2010 Corporate Responsibility Report
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2010 Corporate responsibility report Introduction and approach Contents 2 Chief Executive’s introduction 11 Governance 3 Approach and governance Centrica Executive Committee An Integrated business and CR strategy Corporate Responsibility Committee 4 Our CR strategy Performance 2010 Energy for a low carbon world 12 Looking ahead 8 Risk management 13 Assurance and reporting 9 Materiality 14 Scope of report 10 Stakeholder engagement Key stakeholder groups Prioritising stakeholders 2010 Corporate responsibility report: Introduction and approach 1 Chief Executive’s introduction In last year’s corporate responsibility (CR) report I discussed the changing shape of our business and how we responded by developing a new CR strategy. In 2010 we have focused on implementing that strategy and pursuing opportunities that lead the drive to a low carbon world. I am delighted to present our 2010 CR Report, which sets out our progress during the year and addresses some of the challenges that we face. Our new CR strategy has given us a better framework for our through energy efficiency and behaviour change, and on activities, with an emphasis on identifying ways in which providing additional support to our most vulnerable customers. Centrica can reduce carbon emissions. This is a role we are uniquely placed to fulfil through our customer relationships, the What is apparent is that we cannot achieve our low carbon skills of our service engineers and our expertise in sourcing goals in isolation. In September 2010, I set out what I believe energy and generating power. There are significant new market is needed from the industry, government and consumers to opportunities in helping to deliver a low carbon society; building achieve a low carbon economy. trust in this area will enable us to grow our business, while delivering environmental and social benefits to society. The investment in lower carbon generation does however come at a price. Unless we are able to offset this increase with Our flagship programme focuses on delivering ‘energy for a increased consumption savings, higher household bills are low carbon world’, through decarbonising power generation, inevitable. We need to be honest about this as an industry and helping our customers cut their carbon emissions and reducing as a nation and continue to take steps to protect the most our own internal footprint. To achieve this, we need to build vulnerable in our society. trust among all our stakeholders and this is the role of our four supporting focus areas – prioritising safety, supplying energy Centrica’s business model is now better balanced and well needs, building and maintaining customer trust and developing placed to thrive with the majority of our energy being sourced our people. These are in turn underpinned by responsible from our own low carbon sources. The opportunity for us is business practices and behaviours. We track progress against to help our customers through our growing services businesses all of these through key performance indicators and via to reduce both their fuel bills for today and their emissions stakeholder dialogue and feedback. for tomorrow. We have made good progress against our CR strategy in 2010, The changes we are making in the business are dramatic and I reducing our UK carbon intensity by 26%, moving forward with would like to thank all our employees for the flexibility and our wind farm developments and receiving our first nuclear continued commitment they have shown throughout the year. power from our investment in British Energy. We are also Their vigilance has also been instrumental in achieving helping customers cut their carbon footprint through energy continued improvement in our safety record in 2010, with a efficiency and new technologies such as microgeneration and further 16% reduction in the lost time injury rate. smart meters. These are just a few of the highlights from Centrica’s CR However, we must also ensure that we secure sufficient gas programme in 2010. I am proud of the progress we have made and electricity for our residential and business customers and this year and I invite you to explore this online report to find ensure energy is affordable; meeting all of these challenges out more and leave your feedback. together is not easy. We are already securing UK supplies through new LNG deals and by continuing to invest in wind, nuclear and CCGT generation assets. However, the consensus is that £200bn needs to be invested in UK energy infrastructure by 2020, a huge sum. We also face challenges in keeping energy affordable in an environment of rising international commodity Sam Laidlaw costs. Our focus is on helping customers to reduce bills Chief Executive 2010 Corporate responsibility report: Introduction and approach 2 Approach and governance Centrica’s corporate responsibility (CR) ambition is to be the most trusted energy company, leading the move to a low carbon future. CR is also about the values which underpin our business. Our choice. Building trust in this area will enable use to grow our experience is that a principled approach to doing business wins business while delivering environmental and social benefits to the trust of our customers, regulators, investors and other society. See our CR strategy to find out more. stakeholders. Is also helps us to attract and retain talented and committed employees. The Corporate Responsibility Committee provides oversight and challenge on the CR strategy and its delivery. The Centrica We must understand the impact our activities have on society Executive Committee and our business units are responsible and the environment. We do this through engaging with our for its implementation. See CR governance to find out more. stakeholders and exploring how we can address their concerns. We also use these discussions to help us prioritise our most material issues, ensuring we focus our resources in Our approach to CR is straightforward and integral to our the most important areas. To find out more about our approach, strategic decision-making and business performance: see stakeholder engagement and materiality. • We communicate our position on key issues and, through our business principles, are clear about the standards we We can also benefit society and the environment, contributing expect of ourselves and those we work with to the long-term health and sustainability of both. We strive to do this in a way that creates opportunities and advantages for • We consult our employees, customers, investors and wider our business and shareholders. stakeholder groups to understand the main social and environmental matters affecting our business • We identify and prioritise the risks we face and opportunities An Integrated business we have and develop distinctive strategies, commitments and CR strategy and targets The Centrica Group’s strategic vision is to be the leading • We manage CR with an impact areas-based approach to integrated energy company in our chosen markets. In February ensure our resources and engagements are focused on the 2010, the Centrica Executive and CR Committees approved a most relevant issues and where we have the greatest impact new corporate responsibility strategy and programme which directly support this vision. • We communicate our performance with openness and transparency, so that our stakeholders understand the The main emphasis of our CR strategy is to identify ways in progress we're making which Centrica can contribute to reducing the levels of carbon emitted into the environment; a role we are uniquely placed to fulfil through our customer relationships, the skills A strong reputation for CR can help us win business of our service engineers and our expertise in sourcing advantage and contribute to shareholder value. Conversely energy and generating power. perceived weakness in CR may damage our reputation and cause financial risks. See risk management for more about We see significant new market opportunities in helping to our approach. deliver a low carbon society and want to ensure that British Gas and Direct Energy are the energy services providers of 2010 Corporate responsibility report: Introduction and approach 3 Our CR strategy Centrica’s strategic vision is to be the leading integrated Our approach reflects the three areas where we believe we energy company in our chosen markets. Our corporate can make a difference: responsibility (CR) strategy and programme directly supports this vision. • Enabling customers to cut their carbon footprint Investing in lower carbon power Our corporate responsibility ambition is to be the most trusted • Leading by example by cutting the carbon emissions of our energy company, leading the move to a low carbon future . • property, company vehicles and travel The amount of emissions from power generation is mostly Energy for a low driven by the demand for power from consumers. Until power carbon world supply is decarbonised, the biggest environmental benefits can be achieved by reducing consumer demand through energy We developed our ‘energy for a low carbon world’ programme efficiency, smart metering and microgeneration technologies. to drive our ongoing response to climate change, helping We aim to lead the consumer market for low carbon products us to mitigate the key risks and take advantage of and services and to build on our legal obligations by viewing the opportunities. them as opportunities. Customer carbon As we lay the groundwork for a low carbon future, we must planning, investment and agreement among interested preserve