2023 ANNUAL REPORT

Energy and Carbon Reporting

Introduction

As a large, unquoted company incorporated in the UK, the University has a mandatory obligation under The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 to disclose its UK energy and greenhouse gas emissions.

As a minimum, the University is required to report our UK energy use relating to gas, electricity and transport and associated greenhouse gas emissions. All energy consumed by the University is in the United Kingdom. The University has chosen to use tonnes of CO2e per total floor area as its intensity ratio (energy performance indicator) to normalise our energy and carbon figures. This is the recommended ratio for the sector and is also used for both the Higher Education Statistics Agency data set and Display Energy Certificates. The University estate consists of academic and student residence buildings. The gross internal area (GIA) of these, 193,416m2 at 31 July 2023, has been used to calculate the intensity ratio.

Period

The annual period covered for the purposes of the streamlined energy & carbon reporting section is the year ending 31 July 2023.

Emission scope

Total Emission Scope Summary

Scope 1 (Direct)

Emissions from activities owned or controlled by the University that release emissions into the atmosphere, for example emissions from combustion in owned or controlled boilers, furnaces, vehicles; emissions from chemical production in owned or controlled process equipment.

Scope 2 (Indirect)

Emissions released into the atmosphere associated with consumption of purchased electricity, heat, steam and
cooling. These are indirect emissions that are a consequence of the University’s activities, but which occur at sources
not owned or controlled by the Group.

Scope 3 (Indirect)

Emissions that are a consequence of the University’s actions, which occur at sources not owned or controlled by the
University and which are not classed as Scope 2 emissions. Examples include business travel by means not owned
or controlled by the University (e.g. grey fleet and rental cars).

For this reporting period, the University has broadened the scope of its carbon reporting to include more scope 3
data such as emissions associated with waste, water and our supply chain. This has caused the significant increase
seen in the total carbon footprint for 2022/23. Scope 3 emissions associated with staff and student commuting have
been excluded due to lack of available data. Under SECR it is not mandatory to report rail or air travel.

Intensity Ratio

Year on year comparison for Scope 1 and 2 emissions

* Estimated values were included in the 19/20 Annual Report.

Quantification and reporting methodology

The University has taken guidance from the UK Government Environmental Reporting Guidelines (March 2019), the GHG Reporting Protocol - Corporate Standard, and from the UK Government GHG Conversion Factors for Company Reporting document for calculating carbon emissions. Energy usage information (gas and electricity) has been obtained directly from the University’s energy suppliers and half-hourly (HH), where available, for those supplies with HH meters. Transport mileage data was obtained from expense claims submitted for our company cars and grey fleet. For travel by staff for business purposes in their own vehicles we only hold mileage data, which is split into car and motorcycle. Therefore, we have applied the conversion factor for an average car with an unknown fuel type to calculate the emissions from employee-owned vehicles. Some of our transport emission data is provided to us via third parties as a total carbon emission figure and so it has not been possible to breakdown these figures and convert them into kWh. Our scope 3 emissions are therefore calculated in tonnes of CO2e. Supply chain emissions are calculated based on spend using the HESCET tool, which was created by the EAUC (The Alliance for Sustainability Leadership in Education), HEPA (Higher Education Procurement Association) and UKUPC (UK Universities Purchasing Consortia) for use by universities. CO2e emissions, including those associated with waste and water, were calculated using the 2023 emission factors from the UK Government GHG conversion information.

Energy efficiency action

Over the past 12 months, the University has taken the following energy efficiency action:

• Published a Carbon Management Plan outlining our roadmap to reach net zero carbon emissions by 2040.
• Secured Salix funding to develop heat decarbonisation plans for Kedleston Road, Markeaton Street and Britannia Mill.
• Replaced 25 of our diesel vehicles with 14 electric vans and 11 hybrid cars.
• Carried out an initial pilot of a system which unifies the room booking system with the Building Management plant
  schedule to maximise efficiencies.
• Removed desk phones and replaced with a new telephone system called Teams Phone.
• Implemented a new device power saving policy, ensuring PCs are shut down when not in use at 9.30pm each evening and are set to sleep during the day when not in use.
• Improved space utilisation and mothballed the South Tower at the Kedleston Road site to save energy.
• Carried out energy audits at key sites to highlight out of hours energy issues.
• Carried out an energy switch off campaign as part of the University Go Green Week in March 2023.
• Continued replacement of fluorescent tube lighting with more efficient LED lights.

Statement of Corporate Governance

This statement of corporate governance covers the period of the financial statements for the year ended 31 July 2023, and the period up to the date of approval of the audited financial statements. The establishment of the University of Derby was approved by the Privy Council under the provisions of the Further and Higher Education Act on 14 January 1993. It was subsequently incorporated as a company limited by guarantee on 7 July 1995. The Company Registration number is 03079282. The University became an exempt charity by order of the Privy Council with effect from 30 November 1995 (SI 1995 No 2998). The Office for Students (OfS) is the independent regulator of higher education in England and in October 2018, the University was formally entered in the Register for English higher education providers.

The University is committed to best practice in all aspects of corporate governance. It follows the principles set out in the Committee of University Chairs (CUC) HE Governance Code of Practice and complies with the OfS Public Interest Governance Principles. The Governing Council (GC) is the Board of Directors of the Company; it also comprises the Members of the Company and the Trustees of the Charity. It observes the highest standards of corporate governance and discharges its duties with due regard for the proper conduct of a business that receives public funds, ensuring regularity and propriety in the use of this funding as articulated below. The powers and framework for governance are set out in the Articles of Association and Ordinances. Following a review of both the Articles and Ordinances by GC and their legal advisors VWV LLP, new Articles and Ordinances were approved by the Directors. A Special Resolution to adopt the new Articles was passed upon receipt of the written agreement of more than 75 per cent of the directors
by 9 December 2021. The Charity Commission has approved the new articles which took effect, along with the new Ordinances, on 8 April 2022. The Ordinances have been kept under review since taking effect and further minor amendments, to terms of reference and to update terminology have been made. The updated Ordinances (9th edition) were approved by the Directors at its meeting on 10 July 2023. In summary, the GC:

• Determines the educational character and academic direction of the University;
• Approves the mission and strategic aims of the University including the strategic framework, and the key indicators
  of University performance;
• Delegates to, and holds to account, the Vice-Chancellor as Chief Executive, with authority for the academic,
  corporate, financial, estate and human resource management of the University and to establish and keep under
  regular review the policies, procedures and limits within which such management functions are undertaken by and
  under the authority of the Vice-Chancellor;
• Ensures the establishment and monitoring of systems of control and accountability including financial and operational controls, solvency and risk assessment;
• Ensures that processes are in place to monitor and evaluate the performance and effectiveness of the University in each of its major activities against approved targets;
• Is the principal financial and business authority of the University, ensures that proper books of account are kept, approves the annual budget and financial statements, and has overall accountability for the University’s assets, property and estate. GC must ensure that the University is financially sustainable and is using its resources efficiently for the benefit of its students and stakeholders;
• Is the University’s legal authority and, as such, ensures systems are in place for meeting all the University’s legal obligations, including those arising from contracts and other legal commitments made in the University’s name.
  This includes for health, safety and security and for equality, diversity and inclusion;
• Ensures that systems are in place for securing continued compliance by the University as a provider of higher education with the Office for Students’ (OfS) ongoing conditions of registration and all of the University’s statutory, legal and other regulatory compliance obligations;
• Ensures that there are procedures for handling internal grievance, conflicts of interest, fraud, bribery and corruption; and to ensure that there are procedures by which staff and students can raise matters of concern;
• Establishes processes to monitor and evaluate the performance and effectiveness of the Governing Council itself;
• Conducts its business in accordance with best practice in higher education corporate governance and with the principles of public life drawn up by the Committee of Standards in Public Life;
• Appoints the Chancellor of the University, the Vice-Chancellor as Chief Executive and the Clerk to the Governing Council and puts into place arrangements for monitoring their performance, ensuring that, in relation to the Clerk,there is an appropriate separation of their lines of accountability from any management functions;
• Ensures that all students and staff have opportunities to engage with the governance and management of the University
• Is the employing authority for all staff and is accountable for ensuring that an appropriate human resources strategy is established;
• Ensures that there is provision for the appointment, grading, appraisal, remuneration, professional development, welfare, discipline, suspension and dismissal of staff;
• Endeavours to ensure that students benefit from a valuable learning experience, leading to academic awards which are subject to the application of appropriate academic standards;
• Ensures there is a complaints procedure which students may use and procedures which are used in the event of alleged student disciplinary offences;
• Receives assurance that adequate provision has been made for the general welfare of students;
• Ensures that the Students’ Union is accountable for its finances and that it operates in a fair and democratic manner;
• Safeguards the good name and values of the University;
• Promotes a culture which supports equality, diversity and inclusion across the University;
• Maintains and protects the principles of academic freedom and freedom of expression.

Corporate Governance Arrangements

GC met formally seven times this year and in addition held two strategic planning events with the VCE and the Academic Board. It has several formally constituted committees, each of which has clearly defined, delegated responsibilities, as outlined in the table below.

Members of Governing Council and Directors

The biographical details of the current members of GC can be viewed on the University’s website at derby.ac.uk/about/organisation/governance/governors/council-membership

Student and staff representative membership is included in the composition of the GC and all Committees with the exception of the ARC, which comprises independent governors and a student representative member. A full list of GC members can be found on page 23 of the Annual Report and Accounts 2023

To provide further transparency about the business of the GC, minimally redacted minutes of the meetings of the following are published on the University’s website, once approved at www.derby.ac.uk/about/governance/published-minutes.

• GC (2010 onwards)
• Remuneration Committee (July 2017 onwards)
• ARC (October 2019 onwards)
• SFPC (October 2019 onwards)
• SC (December 2020 onwards)
• SAC (July 2023 onwards)

Effectiveness of Governance Arrangements

The University has assessed through self-declaration and further checks, and satisfied itself that governors, members and the VCE can be considered ‘Fit and Proper’ persons.

Through its annual report to GC, ARC has provided assurance regarding the rigour and review of the process by which statutory data returns are formally monitored and submitted to relevant regulatory bodies by the University to safeguard timely and accurate outputs.

GC has maintained oversight of and assurance regarding the adequacy and effectiveness of the University’s compliance with the OfS’ ongoing conditions of registration and in turn the OfS Terms and Conditions of Funding (OfS 2021.30).

GC has delegated to Audit and Risk Committee the responsibility for maintaining oversight of a governance effectiveness review which is being conducted this year by an external review organisation, in accordance with the Higher Education Code of Governance (2020) published by the Committee of University Chairs (CUC) (“the 2020 CUC Code”). The 2020 CUC Code provides that a regular, full and robust review of governance effectiveness with some degree of independent input must be conducted by all Higher Education Institutions at least every three years.

Governors’ skills and experience are reviewed annually through a skills audit questionnaire considered annually by the Nominations Committee. This process highlights gaps and enables the Chair and Clerk of GC to plan how to address any issues that arise. A thorough review of the skills audit questionnaire was conducted in 2021 and the skill categories were extended, ensuring that it remains relevant and that future needs are factored into GC’s analysis. Nominations has continued to review the skills audit this year to maintain its relevancy. The Chair meets with each member of the GC annually to discuss the effectiveness of GC and to provide feedback on individual performance. New governors receive an induction handbook and are invited to meet the Chair of GC, the Clerk and members of the VCE. They are also required to undertake mandatory training in Prevent awareness, Data Governance Awareness, Let’s Talk About Race, Unconscious Bias and How We Work. Other training and development opportunities are made available, usually through the AdvanceHE development programme, invitations to sector briefings run by independent organisations, the University’s legal advisors, its internal and external auditors, the University’s own ‘My Learning’ programme and seminars which are run in conjunction with the GC and other committee meetings.

When considering succession planning and refreshing the Board, regard is given to the skills, qualities, talents and the diversity of members of GC. During this year, Nominations has undertaken a search for a number of positions for independent governors and co-optees using the professional search advisers Peridot Partners. These include the appointment of a new Vice-Chair of GC, whose term of office commenced on 1 August 2023 and two new Independent Governors who will join ARC and SFPC. GC has also approved the appointment of a Senior Independent Governor (SIG) to GC. Membership of GC and co-opted members have been appointed to Skills, ARC, SFPC, Nominations, Remuneration and SAC. These appointments form an important part of the University’s succession planning.

Preparation to ensure the smooth transition of the Chair of GC from the outgoing Chair, Stephen Smith, to Chair-Elect Gurpreet Dehal has also formed part of the GC succession planning this year.

During the year and up to the date of the approval of the financial statements, the governing council and co-optees comprised 16 male and 12 female members and included ten members from a black, Asian and minority ethnic background.

GC delegated power to the Remuneration Committee to review the decision to offer remuneration and the sums offered to the Chair of GC and the Chairs of its formally constituted committees this year. The review concluded that the Chair remuneration policy continued to offer value for money and remained in the interests of the University. GC delegates power to the Remuneration Committee to determine the remuneration and the bonus payments due to senior post holders. The Remuneration Committee’s Terms of Reference are aligned to the CUC HE Senior Staff Remuneration Code. GC receives an annual report from the Remuneration Committee which was approved by GC in November 2022. This report is published on the University’s website.

SFPC advises GC on matters relating to strategy, financial performance, planning, employment, safeguarding, equality and diversity and corporate responsibility of the members of the University Group.

The Skills Committee determines the strategic direction of the University’s skills education and training, considering appropriate insight into the external environment. It oversees and monitors the processes for the maintenance and improvement of quality and delivery of university skills provision, including Ofqual/Ofsted regulated further and higher skills education and apprenticeships, in line with the educational character and mission of the University, as agreed by the Governing Council. It monitors equality and diversity, safeguarding and Prevent issues, ensuring that the University’s activities in these areas conform to current good practice and statutory requirements, where applicable. It also scrutinises sub-contracting provision, monitoring activities and make recommendations to inform future strategies.

University Court

The University’s Articles of Association state that there shall be a University Court. This is a forum of critical and supportive friends of the University which has a purely advisory function. Membership is normally by invitation and responsibility for approving membership lies with GC, advised by the University Court Advisory Group via Nominations Committee. During the year membership has increased from 210 to 227 members, comprising external associates and friends, together with governors, former governors, and senior managers of the University. Meetings of Court are presided over by the Chancellor, William Cavendish, Earl of Burlington. Three meetings of
Court took place during 2022/23. One took place over Microsoft Teams and two in-person meetings were also held. The purpose of the meetings is to explore strategic issues through lively discussion in a critical but supportive atmosphere. Topics for discussion at these meetings were: ‘Learning and Teaching’, Nuclear Skills Academy and the Civic University Agreement.

Statement of Internal Control

This statement of internal control covers the period of the financial statements for the year ended 31 July 2023, and the period up to the date of approval of the audited financial statements.

The approach to internal control is risk-based, including an evaluation of the likelihood and impact of risks becoming a reality. The system of internal control is based on an ongoing process designed to identify the principal risks to the achievement of policies, aims and objectives: to evaluate the nature and extent of those risks; and to manage them efficiently, effectively and economically. This process has been in place for the year ended 31 July 2023 and up to the date of the approval of the financial statements. However, it is  important to note that no system of internal control can provide absolute assurance.

GC acknowledges its responsibility for ensuring that a sound system of internal control is maintained. This responsibility includes the identification and management of risk as an ongoing process linked to achieving the organisation’s objectives. GC has established an ARC, which is responsible for assuring it about the adequacy and effectiveness of:

• Risk management, control and governance
• Economy, efficiency and effectiveness (Value for Money or VFM)
• The management and quality assurance of data

It is the role of ARC to advise and assist GC in respect of the entire assurance and control environment of the institution. This in turn assists to ensure compliance with the OfS General Ongoing Condition G2: Terms and conditions of financial support.

GC’s review of the effectiveness of the system of internal control is informed by the work of externally-appointed internal auditors, who operate to the standards set out under Annex C of the Terms and Conditions of Funding for Higher Education Institutions published by the OfS. It is also informed by ARC, which has oversight of internal audit and reports annually to GC for its approval of the effectiveness of risk management and the system of internal control; by the work of the VCE and the risk managers within the University who have responsibility for the development and maintenance of the internal control framework; and by comments made by the external auditors in their management letter and other reports.

GC confirms that there is an ongoing process for identifying, evaluating and managing the University’s significant risks. ARC meets at least four times per year and along with the GC receives a Strategic Risks report at each of its meetings. The University has eight Strategic Risks that play a significant role in delivering successful outcomes against the University’s Corporate Plan and Strategic Objectives. Across them the Strategic Risks cover business, operational and compliance risk as well as financial risk. GC, SFPC and ARC also received and discussed regular update reports and were able to gain assurance of management’s control over its arrangements.

Upon the recommendation of ARC, GC appoints an internal auditor to provide assurance about the University’s internal control arrangements. ARC receives reports on internal control and risk at each meeting, monitored against an agreed plan of internal audit work. The development of the plan is founded on a risk-based assessment and through discussion with VCE, submitted for approval by ARC. Recommendations arising from the internal auditor’s workplan are reported to and monitored by ARC in order to ensure risk assessment and internal control is embedded in the University’s ongoing operations. This in turn contributes to the University’s delivery of value for money for both students and the taxpayer.

GC confirms, supported by the audit conducted by the internal auditor, that it is able to provide assurance that the University’s risk management system is operating effectively and that the University is compliant with OfS requirements.

Statement of Financial Responsibilities

Statement of Directors’ Responsibilities in respect of the Strategic Report, the Report of the Governing Council and the Financial Statements

In accordance with the University’s Ordinances (9th edition) GC is the principal financial and business authority of the University and is responsible for: ensuring that proper books of account are kept; approving the annual budget and financial statements; and the overall accountability for the University’s assets, property and estate. GC must ensure that the University is financially sustainable and is using its resources efficiently for the benefit of its students and stakeholders.

Company law, along with the terms and conditions of ongoing registration with the OfS, requires the GC, through its Accountable Officer, to prepare and present audited financial statements for each financial year. Under that law they have elected to prepare the University financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. The terms and conditions of funding further require the financial statements to be prepared in accordance with the 2019 Statement of Recommended Practice – Accounting for Further and Higher Education and in accordance with the requirements of the Accounts Direction issued by the OfS.

Under company law GC must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and University and of its income and expenditure, gains and losses and changes in reserves for that period. The University has complied with the terms and conditions of funding set out within documents OfS 2022.38.

In preparing each of the Group and University financial statements, GC is required to:

• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable UK accounting standards have been followed, subject to any material departures
  disclosed and explained in the financial statements;
• assess the Group and University’s ability to continue as a going concern, disclosing, as applicable, matters related
  to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the parent University or to cease
  operations or have no realistic alternative but to do so.

GC is responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that its financial statements comply with the Companies Act 2006.

They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and University and to prevent and detect fraud and other irregularities.

GC is also responsible for ensuring that:

• funds from whatever source administered by the University for specific purposes have been properly applied to those purposes and managed in accordance with relevant legislation;
• funds provided by OfS and Research England have been applied in accordance with the terms and conditions attached to them
• there are appropriate financial and management controls in place to safeguard public funds and funds from other sources; and
• the University’s resources and expenditure are managed efficiently, effectively and economically.

GC is responsible for the maintenance and integrity of the University and Group’s financial information included on the University’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Additional areas of assurance

Prevent duties

GC received a copy of the University’s submission to OfS on the University’s ongoing compliance with its Prevent duties. It received additional assurances that existing governance and oversight had been widened and further strengthened to include the other strands of the CONTEST strategy. The University believes it has demonstrated due regard to the Prevent Duty and is not at risk of non-compliance with Prevent.

The OfS has previously indicated the holistic approach by the University of the CONTEST strategy and action plan as an area of good practice to be shared with the sector.

Duty to promote the success of the group

GC and VCE, both individually and together, have acted in the way they consider to be in good faith, would be most likely to promote the success of the Group for the benefit of the members, and in doing so have regard to the matters set out in s172(1) (a) to (f) of the Companies Act.

The likely consequences of any decision in the long term

The Group’s purpose is to provide high quality learning opportunities to learners in the UK and internationally who wish to enhance their career and earning potential. We are part of a sector which is well placed to help the Government respond to recession through developing key skills in the workforce and innovation through research. We have strong financial performance, tight budgetary controls and our going concern modelling shows we are a resilient organisation that can withstand and respond to the uncertain external environment.

The interests of group employees

Our employees across the Group are fundamental to our mission, which is why they are at the heart of our strategy. The health, safety and wellbeing of our employees is one of our primary considerations and we have actively engaged with employees throughout the year to ensure staff are fully supported in their roles.

The Group is a Disability Confident employer demonstrating our commitment to providing an equitable experience for people with disabilities. We have robust practices that challenge bias and take a zero tolerance approach to discrimination. The Group aims to ensure that every employee, regardless of protected characteristic, is treated equally and fairly and that all employees are aware of their responsibilities.

The Group provides staff with an inclusive workplace, providing additional supportive structures for those with disabilities. We provide guidance for managers on reasonable adjustments and take active measures to be inclusive and accessible. If an employee of the Group becomes disabled during their time with us, we will adapt the working environment where possible, in order to keep the employee within the Group.

The need to foster the group’s business relationships with suppliers, customers and others

Our stakeholders are core to our organisation, and we emphasise the fundamental importance of high-quality services and trust. We aim to act responsibly and fairly in how we engage with our suppliers, our stakeholders and our regulator; all of whom are integral to the successful delivery of our purpose and strategy.

The impact of the group’s operating on the community and the environment

Operating in a recognised area of social immobility, the University has a strong focus on widening access to higher education in its community. We are ranked second out of the 132 UK universities by HEPI for fair access and believe higher education should be equitable, inclusive and open to all with the ambition and desire to learn.

We have a keen awareness of our impact on the local, national and global environment, and we are particularly conscious of our responsibilities. The University has an Environmental Management System in place that ensures we continue to manage our environmental impacts, comply with environmental legislation and commit to protecting and enhancing the environment.

The desirability of the group maintaining a reputation for high standards ofbusiness conduct

Our intention is to behave responsibly and ensure that management operate the business in a responsible manner.

We operate within the high standards of business conduct and good control set out in our Statements of Governance and Internal Control, and therefore the company demonstrates the highest standards of governance.

The need to act fairly between members of the group

Our intention is to behave responsibly towards all parts of our Group and our stakeholders and treat them equally and fairly, so all benefit from the successful delivery of our plan.

Disclosure of information to auditors

The directors who held office at the date of approval of this directors’ report confirm that, so far as they are each aware, there is no relevant audit information of which the Group’s auditors are unaware; and each director has taken all the steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the Group’s auditors are aware of that information. BDO LLP have expressed their willingness to continue in office as auditors and will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

Gurpreet Dehal - Chair of Governing Council

Susan Ambler - Interim Chief Financial Officer

June Hughes - Clerk to Governing Council

Signed 8th December 2023