Building on Sustainability

Inhaltsverzeichis 2 GROUP SUSTAINABILITY REPORT 2004/2005 BUILDING ON SUSTAINABILITY

➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Establishment & growth Concept and realisation ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Group Communication HeidelbergCement, Heidelberg, Germany ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ IFOK – Institut für Organisationskommunikation, Bensheim, Germany ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Studio Delhi, Konzept und Design, Mainz, Germany ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Sustainability & strategy Koch Lichtsatz und Scan GmbH, Wiesbaden, Germany ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ColorDruck Leimen GmbH, Leimen, Germany ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Photographs ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Markets & added value Photo archives HeidelbergCement, Heidelberg ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Translation of Sustainability Report 2004/5. ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Further information is available on request from ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Environment & resources Group Communication. Kindly find this report and ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ further information about HeidelbergCement ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ on the Internet ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ www.heidelbergcement.com ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Contact ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Group Communication ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Employees & society Phone: 0 62 21/481-227 ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Fax: 0 62 21/481-217 ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ E-Mail: [email protected] ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Printed on environmentally friendly paper, ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ bleached without chlorine. ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔➔ ➔ ➔ Partnership & dialogue ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ Goals & program ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ HeidelbergCement AG Berliner Strasse 6 69120 Heidelberg, Germany Strategic business regions www.heidelbergcement.com Preamble Strategic business regions

■ North America ■ Mediterranean region Canada, USA Turkey

Three years ago, we published the first Group-wide environmental report and commited ourselves to sustainable development. With our first sustainability report we prove that we are making progress towards this target by extending our reporting to include social and economic issues. The importance of environmental goals remains undiminished. We are working on reducing carbon dioxide and other emissions even further and decreasing the consumption of natural raw materials. Our Group-wide strategy is clear: More alternative fuels and continuous technical improvements. Another ongoing challenge is health and safety. We are extending our health and safety systems further in order to improve in this area. Wherever possible, we want to offer our Dr. Bernd Scheifele, employees long-term jobs and a stimulating working environment with good opportunities for Chairman of the Managing development. Nevertheless, we will have to make job cuts also in the future in order to maintain Board of HeidelbergCement our activities in a difficult economic environment and thereby secure the remaining jobs. We take a socially responsible approach, talk with employee representatives, try to avoid redundancies as far as possible and support employees in making a new start when they leave us. Even with all the challenges still facing us, we have already achieved a great deal. In recent years, we have been able to decrease specific carbon dioxide emissions significantly and we have modernised numerous plants, thus reducing the adverse effects on the local environment. We contribute to added value at our locations and are a recognised partner in the communities where our plants are located. An international Group with 1,500 locations worldwide has a great deal to report and we thank all the employees who have made their contributions to this report. Besides examples of our activities in connection with sustainable development, we would particularly like to clarify what Group-wide sustainable development goals we are pursuing and how we intend to make ongoing improvements in sustainable business. Reporting is orientated to the guidelines of the World Business Council and the Global Reporting Initiative. We would like to draw your attention to our core business, cement production, and are happy to receive your ques- tions, criticisms and suggestions. We look forward to ongoing dialogue with you.

Heidelberg, May 2005

■ Africa ■ Central Europe West ■ Asia For the Managing Board Benin Austria, Germany, Switzerland Bangladesh Gabon Brunei HeidelbergCement is member of: ■ Ghana Western Europe China Liberia Belgium, France, Netherlands, Indonesia World Business Council for Niger United Kingdom Singapore Sustainable Development Nigeria ■ Northern Europe United Arab Emirates Dr. Bernd Scheifele Republic of Denmark, Estonia, Latvia, the Congo Chairman of the Managing Board Lithuania, Norway, Russia, Sweden Sierra Leone ■ maxit Group ■ Tanzania Central Europe East ■ Togo Bosnia-Herzegovina, Croatia, Group Services Subsidiaries have additional locations in Bulgaria, Finland, Iceland, Czech Republic, Hungary, Poland, Italy, Kazakhstan, Portugal, Saudi Arabia, Spain and Uzbekistan. Romania, Slovakia, Ukraine Index

➔ ➔ ➔ ➔ ➔ ➔ 2 Establishment and growth ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 4 The Group ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 8 Sustainability and strategy ➔ ➔ ➔ ➔ ➔ ➔ 10 Our vision ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 12 Management and integration ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 14 Implanting sustainability ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 18 Markets and added value ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 20 The market for cement ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 21 Creating added value ➔ ➔ ➔ ➔ ➔ ➔ ➔ 23 Optimising products ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 24 Environment and resources ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 26 The process at a glance ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 28 Promoting climate protection ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 30 Saving raw materials and using alternatives ➔ ➔ ➔ ➔ ➔ ➔ 32 Reducing emissions ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 34 Reducing local impacts ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 36 Employees and society ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 38 Our employees ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 40 Community involvement ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 42 Case Study: Impetus for Górazdze location ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 44 In dialogue ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 44 Dr. Bernd Scheifele and Prof. Klaus Töpfer ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 46 Partnership and dialogue ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 48 Taking the initiative ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 50 Prospects ➔ ➔ ➔ ➔ ➔ 52 Goals and program ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ 54 The GRI Content Index ➔ ➔ ➔ ➔ ➔ ➔ 56 Glossary ➔ ➔ ➔ ➔ Imprint ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔ ➔

Establishment and growth 3

Establishment and growth

HeidelbergCement has come a long way from the first cement plant in Heidelberg to the international group it is today. Now, we are one of the largest building materials producers in the world. After the major expansion measures of the nineties, our current objectives are the consolidation of our competi- tive position on an international level, the increase of efficiency, and sustainable growth. 4 Sustainability Report 2004/2005

The Group

In 1873, Johann Philipp Schifferdecker began building a cement plant in Heidelberg, laying the foundation stone for an international group: Today, HeidelbergCement employs 42,000 people in 1,500 locations in 50 countries. At the end of the 2004 financial year, the total turnover was EUR 6.9 billion.

jority share in the Indonesian cement manufacturer In- docement, together with a financial investor. In 2004, cement sales volumes rose to 65 million tonnes, making us number four among the cement producers in the world.

Cement in focus Our products are used to build houses, roads, bridges, tunnels and factories – buildings for the world of today and tomorrow. Our product range comprises cement, concrete and building materials. We have a production capacity of 81 million tonnes worldwide. Cement is also the material discussed in this sustainability report for the years 2003 and 2004.

How we got to where we are today A broad range of cement products Until the 1960s, our activities were confined to South- Cement, a finely ground binder manufactured from ern Germany. The first international steps were the limestone, clay and marl, has to fulfil various require- participation in the French cement manufacturer Vicat ments laid down by the construction industry. Hence, in 1968 and the purchase of the American company in addition to standard cements, we offer products with Lehigh Cement nine years later. The countries in East- special properties relating to processability, strength ern and Central Europe opened up as a result of the or resistance to chemical substances. These include political changes in the former Eastern Bloc: The devel- quick-hardening, refractory and sulphate resistant cal- oping market economies provided a healthy environ- cium aluminate cements, cements for landfill sealing, ment for investments in the Czech Republic, Poland, hydraulic engineering or sewage works construction. Hungary, Croatia, Romania, Bosnia-Herzegovina, the Other cements are particularly suitable for soil injection Ukraine and Russia. and masonry repair. We are continuously developing With the acquisition of the Belgian company CBR our products and services according to our customers’ in 1993, HeidelbergCement almost doubled its busi- needs. ness volume. The acquisition of the Scandinavian Scan- cem group in 1999 opened new markets in Northern Europe, in the United Kingdom, in Africa and Asia. Two years later, HeidelbergCement acquired the ma- Establishment and growth 5

6.9 billion Euro

Turnover of the Group in 2004 6 Sustainability Report 2004/2005

52 %

Share of the cement business of the Group turnover in 2004

Turnover 2004 by regions: EUR 6,929 million Employees 2004 by regions: 42,062

Central Europe West: 846 Central Europe West: 4,409 Western Europe: 929 Western Europe: 3,640 Central Europe East: 657 Central Europe East: 8,363 Northern Europe: 716 Northern Europe: 4,084

North America: 1,699 North America: 5,551 maxit Group: 1,053 maxit Group: 4,902 Group Services: 505 Group Services: 54 Africa-Asia-Turkey: 1,007 Africa-Asia-Turkey: 11,059 Establishment and growth 7

Our business regions HeidelbergCement’s headquarters are in Heidelberg, where the activities in our business regions are coordi- nated. ! The Central Europe West region comprises Ger- many, Austria and Switzerland. We produce and sell not only cement and ready-mixed concrete, but also concrete products, lime, sand-lime bricks, sand and gravel. We are the largest producer of cement in Germany. ! The Western Europe region comprises the Benelux countries and the United Kingdom. In Belgium and the Netherlands we produce ready-mixed concrete and we mine sand and gravel. ! Scandinavia and the Baltic states, including the Saint Petersburg region in Russia, belong to the Northern Europe region. In most countries we are the market leader in the cement business. In addition, we manufacture ready-mixed concrete, aggregates and concrete products. cluding Russia and China, and is the market leader ! In the Central Europe East region, we are the in Europe. biggest investor in the building materials sector. ! HC Trading and HC Fuels belong to Group Ser- Our activities extend to Poland, the Czech Repub- vices. HC Trading manages worldwide trading in lic, Hungary and Slovakia, which all became mem- cement and clinker and is one of the largest trad- bers of the European Union in the previous year, ing companies in this sector. HC Fuels trades with as well as to Bosnia-Herzegovina, Croatia, Roma- fossil fuels, especially coal, which it sells to Group- nia and the Ukraine. owned and third-party companies. ! In the North America region, comprising the US and Canada, we produce cement, ready-mixed Cement business in the regions concrete, concrete products and aggregates. De- The cement business line contributes 51 % to the spite the weak dollar, North America has the high- Group’s total turnover. It varies in the individual re- est turnover and operating income before depre- gions from 43 % in Central Europe West to more than ciation of all Group regions within Heidelberg- 90 % in Africa-Asia-Turkey. With EUR 1 billion, the Cement. highest turnover in the cement business line within ! In the region Africa-Asia-Turkey HeidelbergCement HeidelbergCement is recorded in North America, with is represented in seventeen countries. Whereas in a cement capacity of 11 million tonnes. The region Africa we only produce cement, we are active in with the largest cement capacity in the Group is Asia, both the cement and the ready-mixed concrete with 20 million tonnes. business in Turkey and in Asia. In Asia, we are represented in Bangladesh, Brunei, China, Indonesia, Local responsibility for global goals Singapore and in the United Arab Emirates. In Cement is a local business. This is why our operating China, we will open a new cement plant in 2005. activities are organised regionally. This allows us to In Indonesia, we hold the majority share in the remain flexible and respond quickly to changes and country’s second-largest cement manufacturer with new challenges in the markets at all times. Standard- a cement capacity of 16 million tonnes. ised management guidelines and the principle of tar- ! The maxit Group combines our activities in the dry get agreements are the worldwide foundations for mortar, lightweight aggregates and building chemi- consistent delegation of responsibility, duties and de- cals sectors. maxit Group is active in 25 countries, in- cision-making powers.

Sustainability and strategy 9

Sustainability and strategy

The Group has activities in 50 countries and its goal of sustainable development is shared by all regions and business units. We are building on the three pillars of sustainable development: Economy, ecology and social responsibility. We create added value for our customers, employees, suppliers and shareholders. We preserve natural resources – the basis of our economic activity. And we recognise our social responsibility at our locations and toward our employees. 10 Sustainability Report 2004/2005

Our vision – Joined by common goals

Our business is local, yet joined together by common goals: We have therefore developed a Corporate Mission, which is followed at all locations, and have expressed therein also our vision of sustainable development. Sustainability and strategy 11

Ethical principles of our Corporate Mission Ecology: Protecting resources for tomorrow’s In our Corporate Mission, we have made a commit- economy ment to ecological, social and economic goals: We act Greater prosperity in developing national economies is responsibly towards the environment, promote the often accompanied by greater use of resources and preservation of identities and cultures and demonstrate increased environmental pollution. For this reason, we respect and appreciation for our employees, customers, are combining our economic commitment in growth business partners, co-partners and shareholders. We markets with the transfer of progressive technology ensure that human rights are respected within our and expertise in environmental issues. Group and pursue a strategy of active, open commu- Cement manufacturing is one of the energy inten- nication and a transparent information policy. In doing sive industries. A primary objective of our sustainability so, we want to number among the best in the world strategy is therefore climate protection. within our industry. The ethical principles in our Cor- As a company that exploits raw materials, we are porate Mission form the basis for our sustainability aware of the high responsibility we have regarding the goals. use of natural resources. As far as it is possible, we re- i www.heidelbergcement.com; place raw materials with alternative materials and bio- path: About us ! Corporate Mission mass, reduce emissions and noise, and keep interfer- ence with the landscape at our locations to a minimum. Economy: Growth and profits through fairness and Sustainable business activity requires us to think long responsibility term: Even before exploiting new raw material de- We want to continue our growth, and increase our posits, we make plans for the site after quarrying. profits accordingly. We will only achieve our economic goals in the long term if we produce added value for Social responsibility: Employees and companies at our stakeholders: our locations ! We want our customers to benefit from our knowl- Our success is based on competent and dedicated em- edge, through the high quality of our products and ployees. We are interested in long-term jobs and pro- cooperation based on partnership. vide opportunities for personal and professional train- ! We want to provide our employees with a secure ing. We demonstrate appreciation for our employees income and good qualifications for the long term. and their representatives. Our treatment of each other ! We foster respectful relationships with suppliers and is marked by active and open communication. Funda- treat competitors fairly. mental human rights are observed at all our locations. ! Our economic activity is characterised by commer- We are working continuously to increase health and cial caution and rule of law. safety. ! We promote the creation of value at our locations As an international company, we promote diversity and contribute to greater prosperity and a higher and seek to respect and learn from other cultures. quality of life, particularly in areas of economic Through added value and commitment to society, we growth. make a contribution towards sustainable development ! Higher growth means adequate dividends and an at our locations. We maintain an open dialogue con- increasing company value for our shareholders. cerning our activities. ! Growth and profit are also necessary in order to achieve added value for the environment – through investments in progressive technologies and Group-wide environmental management.

Management and integration 13

Management and integration

Across the Group, we focus on local responsibility for our sustainability goals. The framework for this is provided by our management system for ecological and social issues. Exchange and interaction within the Group allow us to learn continuously from one another. After all, sustainable development is a process. One that penetrates all levels of HeidelbergCement. 14 Sustainability Report 2004/2005

Implanting sustainability

We want to implant our vision and our goals for sustainable development on all levels within the Group. We have therefore taken organisational measures to integrate environmental protection, health and safety and social goals into our entrepreneurial activity, and are gradually establishing appropriate management structures.

Environmental protection and health and safety ! develop positions on regulatory issues and repre- At Group level, the Group Environmental Committee sent the Group in the relevant bodies. (GEC) takes care of environmental protection and health and safety. It is the task of our international A core element of our Group-wide environmental experts from the business regions to: management is the Group Benchmark Report (GBR): ! develop guidelines and standards for environmen- Every three months, the business units submit environ- tal protection within the Group mental data, which is combined into the GBR twice a ! assess the environmental protection situation in the year. Group and develop goals and appropriate meas- In addition, we are committed to the goal of intro- ures ducing environmental management systems at all our ! promote the exchange of knowledge across the cement plants. More than 80 % of our cement is pro- Group duced in plants where such management systems are ! initiate research and development projects in place.

Western Europe Reporting Managing Board HeidelbergCement AG Strategy Africa-Asia-Turkey Environmental co-ordinator in the Heidelberg Technology Center (HTC) Information Coordination

Group Environmental Committee 0 20

40 Representatives Director Heidelberg 60 of the regions EU Public Affairs Technology Center 80 ! Central Europe West 100 ! Western Europe Central Europe East ! Northern Europe Central Europe West ! Central Europe East North America ! North America Northern Europe ! Africa-Asia-Turkey

Cement production in plants with environmental Organisation in the field of environment, health & safety management systems Management and integration 15

Environmental experts from all business regions working together.

Social responsibility Cooperation with employee representatives For personnel issues, we have created a structure sim- Constructive and respectful cooperation with the em- ilar to that of our environmental protection activities. ployee representatives is one of the basic principles of The regional human resources managers work in close our personnel strategy. Employee interests have been cooperation with the Group human resources man- represented at a European level in the European Works ager. His task is to: Council since 1996. As a result of the EU’s eastward ! implement the personnel strategy established by enlargement, additional countries had to be integrated the Managing Board across the Group, into the European Works Council. The distribution of ! ensure that the regional personnel strategies are the seats was renegotiated and the existing agree- attuned to that of the Group, ment revised. The internal agreement ensures that ! develop common standards accordingly and imple- the employee representatives have comprehensive in- ment these within the Group, formation and consultation rights on issues affecting ! make personnel services available to Group staff, more than one European country. We accept our ! advise the Managing Board in its decisions on per- employees’ involvement in unions, independently of sonnel issues at Group level. legal regulations.

The human resources managers of the Group and the Reinforcing sustainability goals throughout the Group regions meet twice a year. They also meet with the Under the project leadership of Group Communication, national representatives every two years. the first Group Sustainability Report was drawn up together with the Head of the Group Environmental Committee, the Group Human Resources Manager and the Head of Finance, Controlling and Reporting. This working group forms the basis for a steering committee, which will further reinforce sustainability goals across the Group in the future. 16 Sustainability Report 2004/2005

Risk management Sustainability – a topic for risk management Our commitment to sustainable development is also When assessing macroeconomic, industry, market, cur- based on economic considerations: We know that our rency and other risks, we also include those economic social and ecological environment affects the com- risks that arise from the social and environmental de- pany’s development. This subject is therefore dealt mands of politics and society. In 2004, these included within our risk management – a company-wide early carbon dioxide emissions trading. Supported by the detection system, in order to anticipate and hedge risk management we prepared in good time for the or- against risks that threaten the Group’s existence. ganisational and financial effects of emissions trading. Our risk management systematically records and evaluates the risks in the various plants and regions. All Group companies and strategic business units are integrated in our risk reporting. We have established contingency plans for all significant risks and check regularly whether the risk management process is effective. The risk management system offers security for investors and shareholders and is inspected annu- ally by an external auditor. Management and integration 17

Knowledge management The current transition from an industrial society to one based on information and knowledge implies that com- petitiveness and economic success no longer depend solely on the use of material production factors such as capital, machinery and raw materials. The excellent flow and use of information and knowledge is becoming increasingly important. Consequently, we are building a Group-wide knowledge network and we are investing in managing our knowledge efficiently. In the Knowledge Management Board, representatives from various business units and the Heidelberg Technology Center (HTC) regulate our internal knowledge management and support our activities in international bodies. These include, in particular, the World Business Council for Sustainable Development (WBCSD), the European Cement Association CEM- BUREAU and national industry associations.

Pooling of expertise across the Group The Knowledge Management Board established 16 expert groups for all fields in which we pool our knowledge across the Group. These include, for example, the use of alternative materials, emission and immis- sion measurements, and the reduction of emissions. In 2003, the Knowledge Management Board held a competition for technical topics. The employees sub- mitted a total of 108 suggestions.

World of Cement One of the pillars of our knowledge management is the World of Cement intranet portal – WOC. WOC is a database currently providing 14,000 documents on relevant issues and a library containing examples of best practice. It is accessible to all our employees worldwide.

Via the intranet portal World of Cement of Heidelberg Technology Center (HTC), the various locations benefit from experiences and knowledge of other Group plants.

Markets and added value 19

Markets and added value

We are a growth-oriented company. We pursue two strategies: We want to belong to the market leaders wherever possible and we make it our priority to invest in growing markets – where cement is needed to build the economy and society. We want to generate added value for our customers, employees, investors, and suppliers and provide impetus for the local communities. 20 Sustainability Report 2004/2005

The market for cement

The market for cement is characterised by a central property of the product and its raw materials: the sales radius is limited by high transport costs. There- fore our markets are, to a large extent, regionally oriented. Winning new markets requires investment in new locations. In recent years, HeidelbergCement has acquired a large number of cement plants worldwide, thereby enhancing its position on the world market.

Construction activity – the decisive factor for our Cement and clinker sales volumes by regions (in 1,000 tonnes) markets 2003 2004 The more construction takes place, the more cement is Central Europe West 7,560 7,138 needed. The development of our markets is therefore Western Europe 8,750 8,649 closely linked to the economic development of which Northern Europe 5,361 5,359 construction activity is a significant indicator. In par- Central Europe East 9,720 9,804 North America 12,531 13,414 ticular Eastern Europe and Asia are growth markets. Africa-Asia-Turkey 7,144 20,822 North America continued to significantly expand also Total 51,066 65,186 in 2004. In contrast, there was varied development in Europe. During the course of 2003 and 2004, the world economy improved markedly and in many re- Investigation by the German Federal Cartel Office gions construction activity started to rise once again. (Bundeskartellamt) In Germany, however, construction demand remained In 2003, the German cartel authorities imposed fines of weak. around EUR 700 million against German cement companies. HeidelbergCement’s share of the fine amounts Market leader in many countries to EUR 278.5 million. The allegation relates to quota In terms of sales volumes, HeidelbergCement is the and price agreements. It is, for the most part, unjusti- fourth-largest cement producer in the world. On many fied. The amount of the fine is completely unreason- mature markets, we are the market leader and we are able. Like most of the companies involved, Heidelberg- increasingly strengthening our position in growth Cement has filed an appeal. No decision has been markets. made as yet regarding the appeal. In order to avoid We aim to belong to the regional market leaders future cartel violations, we are continuing to take in- wherever possible. In particular, we want to concen- ternal precautionary measures such as training. trate on growth markets – where cement is used to construct and expand the economy and society. We have set ourselves the target of obtaining a ratio of mature markets to growth markets of 50 to 50. In particular, we want to invest in areas where sufficient raw material reserves and long-term market oppotu- nities are guaranteed. Markets and added value 21

Creating added value

Our goal is to create added value for our customers, employees, investors, suppliers and the communities around our locations. In addition, we want to offer long-term prospects to everyone connected with our economic activities. The conditions are good; our investments are capital-intensive and therefore forward-looking.

Customers We place the requirements of ready mixed concrete and concrete products customers, architects, construction companies as well as public and private builders at the centre of our economic activities. We remain close to the market, often in direct customer contact, so that we can develop products and applications on an ongoing basis. The expertise of our construction advisors at the plants and at the Heidelberg Technology Center allows us to translate our customers’ specific requirements into the product properties required. In the yearly Building Forum, for instance, we bring together our German-speaking customers and numerous partners from the construction industry in con- Investors structive dialogue on the future of the construction During the course of 2004, the HeidelbergCement sector. share price rose by 32 % and closed the year at EUR i www.heidelberger-bauforum.de 44.30, only slightly below its highest level. Our shares, which rank among the most important in the building Employees materials sector in Europe, are represented in around In 2004, the personnel costs for all business lines, 30 share indices. The main shareholders are Schwenk amounted to EUR 1,365 million. The cement line ac- Beteiligungen GmbH & Co. KG with 22.44 % of the counted for EUR 610 million, or around 45 %, of this share capital, and Dr. h.c. Adolf Merckle with 12.80 %. total. Although personnel costs increased by 3.3 % in the cement business line as a result of new consolida- tions, they fell by 0.6 % across the Group in 2004. We Dialogue with our shareholders create added value for our employees, not just through We also conducted intensive dialogue with our wages and salaries, but also by offering greater knowl- shareholders, analysts and investors in 2003 and edge. One of the goals of our personnel policy is to 2004. We offer our private investors the same help employees obtain further qualifications in order level of information as institutional investors and to give them the best possible foundation for further analysts via our website professional development. www.heidelbergcement.com!Investor Relations and the shareholder hotline (++49 62 21/4 81-696). 22 Sustainability Report 2004/2005

Added value calculation of the Group (EURm)

2003 2004 Purchasing guidelines – principles for our Overall performance 6,344 6,929 cooperation with suppliers Purchases -2,469 -2,656 Our purchasing guidelines govern relationships Other operational expenditures -1,670 -1,892 with our suppliers: When selecting suppliers, we Depreciation and amortisation of fixed assets -512 -626 consider health, environmental and safety aspects. Amortisation of goodwill -186 -346 Relationships with our suppliers are based on re- Net added value 1,916 1.531 spect, strict business ethics and credibility. The purchasing guidelines do not allow our employees to accept personal commission, gifts or services About 65 % of our shares are in free float. Our finan- from suppliers. All goods and services procured cial management benefited from a steadily improving must comply with the local regulations in the coun- credit rating and was able to carry out a number of tries where they are to be used. In future, we will financial transactions to improve the debt situation. also consider human rights and working standards in our purchasing guidelines. By supplier audits, Suppliers we will ensure that these rights and standards will In the cement business line, we work with around be met also by the local producers. 30,000 suppliers across the Group, with a purchasing volume of EUR 2.6 billion. This includes investments of EUR 290 million. Making up 20% of the purchasing volume, energy procurement represents the largest item. Therefore, our investments worldwide focus mainly on optimising the specific primary fuels consumption and the use of alternative fuels. Distribution of the added value created by HeidelbergCement 2004 (2003) Locations

Our economic activity provides impetus for develop- Employees 70.0% (71.7%) ment at our locations. We pay a total of EUR 175 million in tax at our locations across the Group. Our purchasing volume also contributes to the development of our locations. In the area surrounding a cement plant, we award contracts to around 300 local suppliers. Throughout the Group, they account for around EUR 1.3 billion, or roughly 50 % of the purchasing volume. The proportion of goods and services procured from the immediate vicinity of the plants

is significantly larger in developing markets, as there Creditors 16.2% (13.8%) is usually a greater demand for goods and services in these areas. We also achieve added value for our locations through the transfer of technology and expert- Governments (taxes) 9.3% (7.6%) ise. We are modernising the plants and thus reducing Shareholders 2.8% (6.0%) adverse effects on the local environment. Other shareholders in associated companies 1.7% (0.9%) Markets and added value 23

Optimising products

In 2004, we sold more than 65 million tonnes of cement worldwide. This required large quantities of material and energy flows, from the quarrying of raw materials to the construction phase. For us, acting responsibly in the market means informing the customers about the ecological profile of our products. Assessments on the whole life cycle of products – from the quarrying of raw materials to disposal – are also becoming increasingly important in environmental policy and business.

Reducing ecological footprints Cement is a semi-finished product and can therefore only be assessed in conjunction with its main secondary product, concrete. Eco-balances show that the cement production process is critical in the energy assessment of concrete. A high percentage of the total energy used in concrete production is attributable to the burning of cement clinker – an intermediate product of cement. This part of the process requires high temperatures and is therefore energy-intensive. How- ever, if a higher proportion of additives is used for cement production, such as blast furnace slag or fly ash, this has a positive effect on the ecological profile.

Promoting greater transparency The life cycle perspective is also the principle of integrated product policy, a focal point of the European Union’s environmental policy. Integrated product policy aims to promote the life cycle approach in industry. This involves providing information to market Concrete elements make building more efficient. partners about the ecological effects of a product, for example. Environmental Product Declarations (EPDs) in accordance with the international environmental standard ISO 14025 combine environmental data from a product’s entire life cycle. HeidelbergCement is also taking part in the discus- accordance with ISO 14025. The data for the Euro- sion on integrated product policy and is involved in pean cement industry will be collected in the course developing product declarations. Cementa in Sweden of 2005. and ENCI in the Netherlands have already prepared Today, our construction advisors are already mak- EPDs of their own, which are available for all cus- ing sure that customers are informed about the eco- tomers. In the European cement association CEMBU- logical footprints of the various types of cement and, REAU, HeidelbergCement works with other cement in particular, about carbon dioxide emissions. This en- producers to establish a uniform data format and a sures that the customers have all the information they method of collecting data for product declarations in need to choose more ecologically sound variants.

Environment and resources 25

Environment and resources

We realize that natural resources are the basis of our economic activity. Climate protection, conserv- ing resources, reducing emissions and minimising environmental impact on our quarrying and production sites are our objectives in environmental protection. This requires high technical standards, which are achieved through the exchange of knowledge across the Group and the introduction of environmental management at all our sites. 26 Sustainability Report 2004/2005

The process at a glance

Quarrying raw materials The raw materials limestone, clay and marl are ex- tracted by means of blasting or excavation in the quarry and transported to the crushing facilities, where the stone is crushed into the size of gravel.

Blending, grinding and drying Conveyor belts, ropeways or railways and, in excep- tional cases, lorries, bring the crushed materials to the cement plant, where they are stored in blending beds and homogenised. Along with additional raw materials as the need may be, e.g. silica sand and iron ore, the mixture is ground into powder and dried. The raw meal is then conveyed to silos.

Burning Cement clinker is produced from the raw meal at 1,450°C in rotary kilns. Burning clinker involves the use of both primary fuels, such as coal and oil, and, increasingly, alternative fuels such as used tyres, waste oil, plastics or biomass. As soon as the clinker leaves the kiln, it is cooled and stored in clinker silos.

Sustainability and the cement industry Grinding A study by the WBCSD’s Cement Sustainability Gypsum, anhydrite and, at times, other grinding ad- Initiative (CSI) has identified the following areas as ditives such as granulated blast-furnace slag or fly ash, the main challenges facing cement manufacturers: are added to the clinker during the grinding process ! Climate protection in cement mills. ! Fuels and materials ! Employee health and safety Loading, packing and shipping ! Emissions In mature markets, cement is supplied to our cus- ! Local impacts tomers mainly in bulk form by truck, train or ship. In ! Reporting and communication growth markets a big portion is delivered in bags.

For these aspects we set targets and report about measures and progress. Waste and water consumption are not included in the topic issues of CSI, although we started to ascertain specific data and set reduction targets regularly also in these fields in 2004. We will publish this data in our Sustainability Report 2006/2007. i www.wbcsd.org Environment and resources 27

Quarries stand at the beginning of a long chain of creating added value. Without quarrying of limestone, no cement can be produced. We therefore are committed to treat natural resources responsibly.

Quarrying raw material Crushing Grinding and drying

Iron ore and Raw meal silica sand silos

Quarry Crusher Blending bed Vertical roller mill

Cement silos Palletiser

Cyclone preheater

Clinker silos slag, gypsum, limestone Calciner

Preheater kiln

Ball mill Clinker cooler

Burning Grinding Loading, packing and shipping 28 Sustainability Report 2004/2005

Promoting climate protection

The cement industry is responsible for around 5 % of global man-made carbon dioxide emissions. Half of this is attributable to the calcination of limestone in clinker production, 40 % to the fuels used in clinker burning and 5 % each to electrical energy and shipping. Climate protection is one of the main goals of our sustainability strategy.

Development of absolute Our goal: reducing carbon dioxide emissions CO2 emissions The economic progress in many countries is accompa- The Kyoto Protocol – A global action plan (Mio t CO2 ) nied by an increase in construction activity and cement against the greenhouse effect consumption. We would like to contribute towards In 1997, the majority of the community of nations 45,9 45,2 43,0 41,9 39,0 37,4 39,4 37,9 39,6 38,2 50 the development of these countries while at the same came to an agreement, in the Kyoto Protocol, to

40 time ensuring that adverse effects on the climate are reduce emissions of climate-hazardous material. minimised. The main greenhouse gas in cement pro- These nations subsequently agreed on emissions 30 duction is carbon dioxide (CO2). Since 2002, we have trading as a political measure and are entitled to 20 assessed CO2 emissions across the whole Group in a limited allocation of emissions allowances. The 10 accordance with the Carbon Dioxide Protocol of the trading can take place between companies of the 0 World Business Council for Sustainable Development, included industries. The next step is to allow in- which is implemented in all plants. vestments for climate protection in developing 1990 2000 2002 2003 2004 i www.ghgprotocol.org countries or countries in transition to be credited gross net to the investor. This is referred to as Joint Imple- We have set ourselves the goal of reducing the specific mentation or Clean Development Mechanisms. net carbon dioxide emissions per tonne of cement by The emissions trading in the EU already com- Development of specific

CO2 emissions 15 % across the Group between 1990 and 2010. The menced in January 2005. (kg CO2 /t cement) reduction target relates to all fully or proportionately i www.unfccc.int/2860.php consolidated cement companies in our Group, includ- 796 785 785 765 740 711 734 706 723 698 ing all future acquisitions. 800 Net and gross emissions have to be distinguished. ! Wherever possible, we are replacing clinker in ce- 600 Gross-emissions comprise all direct emissions, net emis- ment with other materials. This allows us to reduce sions are direct emissions less the savings that are the energy-intensive production of the intermedi- 400 achieved, for instance, through the use of alternative ate product clinker and to fulfill the corresponding

200 fuels and which are assessed to be CO2 neutral. quality standards at the same time. ! Fossil fuels such as coal or oil are increasingly re- 0 Our climate protection measures placed by alternative fuels. 1990 2000 2002 2003 2004 To reduce carbon dioxide emissions we take the fol- gross lowing steps: net ! We are continuously modernising our production facilities in order to guarantee the highest possible efficiency of the cement production. Environment and resources 29

500,000 tonnes

Reduction of CO2 emissions over the next 10 years at Indocement

Heading for success Our activities are bearing fruit: In 2004, specific gross First CDM project in Indonesia

CO2 emissions were at a level of 723 kg per tonne of Indocement, HeidelbergCement’s Indonesian subsidiary, began preparations for cement. Despite higher clinker production in Eastern a Clean Development Mechanism (CDM) project in 2002. The methodology Europe, Asia, and North America absolute gross emis- for calculating the emission reductions was approved by the United Nations in sions at 39.6 million tonnes were only slightly above February 2005. As first Indonesian cement company Indocement will introduce previous year’s level. Compared with the 1990 base low-clinker cements. In addition, the company will increase the use of alterna- year, we have already achieved a reduction of 73 kg tive fuels, in particular rice husks and residues from palm oil production. The

CO2 per tonne of cement. CO2 emissions from bio- alternative fuels replace fossil fuels like coal. Indocement will eliminate more mass amounted to 596,000 tonnes in 2004. Indirect than 500,000 tonnes of CO2 emissions per year over the next 10 years.

CO2 emissions from externally purchased electrical en- It took around two years to prepare the project in close collaboration with ergy totalled to 5.6 million tonnes. According to our the World Bank. self-commitment we also establish net CO2 emissions which reduced by 11 % in the reference period. 30 Sustainability Report 2004/2005

Saving raw materials and using alternatives

Fair distribution of natural resources across generations is one of the funda- mental goals of sustainable development. The increasing economic progress in many countries compels us to use the resources intelligently.

13,9 %

Share of alternative fuels of the total energy consumption across the Group

Plastic chips – one of the most commonly used alternative fuel within HeidelbergCement to replace fossil fuels. Environment and resources 31

Reducing the proportion of clinker Wherever possible, we are replacing clinker with ce- Main alternative fuels mentitious additives such as blast-furnace slag and fly ash. We have set ourselves the goal of reducing the biomass percentage of clinker in cement across the Group to used tyres 80 % by 2010. We already achieved a clinker content of 83 % in 2004.

Using alternative fuels Within HeidelbergCement, there are numerous activities which focus on replacing fossil fuels with alternative fuels. The choice of materials depends among other things on their availability and their calorific plastic solvents value. In addition, we pay attention to the chemical waste oil composition to avoid harmful emissions and disadvan- tages to the product’s environmental impacts. Selection and use of alternative fuels are orientated towards guidelines developed by the Cement Sustainability specific industrial waste with paper, cardboard or tex- Initative (CSI) under the auspices of the WBCSD. tiles. Also of increasing interest for us is the use of bio- The first alternative fuels used in cement production mass. This includes, for example, animal meal, which are tyres and waste oil. The most commonly used alter- has been used across Europe since the BSE crisis. native fuel is plastic, often as a mixture of production- Wood and, increasingly, sewage sludge, nutshells and rice husks, as well as other locally available materials are also used for energy. Anneliese Zementwerke AG/Germany - The use of alternative fuels was 13.2 % of the to- ahead in using alternative fuels tal energy consumption across the Group in 2003 and At Ennigerloh plant of Anneliese Zementwerke AG increased to 13.9 % in 2004. The share of biomass the proportion of alternative fuels is 66 %, at amounted to 3.2 % in 2004. Paderborn plant 78 %. At Ennigerloh we particularly use tyres, plastic and paper residues as well Reducing water consumption as animal meal, at Paderborn predominantly tyres, In 2004, we recorded the water consumption figures animal meal and grease, and sewage sludge are across the Group for the first time. Water is used for used. For replacing primary fuels to this high ex- cooling, as process water, to reduce dust in quarries tent nearly 8 million Euro have been invested at and as drinking water, for example. A preliminary Ennigerloh since 1999 and nearly 4 million Euro at analysis of the specific water consumption of 50 re- Paderborn since 2000. The plants built storage porting plants clearly showed that the consumption equipment, homogenization and dosing installa- levels vary over a wide range. This is due to the differ- tions for different alternative fuels. Our installations ent technology used, as well as the inconsistent record- meet the emission limits of the EU incineration of ing methods. Our goal is therefore to obtain reliable waste. data for all our plants, in order to take targeted reduction measures. 32 Sustainability Report 2004/2005

Reducing emissions

Many different sources of emissions exist in cement manufacturing. There is no such thing as an emission-free plant, but by using modern filter technologies, innovative production methods and process-integrated environmental protection, we have been able to substantially reduce the adverse effects on people and the environment.

Mercury emissions Development of dust, NOx and SOx emissions ! Sulphur oxides (SOX) can be formed during the

Spezific Emissions Absolute clinker production process. Sulphur is often intro- 35 (g/t clinker)a Emissions (t/a)b duced into the kiln with raw material. Certain sul- 30 2003 2004 2004 phur compounds in the raw material can lead to 25 Dust 210 160 8,300 20 increased emissions of SOX. We reduced the SOX NOx 1,620 1,730 90,000 15 emissions from 840 grammes per tonne of clinker SOx 840 770 40,000 10 in 2003 to 770 grammes per tonne of clinker in

5 a To achieve data comparability the emission values for dust, NOx 2004.

Number of measurements 0 and SOx of new consolidated plants were considered retrospec- ! Heavy Metal compounds occur in raw materials tively. > 0.1 and fuels. Non-volatile heavy metals are incorpo- < 0.05 b The absolute emissions are extrapolated using the available spe- 0.05 – 0.1 cific emissions factor of the year 2004 for all plants. rated into the clinker, volatile bind to dust and are gram Hg per tonne of clinker filtered out to a large extent in dedusting facilities. In 2004, we increasingly checked the mercury emis- ! Dust arises as part of the quarrying process, as well sions of our plants. We will further intensify this Emissions of as during grinding, burning, filling, loading and process. Dioxines und Furans shipping. Modern electric precipitators and fabric ! Dioxines and Furans. Sufficient long periods at high filters are used in our plants to clean dust-bearing temperatures and excess oxygen guarantee the 35 30 exhaust air. In 2004, emission could be consider- reliable destruction of the toxic compounds. To 25 ably reduced relating to one tonne of clinker. Sep- minimize the possibility of dioxin formation in the 20 arated dust – generally called cement kiln dust exhaust gas it is important that the kiln gases are 15 (CKD) – is brought back to the process as far as cooled as quickly as possible through this critical 10 possible. Despite increased clinker production, we temperature range. It is our target, to check all of 5 were able to reduce the quantity of dust to be de- our kilns on dioxin and furan emissions. Number of measurements 0 posited from 158,000 in 2003 to 134,000 tonnes ! Noise is produced in quarries and plants by power

> 0.5 < 0.05 in 2004. units, machines and vehicles. Noise abatement is 0,1 – 0.5 0.05 – 0.1 ! Nitrogen oxides (NOX) are formed during clinker already taken into account in the design of our µg TEQ per tonne of clinker production at the high temperature (2000 °C) re- plants. Vibrations mainly occur during the quarry- TEQ: toxity equivalent quired to process the raw materials. We are reducing of raw materials and are reduced by means of

ing the NOX emissions by optimising the process special blasting techniques. continuously. In some plants, we use the Selective Non Catalytic Reduction (SNCR) process. From

2003 to 2004, the specific NOX emissions slightly increased from 1,620 to 1,730 grammes per tonne of clinker. Environment and resources 33

Our goal: Continuous improvement Dust, nitrogen oxides and sulphur oxides are beside Best available technology in

CO2 the main emissions in the clinker production Edmonton, Canada process. To monitor our progress in the reduction of At Lehigh Inland Cement in Edmonton, Canada these emissions we use key performance indicators the filter system of the kiln was replaced by a new according to the “Guidelines for Emission Monitoring bag house system. Comparable to other filter proj- and Reporting in the Cement Industry” agreed in the ects we rely on the best available technology. The WBCSD. We also examine the emissions of dioxins and modification was finished within only 34 days. furans, heavy metals and volatile organic compounds The new filter works like a huge vacuum cleaner (VOCs). In 2004, we produced 36 % of our clinker in bag. Altogether, 11,000 square metres of filter kilns where all components mentioned in theses guide- surface were installed. Lehigh Inland invested lines are controlled. For 45% of our clinker production, EUR 7 million in the system – with demonstrable we continuously measured dust, NOX and SOX emis- results: The dust emissions could be reduced by sions. We are modernising our facilities continuously to more than 90 %. reduce emissions. We are continuing to develop our know-how across the Group, especially through expert groups.

By using modern filter technology, the specific dust emissions per tonne of clinker reduced to 160 grammes in 2004. 34 Sustainability Report 2004/2005

Reducing local environmental impacts

Raw material mining involves a certain degree of intervention in the landscape and the use of mineral resources that have built up over millions of years. Because we want the growth of our company to go hand in hand with sustainable development, using raw materials responsibly is our foremost priority.

Right from the beginning: recultivation and renaturalization When choosing the areas, we make meticulous plans for the proposed quarrying and subsequent land use. We often work closely with scientists from universities and conservationists. Our annual balance sheet for 2003 included provisions of EUR 142.8 million for the recultivation of former quarries, in 2004 EUR 138.4 million. We either prepare the areas to be used for agriculture or forestry, or make them available for nature conservation. Our quarries and aggregate pits enrich the landscape and create habitats for various species of animals and plants that are becoming increasingly marginalised, particularly in modern agricultural landscapes. In the CSI/WBCSD, we have made a commitment to draw up plans for subsequent use for all locations until 2006. In the future, we also want to Renaturalised quarries offer habitats for numerous animals and plants. develop plans to promote biodiversity at our quarrying areas. Castle Cement in the United Kingdom is already leading the way, with Biodiversity Action Plans. After quarrying: examples from our production sites For instance, the former quarry at Górazdze/Poland has been left to natural succession and now provides Recultivation a diverse habitat with lakes, bushes and rock walls. In By active measures used quarries are converted the former quarry at Malomerice in the Czech Repub- for agriculture, forestry or leisure activities. lic, nature trails were created. The grounds are managed together with a local environmental group. Lehigh Renaturalization Inland in Canada is supervising a waterbird biotope Native plants and animals start colonising man- in a recultivated clay pit together with the Canadian made sites without any human contribution National Railway and Ducks Unlimited. Parts of the (natural succession). As a result, a diverse commu- Gerhausen/Beiningen quarry near Schelkingen in nity of living creatures native to the location can Germany have been left to natural succession: Today, emerge and develop – hereby former quarries offer small ponds provide habitats for rare dragonflies, am- habitats for rare species of plants and animals. phibians and birds, and part of the mining area is available to scientists for systematic long-term studies. Environment and resources 35

EUR 138.4 million

Provisions in 2004 for the recultivation of former quarries

Until 2006, HeidelbergCement will develop plans for subsequent use for all quarries.

Expert groups for best practice and good cooperation with nature protection organi- In the “Raw Materials Resources and Mining” expert sations and environmental authorities, in order to group, on-site persons in charge, geologists and biol- reach subject-specific solutions. If necessary, we set ogists meet regularly to discuss best practice standards. up alternative areas to allow the biotopes network to The expert group also deals with the European Union’s be established. Natura 2000 directive, which aims to create an inter- linked network of biotopes across Europe. Our activities support this goal: For quarries in Natura 2000 areas, we rely on moderation of the planning process

Castle Cement: Promoting biodiversity, creating habitats During the planning phase for the expansion of the Ketton quarry in the United Kingdom, ecological studies showed that the location was favourable for the development of bat colonies. Castle Cement therefore created an artificial, 63-metre-long bat cavern in the vicinity of the quarry. The tunnel was constructed using limestone blocks from the quarry and covered with a three-metre-thick protective layer made from limestone, clay and soil. Various species of bat have now colonized the new site. Castle Cement has also created new habitats for the flora. In the Ribblesdale and Ketton quarries, seed-rich grass cuttings from the surrounding area were introduced onto the recultivated land, specifically encouraging limestone grasslands. This type of grassland, rich in flowers and insects, has become rare in the United Kingdom as a result of the in- tensification of agriculture. Castle Cement’s former quarrying areas are managed by a local nature conservation organisation.

Employees and society 37

Employees and society

We take our social responsibility at our locations seriously. Respect for our employees and their representatives form the basis for all cooperation. We support our employees by helping them in their personal and professional development by first-class training. However, our responsibility extends even beyond this: The Group benefits from the various local communities and we want these communities to benefit from the Group, too. As an international Group, we respect national identities and cultures. 38 Sustainability Report 2004/2005

Our employees

In 2004, HeidelbergCement employed an average of 42,062 (previous year: 37,774) members of staff in the various business lines, 25,542 of them in the cement business line. From 2003 to 2004 the number of employees in the cement business line increased by 4,265. This is mainly due to the consolidation of Indocement and proportionately consolidation of our Chinese participation China Century Cement.

Securing jobs Employees in the cement business line by regions Despite an increasing total number of employees, we 2003 2004 have cut jobs in mature markets as a result of the Central Europe West 2,166 1,924 low level of construction activity. We also have to cut Western Europe 2,671 2,595 jobs in growth markets, as many plants are still in the Northern Europe 2,540 2,388 process of increasing productivity. As our markets are Central Europe East 7,995 6,508 North America 2,070 2,034 regionally oriented, we do not intend to move our ac- Africa-Asia-Turkey 3,835 10,093 tivities to cheaper production locations. Whenever we Total 21,277 25,542 cut jobs for productivity reasons, we secure the existence of the plants and the remaining qualified jobs. We try to be as socially responsible as possible in re- Qualifications for the future ducing personnel and, together with unions and em- We see helping our employees gain qualifications as a ployee representatives, aim to find suitable solutions. core personnel development task: Qualified employees form one of the main pillars of our Group. There- fore, we offer Group-wide programs such as the In- Outplacement – Supporting employees ternational Management Candidate Program (IMCP) in finding new employment for junior employees with management potential Due to the unprofitability of the Polish cement and the Senior Management Development Program plant at Strzelce Opolskie, we decided to discon- (SMDP) for experienced executives. In all business tinue production at the end of 2003. 52 of the units, and sometimes at the plant level, we also pro- 190 employees were released in 2004, the remain- vide advanced training in leadership and management, ing 138 until the end of March 2005. An outplace- business administration, sales, cement production, ment program helped them to move into new quality management, IT and foreign languages. jobs. The plant set up the Occupational Adapta- tion Center (OAC), a transition company, for this Attractive, performance-oriented remuneration purpose. The OAC supports professional reorien- systems tation and offers various training courses. The ad- Our remuneration systems are based on performance visors look for new jobs in the region and teach and results. In the future, we aim to make even more business start-up skills. The activities of the OAC consistent use of the principle of target agreement in are bearing fruit: From the 52 employees which order to achieve our goals. We will create attractive were made redundant in 2004, 43 contacted the variable remuneration systems as incentives for our OAC. By the end of 2004, 33 had found a new employees to contribute to the continuing success of workplace. our Group. Employees and society 39

Health and safety For a long time, we have placed a high value on health and safety, supporting it with a variety of training measures. Many of our plants have developed integrated or independent management systems for health and safety. Within the WBCSD, in the “Health and Safety” working group, we established a guideline for uniform collection of health and safety data across the industry in 2004 and, on this basis, collected uniform accident data for 2003 for the first time. Unfortunately, there were three fatalities (two Heidel- bergCement employees, one contractor) in 2003. In 2004, this figure increased to eight, therefrom five HeidelbergCement employees. We recognise that we must be more active in the area of health and safety. We have therefore set up an expert group to tackle We will continue to further develop our management systems for health and safety. this problem on a Group-wide basis. In the future, we want to focus on including our subcontractors more 2003 2004 extensively in our efforts for greater health and safety. Frequency rate a 10,5 8,1 Severity rate b 281 167 c Health programs Fatality rate 1,1 2,4

In a number of plants, our employees can take part in a Number of Lost Time Injuries of own employees with a minimum health programs. For instance, Indocement offers a of one lost day per 1,000,000 worked hours b “Healthy Living” program, as well as seminars on Number of lost working days due to injuries of own employees per 1,000,000 worked hours the subject of AIDS. We are also running campaigns c Number of fatalities of own employees per 10,000 employees to educate people about AIDS in Gabon. In Ghana, there are advisors on hand, and our plant in Tanzania provides comprehensive health programs for employees and their families.

Health and safety in Turkey With its two locations, Çanakkale and Büyükçekmece, Akçansa is one of the leading cement manufacturers in Turkey. In addition to the quality and environmental management system, the company started setting up a management system for employee health and safety, in accordance with the internationally recognised standard OHSAS 18001, in August 2003. Since then, more than 3,600 risk analyses have been carried out and more than 500 people have received training in the Çanakkale plant alone. Besides training its 280 employees, particular attention has been placed on including subcontractors. Training subjects were awareness, first aid, analyses of industrial accidents in 2003, and safety training. In spring 2004, the British Standard Institute (BSI) Eurasia confirmed the conforming of both plant’ management systems with OHSAS 18001. Thereby, Akçansa is the first OHSAS 18001-certified company in the Turkish Cement Manufacturers Asso- ciation (TCMA). 40 Sustainability Report 2004/2005

Community involvement

Our principle is that local employees are responsible for on-site management and local suppliers and service providers work for us, ensuring that our economic activities contribute to providing added value at our locations. As corporate citizen we act locally and in doing so strengthen our locations.

The HeidelbergCement Africa Academy In 2002, we founded the HeidelbergCement Africa Academy, in order to specifically promote local management on the African continent. Participants in the two-year program are junior African employees with management qualities. The first-year- group completed a total of four modules on leadership and management and then spent a few months working in other African subsidiaries, in order to gain leadership experience and expand their intercultural capabilities. We are now seeing Economic impetus for our locations the first fruits of this program. One participant Our cement plants are mostly headed by local staff from Ghana is currently working as a controller for and each plant employs around 300 local suppliers or the Group in Heidelberg and will later return to service providers. With wages, investments and our Africa in order to incorporate his experiences there purchasing volume, as well as the taxes we pay lo- in a more advanced position. cally, we provide impetus for economic development at our locations in developing markets, and help to stabilise the mature markets.

Community involvement ! In Central Europe West, we are committed to im- The examples for local commitment are as numerous proving job market opportunities for young people. as the cultures and as diverse as the communities at One example is the project Cooperation between our locations. Therefore, we can only illustrate a hand- Industry and Schools (KIS – Kooperation Industrie ful of our activities: und Schule). Together with secondary schools ! In Northern Europe, our Swedish subsidiary Ce- (Gymnasien), we offer practical training modules and menta is the largest private sponsor for the preser- series of lectures on topics such as industrialisation vation of the agricultural landscape in the South of or globalisation. In Heidelberg we are also one of the island of Öland. In 2004, the region was des- the main sponsors of the prestigious “Heidelberger ignated a UNESCO world heritage site. Frühling” music festival. ! In Western Europe, Castle Cement is the main spon- ! In North America, our commitments range from do- sor of the National Insect Week, which was intiti- nations for social, cultural and sporting activities to ated by the Royal Entomological Society. The im- active support for educational institutions or com- portance of insects for the ecosystem is presented munity initiatives. For instance, the plant manager to the public by various events, exhibitions, and a at HeidelbergCement’s plant in Waco, Texas, is website. i www.nationalinsectweek.co.uk Employees and society 41

involved in a working group for community development with other industry managers. In addition, we support the construction of public buildings with building materials and workforce free of charge. ! In Central Europe East, activities focus on supporting the socially disadvantaged and promoting science. Examples include the orphanage in Skoro- gosczc in Poland or the Mendel Museum in the Czech Republic: With the financial support of Ceskomoravsky´ Cement, the abbey and gardens in Brno where Gregor Mendel carried out his famous experiments in plant breeding have been turned

into a centre for scientific studies. In our project cooperation between Industry and Schools, pupils of the secondary school (Gymnasium) i www.mendel-museum.org in Walldorf near Heidelberg get to know the various uses of cement. ! In the Africa-Asia-Turkey region, we are concen- trating on promoting infrastructure for education However, social responsibility is not merely left to our and health. One example of this is the Ghacem locations. We are also active at Group level: Our ef- Cement Foundation, which provides cement for forts include short-term donation appeals for the public building such as schools, clinics or hospitals Tsunami victims, as well as longer-term cooperation. in Ghana. Indocement has developed Community One example is our work with CARE International. Development Programs for Indonesia, to support Since 2001, we have supported the activities of the social institutions and services. The activities include aid organisation to secure the supply of water in Africa. education, health promotion and social as well as The donations are used for well-building projects in ecological improvement. Niger.

Górazdze supports among others the Philharmonic Chamber Orchestra of Oppeln, here at a performance in Brussels. 42 Sustainability Report 2004/2005

Case Study: Impetus for Górazdze location

The Polish cement company Górazdze Cement S.A. is one of many acquisitions in recent years. Our goal has always been to make Górazdze one of the most modern and efficient cement plants in Europe. With high social and environmental standards, and economic efficiency, we intend to contribute to sustainable development in the region.

EUR 150 million

Turnover in 2004

The HeidelbergCement Górazdze location in Poland on its way to becoming one of the most modern and efficient plants in Europe.

Cement production in Górazdze began in 1977, ini- per year. In 2004, turnover amounted to 695 million tially as a state-owned unit, becoming privatised in Polish Zloty (EUR 150 million). 1991. Górazdze Cement S.A. has been part of our However, the investments were only profitable be- Group since 1993. cause our production was concentrated at Górazdze. Even before the modernisation, the production costs at Profitability – foundation for ecological and social the Strzelce Opolskie plant were substantially higher progress than in Górazdze. As a result, production was initially Immediately after acquiring the plants, Heidelberg- cut back and finally discontinued in 2005. We support Cement began modernisation measures. Between 2001 the local authorities in converting the site into an in- and 2004 alone, we invested 249 million Polish Zloty dustrial park. The first Polish investor has already been (EUR 61 million), primarily in clinker burning technol- found. This is expected to create 50 new jobs in the ogy at the Górazdze plant. This increased the plant’s region. total capacity by 35 % to 2.8 million tonnes of clinker Employees and society 43

Creating added value is English. For this reason, we provide ongoing English In many ways, Górazdze contributes to creating value language lessons for our employees. locally. With 960 employees, we are one of the biggest They also receive a number of voluntary social ben- employers in the region. In 2004, we paid 55 million efits. For example, we offer a health care program Polish Zloty (EUR 13.5 million) in tax and social security and support them in building or purchasing their own contributions. In addition, we are working in cooper- home through low-interest loans. ation with 86 local suppliers, from whom we obtain 97 % of all the goods and services purchased. 90 % of the equipment and installations for the plant mod- Cement industry in Poland ernisation come from Polish suppliers. The Polish cement industry was one of the first fully privatised industry sectors in the country. All Increasing our environmental sustainability the cement plants in Poland now belong to inter- By modernising the plant, we significantly reduced en- national groups. The economic environment in ergy consumption while increasing capacities. Today, Poland has been characterised by weak construc- we use 10 % less electricity and 18 % less heat en- tion activity in recent years, with no recovery in ergy than before the modernisation. Currently using demand until 2004. The proportion of the gross 81 kilowatt-hours per tonne of cement, Górazdze is domestic product resulting from the construction one of the most energy-efficient cement plants in the industry fell from 13.3 % in 2000 to 10 % in world, and is substantially below the Group average 2003. The increasing productivity of cement of 112 kilowatt-hours. At the same time, we have in- plants and cautious market development led to a creased the proportion of alternative fuels since 1998 sharp decline in the number of people employed from 2.6 to 10.5 %, which brings us closer to the cur- in the cement industry. From 8,300 people in rent Group value of 14 %. We aim to increase this pro- 2000, this number dropped to 4,900 in 2003. portion to 25 % in 2006. We are also in a leading position in Poland with our recultivation activities. Since 1984, 270 hectares of land have been reaforested. In 2000, we introduced an environmental management system in accordance with ISO 14001. We also have a health and safety management system in accordance with OHSAS 18001.

Offering social benefits We are interested in long-term employment relationships, because they secure vital expertise. Nevertheless, we had to make a total of 190 redundancies as a result of the closure of the Strzelce Opolskie plant. How- ever, we accept our responsibility to the employees involved and support them in their reintegration into the job market (see p. 38). As part of an international Group, we offer our employees numerous opportunities for training, to help them obtain qualifications in line with rising demands. Courses are held in the fields of technology, finance, sales and quality management. The Group language 44 Sustainability Report 2004/2005

In dialogue: Bernd Scheifele and Prof. Klaus Töpfer

Dr. Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement AG in dialogue with Prof. Dr. Klaus Töpfer, Executive Director of the United Nations Environment Program (UNEP), the United Nations’ environmental organisation at the Sustainable Investment Conference 2005 in Frankfurt.

Scheifele: Professor Töpfer, your commitment to eco- most important contribution that businesses can make logical sustainability and the interests of developing to sustainable development is to act economically and countries means that you have a full schedule with achieve profits? talks all over the world. Töpfer: I agree – businesses are not charities, and Töpfer: Dialogue with industry is important to me. The rightly so. The creation of value is central to their activ- value of cooperation between businesses and society ities. Businesses are the foundation of prosperity and for sustainable development was clear even before jobs. However, there are many different ways in which the World Summit in Johannesburg. The key phrase is they can positively influence economic, social and eco- public-private partnership, which promises consider- logical development. Companies that appoint local able potential for reaching solutions. suppliers or support local infrastructure contribute to social development at their locations. Companies that Scheifele: A key phrase that is rather hard to grasp: invest in efficient technologies and high environmen- Public-private partnership sounds like additional ex- tal standards help to improve the environment. But pense for industry. We donated money for the Tsunami it’s not a question of morals: It’s more about creating victims and our locations support numerous cultural favourable conditions at their locations, as well as com- and social initiatives. But these payments are hard to petitive advantages. justify when we are battling to maintain jobs in stag- nating markets and need to continue on the path to Scheifele: We also see the market and economy as economic stabilisation in growth markets. Surely the reasons to promote sustainable development. This is In dialogue 45

why we are investing in growth markets in the first quires some new ways of thinking: Instead of standard instance. In recent years, some of our largest invest- solutions, they need innovative products and services ments have been our plants in Indonesia and China. geared towards the living conditions in poor countries. The economy is booming there. Of course, this also In this respect, water technology is a good example. means that there are growing opportunities for innovative environmental protection in these markets. Scheifele: An interesting idea. Even now, Heidelberg- Cement is one of the few international cement com- Töpfer: The upturn in Asia and Eastern Europe is panies that is active in Africa. We have locations in ten opening up significant opportunities as regards the en- African countries. In Africa, we are faced with totally vironment. With increasing prosperity, more funds can different challenges. One of these is supplying clean be invested in environmental protection, and environ- drinking water, even in countries with high water avail- mental pollution caused due to poverty, such as cutting ability. One of our local social projects deals with this down forests for energy, is decreasing. This is why I issue, in cooperation with Care International. emphasise time and again the close link between development and environmental protection. However, at the Töpfer: Water supply is one of our top-priority tasks. same time, the higher level of consumption and pro- 50 % of people in developing countries have insuffi- duction leads to increased consumption of resources. cient access to clean water, and this proportion will We are already seeing shortages on the international increase even further as a result of the growing global steel market and are having the discussion about the population and climate change. Water will be the root “oil endgame”, and these are more than simply pes- of many conflicts in the 21st century. So we need to simistic scenarios of the future proposed by environ- invest in better, efficient use of water, and this will re- mental activists. We’re talking about hard facts for in- quire closer cooperation between businesses and public dustry. Therefore, investments in higher energy effi- authorities. There are some initiatives to launch pub- ciency and in new and renewable forms of energy are lic-private partnerships to deal with the issue of water. absolutely essential for the future. One example is the World Economic Forum’s Water Initiative, with which the World Bank, IUCN and UNEP Scheifele: As a Group that uses a great deal of en- are involved, which brings us back to the start of our ergy, these issues are fundamentally important to us. discussion … By 2010, we want to increase the proportion of alternative fuels to 30 %, in an effort to become more in- Scheifele: Professor Töpfer, I look forward to contin- dependent of the energy markets. In addition, we are uing the dialogue on this topic. taking countermeasures against the increasing energy consumption worldwide. Sustainability is all about be- ing cost-effective in the long run. Nevertheless, I can also see that there are limits to this approach: The poorest countries in the world find it hard to attract investment and are therefore at a disadvantage.

Töpfer: That’s right. Some countries are becoming increasingly cut off from the world’s economic development. This includes, for example, sub-Saharan Africa. This is one of the main challenges for cooperation towards development. But businesses can do something about it – and not just for altruistic reasons. “Doing Business with the Poor”, an initiative launched by the WBCSD, has shown that these areas represent completely untapped markets. Businesses need to get their names established at an early stage. However, this re-

Partnership and dialogue 47

Partnership and dialogue

We see ourselves as a partner in the community. The basis for good relationships is open communication: We therefore maintain a transparent information policy and endeavour to provide accurate information in a responsible manner. We also strive for lively and constructive debate: both internationally and at a local level. 48 Sustainability Report 2004/2005

Taking the initiative

We have joined forces with partners from business and the community, both at Group level and in the regions, to promote best practice standards for increased sustainability in the cement industry. In the world of politics, we ad- vocate workable sustainability goals. This requires a close exchange of ideas with our stakeholders.

Worldwide initiative for sustainability in the cement Getting involved – shaping environmental policy industry Stakeholder participation is not just a principle for sus- In 1999, ten leading cement companies worldwide tainable corporate governance, but also for a sustain- joined forces under the auspices of the World Business able development policy. We want to make our con- Council for Sustainable Development (WBCSD) in the tribution and are involved at both the international and Cement Sustainability Initiative. In March 2002, the national level: companies decided on an agenda for action with six ! We are personally and financially committed to key areas. Besides the environmental themes of cli- CEMBUREAU, the European cement industry asso- mate protection, the use of fuels and raw materials, ciation in Brussels. We want to promote a work- emissions and local impacts on the environment, the able industrial policy that is adapted to both the themes include employee health and safety, as well as simplification principle and sustainable develop- reporting and communication. A working group has ment. In principle, we welcome emissions trading been appointed for each area, to produce Good Prac- as economically oriented instrument of climate pro- tice Standards and common protocols for reporting. tection, and at the same time support the com- HeidelbergCement is active in all six working groups petitive of the European cement industry. Further and leads the working group on emission monitoring issues we dealt with at CEMBUREAU in 2003 and and reporting. The initiative has given us impetus in all 2004 were health and safety, chemicals policy and many ways. integrated product policy. i www.wbcsd.org i www.cembureau.be ! At the national level, we are involved in econ- Initiative for Sustainable Development in the German sense – the Forum for Sustainable Development cement industry founded at the initiative of the Federation of Ger- In 2000, the social partners in the German cement in- man Industries (Bundesverband der Deutschen dustry made a shared commitment to sustainable de- Industrie – BDI). Here, 23 member companies work velopment. The initiative adopted the goals of incorpo- together to promote political conditions that allow rating the guidelines for sustainable development within sustainable innovations. econsense aims to bring companies, stimulating dialogue between social part- the interests of industry into the sustainable devel- ners and other stakeholders and communicating the opment debate through an open, constructive dia- concept of sustainable development to employees. The logue. In 2004, for example, HeidelbergCement, first stakeholder dialogue took place in Berlin in No- together with BASF and TetraPak, organised an vember 2003 and dealt with the themes of extraction event with the title “Eco-balances as signposts for of raw materials and nature conservation, sustainable companies focusing on sustainable business” un- site policy and perspectives on sustainable construction. der the umbrella of econsense. More dialogue events are to follow. i www.econsense.de i www.initiative-nachhaltigkeit.de Partnership and dialogue 49

In direct contact – dialogue and partnership at our locations Brevik Vel – a tradition in good communication Dialogue and partnership have special significance The cooperation between the action group Brevik at our locations, because there contact between the Vel (Good Brevik) and Norcem in Norway illus- plants and the local residents is most direct. Many trates how good communication can work: In examples within our Group have shown that openness 1980, Norcem made plans to use alternative fu- and communication with the citizens and their lobbies els. The population of Brevik responded alarming pays off. In order to increase transparency, we will to these plans and united to form an action continuously increase our reporting on sustainability. group. This dispute formed the start of a long- i www.heidelbergcement.com standing relationship between the residents and path: Environment!Environmental report the company. Today, the action group and Norcem representatives meet regularly two to four times a year. The members – virtually every third household in Brevik – are regularly supplied with information from the plant. This created a solid foundation of trust: In fact, the action group asked the government to allow Norcem to take over a waste treatment plant. Environmental groups were sceptical about a company recycling as well as using alternative fuels. However, the members of Brevik Vel felt the plant would oper- ate the facility safely.

Prospects 51

Prospects

Sustainable development cannot be achieved overnight. To get there, we need concrete goals and measures. That’s why we have drawn up our first agenda for sustainable development including a system for monitoring our success. 52 Sustainability Report 2004/2005

Goals and program

Chapter Page Targets and measures Status 2004/Implementation since Environ- Dead- mental Report 2002 line

Sustainable development management

Organisation 14 Expansion of our sustainable development manage- New " 2005 ment system: Forming of a Sustainability Council

Integration CSI 14 Integration of sustainable development criteria into Environmental protection, particu- # 2006/ decision-making processes in conformity with the larly climate protection, taken into ongoing Cement Sustainability Initiative (CSI) account in investment decisions

Environmental 14 Establishment of environmental management 80 % of cement production from $ 2006 management systems (EMS) at all our cement plants plants with EMS

Internal reporting 15 Expansion of our internal reporting on sustainabil- New " 2005/ ity concerning social and economical information ongoing

External reporting 49 Continuation of external reporting on our sus- Sustainability report 2004/ 2005 # 2006/ tainable development goals and achievements 2007 – via Internet – via Sustainability Report

Stakeholders 49 Increased stakeholder involvement New " ongoing

Knowledge 17 Investment in knowledge management: Further Access data on WOC # 2006 management expansion of the World of Cement (WOC) intra- – 700 users/month net, as well as formation and continuation of – 1,500 downloads/month Group-wide expert groups Targets: – 800 users/month – 2,000 downloads/month

Social

Responsibility for 38 Responsible dealings with personnel in stagnat- New " ongoing personnel ing or declining markets through socially accept- able solutions and reintegration support

Cultural diversity 40 Promotion of cultural diversity by implementing New " ongoing management programs for candidates worldwide

Health and safety 39 Implementation of the CSI guidelines on health New " and safety at our cement plants Improvement of reporting Data on health and safety in plants 2006/ and for suppliers compiled in a uni- ongoing form manner for the first time in 2003

Purchasing and 22 Extension of purchasing guidelines to include New " 2006 suppliers statements on dealing with suppliers and subcontractors as regards the environment, human rights and working standards Prospects 53

Chapter Page Targets and measures Status 2004/Implementation since Environ- Dead- mental Report 2002 line

Ecology

CSI guidelines 28 Implementation of the CSI guidelines in the areas New " 2006 – of climate protection, raw materials and fuels, 35 emissions and local impacts

28 Installation of a reporting system on the imple- New " 2006 mentation of the CSI guidelines

Climate protection 28 15 % reduction (base year: 1990) of our specific 11,1 % $ 2010

net CO2 emissions by – reducing the proportion of clinker in our cement to 80 % 83 % 2010 – further increasing the use of alternative fuels to 30 % 14 % 2010 – further reducing specific energy consumption to 3,500 kJ/kg clinker 3.600 kJ/kg 2010

Raw materials 30 Application of the CSI guideline on the use of New " 2006 and fuels raw materials and fuels Reporting on the use of raw materials and fuels

Emissions 32 Establishment of reduction targets for dust, New " 2006 nitrogen oxides and sulphur dioxide and regular progress reports

Local impacts 34 Development of plans for renaturalization and New " 2006 recultivation of our quarries Development of plans to promote biodiversity at our quarries

": New, no basis for comparison $: Improvement

$#: Decline #: No change 54 Sustainability Report 2004/2005

The GRI Content Index

This report is aligned with the Global Reporting Initia- GRI Name of indicator Page tive (GRI) Sustainability Reporting Guidelines of June 2002. The aim of the GRI is to standardise reporting internationally, and it has developed reporting princi- Vision and strategy ples and a set of indicators for this purpose. The guide- 1.1 Vision and strategy 10-11 lines and indicators were compiled in cooperation with 1.2 Statement from the CEO Introduction companies and numerous stakeholders.

Profile Greater transparency 2.1 Name i We want to support the efforts for increased compara- 2.2 Major products 4 bility between reports and have therefore matched the 2.3 Operational structure 6 facts and figures from our report to the GRI’s list of 2.4 Major divisions 4, 6 indicators in the GRI Content Index. This means that 2.5 Countries with locations 4, 6, iii-iv 2.6 Nature of ownership 21 interested readers can quickly find the desired informa- 2.7 Markets 4, 20 tion in the report. The index should also show to what 2.8 Scale of organisation 4, 6, 38 extent we have been able to use the GRI indicators. 2.9 Stakeholders 9, 49, 52 We have covered many of the indicators and items of 2.10 Contact person vi 2.11 Reporting period 4 information, while some were not relevant for us and 2.12 Date of most recent previous report Introduction, 52 others we could not ascertain. We will not be able to 2.13 Boundaries of report Introduction, 4 report on some topics until we have further expanded 2.14 Significant changes 4, 7, 38 our sustainable development management system. 2.15 Subsidiaries 29, 31, 35, 39, 49, iii-iv 2.16 Re-statements of information 32, 39 Core indicators and additional indicators 2.17 Decisions not to apply GRI principles The GRI makes a distinction between core indicators 2.18 Definitions used in report 28, 32, 33, 39 and additional indicators. Core indicators are relevant 2.22 Obtaining additional information 11, 23, 49 to all reporting companies, while additional indicators provide extra information. The additional indicators are Governance and management shown in italics in the GRI Content Index. 3.1 Governance structures 15, 16 i www.globalreporting.org/guidelines/2002.asp 3.3 Process for determining risks 16 3.4 Processes for overseeing risks 16 3.6 Organisational structure for economic, environmental and social policies 14-17 3.7 Mission and values 11 3.10 Stakeholder consultation 49, 52 3.11 Information generated by stakeholder consultations 48-49 3.12 Use of stakeholder information 49 3.13 Observance of precautionary principle 16 3.14 External agreements/initiatives 48-49 3.15 Memberships in associations 48-49 3.16 Supply chain management 21, 22, 23 3.17 Managing indirect impacts 22, 23 3.18 Relocations, changes in operations 4, 7, 38 3.19 Sustainability program 52-53 3.20 Certification of management systems 14, 52 Prospects 55

GRI Name of indicator Page GRI Name of indicator Page

Economic performance indicators EC 1 Net sales 7 HR14 Operating revenues redistributed EC 2 Geographic breakdown of markets 6 to local communities 42 EC 3 Cost of purchases 21, 22 SO1 Dealing with communities 11, 22, 40-41 EC 5 Payroll and benefits 21, 38, 41, 43 SO2 Bribery and corruption 22 EC 6 Distributions to providers of capital 21, 22 SO3 Political lobbying 48-49 EC 8 Total sum of all taxes paid 22 SO6 Court decisions regarding anti-trust EC 10 Donations to community and and monopoly regulations 20 civil society 40-41 PR2 Product information and labelling 23 EC 13 Indirect economic impacts 22, 42-43

Not relevant Environmental performance indicators 2.19, 3.2, EN9, EN12, EN13, HR6 EN1 Materials used 30-31 EN2 Waste materials used 30-31 Not known EN3 Direct energy use 31, 42 2.21, EC9, EN6, EN15, EN16, LA3, LA9 EN5 Total water use 31 EN7 Impacts on biodiversity 34-35 Not provided EN8 Greenhouse gas emissions 28-29 2.17, 2.20, 3.5, 3.8, 3.9, EC4, EC7, EN4, EN14, 2.21, LA10,

EN10 NOx, SOx and other air emissions 32-33 LA11, HR7, PR1, PR3 EN11 Total amount of waste 27 EN 17 Initiatives to use renewable energy sources/energy efficiency 28-29, 30-31 EN 26 Changes to natural habitats 34-35 EN 27 Programs for protecting ecosystems/species 34-35, 53

Social performance indicators LA1 Workforce 7, 38 LA2 Net employment creation 38 LA4 Information, consultation, negotiation with employees 15 LA5 Recording of occupational accidents/diseases 39 LA6 Health and safety committees 14 LA7 Injury rates etc. 39 LA8 Policies and programs on HIV/AIDS 39 LA 12 Employee benefits beyond those legally mandated 43 LA16 Support for continued employability 38 HR1 Dealing with human rights 11 HR3 Human rights within the supply chain 22, 52 HR4 Prevention of discrimination 40, 52 HR5 Freedom of association 15 56 Sustainability Report 2004/2005

Glossary

Bag house filter Modern filter technology to eliminate Greenhouse effect Warming of the Earth’s atmos- dust. Also called a fabric filter, the filter works rather phere due to the release of trace gases that affect the like a vacuum cleaner bag. climate, such as carbon dioxide, methane or chloro- fluorocarbons (CFCs) as a result of human activity. Blast furnace slag Fine-grained, glassy by product from steel production. It occurs when the molten slag Nitrogen oxides Released during combustion pro- is quenched in cold water. Additive for cement. cesses at high temperatures and converted into harmful low-level ozone through photochemical reactions Calcination Heat treatment process at over 800 °C, caused by the sun’s rays.

where CO2 is released from the limestone into CaCo3 burned lime (CaO). OHSAS 18001 – Occupational Health and Safety Assessment Series British management standard Cement Sustainability Initiative (CSI) Sustainable for systematic assessment of health and health and development initiative for the international cement safety within companies, accepted worldwide. industry: Association of leading cement companies worldwide to promote sustainable development under Selective Non Catalytic Reduction (SNCR) Process

the auspices of the ! WBCSD. for the reduction of nitrogen oxide (NOX). NOX emissions are reduced by means of the SNCR process, in Clinker Intermediate product in cement production which ammonia water is sprayed into the preheater and main component of most types of cement. By at temperatures of about 900 to 1,000 °C, convent-

burning from limestone, clay and marl at about ing nitrogen oxides into atmospheric nitrogen (N2

1,450 °C. and water vapor (H2O).

Dioxins and Furans Halogenated aromatic hydrocar- TEQ Summarized parameter of 17 dioxins and furans bons. Undesired, toxic and carcinogenic by-products to ascertain the toxicity of dioxins and furans. of combustion and production of chlorinated organic compounds. UN-Human Rights Convention Universal Declaration of Human Rights, adopted and proclaimed in 1948. Ecobalance Analysis of material and energy flows and their impact during the product’s life cycle. Volatile organic compounds (VOCs) Compounds that can sometimes have a directly damaging effect Electrostatic precipitator Modern filter technology to on humans and the environment (e.g. benzene). eliminate dust. The electrically charged dust particles Like ! nitrogen oxide, they are also preliminary sub- are deposited onto collector plates. stances for low-level ozone.

Fly ash Solid, particulate combustion residue from coal World Business Council for Sustainable Develop- power plants. Additive for cement. ment (WBCSD) Cooperation of more than 175 international companies building on the three pillars of Global Reporting Initiative (GRI) International inita- sustainable development: Economy, ecology and so- tive. The aim of the GRI is to standardise sustainabil- cial responsibility. ity reporting internationally. Preamble Strategic business regions

■ North America ■ Mediterranean region Canada, USA Turkey

Heidelberg, May 2005

Concept and realisation Group Communication HeidelbergCement, Heidelberg, Germany IFOK – Institut für Organisationskommunikation, Bensheim, Germany Studio Delhi, Konzept und Design, Mainz, Germany Koch Lichtsatz und Scan GmbH, Wiesbaden, Germany ColorDruck Leimen GmbH, Leimen, Germany

Photographs Photo archives HeidelbergCement, Heidelberg

Translation of Sustainability Report 2004/2005.

Further information is available on request from Group Communication. Kindly find this report and further information about HeidelbergCement on the Internet www.heidelbergcement.com

Contact Group Communication Phone: 0 62 21/481-227 Fax: 0 62 21/481-217 E-Mail: [email protected]

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Strategic business regions Inhaltsverzeichis 2 GROUP SUSTAINABILITY REPORT 2004/2005 BUILDING ON SUSTAINABILITY