and external auditors;
5. oversee any investigation of activities which are within its terms of reference;
6. work and liaise as necessary with all other Board Committees taking particular account of the impact of risk management and internal controls being delegated to different committees; and
7. arrange for periodic reviews of its own performance and, at least annually, review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board.

The Committee is authorised to:

1. seek any information it requires from any employee of the Company in order to perform its duties;
2. obtain, at the Company’s expense, independent legal, accounting or other professional advice on any matter it believes it necessary to do so;
3. call any employee to be questioned at a meeting of the Committee as and when required; and
4. have the right to publish in the Company’s annual report, details of any issues that cannot be resolved between the Committee and the Board.

The Board hereby resolves to establish a Committee of the Board, in accordance with the articles of association of the Company, to be known as the Nominations Committee, to assist the Board in fulfilling its oversight responsibilities.

1. Members of the Committee shall be appointed by the Board and shall comprise at least three members.
2. The majority of the members of the Committee shall be non-executive directors who are independent in the opinion the Board.
3. The Chairman of the Committee shall be appointed by the Board and should be either the Chairman of the Board or an independent non-executive director. The Board may appoint a deputy Chairman of the Committee. In the absence of the Committee Chairman (and, if applicable, any duly appointed deputy), the members of the Committee present shall elect one of their number to chair the meeting. The Chairman of the Board shall not chair the Committee when it is dealing with the matter of succession to the Chairmanship.
4. Where any matter to be considered by the Committee concerns one of the Committee members, that Committee member shall be replaced for the purposes of that discussion by another non-executive director selected by the Chairman of the Committee (unless the matter concerns the Committee Chairman, in which case the replacement shall be selected by the remaining Committee members).
5. Appointments to the Committee shall be for a period of up to three years, which may be extended for up to two further three-year periods, provided that the majority of the Committee members remain independent and continue to meet the criteria for membership.

The Company Secretary shall be the secretary of the Committee.

1. The quorum shall be two members of the Committee. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

1. Except as otherwise provided, no one other than the Committee members shall be entitled to attend Committee meetings.
2. The Committee shall have the discretion to decide who, other that its members, shall attend its meetings.
3. As and when appropriate and necessary, the Chairman of the Board (if not a member of the Committee), other non-executive directors, the CEO, the Company Secretary, the Chief People Officer or other persons, and external advisers may attend meetings at the invitation of the Committee.

1. The Committee shall meet at least twice a year and at such other times as the Chairman of the Committee or the members of the Committee shall require.

1. Decisions of the Committee will be made by majority vote. Each member of the Committee shall have one vote which may be cast on matters considered at the meeting.
2. If a matter that is considered by the Committee is one where a member of the Committee, either directly or indirectly has a personal interest, that member shall not be permitted to vote at the meeting.
3. In the event of any equality of votes, save where he has a personal interest, the Chairman of the Committee will have a second or casting vote.

1. Meetings of the Committee shall be called by the Company Secretary at the request of the Committee Chairman.
2. Unless otherwise agreed, notice of each meeting confirming the venue, time and date, together with an agenda of items to be discussed, shall be forwarded to each member of the Committee and any other person required to attend, no later than three working days before the date of the meeting. Any supporting papers shall be sent to Committee members and to other attendees (as appropriate), at the same time.
3. Meetings may, particularly if required on short notice, by held by telephone or any other method of communication approved by the Chairman of the Committee.

1. The Company Secretary shall minute the proceedings and resolutions of all meetings of the Committee, including recording the names of those present and in attendance.
2. Minutes of Committee meetings shall be circulated promptly to all members of the Committee and, once agreed, to all the members of the Board, unless in the opinion of the Committee Chairman it would be inappropriate to do so.

1. The Chairman of the Committee shall attend the annual general meeting and be available to respond to any shareholder questions on the Committee’s activities.

1. The Committee is authorised by the Board to investigate any activity relevant to its terms of reference. It is authorised to seek any information that requires from any employee of the Company and all employees or directors to co-operate with any request made by the Committee.
2. The Committee is authorised by the Board to obtain, outside legal or other independent professional advice, at the Company’s expense, on any matter within its terms of reference, and seek the attendance of outsiders with relevant experience and expertise if it considers this necessary.

The Committee shall carry out the following duties:

12.1 Composition of the Board

1. regularly review the structure, size and composition (including the skills, experience, independence, knowledge and diversity) of the Board and make recommendations to the Board with regard to any changes that are deemed necessary;
2. keep under review the leadership needs of the organisation, both executive and non-executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace; and
3. keep up to date and fully informed about strategic issues and commercial changes affecting the Company and the market in which it operates.

12.2 Succession planning

1. give full consideration to succession planning for directors and other senior executives in the course of its work, taking into account the challenges and opportunities facing the Company, and the skills, experience, independence, knowledge and diversity needed on the Board in the future; and
2. satisfy itself that plans are in place for orderly succession for appointments to the Board and senior management.

12.3 Appointments to the Board

1. be responsible for identifying and nominating for the Board’s approval, candidates from a wide range or backgrounds to fill Board vacancies as and when they arise;
2. consider proposals for the re-appointment or promotion of Directors and also any proposal for their dismissal, retirement, non re-appointment or any substantial change in their duties or responsibilities or the term of their appointment;
3. before the Board makes any appointment, evaluate the balance of skills, experience, independence, knowledge and diversity on the Board, and, in light of this evaluation, prepare a description of the role and capabilities required for a particular appointment. In identifying suitable candidates, the Committee shall:
   1. use such methods as it deems appropriate, including the use of open advertising or the services of external advisers to facilitate the search;
   2. consider candidates from a wide range of backgrounds; and
   3. consider candidates on merit and against objective criteria and with due regard for the benefits of diversity on the Board, including gender, taking care that appointees have enough time available to devote to the position;
4. for the appointment of a Chairman, prepare a job specification, including the time commitment expected, and require a proposed Chairman to disclose other significant commitments to the Board before appointment and disclose any changes to the Chairman’s commitments to the Board as they arise;
5. ensure that on appointment to the Board, Non-Executive Directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, Committee service and involvement outside Board meetings and the induction process;
6. ensure that all directors offer themselves for annual re-election by shareholders in accordance with the UK Corporate Governance Code (Provision B.7.1) or the retirement by rotation provisions in the articles of association, having regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required and the need for progressive refreshing of the Board (particularly in relation to Directors being re-elected for a term beyond six years); and
7. keep under review the number of external directorships held by each director.

12.4 Induction and training

1. ensure that all new Directors undertake an appropriate induction programme to ensure that they are fully informed about strategic and commercial issues affecting the Company and the markets in which it operates as well as their duties and responsibilities as a director; and
2. consider any training requirements for the Board as a whole.

12.5 Conflicts of interest

1. before appointment of a Director, require the proposed appointee to disclose any other business interests that may result in a conflict of interest and to report any future business interests that could result in a conflict of interest;
2. consider and, if appropriate, authorise situational conflicts of interest of Directors and potential Directors;
3. keep under review at least annually potential conflicts of interests of directors disclosed to the Company and develop appropriate processes for managing such conflicts if the Committee considers this to be necessary.

12.6 Board evaluation

1. assist the Chairman of the Board with the implementation of an annual evaluation process to assess the overall and individual performance and effectiveness of the Board and its Committees, including consideration of balance of skills, experience, independence and knowledge of the Company, its diversity, including gender, how the Board works together as a unit, and other factors relevant to the Board’s effectiveness;
2. review the results of the Board performance evaluation process that relate to the composition of the Board;
3. ensure that evaluation of the Board is externally facilitated at least every three years;
4. review the results of the performance evaluation of the Committee; and
5. review annually the time required from Non-Executive Directors, including the Chairman and Senior Independent Director. Performance evaluation should be used to assess whether the Non-Executive Directors are spending enough time to fulfil their duties.

The Committee shall also make the following recommendations to the Board, as appropriate.

13.1 Nominations and succession planning

1. the appointment of any director to executive or other office other than to the positions of Chairman and Chief Executive, the recommendation for which is to be considered at a meeting of the full Board and keep under review the number of external directorships held by non-executive directors;
2. the Chairman of the Board, having assessed every three years whether the present incumbent shall continue in post, taking into account the need for continuity versus freshness of approach;
3. suitable Non-Executive Directors for the role of senior independent director;
4. membership [and chairmanship] of the Audit and Remuneration Committees, and any other Board Committees as appropriate, in consultation with the Chairman of those Committees; and
5. formulating succession plans for both Executive and Non-Executive Directors and in particular for the key roles of Chairman and Chief Executive.

13.2 Re-appointment of directors

1. the re-appointment of any Non-Executive Director at the conclusion of their specified term of office, having given due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required; and
2. re-election by shareholders in accordance with the UK Corporate Governance Code (Provision B.7.1) or the retirement by rotation provisions in the articles of association, having regard to their performance and commitment to the role (particularly in relation to non-executive directors being re-elected for a time beyond six years).

13.3 Continuation of office

1. any matters relating to the continuation in office of any Director at any time including the suspension or termination of service of an Executive Director as an employee of the Company, subject to the provisions of the law and their service contract.

1. The Chairman of the Committee shall report verbally to the Board on the principal matters arising from its meeting.
2. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit.
3. The Committee shall produce a report to be included in the company’s annual report about its activities, the process used to make appointments and explain if external advice or open advertising has not been used. Where an external search agency has been used, it shall be identified in the annual report and a statement made as to whether it has any connection with the company.

The Committee shall:

1. have access to sufficient resources in order to carry out its duties, including access to the Company Secretariat for assistance as required;
2. be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members;
3. give due consideration to laws and regulations, the provisions of the Code and the requirements of the UK Listing Authority’s Listing, Prospectus and Disclosure and Transparency Rules and any other applicable rules, as appropriate;
4. arrange for periodic reviews of its own performance and, at least annually, review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

The Board hereby resolves to establish a Committee of the Board, in accordance with the articles of association of the Company, to be known as the Remuneration Committee, to assist the Board in fulfilling its oversight responsibilities.

1. Members of the Committee shall be appointed by the Board and shall comprise of at least three members.
2. All members of the Committee shall be Non-Executive directors who are independent in the opinion of the Board. The Chair of the Board may also serve on the Committee as an additional member if he or she was considered independent on appointment.
3. The Chair of the Committee shall be appointed by the Board and the Board may appoint a deputy. Before appointment as Committee Chair, the appointee should, if possible, have served on a remuneration committee for at least 12 months. In the absence of the Committee Chair (and, if applicable, any duly appointed deputy) the members of the Committee present shall elect one of their number to chair the meeting.
4. Appointments to the Committee shall be for a period of up to three years, which may be extended for up to two further three-year periods, provided the director continues to meet the membership criteria.

1. The Company Secretary shall be the secretary of the Committee and will ensure that the Committee receives information and papers in a timely manner to enable full and proper consideration to be given to the issues.

1. The quorum shall be two members of the Committee. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

1. Except as otherwise provided, no one other than the Committee members shall be entitled to attend Committee meetings.
2. The Committee shall have the discretion to decide who, other than its members, shall attend its meetings.
3. The Chairman of the Board (where they are not a member of the Committee), other Non-Executive directors, CEO, CFO, HR Director, or other persons shall attend meetings at the invitation of the Committee, as and when appropriate.

1. The Committee shall meet at least twice a year and at such times as the Chair of the Committee or the members of the Committee shall require.

1. Decisions of the Committee will be made by majority vote. Each member of the Committee shall have one vote which may be cast on matters considered at the meeting.
2. If a matter that is considered by the Committee to be one where a member of the Committee, either directly or indirectly has a personal interest, that member shall not be permitted to vote at the meeting.
3. In an event of an equality of votes, save where he has a personal interest, the Chair will have a second or casting vote.

1. Meetings of the Committee shall be called by the Company Secretary at the request of any of its members.
2. Unless otherwise agreed, notice of each meeting confirming venue, time and date, together with an agenda of items to be discussed, shall be forwarded to each member of the Committee and any other person invited or required to attend, no later than three working days prior to the date of the meeting. Any supporting papers shall be sent to Committee members and to other attendees (as appropriate), at the same time.
3. Meetings may, particularly if required on short notice, be held by telephone or by any other method of communication approved by the Chair of the Committee.

1. The Company Secretary shall minute the proceedings and resolutions of all meetings of the Committee, including recording the names of those present and in attendance.
2. Minutes of Committee meetings shall be circulated promptly to all members of the Committee and, once agreed, to all members of the Board, unless the Chair of the Committee and the Chair of the Board agree otherwise a conflict of interest exists.

1. The Chair of the Committee shall attend the annual general meeting and be available to respond to any shareholders’ questions on the Committee's activities. In addition, the Chair of the Committee should seek engagement with shareholders on significant matters related to the Committee's areas of responsibility.

1. The Committee is authorised by the Board to investigate any activity relevant to its terms of reference. It is authorised to seek any information that it requires from any employee of the Company and all employees are directed to co-operate with any request made by the Committee.
2. The Committee is authorised by the Board to obtain outside legal, or other independent professional advice, at the Company's expense, on any matter within its terms of reference and seek the attendance of outsiders with relevant experience and expertise if it considers this necessary.

The Committee shall:

1. 1. determine and agree with the Board the framework or Board policy for directors’ remuneration and setting the remuneration of the Executive Directors, Executive Committee members and the Chair of the Board. The remuneration of Non-Executive directors shall be a matter for the Executive Directors of the Board.  No individual shall be involved in any decisions as to his or her own remuneration;

2. 2. design remuneration policies and practices to support strategy and promote long-term sustainable success, with executive remuneration linked to company purpose and values, clearly linked to the successful deliver of the company’s long-term strategy, and that enable the use of discretion to override formulaic outcomes and to recover and/or withhold sums or share awards under appropriate specified circumstances;

   3. have oversight to the overall all-employee pay arrangements in the Group and oversee any major changes in employee benefit structures throughout the Company and its group;

   4. approve the design of remuneration policies that promote long-term shareholding by executive directors with long-term share awards subject to a total vesting and holding period of at least five years, and determine targets for, any performance related pay schemes operated by the Company and approve the total annual payments made under such schemes.  Performance related elements of Executive Directors' remuneration should be transparent, stretching and rigorously applied in order to promote the long-term success of the Company and comply with the provisions of the Code;

   5. review the design of all share plans prior to approval by the Board and shareholders.  For any such plans, determine each year whether awards will be made, and if so, the overall amount of such awards, the individual awards to Executive Directors and Executive Committee members and review whether the performance targets contained within the schemes continue to be appropriate. The choice of financial, non-financial and strategic measures is important, as is the exercise of independent judgement and discretion when determining remuneration awards, taking account of company and individual performance, and wider circumstances;

   6. determine the policy, and scope of pension arrangements for each Executive Director and Executive Committee member;

   7. ensure that the contractual terms on termination of an Executive Director, Executive Committee member or Chair of the Board, and any payments made, are fair to the individual, and the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised;

   8. review the on-going appropriateness and relevance of the remuneration policy.

   9. within the terms of the agreed policy and in consultation with the Chair of the Board and all other Board Committees as appropriate, determine the total individual remuneration package of each Executive Director and Executive Committee member including, where appropriate, bonuses, incentive payments and share options or other share awards, and

      1. in assessing the personal performance of the Executive Directors and Executive Committee members, the Committee will determine the appropriate level having received recommendations from the Chair, in respect of the CEO’s performance, from the CEO in respect of the performance of the other Executive Directors and from the CEO and Executive Directors (where relevant) in respect of the performance of the Executive Committee members;

      2. the Chair of the Committee will advise and inform the Chair of the Board of the Committee’s recommendations in respect of the Executive Directors; and

      3. following ratification of the Committee’s recommendations by all of the Non-Executive directors, notification of the agreed bonuses to be communicated to the: (i) Executive Directors by either the Chair of the Board or the Chair of the Committee; and (ii) Executive Committee members by one of the Executive Directors, as agreed between themselves;

   10. in determining such packages and arrangements, give due regard to any relevant legal requirements, the provisions and recommendations in the Code and the rules of the UK Listing Authority' and associated guidance;

   11. ensure, where relevant, that any payments made to any Director are permitted under the latest shareholder approved remuneration policy and, if not, that either a revised remuneration policy or the proposed payment is submitted for shareholder approval;

   12. when setting remuneration policy for directors and Executive Committee members, review and have regard to workforce remuneration and related policies and consider the Code requirements for clarity, simplicity, risk mitigation, predictability, proportionality and alignment with culture;

   13. agree the policy for authorising claims for expenses from the CEO and Chair of the Board;

   14. review annually the shareholdings in the context of appropriately structured share ownership guidelines of the Executive Directors and Executive Committee members and establish a formal policy for post-employment shareholding guidelines (to the extent that such guidelines operate below Board);

   15. ensure that all provisions regarding disclosure of remuneration, including pensions, are fulfilled;

   16. be exclusively responsible for establishing the selection criteria, selecting, appointing and setting terms of reference for any remuneration consultants who advise the Committee; and

   17. obtain reliable, up-to-date information about remuneration in other companies of comparable scale and complexity. The Committee shall have full authority to commission any reports or surveys which it deems necessary at the expense of the Company but within any budgetary restraints imposed by the Board.

   18. work and liaise as necessary with other board committees, ensuring the interaction between committees and with the board is reviewed regularly.

The Committee shall consider such other matters as may be requested by the Board.

1. The Chair of the Committee shall report verbally to the Board on the principal matters arsing from its meetings.
2. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit.
3. The Committee shall ensure that provisions regarding disclosure of information, including pensions, as set out in the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and the Code, are fulfilled and produce a Remuneration Policy report (at least once every three years) and Annual Report on the implementation of Remuneration Policy (annually) to be included in the Company’s annual report and ensure each year that the appropriate shareholder approvals are sought at the AGM.
4. If the Committee has appointed remuneration consultants, the annual report of the Company’s remuneration policy should identify such consultants and state whether they have any other connection with the Company.

The Committee shall:

1. Have access to sufficient resources in order to carry out its duties, including access to the Company Secretariat for assistance as required.
2. Be provided with appropriate and timely training, both in the form of an induction programme for new members and on an on-going basis for all members.
3. Give due consideration to laws, regulations and any published guidelines or recommendations regarding the remuneration of directors of listed/non listed companies and formation and operation of share schemes including but not limited to the provisions of the Code, the requirements of the UK Listing Authority’s Listing, Prospectus and Disclosure and Transparency Rules as well as guidelines published by the Investment Association, Glass Lewis and Institutional Shareholder Services and any other applicable rules, as appropriate.
4. Arrange for periodic reviews of its own performance and, at least annually, review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the board for approval.

The Board hereby resolves to establish a Committee of the Board, in accordance with the articles of association of the Company, to be known as the Responsible Business Committee, to assist the Board in fulfilling its oversight responsibilities.

1. Members of the Committee shall be appointed by the Board and shall comprise at least three members.

2. The majority of the members of the Committee shall be non-executive directors who are independent in the opinion the Board. 

3. The Chair of the Committee shall be appointed by the Board and should be a non-executive director of the Board.  The Board may appoint a deputy Chair of the Committee.  In the absence of the Committee Chair (and, if applicable, any duly appointed deputy), the members of the Committee present shall elect one of their number to chair the meeting.  

4. Where any matter to be considered by the Committee concerns one of the Committee members, that Committee member shall be replaced for the purposes of that discussion by another non-executive director selected by the Chair of the Committee (unless the matter concerns the Committee Chair, in which case the replacement shall be selected by the remaining Committee members).

5. Appointments to the Committee shall be for a period the Board shall determine from time to time and may be beyond the relevant initial term, provided that the majority of the Committee members remain independent and continue to meet the criteria for membership. 
 

1. The Company Secretary or Deputy Company Secretary shall be the Secretary of the Committee.

1. The quorum shall be two members of the Committee. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

1. The Committee shall have the discretion to decide who, other that its members, shall attend its meetings.

2. As and when appropriate and necessary, the Chair of the Board (if not a member of the Committee), other non-executive directors, the CEO, the CFO, the Company Secretary, the Deputy Company Secretary, the Chief People Officer, the Director of Corporate Affairs, the Head of Sustainability and CSR, or other persons (including employees), and external advisers may attend meetings (in whole or in part) at the invitation of the Committee.
 

1. The Committee shall meet at least twice a year and at such other times as the Chair of the Committee or the members of the Committee shall require.

1. Decisions of the Committee will be made by majority vote. Each member of the Committee shall have one vote which may be cast on matters considered at the meeting. 

2. If a matter that is considered by the Committee is one where a member of the Committee, either directly or indirectly has a personal interest, that member shall not be permitted to vote at the meeting.

3. In the event of any equality of votes, save where he/she has a personal interest, the Chair of the Committee will have a second or casting vote.
 

1. Meetings of the Committee shall be called by the Secretary at the request of the Committee Chair.

2. Unless otherwise agreed, notice of each meeting confirming the venue, time and date, together with an agenda of items to be discussed, shall be forwarded to each member of the Committee and any other person required to attend, no later than three working days before the date of the meeting.  Any supporting papers shall be sent to Committee members and to other attendees (as appropriate), at the same time. 

3. Meetings may, particularly if required on short notice, by held by telephone or any other method of electronic communication approved by the Chair of the Committee and may take decisions without a meeting by unanimous written consent, when deemed necessary or desirable by the Chair of the Committee.
 

1. The Secretary shall minute the proceedings and resolutions of all meetings of the Committee, including recording the names of those present and in attendance. 

2. Minutes of Committee meetings shall be circulated promptly to all members of the Committee and, once agreed, to all the members of the Board, unless in the opinion of the Committee Chair it would be inappropriate to do so. 
 

1. The Chair of the Committee shall attend the annual general meeting and be available to respond to any shareholder questions on the Committee’s activities. 

1. The Committee is authorised by the Board to investigate any activity relevant to its terms of reference. It is authorised to seek any information that requires from any employee of the Company and all employees or directors to co-operate with any request made by the Committee. 

2. The Committee is authorised by the Board to obtain, outside legal or other independent professional advice, at the Company’s expense, on any matter within its terms of reference, and seek the attendance of outsiders with relevant experience and expertise if it considers this necessary.  
 

1. Agree and review the Company’s long-term targets in respect of responsibility and measure progress against the company’s sustainability strategy, commitments and targets;

2. monitor the areas and activities likely to impact Grainger’s performance and reputation as a responsible business;

3. in conjunction with the Audit Committee, review the risks and controls relevant to the duties of the Committee;

4. to advise and support the Remuneration Committee in respect of setting targets, objectives, metrics and/or measures in respect of those components of managements’ remuneration that (from time to time) are relevant to the business of the Committee, including (but not limited to) climate change, environmental, social, sustainability, employee engagement and diversity and inclusion; 

5. review and approve policies relevant to the business of the Committee; 

6. monitor engagement with those stakeholders of the Company relevant to the business of the Committee and ensure that their views are considered and understood by the Board, including consideration of environmental, social and community matters and employee engagement;

7. review and approve the corporate responsibility section and responsibility disclosures (including but not limited to climate, environmental, social and employee disclosures, contained in the annual report and accounts and other external disclosures); 

8. monitor the Company’s relationships with charitable partners and other charitable and employee volunteering activities; 

9. give oversight to any other sustainability, community, stakeholder or other corporate responsibility initiatives and matters as delegated to it by the Board;

10. oversee Company’s sustainability, corporate responsibility and community initiatives, and make recommendations to management for further improvements; 

11. oversee and monitor the development and implementation of the Company’s environmental and climate change agenda and in particular its net zero carbon transition plan;

12. assist the Chair of the Committee in gathering the views of the workforce, as recommended under the UK Corporate Governance Code, acknowledging that the Committee Chair is the designated Non-Executive Director under the Code for this purpose; and

13. monitor the development and implementation of the Company’s Diversity & Inclusion strategy and associated plans and commitments. 
 

1. The Chair of the Committee shall report verbally to the Board on the principal matters arising from its meeting.

2. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit. 

3. The Committee shall produce a report to be included in the company’s annual report about its activities, the process used to make appointments and explain if external advice or open advertising has not been used. Where an external search agency has been used, it shall be identified in the annual report and a statement made as to whether it has any connection with the company. 

The Committee shall: 

1. have access to sufficient resources in order to carry out its duties, including access to the Company Secretariat for assistance as required;

2. be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members;

3. give due consideration to laws and regulations, the provisions of the Code and the requirements of the UK Listing Authority’s Listing, Prospectus and Disclosure and Transparency Rules and any other applicable rules, as appropriate; and 

4. arrange for periodic reviews of its own performance and, at least annually, review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.