Sustainability Reporting tips Simple actions to make your reporting more accessible and effective

www.pwc.com/corporatereporting Contents

Developments in Corporate Reporting 1 The way forward 4 Sustainability Reporting tips: 6 Set the scene 7 Live it,breathe it 10 What gets measured, gets done 14 The good, the bad, and the ugly 16 Snakes and ladders 20 It’s a material world 22 Cash is still king 24 The great beyond 26 Pay as you go 28 Ask around 30 Reach out 34 Big brother 38 Prove it 42 Key contacts 45

b PwC Developments in corporate reporting

The evolution of non‑financial reporting In 2011 the results of PwC’s Building Public Trust Sustainability Awards 2011 indicated that companies, particularly in the FTSE 100, were making efforts to incorporate sustainability into their core business strategies. However, this year our assessment suggests disappointingly that this progress has slowed. Apart from a few stand‑out reports and big improvers, the standard of sustainability reporting has largely remained the same year on year.

This is disappointing not only for us, but Of the reports we reviewed: • 68%* (60%) discuss the relevance and also for business and society at large. implications of sustainability risks, yet Amid today’s tough trading conditions, it • 96%* (78%) disclose some narrative only 38%* (33%) described their is understandable that reporting on on their sustainability strategy. Despite approaches to mitigating all of these sustainability performance may have this, only 39%* (22%) demonstrated risks. slipped down the agenda for many linkage to the core business strategy. boards. But it can make a real difference • 69%* (36%) disclose the process not least by helping to build and retain • 49%* (25%) include KPIs related to undertaken to determine their material trust among a wide range of each material issue identified. sustainability issues. 53%* (27%) stakeholders. However, only 16%* (13%) disclose indicate how stakeholder engagement KPIs with specific, measurable targets supports their understanding of It’s for this very reason that transparent for all of their material issues. material issues. and integrated sustainability reporting is especially important in the current • 80%* (73%) provide some narrative environment. This importance applies linking performance on KPIs to equally in the public and private sectors, strategy, but only 12%* (16%) were since both businesses and governments clear on how this impacts the strategy. have pivotal roles to play in enabling society to mitigate and adapt to the effects of climate change and foster sustainable development. ‘This year, our assessment suggests, disappointingly, that this progress has Our analysis has regularly found that companies score well on the disclosure slowed significantly. Apart from a few of their sustainability strategies. stand‑out reports and big improvers, the However, reporting of risks and opportunities, materiality and standard of sustainability reporting has performance remain areas of challenge. largely remained the same year on year.’

Alan McGill, Partner, PwC

Sustainability Reporting tips 1 Integrated reporting – An integrated report may also report on what we mean the risks and opportunities across a company’s entire operations, including Integrated reporting’ continues to be the their suppliers, customers and other talk of the town yet it is very difficult to critical elements beyond the legal entity find two people who can agree exactly itself. This kind of report should offer a on what it means. In our view, integrated more complete, and joined‑up, picture of reporting is more than just a collection of a company’s performance and prospects. statements covering corporate strategy, business and financial results, Integrated reporting is achieved when it environmental, social and governance shows how governance connects with issues. remuneration and risk, when strategy is designed to exploit a changing market To us, an integrated report provides a environment, and when strategic strategic picture of a business that priorities align with key resources, explains how a business creates and relationships and key performance sustains value now and in the future. It indicators. recognises that meaningful reporting must include stewardship of more than So what else is different about ‘integrated just financial capital and will include reporting’? The International Integrated stewardship of intellectual, natural, Reporting Council (IIRC), in its discussion social or other forms of capital, where paper, outlines some key differences with these are material to the business. the current model (see table).

How is integrated reporting different?

Current model Future model

Reporting scope Legal ownership and Value chain control Dominant driver Financial, past Strategic, holistic, future Timeframe Short term Short, medium and long term Detail Long and complex Concise and material Compliance Rule bound Responsive to industry & company Presentation Paper based Electronic Trust Narrow disclosure Greater transparency Information construct Silos Integrated Performance Financial capital All capital – intellectual, human, social

Source: IIRC – Discussion paper: Towards Integrated Reporting – Communicating Value in the 21st Century

2 PwC The IIRC’s pilot programme, which was launched to help in the creation of the world’s first international integrated reporting (IR) framework, now includes over 80 businesses and 25 investors from around the globe.

The IIRC has launched The Pilot Programme Yearbook 2012 which has identified early IR trends from businesses in the Pilot Programme. The Yearbook provides further information, quotes and case studies.

Source: IIRC – The Pilot Programme 2012 Yearbook :http://www.theiirc.org/ wp‑content/uploads/Yearbook_2012/sources/indexPop.htm

PwC’s integrated reporting model

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For further insight into the PwC integrated reporting model contact us for a copy of Integrated reporting: What does your reporting say about you? or for detailed examples of effective reporting in particular areas, email: [email protected]

Sustainability Reporting tips 3 Our engagement with companies, users and regulators highlights a growing The way forward recognition that improving the effectiveness of reporting cannot be achieved through compliance and clever presentation. The current debate is The key to companies turning their rightly focused on the need for reliable, reporting into a source of quality information that reflects the competitive edge, lies in the action reality of a business today and exposes taken internally. its future prospects.

The external benefits that come from The financial crisis has placed a premium communicating relevant information to on information disclosure, risk the markets are important, but not management, scenario planning and always tangible or measurable. The good corporate governance. Seen in this intangible benefits might include: light, experiments in the FRC Reporting increased stakeholder confidence and Lab and the IIRC’s pilot programme, trust; enhanced corporate reputation together with the BIS consultations, are (reduced reputational risk); more practical forces for improving how productive dialogue with stakeholders. businesses are managed as well as mechanisms for better corporate But arguably, the most fundamental reporting. benefits spring from the discipline imposed on a company by shining a light on its internal workings. Companies are telling us that the real catalyst for improvement is finding ways of accessing better information to support management decision‑making, board review and employee awareness.

Certainly ‘integrated thinking’ is a central tenet of integrated reporting, and uncovering opportunities to optimise management processes appears to be a key motivator for companies participating in the IIRC pilot programme. Coherent external reporting will follow, but the first goal is a better managed company.

‘But arguably, the most fundamental benefits spring from the discipline imposed on a company by shining a light on its internal workings.’

4 PwC Where are you on the reporting journey? We believe there are compelling options for every company looking for a way forward with its reporting. The right options will depend on where each company has got to on its reporting journey. Some might choose to get involved in influencing the future, joining the debate, experimenting and innovating. Others will want to wait and see, responding when reporting practices are more fully formed. ‘

In our view, there is no excuse for inaction. Options for companies considering positive action on reporting are outlined in the chart below.

How can you take reporting forward?

Differentiate Fix Think beyond current reporting. Go for Keep up with current practice and new competitive edge with integrated reporting, requirements. Focus on quick wins and fill eg: any significant gaps, eg: • Report on your stewardship of all forms of capital • Keep up with industry reporting trends and what – human, social, natural etc as well as financial other companies in your peer group are doing • Think beyond the accounting definition of • Look for ways to avoid repetition and reduce ‘control’, consider length to improve narrative flow risks and opportunities across your entire • Consider whether your risks descriptions can operations better reflect your industry and specific • Pick up cutting edge ideas from the companies circumstances signed up to the IIRC pilot programme • Consolidate existing content to build a picture • Take a longer-term perspective with your of your business model – is any key reporting F information missing? ix • Provide your content with a forward- • Use clearer sign-posting and looking orientation cross-referencing to demonstrate • Combine financial, operational, links between key information e governance and environmental t a • Explain why your ‘key i information in a concise and t performance indicators’ are key coherent way n e

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d e r i p s n i e B Be inspired Innovate In Learn from emerging and best reporting Challenge today’s reporting. no vate practices, eg: Experiment with content, structure and integration, eg: • Use your strategy to underpin your reporting • Explore what a Strategy Report (BIS) might look like and • Demonstrate a clear link between your strategic priorities, how you could pull the information together KPIs and remuneration • Understand investors’ bug bears and find innovative ways to • Discuss the group’s risk profile and how it has changed address them – sign up to the FRC Reporting Lab? • Explain the drivers shaping the market in which you operate • Challenge the content of your annual report and whether and how they influence your strategic choices it is ‘material’ • Embed business model and corporate responsibility into your • Innovate with your annual report to create a clearer discussion of strategy and performance narrative flow • Provide more operational/non-financial KPIs to support your • Experiment with structure and channels – place standing discussion of key resources and relationships data on-line? • Check out the Building Public Trust Awards winners reports or good practice examples on www.corporatereporting.com

Sustainability Reporting tips 5 Sustainability Reporting tips

Simple actions you can take to make your sustainability reporting more accessible and effective as you communicate your performance to the capital markets and other stakeholders. The following pages provide examples of good practice from across the FTSE 350 and the public sector.

Set the scene Provide an overview of your business and the market environment in which you Pages operate to contextualise your reporting for the reader. 7 – 9 Live it, breathe it Clearly describe your sustainability strategy over the short, medium and long term. Pages Demonstrate how this is integrated in your core corporate strategy and permeates 10 – 13 throughout your business. What gets Identify KPIs which are directly relevant to your sustainability strategy. Explain why Pages measured, gets they are relevant and how they are defined. Set and review your performance against 14 – 15 done challenging but realistic targets. The good, the Present information in a balanced and transparent fashion. Celebrate success but Pages bad, and the also avoid glossing over negative sustainability impacts or poor performance against 16– 19 ugly targets. Explain where and how improvements will be made. Snakes and Draw out and explain in detail the key strategic risks and opportunities arising from Pages ladders the sustainability agenda. Explain the relevance and implications of each as they 20 –21 relate to your organisation and the actions put in place to mitigate risks and maximise opportunities. It’s a material Demonstrate an understanding of the sustainability issues relevant to you and your Pages world key stakeholders; report only those of material importance. 22 – 23 Cash is still king Illustrate how your sustainability strategy has had an impact on the bottom line. Pages Identify and define potential means of maximising economic benefits going forward. 24 – 25 The great Consider relevant extended upstream and downstream value chain aspects of your Pages beyond business in order to take account of all its environmental, social and economic 26 – 27 impacts, both positive and negative. Pay as you go Explain how directors and staff are incentivised to deliver on the sustainability Pages strategy and the goals set. Ensure that the reader can understand the link between 28 – 29 remuneration and actual performance. Ask around Explain how you engage with principal stakeholders and how this has impacted your Pages sustainability strategy and reporting. 30 – 33 Reach out Use multiple communication channels thoughtfully. Ensure that the medium, content Pages and style are tailored to both the audience and the messages being delivered. 34 – 37 Big brother Explain how the sustainability governance system operates. Identify the board Pages member responsible for sustainability issues, describe the policies that have been 38 – 41 implemented and explain how management ensure that these policies are working. Prove it Ensure the credibility of your reported content, for example, by reference to Pages independent studies, external benchmarking, expert review panels or through 42 – 44 conventional assurance. Where assurance is used the opinion should clearly state the scope of work.

6 PwC Set the scene

Provide an overview of your business and the market environment in which you operate to contextualise your reporting for the reader

Example: Johnson Matthey Plc Annual Report and Accounts 2012 Pages 10 – 13: Our Business

Sustainability Reporting tips 7 Example: Centrica plc 2011 CR Performance Review Understanding our business http://www.centrica.com/index.asp?pageid=1071

8 PwC Example: The Highways Agency Annual Report and Accounts 2012 and website Page 11: Annual Report & Website: http://www.highways.gov.uk/about‑us/sustainability/

About us: SECTION 1

Section 1: Our role The strategic road The Highways Agency, created network in England What we do in March 1994, is an executive The strategic road network in agency of the Department for England is some 4,300 miles long Transport (DfT). Our role is to and is made up of motorways and help support the sustainability of trunk roads - the most significant the UK’s economy by operating, ‘A’ roads. A map of the network maintaining and improving the is shown opposite. Whilst our strategic road network in England network represents only two per on behalf of the Secretary of State cent of all roads in England by for Transport. Our responsibilities length, it carries a third of all traffic are formally laid down by DfT in by mileage. Significantly, two our Framework Document which is thirds of all heavy goods vehicle published on our website at Spaghetti Junction Birmingham mileage in England is undertaken www.highways.gov.uk. M6/A38 interchange on the strategic road network, We operate the strategic road making it the economic backbone network through a National of the country. Traffic Information Service which Vision and goals Key fact: supports our National Traffic Operations Centre and seven The Highways Agency has set Each year, an regional control centres. We have itself the challenging task of average of 1.6 billion a uniformed Traffic Officer Service becoming ‘The world’s leading who serve in control centres road operator’ by 2015. We have SECTION 1: About us tonnes of freight is and patrol the key areas of the identified five goals which will help Highways Agency transported using network, helping to manage and us towards our vision: the strategic road clear incidents as quickly and 1. We provide a service that our strategic road network safely as possible. customers can trust. network. Motorways Our role in maintaining and 2. We set the standard for delivery.

improving the network is delivered Contents Trunk Roads 3. We deliver sustainable A1 through a large and complex solutions. supply chain through a number Newcastle upon Tyne and variety of contracts. We 4. Our roads are the safest in the A74(M) M6 A69 also set and maintain technical world. A194(M) Sunderland standards for roads and structures 5. Our network is a dynamic and Carlisle A1(M) which we require our contractors resilient asset. M6 to adhere to and which are A66 To support this we have set out A66 Middlesbrough referred to by many local and a values statement, ‘Delivering A66(M) other national authorities for the a professional and affordable roads that they manage. service through innovation M6 The Agency is overseen by a and partnership working’, to A1(M) A64 Board which includes a non- communicate the behaviours Kingston executive chairman, three required of staff and contractors Leeds M65 M621 upon Hull to ensure the delivery of our M55 A1(M) non-executive directors, the chief M606 M62 M6 M62 executive and five executive goals and the fulfilment of our M66 M181

M61 M1 Contents M58 A627(M) directors as shown in Annex A. organisational objectives. M180 M18 Liverpool M60 A1(M) Further details of our governance M57 M62 M67 M56 arrangements can be found in M53 M56 Manchester Sheffield Section 6 of this report. M1 Nottingham

M6 A50 A5 A1 M1 Norwich Highways Agency Annual Report and Accounts 2011-12 11 A47 M54 M6 Toll M42 Leicester Birmingham M69 Peterborough M6 A1(M) A11 M5 M42 A14

A49 M5 M45 A14 Northampton Cambridge M40 A46 A5 M1 M50 M11 M5 A1(M) A120 Oxford A12 M48 A308(M) M1 M4 M40 M25 M11 M25 M4 M49 M4 A404(M) M4 M4 M32 London M2 M3 M20 M25 Bristol A34 M3 M25 M26 A2 M23 M20 A3 A21 A303 M27 Southampton A23 M5 M27 A3(M) M271 A27 M275 Brighton A30 A35 Portsmouth Plymouth

A38 A30 © Crown Copyright and database right 2012. All rights reserved. Ordnance Survey Licence number 100018928.

Highways Agency Annual Report and Accounts 2011-12 10

Sustainability Reporting tips 9 Live it, breathe it

Clearly describe your sustainability strategy over the short, medium and long term. Demonstrate how this is integrated into your core corporate strategy and permeates throughout your business

Example: MITIE Group PLC Sustainability 2012 micro site Our approach: http://sustainability2012.mitie.com/our‑approach/ sustainability‑approach.aspx

10 PwC Example: Unilever PLC Sustainable Living Plan Progress Report 2011 Page 2: Building a sustainable business

2 Unilever Sustainable Living Plan Progress Report 2011 BUILDInG A sUstainaBle BUsiness We believe growth and sustainability go hand in hand.

the BUsiness case oUr BUsiness Progress eMBedding sUstainaBility As we implement our Plan we are As a business we cannot choose between only by embedding sustainability into our recognising that the business case for growth and sustainability. We need to business will we succeed in reaching our embedding sustainability into our brands grow if we are to have the resources to targets. We are doing this in a number is strong. invest in renewable energy, sustainable of ways. agriculture and product innovation. 1. consumers want it. A small but n o ur business strategy now includes growing number of consumers around The Unilever Sustainable Living Plan is sustainability at its heart. the world are seeking the assurance helping drive both growth and profitability. n We are measuring progress. that the products they buy are ethically n The brands which are building our brand and functional teams all sourced and responsibly made. A more sustainability into their offer all have sustainability scorecards. These sustainable brand is often a more performed well. For example, Lifebuoy, are reviewed quarterly by the Unilever desirable brand. our concentrated liquid detergents and Leadership Executive. 2. r etailers want it. Many retailers comfort all grew double digit in 2011. n We are starting to link progress to have sustainability goals of their own n The eco-efficiency programmes in our reward. An increasing number of and need the support of suppliers factories have continued to deliver good managers, from the cEo downward, like Unilever to implement them. levels of savings. have sustainability goals as part of their This collaboration is deepening compensation. the relationships we have with n o ur efforts to reduce the amount of our customers. packaging we use have also cut costs. n We are building sustainability into innovation. We have a set of tools to 3. i t fuels innovation. Sustainability is In 2011 Unilever’s underlying sales growth evaluate the environmental impacts of a fertile area for both product and was 6.5%, its market shares improved and new products. packaging innovation. It is allowing its operating margin was broadly stable. n We have appointed 65 sustainability us to deliver new products with new We see no conflict between sustainable champions to cover every key function, consumer benefits. consumption and profitable growth: they category and country across the 4. i t helps develop new markets. over are mutually supportive. business. half Unilever’s sales are in developing countries, which often face the greatest n We are building expertise in behaviour sustainability challenges. new products change. Unilever’s Five Levers for that help people adapt to the changing change methodology helps our brand world will drive growth. and R&D teams design effective programmes (see page 11). 5. i t saves money. Managing our operations sustainably reduces energy, minimises packaging and drives out waste. It not only generates cost savings, it can also save the consumer money. 6. it inspires our people. our vision to create a sustainable, growing business is motivating for our employees and appealing to people who are considering joining Unilever.

oUr BUsiness

Personal care reFreshMent Turnover €15.5 billion Turnover €8.8 billion Underlying sales growth 8.2% Underlying sales growth 4.9% Sustainability Reporting tips 11 dove is the world’s top Unilever is the world’s leading cleansing brand ice cream company rexona is the world’s leading lipton is the world’s deodorant brand best-selling brand of tea Example:

NHS Business Services Authority Carbon Management Plan Sustainable Development Action Plan 2012/13 We are committed to supporting the Government’s target of an 80% reduction in carbon emissions by 2050 (compared to 1990 levels). Every annual SDAP published since 2009 has included Page 5, 6 & 15. specific actions and targets related to carbon reduction and good progress has been made in reducing absolute emissions.

In 2011/12, we worked with the Carbon Trust to develop a comprehensive Carbon Management Plan for the Authority, providing a much higher degree of clarity in terms of how we intend to achieve our target running up to the end of 2014/15. The plan was aligned with the centrally mandated Greening Government targets using a 2009/10 baseline. Therefore, actions completed between 2009/10 and 2011/12 have been summarised and documented, as well as future planned actions.

This SDAP contains brief details of the actions planned for 2012/13. Further detail can be found Our Sustainable Development Policywithin the NHSBSA Carbon Management Plan (2009 to 2015) available on the internet. Sustainable Development Goal Sustainable Development Actions The goal of sustainable development is to ensure all people throughout the world are able to satisfy their basic needs, while making sure future generations can enjoy the same Key Themes quality of life. In developing this SDAP, we have considered relevant Government, DH and NHS Sustainable development recognises the interconnections between society, the programmes and strategies and have structured the plan around the following easily environment, and economy – and aims to use a holistic approach to find solutions that understandable key themes: deliver benefits for all of these whilst minimising negative impacts. Our long term economic growth relies on protecting and enhancing the environmental resources that • Sustainable development framework; underpin it. • Staff and community engagement; • Reference: www.sd.defra.gov.uk/what/ Climate change adaptation; • Energy use in our buildings; Our Approach • Water use in our buildings; • Travel and transport; We will support the UK Government’s stated Sustainable Development Goal by: • Waste reduction and recovery; • Sustainable procurement. • Ensuring that sustainable development is addressed within our business strategy, policies and plans; The following pages set out the actions that we plan to undertake in each of these areas • Working with our business partners and service providers to ensure sustainable during 2012/13 to build upon the work completed during previous years, the planned development is addressed in our supply chain; outcomes from these actions, the dates by which these action will have been performed, • Setting specific objectives and targets to monitorEmbedding, progress against key performance Delivering,and the high-level accountability Monitoring for delivering these actions. indicators; • Producing an annual Sustainable DevelopmentTo Actionmake SustainablePlan to ensure Development delivery of In a delivering reality for theus itactions is essent setial out that in thethese actions key areas, outlined we will learn from the experience of our the Government’s goal, our objectives andwithin our targets;this plan are embedded withinothers inour the operations, public and arprivatee proactively sectors anddelivered share ourand own experiences between each of • Establishing and maintaining governance arrangements,accurately monitored ensuring thatand progressreported. our work streams and externally. We will utilise support from organisations such as the reporting is undertaken regularly both internally and externally. Carbon Trust, NHS Sustainable Procurement Forum and the NHS Sustainable Embedding Development Unit, to ensure that we successfully deliver against all elements of the agenda. Supporting Policies We recognise that it is essential that the delivery of sustainable development actions needs to be embedded into our activities and be an integral part of all of our planning Although our aim is to ensure sustainable development is addressed across all business processes. To ensure this is successful the following processes shall be followed: areas and related policies, the following list highlights key policies/ documents specifically linked to the agenda: • Business Plans will include consideration of the sustainable development implications, will look to ensure positive outcomes and will ensure mitigation • Sustainable Development Plan; • Carbonmeasures Management are in placePlan; where necessary; • Environmental Policy; • Business• Challenging Travel Policy;performance targets related to sustainable development will be set for • Health & Safety Policy; • Careerall areasBreak ofPolicy; the business to help drive continuous improvement; • Sustainable Procurement Policy; • Equality• All business& Diversity cases Policy; for revenue or capital spending will be reviewed actions • Health & Wellbeing Policy; • Flexiimplemented time/ Flexible to Working provide Policy; positive outcomes wherever possible; • Further Education & CPD Policy; • Maternity/• Sustainable Paternity procurement Leave Policy; policies and procedures will be followed to embed • Training and Development Policy; • Schemesustainability to Purchase requirem Leave.ents within contracts; • An updated Sustainable Development Action Plan will be incorporated into our corporate NHSBSA Business Plan for 2012/13; • Appropriate resources, including funding, will be put in place to deliver against this agenda. Underpinning all of this our staff and other relevant stakeholders will be actively involved in ensuring that we achieve our goals.

Delivering In order to ensure that our approach to the sustainable development agenda is managed in an organised and systematic way, an Environmental Management System shall be implemented and maintained, and externally certified against the ISO 14001 standard.

Targets & monitoring

Accountability for managing the sustainable development agenda has been delegated to Michael Brodie, Director of Finance, and David Teale is our Non-Executive Director lead. Performance is monitored through the Leadership Team Management Review Programme and Main Board meetings.

We are required to undertake monitoring and report in line with a number of programmes, all of which have different requirements in terms of scope and data. These include:

• Central Government - Greening Government programme; • Carbon Reduction Commitment Energy Efficiency Scheme, and • HM Treasury - Annual Report requirements.

12 PwC Sustainability Reporting tips 13 What gets measured, gets done Identify KPIs which are directly relevant to your sustainability strategy. Explain why they are relevant and how they are defined. Set and review your performance against challenging but realistic targets

Example: Johnson Matthey Plc Annual Report and Accounts 2012 Performance Highlights

14 PwC Example: Balfour Beatty plc Sustainability Report 2011 Page 6: Our performance at a glance

Overview

Key Our performance Positive trend 2009–2011 No change at a glance in trend 2009–2011 Negative trend 2009–2011

Our performance at a glance (2009–2011)

Link for further Trend Key Performance Indicator information 2009 2010 2011 2008-2011 2012 target Profitable Markets Value of completed sustainability products P30 n/a 2.3 2.5 n/a (such as LEED, BREEAM, CEEQUAL) £bn % of projects with agreed sustainability objectives P30 n/a 4 7 n/a Healthy Communities % of staff completing annual appraisal P46 63* 59 59 90 Fatal accidents P45 3 5 5 0 (employees and subcontractors) Accident frequency rate P44 0.17 0.16 0.17 0.10 (employees and subcontractors) Permanently disabling injuries (employees P44 3 2 5 0 and subcontractors) Injuries to the public P44 156 159 158 0 Environmental Limits

* Tonnes CO 2e/£m revenue P61 36.3 41.7 41.4 33.3 Waste to landfill (tonnes/£m revenue) P66 80 82* 43 41

% recycled content in major construction materials P67 n/a 3 7 25 % major construction materials from responsible P70 n/a 19** 34** 25 sources (eg concrete, aggregates and steel) Sustainably sourced timber P70 89 75 65 100 (% of total timber spend by value) Water use (m3/£m revenue) P71 191 250 203 225

* Restated data (following improvements made to our data collection systems and analysis) ** UK only (responsible sourcing schemes are not readily available outside the UK for these materials)

Red/green rating displayed for performance between 2009 and 2011. The year’s “at a glance” table has been aligned to the numerical targets within our sustainability roadmap and Zero Harm vision. Although our sustainability roadmap does not yet include quantified measures in the profitable markets area, we have included two indicators to provide some balance to the scope of our performance

reporting. 2010 is the baseline year for our CO2e, waste and water reduction targets. We have made good progress in reducing our waste to landfill and are on track to achieve our 50% reduction by 2012. Our water reduction target has been achieved a year early and we will develop a new target for 2015. Our UK businesses continue to make good progress in sourcing major construction materials from recognised responsible sources, exceeding our 25% target a year early. Progress outside the UK is inhibited by a lack of equivalent responsible sourcing schemes. More detailed five-year performance data, displayed by region and the progress each of our operating companies is making against our 2020 sustainability vision and roadmap, is provided here (see our Data tables section). There are areas of our performance where we fell short in 2011. These include: • The tragic loss of five lives due to workplace accidents and a further five permanently disabling injuries (see our Health and safety section) • We were also fined £163,000 GBP equivalent in 2011 for health and safety offences (see our Health and safety section) and £18,800 GBP equivalent for environmental violations (see our Environmental compliance section) • Reducing our energy use is challenging, being driven by the significant growth of our Hong Kong business, including energy intensive tunnelling projects • The value of sustainably sourced timber has decreased as we have been unable to secure adequate evidence that all our timber purchases are from recognised responsible sourcing schemes • Exclusion from the Dow Jones Sustainability Index

06 Balfour Beatty Sustainability Report 2011

Sustainability Reporting tips 15 The good, the bad, Management summary Marks and Spencer Group plc How We Do Business Report 2012 08

and the uglyManagement summary Marks and Spencer Group plc How We Do Business Report 2012 07 Management summary Our planet is getting warmer – mainly small-scale generators, including Pillar 3 because of an increase in greenhouse a new Archimedes screw water wheel Present information in a balanced and transparent fashion. Celebrate successThis is the first year that we’ve provided ClimateUNICEF change gases produced by human activity – installed on the Thames at the an update on our progress towards Reusing and recycling clothes with many damaging consequences. Mapledurham Estate. but also avoid glossing overhangers negative is helping to support sustainability impacts or poor performancegiving all M&S products a Plan A quality It’s a global problem but one that Unicef projects in Bangladesh. We– for improved example, the by fuelmeeting efficiency Fairtrade, of our against targets. Explain where147 million hangers and how improvementswe’re helping will to address. be made collectedProgress on commitments Foodsustainable delivery raw and materials, General animalMerchandise What we’ve achieved this year fleetswelfare by or 28%healthier and food30% respectivelystandards. 26 Achieved On 1 January 2012 all M&S operated againstCurrently, 2006/07, 31% of butM&S didn’t products pursue have our 147m 4 On plan stores, offices, warehouses and delivery commitmenta Plan A quality to use(by volume). 50% bio-diesel Ultimately, 1 Not achieved fleets in the UK and Republic of Ireland duethis willto sustainability allow us to give concerns our customers over 2 Behind plan became carbon neutral. We’ve reduced the currentsimple re-assurance generation of thatbio-diesels every Example: our annual carbon dioxide emissions Performance against our madeM&S product from food has crops. Plan A However, built into weit. commitments on page 21 by 158,000 tonnes since 2006/07, conducted trials on a range of other What we’re aiming to achieve next year Marks and Spencer Group plc despite an 18% growth in salesfloor fuels including electric, diesel/electric We want to make it easier for our How we do business report 2012 footage, and purchased high quality hybrids and compressed natural gas. customers to live more sustainably UK grown asparagus international carbon offsets to match Pages 6‑11: Management SummaryWorking with and suppliers pages 40 – 41: Performance Summary. Weand widened change the our way range they of shop.low carbon the remaining emissions. Management summary Performance in full MarksCommunitywe’ve and extended Spencer investment the Group plc How We Do Business Report 2012 41 products, including projects to extend We’veUK growing invested season £11.4m for We’ll be working to find new ways to We improved energy efficiency across the UK asparagus season and improve inasparagus, community reducing projects involve them in Plan A and increase equivalentthe need for to imports 1.7% our stores, offices and warehouses by energy efficiency in food manufacturing Plan a the proportion of M&S products of pre-tax profits 28%/sq ft and put in place ‘green’ tariff processes such as baking and cooking. The main social The overall The individual targets with Plan A qualities. electricity contracts for all the electricity 7 and environmental 20 objectives we 180 we’ve put in place to Our work with suppliers on Farming for pillars issues facing retailers aim to achieve we buy directlymeasure from our April progress 2012. These Management summary objectivesMarks and Spencer Group plc commitmentsHow We Do Business Report 2012 06the Future best practice, Food Supplier 1.7 % contracts include 15% of electricity from Sustainability Framework and on energy

PROGRESS THIS YEaR efficiency at our top 100 clothing Big Beach Clean-up suppliers also helped us to reduce Sustainability will only become ‘the vehicles, along with hydrogen fuel-cell Performance in full M&S employees and emissions in our supply chains. Pillar 1 Pillar 2 138business 30that we do’ if we integrate powered forklift trucks. We completed Involve our customers Achieved On plan customers took part Make Plan A Plan A into our everyday activitiesin 117 beach, and canal Whatour responsible we’re aiming buying to achieve training nextfor all year in Plan A how we do business processes – including the andway river we clean-ups Havingcolleagues met whoour 2012 deal directlyPlan A with Food in May 2012 6 engage employees,6 build our stores, commitmentsand General Merchandise on energy and suppliers fuel and Behind Not plan work withachieved our suppliers and develop efficiencycontinued towe’re link seniornow working management towards new products. morebonuses demanding to Plan A. 2015 Around targets. 91% of Progress on commitments Progress on commitments employees took part in our 2012 annual What we’ve achieved this year We’ll also focus more attention on our Pillar Four Pillar Seven 117 Your Say survey (last year 95%) and we 8 Achieved 35 Achieved In September 2011, we opened a new work with suppliers, whose operations Waste Health and wellbeing were again listed in the Times Top 50 4 On plan 4 On plan Sustainable Learning Store at Stratford account for the major part of our employers for women. 1 Behind Create partnerships plan to help our customers 1 Be Reducehind the impact plan on the natural resources City Drive health near and the nutrition site benefits of the across London our 2012 carbon footprint. 12 reuse or recycle all our products and 16 used to make our products. 18 product offer. Performancepackaging. against our Performance against our Olympic Games. The store features We also worked with our suppliers on a Management summary Not Behind On Marks and Spencer GroupNot Behind plc On How We Do BusinessNot Behind Report On 2012 08 achieved plan plan Achieved achieved plan plan Achieved achieved plan plan Achieved commitments on page 12 Photograph ©Mr. Corry Starling of Mapledurham Watermill commitments on page 15 sunpipes to maximise natural light, a wide range of Plan A projects, making 12.1 Clothes hanger reuse 16.1 Food factory water use 18.1 M&Sliving food nutritional roof content and hydrocarbon (non-HFC) good progress on our Farming for the 12.2 Customer clothes recycling 16.2 Sustainable farmed fish 18.2 Saturated fat in dairy products 12.3 Packaging recycling partnerships 16.3 General Merchandise 18.3 30%refrigeration. healthier food Stratford City obtains 99% Future best practices, Food Supplier 12.4 Reduce home delivery packaging chemical policy 18.4 Naturalof coloursits heating and cooling energy fromPerformance in full a Sustainability Framework and three 12.5 Simplify packaging materials 16.4 FoodOur animal planet welfare is getting warmer – mainly18.5 ReduceThe salt small-scaleUK throws away generators, around including 300 million £1 used to fund UNICEF activities to Pillar 3 Pillar 4 central combined cooling heat and Model Eco Dyehouses. However, we’ve 12.6 Reduce weight of non-glass 16.5 Mbecause&S packaging forest of an increase in greenhouse18.6 Lochmuirtonnes salmona new of waste Archimedes every year screw – most water of wheel it alleviate poverty for children and their Climatepackaging change 16.6Waste Animal testing cut-off on 18.7 Food power with health supply.benefits No waste was sent to fallen a little behind in our programme 12.7 Sustainable packaging materials clegasesaning materials produced by human activity18.8 – Nutritionallyfrominstalled enriched construction food on the and Thames industry at the with families in Bangladesh. We maintained 12.8 Packaging recyclability 16.7 Recycledwith binmany bags damaging consequences. 35landfill millionMapledurham during tonnes its fromconstruction Estate. households. and it has reductionsto improve energyof non-glass efficiency packaging at our at 12.9 WRAP recycling symbols 16.8 Recycled carrier bags been Help to facilitate awarded behaviour an change ‘Excellent’ through BREEAM top 100 clothing suppliers. It’s a global problem but one that Packagingclear nutritional labelling accounts and information. for ten million an average of 26% per item against 12.10 Courtauld Commitment 16.9 Tripling organic food 19 rating.We We’ll improved be opening the fuel our efficiency largest of our 12.11 Clothes hanger recycling 16.10 Phasewe’re out hazardous helping pesticides to address. tonnes of which seven million tonnes 2006/07What we’re and aiming continued to achieve our work next with year Progress on commitments Progress on commitments Food deliveryNot and Behind General On Merchandise 12.12 Recycling services for customers 16.11 Pesticide residue-free food areSustainable recycled. Learning If wasteachieved plan isn’tStoreplan recycled,Achieved to date at Somerset County Council’s Waste Reduce carrier bag use Pesticide Action Network We want to continue integrating 12.13 16.12 What we’ve achieved this year 19.1 NutritionalCheshire labellingfleets Oaks by 28% later and in 2012.30% respectivelyWe’ve 12.14 Carrier Bag Agreement 16.1319 Non A-GMchieved food 19.2 Integratemuch sustainability of it labellingends up in landfill sites Partnership,Plan A processes which into collected all aspects an of 26 Achieved 16.14 S ustainableOn 1 Januarytextiles 2012 all M&S operated against 2006/07, but didn’t pursue our Our biggest impacts on the environment19.3 On packwhereconducted portionApril itadvice gradually 2012 trials giving on decomposes alternative customers fuels the additional 12,500 tonnes of packaging

16.15 Procure sustainable cotton our business and use these to make Behind the plan 4 On Send p nolan operational and construction waste 6stores, On plan offices, warehouses and delivery19.4 Alcohol commitment to use 50% bio-diesel to landfill and reduce our operational waste and society come through the products withopportunity a small fleet to of recycle dual-fuel any diesel unwanted 13 1 Not achieved 16.16 1Six rawBe materialshind to planstop 19.5 Nutritional over traffic many light labels years. materialsmore informed for recycling. decisions and by 25% and construction waste by 50%. deforestationfleetswe sell in and the the UK way and they’reRepublic used of Ireland– so we and dueitemscompressed to of sustainability clothing natural when concerns gas they delivery visit over 2 Behind plan Not Behind On 16.17 S ustainable wood improve performance. achieved plan plan Achieved Performancebecamewant to make againstcarbon it our easier neutral. for We’ve our customers reduced What Encouragethe our we’ve our current stores. customers achieved generation and employees this to of year bio-diesels We launched a collection and recycling 16.18Cheshire Sustainable Oaks wild fish become more active. 13.1 Reduce food waste and commitmentsour annual on carbonpage 26 dioxide emissions20 From February 2012 we achieved our scheme for mattresses and a similar Performancenon-good transit against packaging our 16.19Sustainable D yehouseto live standards moreLearning sustainably by getting made from food crops. However, we 16.20 Recycledby 158,000 polyester tonnes since 2006/07, During the year,Not Behindwe alsoOn launched a 13.2commitments Waste carbon footprint on page 21 Storeinvolved in Plan A. commitmentconducted to trialssendachieved planon no a planwaste rangeAchieved to of landfill other trial with Oxfam and the British Heart 16.21 Non-food animal welfare 13.3 Reduce construction waste Our largest Sustainable 20.1 Online diet websitecommunity partnership with UNICEF 16.22 Beauty despite testing cut-off an date18% growth in salesfloor fromfuels our stores,including offices, electric, warehouses diesel/electric Foundation for replaced furniture. The 13.4 Reduce paper usage 5pLearning Food Storecarrier will bag open 20.2 Launch get active campaign 16.23 Free footage,What range food we’ve and achievedpurchased this high year quality linked to clothes hanger recycling. 13.5 No waste to landfill charge (with profits 20.3 Children’s and sweets hybridsconstruction at till points and compressed activities. We natural reduced gas. Marks & Spencer and Oxfam Clothes 16.24at Cheshire Oa kham chicken Oaks later UK13.6 grown Reduce foodasparagus waste internationalIn June 2011, carbon we launched offsets a to major match20.4 Food Healthy EatingThe Advisers partnership will see M&S donate 16.25donated)in 2012 Supply chain water efficiency total volumes of waste from our Exchange collected around three million Working13.7 Food withwaste tosuppliers composting and AD Sincecampaign, its launch in Forever Fish, using the profits20.5 Calendar ofWeat health least widenedcampaigns £650,000 our range a year of for low three carbon years. 13.8 No construction waste to landfill the remaining emissions. operations by 31% compared items of unwanted clothing, raising £2m we’ve extended the 2008, we’ve reduced 20.6 Customer healthproducts,The information money including will be used projects to provide to extend health UK13.9 growing Use of recycled season materials for in from sales of Food carrier bags to help to 2008/09. for Oxfam and increasing the number of construction usageWe Pillarby 78%improved Six energy efficiency across the UK asparagus season and improve asparagus, reducing Stratfordcustomers City and their families learn more care, clean drinking water and access customers visiting our stores. In April, 13.10 Closed-loop recycling Fair partner the need for imports In Septemberourabout stores, fish 2011 officesand supporting and warehouses marine by We alsoenergyto education reduced efficiency forfood children in waste food andbymanufacturing 40% their 16 PwC we extended the scheme when we Help our suppliers to reduce waste and we opened28%/sqconservation Ensure a workforces new ft and and activities. put communities in place By benefit ‘green’2014 in we tariff aim overprocessescommunities the same period,such in Mymensingh as with baking none and sent and cooking. to

Behind the plan launched ‘shwopping’ – encouraging 14 send no waste to landfill. 17Sustainableelectricityour supply Learning chain. contracts for all the electricity landfill and 89% processed to generate Storeto at showStratford 400,000 City primary school children OurDhaka work in Bangladesh.with suppliers We on involved Farming our for customers to donate used items of Not Behind On we buy directly fromNot AprilBehind On2012. These energy using anaerobic digestion. achieved plan plan Achieved near thejust site how of the important achieved it isplan to planprotectAchieved the thecustomers Future best in a widepractice, range Food of Plan Supplier A clothing to Oxfam whenever they visit 14.1 Food packaging write-offs 17.1London Generalcontractsearth’s 2012 Merchandise fish include living species wage 15% and of invite electricity all our from 21 campaigns this year, including the 14.2 Food supplier waste 17.2Olympic Supply Gameschain training We reusedSustainability or recycled Framework 147 million and on energyour stores. 17.3 Singlemillion Ethical Code customers and our employees to clothesefficiencynational hangers, Big at Butterfly withour top 50p 100 inCount everyclothing (with more 17.4 Researchparticipate on community in impacts over 100 beach, canal and than 34,000 garden surveys submitted), Pillar Five 17.5 Food supply chain skills suppliers also helped us to reduce river clean-ups every year. We also plan Macmillan Cancer Support’s World’s Natural resources 17.6 Food supply chain HR emissions in our supply chains. 17.7 Constructionto invest Health more and Safety than £1m in WWF marine Biggest Coffee Morning, the Prince of Ensure efficient use of natural resources in our 17.8 Furtherconservation five produce R&D projectsprojects. WhatWales’s we’re START aiming sustainability to achieve project, next year 15 operations. 17.9 UK and RoI food sourcing 17.10 Five R&D produce projects HavingBreakthrough met our Breast 2012 PlanCancer, A Not Behind On Building on the success of the M&S achieved plan plan Achieved 17.11 S emi-announced supplier commitments on energy and fuel assessments Leukaemia & Lymphoma Research, 15.1 Recycled consumables and Oxfam Clothing Exchange, which 17.12 In-country resources efficiencyWoodland Trustwe’re Christmasnow working card towards 15.2 Reduce water usage incentivised consumers to donate three 15.3 Sustainable construction 17.13 Supplier ethical assessments morerecycling, demanding the Prostate 2015 Cancertargets. Charity 17.14 Extendmillion ethical assessmentsunwanted items to Oxfam during 17.15 Confidential helpline We’lland Shelter. also focus more attention on our 17.16 Smallthe local year suppliers we launched ‘shwopping’ in 17.17 Buying Pledge work with suppliers, whose operations 17.18 DoubleShwopping regional food sourcing account for the major part of our 17.19 Fairtrade food 17.20 FairtradeIn April clothing 2012, we launched carbon footprint. 17.21 Supplierour ‘shwopping’ Exchange – communities campaign to encourage customers to

Photograph ©Mr. Corry Starling of Mapledurham Watermill donate unwanted garments **Assurance for statements and claims is provided by Ernst & Young (see page 49 for details) to Oxfam whenever they visit our stores. Pillar 4 The UK throws away around 300 million £1 used to fund UNICEF activities to tonnes of waste every year – most of it alleviateBreakthrough poverty for children and their Waste from construction and industry with familiesBreast Cancer in Bangladesh. We maintained We helped to raise 35 million tonnes from households. reductionsanother £1.9m of for non-glass packaging at Packaging accounts for ten million anBreakthrough average Breastof 26% per item against tonnes of which seven million tonnes 2006/07Cancer, reaching and continued a our work with Progress on commitments total of £17m since are recycled. If waste isn’t recycled, Somersetwe started in County2001 Council’s Waste 19 Achieved much of it ends up in landfill sites Partnership, which collected an 6 On plan where it gradually decomposes additional 12,500 tonnes of packaging 1 Behind plan over many years. materials for recycling. Photograph ©Rankin Photography Performance against our What we’ve achieved this year We launched a collection and recycling commitments on page 26 From February 2012 we achieved our scheme for mattresses and a similar commitment to send no waste to landfill trial with Oxfam and the British Heart from our stores, offices, warehouses Foundation for replaced furniture. The 5p Food carrier bag charge (with profits and construction activities. We reduced Marks & Spencer and Oxfam Clothes donated) total volumes of waste from our Exchange collected around three million Since its launch in operations by 31% compared items of unwanted clothing, raising £2m 2008, we’ve reduced usage by 78% to 2008/09. for Oxfam and increasing the number of customers visiting our stores. In April, We also reduced food waste by 40% we extended the scheme when we over the same period, with none sent to launched ‘shwopping’ – encouraging landfill and 89% processed to generate customers to donate used items of energy using anaerobic digestion. clothing to Oxfam whenever they visit We reused or recycled 147 million our stores. clothes hangers, with 50p in every Example: British American Tobacco plc

SustainabilitySustainability Harm reduction SummaryMarketplace 2011 Environment Supply chain People and Assurance and Sustainability Harm reduction Marketplace Environment Supply chain People and Assurance and overview overview cultureculture performanceperformance Pages 6Sustainability – 8 & 32‑34Harm reduction Marketplace Environment Supply chain People and Assurance and overview culture performance

Our harm reduction commitment: Our harm reductionOur commitment: harm reduction commitment: We will strive to bring commercially We will Westrive will tostrive bring to bring commercially commercially Our material issues viable, consumer acceptable OurOur material material issues issues viable, consumer acceptable Reported viable, consumer acceptable Reported■ Reduced-risk products reduced-risk products to market. ■Reported EngagementReduced-risk products

reduced-risk products to market. ■■ See our 2012 goals on page 33. Covered Engagement Reduced-risk at www.bat.com products reduced-risk products to market. ■ See our 2012 goals on page 33. ■Covered Information Engagement at www.bat.com on the health risks ■ of smoking See our 2012 goals on page 33. 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Campaignto the feedback for each survey. of the first 200 responses system for digital tax verification by end 2011. this view. it is the toxicants in the tobacco and tobaccopreferences and different needs for potentially tocompanies the feedback survey. really be 1 MHRA Public Assessment Report. ‘The use of Environment reduced-risk1 nicotine products. replacement We believetherapy to thatreduce a harm ‘one in impartial? Our role in tobacco harm reduction MHRA Public Assessment Report. ‘The use of Develop new goals for our energy, water andproduct waste measures fitsnicotinesmokers’, all’ by approach replacement February 2010. cannottherapy15 to achievereduceDevelop harm new in goals for our energy, water and waste measures. End 2012 As a manufacturer ofend tobacco 2011. (This products, has been delayed while wetobacco review our approach.)harmsmokers’, reduction, February 2010.so our approach is to Read our responses to your questions www.bat.com/sustainability 7 we have a responsibilitySet five-year to pursue milestones ways to monitor progressmake towards available our 2030 aand range of reduced-risk15 Set five-year tobacco milestones to monitorwww.bat.com/sustainability/answers progress towards our 2030 and 2050 End 2012 www.bat.com/sustainability 7 in which we might 2050reduce CO2 ethe targets health by end risks 2011. (This has beenand delayednicotine while products we for adult consumers.CO2e targets. of our products. Althoughreview our nicotine approach.) is not Tell us what you think about our completely harmless,Reduce contrary our direct to energy what use many towards our 2012Alongside target of 11.03this, we are engaging16 withReduce the our direct energyapproach use towards toour harm2012 target reduction. of 11.03 End 2012 people believe it is gigajoulesnot associated per million with cigarettes most equivalent produced,scientific 6.7 and per centpublic health communitygigajoules to pertry million cigaretteswww.bat.com/sustainability/feedback equivalent produced, 6.7 per cent lower lower than our 2007 baseline. than our 2007 baseline. Sustainability Reporting tips 17 tobacco-related diseases. There is widespread to build more widespread support for this We will donate £10 to the Global Trees agreement in the scientificReduce our directcommunity water use towardsthat our 2012broader target of approach4.2 cubic to tobacco harm16 Reduce reduction. our direct water useCampaign towards ourfor 2012each target of the of first4.2 cubic 200 metres responses End 2012 per million cigarettes equivalent produced, 13.4 per cent lower than our metres per million cigarettes equivalent produced, 13.4 per cent lower to the feedback survey. it is the toxicants inthan the our tobacco 2007 baseline. and tobacco 2007 baseline.

Reduce our waste to landfill towards our 2012 target of 0.022 tonnes 16 Reduce our waste to landfill towards our 2012 target of 0.022 tonnes per End 2012 1 MHRA Public Assessment Report. ‘The use of per million cigarettes equivalent produced, 12 per cent lower than million cigarettes equivalent produced, 12 per cent lower than our 2007 our 2007 baseline, and recycle at least 85 per nicotinecent of our replacement waste. therapy to reducebaseline, harm andin recycle at least 85 per cent of our waste. smokers’, February 2010. Reduce our direct CO2e emissions by 50 per cent by 2030 and 80 per 16 Reduce our direct CO2e emissions by 50 per cent by 2030 and 80 per 2030/ cent by 2050 against our 2000 baseline of 1.38 tonnes per million cent by 2050 against our 2000 baseline of 1.38 tonnes per million 2050 cigarettes equivalent produced. cigarettes equivalent produced. www.bat.com/sustainability 7

Engage with stakeholders about the long-term challenges and 16 opportunities of climate change, focusing on the areas of carbon pricing and renewable energy by end 2011.

Undertake a feasibility review of renewable energy to help identify 16 Incorporate renewable and low-carbon energy options in the End 2012 potentially suitable manufacturing locations and technologies by development of plans to help us meet our long-term CO2e targets. end 2011.

Carry out a water footprint analysis to better understand the risks and 16 Complete the strengthening of our sustainable water End 2012 opportunities that changes in water availability could present for us by management strategy. end 2011.

33 British American Tobacco Sustainability Summary 2011 Environment Agency

Example:Appendix C - Sustainability accounting and reporting Environment Agency In this section we highlight our sustainability performance. We have presented this data Annualin Report a format consistent and Accounts with the requirem 2011‑12ents of HM Treasury's Sustainability Reporting guidance. We have taken an active role in working with HM Treasury and the Financial Page 105:Reporting Appendix Advisory Board C. Page to develop 102: public Appendix sector sustainability A. reporting standards and guidance. We aim to provide as clear and accurate a picture as possible of our environmental impacts. This appendix presents the detailed information that underpins the reporting of our performance against a number of specific sustainability related targets.

Our sustainability performance

Target Financial Sustainability KPI 2011-2012 actual performance indicator

Carbon dioxide (CO ) 2 56,000 tonnes CO Off target - emissions 2 Office waste 552 tonnes On target £730,000 Office waste sent to landfill 50 tonnes On target £120,000 Mains water consumption 48,000 m3 On target £250,000 Buildings energy 32.6 million kWh On target - consumption Total energy expenditure - - £6.5 million Official business travel (no 36.9 million miles On target - trains) Official business travel 55 million miles - - (including train) Total business travel - - £13.9 million

Annual Report and Accounts 2011-2012

Outcome measure and progress 2011-2012 target Status 4.2a More waste is fully recovered to the standards defined in the Quality Protocols, such 940,000 Red that it is no longer classed as waste

Target not achieved Delays in development and review of quality protocols means we can only use waste diversion figures for Compost and Poultry Litter Ash, as these are the only protocols completed in 2011-2012. The delays have been due to a number of issues including:  the determination of hazardous substances under the Groundwater Daughter Directive  ongoing research into the impacts on animal health 105  changes to the processing and make-up of waste We are working through these issues and continue to focus on delivering the protocols or investigating and implementing alternative approaches to reducing the amount of waste going to landfill. This measure is being reviewed for 2012- 2013 to include a greater focus on facilitating waste reuse and recovery.

Be the best we can

Outcome measure and progress 2011-2012 target Status 5.1b We have a diverse workforce 3.4% Green

Target achieved This measure reports on the number of employees who are recorded as BAME (Black, Asian and Minority Ethnic) and the percentage this is of the total employee population. In Quarter 4 of 2011-2012,there were 397 BAME employees. This is 3.5 per cent 18 PwC of the total population which is above the target of 3.4 per cent. During the past year we have focused on retaining the diversity of our workforce whilst meeting the need to reduce our headcount. We are:  Ensuring our recruitment processes attract applicants that reflect all the communities we serve. We are using specific websites to attract potential BAME applicants to our own job site.  Completing Equality Impact Analysis for all our Change Programmes, and for all new or revised policies and procedures that may impact our staff.  Working with and providing support for the BAME employee network and running a new BAME Action Plan under the executive leadership of Directors.

102 Sustainability Reporting tips 19 Snakes and ladders

Draw out and explain in detail the key strategic risks and opportunities arising from the sustainability agenda. Explain the relevance and implicationsOur Plan – Vision2020 of each as they relate to your organisation and the actions put in place to mitigate risks and maximise opportunities Our Plan vision2020

Example:To read more about shaPing the FUtUre oF oUr BUsiness anD how we manage our maXimising oPPortUnities risks and opportunities: The Berkeley Group Plc Vision2020 has been designed to help us manage key business risks and exploit www.berkeleygroup.co.uk/ strategic opportunities. Sustainabilitysustainability/governance- Report 2012 – Executive Summary and-management The diagram below provides a snapshot of how Vision2020 will help shape Berkeley Pages 4 – 5: Our Plan – Visionin the future 2020. to create a truly sustainable business.

MANAGEMENT THE CUSTOMER KEY RISK FINANCIAl IMPACT THROUGH VISION2020 ExPERIENCE Failure to meet Fewer customer Commitment that over expectations recommendations and 95% of customers would sales as a result of damage recommend us to a friend to corporate reputation from poor service lower market value of homes due to lack of customer appeal

MANAGEMENT KEY OPPORTUNITY FINANCIAl IMPACT THROUGH VISION2020

Engaging with customers Higher sales due to highly Commitment to survey to inform better design desirable and comfortable 25% of customers on home design how sustainability influenced their home Increased market value purchase decisions of homes due to their customer appeal

MANAGEMENT BUIlDING KEY RISK FINANCIAl IMPACT THROUGH VISION2020 GREENER HOMES Increasing legislatory/ Increase in cost of Commitment to undertake regulatory requirements building homes research to understand the implications of the Increase in research and Government’s proposed development costs zero carbon standard on our future developments

MANAGEMENT KEY OPPORTUNITY FINANCIAl IMPACT THROUGH VISION2020

Market differentiation Higher sales due to Commitment to design all of our product unique product offering new homes to achieve at to customers least level 3 of the Code Increased market value for Sustainable Homes of homes due to demand Commitments to provide for good design cycle storage, home office working and recycling facilities in all new homes

4 Berkeley Sustainability Report 2012

20 PwC OUR APPROACH

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We alsogroup support CR EDP committee, which is chaired Corporate Responsibilityemployee satisfaction with theCommittee CR programme * 6 Logica Corporate Responsibility Report 2011 Quadrant Technology Services 2012 expectations of usas as measured a sustainable by the annual supplierpeople survey. the top quartile of bids, tenders and supplier Corporate Responsibility Report 2011 Logica 5 in Portugal and Brazil on theirby Amanda‘Part of Us’ Mesler RISKS, CEO ANDof Business OPPORTUNITIES Amanda Mesler, Chairman campaign and Schools programmes.report’ offering the widest and deepest through achieving our own CR targets and assessments Consulting and is advised by two non- benchmarking our performance • Proactively partnering with clients to set of capabilities and sustainabilityClient ValueExecutiveOPPORTUNITIES Partner O&G Sector / President Business Consulting and North America executive directors Noel Harwerth and contribute towards their achievement of their services to buyers.Potential Our clients impact rank: Closer our relationships with clients, demonstratingSTATUS: we live their values and Jan Babiak. On this committee alsoWe deliver sit clientthe value through CR goals approach to CR asunderstand the fourth their highestdemonstrating wider eco- system, to clients wewill are potentially a lead• Differentiating to differentiation Logica in bid tenders with Chairpersons of the steering committeessustainable supplier and areenvironmental credible • Creating Steering for clients sustainablePeople futures todaySteering Community Steering attribute, as measuredgreater by opportunities our Client to win more business. for Environment, Community andproviders of sustainabilityRISKSCommittee services. AND OPPORTUNITIES Committee Committee Satisfaction Survey. In 2011 we entered the Dow Jones 2011 TARGETS Sustainability Reporting tips 21 How we are takingSustainability advantage Index, of maintained it: Working our closely with client account teams to identify joint CR People and the CR Executive Sponsors Bert van derIncrease ScheldeRISKS our ranking on industryPam indices Chase OPPORTUNITIESGBS Bindra position in the Carbon Disclosure Project’s from our seven largestand community countries. programmes, which Chairmancontribute to our clients’ sustainabilityChairman agendas Chairman Leadership Index for aPotential fourth consecutive impact : Loss2012 GOALSof business VS LONG and/or TERM GOALS Potential impact: A Sustainability Services The CR Committee is responsibleyear for and improved our ranking as a Global 100 Sustainableclient Company.CFO loyalty Outsourcing We arethrough Services failure to meet2012 VP,client HR Northern &Practice Central Europe potentiallyLONG TERMGlobal generating Innovation hundreds Director of reviewing the strategy, agreeingrecognised KPIs, as a leaderexpectations in Verdantix ‘Green of usContinue as a sustainable to demonstrate that company. we meet client millions• Meeting client of pounds expectations to by theperforming business. in Client Focusedreviewing People progress against targetsQuadrant and Technology Services 2012 expectations of us as a sustainable supplier the top quartile of bids, tenders and supplier report’ offering the widest*Reports and deepest to the Executivethrough achieving Committee our own CR targetsand Boardand assessments benchmarking our performance • Proactively partnering with clients to We help create client focusedcontinually and keepingSTATUS: track of the setrisks of capabilities and andHow sustainability we mitigate it: Integrate CR deeper How we are taking advantage of it: Our services to buyers. 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We were singled out as a to our three priority programmes are At a country level,Potential the impact CR : programmesLoss of business and/or of Potentialfrom theimpact key: A Sustainability functions Services who are for Logica. Future Proof - our internal 2011 TARGETS as a sustainable supplier,client loyalty as through measured failure to meet by clientour Practiceleader potentially in the generatingmarket hundredsby offering of the widest responsible for overseeing the progress our seven largestexpectations businesses of us as a sustainableare directed company. millionsresponsible of pounds to thefor business. overseeing the successful communications campaign to raise • 3% of employees volunteering forperformance one day per in year relevant indices and accolades. and deepest set of capabilities and can of the individual programmes as well as by Executive Sponsors who are country delivery of the group targets. 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We were singled out as a as a sustainable supplier, as measured by our leaderCorporate in the market Responsibility by offering the widest Report 2011 Logica 7 6 Logica Corporate Responsibility Report 2011 performance in relevant indices and accolades. and deepest set of capabilities and can provide the most integrated and holistic set of Corporate Responsibility Report 2011sustainability Logica 5 services to buyers.

6 Logica Corporate Responsibility Report 2011 It’s a material world

Demonstrate an understanding of the sustainability issues relevant to you and your key stakeholders; report only those of material importance

Example: RSA Insurance Group plc

16 | RSA | CorporateCorporate Responsibility 2011 Responsibility Report 2011/2012 Page 16: Materiality

MATERIALITY

Every year we compile a risk matrix to Issues being flagged in any of the processes are Our 2011 materiality assessment confirmed that help determine the material issues for assessed against: financial and social inclusion, flood risks associated our CR strategy and reporting. with climate change, safety and disasters remain key • Significance to RSA (including importance to issues for us. We are tackling these through our Issues are assessed through a variety of channels. stakeholders); strategic focus on safety, the environment, social These include our group risk framework, inclusion (see page 19) and community activities • Alignment to our core business; and stakeholder engagement process, external (see page 30). Rising up the agenda this year are benchmarking, investor assessments, sustainability • Our ability to influence. issues concerning the economy and public spending. ratings and the employee CR survey, as well as a While we have little control over these, they are materiality review by Forum for the Future. important considerations for the company as they will affect the environment in which we operate.

Economic situation Social inclusion Flooding / Climate High priority Safety Disasters

Ageing populations Investments Tranparency Customer service Medium priority Employee wellbeing Employee training

STAKEHOLDER VIEWS STAKEHOLDER Obesity Urbanisation Corruption Product innovation Supply chain Water scarcity Emerging markets Ecosystem decline Diversity Low priority New technology Direct environmental impact Resource prices Energy security Business ethics

Limited influence or no ability Able to influence or encourage mitigation Direct control or ability to mitigate

OUR ABILITY TO INFLUENCE

22 PwC Example: BT Group plc – Better Future Report 2012 Material issues: http://www.btplc.com/Responsiblebusiness/Ourstory/ Sustainabilityreport/report/report/mat.aspx

Material issues We use a formal process to identify the aspects of being a responsible and sustainable business that are most material (relevant and significant) to our business and stakeholders. This process is a key principal of the AA1000 Assurance Standard 2008, which we use in our reporting.

Material issues in 2012 This year’s materiality study showed largely consistent findings with previous years. Our most material issues appear at the top right hand section of the chart below.

Sustainability Reporting tips 23 Cash is still king

Illustrate how your sustainability strategy has had an impact on the bottom line. Identify and define potential means of maximising economic benefits going forward

Example: Hammerson plc Annual Report 2012 Directors’ report | Business & financial review | Connected reporting framework Pages 28 – 29: Connected Reporting Framework

Connected reporting framework

Carbon and energy Coverage 2009 2010 2011 Comments on 2011 performance

CR MEASURE: This measure Year-on-year greenhouse gas emissions building intensity by • The major drop in office energy intensity in portfolio (like-for-like properties), in line with EPRA BPR Reduce carbon emissions associated covers 44,520 2009 related to a change in tenant/ 250 landlord apportionment with landlord-provided energy for tonnes of CO2e, shared services in the like-for-like which 200 • A review of natural ventilation has been / year 2 completed at all assets. Oracle and portfolio by 1.5% per annum for represents 150 Queensgate completed stage two detailed e per m UK offices and by 20% for shopping 2 100% of total 100 design review

centres, from a 2010 baseline (UK/FR) greenhouse gas kg CO 50 • Lighting projects to reduce consumption UK offices emissions UK shopping centres French shopping centres commenced across all car parks 0 2006 2007 2008 2009 2010 2011 • The cost of energy continued to rise, new contracts noted an increase of 18% Percentage change 2010 to 2011 • 99 Bishopsgate topped the new Carbon (shopping centre and office portfolios) Reduction Commitment league table -13% UK offices • Energy Performance Certificates have been -9.85% UK shopping centres completed at all assets with ratings shown in

-18.81% French shopping centres the Annual Report for the first time • 125 Old Broad Street delivers new -11.45% Combined shopping centres benchmark for energy efficiency in the -20% -15% -10% -5% 0% Hammerson portfolio • Good progress continues to be made in Cost of energy (£000) UK/FR 10,858 8,202 9,707 shopping centre portfolio, with the French all properties portfolio reducing energy consumption by 14.6% Energy efficiency investment (£000) UK/FR 53 697 1,231 • Bercy 2 achieved a reduction of 8% all properties through improved operational Estimated energy savings (£000) UK/FR 980 211 1,157 management. like-for-like

Waste Coverage 2009 2010 2011 Comments on 2011 performance

CR MEASURE: Shopping centres (UK & France) Offices (UK) • Overall waste recycling has increased to Increase waste recycling Annual waste production (absolute by final disposal route) Annual waste production (absolute by final disposal route) 58.5% 1,000 25,000 • A new centralised management contract to 75% by 2013 (offices 900 has been implemented including strict and shopping centres) 20,000 800 700 recycling targets. WestQuay implemented (UK/FR) 15,000 600 500 the new system in October and by 10,000 400 December recycling rates had increased 300 from 25% to 68% 5,000 200

Annual waste production tonnes annual metric Absolute Absolute annual metric tonnes tonnes annual metric Absolute 100 • Silverburn continued to struggle this year by final disposal route, 0 0 but a new contractor has been selected and 2009 2010 2011 2009 2010 2011 will commence work in 2012 in line with EPRA MRF – recovery rate not known Incinerated waste (use as fuel) MRF – recovery rate not known Incinerated waste (use as fuel) Recycled/reused/composted Landfilled waste Recycled/reused/composted Landfilled waste • We continue to see a dramatic reduction in landfill tax. By 2014 landfill tax will reach Total waste cost (£000) UK Only 1,473 1,668 1,325 £80 per tonne (UK) and €20 per tonne (France). Amount saved in landfill tax (£000) UK Only 370 558 527

Income from sale of waste (£000) UK Only 44 76 110

Water Coverage 2009 2010 2011 Comments on 2011 performance

CR MEASURE: Building water intensity Office water intensity • Water intensity at 99 Bishopsgate has 40 Reduce water consumption 8 increased as a major refurbishment has 35 3 7 to typical 9.3m /person/ 30 reduced occupancy levels without an 6 pa by 2013, (CIBSE 25 equivalent reduction in water consumption 5 benchmark levels, offices) 20 • Water audits are complete at all UK 4 15 shopping centres and water management and good practice 6.4m3/ 3 10 plans underway (cubic metres/person/annum) person/pa by 2015 and 2 5

Water intensity – Landlord and tenant and tenant – Landlord intensity Water • Water explorer event held at Highcross in by 12% by 2015 in the 1 0 Stockley 10 125 60 99 partnership with Levis to raise consumer Water intensity – landlord and tenant – landlord intensity Water House Grosvenor Old Broad Threadneedle Bishopsgate shopping centres 0 Street Street Street 2006 2007 2008 2009 2010 2011 awareness of water consumption and 24 PwC portfolio (common UK shopping centres: (Landlord only) (litres per visit) 9.3m2 /person/annum - 2013 ‘typical practice’ level promote waterless jeans French shopping centres: (Landlord only) (litres per visit) 6.4m2 /person/annum - 2015 ‘good practice’ level part areas) French shopping centres: (Landlord and Tenant) (litres per visit) • Despite a reduction in water consumption across the rest of the portfolio we cannot Cost of water (£000) UK/FR 1,628 1,742 1,896 report a saving as we discovered a faulty meter at Silverburn resulting in a major all properties increase in water consumption • Water cost and investment figures have Investment in water management UK/FR 14 12 16 been restated for 2010, as a mistake has improvements (£000) all properties been identified in the calculation. Estimated water savings (£000) UK/FR 420 97 -143 all properties

28 Hammerson plc | Annual Report 2011 Example: Johnson Matthey Plc Annual Report and Accounts 2012 Pages 25 – 34: Financial Review of Operations

Sustainability Reporting tips 25 The great beyond

Consider relevant extended upstream and downstream value chain aspects of your business in order to take account of all its environmental, social and economic impacts, both positive and negative

Example: British Land plc Building Business, Creating Growth: Our Socio‑Economic Contributions Report 2012 http://www.britishland.com/files/reports/2012_sec_report.pdf

BUILDING BUsINess, CReATING GROWTH

Our socio-economic Contributions Report 2012

26 PwC Example: PUMA SE PUMA’s Environmental Profit and Loss Account for the year ended 31 December 2010 http://about.puma.com/wp‑content/themes/aboutPUMA_theme/financial‑report/pdf/ EPL080212final.pdf PUMA’s Environmental Profit and Loss Account for the year ended 31 December 2010 8

PUMA’s 2010 E P&L results

The table below sets out for the first time in monetary terms the changes in human welfare which result from PUMA’s environmental impacts. Details on how these monetary values were derived are set out in ‘How it was done’ on pages 12-22. The top half of the table splits the total impact of EUR 145 million between that attributable to our own operations and each tier of our supply chain. The latter half of the table shows where the impacts occur by our key regions and segments, including the impacts by segment normalised by sales. The Environmental Profit and Loss

Water Land Other air EUR million use GHGs use pollution Waste TOTAL % of total

33% 33% 25% 7% 2% 100%

TOTAL 47 47 37 11 3 145 100%

PUMA operations <1 7 <1 1 <1 8 6%

Tier 1 1 9 <1 1 2 13 9%

Tier 2 4 7 <1 2 1 14 9%

Tier 3 17 7 <1 3 <1 27 19%

Tier 4 25 17 37 4 <1 83 57%

Regional analysis

EMEA 4 8 1 1 <1 14 10%

Americas 2 10 20 3 <1 35 24%

Asia / Pacific 41 29 16 7 3 96 66%

Segments

Footwear 25 28 34 7 2 96 66%

Apparel 18 14 3 3 1 39 27%

Accessories 4 5 <1 1 <1 10 7%

Intensity Environmental impact (EUR) per EUR 100 of sales

Footwear 1.8 2.0 2.4 0.5 0.1 6.7

Apparel 1.9 1.5 0.3 0.3 0.1 4.1 Complete results and the story behind PUMA's E P&L - the first ever attempt to measure, value and report the environmental externalities caused by a major corporationAccessories and its entire supply 1.2 1.5 0.00 0.3 0.00 2.9 chain

PUMA’s Environmental Profit and Loss Account for the year ended 31 December 2010

Sustainability Reporting tips 27 Pay as you go

Explain how directors and staff are incentivised to deliver on the sustainability strategy and the goals set. Ensure that the reader can understand the link between remuneration and actual performance

Example: Royal Dutch Shell plc Annual Report and Form 20‑F 2011 Pages 62 to 77: Directors’ Remuneration Report

For the 2011 Executive Directors’ Scorecard, the sustainable development component was a combination of the safety measure (10% weight) and additional targeted internal measures (10% weight in total) covering operational spills, energy efficiency and use of fresh water. These measures reflect some of the most important sustainability issues faced by Shell and will also be used for 2012.

28 PwC Remuneration report continued

98 In determining policy and practice, the key factors we take into account |

Xstrata | Annual Report 2011 www.xstrata.com Base salary include: Purpose • Attract and retain talented and experienced executives • the UK Listing Rules; from an industry in which competition for talent is • the provisions of the UK Corporate Governance Code and associated extremely high guidance attached to it; • Reflect the individual’s capabilities and experience • the97 competitive environment for experienced personnel in the global Xstrata’s value creation Remuneration Committee | Xstrata | Annual Report 2011 www.xstrata.com • Reward leadership and direction of Xstrata on behalf Our approach towards remuneration plays an important role in retaining Members: extractive industries sector; of shareholders and incentivising the current management team who have built Xstrata David Rough (Committee Chairman from 4 May 2011. Independent, • the guidance provided by a number of institutional investor representative into a major diversified mining company over the past decade. Since our non-executive director and Senior Independent Director) bodies; and Policy • Reviewed annually with any changes effective initial public offering in March 2002, we have transformed from a debt- Sir John Bond (Member from 4 May 2011. Independent, 1 January constrained $500 million company in 2001 into a $56 billion global mining non-executive Chairman of the Board) • feedback received from shareholders. major. This growth has been accompanied by superior value creation for • Set at a competitive level benchmarked against shareholders. Since 2002, we have delivered total shareholder returns of Con Fauconnier (Member from 5 May 2010. Independent, We also take into account pay and employment conditions across Xstrata other global mining and major UK companies using some 340% compared to an average for the FTSE100 index of 58%. non-executive Director) when setting the remuneration of executive directors. We do not believe a independent external data and inflation statistics for ratio comparison between executive directors and non-Board employees is key mining markets We have maintained exceptional levels of retention across all senior Sir Steve Robson (Member from 4 May 2011. Independent, appropriate. A ratio comparison does not provide a useful measure of fairness management – a core objective of our remuneration policy – throughout Example: non-executive Director) or balance due to the vastly different costs of living in the countries where • Consider the individual’s skills, experience and the past decade. No Executive Committee members have left to join Willy Strothotte (Retired 4 May 2011. Immediate past Chairman) we have operations and fluctuations in exchange rates. However, on a regular influence over, and responsibility for, the success competitors and we have over 90% retention at senior management level. basis we assess the fairness and balance of our remuneration policies and of the business This low staff turnover is in shareholders’ interests, given the direct and Details of the Remuneration Committee’s role, meetings and activities may practice internally and benchmark against our competitors in the various indirect costs associated with replacing experienced managers in the Xstratabe found plc in the Corporate Governance report on page 94. • The impact of any salary increase awarded on the value highly competitive global mining market and in the context of Xstrata’s regions in which we operate. In 2011, we assessed the remuneration of all of the total package is considered carefully prior to any AnnualThe Remuneration Report Committee and accountsreceives advice on 2011 pay and conditions across ambitious organic growth strategy. Group and headquarters roles, including Executive Committee members, change being made Xstrata from the General Manager Human Resources and Legal who also acts with support from external consultants, to benchmark remuneration against We believe our remuneration policy and approach incentivises Pageas 97 Secretary & to98: the Remuneration Remuneration Committee. report a global peer group and ensure that our approach to pay is consistent from • Ensure that our approach to pay is consistent from outperformance by executive directors and senior management and During the year, Hay Group provided independent advice to the executive level to support personnel. executive level to support personnel aligns management’s interests with your interests and mine as Xstrata Remuneration Committee on executive remuneration. Hay Group also Link to strategy • Protect and generate shareholder value through the shareholders, where possible. As ever, we welcome your feedback on our

provides market information on remuneration for positions below Executive Strategic review retention and attraction of high-calibre individuals approach to remuneration, including the format and scope of this report. Committee level. Freshfields Bruckhaus Deringer provided legal advice Risk • Enhance retention of key personnel to ensure on incentive plan rules and KPMG provided external validation of Total management business continuity Shareholder Return and real cost savings performance. Remuneration policy Elements of remuneration • Structured and policy-driven approach to Our remuneration policy and practices aim to attract, retain and motivate The table below sets out a summary of the component elements of our conducting salary reviews the high-performing individuals we rely on to deliver our business strategy remuneration policy for executive directors. and create long-term value. We believe that performance-related pay should David Rough Salary review for 2012 incentivise exceptional performance and that rewards should be closely linked Salary inflation for staff in the mining industry is currently extremely high, with Remuneration Committee Chairman to and commensurate with performance. Total remuneration intense competition for qualified and experienced people driven by increased investment in the sector. Across Xstrata, salary increases for employees were 1. Over 80% of the executive pay package is performance-related and review Performance therefore ‘at risk’ (i.e. the contractual obligation to pay is dependent between 4% and 10% in most parts of the business, with increases in excess Fixed pay Performance related pay on satisfaction of performance criteria). of 10% for a number of experienced mining, engineering, project manager Short-term variable pay Long-term variable pay and senior management roles. Salary increases for executive directors are 2. For exceptional performance, potential pay levels are positioned in within the range of increases awarded across Xstrata. the upper quartile of the global mining industry and other global FTSE100 companies. Base pay Base salary effective Base salary effective Executive Long-term 1 January 2012 1 January 2011 3. Performance is assessed on a holistic basis, taking into account a wide Retirement benefits Committee incentive plan Mick Davis (£) 1,501,500 1,430,000 variety of factors that are aligned to the delivery of superior long-term bonus plan returns to Xstrata’s shareholders and continuous and sustainable Added value plan Trevor Reid (£) 815,000 750,000 improvements in the underlying operating and financial performance Other benefits Santiago Zaldumbide (€) 1,076,400 1,040,000

of Xstrata. Governance • Individual performance criteria for annual bonus awards reflect health and safety, environment and sustainability performance; financial performance in both absolute and relative terms; and the effective delivery of strategic priorities including the project pipeline, and various lead performance indicators. The use of multiple factors ensures that bonuses cannot be earned on the basis of inappropriate or risky behaviour and avoids rewarding achievements against one or narrow objectives that come at the expense of performance in other areas. • The value of long-term incentives is dependent upon both absolute and relative share price performance and vesting is subject to the satisfaction Financial statements of stretching performance conditions as outlined below under ‘Long Term Incentive Plan’. In the event that performance is below threshold, participants will receive no benefit from long-term incentives. 4. Pay arrangements are intended to remain in place, so far as is practicable, throughout the business cycle. We have therefore avoided making frequent changes to incentive arrangements or performance metrics.

Sustainability Reporting tips 29 Ask around

Explain how you engage with principal stakeholders and how this has impacted your sustainability strategy and reporting

Example: British Land plc Stakeholder Survey Report 2011 http://files.the‑group.net/library/britishland/files/pdf_235.pdf

Stakeholder WorkShop report

2011

britishland.com/europe

30 PwC Example: Centrica plc Sustainability Report 2011 – 2011 Stakeholder Engagement Summary http://www.centrica.com/files/pdf/centcr11_Stakeholder_matrix.pdf

2011 Stakeholder engagement summary

Stakeholder Key interests What we want to Our aims Engagement methods Our 2011 performance group know Customers • We are active members of the Carbon Monoxide Consumer (continued) Awareness Alliance (COCAA) and provided over 200,000 CO monitors to customers in 2011. • Our Direct Energy and British Gas Customer Ideas Factories, which are web-based customer discussion groups, continued to consider new proposals and questions submitted by the company on issues ranging from climate change to payroll giving.

Government • Climate change / • Policy and regulatory We operate in highly • Consultation responses • We continue to support mechanisms that promote low carbon and carbon reduction frameworks across regulated markets around • Advocacy and position technologies, and through consultation outlined our regulators • Consumer protection all areas impacting the world where public papers recommendations for the plans for the Green Deal and ECO • Education/skills our business policy decisions can affect • Direct engagements with in January 2012. • Employee health and • Market pace and all aspects of our government and Regulator • We have advocated electricity market reform to enable safety level of regulatory operations, including representatives appropriate support for new low carbon generation including • Energy efficiency intervention in the investment decisions, • External panel, CR wind and nuclear. measures and market consumer protection and Advisory Group • We inputted into Ofgem’s price control consultations and technology • Pricing and customer employment relations. We stakeholder engagements. • Energy pricing support obligations seek open, transparent and • We engaged with MPs and local government on debt advice • Energy security • Broader deregulated energy for the vulnerable and fuel poor, including an active markets. • Environmental understanding of the membership of Fuel Poverty Action Group, and MP management market and political engagements relating to the debt advice centres funded We do not favour any one • HSE compliance environment and through the British Gas Energy Trust. political party and work • how it impacts on our • To identify eligible pensioners to receive the Warm Home Market competition closely with political • Social inclusion strategy Discount, we completed a data exercise with the Department • stakeholders to inform • Vulnerable Perceptions and of Work and Pensions. views of our policy formation on • We have engaged with the Department for Energy and customers/fuel important issues such as poverty business and Climate Change to develop their policy for the rollout of smart approach energy, environment, metering. • Which of our consumers and • We are a signatory of the UK Health & Safety Executive customers are employment relations. pledge. vulnerable and require additional support

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Sustainability Reporting tips 31 Example: The Crown Estate Annual Report and Accounts 2012 KƵƌƐƚƌĂƚĞŐLJ KǀĞƌǀŝĞǁ KǀĞ Pages 55‑56: Sustainability &ŽƌŵŽƌĞŝŶĨŽƌŵĂƟŽŶĂŶĚƚŽƐĞĞ ƚŚĞĨƵůůƌĞƉŽƌƚ͕ǀŝƐŝƚ͗ ƌǀŝ ǁǁǁ͘ƚŚĞĐƌŽǁŶĞƐƚĂƚĞ͘ĐŽ͘ƵŬͬ Ğǁ ĂŶŶƵĂůͲƌĞƉŽƌƚͬ ^ƵƐƚĂŝŶĂďŝůŝƚLJŝƐŝŶƚĞŐƌĂůƚŽŽƵƌǀĂůƵĞƐŽĨĐŽŵŵĞƌĐŝĂůŝƐŵ͕ ŝŶƚĞŐƌŝƚLJĂŶĚƐƚĞǁĂƌĚƐŚŝƉĂŶĚƚŚĞƌĞĨŽƌĞƚŽŚŽǁǁĞĚŽďƵƐŝŶĞƐƐ͘

tŽƌŬŝŶŐƚŽŐĞƚŚĞƌ tĞŚĂǀĞĂĐůĞĂƌŐŽǀĞƌŶĂŶĐĞƐƚƌƵĐƚƵƌĞĨŽƌƐƵƐƚĂŝŶĂďŝůŝƚLJ DĂƚĞƌŝĂůŝƚLJĂŶĚĞŶŐĂŐĞŵĞŶƚ ƚŚĂƚĚĞĮŶĞƐƌŽůĞƐĂŶĚƌĞƐƉŽŶƐŝďŝůŝƟĞƐĂŶĚŚĞůƉƐƵƐ tĞƵŶĚĞƌƚĂŬĞĂĨŽƌŵĂůƉƌŽĐĞƐƐƚŽĚĞƚĞƌŵŝŶĞƚŚĞŵŽƐƚ ŝŵƉůĞŵĞŶƚŽƵƌƐƚƌĂƚĞŐLJ͘ ŵĂƚĞƌŝĂůŝƐƐƵĞƐĨŽƌŽƵƌďƵƐŝŶĞƐƐ͘dŚŝƐŝƐŝŶĨŽƌŵĞĚďLJŽƵƌ WĞƌĨŽƌŵĂŶĐĞ ďƵƐŝŶĞƐƐŐŽĂůƐ͕ŽƵƌĐŽƌƉŽƌĂƚĞƌŝƐŬŵĂŶĂŐĞŵĞŶƚƉƌŽĐĞƐƐĂŶĚ WĞƌ ƚŚƌŽƵŐŚĞŶŐĂŐĞŵĞŶƚǁŝƚŚŽƵƌƐƚĂŬĞŚŽůĚĞƌƐ͘ ĨŽƌ tĞƌĞĐŽŐŶŝƐĞǁĞŚĂǀĞĂƌĞƐƉŽŶƐŝďŝůŝƚLJƚŽĂĐƚŝŶĂǁĂLJƚŚĂƚ ŵĂŶ tĞĂƌĞĐŽŵŵŝƩĞĚƚŽĞŶƐƵƌŝŶŐƚŚĂƚǁŚĞŶĞǀĞƌǁĞĞŶŐĂŐĞ͕ ĐĞ ĚĞŵŽŶƐƚƌĂƚĞƐǁĞĐĂŶďĞƚƌƵƐƚĞĚƚŽĚĂLJĂŶĚŽǀĞƌƚŚĞůŽŶŐƚĞƌŵ͘ ǁĞŵĞĞƚƚŚĞŚŝŐŚĞƐƚƐƚĂŶĚĂƌĚƐŽĨƚƌĂŶƐƉĂƌĞŶĐLJǁŝƚŚŽƵƌ ƐƚĂŬĞŚŽůĚĞƌƐƚŚƌŽƵŐŚƚŚĞĨŽůůŽǁŝŶŐĐŽŵŵŝƚŵĞŶƚƐ͗ DĂŝŶŽĂƌĚ KƵƌĂƉƉƌŽĂĐŚ ŐŽŽĚĞdžĂŵƉůĞŽĨĐƌĞĂƟŶŐŵƵƚƵĂůďĞŶĞĮƚĨŽƌĂůů ϭ ƐƚĂŬĞŚŽůĚĞƌƐŝƐŽƵƌĞŶŐĂŐĞŵĞŶƚĂƚdŽŵŝŶƚŽƵůŝŶ^ĐŽƚůĂŶĚ ůůƌĞůĞǀĂŶƚƐƚĂŬĞŚŽůĚĞƌƐǁŝůůďĞĐŽŶƐƵůƚĞĚ͘ tĞǁŽƌŬƚŽďƵŝůĚŽƉĞŶ͕ƚƌĂŶƐƉĂƌĞŶƚĂŶĚŵƵƚƵĂůůLJďĞŶĞĮĐŝĂů ǁŚĞƌĞǁĞĂƌĞƉƌŽǀŝĚŝŶŐĨƵŶĚƐ͕ĨĂĐŝůŝƟĞƐĂŶĚƐƚĂīƟŵĞƚŽ ƌĞůĂƟŽŶƐŚŝƉƐǁŝƚŚĂůůŽĨŽƵƌƐƚĂŬĞŚŽůĚĞƌƐ͕ŝŶĐůƵĚŝŶŐ͗ ŚĞůƉĚĞǀĞůŽƉĂƐƵƐƚĂŝŶĂďůĞƌĞŐĞŶĞƌĂƟŽŶƐƚƌĂƚĞŐLJǁŝƚŚƚŚĞ ůŽĐĂůĐŽŵŵƵŶŝƚLJ͕DŽƌĂLJŽƵŶĐŝů͕ĂŝƌŶŐŽƌŵƐEĂƟŽŶĂůWĂƌŬ Ϯ ŵƉůŽLJĞĞƐ ƵƚŚŽƌŝƚLJĂŶĚ,ŝŐŚůĂŶĚĂŶĚ/ƐůĂŶĚƐŶƚĞƌƉƌŝƐĞ͘ dŚĞŝŶĨŽƌŵĂƟŽŶǁĞƉƌŽǀŝĚĞǁŝůůďĞĂĐĐƵƌĂƚĞ͕ ƌĞĂƟŶŐĂĨƵůĮůůŝŶŐǁŽƌŬĞŶǀŝƌŽŶŵĞŶƚ ĂĐĐĞƐƐŝďůĞĂŶĚǁƌŝƩĞŶŝŶĐůĞĂƌůĂŶŐƵĂŐĞ͘ ƵƐƚŽŵĞƌƐ KƵƌƉĞƌĨŽƌŵĂŶĐĞ WƌŽŵŽƟŶŐƋƵĂůŝƚLJƐĞƌǀŝĐĞ͕ĐŚŽŝĐĞĂŶĚŇĞdžŝďŝůŝƚLJ ϯ tĞǁŝůůŬĞĞƉĂĐůĞĂƌƌĞĐŽƌĚŽĨĂůůĐŽŵŵƵŶŝĐĂƟŽŶƐ͘ ^ƵƐƚĂŝŶĂďŝůŝƚLJ ,ĞĂůƚŚΘ^ĂĨĞƚLJŝŶĐŝĚĞŶƚƐ ^ƵƐ

^ƵƉƉůŝĞƌƐ ƚĂŝ ĐĐŝĚĞŶƚ^ĞǀĞƌŝƚLJZĂƚĞ;^ZͿʹEƵŵďĞƌŽĨĞŵƉůŽLJĞĞůŽƐƚĚĂLJƐƉĞ^ƵƐƚĂŝŶĂďŝůŝƚLJƌϭϬϬ͕ϬϬϬŚŽƵƌƐǁŽƌŬĞĚ ƵŝůĚŝŶŐƌĞůĂƟŽŶƐŚŝƉƐǁŚŝĐŚĐƌĞĂƚĞǀĂůƵĞĨŽƌƵƐĂŶĚĨŽƌƚŚĞ ĐĐŝĚĞŶƚ/ŶĐŝĚĞŶƚZĂƚĞ;/ZͿʹEƵŵďĞƌŽĨĂĐĐŝĚĞŶƚƐƉĞƌϭϬϬĞŵƉůŽŵŵŝƩĞĞ ŽLJĞĞƐ ŶĂď ǁŝĚĞƌŵĂƌŬĞƚ ĐĐŝĚĞŶƚ&ƌĞƋƵĞŶĐLJZĂƚĞ;&ZͿʹEƵŵďĞƌŽĨZ/KZƌĞƉŽƌƚĞĚŝŶũƵƌŝĞƐ ϰ ŝůŝ ƉĞƌϭϬϬ͕ϬϬϬĞŵƉůŽLJĞĞŚŽƵƌƐ tĞǁŝůůƉƌŽǀŝĚĞĨĞĞĚďĂĐŬƐŽƚŚĂƚƚŚĞĐŽŶƐƵůƚĂƟŽŶŝƐĂŐĞŶƵŝŶĞ ƚLJ ZĞƐƉŽŶƐŝďůĞĨŽƌĚĞǀĞůŽƉŝŶŐ ƚǁŽͲǁĂLJƉƌŽĐĞƐƐŝŶĐůĞĂƌůĂŶŐƵĂŐĞ͘ tŝĚĞƌƐƚĂŬĞŚŽůĚĞƌƐ Ϯϱ ĂŶĚŵŽŶŝƚŽƌŝŶŐdŚĞƌŽǁŶ ŶƐƵƌŝŶŐƚŚĂƚǁĞĂƌĞŐŽŽĚƉĞŽƉůĞƚŽĚŽďƵƐŝŶĞƐƐǁŝƚŚ ϮϬ ƐƚĂƚĞ͛ƐƐƵƐƚĂŝŶĂďŝůŝƚLJƐƚƌĂƚĞŐLJ͘ ϭϱ ϱ DĞĞƚƐƋƵĂƌƚĞƌůLJ͕ĐŚĂŝƌĞĚďLJƚŚĞ dŚĞǀŝĞǁƐŽĨƐƚĂŬĞŚŽůĚĞƌƐǁŝůůďĞĐŽŶƐŝĚĞƌĞĚďĞĨŽƌĞ KƵƌĂĐƟŽŶ ϭϬ ĐŚŝĞĨĞdžĞĐƵƟǀĞ͘ ϱ ĐŽŵŝŶŐƚŽĂŶLJĮŶĂůĚĞĐŝƐŝŽŶƐ͘

Ϭ ŵƉůŽLJĞĞƐ ϮϬϬϴͬϬϵ ϮϬϬϵͬϭϬ ϮϬϭϬͬϭϭ ϮϬϭϭͬϭϮ tĞŚĂǀĞƌŽůůĞĚŽƵƚĂŶĞǁŽĚĞŽĨƵƐŝŶĞƐƐƚŚŝĐƐĂŶĚĂƌĞ /ŶƚŚĞƉĂƐƚĮŶĂŶĐŝĂůLJĞĂƌǁĞŚĂǀĞĞŶŐĂŐĞĚǁŝƚŚŽƵƌ ǁŽƌŬŝŶŐŽŶĂĐŽŵŵƵŶŝĐĂƟŽŶƉůĂŶƚŽĞŵďĞĚƚŚŝƐŝŶƚŽŽƵƌ ĂƚĂŶŽƚĞ͗/ŶϮϬϬϵͬϭϬƚŚĞ^ZƌĂƚĞǁĂƐŚŝŐŚĚƵĞƚŽĂƐŵĂůůĞƌǁŽƌŬĨŽƌĐĞĂŶĚŵŽƌĞƟŵĞŽīǁŽƌŬ͕ ƐƚĂŬĞŚŽůĚĞƌƐŽŶĂǁŝĚĞƌĂŶŐĞŽĨŝƐƐƵĞƐŝŶĐůƵĚŝŶŐƉƌĞͲ ďƵƐŝŶĞƐƐ͘ϵϭƉĞƌĐĞŶƚŽĨŵĂŶĂŐĞƌƐĐŽŵƉůĞƚĞĚƚŚƌĞĞĚĂLJ ŝŶĐůƵĚŝŶŐŽŶĞŝŶĐŝĚĞŶƚƚŚĂƚƌĞƐƵůƚĞĚŝŶϭϬϰĚĂLJƐŽī^h^d/E/>/dzW/>>Z^͗ ŵĂŶĂŐĞŵĞŶƚĚĞǀĞůŽƉŵĞŶƚƚƌĂŝŶŝŶŐŽǀĞƌƚŚĞƉĂƐƚLJĞĂƌĂŶĚ ƉůĂŶŶŝŶŐŽĨŶĞǁĚĞǀĞůŽƉŵĞŶƚƐĂŶĚƉƌŽŐƌĞƐƐŽŶƚŚĞǁŽƌůĚ͛Ɛ ĮƌƐƚĐŽŵŵĞƌĐŝĂůǁĂǀĞĂŶĚƟĚĂůĞŶĞƌŐLJƉƌŽŐƌĂŵŵĞ͘ ǁĞĐŽŶƟŶƵĞĚƚŽĂĐŚŝĞǀĞ/ŶǀĞƐƚŽƌƐŝŶWĞŽƉůĞ;//WͿ͘ ǀĞƌĂŐĞŚŽƵƌƐŽĨƚƌĂŝŶŝŶŐƉĞƌLJĞĂƌƉĞƌĞŵƉůŽLJĞĞ EƵŵďĞƌŽĨŚŽƵƌƐ dŚĞƐĞŚĂǀĞƚĂŬĞŶƉůĂĐĞĂƚůŽĐĂƟŽŶƐƌĂŶŐŝŶŐĨƌŽŵůƐĞŶŚĂŵ ƵƐƚŽŵĞƌƐ 'ŽǀĞƌŶĂŶĐĞ ŝŶƐƐĞdž͕ƚŽ&ŽĐŚĂďĞƌƐĂŶĚWĞŶƚůĂŶĚ&ŝƌƚŚŝŶ^ĐŽƚůĂŶĚ͘ 'Žǀ tĞĂŝŵƚŽĚĞůŝǀĞƌĞdžĐĞůůĞŶƚƐĞƌǀŝĐĞĂƚĂůůƟŵĞƐĂŶĚǁĞ ϭϲ ϭϬ ϭϮ ϭϴ ŵĞĂƐƵƌĞƚŚŝƐƚŚƌŽƵŐŚƐƵƌǀĞLJƐ͘KĨƚŚĞϭϵϳƵƌďĂŶĂŶĚƌƵƌĂů tĞĂůƐŽƐŝƚŽŶǁŽƌŬŝŶŐŐƌŽƵƉƐƚŽĚĞǀĞůŽƉƉŽůŝĐLJƐƵĐŚĂƐƚŚĞ ĞƌŶ ĂŶĐ ƚĞŶĂŶƚƐƐƵƌǀĞLJĞĚ͕ƌĞƐƉŽŶƐĞƐŝŶĚŝĐĂƚĞƚŚĂƚϴϰйĂƌĞǁŝůůŝŶŐ tŽƌŬŝŶŐ dĂĐŬůŝŶŐĐůŝŵĂƚĞ ƌŝǀŝŶŐ ^ƵƐƚĂŝŶŝŶŐ ŽƵŶƚƌLJ>ĂŶĚĂŶĚƵƐŝŶĞƐƐƐƐŽĐŝĂƟŽŶĂŶĚƚŚĞƌŝƟƐŚ ƚŽƌĞĐŽŵŵĞŶĚdŚĞƌŽǁŶƐƚĂƚĞĂƐĂůĂŶĚůŽƌĚ͘ ƚŽŐĞƚŚĞƌ ĐŚĂŶŐĞĂŶĚ ĞŶǀŝƌŽŶŵĞŶƚĂů ĐŽŵŵƵŶŝƟĞƐ WƌŽƉĞƌƚLJ&ĞĚĞƌĂƟŽŶ͘ Ğ ĞŶĞƌŐLJƐĞĐƵƌŝƚLJ ǀĂůƵĞ ^ƵƉƉůŝĞƌƐ KƵƌĚŝǀĞƌƐĞƉŽƌƞŽůŝŽŝƐƐƵƉƉŽƌƚĞĚďLJĂǁŝĚĞƌĂŶŐĞŽĨ ϮϬϬϴͬϬϵ ϮϬϬϵͬϭϬ ϮϬϭϬͬϭϭ ϮϬϭϭͬϭϮ ŽŶƚƌŽůŽƌŝŶŇƵĞŶĐĞ ƐƵƉƉůŝĞƌƐĂŶĚƚŚƌŽƵŐŚŽƵƌŶĞǁĞƚŚŝĐĂůƐƵƉƉůLJĐŚĂŝŶƉŽůŝĐLJ ǁĞĞŶĐŽƵƌĂŐĞƚŚĞŵƚŽŵĞĞƚƚŚĞƐĂŵĞŚŝŐŚƐƚĂŶĚĂƌĚƐǁĞƐĞƚ dŚĞǁĂLJǁĞŵĂŶĂŐĞŽƵƌĚŝǀĞƌƐĞƉŽƌƞŽůŝŽďƌŽĂĚůLJĨĂůůƐŝŶƚŽ ĨŽƌŽƵƌƐĞůǀĞƐ͘tĞĞŶŐĂŐĞŽŶďĞƐƚƉƌĂĐƟĐĞĂŶĚŽƵƌƵƌďĂŶ ^ĞĞƉĂŐĞϱϲ ^ĞĞƉĂŐĞϱϴ ^ĞĞƉĂŐĞϲϬ ^ĞĞƉĂŐĞϲϮ ƚǁŽĐĂƚĞŐŽƌŝĞƐ͚͗ĐŽŶƚƌŽů͛ʹǁŚĞƌĞǁĞĚŝƌĞĐƚůLJŵĂŶĂŐĞƚŚĞ ďƵƐŝŶĞƐƐƉĂƌƚŶĞƌƐĐŽŶƟŶƵĞƚŽƉĞƌĨŽƌŵĂŐĂŝŶƐƚŽƵƌ ŵƉůŽLJĞĞƐĂůĂƌLJƌĂƟŽƐďLJŐĞŶĚĞƌϮϬϭϭͬϭϮ;ϲϳйŵĂůĞ͕ϯϯйĨĞŵĂůĞͿ ƉƌŽƉĞƌƚLJ͕ƚLJƉŝĐĂůůLJƚŚƌŽƵŐŚŵĂŶĂŐŝŶŐĂŐĞŶƚƐĂŶĚĂƌĞĂďůĞƚŽ ŶǀŝƌŽŶŵĞŶƚĂůWĞƌĨŽƌŵĂŶĐĞ/ŶĚĞdž;W/Ϳ͘ WĞƌĐĞŶƚĂŐĞŽĨƚŽƚĂůĞŵƉůŽLJĞĞƐ;ĨĞŵĂůĞͿ ƐĞƚƐƚĂŶĚĂƌĚƐĂŶĚŝĚĞŶƟĨLJĐŽŵŵŽŶŐŽĂůƐ͖ĂŶĚ͚ŝŶŇƵĞŶĐĞ͛ WĞƌĐĞŶƚĂŐĞŽĨƚŽƚĂůĞŵƉůŽLJĞĞƐ;ŵĂůĞͿ tŝĚĞƌƐƚĂŬĞŚŽůĚĞƌƐ   ǁŚĞƌĞŽƵƌĐŚĂůůĞŶŐĞŝƐƚŽĞŶĐŽƵƌĂŐĞĂĐƟŽŶŝŶůŝŶĞǁŝƚŚŽƵƌ tĞƌĞĐŽŐŶŝƐĞƚŚĂƚƚŚĞƐƵĐĐĞƐƐŽĨŽƵƌďƵƐŝŶĞƐƐĚĞƉĞŶĚƐ ϮϮй ǀĂůƵĞƐ͕ƚŚƌŽƵŐŚĞŶŐĂŐĞŵĞŶƚ͕ƌĞƐĞĂƌĐŚĂŶĚďLJƌĞĐŽŐŶŝƐŝŶŐ ŽŶƉŽƐŝƟǀĞĞŶŐĂŐĞŵĞŶƚǁŝƚŚŵĂŶLJĚŝīĞƌĞŶƚƐƚĂŬĞŚŽůĚĞƌƐ͘ ďĞƐƚƉƌĂĐƟĐĞƚŚƌŽƵŐŚĂǁĂƌĚƐ͘dŚĞƐƵƐƚĂŝŶĂďŝůŝƚLJ ϭϯй /ŶĂĚĚŝƟŽŶƚŽůŽĐĂůĐŽŵŵƵŶŝƟĞƐ͕ǁĞĂůƐŽĞŶŐĂŐĞĚǁŝƚŚ ϭϭй ϵй ƉĞƌĨŽƌŵĂŶĐĞĚĂƚĂŝŶƚŚŝƐƌĞƉŽƌƚĐŽǀĞƌƐƚŚĞƉƌŽƉĞƌƟĞƐ ϴй ϳй &ŝŶĂŶĐŝĂůƐ

ϳй &ŝŶ ƉŽůŝƟĐŝĂŶƐĂƚĂůůůĞǀĞůƐŽĨ'ŽǀĞƌŶŵĞŶƚ͕ŝŶĐůƵĚŝŶŐŶĂƟŽŶĂů͕ ϱй ϱй ϯй ϰй ϯй ĂŶĚĂĐƟǀŝƟĞƐƵŶĚĞƌŽƵƌĐŽŶƚƌŽů͘KƵƌŽŶůŝŶĞĂŶŶƵĂůĂŶĚ ĚĞǀŽůǀĞĚ͕ƌĞŐŝŽŶĂůĂŶĚůŽĐĂůĂŶĚŽƚŚĞƌŽƌŐĂŶŝƐĂƟŽŶƐǁŝƚŚĂŶ Ϯй ϭй ĂŶĐ

ŝŶƚĞƌĞƐƚŝŶŽƵƌĂĐƟǀŝƟĞƐ͘ hŶĚĞƌ άϮϬ͕ϬϬϬʹ άϯϬ͕ϬϬϬʹ άϰϬ͕ϬϬϬʹ άϱϬ͕ϬϬϬʹ άϲϬ͕ϬϬϬʹ άϵϬ͕ϬϬϬн ƐƵƐƚĂŝŶĂďŝůŝƚLJƌĞƉŽƌƚĚĞƚĂŝůƐǁŚĞƌĞǁĞŚĂǀĞĐŽŶƚƌŽůĂŶĚ ŝĂů άϮϬ͕ϬϬϬ άϮϵ͕ϵϵϵ άϯϵ͕ϵϵϵ άϰϵ͕ϵϵϵ άϱϵ͕ϵϵϵ άϵϬ͕ϬϬϬ ŝŶŇƵĞŶĐĞĂĐƌŽƐƐĂůůŽĨƚŚĞĂĐƟǀŝƟĞƐĐĂƌƌŝĞĚŽƵƚŽŶĞĂĐŚ Ɛ ŽĨŽƵƌĞƐƚĂƚĞƐ͘

dŚĞƌŽǁŶƐƚĂƚĞŶŶƵĂůZĞƉŽƌƚĂŶĚĐĐŽƵŶƚƐϮϬϭϮʹϱϱ ϱϲʹdŚĞƌŽǁŶƐƚĂƚĞŶŶƵĂůZĞƉŽƌƚĂŶĚĐĐŽƵŶƚƐϮϬϭϮ

32 PwC Sustainability Reporting tips 33 Reach out

Use multiple communication channels thoughtfully. Ensure that the medium, content and style are tailored to both the audience and the message being delivered

Example: Unilever PLC Online Sustainable Living Plan Progress Report for 2011. http://www.unilever.com/sustainable‑living/

34 PwC Example: InterContinental Hotels Group Corporate website Multiple sources

Sustainability Reporting tips 35 Example: The Environment Agency – Website http://www.environment‑agency.gov.uk/aboutus/123712.aspx http://www.environment‑agency.gov.uk/aboutus/122986.aspx

36 PwC Sustainability Reporting tips 37 Big brother

Explain how the sustainability governance system operates. Identify the board member responsible for sustainability issues, describe the policies that have been implemented and explain how management ensure that these policies Shanks Group plc are working  Annual Report & Accounts 2012

*RYHUQDQFH Example: The Chairman’s introduction Shanks Group plc Annual Report & Accounts 2012 Page 39 (Our Corporate ResponsibilityFinancial and savingsSustainability and improved Reporting risk framework) & page 68 (Our Corporate Governance reportingmanagement management consistent framework) with the Shanks Group plc Annual Report & Accounts 2012   principles of good corporate0DQDJLQJDVXVWDLQDEOHEXVLQHVV governance.

$GULDQ$XHU Group Chairman On behalf of the Board, I am pleased to present of a Risk Committee together with a new Health the Corporate Governance Report for 2012. & Safety Committee further strengthened our 2XU&RUSRUDWH5HVSRQVLELOLW\DQG6XVWDLQDELOLW\5HSRUWLQJIUDPHThe Board fully supports theZRUN principles of good governance framework and reporting structure. corporate governance and is committed to the A clear priority for the Board during the year was improvement and development of appropriate the recruitment of a new Group Chief Executive structures, processes and procedures charged with bringing the energy and leadership throughout the Group in support of these to maintain the momentum of the Group’s principles. progress and manage the next phase of growth. Underpinning our entrepreneurial culture is Following on from a comprehensive search a central framework which enhances and recruitment process led by the Nomination 6KDQNV*URXSSOFco-ordination throughout the Group and which Committee and external recruitment consultants, %RDUG will continue to deliver financial savings and I was therefore delighted to announce the improved risk management consistent with appointment of Peter Dilnot who was appointed the principles of good corporate governance. to the Board in February 2012 and whom shareholders now have an opportunity to elect *URXS([HFXWLYHThis framework is in turn built around our for the first time at the forthcoming AGM. &RPPLWWHH core values of responsibility, innovation, straightforwardness and openness. The aim This year we report against the new UK of the central framework is to improve our Corporate Governance Code which has &5GLUHFWLRQ ability to+ 6GLUHFWLRQ execute right first time and to ensure superseded the Combined Code. Having fully &5UHSRUWLQJDQGDGYLFH DQGOHDGHUVKLS DQGOHDGHUVKLS experience and good ideas+ 6UHSRUWLQJDQGDGYLFH are shared across considered the new code the Board are pleased the Group. to confirm compliance in all material respects The Board also recognises its responsibility save for one, as identified in last year’s &RUSRUDWH5HVSRQVLELOLW\&RPPLWWHH to ensure+HDOWK 6DIHW\&RPPLWWHH its governance is relevant and focused Governance Report, regarding the annual on improving the business, strengthening re-election of executive directors. A more detailed explanation of this together with our

&RPSDQ\UHSRUWLQJ our internal controls and its management processes. The establishment during the year wider corporate governance arrangements &5UHSRUWLQJ 2SHUDWLQJ'LYLVLRQV + 6UHSRUWLQJ are set out on the following pages.

2XU&RUSRUDWH*RYHUQDQFHUHSRUWLQJPDQDJHPHQWIUDPHZRUN

.HWWHULQJ0DWHULDOV 5HF\FOLQJ)DFLOLW\ 05) Kettering MRF is just one of our new facilities commissioned and brought on line over the past year. The facility accepts commercial waste and uses high-tech separation processes such as automatic optical sorting to produce 6KDQNV*URXSSOF%RDUG quality recyclate products which are used by re-processors to replace virgin raw materials. $XGLW 1RPLQDWLRQ 5HPXQHUDWLRQ Principal Board Committees

*URXS([HFXWLYH Executive Management &RPPLWWHH

5LVN &5 + 6 Specialist Committees

2SHUDWLQJ'LYLVLRQV Divisional Management *Additional reporting line to Group Board

38 PwC Example: Experian PLC Corporate Responsibility Report 2011 CR Governance: http://www.experianplc.com/corporate‑responsibility/ our‑approach‑to‑cr/cr‑governance.aspx

Sustainability Reporting tips 39 Example: KƵƌƐƚƌĂƚĞŐLJ KǀĞƌǀŝĞǁ KǀĞ &ŽƌŵŽƌĞŝŶĨŽƌŵĂƟŽŶĂŶĚƚŽƐĞĞ ƚŚĞĨƵůůƌĞƉŽƌƚ͕ǀŝƐŝƚ͗ ƌǀŝ The Crown Estate ǁǁǁ͘ƚŚĞĐƌŽǁŶĞƐƚĂƚĞ͘ĐŽ͘ƵŬͬ Ğǁ Annual Report and Accounts 2011‑12 ĂŶŶƵĂůͲƌĞƉŽƌƚͬ Pages 54‑55: Sustainability & Our Strategy ^ƵƐƚĂŝŶĂďŝůŝƚLJ ^ƵƐƚĂŝŶĂďŝůŝƚLJŝƐŝŶƚĞŐƌĂůƚŽŽƵƌǀĂůƵĞƐŽĨĐŽŵŵĞƌĐŝĂůŝƐŵ͕ ^ƵƐƚĂŝŶĂďŝůŝƚLJŝƐŝŶƚĞŐƌĂƚĞĚƚŚƌŽƵŐŚŽƵƚƚŚĞƌĞƉŽƌƚďƵƚŝŶƚŚŝƐ ƐĞĐƟŽŶǁĞĨŽĐƵƐŽŶŽƵƌƐƚƌĂƚĞŐLJĂŶĚĂĐŚŝĞǀĞŵĞŶƚƐ͘ ŝŶƚĞŐƌŝƚLJĂŶĚƐƚĞǁĂƌĚƐŚŝƉĂŶĚƚŚĞƌĞĨŽƌĞƚŽŚŽǁǁĞĚŽďƵƐŝŶĞƐƐ͘

ŝƌĞĐƚŽƌ͛ƐŝŶƚƌŽĚƵĐƟŽŶ <ĞLJĂĐŚŝĞǀĞŵĞŶƚƐ tĞŚĂǀĞĂĐůĞĂƌŐŽǀĞƌŶĂŶĐĞƐƚƌƵĐƚƵƌĞĨŽƌƐƵƐƚĂŝŶĂďŝůŝƚLJ DĂƚĞƌŝĂůŝƚLJĂŶĚĞŶŐĂŐĞŵĞŶƚ dŚƌĞĞLJĞĂƌƐĂŐŽ͕ǁĞĚĞǀĞůŽƉĞĚŽƵƌƐƵƐƚĂŝŶĂďŝůŝƚLJ ͻϭϯ'tƌĞŶĞǁĂďůĞĞŶĞƌŐLJĐĂƉĂĐŝƚLJƐŝŐŶĞĚƵƉ ƐƚƌĂƚĞŐLJ͕ĞŵďĂƌŬŝŶŐƵƉŽŶĂǀŝƐŝŽŶƚŽďĞĐŽŵĞĂ ƚŚĂƚĚĞĮŶĞƐƌŽůĞƐĂŶĚƌĞƐƉŽŶƐŝďŝůŝƟĞƐĂŶĚŚĞůƉƐƵƐ tĞƵŶĚĞƌƚĂŬĞĂĨŽƌŵĂůƉƌŽĐĞƐƐƚŽĚĞƚĞƌŵŝŶĞƚŚĞŵŽƐƚ ͻϮŵŝůůŝŽŶŵĂŶŚŽƵƌƐǁŝƚŚŽƵƚĂƌĞƉŽƌƚĂďůĞŚĞĂůƚŚĂŶĚ ƐƵƐƚĂŝŶĂďŝůŝƚLJ͚ŝŶŶŽǀĂƚŽƌ͛͘dŚŝƐǁĂƐĂĐŚĂůůĞŶŐŝŶŐ ŝŵƉůĞŵĞŶƚŽƵƌƐƚƌĂƚĞŐLJ͘ ƐĂĨĞƚLJŝŶĐŝĚĞŶƚĂƚYƵĂĚƌĂŶƚϯ ŵĂƚĞƌŝĂůŝƐƐƵĞƐĨŽƌŽƵƌďƵƐŝŶĞƐƐ͘dŚŝƐŝƐŝŶĨŽƌŵĞĚďLJŽƵƌ ĂŵďŝƟŽŶ͕ďƵƚLJĞĂƌͲŽŶͲLJĞĂƌǁĞŚĂǀĞƚĂŬĞŶŵĞĂŶŝŶŐĨƵů WĞƌĨŽƌŵĂŶĐĞ ďƵƐŝŶĞƐƐŐŽĂůƐ͕ŽƵƌĐŽƌƉŽƌĂƚĞƌŝƐŬŵĂŶĂŐĞŵĞŶƚƉƌŽĐĞƐƐĂŶĚ WĞƌ ƐƚƌŝĚĞƐƚŽǁĂƌĚƐŝƚƐĂĐŚŝĞǀĞŵĞŶƚ͘ ͻϵϴй^^^/ƐŝŶĨĂǀŽƵƌĂďůĞŽƌƌĞĐŽǀĞƌŝŶŐĐŽŶĚŝƟŽŶ ƚŚƌŽƵŐŚĞŶŐĂŐĞŵĞŶƚǁŝƚŚŽƵƌƐƚĂŬĞŚŽůĚĞƌƐ͘ ĨŽƌ dŚŝƐůĂƐƚLJĞĂƌǁĞŚĂǀĞƌŽůůĞĚŽƵƚĂĐŽŵŵƵŶŝƚLJŝŶǀĞƐƚŵĞŶƚ ͻϵϯйǁĂƐƚĞĚŝǀĞƌƚĞĚĨƌŽŵůĂŶĚĮůů ŵĂŶ

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40 PwC Sustainability Reporting tips 41 Prove it

Ensure the credibility of your reported content, for example, by reference to independent studies, external benchmarking, expert review panels or through conventional assurance. Where assurance is used the opinion should clearly state the scope of work

Example: NEXT Plc Corporate Responsibility Report 2012. http://ir2.flife.de/data/next/igb_html/index.php?bericht_ id=1000008&lang=ENG

42 PwC Performance Example: Xstrata plc Creating shared value: Sustainability Report 2011 Page 9: Performance

We aim to achieve and maintain the highest standards of health, The following Scorecard reflects the targets set for Xstrata Group and our 9 | safety and environmental performance at our operations, and to performance against them. Our targets for 2012 establish stronger ambitions Xstrata | Sustainability Report 2011 www.xstrata.com work in partnership with local communities for mutual benefits, for progress against the issues that are material to the Group. As a result, supporting the principles of sustainable development. the number of targets we have for each key area has reduced. Continuous improvement of our assets and operational performance, Each of our commodity businesses reviews and sets annual SD targets that including sustainability, is a core objective of Xstrata’s approach to are aligned with the company-wide targets and tracks their performance doing business. against them. The commodity business scorecards are available on our corporate website: We set sustainable development targets that are meaningful in both relative and absolute terms and that focus on our material SD risks www.xstrata.com/sustainability and opportunities. Performance against these targets is monitored carefullyPerformance and as an integral part of our sustainable development management framework.

Group 2011 Scorecard 2011 targets 2011 performance 2012 targets

Assurance and strategy

All managed operations and projects to SD Standards Audits are being conducted All managed operations and projects to undergo third party SD Standards audit at as per audit schedule and 17 audits were achieve a minimum overall audit rating of 65% least once every three years with findings completed in 2011 in scheduled third party SD Standards Audits We aim to achieve and maintain the highest standards of health, The following Scorecard reflects the targets set for Xstrata Group and our 9 presented to the Board HSEC Committee | safety and environmental performance at our operations, and to performance against them. Our targets for 2012 establish stronger ambitions Xstrata | Sustainability Report 2011 www.xstrata.com work in partnership with local communities for mutual benefits, for progress against the issues that are material to the Group. As a result, At all managed operations and projects, Group Nominated managed operations and projects All managed operations and projects to achieve supporting the principles of sustainable development. the number of targets we have for each key area has reduced. Internal Audit to complete in-depth audits of are being audited as per audit schedules a minimum overall audit rating of ´Acceptable´ ContinuousSD risks identified improvement by risk andof our materiality assets and operational performance, Each of our commodity businessesin scheduled reviews Group and Internal sets annual Audit SD targets that including sustainability, is a core objective of Xstrata’s approach to are aligned with the company-wideRisk Audits targets and tracks their performance doing business. against them. The commodity business scorecards are available on our corporate website: WeAll managed set sustainable operations development to document targets an that are meaningfulNearly in bothall managed operations have processes All managed operations to document an annual relativeannual reviewand absolute of site closureterms and plans that focus on our materialin place SD risksto annually review closure plans.www.xstrata.com/sustainability The review of closure plans and opportunities. Performance against these targets isSinclair monitored nickel mine closure plan is awaiting carefully and as an integral part of our sustainable developmentthird party confirmation of rehabilitation costing. management framework. At Nikkelverk, a closure plan exists only for the underground waste storage area

Health, safety, environment and community Four Xstrata Coal sites (Newlands surface, elementsGroup 2011in individual Scorecard SD Standards to score Newlands underground, Goedgevonden and >50% in third party SD Standards audits Bulga open cut mine) had elements of specific 2011 targets 2011SD performance Standards which scored <50% 2012 targets Assurance and strategy Site SD improvement plans for all managed All commodity businesses have processes in operations will be reviewed by commodity place to review their SD improvement plans for All managed operations and projects to SD Standards Audits are being conducted All managed operations and projects to business management and consolidated managed operations and to provide the Group undergo third party SD Standards audit at as per audit schedule and 17 audits were achieve a minimum overall audit rating of 65% reports will be submitted to the Group Executive and Board HSEC Committees with a least once every three years with findings completed in 2011 in scheduled third party SD Standards Audits Executive and the Board HSEC Committees consolidated report presented to the Board HSEC Committee

All managed operations to maintain risk-based Completed for all managed operations except At all managed operations and projects, Group Nominated managed operations and projects All managed operations and projects to achieve internal and external audit schedules for major Xstrata Copper’s Altonorte smelter where an audit Internal Audit to complete in-depth audits of are being audited as per audit schedules a minimum overall audit rating of ´Acceptable´ waste storage facilities schedule was completed in the first quarter of 2012 SD risks identified by risk and materiality in scheduled Group Internal Audit SD Risk Audits

All Target managed achieved operations Target substantiallyto document achieved an Target not Nearlyachieved all managed Target result operations not yet known have processes All managed operations to document an annual annual review of site closure plans in place to annually review closure plans. The review of closure plans Sinclair nickel mine closure plan is awaiting third party confirmation of rehabilitation costing. At Nikkelverk, a closure plan exists only for the underground waste storage area

Health, safety, environment and community Four Xstrata Coal sites (Newlands surface, elements in individual SD Standards to score Newlands underground, Goedgevonden and >50% in third party SD Standards audits Bulga open cut mine) had elements of specific SD Standards which scored <50%

Site SD improvement plans for all managed All commodity businesses have processes in operations will be reviewed by commodity place to review their SD improvement plans for business management and consolidated managed operations and to provide the Group reports will be submitted to the Group Executive and Board HSEC Committees with a Executive and the Board HSEC Committees consolidated report

All managed operations to maintain risk-based Completed for all managed operations except internal and external audit schedules for major Xstrata Copper’s Altonorte smelter where an audit Sustainability Reporting tips 43 waste storage facilities schedule was completed in the first quarter of 2012

Target achieved Target substantially achieved Target not achieved Target result not yet known PwC has long been at the forefront of thinking around sustainability. The UK sustainability practice has over 15 years of experience delivering insight and solutions to clients around the world.

www.pwc.com/trustintheair Business resilience in an uncertain, Building trust resource-constrained in the air: world Is airline corporate sustainability reporting taking off?

A close look at corporate sustainability reporting in the airline industry CDP Global 500 Climate Change Report 2012 November 2011 On behalf of 655 investors with assets of US$ 78 trillion Accelerating progress toward a lower-carbon future

Global Advisor and Report Writer

1 CDP S&P 500 Climate Change Report 2012 On behalf of 655 investors with assets of US$ 78 trillion

Report written for Carbon Disclosure Project [email protected] Carbon Disclosure 6 W 48th Street, 10th Floor +1 212 378 2086 Project by: New York, NY 10036 www.cdproject.net 1

www.pwc.co.uk/sustainability

Counting the Typico plc cost of carbon Low carbon economy index 2011 Greenhouse Gas November 2011 Emissions Report An illustration for business climate change and greenhouse gas emissions reporting

pwc

44 PwC Key contacts:

PwC has a strong network of people who can advise you on how to develop your reporting to best meet the needs of your business, the board and external stakeholders. To discuss reporting insights for your organisation, please speak to your usual contact or one of these people:

Alan McGill Tel: +44 (0) 20 721 24348 email: [email protected]

Kyle Santos Private Sector Reporting Tel: +44 (0) 20 721 23487 email: [email protected]

Andrew Thurley Public Sector Reporting Tel: +44 (0)20 7212 6503 email: [email protected]

www.pwc.com/corporatereporting

PwC firms provide industry‑focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com for more information. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2012 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom), which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. Design Services 27935 (10/12) www.pwc.com/corporatereporting