Centrica ‘We aim to build positive relationships by developing a sustainable approach to doing business.’ Sir Roy Gardner, Chief Executive

Corporate Responsibility Report 2003 What matters to you...

Our first responsibility is to meet our customers’ needs for essential services. Through our business activities, we are an integral part of local communities. We create wealth for employees, generate taxes to government, create jobs among suppliers and deliver a fair reward to investors who finance our business.

Centrica Energy manages Centrica Business Services One.Tel provides a fresh In Canada, Direct Energy our gas production and aims to be recognised as the and innovative approach in Essential Home Services offers electricity generation most innovative and flexible providing a range of landline, gas and electricity and a range capabilities, along with provider of energy and other mobile and internet services of home services in Ontario. third party supply and essential services to the UK across the UK. In Texas, we supply electricity transportation contracts. business community. under the Direct Energy, WTU Retail Energy and CPL Retail Energy brands to homes and businesses. We supply gas under the British Gas is the market The AA provides reassurance Luminus, our joint venture Energy America brand in leader in delivering gas, and services to motorists energy business in Belgium, Michigan, Ohio and electricity and telecoms to in the UK and Ireland. Our and Luseo Energia, our Pennsylvania. Direct Energy millions of homes across roadside assistance remains business to business brand Business Services provides the UK. As well as energy at the core of our activities in Spain, provide us with a comprehensive energy and telecoms, we offer and we are the UK’s number launch pad into the markets solutions to businesses customers an increasing one insurance intermediary. of continental Europe. throughout Canada and choice of complementary The AA is also a growing in Texas. home services. provider of personal loans and financial services.

Every day matters

Every day our businesses touch the lives of millions of people. Through our leading brands, we provide warmth, comfort and peace of mind. People know us through our brands, but behind those brands lies the skill, knowledge and expertise of thousands of employees. £1,058m £17.9bn www.centrica.com/responsibility 2003 Operating Profit. 2003 Group turnover. ...matters to us

“…by understanding our impact on society, the economy and the environment, we can build positive relationships that benefit our shareholders through the development of a sustainable approach to doing business.”

Corporate responsibility is often thought of as a new concept. and friends and our relationships go beyond the provision In reality, companies have always had to address issues of of good quality products and services. For example the social and environmental responsibility as a core part of £150 million ‘here to HELP’ programme is providing a package doing business. of products, services and advice to make 500,000 homes warm, safe and comfortable. This programme aims to However, the recent external focus on corporate responsibility improve living conditions and the quality of life for families, has provided an impetus for businesses of all sizes to challenge older people and people with disabilities in some of Britain’s their existing practices and to focus on introducing increasingly most deprived communities. We also have a responsibility rigorous processes into their work. We have embraced this to help our customers be more environmentally responsible challenge. when using our products and services.

Our vision is given substance by core values and business My management team and I are committed to ensuring that principles, which are intended to inform every aspect of our we manage the social, economic and environmental impacts organisation and define the way we work. This report describes of our businesses and report on our progress. We believe this how we put our values and principles into practice in terms of: approach will enable us to continue to evolve and develop our corporate responsibility strategy. We recognise that is key to – supporting our employees in the workplace continuing business success. – our pride in delivering good-quality products and services for our customers in the marketplace I hope you find this report interesting. I would welcome your – our responsibility in managing our impacts on the feedback on any aspect of our policy and initiatives. You will environment find the appropriate contact details throughout this report. – investing in our local communities

We have many millions of customers world-wide. Each of these relationships is built on trust and hence everything we do and every decision we make is based on our values. Sir Roy Gardner Our products are essential for our customers, their families Chief Executive

Contents Introduction 01 Our business 02 Workplace 06 Marketplace 12 Community 18 Environment 22 Looking ahead 26 Assurance statement 28 42,573 44m £6.6m Further information/links 29 More than 42,573 employees More than 44 million Contributed to community across the business. customer relationships. causes in 2003.

Centrica plc Corporate Responsibility Report 2003 01 Our business

A business with values

Corporate responsibility is an important part of our culture, identity and business practice. At the heart of our approach is a clear articulation of our vision, strategy and values underpinned by our business principles.

We aim to grow our Building a better business developments during the year Our principles are designed earnings and cash flow Since Centrica was formed included further investments to help every employee play within a prudent risk in 1997, the company has in power generation, the a full part in protecting and management framework. gone through a significant Competition Commission enhancing our reputation in transformation. We were clearance of our aquisition a manner that is consistent During 2003, our share essentially a UK gas supplier of the Rough gas storage with our values. We have price outperformed the in a monopoly market. facility and the sale of the also produced more detailed market by nearly 10%. Today we sell a wide range Goldfish credit card and business practice guides to Since our demerger of products and services personal loan business. help our employees make the in February 1997 to 31 in the UK and overseas, values and principles a reality December 2003 we have competing strongly in Principles in practice in their day-to-day conduct. out-performed the highly competitive markets. Underpinning the FTSE100 Index by 221%. transformation of our The full version of our In 2003, we reported record business has been a principles can be found at group performance following single vision: to be a leading www.centrica.com/ a challenging year in which supplier of essential services businessprinciples the performance of British in our chosen markets. Gas was impacted by an adverse combination of This vision is supported warm weather and high by an integrated set of commodity costs. Group core values and business turnover was up 25% to principles that define the £17,931 million and operating way we work. profit increased by 14% to £1,058 million. Our operating We aim to ensure that profit in North America more all Centrica employees are than doubled to £130 million familiar with our values and and we reported strong principles, and can apply growth in the core business them consistently and of the AA, leading to a 27% rigorously. A copy of our increase in operating profit. business principles is Other major business available to every employee.

Our history

Centrica is created Centrica announces UK domestic gas Centrica Centrica acquires Centrica enters the energy following the its entry into the market becomes acquires Canadian energy markets of Continental demerger of UK domestic fully open to the AA for company, Direct Europe through 50% British Gas plc electricity market competition £1.1 billion Energy share in Luminus N.V., Belgium 1997 1998 1999 2000 2001

Multi-million pound Centrica partnership is launched environment between British Gas website launches Our CR achievements and Help the Aged

02 Centrica plc Corporate Responsibility Report 2003 “Centrica is committed to the highest First 12% ethical standards. To deliver against this commitment we have developed a set of principles that set out how Centrica was named 2003 Utility Earnings up 12% in 2003. Company of the Year in the Utility we operate responsibly to create Industry Achievement Awards. the kind of service our customers, suppliers, business partners and colleagues expect.” Sir Roy Gardner, Chief Executive

Vision, Strategy, Values

Our vision is to be a leading supplier of essential services in our chosen markets in order to provide maximum value to our shareholders.

Our distinctive strategy Sharing knowledge and Pride Challenge is to create value for best practice Pride comes from the We are constantly striving shareholders through: Making Centrica greater satisfaction of our customers for continual improvement; than the sum of its parts both and from delivering high we are never satisfied. Deepening our by implementing common quality products and services. We engage constructively relationships processes and by sharing We’re proud of our staff with advocates and critics with customers knowledge, best practice and and their achievements, from within and outside Gaining and retaining learning across the company. and we recognise and the company. We do this valuable customers by reward success. to maintain our competitive understanding their needs Our values are the edge and deliver and offering them tailored core of our corporate Trust consistently outstanding products and services philosophy: Trust is at the heart of our shareholder returns. through our strong brands. relationships with customers. Passion for customers Trust means doing what we Support Managing risk in the This value is central to the say and acting with integrity. We support employees energy markets way we work. We have We demonstrate trust seeking to meet and own Identifying and an ethos of delivering by respecting and challenges. We foster implementing the right outstanding customer service. empowering our employees. teamworking and blend of owning production We must be able to anticipate Building trust will help us knowledge sharing and assets, negotiating long our customers’ needs and develop strong future give our employees the term contracts and daily correct any errors promptly. relationships with our tools and training they buying activities. We must give value for stakeholders. need to do their job well. money, and deliver efficient and effective products and services.

Centrica becomes the largest Centrica acquires Joint venture is The sale of Goldfish credit provider of indirect telecoms Glanford Brigg Power formed to build an card and personal loans services in the UK following Station in Lincolnshire, offshore wind farm businesses to Lloyds TSB the acquisition of One.Tel plc its fourth power station is completed

2002 2003 2004

British Gas Help the The first online Centrica wins Centrica is included Centrica launches an Aged partnership Centrica corporate a Business in in the Dow Jones online and printed wins the Marketing responsibility the Community Sustainability World corporate responsibility Society Corporate section is Excellence Award Index for the first time report for 2003 Citizenship Award launched for its Project-Led Recruitment initiative

Centrica plc Corporate Responsibility Report 2003 03 Our business

Responsibility in practice

Corporate responsibility means different things to different people. We believe it describes all the actions we take to deliver shareholder value in the long term. It is that fundamental.

Managing corporate their business strategies Government, regulators, responsibility and are accountable to the Non-Governmental We have established a CRC in reporting their Organisations and think Corporate Responsibility performance. tanks to ensure that they are Committee (CRC) made up fully informed at all times. of senior executives from Each business manages its across Centrica to lead the business impact in different We believe the best way to development and application ways, often working closely manage these relationships is of our corporate responsibility with corporate functions, to exchange information with “This is our first strategy. The committee is including human resources, openness and transparency. corporate chaired by the Group General procurement, health, safety Measuring our performance responsibility report Counsel and Company and environment, marketing Secretary and includes the and community affairs. We have developed a range and an important Group Director, Human of corporate responsibility milestone for Centrica. Resources, the Chief Effective risk management measures that are appropriate We were pleased with Operating Officer for Centrica Our risk governance structure to the businesses we run our progress in 2003 North America, the Group is designed to assess and and the countries in which we but recognise that Marketing Director, the quantify all the risks to which operate. Where possible, we there is much more Group Corporate Affairs our businesses are subject participate in initiatives that to be done across a Director and the Head of and to create a culture in provide external stakeholders range of business Corporate Responsibility. which risk management is with benchmarks of our impacts. We hope integrated with decision- performance. In particular, that this publication The committee meets making. A number of key we participate in the: will form part of a quarterly and is a formal sub processes are in place to committee of the Centrica identify and actively manage Dow Jones process to enable Executive Committee (CEC). business risk. These form Sustainability Indexes us to achieve Regular presentations are part of our commitment to Centrica has been selected as continually improving made to both the CEC and meet the requirements of an index component for both levels of performance the Centrica board with the Turnbull Guidance on the Dow Jones Sustainability in future years.” further updates to the CEC Internal Control, as appended World and European Indexes as appropriate. to the Combined Code on (DJSI World and DJSI STOXX) Grant Dawson Corporate Governance. in 2003. This means we are Group General Counsel Our thinking – into action judged to be among the and Company Secretary Our operating businesses Engaging with the leading sustainability-driven have a critical role to play regulators companies world-wide. in the delivery of the group Centrica operates in a corporate responsibility number of markets, including strategy. Each business energy, telecommunications operates in a different trading and financial services, that environment and the issues are extensively affected by they need to address depend changes in regulation and on the location and nature of public policy. We, therefore, their main business activities. have structured dialogue The operating businesses are with all those that contribute responsible for integrating to the policy making process corporate responsibility into in these areas including

04 Centrica plc Corporate Responsibility Report 2003 Top 10 2nd 48th £5.75m

The accessibility of our Centrica was placed second Centrica was ranked Cash support provided to corporate website has been in the Employers’ Forum on 48th within the BITC 2003 community activities in 2003. rated in the top 10 of FTSE100 Disability Global Benchmark Corporate Responsibility companies by web usability in 2003. Index. 139 companies consultants Nomensa. took part.

BITC Corporate Responsibility Index Reporting on our performance Business in the Community introduced their corporate In this summary report, we consider our performance under the responsibility index in following headings. We review details of policies and initiatives that 2002 when a total of 122 illustrate our commitments. More detail is available on the web at companies took part and Centrica was placed in the www.centrica.com/responsibility third quintile. 139 companies took part in 2003 and Centrica was ranked 48th (second quintile) within Workplace Marketplace the overall index with an How we support our employees within the How we manage the impact our core products improved score of 87.19%. working environment to help them balance and services have on society including how the competing demands of work and life. we buy and sell goods and services. In all of the main categories, Page 06 Page 12 we met or exceeded the average rating, and were pleased that our performance in the areas of corporate strategy and integration significantly improved on our 2002 performance. We accept there are still areas for improvement and would hope to make further progress in 2004 based on the planned activities around our key impact areas. Community Environment FTSE4Good Indices How we seek to achieve positive Information about the major environmental The FTSE4Good indices impact in local communities through impacts of our business and how we are have been designed to our community investment programme. working to reduce them. measure the performance Page 18 Page 22 of companies that meet globally recognised corporate responsibility standards, and to facilitate investment in those companies. Centrica has been included in selected indices since their inception by the FTSE Group in 2001.

Centrica plc Corporate Responsibility Report 2003 05 Workplace

Pride, trust, opportunity

Our ongoing success depends on the people we employ. The conduct of each and every employee is the basis on which we build effective relationships with customers, with each other, and with the communities in which we operate.

Our workplace Our workplace policies seek process, a total of 36 new initiatives underway at any responsibilities… to create an environment or revised policies were one time. For example, a new that motivates and engages introduced in 2003. Our graduate recruitment brand, at a glance our employees and rewards corporate responsibility MORE, was developed in performance, whilst also strategy in the workplace 2003, (see case study > Attracting quality people supporting equality of seeks to bring alive our opposite). Our website was Seeking to attract and opportunity for all. values and to realise our extensively overhauled to retain high-quality individuals objective of becoming an enable applicants to apply through flexible reward Strengthening relationships employer of choice. online, and we developed packages. with employees on-campus support to help We want to be regarded The priorities for action that with recruitment activities. > Employee development as an employer of choice, we have set are: As a result of these initiatives, Helping our people to developing initiatives that –to embed the responsible we recruited 48 UK graduates develop and grow through help attract, develop, retain behaviour embodied in our in 2003. effective strategies. and motivate the best people values; to work with us. In 2003, –to be clear on our This was also the first full > Equal opportunities we launched a global people expectations of our year of activity at the British Respecting and valuing strategy which is designed employees and about Gas Engineering Academy the individual, ensuring to help us meet specific what we offer in return; (see case study opposite) there is equality of business needs. The –to ensure that the people and we continued to support opportunity for all. strategy has been widely we employ reflect the various employment initiatives communicated across our customers we serve; designed to recruit people > Health and safety businesses, and we believe –to attract the best people from different backgrounds Ensuring a 100% that we now have a to work with us in achieving and groups in the community commitment to the health framework in place that our business objectives; including people with and safety of every will allow us to continue to –to ensure that our leaders disabilities, lone parents, employee and customer. invest in our employees. understand and apply our long-term unemployed values in everything they do; people and carers. > Listening to employees We have also articulated –to develop our people in a Valuing the views of Centrica’s values (see page 3) structured way; These included Ambition: employees and integrating and introduced a new guide –to promote a safe and Energy and the Centrica their ideas into business to sound business practice. healthy working Employment Programme planning. This guide sets out the environment; and which was launched in 2003. standards of behaviour we –to consult and respond to This programme builds on > Keeping our people expect from our employees. the needs and interests of the earlier success of our informed our employees. Project-Led Recruitment Striving to ensure that The guide was circulated programme between 1998 all employees have the to all UK employees; North Attracting high quality recruits and 2002 which saw more information they need American employees will Centrica is a diverse group than 180 people employed by about their role in their receive copies in 2004. of businesses, with a demand the group, of whom around organisation, at all times. for employees with wide 45% had a disability. Our values and business ranging skills, technical principles are supported expertise and experience. by policies that ensure the support we provide to our This means that there are employees is both effective always a variety of different and relevant. Following a recruitment activities and comprehensive review innovative employment

06 Centrica plc Corporate Responsibility Report 2003 What matters 42,573 70% 5,000 to you?

> Let us know During 2003, we employed an average Around 70% of all our employees The creation of the British Gas of 42,573 people. An increase of more had an annual training and Engineering Academy has helped your views: than 4,500 on 2002. development review in 2003. We us develop and re-focus our aim to increase the proportion of training facilities to handle the responsibility@ our employees who benefit from training requirements for an centrica.com such a review on a rolling basis. additional 5,000 recruits into our engineering workforce. www.centrica.com/ workplace

Partnership: the key to success at the academy

At the end of 2002 we established the British Gas Engineering Academy. The academy was set up to re-focus our training facilities and to meet the extra training requirements involved in recruiting an additional 5,000 new engineers into our workforce. In 2003 alone, the academy has trained over 500 Modern Apprentices and 1,000 adult recruits. The academy’s strategy is not only to use our own training centres but also to engage in partnerships with further education colleges. This will enable us to handle our peak requirements for technical training within British Gas over the next few years. It will also allow us to learn from other training professionals. Three partnerships have been created so far with Stourbridge, Filton and Blackburn colleges.

For more information on the British Gas Engineering Academy visit www.britishgasacademy.co.uk

Graduates get MORE opportunities

Our new graduate development programme seeks to develop future senior managers by giving them a thorough understanding of the operational aspects of our businesses from the outset. Introduced in 2003, the programme is structured to provide a number of key placements, including time spent within our customer service operation, alongside on-the-job training and personal development opportunities. The two-year general management programme, the three- year finance programme and the one year IS programme include projects related to corporate responsibility within the personal development stream.

For more information on our graduate development programme visit www.centrica.com/graduatesmore

Centrica plc Corporate Responsibility Report 2003 07 Workplace Pride, trust, opportunity

Work-life balance with the AA

The AA employs around 1,000 people to handle emergency breakdown calls in centres across the country. However, working in a call centre does not suit everybody and following a successful pilot involving ten people in 1997, the AA now has the capacity for 150 people to work at home at any one time, with 140 employees working in this way in 2003.

Teleworkers benefit from the greater flexibility to structure their work around other responsibilities as well as the elimination of travel time. The business also benefits as teleworkers are more productive in terms of the number of calls handled and length of call compared to the office-based employees. It is also easier to attract people to manage out of office hours calls, essential to operating a 24 hour service.

“Being able to work from home means I can focus entirely on giving excellent customer service, without any of the distractions a call centre environment brings. My travelling time consists of a 20-second journey to work instead of a 30-minute journey. It fits in well with my domestic circumstances and this year I have been selected to represent the teleworking team at the award ceremony for call handler of the year, which makes me very proud.”

Lisa Earp Customer Service Advisor

In partnership with Enhancing leadership and individual objectives. The new We also launched a new the Employers’ developing talent system seeks to create and career development and Forum on Disability, we Centrica recognises that the maintain a high performance management portfolio to produced a publication quality of leadership is a culture across the group with provide us with a clear of best practice called central factor in achieving greater emphasis on helping understanding of the future ‘Recruitment that Works’. our business objectives and to manage underperformance. leadership talent within in ensuring that the behaviour From 2004 onwards, the organisation. This guide continues to of all our employees truly managers will use the highlight the key learning reflects our values. This is a behavioural competencies Promoting diversity points from our experience, priority area for us. to identify their development and equality and gives step-by-step needs and then receive We are working with a number guidance for employers In 2003 we identified the feedback on how they are of partner organisations on who want to recruit a key behaviours required by doing. diversity-related initiatives diverse workforce and leaders at all levels to enable that enable us to share best for agencies that help Centrica to achieve its In June 2003, the Centrica practice, address key issues disadvantaged people business goals. Following Executive Committee agreed and continually improve our into work, in particular research amongst employees, actions to develop talented approach to diversity and people with disabilities. we created a clear and managers across the equality. These include concise set of behavioural business. The management initiatives focused on disability, competencies for leadership talent review involves the top racial discrimination, age and that are consistent with our 1,000 managers and enables work-life balance. We are culture and values. Based on the organisation to succession also involved in a number these competencies, a new plan for the most senior roles of recruitment initiatives performance management in the business. Succession designed to attract people system has been developed plans were developed in 2003 from a wide range of different that provides greater clarity and used in the movement of backgrounds and groups in at all levels, from business a number of people between the community including and management agendas to brands and across functions. people with disabilities,

08 Centrica plc Corporate Responsibility Report 2003 Total accidents per 100,000 hours worked (Jan - Dec 2003) Age comparison of workforce 5,000 10 8.8 8.8 2002 Male 2003 4,000 Female 8

5.9 3,000 6 4.9 4.7 4.3 4.0 2,000 4

2 1.4 1.6 1.7 Number of employees 1,000 Number of employees 1.2 0.5 0.3 0.0 0 0 AA British Centrica One.Tel Centrica Direct Luminus <20 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 >65 Gas Energy Corporate Energy Age range

lone parents, long-term Visit www.centrica.com/ at a low frequency despite unemployed people and healthandsafety for further the significant growth in “I am determined carers. details of our HS&E our operational businesses. to ensure that management system. This has been due to our we improve our More information on our continuing programme of performance in all approach is provided on our Our health and safety targets risk assessment, training, areas of the workplace. www.centrica. website at and key performance team briefings and auditing. I will be monitoring com/diversity and in the indicators are monitored and focus feature on diversity reported regularly to the We also introduced a number our progress closely on page 11. Centrica board. Detailed of occupational health and and will continue to scrutiny of actual or safety initiatives in 2003 to report regularly to Employee health and safety potentially significant highlight, manage and the management Our health, safety and incidents identifies lessons to mitigate particular risks within team and back to environmental management be learned and preventative our business. Examples in employees as well.” system is based on action taken. The two key 2003 included managing internationally recognised reactive indicators are occupational road risk, Anne Minto OBE good practice, and we take fatalities and major injuries. managing stress in the Group Director time to advise all employees We are pleased to report no workplace (see case below), Human Resources that they have a duty to work fatal workplace accidents in improving arrangements safely, with consideration for 2003. Major injuries, usually for employee rehabilitation themselves and others. as a result of slips, trips, falls and reinforcing our policy on and handling, have remained the use of mobile phones.

Understanding and managing stress

The Health and Safety Executive estimates initially at management styles, behaviours that up to 25% of employees in the UK and structures. An employee module to are affected by stress related problems address individual issues and behaviours and is developing guidelines for the was subsequently launched in early 2004. management of stress in the workplace. The introduction of the management In June 2003, we launched our own module has been integrated with a new group-wide programme entitled company policy on stress and clear ‘Managing the Balance – Understanding guidelines for the recognition of stress in and Managing Stress in the Workplace’. the workplace. The training offered to managers now includes an interactive This initiative followed a review of data e-learning package available on the which indicated that stress levels within intranet and one-day workshops which Centrica reflected the UK-wide picture. build on the e-learning. Feedback to date Managers decided to address the more has been excellent and we will continue challenging aspects of the problem by to monitor stress indicators to gauge establishing a programme which looked impact throughout 2004 and beyond.

Centrica plc Corporate Responsibility Report 2003 09 Workplace Pride, trust, opportunity

300 £750 74% 10,000

Between 2002 and 2005, British We spent an average of £750 Almost 74% of our employees We expect that 10,000 employees Gas has committed to employing per employee on training in 2003, responded to our annual employee will have access to our new Flex 300 engineers as part of the UK-wide providing around three full days engagement survey in 2003. employee reward package by the drive to deliver 4,500 jobs through of training for each employee. end of 2004. Ambition: Energy.

Stakeholder engagement: listening to our employees

In the workplace, our most important stakeholders are the people we employ. It is essential that we communicate with our employees to make sure that our policies and initiatives are helping them to meet our high expectations and their own personal needs.

We encourage our employees to share their views and perceptions. Our annual employee engagement survey gives everyone within Centrica an opportunity to comment on how the business is being run. Since 1999, the survey has evolved from a simple measure of employee satisfaction to a sophisticated tool that provides invaluable input into our strategic decision making. More than 74% of our employees participated in the survey in 2003.

In November 2003, it Pay, performance regular analysis across our Real commitment was announced that and reward businesses to ensure that from our executives British Gas had achieved We work hard to reward our bonus schemes are applied A key factor in the success business-wide recognition employees fairly for their consistently. of our workplace initiatives to the Investors in efforts. From the moment has been the top-level People standard. an employee joins Centrica, During 2003, Centrica commitment of key the way in which their conducted a review of the members of the Centrica This success underlines performance is evaluated pay levels between men Executive Committee. our commitment to the and recognised is made clear and women in accordance Examples of direct development of our people. to them. All employees are with our commitment made involvement include: British Gas is now the second encouraged to bring forward in the Kingsmill Report. largest business in the UK all queries as they arise. The results showed that the Sir Roy Gardner with such accreditation. gender pay gap in Centrica •President of Carers UK We regularly review the is much narrower than •Chair of Ambition Energy remuneration packages we national norms and our •Chair of the Government’s offer to ensure that they are current pay policies and Modern Apprenticeship competitive. We also use practices contain no gender Task Force bonus schemes to encourage bias. This review will now employees to surpass be a regular report to our Anne Minto OBE business and personal goals. executive committee. •Chairman Engineering In 2003, we introduced the Development Trust new Centrica Flex employee More information is (Year in Industry) reward package to support available on our website •Vice President, Chair of our employee retention at www.centrica.com/ the Board of Institute of strategy. Around 3,500 reward including our Employment Studies employees have access to specific policies relating •Member of the the scheme at present, a to the minimum wage, National Employers figure we expect to increase company shares, pensions, Advisory Board – to 10,000 by the end of reward strategy and The Reserve Forces 2004. We carry out a executive pay.

10 Centrica plc Corporate Responsibility Report 2003 Focus on diversity

Our business case for diversity is built on two fundamental principles. The first is a recognition that valuing and embracing diversity is simply the right thing to do. The second is a commercial recognition that valuing and embracing diversity makes good business sense.

In 2003, we brought together our employee to review access at our sites and to create and customer strategies in a single document a disability ‘tool kit’ for all facilities employees. ‘Managing the value of diversity’. This sets out our aim to be a truly inclusive organisation, To mark the European Year of Disabled People both in the workplace where we are working to in 2003, we developed a number of new build an employee profile that is representative initiatives as part of our wider diversity of our customer base, and in the marketplace, programme. For example, the AA held where we strive to meet the essential needs roadshows at nine of our customer service of an increasingly diverse range of customers. offices providing guidance on customers with “We operate in an disabilities to over 3,000 customer facing increasingly diverse Diversity and our workforce employees. The AA also produced a booklet community, not just We support a wide range of diversity-related entitled ‘Serving Disabled Customers’ which of work colleagues, recruitment programmes and employee was issued to all 12,000 of our customer but of customers communications campaigns are also carried facing employees. out each year to raise awareness of diversity and suppliers. in a business context. In 2003, a customer Diversity and service provision Recognising and diversity intranet site was established to We have reviewed the requirements of valuing diversity will provide guidance to all employees on this hearing and speech impaired customers help us to deliver important issue. in collaboration with the Royal National truly world class Institute for Deaf People (RNID). Our policy services that are We worked in collaboration with Disability now ensures that text phones are installed accessible to Matters, Business in the Community and throughout the business and that contracts everyone. It makes Race for Opportunity to develop a training are established with services such as RNID good business sense.” package on diversity issues for new Text Direct. On average in 2003, we received employees. In addition, we produced an around 120 text phone calls each month. Anne Minto OBE in-depth training package on disability Group Director which looks at topics ranging from disability We also provide a telephone translation Human Resources legislation through to the provision of service for customers whose first language products and services. Facilities teams also is not English. The service covers over received disability awareness training and we 100 languages and is used, on average, commissioned expert disability consultants by over 200 customers each month.

Groundbreaking use of SMS text messaging 17,000

After listening to the needs of customers We send out more than 17,000 bills, with disabilities, the AA has developed a statements, letters and marketing text messaging service which enables its communications each month to hearing and speech impaired members customers in alternative formats such as Braille, large print and audio tape. to communicate effectively with the AA using their mobile phone. This service has received numerous external accolades from UK disability groups and around 20 texts are received each month.

Centrica plc Corporate Responsibility Report 2003 11 Marketplace

Passion, service, support

Passion for customers is the cornerstone of our values. Being responsible in the way we behave towards customers and in our relationships with suppliers is central to how we strive to achieve our company vision and how we define our values.

Our marketplace Our responsibility begins consumer representative thrown up by energy sales in responsibilities… with advertising and selling, organisations to understand the de-regulated market. extends through customer the key marketplace issues at a glance service and satisfaction and for our customers and A particular focus for us is covers the safe use of our potential customers and to face to face selling through > Customer satisfaction products. It also means learn new ways of serving our direct sales agents. We monitor customer upholding customer privacy, their needs. Customer We have reviewed our own satisfaction and measure respecting customers with satisfaction is measured on recruitment and training our performance to drive specific needs, and sharing an annual basis, while procedures and worked with service improvements. our business principles with monthly performance industry, regulator and our suppliers. indicators of service delivery consumer bodies to agree the > Excellent customer are reported to senior recently launched ‘AES Code service Improving our relationships managers throughout the of Practice for Face to Face We address particular with customers group in order to track key Selling’ which is designed needs to ensure that all our We are committed to aspects of our performance. to ensure everyone in the customers receive the best continually improving our industry applies a range of possible service. standards of customer service. Attracting new customers checks and measures to As such, we recognise the We use a variety of channels their direct sales activities. > Valuing diversity importance of listening to a to sell our products and A commitment to fairness wide range of stakeholders, services. We are committed We are committed to ensuring and equality is at the heart and working in partnership to ensuring that the same that our advertising is honest of our service ethic. with them, to meet our standards of responsibility and legal. We implement a corporate responsibilities. apply regardless of the sales rigorous approval process > Helping to alleviate fuel These include not-for-profit channel. As founder members operating within the wider poverty agencies, our industry peers of the Association of Energy regulatory framework. British Gas continues to and government regulators. Suppliers (AES) we are Representatives from relevant play a leading role in But, most importantly, we pressing for industry-wide areas of the business review achieving the Government’s maintain dialogue with various solutions to the issues and challenge all prospective challenging fuel poverty targets.

> Stewardship programmes Technology boosts AA customer service Our stewardship programmes aim to help our The AA continues to develop technology to customers use our products improve customer service. All patrols are and services safely. now equipped with specialised all weather portable computer systems with fault > Supplier relationships diagnostic capability, which will enhance We expect our suppliers patrols’ ability to fix faults at the roadside. to have similar values and Called VIxEN, the laptop computer also high standards to our own provides AA patrols with GPRS in how they manage their communications functionality which enables environmental and social more efficient deployment and better impacts. management of call to arrive times. In November 2003, VIxEN was recognised by the automotive industry when it won the 2003 Autocar Idea of the Year Award.

12 Centrica plc Corporate Responsibility Report 2003 What matters 1st 44m No.1 to you?

> Let us know The AA won the annual JD Power Centrica has more than Centrica business services & Associates UK Road Assistance 44 million customer relationships maintained its position as the your views: Study Award for customer satisfaction in the UK, North America and number one supplier of energy for the second successive year and Western Europe. to the commercial sector in responsibility@ for the fourth time in the six Britain in 2003. centrica.com years it has been awarded. www.centrica.com/ marketplace

“As a leading supplier of essential services, we have a responsibility to meet the diverse needs of all our customers. Our responsibilities ‘Doing the right thing’ extend across the entire customer During 2003, British Gas launched the updated British Gas branding and experience from how a significant culture change programme become the strapline of a highly successful we attract new entitled ‘Doing the Right Thing’ designed to marketing campaign. Following our online enhance customer service performance and billing television advertisement, our website, customers through to embed new ways of working to derive www.house.co.uk saw an increase in unique to how we enhance maximum benefits from the investment in visitors from 140,000 to 203,000 per week. customer business transformation. The initiative has Almost 130,000 have signed up to online relationships.” been embraced by employees across British e-bills since the launch of paperless billing Gas. It has also formed the creative focus of in May 2003. Simon Waugh Director of Marketing

advertising. We adhere to Authority. We were The following standards are British Gas the Committee of Advertising disappointed that our internal in place currently across the British Gas is certified Practice (CAP) Code, a procedures did not work on AA and British Gas: company wide to ISO self-regulatory body that these occasions and will make 9001:2000 by British creates, revises and every effort to improve our The AA Standards Institute and is one enforces the code. performance in 2004. The AA has adopted a risk of a select number of UK based approach to managing companies to achieve this Our advertising methods are Reinforcing our its businesses, identifying status. In addition, our Print researched extensively with management processes potential risks, implementing Management Centre is also consumers to establish Centrica businesses seek management systems (ISO certified to OHSAS 18001. whether they convey a to achieve best practice 9001:2000) to reduce those All these are brought together positive image of the standards both for risks to an acceptable level in a common approach to company. Our customer management systems and and monitoring performance Business Management communications are written for the services we offer to against targets and measures. Systems across the company. in language appropriate and customers. Where appropriate, Road Services are also accessible for the target we link these to external certified to PAS-43 which is audience. During 2003, two standards, as they help our for the safe working of vehicle complaints about our managers, employees and breakdown and recovery advertising were upheld customers to know what level operators. by the Advertising Standards of performance to expect.

Centrica plc Corporate Responsibility Report 2003 13 Marketplace Passion, service, support

3,500 18m 750,000 9.93m

The AA has the largest dedicated As the key player in the campaign There are more than 750,000 On One.Tel’s busiest day in 2003, patrol force in the UK, with to reduce carbon monoxide (CO) customers on the British Gas Home our customers spent approximately approximately 3,500 patrols. poisoning, British Gas delivered Energy Care Register, and 250,000 9.93 million minutes on the phone. 18 million CO leaflets to energy customers with disabilities advise customers in 2003. us of their individual service needs.

Safe use of all our Promoting the safe use campaigning and children. The charity’s current products and services is of our products investigation, and the AA’s work includes assessing the a top priority. Through The success of our brands commitment to safer travel environmental impacts of employee training, means that we have many on the roads. travel. Further information on customer contact and millions of customer The AA Motoring Trust can be targeted communication, relationships worldwide. This Promoting safer motoring found at: www.aatrust.com we raise awareness on presents us with a unique The AA is committed to safety issues relating to opportunity to encourage our promoting safer motoring and Valuing and embracing our core businesses. customers, and through them offers advice for drivers on all diversity their family and friends, to use aspects of driving. Concern In 2003, we introduced Specific examples come from our products and services for road safety was enshrined a new diversity strategy that the AA in promoting safer more safely and efficiently. in the first rules of the AA and includes both employees and motoring and the work done we have since extended them customers. We appointed a by British Gas on the safe use Our stewardship programmes to include environmental new diversity director, and of services and campaigning help our customers to make concerns. established an action group to raise awareness of the informed decisions about the that is chaired by the risks of carbon monoxide. use of our products and The AA established the managing director of Centrica services in a way that reduces AA Motoring Trust in 2002 Energy. The group is driving their environmental impact and to carry on its role in an integrated approach that makes a positive contribution championing the interests and will build on the excellent to society. Examples include safety of Britain’s road users. practices we have already British Gas promoting energy At the heart of the new developed and ensure they efficiency at home and in charity’s work is research and are consistent through all business, our carbon information on road safety, areas of our business. monoxide awareness particularly to protect our We commission annual

Money and budgeting advice for customers

Working with the Employers’ Forum on Disability and Mencap, British Gas produced ‘Paying Your Bills’. This booklet was developed with the help of a cross section of people with a learning disability. It is a guide to help manage household bills and covers issues including how to find the easiest method of payment, how to get support if problems arise and tips on saving energy and money. The booklet is equally valuable to those moving into their first home or for those whose first language is not English.

14 Centrica plc Corporate Responsibility Report 2003 Carbon monoxide (CO) incidents 1997-2002

248 97/98 233 Figures from Health and 99/00 Safety Executive 2003 1st £2bn 00/01 01/02

132 British Gas was placed top in the We spend £2 billion on goods J.D. Power & Associates Gas and services annually to support 109 112 95 Supplier Domestic Customer business operations. Satisfaction Study for 2003. 55 24 24 16 13 34

Total number of deaths Total number of Total number of incidents non-fatal casualties

Carbon monoxide awareness

Centrica is the leading carbon monoxide incident investigator and campaigner in the UK. Carbon monoxide (CO) is a highly poisonous gas, which can be produced by burning any fossil fuels such as gas, oil, coal and wood, without sufficient air. Since 1997 more than 75 people have died and hundreds more are injured as the result of CO poisoning. The most common causes are appliances that have been poorly installed, or not regularly serviced or where there is inadequate ventilation. British Gas campaigns to raise awareness of both the dangers and the safety measures that can save lives.

As a key industry player in carbon monoxide campaigns we have delivered:

– 18 million CO information leaflets to all British Gas energy customers – 1.4 million leaflets to health centres and Citizens Advice Bureaux – specially designed student CO awareness leaflets to universities and colleges across Britain –a CO section on our website at www.house.co.uk/safety –a TV advertisement to raise awareness – over 280 articles on CO in press, on radio and television – local press competitions, giving away over 2000 CO detectors – support to the current Health and Safety Executive Fundamental Review of Gas Safety – support to all Gas Safety Fundamental Review Groups – support to Understanding Energy, a CO video for schools.

market research from that could affect the way we inclusion of disability in a For full details of progress independent research serve them. We record these company’s social reporting in this area during 2003 organisations to establish details so we can take them process. Having been placed see the focus feature on the service needs and into account when we contact sixth in 2002, our performance diversity on page 11. perceptions of our disabled or visit them. Service registers improved during 2003 when customers, older customers are now established in all our we achieved second position and customers from ethnic major brands. in the survey. We were pleased minority backgrounds. that the accessibility of our Centrica participated in the corporate website was rated We also invite our customers 2003 Employers’ Forum on seventh of all FTSE 100 to tell us about any Disability Global Inclusion companies by web usability requirements or disabilities Benchmark that monitors the consultants Nomensa.

Centrica plc Corporate Responsibility Report 2003 15 Marketplace Passion, service, support

‘here to HELP’ progress as at 31 December 2003 20,000 37% Activity Status Zones signed up 517 Households included 262,380 Zones completed 41 Direct Energy completed an average Our Condensing Boilers & Heating of 20,000 service calls each week Controls scheme offers customers the Household assessments completed 51,952 during autumn and winter 2003 – an opportunity to reduce fuel costs by up Charity referrals (of which 90% are completely new clients for the charities) 10,230 average of about 3,000 calls every day. to 37%, to use energy more efficiently Completed benefit checks 3,171 and reduce CO2 emissions. Total unclaimed benefits identified £1,826,537 Potential average benefit gain per qualifying household (pa) £1,619

In the UK, we continue Promoting energy efficiency reducing greenhouse to be guided by a similar to play a leading role in Since April 2000 the British emissions. British Gas set of values to our own. helping to achieve the Gas energy efficiency contacted all its business We seek to establish effective, Government’s challenging programme has been helping customers with details of the two-way relationships with fuel poverty and climate consumers to reduce their new Climate Change Levy key suppliers that involve change targets and also energy consumption and fuel and its implications before information exchange and champion the efficient use bills, whilst creating warmer its introduction in April 2001. joint exploration of new of energy in households homes and fighting fuel opportunities. throughout Britain. poverty. (See the focus By promoting product feature on fuel poverty on benefits and energy savings, We have agreed to support We engage with voluntary page 17.) 34% of all boilers sold by the DTI inspired Better groups, charities and British Gas during 2003 Payment Practice Code. public sector partners on Centrica Business Services were condensing boilers. a wide range of energy (under the British Gas brand) This figure has increased Compliance with the code will efficiency initiatives and is a major supplier of gas and to more than 40% since only happen if we follow the the effectiveness of these electricity to industrial and September 2003. correct internal purchasing/ partnerships is a key factor commercial customers. payment processes that are in our success. Climate Change Levy (CCL), Managing our supply chain designed to protect both our which was first applied on We seek to procure the most suppliers and ourselves. 1st April 2001, is a tax on the cost effective solutions for use of energy for business our businesses and we take For more information on the purposes. The purpose of great care in choosing our Better Payment Practice the levy is to encourage suppliers. Code, visit the website at more efficient use of energy www.payontime.co.uk and contribute to the In addition to offering high Government’s targets under quality goods and services, the Kyoto Protocol for we expect all our suppliers

Stakeholder engagement: Working with our suppliers

Approximately 400 contracts per annum are within their fields of expertise. This support awarded through the Centrica procurement benefited the group by more than team. This team consists of category £2.3 million in 2003. managers who are experts in their particular areas of spend, plus a small team of Similarly One.Tel has been able to benefit dedicated strategic supplier relationship significantly from its relationships with key managers who aim to maximise the value, telecoms suppliers to the group such as effectiveness and efficiency of our top 20 Vodafone, Energis and Cable & Wireless. strategic supplier relationships. This more Focused and structured account structured and coordinated approach has management from these suppliers, including resulted in stronger group-wide contract dedicated executive sponsorship at board management for some suppliers and in a level, for example from Vodafone’s CEO greater focus on process improvement with UK, provides One.Tel with the right level others. As a result, some suppliers are now of influence when escalating issues or providing consultancy, advice and training making high impact decisions.

16 Centrica plc Corporate Responsibility Report 2003 Focus on fuel poverty

In the UK, we play a leading role in challenging fuel poverty by working to meet the needs of customers on low incomes and by helping customers during periods of personal financial difficulty.

Our energy efficiency programmes include customers who could pay but choose not to. ‘Warm-a-Life’ and ‘here to HELP’. ‘Warm-a- British Gas uses disconnection as a last “ In the 21st century, Life’ is a national initiative offering free energy resort and most disconnections are the result it is incredible that efficiency measures, fuel discounts and help of refusal rather than inability to pay. there are people dying with identifying social security benefits. Since due to cold related it was introduced in 2000, about 50,000 There are a series of safeguards, including illnesses and missing customers have been assisted. Through the a comprehensive communications process, British Gas ‘here to HELP’ programme we as we seek to make contact with the out on the basic provide funding to local authorities and customer. Education and advice are the first necessities of life. housing associations to upgrade boilers and steps in trying to prevent debt, and ultimately Through a range of to improve insulation. In 2003, this initiative disconnection. We ask all our customers to let initiatives, British helped people in more than 40,000 us know early if they have problems paying – Gas is bringing households to reduce their fuel bills. and we promote alternate payment plans and together private, cheaper payment options. We also issue a public and voluntary Help with debt management range of advice leaflets including codes sector partners to help We believe our debt management policies of practice for paying bills, dealing with combat household strike the right balance between helping prepayment meters and our commitment to poverty and make a customers who would like to pay but can’t, older, disabled or chronically sick customers. difference to the whilst applying commercial good practice to quality of life for many families and individuals.”

Mark Clare Managing Director British Gas

‘here to HELP’ improves quality of life

The £150 million ‘here to HELP’ programme Tina Cartwright – a 34 year old single mother aims to improve living conditions in some of from Stoke-on-Trent – and her two children Britain’s most deprived communities. Created have benefited from free energy efficient by British Gas in partnership with seven UK draught proofing, loft insulation and energy charities – Help the Aged, Save the Children, efficient light bulbs. They also received a Scope, RNIB, Gingerbread, National Debtline £5 discount on their energy bill and free and Family Welfare Association – the membership to Gingerbread which has

programme is now operating in more than provided support and advice, plus day trips The ‘here to HELP’ 515 communities and has helped over for the children and a family holiday to programme was 260,000 households. Butlins. awarded a BIG TICK in the Business in the Community Awards for Excellence 2003.

Centrica plc Corporate Responsibility Report 2003 17 Community

Support, action, impact

Playing an active role in our local communities is an essential part of being a good corporate citizen. We understand that our success in the marketplace can only be sustained if we accept and play an active role in the community.

Our community Through our actions, we look case for community Tackling the issues that priorities… to manage and improve our investment and, in turn, bring concern us social impact. We work in the sustained commitment We are involved with a range at a glance partnership on projects that that we know community of projects and partners meet both the needs of partners value. Through long- tackling issues that are of > Customer focus society and fit with our key term partnerships, we can concern to us and to society. We aim to harness the power business objectives as a develop relationships and These primarily target in of our business to help tackle provider of essential products activities that achieve impacts four areas: customer focus; social problems relating to and services. within our identified priority education, skills and areas where we have areas as well as delivering employability; sustainable expertise. Ensuring access to the value for the business. enterprise; and employee essentials involvement. > Education, skills and In line with our overall It is our responsibility to employability strategy, we have developed develop and manage We have developed a range We have a responsibility to an umbrella theme for the community investment of community initiatives help people, both young and Centrica community activities which embody our focused on our customers old, take advantage of the investment programme: core values. We are constantly and their needs. Examples of opportunities that life ‘ensuring access to the looking for new ways to put these projects include a major presents. We look for essentials’. The purpose of our skills and resources to partnership with Help the opportunities that are closely this theme is to help our good use for community and Aged, which aims to address linked to our business to help stakeholders, both inside and business benefit. By focusing a range of issues faced by people widen their horizons. outside the organisation, to on specific issues that relate older people including fuel understand the kinds of social to our core business activities, poverty, isolation and safety. > Employee involvement and community programmes we believe we can add value Our employees make direct we get involved in. and expertise to help deliver To date, there have been contributions in a range of solutions that make life better more than 1.7 million ways including volunteering, We believe that this clarity will for people. beneficiaries of this payroll giving and through a help us to build the business programme. charity employee lottery.

> Sustainable enterprise Our family of businesses is REECH gives communities a helping hand linked by shared values. By extending this principle Realising Energy Efficient Communities and Homes through our community (REECH) is a partnership between British Gas and National support, we aim to encourage Energy Action. Launched in 2002, it aims to help members sustainable enterprise that of minority communities overcome barriers, such as continues to make a positive language difficulties, that can prevent them from heating contribution to building a and insulating their homes affordably. healthy civil society. REECH provides training and support for community advice workers and volunteers to enable their communities to access energy efficiency advice, information and grants. Delegates who attend training sessions can access the British Gas Warm-a-Life programme and receive low energy light bulbs for their communities. Over 60 community groups have already registered.

18 Centrica plc Corporate Responsibility Report 2003 What matters £6.6m 43% £25m to you?

> Let us know In 2003, we contributed £6.6 million Some 43% of our community In the past five years, we have to community causes through a investment is customer-focused provided a range of charities and your views: combination of both cash and and targeted at social problems in community organisations with in-kind support. the areas where we have expertise. almost £25 million of support. responsibility@ centrica.com

www.centrica.com/ community

AA Trust focuses on children and road safety

The AA Motoring Trust was publicly launched in February 2003. As a registered charity, the trust is wholly independent and undertakes a wide range of activities and research related to motoring and road safety issues. As the AA’s parent company, Centrica will donate at least £1 million each year over the next five years to support the work of the AA Trust.

A key focus in 2003 was child safety. Some 5,000 children under the age of 16 die or are seriously injured on Britain’s roads each year – and nearly 1,000 of these are killed or seriously injured in cars. In February 2003, the trust launched ‘The facts about road accidents and children’ with a foreword by the UK Prime Minister, and in June published ‘The effectiveness of child restraints’ which gave ratings to child car seats in crash tests (part of a European-wide programme). In February 2004, the trust launched its research ‘Loose in the car’ on the risks of not using, or in making mistakes in using, a child safety seat. More information on all these initiatives is available at www.AAtrust.com

Other initiatives linked to successful employment community organisations measure our contributions our brands include the AA programmes promote greater become more financially through membership of the Accessible Hotel of the Year diversity in the recruitment sustainable. London Benchmarking Group Award, which aims to market. Key initiatives in this (LBG). The LBG system highlight the importance of area include the education Measuring impact in the helps us to capture exactly ensuring equal access for programme Think Energy (see community what cash, time and in-kind disabled people and the AA case study on page 21) and The contribution we make to contributions we make Disabled Travellers’ Guide, our close involvement with the community reflects our and what impacts they which gives information and Carers UK through a range of standing as one of the UK’s are making. ideas to help make getting carers in employment largest energy providers. about easier at home and initiatives. In 2003 we contributed a abroad. total of £6.6 million to Our flagship project under the community causes. In terms of initiatives linked sustainable enterprise theme to education, skills and is the Sustainable Funding We are committed to employability, we provide Project. Working with the professional measurement a range of resources for National Council for Voluntary of our contributions and students, parents and Organisations, the project the impact they have. teachers, and our highly helps voluntary and We carefully manage and

Centrica plc Corporate Responsibility Report 2003 19 Community Support, action, impact

Focus of contribution in 2003

£1.2m 3,000 Charitable gifts – 4% Community investment – 69% Commercial initiatives – 21% Management costs – 6% Since our UK ‘Charity of the Year’ More than 3,000 (7%) Centrica initiative, launched in 2001, our employees now give to a range of employees have raised more than charities via the payroll, generating £1.2 million for our chosen charities. an annual contribution of more than £300,000.

Centrica’s community spend is focused on a number of priority areas, linked to issues relevant to our business.

Our approach to community Helping employees to investment is based on get involved systematic management, We encourage employee clearly identified objectives involvement through many of and ongoing evaluation of our community programmes. impacts. Each year, we run a fundraising partnership with We discuss and agree with our UK Charity of the Year. our charity partners how we Many of our employees will measure the benefits of also make direct contributions each project. As well as in a range of other ways quantitative outputs, we look including volunteering at longer-term impacts and (see case study opposite). ongoing sustainability. We Volunteering in North America also set measures of business We gather employee opinions benefit for each project. so that we can understand Volunteering in the community benefits charities through their expectations and help the skills and experiences our volunteers bring and the them make the best of the funds raised; benefits our employees through the skills volunteering activities that they develop and benefits the business through increased are open to them. According retention and motivation. to a MORI survey we commissioned, nearly three- In North America, Direct Energy, through the Direct in the quarters (73%) of our Community programme, combines charitable giving with employees are interested in activities designed to encourage our employees to participating in community volunteer in their communities and support causes they projects with our support. value. Employees who do volunteer more than ten hours This is slightly ahead of levels per month are eligible to apply for a corporate donation among employees in the of up to $500 for the registered charity they support. UK as a whole.

Employees support the Charity of the Year

Our UK ‘Charity of the Year’ initiative is at the heart of our community investment programme. Fundraising takes place throughout the UK and the chosen charity, selected by employees, also receives corporate funding. In 2003, the charity of the year was the Meningitis Trust and we successfully raised more than £500,000 via the ‘Every Second Counts’ partnership against a target of £250,000. Our current charity of the year is Cancer Research UK and this partnership, which runs until August 2004, aims to raise more than £400,000. We are also working with Cancer Research UK to raise awareness of cancer prevention amongst employees and customers.

20 Centrica plc Corporate Responsibility Report 2003 Focus on energy awareness

With more than 44 million customer relationships worldwide, we have a unique responsibility to help our customers, and their family and friends, to be more environmentally responsible through the efficient use of our products and services.

As one of the UK’s largest energy providers, British Gas call centre employees launched the main social issue for British Gas is in October 2003. This latter project aims to ensuring sustainable access to energy. We raise awareness of the British Gas energy enable millions of customers to heat their efficiency advice line and to encourage our homes and issues such as efficient use of employees to transfer customers through energy provide an important focus in both our to this team for energy efficiency advice. community and environmental programmes. NEA has helped to develop energy efficiency training for call centre employee induction Increasing awareness of energy efficiency sessions. We invest in a range of products and awareness programmes designed to promote Working with all our stakeholders “ Over and above the energy efficiency. We provide information and Our energy awareness initiatives are not impact of our day- advice to help our customers make informed limited to the people or groups of people to-day operations, decisions about the way they use energy in who use our services. For example, the we aim to be a good their homes – and in the workplace. British Gas Think Energy education corporate citizen. programme is one of the biggest school- To achieve this, it is For example, British Gas has been working in based initiatives of its kind (see below). essential that we play partnership with National Energy Action (NEA) In 2003, Think Energy received a Business an active role in since 1984. Our funding has enabled NEA to in the Community Award for Excellence in the local communities, implement a range of projects encouraging Education and Lifelong Learning category. and address issues of the efficient use of energy and delivering tangible benefits to low-income families. In early 2003, we launched ‘Natural Capital’, wider social concern a campaign that aims to increase levels of that are relevant to Recent examples include the REECH initiative employee awareness of environmental our business.” (see case study, page 18) launched in issues and encourage direct action through November 2002, and a project involving behavioural change. Charles Naylor Director of Corporate Affairs

Energy education is an award winner

British Gas Think Energy is a free energy education programme for 7-18 year olds. Since its launch in 2000, Think Energy has reached 49% of UK schools, some 2.6 million pupils, more than 22,000 teachers and 3.4 million parents in the UK.

The programme combines a mixture of classroom learning and home study. The resources concentrate on energy and the importance of energy efficiency, encouraging behavioural change to reduce fuel consumption and carbon dioxide emissions. Research shows that some 50% of pupils exposed to the resources claim to have made energy efficiency improvements in the home. Please visit www.think-energy.com

Centrica plc Corporate Responsibility Report 2003 21 Environment

Responsible, caring, committed

Centrica recognises that it has a dual environmental responsibility. Our primary responsibility is for the direct impacts of our activities on the environment. Our secondary responsibility is to help our customers make informed decisions about the use of our products and services.

Our environment Understanding and managing performance data for all responsibilities… our environmental impacts is our major assets. key to continuing business at a glance success, and we include an We manage these risks by appreciation of environmental investing in technology for Our environmental policy issues within our decision- hazard prevention and gives us a framework to making processes. minimisation. We are manage our business in an introducing environmental environmentally responsible Managing our major impacts management systems (EMS) manner. Within that Gas and power provision are that meet the requirements “Many companies say framework, we specifically a major part of our business. of ISO 14001 across all of that they take their seek to: Our main environmental our UK businesses by 2005. impact areas are those related The major elements of EMS environmental > Integrate environmental to this industry: climate are already in place for the responsibilities considerations into our change, air pollution and AA, British Gas and for our seriously, but unlike decision making on waste. power generation and gas many, Centrica can operational issues including production activities. make a real lasting new projects and potential In recent years, our portfolio difference. Our acquisitions. of gas and power assets has We are also ensuring that strategy will enable changed significantly. We the businesses with greater us to protect our > Quantify and seek to reduce have acquired six gas-fired environmental impact have customers by the environmental impacts of power stations and the Rough external certification of their providing a cleaner our activities on an ongoing offshore gas storage facility. systems to ISO 14001. and more sustainable basis through continuous These acquisitions have These businesses include improvement. influenced our major our gas fired power stations, fuel mix.” environmental impacts. our production facility in > Jake Ulrich Comply with all applicable In particular, environmental Morecambe, our AA Service Managing Director environmental legislation, emissions have grown Centres, AA patrols, British Centrica Energy regulations and other codes significantly with the Gas print centres and the of practice. integration and reporting of Rough storage facility. emissions from the six power We have so far achieved > Encourage suppliers and stations. Visit www.centrica. certification for 13 of the contractors to pursue com/environment to review 15 selected businesses. responsible environmental practices.

Managing the major impacts Lowest impact Medium impact Highest impact > Review and improve Air Biodiversity Climate Contaminated Ozone Hazardous Waste Water policies and practices in pollution change land depletion chemicals line with developments in Centrica total understanding and British Gas knowledge. Europe Gas production > Improve the choice and North America efficient use of energy, water Power Generation and other resources, focusing Telecommunications particularly on reducing greenhouse gas emissions. The AA

22 Centrica plc Corporate Responsibility Report 2003 What matters 10% 1,000MW 191m to you?

> Let us know At peak production, some 10% of the We aim to have the capacity to In delivering our UK services British UK gas supply is obtained from our generate 1,000MW of electricity from Gas engineers and AA patrols your views: Morecambe gas fields and the gas renewable sources within the next five travelled 191 million miles in 2003. processing terminal at Barrow-in- years - enough energy to power responsibility@ Furness. 350,000 homes. centrica.com

www.centrica.com/ environment

Reporting on our new assets

Our six power stations are all combined cycle gas turbines, which burn clean natural gas to generate electricity. They provide total generation capacity of 2,174 MW, approximately 25% of the peak day domestic and commercial electricity customer demand from our electricity customers. All six sites operate to high environmental standards and four have been certified to the environmental standard (IS0 14001) for several years. Pollution control is a vitally important part of these environmental standards. We are committed to reporting on the environmental performance of new businesses in the UK within 18 months of acquisition. Details on the performance of Barry and Roosecote power stations will be reported in 2004. Current environmental performance data can be reviewed online at www.centrica.com/responsibility

Our investment in renewable energy

Centrica Energy will be investing more than £500 million, alongside joint venture partners, to build renewable assets during the period to 2010.

We have entered a joint venture with DONG and Statkraft to build a 90MW offshore wind farm at Barrow and have acquired the Inner Dowsing and Lynn offshore wind farm developments in The Wash, with a combined generation potential of 180MW.

In partnership with AMEC, we have also won a lease to develop two further sites. This will bring our total potential generation capacity to 1000MW within the next five years.

These announcements will account for about half of British Gas’ renewable obligation and roughly 5% of it’s overall electricity supply requirements. 1,000MW is enough energy to power 350,000 homes, equivalent to the city of Birmingham. Taken as a whole, this investment makes Centrica one of the largest investors in offshore wind farms in Europe.

Centrica plc Corporate Responsibility Report 2003 23 Environment Responsible, efficient, caring

Our buildings: Office recycling 2000-2003 emissions performance 13% 61% 10% 48% 5%

0% 32% Fuel use per mile (mpg) Total waste recycled by of our fleet improved Centrica in 2003 -5% by 13% 19% -10% 17% -15%

2 -20% Change in CO2/m

Change in CO2/FTE of waste recycled Percentage -25% 2000 2001 2002 2003 2000 2001 2002 2003

We aim to provide Buildings and vehicle- monitoring which will ensure A key part of the Government’s comprehensive reports related impacts the buildings are not only run strategy is being achieved by about our environmental As a large business with more efficiently but will be more placing a ‘renewables impacts and how we are more than 40,000 employees, comfortable places to work. obligation’ on all electricity working to reduce them. our buildings consume suppliers to source a set considerable amounts of In 2003, our total vehicle fleet proportion of the electricity We recognise that we still energy and create significant covered over 191 million miles they supply from qualifying have some way to go, but we amounts of waste (see case and used 29 million litres of renewable generation plant. have already put a number study below). In 2003, all the fuel to deliver roadside service This started at 3% in the year of practical and innovative electricity for our offices came and install, maintain and repair to March 2003 and will reach plans in place to ensure we from renewable sources, and central heating, white goods 15.4% by 2015. Centrica make good progress in 2004. hence were on a climate and other products in the intends to meet the renewables change levy exempt tariff. home. We prioritise fuel obligation for its main British efficiency in new vehicles, and Gas energy supply business We remain committed to we implement travel and fuel through a ‘balanced portfolio’ reducing building energy use reduction policies. We also approach. This means per employee and ensuring run a fleet management obtaining electricity from a that our buildings meet, and programme, to reduce the variety of sources: some from where possible exceed, current amount of travel by investment in generating energy efficiency standards. employees, and in turn reduce capacity (see case study on impact on the environment. page 23), some through In 2003, our energy efficiency bilateral contracts with programme continued across Our commitment to independent generators, the estate and delivered renewable energy some through market 2,454 tonnes of carbon In order to address the threat purchases, and some through

dioxide (CO2) savings. In 2004 of climate change the UK has paying the Government’s the programme will deliver agreed to cut its greenhouse ‘buyout’ charge intended to increased levels of remote gas emissions by 12.5%. promote green generation.

Centrica and waste recycling

Our businesses generate a wide range of innovative programmes in areas such waste. Office waste includes paper, cardboard as the recycling of furniture, uniforms, and cans from our offices and call centres. mobile phones and packaging. Through Operational waste covers batteries, tyres, oil the work of the site services people and and used parts from our operations such as environmental champions a recycling rate the service centres, our offshore activities of 48% was achieved by the end of 2003. and from the field engineers and patrols. In an office environment this recycling rate is higher than we are aware of for any other Our office waste recycling programme office-based FTSE100 company and means ensures that paper, cardboard, cans and that the waste per employee has fallen by drinking cups are recycled in most of our more than 40%. office buildings. Toner cartridges are collected and recycled. Where they exist, we try to Our target for reducing waste sent recycle via local schemes that donate any for final disposal by 15% per employee, profits to charity. The group also has has been greatly exceeded.

24 Centrica plc Corporate Responsibility Report 2003 Natural Capital

In early 2003 an environmental communication campaign called ‘Natural Capital’ was launched. This campaign aims to increase levels of employee:

Awareness – of the environment as a business issue for Centrica, along with our environmental policies and programmes. Action – towards key environmental performance targets and savings, by targeting behavioral change in employees. Advocacy – of Centrica as a company that takes its environmental responsibilities seriously.

Natural Capital challenges employees to think about four environmental concepts: boosting efficiency, driving innovation, earning trust and enhancing quality of life. There have been roadshows in our offices, displays at AA patrol conferences and a photo competition to engage Centrica Energy. By setting up quizzes, competitions, green teams and a pledge scheme Natural Capital has helped employees focus on their environment.

To date more than 3,500 pledges have been made to turn-off PC screens at night, recycle rubbish, use trains, buses or bikes and to save energy at home. The campaign has helped employees to understand how environmental issues are relevant in the workplace and in doing so has developed so much goodwill and enthusiasm.

Benchmarking against and improvements in our Employee involvement In 2003 the Natural Capital our peers auditing processes and our Our employees play a vital communications campaign Following a thorough search environmental management role in helping us to reduce (see case study above) was for the most suitable external systems on the previous year. the environmental impacts launched which delivered environmental benchmarking We achieved an above of our operations. We rely significant improvements in tool, we selected the annual index- and sector-average on our employees to work both the spot employee Business in the Environment performance in the core in ways that reduce their surveys and the main results, Index of Corporate impact areas of energy, impact, and to influence our the former by 11% and latter Engagement because it gives transport and solid waste. customers and suppliers to by 14%. the most balanced view use our products and services across our peer group. In the Looking forward, Business in in a more environmentally 2003 Survey (published March the Environment noted that sensitive way. 2004) our ranking, out of 177 our enhanced environmental FTSE companies, was 52nd management systems, and For the last two years, our and within our peer group of comprehensive target setting, employee engagement survey 12 companies, we ranked lead them to expect further has measured what our eighth. Our combined improvements in our employees think about weighted score was 89.83% – performance in next year’s our commitment to the an improvement of more than index. environment. In 2003, 10% on the previous year. more than 60% of employees Environmental issues also across the group felt that we We were awarded full marks in play a key part in socially cared about environmental the areas of clear board responsible investments issues. Communicating our support and policy, the setting surveys we take part in, environmental performance, of objectives and targets, and including FTSE4Good indices and engaging employees is product stewardship. and the Dow Jones important for our brands and Sustainability World and environmental improvement The 2003 index highlighted our European Indexes. programme. continued commitment to performance measurement,

Centrica plc Corporate Responsibility Report 2003 25 Looking ahead

Next steps on the journey

We are constantly refining our approach to corporate responsibility. In each of the four areas of workplace, marketplace, community and environment, we will be seeking to improve performance in 2004.

We will seek more systematic engagement with our stakeholders, building on current relationships but formalising the engagement into corporate decision-making, and ensuring the process and results of the consultation are more Workplace Marketplace Community transparent. Our plans for making further To help us develop our In the community we will seek progress in the workplace marketplace relationships, to improve levels of in-kind We will also aim to improve include: we will be looking at: support as part of overall the communication of our •Developing our career • Increasing our focus on programme. And we will work objectives and targets across development and talent key customer service with the businesses to all material responsibility management programmes performance issues. We will encourage greater employee issues. This will help us to to include: look to provide better non- engagement as part of our ensure we turn our policy – introducing a more robust financial indicator data employer of choice strategy. commitments into real action. management talent around issues such as Specific initiatives will include: review process, resulting appointments missed, •Implementing the British We will update our website in more internal response time to central Gas volunteering initiative on a regular basis to include promotions/ heating failures/car as a blueprint for wider new information. appointments and breakdowns, meter company involvement; – developing performance problems, billing queries; •Improving communication management systems to •Capturing and and business support for ensure identification of communicating more employee support superior performance detailed information on schemes, such as the and tackle under- how we manage corporate matched funding performance. responsibility issues programme, employee •Embedding our leadership across our supply chain; lottery and payroll giving competencies in to all day •Promoting our relationships schemes; and to day business with industry bodies to •Researching how transactions; illustrate stakeholder community investment •Improving employee engagement; and builds personal motivation engagement scores, •Capturing and and employee skills building on the new communicating data on development. criteria and measurement how we develop launched in 2003; appropriate advertising •Monitoring progress in campaigns – and monitor diversity including external complaints upheld per measurement of progress; annum. and •Developing further our employee support policies, particularly around flexible working.

26 Centrica plc Corporate Responsibility Report 2003 Reporting in 2004

We accept that the quality of our current reporting requires significant improvement and aim to further develop our reporting procedures across all areas of corporate responsibility. Some of our plans include: Environment With respect to the environment, we will focus •Improving our level of workplace reporting, •Participating in the 2004 Probus BNW progress in three areas: particularly around performance and issues Corporate Community Involvement Index •Delivering against the such as retention, succession planning and to monitor perceived quality of the targets set out in our flexible working; overall programme against other blue Environmental Improvement • Ensuring more robust reporting of health chip companies; Programme and safety data; • Eliminating environmental data gaps and which include: •Broadening our marketplace reporting and report agreed criteria from North – 15% reduction in office performance across all brands; America; energy use; •Participating in the London Benchmarking •Providing an updated report on the – 50% office waste Group and reporting publicly on our results of our employee environmental recycling rate; performance; awareness campaign; and – 15% waste reduction •Improving our measurement and reporting •Improving the quality of data we report (through paper reduction); of community programmes – moving from in relation to our supply chain. and inputs, to outputs and impacts – with – 13% improvement in fuel improvements to be measured through the efficiency. 2004 verification statement; •Deliver EMS across all businesses and ensure that high risk businesses acheive accreditation to ISO14001; and •Providing continued input to our power generation strategy in both North America and the UK to ensure the environmental risks are quantified, the impacts understood and that these are communicated to key stakeholders.

Centrica plc Corporate Responsibility Report 2003 27 Assurance statement

The Corporate Citizenship Company acts The presentation of this information adds as a specialist adviser to corporations that to Centrica’s longstanding community seek to improve their economic, social and engagement programme, where notable environmental performance. Centrica has strengths are a focus on strategic business commissioned us to provide an external issues and evaluation of results achieved, assurance statement and commentary on not simply amounts contributed. We have the complete corporate responsibility conducted a separate assurance process website from which the contents of this on Centrica’s correct use of the London printed summary have been drawn. Our Benchmarking Group (LBG) assessment full statement is available on-line at model. www.centrica.com/assurance Our full assurance statement and As there are no statutory guidelines for social commentary also identifies areas where reporting, we have formed our judgements we believe Centrica has room to improve. based on emerging best practice among These include improving performance other companies, the principles underlying measurement against stated business voluntary reporting and assurance standards, principles, setting clear targets for managers the views of main stakeholders and our own to achieve and understanding better the professional experience. In our opinion the implications of the company’s commitment corporate responsibility website provides to sustainability especially for the energy a fair account of Centrica’s progress in and motoring services businesses. In these addressing material aspects of its social, and other areas, we believe Centrica should environmental and economic performance. more systematically gather and assess the views of its various stakeholders, take due Our full assurance statement and commentary account of them in decision-making and commends Centrica’s presentation of report the results in future. developments in its corporate responsibility policies and practices. In particular we highlight the systems in place to manage and implement these policies, especially the recent adoption of a statement of Centrica’s values and business principles. We also praise the fact that responsibility issues in mainstream business practices are addressed, on topics such as customer satisfaction, employee attitudes, some The Corporate Citizenship Company diversity concerns, and the environmental www.corporate-citizenship.co.uk impact of products and services. London 12 February 2004

28 Centrica plc Corporate Responsibility Report 2003 Further information

Our commitment towards corporate responsibility is detailed fully on our corporate website, www.centrica.com/responsibility

www.centrica.com/responsibility

For more details of our commitment to corporate responsibility reporting, please visit our website.

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Contact details

Simon Henderson Head of Corporate Responsibility [email protected]

Diana Montgomery Group Head of Environment [email protected]

Andrew McCallum Community Affairs Manager Designed by Loines Furnival. [email protected] Main photography by Simon Kreitem.

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