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Sustainable development report 2007 VEOLIA ENVIRONNEMENT • SUSTAINABLE DEVELOPMENT REPORT 2007 REPORT DEVELOPMENT VEOLIA ENVIRONNEMENT • SUSTAINABLE

Veolia Environnement Sustainable development department 36-38, avenue Kléber 75116 Paris, France Tél.: +33 (0) 1 71 75 00 00

www.sustainable-development.veolia.com Couv Veolia-UKsr2 2/07/08 15:12 Page 2

Useful internet links Veolia Environnement’s sustainable This report was coordinated and produced development site within the Veolia Environnement sustainable Interview with Henri Proglio 2 www.sustainable-development.veolia.com development department by Yves Cabana, Veolia Environnement Fanny Arnaud, Muriel Aubay-Voisin, Opinion of the Independent Visiting Committee 4 www.veoliaenvironnement.com Laurène Chenevat, Pauline Danel, Veolia Environnement foundation Geneviève Férone, Carlos-Miguel Juri-Mejia, www.fondation.veolia.com Patrick Kerfriden, Cécilia Tejedor. Veolia Environnement institute www.institut.veolia.org Anticipating and adapting 8

Introducing new solutions 14

Building the sustainable city 22 Your opinion can help us do better, please send us your comments Inventing innovative services 24 By e-mail Sustainable Development Department – [email protected] or by post Veolia Environnement – Sustainable Development Department 36-38, avenue Kléber – 75116 Paris – France Phone: + 33 1 71750000 – Fax : + 33 1 71751000

We would particularly like to acknowledge the work done by everyone who has contributed to producing this report • Philippe Abraham • Anne Adamo • Guillaume Arama • Catherine Arfi • Claude Arnaud • Michel Avenas • Benoît Bardon • Pascale Barillot • Juan-Andres Bendezu-Zevallos • Claire Billon-Galland • Dominique Boizeau • Denis Chesseron • Jean-Pierre Combe • Gary Crawford • Jocelyne Dauphin • Bruno de Buzonnière• Dominique Delis • Fanny Demulier • Anne Dequecker-Cormont • Gervais Descamps • Jean-Jacques Dœblin • Atika Doukkali • Peggy Dufour • Edouard Dupont-Madinier • Laure Duquesne • Michel Dutang • Caroline Edant • Embedding our governance 28 Sonia Elliot • Émilie Félix • Jérôme Fière • Gérard Fries • Marie Gaillochet • Stéphanie Geisenberger • Émilie Gerbaud • Denis Givois • Émilie Gourmoux • Dominique Héron • Louis Herremans • Ghislaine Hierso • David Houdusse • Ludivine Houssin • Kevin Hurst • Moving forward with our stakeholders 32 Gérard Jeanpierre • Julien Juge • Franck Lacroix • Bérengère Lagraulet • Lucie Lambolez • Stéphanie Laruelle • Pauline Magnien • Michaël Mansuy • Dominique Masson • Céline Menain • Pierre-Alain Menant • Laurence Miller • André Mollon • Philippe Payen • Deploying responsible lobbying 36 Denise Perez-Ramirez • Clotilde Perraudin • Anne-Charlotte Porret • Bernard Portnoi • Emilie Pottier • Jean-Michel Quemerais • Jean-Phillippe Riehl • Mathilde Robert • Claire Rousselet • Amélie Rouvin • Bernard Saint-André • Stéphanie Sinelnikoff • Bernard Identifying and managing our risks 40 Thomas • Mathieu Tolian • Thierry Vandevelde • Joëlle Vautier • Robin Young We would also like to thank The Sustainable Development Visiting Committee: John Gummer • Philippe Lévêque • Karina Litvack • Rajendra Pachauri • Usha Rao-Monari • Ignacy Sachs • Jean-Michel Severino • Björn Stigson Sancroft Group : Sally Bell • Eugénie Mathieu Maps / Infographs Laura Margueritte • Cécile Marin • Agnès Stienne • Under the direction of Philippe Rekacewicz Interviews Christian Cochet • Bernard Harambillet – Chapter 17, paragraph 17.2 for social information – Chapter 6, paragraph 6.3.3 for environmental information. Photo credits Veolia Environnement photo library: Christophe Majani d’Inguimbert, Antoine Muller, Georges Bosio • Veolia Énergie-Dalkia : Bucheon • Muriel Aubay-Voisin • Gettyimages • Photodisc Conception and Design avantgarde 014574 6161, particularly Florence Villatte Data required under the French New Economic Regulations Act is provided in the 2007 Reference Document (Document de Référence): 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 1

Ginkgo biloba

The ginkgo biloba is the last descendent of a family of trees that flourished across much of the planet over 200 million years ago. The only remaining wild-growing population is to be found in Eastern China. Highly resistant to pollution, insects and disease, this tree is often used in urban replanting programs. It is also thought to have curative powers in preventing memory loss. Veolia Environnement has chosen the ginkgo as a symbol of the durability of its sustainable development approach since 2003.

Combating climate change 44

Preserving biodiversity 52

Saving resources 54

Contributing to the protection of health and lifestyle 57

Promoting respect of human rights 60

Reinforcing our social attractiveness 66

Protecting health and safety at work 68

Self-evaluation for progress 72

Extra-financial rating 73

Improving the quality of service 74

Economic performance 76

Environmental performance 77

Social performance 86

Environmental and social data 90

Assurance of environmental and social data 94

Glossary 95 G This symbol gives a definition of the term to which it corresponds in the glossary

This document is printed on oxygen, offset white uncoated paper, made from 100% recycled fibres and FSC, PEFC and ISO 14001 certified. June 2008.

1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 2 “

Finding solutions to increasingly strict constraints to save rare resources and reduce impacts on the environment”

Interview with Henri Proglio, Veolia Environnement’s Chief Executive Officer and Chairman

In your opinion, was the year 2007 a turning point in the public’s increasing awareness about the challenges of sustainable development and climate change? The general awareness of decision-makers, the media and the public in general has been rapidly increasing over the last few years. 2007 was undoubtedly an important year with the impact of the Bali conference and the award of the Nobel Peace Prize to the IPCC (Intergovernmental Panel on Climate Change) and Al Gore. In my opinion, the essential point is that people are seeing for themselves that what has been explained to them scientifically is consistent with what they see in their daily lives. The effects of climate change can be seen everywhere. However, we must not forget that there are other major environmental challenges. For example, access to water and sanitationG, and threats to biodiversityG.

How does this awareness affect your role with your clients and other stakeholdersG? There is a greater awareness but, at the same time, it is already a time of action. And action, in terms of sustainable development, is noticeable firstly in the management of urban communities and large cities around the entire world. Our current and future clients are town and city councils, and they are now moving from being concerned to taking action. We are now helping them build sustainable cities in the same way that we helped them build more efficient and less polluted cities in the past. The strategy that we adopted a few years ago, aimed at concentrating on the business of environmental services alone, has put us in an excellent position for finding global and innovative solutions to their needs. We are one of the few companies in the world capa- ble of doing this, because we have all the necessary know- how. For example, the decision that we have made to be involved in the public transportation sector is not only justi- fied, but is also essential to prove that our company has the expertise to propose a global approach towards reducing carbon emissions in urban areas. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 3

INTERVIEW Veolia Environnement ••• Sustainable development report 2007 3

What are your main commitments in terms of sustainable What are the strengths of Veolia Environnement in invent- development and how are they broken down within your ing and developing the future technologies of change? different activities? Some people often attempt to set public management against In my opinion, we have now taken an important step and are now private management in our businesses. I believe that this is entering a more mature phase.Last year we enthusiastically commit- absurd: there are bad private managers and good public man- ted ourselves to the difficult mission of setting minimum environ- agers, and vice versa. Our enterprise model is better in two mental and social standards for our Group that we will apply respects. Firstly, as an international group, Veolia Environnement throughout the world.This is a very demanding exercise for a compa- has the capacity to share management experience, acquired ny that works in nearly 70 countries across all continents. But even under fundamentally distinct economic, social, environmental more demanding is the need to update the frameworks within and climatic conditions. We can work equally well in Niger and which we are active, so as to better meet increasing constraints on in Norway. Secondly, we also have the means of supporting a rare resources and reducing impacts on the environment. It is a task magnitude and diversity of research and development efforts in which we can play a major role,but we cannot do it alone.We need that none of our competitors can match at the present time. the help of our clients, and national and European authorities, to In our businesses, innovation goes well beyond technology. make this change that goes beyond our contractual and commercial Our principal aim is to use technology to invent new service obligations. solutions that better meet the needs of urban populations. For

example, in the essential fields of transportation, information These subjects are being brought up by an increasing number and communication, technologies offer support to our most of stakeholders internationally at the moment. How do you innovative approaches to achieve integrated management of

meet their desire for transparency, education and assistance? transit systems on the scale of a Greater Urban District. In this field too, we need to know how to pass from the communication phase to the research and joint action phase.The Sustainable “ Development Visiting Committee that I created last year has enabled us to benefit from the opinions of independent experts. All opinions that they have on our strengths and weaknesses are wel- come. In 2007,we carried out an environmental and social responsibility audit on a large number of our operations in Africa and Latin America.This was commissioned in order to obtain a clearer view of our challenges and the manner in which we can face them. We have succeeded in encouraging development banks to share in Veolia Environnement has much the capital of our subsidiaries in several countries; for example, the World Bank, the French Development Agency in Africa and Middle to contribute towards the East, and the EBRD in Eastern Europe. With the help of NGOs and the main international foundations, we definition of new models to meet are searching more and more for joint action models that give prior- the needs of large cities in the ity to transparency.It is essential that everyone should be increasingly open with each other and go beyond self-interest and personal developing world.” comfort, and work together to a greater extent. The urban growth of tomorrow will take place largely in areas with the least infrastructures and services. An economic and social balance is more difficult to achieve in such areas.This is a global challenge; and I believe that due to its historical, geographic, and technical experience, Veolia Environnement can contribute a great deal to meet the needs of large cities in the developing world. At the moment, this experience is under-used, and this is a pity. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 4

Opinion of the Independent Visiting Committee

The Sustainable Development Visiting Committee was created in 2006 to strengthen Veolia’s strategic vision.The Committee’s view on the main issues at stake for Veolia in terms of sustainable development and its recommendations for the company’s sustainability strategy and approach are synthesised below.

Water, waste, sanitationG, energy and transportation are the con- processes that require it to engage effectively with citizens and cerns that lie at the heart of any environmental consideration and opinion formers outside formal political structures.Climate change they are Veolia’s core activities. So, sustainable development can- will be an accelerator of change. Veolia will need to keep ahead of not be an add-on extra. It is Veolia’s business. the pack and be an exemplar of a company, that, by reducing its own emissions and developing lower-emission products, will gain competitive advantage. The stakes are high and their measure is The Reality of Climate Change perhaps best exemplified by the opportunity in the energy service Climate change is an overriding concern. It is likely to result in more markets, which alone is now estimated to be worth €5-10 billion. frequent and extreme droughts, storms, and floods. It will generate considerable health challenges;it may well lead to serious conflicts; Energy and will certainly have increasing consequences for business activity. G The urgency of combating its dangers will become an ever more Primary energy demand is expected to increase by more than insistent demand upon governments, the European Union, and one half by 2030 and fossil fuels will account for 83% of that over- international organizations. We can expect the pricing of carbon all increase. It is therefore a business necessity that Veolia reduces emissions and rising price of energy to drive up costs and increase its own and its clients’ dependence on fossil fuels. Reducing energy consumption is a key factor in minimising car- demand for efficiency savings. This will also have significant impli- bon emissions and Veolia needs to set appropriate targets around cations for the transportation sector in terms of vehicle efficiency, these, e.g. metric tons of CO per thermal MWh produced. fuel prices and public transportation provision. All will lead to addi- 2 One solution is to explore more technical options for Veolia’s tional pressures and opportunities for Veolia’s operations and serv- buildings including efficient appliances and heating and cooling ices. Effective management of its own and its clients’ GHG emis- devices, improving insulation and installing active and passive sions is therefore essential. solar energy.There are opportunities provided by CHP and decen- To this end,Veolia will need to adopt both mitigation strategies and tralised energy. Veolia is also well positioned to move into second adaptation measures to take full advantage of its role in the fight and third generation biofuelsG, and has the necessary expertise to against climate change. Some of those mitigation measures promote the scaling down of technologies to produce biogasG for already exist but new technologies will be needed as will the rural communities in developing countries. Veolia could also look development of the means to transfer and broadcast them. Veolia to provide carbon offsetting opportunities for its clients. will want - and need - to play a central role here.This should involve strategies, systems, and services that support adaptation to climate change for Veolia’s own operations, clients, and stakeholdersG. Water and sanitation Critical areas include infrastructure, information, and capacity of stakeholders to respond to the environmental as well as the Water management, particularly reducing consumption and pollu- human dimensions of a changing climate. tion, is an important challenge. The effects of climate change make that inevitable. Conflicts based on access to water will multiply, fuelled by food insecurity and health concerns.The world’s poor will The Management of Resources be particularly vulnerable to the disruption caused by changes in The human ecological footprint has tripled since 1961 and now the climate.The Group must become the natural choice for modern exceeds the world’s ability to regenerate by 25%. The global popu- water services with the lowest possible water footprint. It must also lation is expected to reach 8.1 billion by 2030 and growth in world show that it has grasped the urgency of the problem and is ready to GDP point towards higher standards of living particularly in meet the pace of change. developing countries. Inevitably, therefore,Veolia will be faced with In this regard, Veolia should seek to influence the creation of envi- global competition for scarce and increasingly expensive resources, ronmentally and socially effective pricing systems and regulations.It particularly energy and water, and will therefore need to substan- should also emphasise the development of water saving, replenish- tially reduce its own ecological footprint.However,its expertise and ment and sustainable supply initiatives.Veolia could look to develop experience puts it in a strong position to handle these problems more cost effective processes for separation of black and grey water, and turn them into opportunities. pre-treatment or limitation of industrial wastes, and efficient small- At the same time, consumer preferences and government regula- scale wastewater treatment, involving lower capital costs and infra- tion are changing in response to environmental concerns. Local structure for wastewater management in developing countries. authorities are becoming aware of these issues and of their Sanitation and waste management in particular are key issues for responsibilities,though Veolia must also overcome weak governing developing countries. 2008 is the International Year of Sanitation 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 5

COMMITTEE Veolia Environnement ••• Sustainable development report 2007 5

and all the indicators show that this component of the Millennium Regulation Development Goals will not be met. This calls for urgent global leadership from businesses such as Veolia operating in this sector. Veolia’s strong presence in the European Union means that it is close to the heart of an organization that, in many ways, is setting Waste environmental standards for the world. These are the standards increasingly accepted in developing countries and hugely influential Veolia’s role in the waste industry should lead it to pioneer in the standards being prepared in the US. The company therefore G innovative ways of reducing GHG emissions through landfill needs to play a proper part in influencing the EU regulatory frame- and incineration gas recovery and improved landfill practices, work to ensure that its targets are as challenging as possible while together with state of the art waste to energy systems and its requirements are cost effective and unprescriptive. In engaging anaerobic digestion. The company should also seek to lead in actively in this process of public standard-setting, Veolia must waste minimisation, recycling and re-use and in the diffusion ensure that it subscribes to the highest standards of transparency. of these mature technologies into developing countries. The Challenge of Development Technology Opportunities The market for efficiency innovations is substantial and Veolia Deprived communities in developing countries will be faced with should have a clear strategy for ensuring that it makes the most of some dramatic changes over the next decades. Veolia’s position in these countries, and particularly its exposure to regions experien- this potential. In particular it should be at the forefront of finding cing very rapid urbanisation, will provide opportunities for Veolia to and investing in simple, ways to help the consumer reduce their play an active role in contributing to social and economic water and energy use and their production of waste. developmentIt will need to adapt its business model for developing By adopting a long-term, cross-sectoral vision, integrating environ- countries and contribute to global awareness raising, behavioral mental and social concerns and involving all stakeholders in busi- changes and development of innovative solutions. A key area of ness activities Veolia will be in a position to further lead by example, focus will be the long term adaptation of client communities to cli- create a strong corporate identity and anticipate regulation and mate change and to the formulation of disaster risk reduction societal expectations. strategies. “Doing business with the poor” will be an important We believe Veolia has the expertise and the vision to play a major growth area for Veolia. role in tackling some of the world's great challenges.

The committee members:

John Gummer, Chairman of the SANCROFT Group, Chairman Usha Rao-Monari, Senior Manager, International Finance of Veolia UK Ltd, former UK Environment Minister Corporation Philippe Lévêque, Executive Director, CARE France Ignacy Sachs, Professor at EHESS (École des Hautes Études en Sciences Sociales) Karina Litvack, Head of Governance and Sustainable Investment, F&C Management Ltd Jean-Michel Severino, Director General, Agence Française de Développement Dr Rajendra K. Pachauri, Head of the IPCC (International Panel on Climate Change), Director-General of TERI (The Energy and Björn Stigson, Chairman of World Business Council for Resources Institute), India Sustainable Development

The first plenary meeting of the committee took place January 16th, 2008.

From left to right : Ignacy Sachs, Rajendra K. Pachauri, Yves Cabana, Henri Proglio, Björn Stigson, Usha Rao-Monari, Jean-Michel Severino, John Gummer, Karina Litvack, Philippe Lévêque. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 6

S 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 7

STRATEGY Veolia Environnement ••• Sustainable development report 2007 7

In a market led by urban growth and increasingly strict environmental requirements, consolidation of our world leadership depends on our capability to propose innovative and responsible solutions for the sustainable management of cities. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 8

Anticipating and adapting

The growth of large urban areas is a major phenomenon typical of the modern world. More than half of the world’s population is already living in cities and this trend will continue. It makes the response in terms of economic efficiency of the city, social balance, sanitation, environmental challenges and ecological footprint more complex.

Urban growth is placing increasing pressure on limited natural ered as distinct realities. The increasing awareness of climate resources. The requires a sustainable development strategy change is accelerating this process, because energy needs for cities – now one of the most robust realities related to housing, transportation and waste disposal are of the actual implementation of sustainable development. It major causes of the production of greenhouse gasesG. A signif- requires a global vision that takes into account the interac- icant percentage of these sectors is related to urban planning tions between urban management aspects previously consid- and management choices.

/ ANNUAL URBAN GROWTH RATE 1990-2006

from - 3 to 0 from 2 to 3 from 4 to 6 Data not available

from 0 to 2 from 3 to 4 from 6 to 8

With the significant exceptions of Russia and part of Eastern Europe, urban growth is a worldwide phenomenon and is advancing at a rate inversely proportional to the level of development. Source: UN-Habitat, 2003 and 2006,World Bank 2008. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 9

STRATEGY Veolia Environnement ••• Sustainable development report 2007 9

/ GROWTH PROSPECTS OF URBAN AREAS

London Moscow Peking Paris New Delhi Shanghai Istanbul Lahore Dacca Tokyo

Los Angeles New York Karachi Osaka-Kobe Lagos Canton Manila Cairo Shenzhen Mexico Bombay Calcutta city (Mumbai) Madras (Chennai)

São Paulo Kinshasa Djakarta Rio of Janeiro Buenos Aires

Millions of city dwellers Growth (United Nations projections) 2025

10 20 35 2007 1950

Achieving economic efficiency as well as environmental and social balance in large urban areas is one of the main global challenges of sustainable development. Sources :World prospects urbanization - the 2007 revision, UNDESA, division, Population York. New

Veolia Environnement is a preferred partner of leaders The development of the Group is based on our of large urban districts for inventing and applying ability to convince our future clients of our sustainable solutions for the management of modern competence in managing environmental services cities, for the followings reasons: better than they can. • more than 150 years experience of managing urban public This model is based on our economic performance and our envi- services. As a result, we have optimized technical, social and ronmental expertise. But it also requires an ability to control the environmental management, but more importantly we have social transformation that accompanies outsourcing in a peaceful accompanied the infrastructure construction process and manner. Finally, it requires an ability to ensure that local popula- helped define frameworks for the regulation of major public tions accept our actions in the short and long term. G services (water, sanitation , waste management, public trans- With this specific model and its four basic pillars (economic, portation, energy management); environmental, social and societal), we have been able to natu- • a strategic vision integrating these various activities into a rally integrate sustainable development into the heart of our single business of providing services to the environment for strategy. We believe that our performance in this field is an essential element of our commercial credibility, our ability to set more than 10 years now, which identify technical, contractual out ourselves aside from our competitors with less expertise, and commercial convergences. In particular, this approach has and more generally in creating value. enabled us to anticipate the multi-dimensional aspects of climate change and evaluate carbon savings, enabling us to give A more urbanized world with a greater awareness of the need to appropriate solutions; control environmental damage related to urban and industrial activities is favourable to the development of our services. a worldwide experience in 68 countries across all continents, • Quantitative needs for environmental services are increasing, and with an extremely broad range of economic, social, environ- technical and organizational difficulties are strengthening the mental and climatic conditions. This obliges us to continuous- need for expertise and experience. ly change our models and this adaptation, then, enriches our level of knowledge and our ability to innovate; • a contractual model based on long-term partnership, rooted in locality and based on a clearly defined balance of responsibilities between the private manager and the public and political authority. Consequently, it shares major characteristics with the concept of sustainable development. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 10

The assets of a diversified worldwide presence

Environmentally, the developed world appeared Aftering the revenue figures to take account of purchasing to be governed by a logic of quality and increasing power parityG (PPP) gives a better idea of the Group's industri- control over the level of risks; due to its magnitude, al realities. When this approach is used, the relative weight of the challenge of climate change is emphasizing the emerging zones, namely Eastern and Central Europe, Asia, Latin America and Africa from which 13% of revenue are need for efficient environmental investments. earned, is doubled. For Veolia Environnement, this provides an opportunity to Revenue Revenue correc. Ratio € benefit further from the diversity of its presence throughout Figures in M for. PPP New entrants the world, and particularly its strong involvement in the to the EU 2,133 3,622 1.7 emerging and developing world. Asia 961 2,386 2.5 The Group has experienced fast international growth over the Latin America 569 752 1.3 past fifteen years. In 2007, its activity in France accounted for Africa 745 1 ,676 2.3 44% of its total turnover. Three large developed countries Total 4,408 8,436 1.9 alone (the United Kingdom, Germany and the United States) % total Revenue 13% 25% in which the Group earns more than €2 billion in revenue, represent 44% of the international turnover. This diversified presence makes our Group into a vector for Even so, Veolia Environnement's involvement in the emerging distributing know how and technologies to the emerging world. and developing world increased in 2007. Almost 27% of its It enables us to identify good practice on sites anywhere in the workforce now works in Asia and the Pacific, Eastern and world, including in developing areas (e.g. Latin America with the Central Europe, Latin America, Africa and the Middle East. Rapid Transit Bus) or remote areas (e.g. Australia with "re-use") The Group employs nearly 90 000 employees in these areas. and to extend its application.

/ BREAKDOWN OF VEOLIA ENVIRONNEMENT’S REVENUE OUTSIDE FRANCE

NORWAY FINLAND SWEDEN THE UNITED KINGDOM DENMARK GERMANY ESTONIA CZECH LATVIA IRELAND NETHERLANDS RUSSIA REPUBLIC LITHUANIA POLAND

BELGIUM SLOVAKIA LUX. HUNGARY SWITZERLAND AUSTRIA SLOVENIA CROATIA ROMANIA SERBIA BULGARIA SPAIN ARMENIE PORTUGAL ITALY TURKEY

CANADA SOUTH THE UNITED STATES KOREA MOROCCO ISRAEL JAPAN CHINA TUNISIA LEBANON ALGÉRIA TAIWAN DOMINICAN REPUBLIC EGYPT MEXICO BURKINA SAOUDI OMAN INDIA THAILAND SENEGAL FASO NIGER ARABIA PLAIN THE PHILIPPINES VENEZUELA BENIN ARAB EMIRATES MALAYSIA COLOMBIA DIMENSION BAHREÏN SINGAPORE IVORY GABON BRAZIL MAURITIUS BOTSWANA SOUTH CHILE URUGUAY AFRICA AUSTRALIA

ARGENTINA NEW- ZEALAND 100 4001,000 2,000 2,750 Revenue in million euros (2007)

In 2007, 44% of the Group's total revenue were earned in France. The remainder was derived from 67 other countries. However, 80% of international revenue were developed in 14 countries, in which Veolia's activity is worth more than €300 million. 44% of international revenue are earned in the United Kingdom, Germany and the United States. Source:Veolia Environnement 2007. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 11

STRATEGY Veolia Environnement ••• Sustainable development report 2007 11

/ BREAKDOWN OF VEOLIA ENVIRONNEMENT REVENUE ADJUSTED FOR PURCHASING POWER PARITY (PPP), OUTSIDE FRANCE

NORWAY FINLAND SWEDEN

THE UNITED KINGDOM DENEMARK ESTONIA GERMANY CZECH NETHERLANDS REPUBLIC LATVIA IRELAND LITHUANIA RUSSIA POLAND

BELGIUM SLOVAKIA LUX. HUNGARY ROMANIA SWITZERLAND AUSTRIA SLOVENIA CROATIA SERBIA BULGARIA SPAIN ARMENIE PORTUGAL ITALY TURKEY

CANADA MOROCCO SOUTH KOREA THE UNITED STATES ISRAEL JAPAN TUNISIA LEBANON CHINA ALGERIA TAIWAN DOMINICAN REPUBLIC MEXICO BURKINA EGYPT SAOUDI OMAN INDIA THAILAND SENEGAL FASO NIGER ARABIA PLAIN ARAB THE PHILIPPINES VENEZUELA BENIN EMIRATES BAHREÏN MALAYSIA COLOMBIA DIMENSION SINGAPORE IVORY GABON BRAZIL MAURITIUS BOTSWANA

SOUTH AFRICA CHILE URUGUAY AUSTRALIA

ARGENTINA NEW-ZEALAND

100 400 1,000 2,000 2,600 Revenue adjusted for PPP in million euros (2007)

Adjusted for PPP, 38% of the Group's revenue is earned in France. This approach compensates for differences due to price levels, and gives a realistic idea of the Group's industrial reality in Eastern and Central Europe, China and Africa. Sources:Veolia Environnement 2006, Bank database 2007,World Development United Nations UNDP Program 2005.

Methodology

INTERNATIONAL REVENUE ADJUSTED FOR PURCHASING POWER PARITY The use of revenue adjusted using the purchasing power parity method compensates for differences in prices Veolia found for similar services in different 64% Veolia Water 52% Energy-Dalkia markets. Thus it represents, more accurately, the breakdown of the Group's industrial realities in the different countries in which it is located. Revenue 66% Veolia 63% Veolia Transportation corrected for purchasing power parity Environmental are calculated using the World Bank's services 2006 ratios, except in specific cases.

Sustainable performance requires important efforts These changes have already been partially implemented, but to adapt and innovate. cannot be under our responsibility alone. The forms of our remuneration, and more generally the conditions under which We need to anticipate and prepare to change our standard we will supply services, are governed by regulations that contracts. This will, in the future, provide a basis for our work depend on public authorities. The required changes necessi- and remuneration to make them more dependent on achiev- tate not only a consensual approach with our clients, but also ing targets on quality and resource efficiency. Additionally, it an understanding and acceptance by the served populations. will provide the fine tuning of means to suit needs, rather than simple supply of large volumes of products or basic services. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 12

Landfill in Hong Kong, China

Our own responsibility consists in: Responsibilities granted to private operators in developed countries have been increasingly broken down into segments and emphasizing what we believe could contradict sustainable • contract durations have been shortened over the last two development objectives in the management of environmental decades, due to competition law. Nevertheless, in the developing services. Thus, traditional remuneration for the provision of world, it is generally accepted that the need to develop basic and water based on volumes supplied must change to incorporate essential services justifies longer contract duration and broader the objective to reduce water consumption, without disturb- managerial responsibilities. ing the economic balance of an activity for which costs are very largely fixed; • highlighting the best organizational frameworks that we Achieving sustainable urban development see in our international experience. For example, in the United objectives requires more consistent models and Kingdom, an operator is made responsible for managing better-targeted responsibilities employed over waste flows produced by a region, and for making changes to the long term. the system by significantly developing recycling and energy At the present time, the obligation to manage climate change recovery. In the long term, such integrated contracts will is creating a new challenge for efficiency and performance in enable increased responsibility and efficiency, unequalled the developed world. The objective is to propose in-depth elsewhere in the European Union. changes to urban services, with the aim of achieving the reductions in GHGG emissions identified by the Kyoto Contract Recycling ratio Recycling objective protocolG. In all our activities, we believe that the basis for a 2008-2009 fixed by the local authority G 2011-2012 solution lies in a public-private partnership . This is based on close public control over a responsible private manager paid Nottinghamshire 37.8% 45% partly on quality and service improvement objectives. Shropshire 37.9% 53.4% Southwark 18.5% 34.8% The need for a global and sustainable approach goes beyond the framework of each of our operational activities. Mobilization of urban districts, in terms of sustainable development, is recommending research on the breakdown of responsibili- • significantly dominated by the will to reduce GHG emissions. ties between delegating authorities and operators. In the field It has become necessary to offer tools to local governments of urban transportation, integrated management of the differ- for them to objectively choose between the various possible ent segments and the implementation of genuine inter-modal actions. means have become an entirely separate business distin- guished from the simple management of transportation The common carbon saving mechanism makes it possible to means. Its increasing complexity justifies the organising pub- design technical-financial tools adapted to the characteristics lic authority in delegating this work to a specialised private of each region, so as to prioritize decisions with an impact on manager. We are experimenting with new responsibilities GHG emissions in different sectors of municipal management based on this logic in contracts in the Netherlands and the (transportation, heating and cooling networks, energy man- United States. agement of public buildings, public lighting, waste treatment, etc.), on the basis of an objective approach towards their financial cost/ ecological benefit ratio. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 13

STRATEGY Veolia Environnement ••• Sustainable development report 2007 13 Proven expertise in social transformation

The development of Veolia Environnement meets particular In the short term, internal transfers can help to maintain local needs with regards to social transformation, particularly in jobs. In the medium term, social efficiency is largely based on terms of its organizational development. training and promotion efforts for local supervisors. Veolia has carried out its internationalization process in line with its policy The challenge is to perform a major social transformation of for the development of its activities, making only very moder- the organizations that we are asked to manage. These are ate use of expatriation. At the end of 2007, the Group only generally public and administrative organizations, and we employed 710 expatriates. need to lead them and their personnel into the world of This experience of social transformation is essential to the private enterprise. success of delegation of public services. Confidence shown by Integration of existing personnel (positions, remuneration, the public decision-makers in the appointed organization’s social advantages, training, capitalization of know how and ability to implement informed and peaceful social manage- transfer of skills) involves progress at all levels of the activity. ment increases confidence in the choice of better economic effi- A new enterprise project based on Veolia Environnement's ciency and environmental expertise. values must be produced taking into account the existing Veolia Environnement enjoys an important competitive situation. advantage over its competitors, because it has been putting Under some circumstances, the complexity of this change can these social transformation processes into practice for more be strengthened by poor historic productivity.This must be cor- than 150 years. This knowledge how is broadly based on man- rected to achieve economic objectives, while controlling the agement experience, and is very difficult for newcomers to risk of traumatic social changes. acquire.

37% 63% Locations of Veolia Environnement employees.

France International

/ BREAKDOWN OF THE VEOLIA ENVIRONNEMENT' WORKFORCE, OUTSIDE FRANCE

NORWAY SWEDEN FINLAND

UNITED KINGDOM DANEMARK ESTONIA RUSSIA GERMANY CZECH REPUBLIC IRELAND NETHERLANDS LATVIA POLAND BELGIUM LUX. 3 ROMANIA AUSTRIA SWITZERLAND 4 1 2 SERBIA BULGARIA SPAIN 1 - SLOVENIA ITALY PORTUGAL 2 - CROATIA TURKEY 3 - SLOVAKIA 4 - HUNGARY

CANADA SOUTH KOREA THE UNITED STATES MOROCCO ISRAEL JAPON TUNISIA LEBANON CHINA LIBYA TAIWAN EGYPT MEXICO BURKINA SAOUDI OMAN INDIA THAILAND NIGER THE PHILIPPINES VENEZUELA SENEGAL FASO ARABIA PLAIN ARAB VIETNAM EMIRATES BENIN MALAYSIA COLOMBIA DIMENSION BAHREÏN IVORY SINGAPORE GABON BRAZIL

ARGENTINA SOUTH AFRICA Total workforce at AUSTRALIA CHILE december 31 2007

NEW-ZEALAND 10 000 27 500 5 000 15 000 20 000 500 2 500

The Group's international development depends on integration and training of local labor. By 2015, 75% of Veolia Environnement's total workforce should be international. Source : Environnement Veolia 2007. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 14

Introducing new solutions

Veolia Environnement calls upon a very wide range of environmental expertise and diverse international experience to make use of a long history of practicing its business.This helps save resources and reduce impacts on the environment.

Veolia Water

Improving the water management model in a context of reducing volumes and with a view towards protection and diversification of resources.

Integrating sustainable development From management of the water into the business model service to resource conservation The economic model for water services has been built up Preservation of the resource, health and safety, service conti- based on a virtuous circle by which increases in volumes sold nuity and adaptation of prices to meet social objectives are all facilitated the development of access to water, improvements qualitative criteria that represent an increasing percentage of to sanitationG parameters, financing of the pipe systems remuneration for the water service. This is why Veolia Water is maintenance, the protection of resources and depreciation of developing a range of services beyond its traditional activity of infrastructure costs. producing and distributing drinking water and providing sanitation. This virtuous circle did lead to a high service quality, but now needs to be adapted to include new constraints. The need to These new uses and services could form the basis for new reduce consumption, to limit pressure on local resources remuneration structures to balance costs and to make the actually leads to a reduction in unit consumption, causes interest of public authorities, consumers and operators more changes to the economic balance of the activity. Therefore, aligned. Veolia Water is orienting its action such that remuneration for the water service is based more on an evaluation of the New resources service quality, rather than volumes consumed. Veolia Water satisfies the problems of qualitative and quanti- The water service also needs to address more social concerns tative pressures on the water resource by extending its sphere than it did in the past, since they were usually managed by of influence from the "small water cycleG" to the "large water external philantropic organizations; for example, application cycleG" through several types of approaches: of the "right to water", assistance to vulnerable customers. • actions towards resource conservation and the fight against New solutions are being developed to balance the water serv- pollution; ice, whilst providing solutions to the needs of all users, • increased awareness of new usages; including those with the greatest needs. • promotion of alternative resources. Efforts can also be made to reduce waste and improve recycling of treated wastewater for certain uses (e.g. industrial, agricultural or recreational). Recycling provides a means of maximiz- ing the use of water before releasing it into nature. million people supplied with water 78 service by Veolia Water Desalination of seawater is possible in regions close to the coast, where fresh water resources are insufficient. Veolia Water is developing high performance technological solutions in this field to reduce energy consumption, costs, and the environmental impact.

million people supplied with 54 wastewater service by Veolia Water 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 15

STRATEGY Veolia Environnement ••• Sustainable development report 2007 15

/ DRAWN OFF WATER QUANTITIES (SURFACE AND GROUND WATER) AS A PERCENTAGE OF RENEWABLE WATER RESERVES

2025

Excessive use

05010 25 75 100 Data not available

2000

The total quantity of fresh water available on the planet is constant. The concept of water scarcity is meaningless except in a local or regional context and depends on the relation between the variable availability of resources (due to natural or climatic causes) and changes to quantities drawn off. There are three possible types of actions to meet increasing needs resulting from urban demography; firstly reduce individual and collective waste, secondly accelerate the natural resource renewal cycle and thirdly "create" new resources by desalination and recycling of previously treated wastewater. Sources : Organization, and Agriculture Food Aquastat Institute, 2007, Resources World Washington.

Developp new partnerships Rethinking the place of water in cities In order for water management to enable access to water or The development of infrastructure designed to evacuate rain- for protection of water resources, a large number of bodies water, to restore water courses and planted canals in cities, is knowledge and roles need to be organized in a complementary one way of reconciling the storage of rainwater and limiting manner. Veolia Water is working towards improving the effi- risks of flooding, at the same time as developing leisure ciency of its service by strengthening its communication with spaces. The arrangement of recreation areas around water civil society. In emerging countries, public-private partnerships contributes to making cities welcoming and more attractive. may be complemented by partnerships with local associations Water thus becomes a means or reintegrating the natural and organizations, so as to implement development and envi- environment and biodiversityG into the urban area.This aspect ronmental protection actions. is taken into account in changes to water services managed by Veolia Water. Veolia Water's development model is now changing. This will only be possible if a number of changes are made outside the company, particularly in the regulations that control the role and scope for maneuver of the operator. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 16

Veolia Environmental Services

Waste is a marvelous deposit of resources, renewable energy, alternative energy and secondary raw materials. Its management represents both an economic opportunity and a social and environmental obligation.

Despite efforts made to reduce waste generated, waste pro- Quantitative and qualitative prevention duced throughout the world is increasing since it is dependent on economic growth and changes to consumption habits. Veolia Environmental services advises its industrial clients on The increasing scarcity of raw materials and increases in their how to reduce quantities of waste produced and the danger- costs are causing an increasing demand for secondary raw ousness posed by each type of waste. In 2007, recovered waste materialsG that encourages their valorisation. quantities decreased and tonnes of recycled waste increased significantly, in the context of Veolia Environmental Services' Finally, climate change and the need to limit impacts on industrial activity. The company organizes awareness raising natural environments result in an increasing need for control aimed at the general public, to reduce waste and encourage over polluting emissions and recovery of available energy in sorting and recycling. non-recycled waste. Recycling and recovery Veolia Environmental Services considers all forms of waste Prioritizing waste treatment methods recoveryG to be a priority (material, agricultural and energy). Veolia Environmental services organizes management of waste Increasing quantities of treated and recycled waste is a perma- assigned to it by defining an order of priority for treatment nent objective, both in traditional forms (paper, cardboard, methods. These methods include: limitation of waste produc- plastic, and metal) and new activities (such as waste electrical tion at the source, reuseG, recycling and recovery of materials, and electronic equipment (WEEE)). Recycling is expanding and finally recovery of energy and elimination. The objective is (+35% recycled materials in 2007), particularly in the paper / to reduce the percentage of waste landfilled or incinerated cardboard (+39%), and metal (+20%) activities. Veolia without any energy recovery. Environmental Services is now recycling 14% of all waste that it receives (at the exit from the installation). The increase in recycling ratios is based on continuous improvement of treatment processes, and the creation of new long-term industries. Thus, recovery of biomassG derived from / GROWTH IN THE PRODUCTION OF MUNICIPAL WASTE IN municipal and industrial waste is now used for manufacturing COMPARISON WITH GROWTH OF THE GROSS NATIONAL biomaterials and bioproducts used in the chemicals, automobile, PRODUCT AND THE POPULATION packaging and construction sectors. Veolia Environmental Services is thus becoming a player at the heart of industrial ecology models.

projections 240 OECD countries GNP Recovering the energy from waste 220 Recovery of energy from waste is the next step after prevention, 200 Municipal waste recovery of materials and recycling. It provides a means of saving 180 production fossil fuel and limiting emissions of GHGsG.Veolia Environmental Services generates heat and electricity from the combustion of 160 waste that cannot be recovered otherwise, or from the recovery 140 of landfill gasG. 120 Population Biomass that contains materials originating from forestry activities or agriculture, and the organic fraction of industrial 100 Base 100 in 1980 and municipal waste,may also be transformed into combustible materials to produce heat, electricity or fuels. Used food fats can 1980 1990 2000 2010 2020 also be recovered or transformed into biodiesel. Common waste (wood, paper, plastics) can be transformed into solid recovered fuel (SRF).

Despite efforts to reduce waste at the source, waste production grows in tandem with economic development. Source : OECD 2000 and 2003. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 17

STRATEGY Veolia Environnement ••• Sustainable development report 2007 17

/ PRODUCTION OF WASTE IN KILOGRAMS PER INHABITANT AND PER YEAR

0 100 200 300 400 500 600 700 800 900

Canada Norway United States Denmark Ireland

om Waste om Waste to Survey”, Waste Resource 2006 World Australia Spain Netherlands Germany United Kingdom Urban China France Italy Sweden Finland Belgium Hungary Japan Mexico Municipal waste: waste from households, Poland percentage of waste commercial activities, small enterprises, from households offices and institutions, and municipal Urban Brazil services (roads, green spaces, etc.) Rural China Household waste: waste derived from the daily activity of houses (organic Municipal waste materials used, packaging, etc.)

The desire to reduce waste production is unfortunately not being realised in today’s world. However, waste can become a resource now that raw materials and energy are becoming rare. Proven techniques are available to change from an ecological elimination logic towards a material or energy recovery logic. Regulations and taxation can be used to direct flows between different methods with genuine efficiency. The most difficult part is to reach a consensus about a reasoned, balanced and integrated vision of treatment methods between the stakeholdersG. On this basis, integrated management of waste flows produced by a given region, then enables fast and effective implementation of sustainable treatment solutions. Sources: 2005, from OECD (data or latest yearbook 2006; since 2000) China statistical available agencies,“Fr environmental National by Elisabeth Lacoste, Philippe Chalmin. Economica.

Protecting natural spaces Promoting integrated waste management Rehabilitating soils and sites Waste flow treatment can be optimized when it is managed Veolia Environmental Services also applies its expertise to depol- globally and is integrated over a region or a residential basin. lution and rehabilitation of sites. Decontamination of soils Veolia Environmental Services use this type of approach when becomes necessary when industrial activities or accidental pol- possible depending on the institutional organization and the lution have degraded their quality. It can be implemented regulations, as is the case in the United Kingdom. through technical processes adapted to each situation (biological treatment, extraction,ventilation, sprinkling, pumping, thermal desorption, etc.). Soils depleted by over-production can also be enriched by organic materials using improvements produced from agronomic recovery of biomass derived from waste. million tonnes of waste recycled Treating hazardous waste 10 by Veolia Environmental Services The company is developing innovative systems for the treatment of hazardous waste that require the use of state-of-the-art technologies. These systems provide a means for limiting the impact of significantly polluting waste on natural environments. The quantity of hazardous waste treated by Veolia Environmental Services increased by 12.1% in 2007. The treatment of hazardous waste from households is also developing million tonnes of waste treated encouragingly. 72 by Veolia Environmental Services 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 18

Veolia Energie-Dalkia

The range of Veolia Energy-Dalkia's services is changing within a context marked by the increasing importance of renewable energy and energy and carbon saving targets.The activity of Veolia Energy-Dalkia lies at the core of three main challenges, firstly the growing urbanization and the industrialization that accompanies it, secondly the price increase and the growing scarcity of fossil fuels and thirdly the climate change.

Veolia Energy-Dalkia is an integrator of energy solutions. Its emission standards and emissions of CO2 and other pollu- business is to provide the energy necessary to its clients in an tants are lower than in a large number of individual facilities. optimized manner, while reducing their final consumption and limiting the accompanying GHGsG emissions. This business consists of reducing global energy consumption Integrated building management G while minimizing the proportion supplied by fossil energy . Veolia Energy-Dalkia optimises energy use in all types of build- Therefore, Veolia Energy-Dalkia adjusts several factors: name- ings, (homes, offices, hospitals, public facilities, shopping centers), ly, modifying the behavior of users, optimizing management with the prospect of a factor of 4 by the year 2020. Solutions of their needs, achieving modernization by making efficient proposed to reduce consumptions and the emissions of GHGs use of technical equipment, and finally, using renewable ener- include boilers, heat pumps, ventilation, intelligent control gy whenever possible. The combination of these factors will systems, renewable energy and cogenerationG. As a global com- achieve improvements in energy efficiency so that, depending petitor, Veolia Energy-Dalkia guarantees results to its clients, on the country, Veolia Energy-Dalkia can earn Energy Saving through long-term contracts. Certificates (ESC) or green certificatesG, and optimise management of CO2 quotas on the corresponding markets. In this context, the company is taking steps to modify the Optimization of energy consumptions structure of its contracts to base its remuneration on the on industrial sites energy saved, rather than on the energy consumed. It also attempts to define offers that incentivise the search for carbon Veolia Energy-Dalkia partners its industrial clients in efforts to efficiency. This objective to "optimize" energy in cities is organ- manage their energy bill and to reduce GHG emissions by ised into four major activities. working on all industrial utilities (steam, hot water, chilled water, compressed air, electricity, industrial gases). As in buildings, its action are based on two services: namely the design of Development of heating and cooling technical improvements leading to improved energy efficiency, and optimized operation of sites within the framework of per- networks formance contracts. For example, Veolia Energy-Dalkia imple- Heating and cooling networks reduce the impact of heating ments solutions integrating renewable energy or recovery of and air conditioning on the environment. They are powerful lost heat. means of integrating renewable or alternative energyG in cities, especially through the use of boilers using biomassG or heat recovery from municipal waste and industrial waste Public lighting incineration plants.These facilities are governed by very severe Public lighting, on average, accounts for almost half of the electrical consumption of city councils, and is also a source of GHG emissions. Veolia Energy-Dalkia optimizes urban lighting by means of simple technological solutions (remote management of light points) through its subsidiary Citelum, and contributes to transforming a traditional town into a sustainable town (reduction of light pollution, reduction of electricity consump- million residents heated tion, etc.). 14.5 by Veolia Energy-Dalkia Veolia Energy-Dalkia is developing complementary activities such as electrical facilities with Clemessy, and climatic engineering with Crystal. 87,375 MW thermal power managed by Veolia Energy-Dalkia 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 19

STRATEGY Veolia Environnement ••• Sustainable development report 2007 19

/ FINAL ENERGY CONSUMPTION Source : Enerdata, Grenoble, 2007.

Kilograms of oil equivalent per year and per inhabitant (2007)

from 70 to 260 from 530 to 1100 from 2500 to 10000 from 260 to 530 from 1100 to 2500 data not available

/ WORLD ENERGY CONSUMPTION, REFERENCE SCENARIO FROM THE INTERNATIONAL ENERGY AGENCY (IEA)

Billion tonnes of oil equivalent

Renewable energies Nuclear Gas The rapid increase of energy demand in the 16 Oil developing world, the growing scarcity Coal of hydrocarbons and the requirements for responding to climate change

14 are all major challenges for the energy sector. Energy consumption projections in the IEA reference scenario are inconsistent with a reduction of GHGG 12 emissions. While there are still serious economic and technological obstacles to carbon 10 storage and the massive development of renewable energyG, the search for restraint and energy efficiency is one immediately available method 8 that combines economic benefit and ecological virtue. The value of the energy flow, further 6 increased by mechanisms for carbon recovery created or inspired by the Kyoto protocolG, provides a means for developing a new industry to optimize energy 4 and carbon efficiency.

0 1970 2002 2010 2020 2030 Source: (IEA), Energy Agency International 2007. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 20

Veolia Transport

Urban growth and climate change are exacerbating the enormous challenges to which public transportation must provide solutions. Urban congestion and the increase in travel requirements make it necessary to improve efficiency and ease of mobility.

Accessible transportation for everyone provides an important edge of passenger needs and an investment capability such lever for social cohesion and is a factor conducive to development. that it can propose innovative contractual solutions on the A substantial movement from private cars to public trans- model of public-private partnerships. These enable optimiza- portation contributes to reducing GHGsG and improving air tion of public investments to meet long-term needs, fixing of quality. Finally, public transportation contributes to the devel- quality objectives in terms of usage or environmental per- opment of more ideal densities in an urban environment. formance to be achieved by the operator, and Veolia Transportation accepting a percentage of investments to be made for the development of new infrastructures. From transportation operator to global mobility manager Embedding environmental efficiency Veolia Transportation's proposals include eco-efficient calcula- Veolia Transportation's services are adapting to take these prob- tions that are useful to town councils to improve their under- lems into account; Veolia Transportation is changing from a pas- standing of their environmental footprint and to define the best senger transportation operator to a global mobility manager. By urban development options for transportation, to encourage the broadening its core business to meet new objectives, Veolia development of integrated transit systems with low CO2 emis- Transportation proposes new services contributing to finding a sions. solution to the increasing economic, social and environmental challenges related to urban mobility and the need for alterna- Developing inter-modal solutions tives to road for the transportation of passengers and goods. Improving networks and transportation hubs and organising Reorganizing responsibilities the best fit between transportation modes are essential elements to provide fluid and efficient journeys for passengers. and contract models Veolia Transportation participates in the development of inter- This new role as global mobility manager implies a redefinition modal transportation by offering complementary travel modes of activity, scope and objectives, in cooperation with organising that provide the missing link between private cars and tradi- authorities and other transportation operators. Veolia tional public transportation (car sharingG, collective taxis, shut- Transportation has the technical expertise and detailed knowl- tle buses, self-service bicycles).

/ LAND TRANSPORTATION FORECASTS FOR PASSENGERS IN BILLIONS OF KILOMETERS 9 000 Billions 5 000 3 000 of kilometers 1 000 200 1990 2020

Western Western Europe Russia and Europe Russia and Eastern Europe Eastern Europe North Asia - Oceania America Asia - Oceania North America

Africa and Latin the Near East Latin America America Africa and the Near East

The public transportation sector tackles sustainable development challenges, through its contribution to economic efficiency, social balance in regions and its impact on atmospheric pollution and world emissions of GHGs. Needs will grow exponentially in future decades, particularly in emerging areas without modern urban transit systems. Source:“RoadWhat – transportation the medium and long-term.”, for alternative energetic Stéphane His, n° 554, de l’énergie Revue 2004. february 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 21

STRATEGY Veolia Environnement ••• Sustainable development report 2007 21

/ PASSENGER TRANSPORTATION MARKET World market: more that 460 billion Euros North Asia America Europe 220 billion Euros of which the existing market 140 billion Euros accessible to private operators 65 billion Euros is 75 billion Euros

Inde

Latin America Australia 35 billion Euros 4,3 billion Euros

Road passenger public transportation market Rail passenger public transportation market

including the part now accessible to the private operators including the part now accessible to the private operators

The opening up of the public transportation sector to private companies is a recent phenomenon in many regions of the world, and should increase considerably during the next twenty years. Source :2007. Transportation Veolia

Developing new transportation offers Proposing alternatives to road freight The objective of global transportation management is to transfer transportation the maximum number of passengers to public transportation; Railway and river freight transportation modes are now under- the use of public transportation should become as easy, flexible used,although with their environmental efficiency,they should be and efficient as the use of a private car. able to offer a viable alternative to road freight. Veolia Transportation is developing rail and sea freight transportation Customizing public transportation through the activity of Veolia Cargo. The business of Veolia Transportation includes a new technological dimension to control mobility within a region and to allow individuals,continuous personal access to information.The supply of real time displays, individual information through SMS and routing computers,makes it easy for each passenger to create and optimize their route. Innovations may also be organizational; to meet the needs of everyone and to increase the use of public transportation networks,detailed analysis has been carried out on demand, leading to the creation of new timetables and improved billion trips done with Veolia frequencies. 2.5 Transportation Developing individual shared ride offers Shared rideG meets particular needs; it is not always possible to set up a regular transportation line in less dense areas. Veolia Transportation has developed transportation on demandG (TOD) in remote urban and rural regions, or to facilitate travel for disabled persons. Shuttle service for airports, buses, shared taxis, are all pos- billion kilometres travelled with sible solutions for making better connections and showing regions 1.75 Veolia Transportation at their best. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 22

Building the sustainable city

Adaptation of management frameworks

Achieving maximum efficiency in all our activities involves the definition of global management frameworks that make an operator responsible for management of a flow and enable: • the manager to take responsibility for quality and performance objectives; • elimination of conflicts of interest between producers and distributors (essential when considering economy of resources); • control of long-term changes to infrastructures; • simplification of control applied by the public authority.

The exercise of competition involves: • setting up periodic competition, intrinsic to the delegated management model; • appropriate segmenting of territories; • subcontracting of some activity segments while maintaining global consistency of the contract.

Combating climate change

NMENT HE ENVIRO Y INTO T HE CIT UCE T TROD EIN er reuse R Wastewat

arge s rech tland d we er an Energy Services wat oir und Maintenance - Operations Gro Reserv Optimisation of needs and costs Wast tion Wastewater tribu treatm Dis Buses ti-functiond Energyation Con Mul pon orm nectin uction transf g r d MACHINEUE Ene egions ro RMIQ P plant THE distri rgy bu Water RATION ry ÉNÉ t COG ion tia d Sort Ter ing center Plantef Fossil holds L rooPITA Reduce energy House HOS al Urb use of Renewableand loc energy an atives lighti Inc Car-sharing ng Bus ine resources altern gy mix Industry Waste ra ener collection Land fill on of the Intermodes Light rail Optimisati Urban ntal nme iro Recovery of raw envservices Metro materials Transportation and Optimisation of urban En distribution of goods er space through in gy public transportation cin rec er over atio y (cap Ag n, b ture and iomas recovery of bio s, altern gas, ative fuel, etc.) REIN TROD UCE THE E NVIRO NMENT IN TO THE CITY Improve access to essential services Updating remuneration methods

Under different conditions, each of our activities requires a progressive change to its economic logic: • for water, the percentage of the remuneration related to the quality of service and saving of resources must increase, to compensate for a reduction in the remuneration for volumes distributed; • for environmental services, the percentage of income related to landfilling must decrease, and be compensated for by an increase for treatment methods to recover the material or energy; • for energy management, combating climate change requires an increase in remuneration related to energy and carbon efficiency; • for public transportation, the virtuous aspect of high volumes which avoids more disruptive and polluting means of transportation, does not eliminate the need for fine tuning of means (financing, urban land occupancy, energy) to transportation needs. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 23

STRATEGY Veolia Environnement ••• Sustainable development report 2007 23

Sustainable urban planning

The objective is to compare investment costs, management costs and the environmental and climatic impact of measures to be taken, based on: • characteristics of each region in terms of economic and natural resources, infrastructures and town planning; • improvement objectives defined by the public authority. At the moment, innovative technical-financial instruments may be defined based on measurements of carbon savings achieved. This enables a comparison between actions planned in a wide variety of sectors such as transportation, housing, waste treatment, lighting, city planning, social housing, etc. In the future, a more ambitious approach will be necessary in order to change from carbon saving to measurements of the global ecological footprint (taking account of biodiversityG and local social, economic and cultural aspects).

bating e change

y Services enance - Operations sation of needs and costs Wastewaterant Wastewater treatment pl ti-functiond Sludge - treated was Mul pon tewa ter

ry tia d Sort Compost Ter Plante ing center f L Reduce negative rooPITA HOS C impacts on om p the environment Inc o Bus Waste ine s rat t ion i and ecosystems collection Land n fill g

Recovery of raw materials ansportation and tribution of goods

overy AgrIcultural rec

e access al services Adaptation of the contract model in emerging countries

Creation or modernisation of essential services in these built-up areas requires research and particular adaptation to take account of: • the frequently enormous size of these built-up areas and their rate of change, that corresponds largely to future urban growth; • special difficulties in creating an economic balance that requires optimized matching of means to needs, both for investments and operation; • whenever possible, reconciling traditional economic and social realities with modern and secure management methods; • definition of regulation mechanisms setting down principles of sustainable governance and increased responsibility of persons or companies causing pollution or using resources. 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:14 Page 24

Inventing innovative services

Veolia Environnement relies upon its research and development (R&D) to improve its range of services and to perfect technologies used within its facilities every day.

Due to strong synergies between our activities and a continu- The scale to be used for sustainable development is the urban ously increasing budget (+45% since 2003), R&D satisfies the district. Although the metabolism of cities has been completely ambitions of the Group and is closely involved in the major transformed, technologies used in environmental services at changes of the 21st century. Veolia Environnement's research the present time are based on the scientific heritage from the objectives for the 2008 - 2010 period have been fixed with the end of the 19th – beginning of the 20th century. The existing four divisions. Projects have been divided into four main cate- approach needs rethinking to create and deploy different gories with different timescales and programs depending on technological solutions, by sharing knowledge on common their duration and their relevance. areas and participating in European and international research programs. Our research has initiated complete programs for the All these programs are defined in close cooperation with our recovery of energy resources, raw materials, water resources, clients and help to optimise existing processes and invent new management of urban areas and optimisation of information solutions both in terms of industrial research and in systems, combining technical expertise and understanding of improvementG of proposed essential services. human organizations that are currently undergoing a thor- ough transformation. Creating tomorrow's solutions Although drinking water is still a basic theme for research, other priority areas are the treatment and recovery of waste, energy and the reduction in GHGsG. Intensive work is being done on G the development of renewable and alternative energy sources, 3% 2% in parallel to the search for solutions to optimise energy efficiency and save fossil fuels, and to provide efficient and easy to 9% understand transportation services. 22% 7%

6% 20% 9%

16%

118 M€ for the 2007 budget Drinking water Transportation Wastewater Environmental and health impact of our businesses Collection, sorting, recovery of waste Development of expertise outside specific programs Bioenergy (production of primary energy) Potential projects outside specific programs Production and optimisation of energy (use of primary energy) +45% since 2003 Ecobuilding – ecodistrict

/ R&D BUDGET BREAKDOWN BY PROGRAM 1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:14 Page 25

STRATEGY Veolia Environnement ••• Sustainable development report 2007 25

800 experts, including 400 research workers and 400 developers

research centers in France >100 research supervisors 3 and extensions in other countries

Managing the impacts of industrial From research to innovation processes The group’s R&D approach is aimed at operational implemen- The ongoing improvement to technologies used in the water, tation of innovative and concrete solutions, crucial for the energy, environmental services and transportation fields is Group's competitiveness. essential for us to adapt our services to be able to meet new The teams at the three research centers and the international units are working towards this end, in close cooperation with the requirements for quality, access and respect for the environment. technical managements of the four divisions. About a hundred In addition to this progress approach, Veolia Environnement’s supervisors validate and improve the reliability of tomorrow's R&D is developing methodologies for measuring the environ- technologies. mental impact of the different processes and innovations developed, using life cycle analyses (LCA) to identify areas for See Veolia’s R&D organization on improvement. www.sustainable-development.veolia.com

FOCUS

Recycling of metals Recovery of metals contained in industrial waste

The use of zinc and nickel by industry has harmful consequences on the environment and the economy: releases into the natural environment, reduction of resources leading particularly to economic tension and fast increases in metal prices. This situation forces manufacturers to pay high prices to buy the metals that they need. This is paradoxical when we know that a large quantity of metals contained in their own waste are not recovered, due to the lack of techniques for extracting them. To overcome this, Veolia Environnement's research teams are working in partnership with the University of Metz to develop a technology for recovering metals contained in industrial waste so that they can be reused. A pre-industrial plant was built on the Cedilor site, a subsidiary of Sarp Industries to validate the technology and improve its reliability, and for which three patents were lodged in 2004. This innovation opens up the way to recovery of many other metals. Already, the Group's research teams are working on specific treatment and recovery technologies for each type of waste. At the moment, Veolia Environnement recovers 600 tonnes of metal waste per year. 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:14 Page 26

A 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 27

APPROACH Veolia Environnement ••• Sustainable development report 2007 27

Sustainable development is a source of opportunity and inspiration for our business. Across the entire company, it provides a challenge of responsibility and consistency, and must be applied by a coherent global governance system based on firm measures. 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 28

Embedding our governance

Effective long-term governance requires a committed approach and aims to anticipate risks and opportunities and integrate the major risks faced by the company in its internal control.

Evaluation of good governance standards

Good governance standards Situation on March 15 2008

Presence of at least 50% of independent directors within the board and on committees (Accounts, And Audit Board Accounts Nominations and Strategic of Directors and Audit Compensation research, Directors among Committee; Nominations and Compensation Committee; Strategic Research, Innovation and Sustainable Committee Committee innovation and themselves Development Committee) sustainable Development and in relation to Committee management • Definition of independence adopted by the internal regulations of the board of directors ...... 11/14 3/3 2/3 2/3

Average duration of a director's mandate of four years ...... six years (half renewed every three years, last done in 2006) Independence

Statutory auditors Auditors cannot offer advisory services, except for services related to the audit ...... yes in relation to management

Auditor - director meetings without the presence of management...... yes

Maximum five accumulated mandates ...... yes*

Board Accounts Nominations and Strategic research, of Directors and Audit Compensation innovation and Number of meetings and average attendance at board meetings and committee meetings sustainable Committee Committee Development Committee • Number of meetings ...... Directors • Attendance ratio ...... 11 6 3 10 77.9% 77.8% 100% 100%

Annual evaluation of the operation of board meetings and committee meetings ...... yes**

Formal evaluation of operation of the board once every three years ...... yes**

Percentage of votes cast in the General Assembly by shareholders present, represented or voting 95.66% by correspondence in 2007 (therefore apart from mandates to the President)...... Shareholders Role in decision making Role Participation ratio (quorum) at the last general assembly (2007) ...... 61.21%

Number of resolutions related to the company’s social responsibility (CSR) proposed and voted in the none General Assembly in 2007 ...... Other Stakeholders

Number of persons who raised questions related to CSR in 2007...... Three out of sixteen questions

2007 remuneration of the company representative (CEO) *** ...... 2,374,033 Euros

See chapter 15 in the 2007 Criteria for determining and fixing remuneration of the CEO and his main directors ...... reference document

Number of share purchase options awarded to the CEO and the ten largest assignments in 2007 • options awarded to the Chairman ...... • ten largest awards ...... 110,000

Financial information Financial 350,000

* To the company's knowledge, based on declarations of directors and excluding legal waivers. ** In addition to a formal evaluation every three years, the board of directors must include an item on the agenda to evaluate and debate its operation once a year. The most recent formal evaluation was held in 2007. *** Total gross remuneration including fixed and variable remuneration, attendance fees paid during the year 2007 by the company and its subsidiaries, and benefits in kind. 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 29

APPROACH Veolia Environnement ••• Sustainable development report 2007 29

As a company with a board of director quoted on the Paris and ance and internal audit programs have also been restructured New York stock exchanges, Veolia Environnement is governed to include major risks. by obligations set down by the 2003 Financial Security law and the Sarbanes-Oxley law for governance of the company and for internal control. Awareness of ethics and sustainable The Group initiated a process to certify the effectiveness of internal development control on December 31 2006, to meet the requirements of these 14 awareness seminars were organised for more than 400 regulations. This certification was renewed in 2007. Group executives between October 2004 and December 2005, around the "Ethics, Commitment and Responsibility Program”. Veolia Environnement is continuing action in this area by Risk mapping creating and deploying a training program for several thousand In continuation of work done to evaluate internal control, a Group executives from 2007 onwards, on respecting competi- map of the major risks affecting the Group was drawn up in tion law. 2006 based on about 150 internal interviews with supervisors. Environmental and awareness training on sustainable The risk evaluation was carried out at the Group level and development (see page 85). reproduced in each division. This enabled an analysis of the gross risk, the residual risk and existing control levels. Veolia Environnement has defined its sustainable development commitments in its Charter, updated in 2006 Based on this map, a steering group was set up to ensure con- (http://www.sustainable-development.veolia.com/en/) tinuous improvement in risk management. Risk committees are organised regularly (four meetings in 2007) under the We use a global system (see pages 30-31) to ensure that chairmanship of the Veolia Environnement Chief Executive we respect our obligations and take account of challenges Officer, to initiate implementation of globally coordinated risk at all stages in their development, from latency to institutio- management strategies. "Risk controllers" have been made nalization. responsible for drawing up and deploying action plans for each identified principal risk, in coordination with risk managers of Veolia Environnement divisions. The Group's assur-

FOCUS

Minimum standards

Veolia Environnement made the decision to set These standards will define environmental minimum worldwide environmental and social standards below which Veolia Environnement standards for itself in 2006. Work groups met will refuse to act, taking account of its during the year 2007 to begin the implementation leadership in its markets. Socially, standards of this approach that should be fully operational will be defined based on identification of by 2011. the main aspects of the company's responsibility towards its employees. One or several symbolic, These standards must provide a basis for the significant, measurable and realistic measures company's environmental and social responsibilities will be set for each employee, taking account applicable throughout the world, independently of the diversity of Veolia Environnement’s economic of the state of local regulations. Environmentally, and social base in the world. Each will be based the first objective is to identify the industrial on a specification describing conditions of products and processes for which a quality implementation in the different geographic areas standard should be produced. This can then be and countries in which the Group is present. developed into a precise specification dealing with the main quality aspects of the final product and control of environmental and health impacts. 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 30

Sustainable development is at the heart of Veolia Environnement’s culture, business and strategy. The management of sustainable development is directly attached to the Chief Executive Officer. The sustainable development department was created in 2003 and it coordinates environmental and social performance and works with divisions

LATENCY EMERGENCE

Mobilization limited to research worker Public awareness is gradually increasing communities, initiation of debates by NGOs as a result of repeated alerts from NGOs (e.g. nanotechnologies, biotechnologies). and the scientific community (e.g. biodiversityG, human rights).

Foresight Spreading a forward looking culture

Institut Veolia Environnement (IVE) Risk management group Created in 2001 This department was created in 2004 and its mission is global Mission and coordinated management of all types of risks that could • to anticipate economic, environmental and social trends affect the Group: and challenges during the next decades, to foster the • anticipate, analyze and weigh risks, by permanent monitoring Group’s long-term vision. (mapping) • to be a platform for exchanges and communication between • ensure that identified risks are actually taken into account different players. and at the appropriate level • check existing risk control systems Key partners • inform all stakeholdersG about global risk management proce- • Foresight Committee, composed of six internationally dure recognised members, that meets twice a year to guide and validate projects, Research management • network of academic experts with which the IVE carries out See page 24. foresight studies in the disciplines represented. Health management Areas of Research Created in 2001. Economic aspects of the environment, relations between health Mission / environment, climate change and lifestyles, the challenges of to monitor and anticipate new health safety challenges for urban growth, society and the environment. • the protection of employees and public using our services. Tools • training of employees on health issues and making the public • foresight studies program to consider areas of interest in aware of environmental health greater detail and to broaden the experts network. • international conferences and seminars so that work can Ethics Committee be done in the context of a permanent communication with The Ethics Committee was created in 2004 and is independent the academic environment and civil society. of Veolia Environnement’s hierarchy. • initiation of innovative projects (FactsG and SapiensG) to Composition record experience and scientific know-how for use in later The three members were chosen for their knowledge of the projects. Group and their career situation, to guarantee independence and the experience necessary for their role. 2007 activities included new studies on the ecological foot- Mission print and on health, pollution of indoor air, and other subjects, • to present recommendations about fundamental valuesG of widening of the network to make it international, and the the company to the Group’s Executive Committee 2050 climate conference in Montreal. • to ensure that the “Ethics, Commitment and Responsibility Program” is respected, particularly through a whistleblowing Find about Institut Veolia Environnement news on systemG. http://www.institut.veolia.org/en/ • to perform ethics audits at all the Group’s sites. Sustainable Development Visiting Committee Europe services Veolia Environnement has a permanent office in Brussels, This Committee was created in 2006 and its objective is to close by the European institutions. help Veolia Environnement in making progress with its views and its research on sustainable development. Campus Veolia Environnement Training center created in 1994 - About twenty training centers See committee’s opinion, page 4. (in France and internationally). Mission • to develop the skills of the company’s employees • to promote environmental services and to accompany the Group’s growth in partnership with major training and recruitment players.

Functional management rely on the Group’s four divisions carry out 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 31

APPROACH Veolia Environnement ••• Sustainable development report 2007 31

egy. The management in defining their objectives. It encourages adaptation of our contractual models and our commercial offers to make sus- e development tainable development a competitive advantage and a value creation lever. nd works with divisions

MATURITY INSTITUTIONALIZATION

Mobilization of public bodies and companies Existence of national or international contributing to the economy, strong standards and regulations representation in the media, priority on (e.g. safety at work, anti-trust law). agendas (e.g. health, environment, hygiene and climate change).

Guidance Compliance

Environmental management systemG Committees, inspection and monitoring bodies • tool for implementing the Group’s policy in the field of the for internal procedures environment and environmental health. Deployed since 2002, Nominations and Compensation Committee provides propos- and adapted to the requirements of international standards als to the Board of Directors about nominations and renewal (ISO 14001, Global Reporting Initiative) of directors’ contracts, payment for social representatives and • objectives are to manage and reduce the impact of the independence of directors. Group’s activities on the environment and health, through Accounts and Audit Committee examines the relevance of environmental performance management. accounting methods and gives its opinion on accounts, examines the internal audit program and is informed about inter- Annual environmental reporting nal control. • monitoring of about a hundred indicators since 2001 using the environmental information system (EIS), production of Strategic Research, Innovation and Sustainable Development action plans Committee, evaluates R&D policies within the Group’s strategy. • methodology principles formally defined in the “measurement and reporting protocol for environmental indicators” Legal management • Implemented in operations representing 75% of the Group’s • analysis of texts and jurisprudence in terms of delegation of turnover public services, government and private contracts, public - G • environmental audits: 1,200 priority facilities audited since private partnerships, for each division. 2001. • legal monitoring in several domains, to have a complementary analysis and / or a Group position on a particular sub- Annual social reporting ject identified by the Reading Committee, recently created • measurement of the Group’s social performance through in 2007 160 social indicators deployed in 68 countries. • conformity of the Group’s activities with regulations and • takes account of the specific social nature of each moni- the company’s good practice. tored business. • network of 600 correspondents in divisions to collect and Systems: internal control and audits consolidate data. Internal Control Department • formal definition and implementation of internal control Annual client reporting processes. This function was created in 2004 within the • measurement of satisfaction of our individual customers financial services management, and has been broken down based on changes to 10 synthesized indicators. into divisions and operational units. • scope: 42 entities in 19 countries (8 businesses added in 2007), Internal Audit Department namely 75% of 2007 revenue made with local authorities. • procedures to evaluate risk management, control and corporate governance processes, and to contribute to improving Requested extra-financial rating them An extra-financial rating exercise has been organised on part • evaluation of internal control, in application of the require- of our geographic coverage and all of our activities since 2004. ments of the 2002 Sarbanes-Oxley Act. • six-monthly antifraud reporting initiated since 2005, for the See “Performance” section attention of internal audit managers and internal control managers. The management was certified by the French Institute for Audit and Internal Control in 2006 and confirmed in 2007.

nt rely on the Group’s four divisions carry out their roles 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 32

Moving forward with our stakeholders

Veolia Environnement’s growth is based on a decentralised operating model with a strong local involvement. We have the responsibility to set up relations of trust and dialogue with each of our stakeholders at all levels, and to include their expectations and contributions in the implementation of our sustainable development strategy.

Shareholders: informing the financial Suppliers: developing responsible community procurement Veolia Environnement meets the expectations of its share- Integrating sustainable development tools into purchasing holders and investors through its irreproachable corporate procedures contributes to limiting risks with regard to suppli- governance, demonstration of the relevance of development ers, safety and working conditions of subcontractors, protec- priorities and appropriate risk management – all levers of tion of the environment and ethics, all of which vary from one value creation. country to another. Apart from meetings with institutional investors and financial analysts, our various company publications provide a means of Integrating sustainable development in meeting the financial community’s transparency and explana- the purchasing process tory requirements: letters to shareholders, the Annual Report, Tools have been developed to include sustainable develop- Reference Document, annual Sustainable Development Report ment in all steps of the purchasing process. They are formally and Social Report. defined in the Group’s Purchasing Charter. Since 2004, 233 All financial information is also available on the financial page buyers with 22 different nationalities have been trained on of the Veolia Internet site (www.veolia-finance.com). purchasing (about 80% of purchasers have been trained).

Call for tenders

• Suppliers’ Charter • Sustainable development • Evaluation of suppliers • Sustainable development commitment • Sustainable development audit questionnaire art. 6 in outline contracts

Give the buyer a first view Oblige our suppliers to make Guide contract relationship of the sustainable development a commitment to contribute to Check that sustainable of the supplier Veolia Environnement’s development commitments made Make the strategy of our sustainable development by suppliers are put into practice suppliers consistent with Veolia objectives, both in their activity Identify risks and fix areas Environnement’s sustainable and in their supply chain. of progress for sustainable development commitments development.

/ INTEGRATION OF SUSTAINABLE DEVELOPMENT INTO THE PROCUREMENT PROCESS 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 33

APPROACH Veolia Environnement ••• Sustainable development report 2007 33

Two complementary support items were developed in 2007 to Sustainable development has also been integrated into the guarantee good project governance: a behavior code for work- contracts of Veolia Water France suppliers, in the same way as ing groups on procurement to evaluate suppliers and assess the quality and technical aspects of products, safety of people the quality of products and services purchased; and a Supplier and equipment, and commercial positioning of proposals. Charter that defines the conditions of a responsible client- This approach was initiated in 2006 and continued in 2007. supplier relationship and summarises the Group’s commit- About forty sustainable development audits of strategic sup- ments towards sustainable development. pliers have been made by Veolia Water in France (around eight Furthermore, Veolia Environnement is carrying out an active European countries), and consulted suppliers answered 381 supplier evaluation policy, particularly on safety and environ- questions on economic, social and environmental subjects. mental aspects. 575 outline agreements with regional suppliers, Improvement areas and action plans were suggested for the namely half of all on-line supplier agreements, were evaluated year 2010. This approach has been deployed in France, and is in 2007. currently being deployed internationally. Apart from tools developed at Group level, each division deploys A sustainable development section is also included in audits its own approaches to manage the selection of products and on the Veolia Environmental Services site, already deployed at the relationship with supplier or subcontractor. For example, 40 suppliers. Veolia Environmental Services insists that its suppliers sign an agreement against illegal labor. Good purchasing practices are disseminated through a specific Internet site on procurement accessible throughout the Sustainable development audits world: 1,337 agreements were referenced at the end of 2007 and they are being referred to more and more frequently Since 2004,Veolia Environnement has carried out sustainable (3,545 users). Consolidation of procurement teams in different development audits of its suppliers, giving them means of countries (the United States, United Kingdom, and Germany) measuring their performance and comparing it with the and broad outline agreements also contribute to consolidat- Group’s expectations in this field. ing the procurement network internationally. In 2007, the Group’s purchasing management carried out an audit of a highlighted supplier of batteries shared by all divisions. This resulted in a progress plan being set up related to improvements to safety, the formal definition of a human resources policy and integration of sustainable development in steering its own suppliers.

BEST PRACTICE

Social progress: approach towards suppliers and subcontractors in Africa

Since 2006, Veolia Water AMI (Africa - Middle East - India) has carried out a policy aimed at integrating social responsibility criteria in the selection of, and relationships with its suppliers and subcontractors. The objective is to ensure that they respect international rules and laws concerning labor, particularly for labor intensive activities, such as maintenance of water networks, urban electrification and sanitationG. In 2006, companies included in the investigation represented more than 80% of purchases in Morocco and in Gabon. After studying and analysing the data, Veolia Water AMI issued accreditation certificates to companies that were considered to comply with the requirements. In 2007, the approach was extended to Niger and audits were carried out in Morocco and Gabon. The results obtained were formally defined through a purchasing charter defining requirements applicable to suppliers in terms of sustainable development. This charter is required by the contract and it must be agreed upon by suppliers who are invited to participate in any new call for bids, and by suppliers with revenue of more than 100 k€ or belonging to risky procurement categories. 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 34

Recycling campaign in Trafford, United Kingdom

Clients: raising awareness Compact that encourages “taking initiatives towards more of responsible consumption sustainable environmental practices”. The Group supports an increasing number of educational pro- The protection of the environment requires the involvement grammes to encourage eco-citizenship, particularly on the fol- of the general public. The Group puts great emphasis on rais- lowing four areas: ing customer awareness on the impact of their consumption. • steps to increase the awareness of children about protection Increasing public awareness can have a direct bearing on the of the environment; environment through encouraging customers to adapt their • campaigns towards reasonable use of water and energy savings; behavior in favor of sustainable development and responsible • promotion of the use of public transportation; consumption. • incentives to reduce and recycle waste. Veolia Environnement has thus committed itself towards a procedure to meet the eighth principle of the Global

BEST PRACTICE

Trafford changes the waste sorting habits of its residents with the help of Veolia Environmental Services

Since 2005, in the United Kingdom, Veolia Environmental Services has been working alongside the metropolitan district of Trafford (Greater 35 % G 45 % Manchester) on a campaign to raise citizens’ Recycling rate achieved by VES Recycling rate objective set by the local authority 40 % awareness of the need to recycle waste. Advertising 30 % ---- and outreach door-to-door campaigns have been 35 % 25 % organized: over 40,000 households have been 30 % contacted so far. 20 % 25 %

Following this campaign, Trafford recorded a 20 % considerable increase in waste recycling: from 10% 15 % 15 % in 2005 to 25% in 2007. This is one of the largest 10 % increases ever recorded in an urban area according 10 % to the Department for Environment, Food and Rural 5 % 5 % Affairs (DEFRA). 2004 2004/05 2005/06 2006/07 2009/10

Such initiatives are frequent in the UK thanks to the / TRENDS IN THE RECYCLING RATE IN TRAFFORD SINCE favourable context of integrated waste management THE SETTING-UP OF PUBLIC-PRIVATE PARTNERSHIPS contracts. IN PUBLIC SERVICES IN 2004 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 35

APPROACH Veolia Environnement ••• Sustainable development report 2007 35

Civil society: listening to residents in water, explained the plans and missions of the company and SEEN (its Nigerian subsidiary), and identified common and associations work areas. The discussion was strengthened by site visits. All Veolia Environnement divisions have initiated a communi- Participants congratulated the Group on this initiative and cation with civil society at the local level, so that the Group’s confirmed their intention to continue the communication activities and services can be adapted to match the expecta- and cooperation. tions of local residents and to reduce perceived nuisance due to its activities.This is particularly true for the construction or renovation of networks that create nuisance, but that are Supporting local sustainable develop- designed to eventually improve the efficiency of the service. ment projects For example, Veolia Transport uses its “proxi quality” Since it was created in May 2004, the Veolia Environnement approach, with the objective of initiating a communication Foundation has supported more than 600 sustainable develop- on a local transportation project by organizing a public meet- ment projects with an annual budget of €5 million. Each project ing between public transportation users and local residents. is sponsored by a person working in the Group. Discussion groups can continuously improve the operation of a public transportation line or network, as is the case in In 2007, 183 selected projects were set up in new countries due Nancy, France. to the support of sponsors originating from Veolia Environnement local subsidiaries.These included the professional integration of Since 2006, Veolia Water has been setting up panels of water employees from the Romany people and the combat against tasters. Agents working at the Greater Toulouse Agency in sexual exploitation and trade in young girls in India. Toulouse,France, participate in these panels and fill in a questionnaire about their perception of the taste and the odor of the water. In 2007, the company broadened this approach and http://www.fondation.veolia.com/en/ involved consumers directly. A sample group of fifty residents was set up, distributed uniformly throughout the breakdown network. Veolia Water AMI organized a debate in Niamey (Niger) in October 2007, attended by about forty NGOs and cooperative organizations with the aim of presenting its activities in FOCUS Africa to them, particularly its programs dealing with the Millennium Development Goals.The communication clarified ++ the roles and responsibilities of the different people involved A Rating requested by Veolia Foundation

145 BMJ Ratings has evaluated the efficiency of the Foundation’s management method and Environment its performances with regard to internationally recognized standards of good practice for foundations. An A++ rating was assigned. Good performance 288 of the Foundation has been emphasized Solidarity including rigorous selection of projects, ensuring 178 that all fields of action are consistent with the Group’s strategy, sound management of resources Professional and quality of information distributed by its integration institutional documents.

/ BREAKDOWN OF THE 611 PROJECTS SUPPORTED BY THE FOUNDATION SINCE ITS CREATION 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 36

Responsible lobbying

Veolia Environnement is at the heart of major public challenges: access to essential services, the environment, public health, climate change.The Group makes submissions to the different institutions concerned so as to perform its activity under optimum conditions, contribute to improving the quality of life and anticipate changes in the management of services for the environment.

The Group uses consultation and communication, mainly in tion facilities with a capacity of more than 20 megawatts. the European Union and with international institutions, to Quotas assigned to it represent 1% of European quotas. These provide material for reflection on environmental policy. are managed in the framework of a special purpose structure, VEETRA (Veolia Environnement Emission Trading) that uses a precise measurement of real emissions resulting from the Participation in consultations for EU operation of sites, to optimise cost effectiveness and identify new financing capacities for GHG emission reduction projects. green papers VEETRA also works for other Group divisions.

Due to the importance of the EU market for Veolia Veolia Transport favors extending the CO2 permit trading sys- Environnement, a permanent representation with European tem to emissions related to companies’ activities (mainly institutions has been set up in Brussels. The Group monitors freight and potentially employees home-office commuting). changes to the legislation and European regulation related to This requirement should first be applied to companies already its activities and participates in preliminary research on the subject to the EU Emission Trading Scheme. environment. Furthermore, Veolia Environnement teams are monitoring Thus, Veolia Environmental Services has made its detailed con- Commission proposals on mechanisms for reducing GHG emis- tribution to European institutions working on production of a sions in sectors not subject to the ETSG to integrate them into framework directive on waste, inspired by field experience. their projects, including targeted incentives (climate plans) and Veolia Transport participated in the ongoing call for information domestic projectsG (in France) that can give the rights to emis- about “sustainable urban mobility”, for which an action plan sion credits. must be produced before the end of 2008. Veolia Energy-Dalkia and Veolia Environmental Services are working on proposals related to policies on climate change and energy of the EU. Energy performance and renewable The Group is also participating in research on problems related energy to sustainable development in the urban context: for example adaptation to climate change, market instruments. Energy saving certificates It is directly involved with strategic questions on which its In France,Veolia Energy-Dalkia participated in the development legitimacy is related to its expertise. It is also involved with of the energy saving certificates (CEE) system, with the objective professional federations, think-tanks and some NGOs. of including the energy performance contract into the CEE system and earn certificates. Combating climate change The Group actively monitors changes to regulations and international negotiations (the Kyoto protocolG,CDMG,JIG) to anticipate how its activity sectors might be involved in matters related to climate change and reduction of GHGG emissions. Concerning the European Union’s Emission Trading SchemeG, the sites concerned are mostly Veolia Energy-Dalkia’s combus- 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 37

APPROACH Veolia Environnement ••• Sustainable development report 2007 37

European Parliament in Brussels, Belgium

Electricity produced by cogeneration Energy recovery from waste CogenerationG is expanding in all European countries. The gener- Veolia Environmental Services is defending different forms of al economic balance of cogeneration contracts in France has been energy recovery from waste (capture and recovery of biogasG modified due to new less favourable tax arrangements. Veolia from landfillG, incineration with energy recovery, methanisationG, Energy-Dalkia is working with the industry to correct this situa- production of biofuelsG and alternative fuels) with European tion, after the economic and environmental advantage of cogen- authorities. eration was recognized by the European Parliament Directive 2004/8/CE.

FOCUS

International partnerships

In 2007, the Group continued its cooperation with international organizations to provide its expertise to help achieve Millennium Development Goals (MDGs). Four priority steps were taken: • the commitment towards the “access to essential services for everyone” initiative controlled by UN-Habitat. The expert committee of which Veolia Environnement is a member was appointed to produce functional means for better controlling the practice of public - private partnerships in the field of housing; • support of the UN-Global Compact Foundation responsible for implementing the principles of the Compact, with particular recognition of Veolia’s actions in the fight against climate change at the Geneva conference in July 2007; • support for centralised cooperation, particularly in Asia where Veolia Environnement is participating in a panel of experts on urban pipe system management methods organised by the Asian Development Bank since December 2007. The Group is also contributing to the creation of a databank on decontamination techniques and practices, with the association of Asian cities (CityNet); • strengthening local skills through a long-term partnership with UNITAR (United Nations Institute for Training and Research) in which Veolia Environnement supported geographic implementation of the ITCLA (International Training Centers for Local Authorities). This helps local decision makers to improve the quality of their urban services. In 2007, our experts worked on twelve sessions that brought together almost 400 elected members and local managers, on the theme of sustainable city planning. 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 38

Patagonia, Argentina

Access to essential services Access to sanitation Lack of sanitationG is considered to be a genuine “sanitary time- Price of services bomb”, and this is why the international community has declared the year 2008 to be the international sanitation year. Veolia Water is actively involved in monitoring the implementa- Access to sanitation has been recognised as a human right since tion of measures recommended by the Water Framework 2002, and has become a subject of concern for nations in the Directive, and particularly their consequences, if any, on the same way as access to drinking water. Veolia Water has made a cost for the consumer of public drinking water and wastewater priority of it in its lobbying actions. services.

FOCUS

Veolia Environnement’s contribution to the “Environnement Grenelle” round table process, in France

The French government launched the “Environnement Grenelle” in July 2007, and provided an opportunity for discussions and debates between the Government and representatives of civil society, to define a road map towards sustainable development. Veolia Environnement actively contributed to the debates in this framework of working groups organised by the France Enterprises Movement (MEDEF) and professional federations. The Group’s strong experience in France and in other countries provided a set of specific proposals that were made available to stakeholdersG on the internet and that can be viewed at: http://www.sustainable-development.veolia.com/en/ . The proposals formulated by the Group’s divisions are in the following areas: • encourage saving of water resources and preservation of natural environments, • use waste as a resource, • manage energy demand and encourage renewable energy and decentralised generation, • set up a sustainable mobility policy. 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 39

APPROACH Veolia Environnement ••• Sustainable development report 2007 39

Climate 2050: technological and political solutions

Climate 2050, the 4th conference of the Veolia Environnement Institute organised with the Pew Center on Global Climate Change and the National Round Table on the Economy and the Environment, met in Montreal in October 2007 with almost 400 participants from twelve countries. The objective was to encourage multidisciplinary and inter-sectoral discussions to improve understanding of strategies to reduce GHGG emissions by the year 2050 and to create links between the scientific community, the private sector and public authorities. The debates identified the technological challenges; innovative measures and needs for public policies, through G sessions concentrating on eight key sectors such as transportation, biofuels and the capture and storage of CO2, and cross- discipline sessions. This event reiterated the call for the involvement of everyone concerned and all countries in combating climate change change, in preparation for the Bali conference (www.institut.veolia.org).

It works within the AquaFedG federation and participates on homogenisation of definitions, to create an international basis FOCUS for discussion, so that challenges related to sanitation can be better understood and taken into account. Service continuity Responsible Veolia Water is also lobbying European institutions to get them to recognise that the breakdown of drinking water and sanita- management of services tion are priority challenges, regardless of climatic conditions. for the environment

Veolia Environnement, extending Group research Resource conservation initiated at the Environment Grenelle, has published a document entitled Proposals for responsible Water shortage and drought management of environmental services. Veolia Water is participating in European research on adapta- This document starts by presenting technical tion to climate change, and is emphasizing that strain on solutions put forward by Veolia, but it also describes water resources is a local phenomenon. changes that it considers necessary, particularly The company is favorable to the development of alternative in terms of governance, to favour good management resources (recycling of treated wastewater, groundwater of services for the environment. recharge, control and recycling of stormwater, seawater desalination), while promoting judicious demand manage- The document can be downloaded from the ment measures. Internet site www.sustainable- development.veolia.com. Preservation of soil Veolia Environmental Services also contributes to The Group supports the European Framework Directive for the debates on waste management policy. Among other protection of soil, in the same way as the Directives on water tasks, it participated in the book Du rare à l’infini, and air and for which Framework Directives have already been panorama mondial des déchets 2006 (From Waste produced. to Resource, 2006 World Waste Survey) with Veolia Environmental Services is also organizing communica- Cyclope, the leading European institute for research tion with public authorities on the protection and remediation on international markets for raw materials and of soils. A conference on this subject was organized in the commodities. French Senate in November 2007. 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 40

Identifying and managing our risks

Risk management is based on principles of anticipation, information, coordination and management. The map of risks in terms of sustainable development provides our stakeholders with transparent information about the degree of commitment and suitability of Veolia Environnement on all subjects.

Furthermore, mapping enables permanent monitoring of they change dynamically.These challenges apply to deep-seated changes to risks in a context of pressure from regulations and trends, among which there are external sources that are the demand for more information by our stakeholdersG. imposed on our business such as scarcity of resources, and Sustainable development challenges facing Veolia Environnement population and urban growth, and internal structural chal- can be considered as risks or opportunities, but in both cases lenges that are specific to growth and internationalisation of

Challenge Sub-challenge Researc

Competition law ...... Make sites comply...... COMPLY AND ADAPT TO REGULATIONS Detection and prevention of frauds...... Anticipate environmental regulations ...... Adaptation to the capability of local consumers to make contributions ...... CHANGES IN CONTRACTUAL MODELS Adaptation of proposals ...... Adaptation of the contracts in emerging countries ...... Decarbonated energy mix ...... Renewable energy ...... CLIMATE CHANGE AND ENERGY Control of methane emissions...... Other GHGsG ...... Water ...... EFFICIENCY AND RECOVERY OF RESOURCES G Biomass - soils ...... Secondary raw materialsG ...... Drinking water and sanitationG ...... Legionella...... HEALTH CHALLENGES Atmospheric pollution...... Indoor air quality...... Preservation of biodiversityG ...... BIODIVERSITY AND ECOSYSTEMS BALANCE Impact of activities on ecosystems / LCA ...... Urban biodiversity ...... SAFETY AND HEALTH OF EMPLOYEES AT WORK ......

Growth and replacement of workforce ...... MANAGEMENT OF SKILLS Development of different businesses...... Career development and continuous training ...... CULTURAL DIVERSITY Internationalisation of recruiting ...... Contribution to local jobs ...... Increased awareness of responsible consumption...... RELATIONS WITH STAKEHOLDERS Contribution to participative debates and responsible lobbying...... Relationships with international non-government organizations ...... Relationships with the local communities ...... Contribution to Millennium Development Goals ...... URBAN POPULATION GROWTH Human rights ...... Converging Technologies*......

INNOVATIVE CHANGES CO2 capture / storage (evaluation) ...... “Decentralized energy”** ......

* Nanotechnologies, biotechnologies, information technologies and cognitive sciences ** Production of energy, where it is used, and not from a remote power station 2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:15 Page 41

APPROACH Veolia Environnement ••• Sustainable development report 2007 41

the Group. In order to organize our approach and define our of challenges affecting the Group and each of its divisions will challenges more precisely, we have decided to combine the be produced in 2008, in coordination with the risk manage- internal risk mapping approach and the external approach of ment department. our sustainable development rating by BMJ Ratings. This first presentation will be studied in more detail and a detailed map

Research Awareness Structuring Action plans

...... to make contributions ...... es ......

...... ion...... nsible lobbying...... organizations ...... G ...... Setup action plan ...... G Guidance during organization

...... G Awareness raising ...... G Research in progress 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:15 Page 42

C 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:15 Page 43

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 43

We communicate our vision on our most important challenges and we make a commitment to research and taking action that combines realism and responsibility, to better meet the expectations of our stakeholders. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:15 Page 44

Combating climate change

Veolia Environnement emits greenhouse gas (GHG) through management of its activities on behalf of its clients, but it also contributes to the fight against climate change through our efforts to make a global reduction of GHG.

Veolia Environnement is highly concerned by two aspects of cli- The objective is to use verified methodologies to demonstrate a mate change and the need to reduce GHGG emissions. continuous improvementG in the ratio between reductions in • Three of our activities (energy services, public transportation, emissions achieved by our management and the emissions for waste treatment), are critical emitters of carbon dioxide and which we accept responsibility. methane.The water sector is less directly involved in GHG emis- In this context, our carbon strategy can be broken down into sions, but is very much affected by the effects of global warming three areas. on the availability of water resources. • Our clients, managers of our cities and companies, are the par- Accompanying innovation: Veolia Environnement invests in low ties most closely involved in the drive to reduce GHG emissions, CO2 emission technologies - biomassG, solar energy, recovery of either through the responsibilities that they hold or as a result byproduct energy. Research is also being undertaken on carbon of constraints set by regulations. storage in order to determine appropriate sites, increase the reliability of techniques and verify economic relevance. Thus, the management of GHG emissions is, for Veolia Although this solution is promising, it will only be viable in the Environnement, a responsibility, in some cases a constraint (faci- medium or long term. lities are subject to quotas in the European Union) and, more often an opportunity to develop expert services for the benefit Promoting renewable and alternative energyG for decentralized of our clients. systems; these energy “decarbonize” the energy mix. However, However, our business model has two unusual features: for technical and economic reasons they are not a complete • Veolia Environnement cannot reduce its absolute GHG emis- substitute for fossil fuels. sions without sacrificing business growth. Each new contract Rationalizing the use of energy to reduce waste by improving we win to manage municipal or industrial facilities brings a energy efficiency. significant increase in emissions under our responsibility. . All urban and industrial activities have significant potential for G • Thus, unlike many other stakeholders , growth of our emis- greater savings and efficiency. Techniques are available for sions must be perceived as being a positive, to the extent that it controlling consumption. The high cost of energy and fuel reco- enables us to broaden the scope of our energy efficiency and very makes most energy efficiency investments economically carbon services, which if all other things being equal, contribute attractive. This is the mainstay of our business. to a global reduction of GHG emissions. Thus, our carbon performance is based on the demonstration of this energy and carbon efficiency model, to which all of our activities can contribute.

Global reduction of GHG emissions + 22%

20.2 Mt 24.6 Mt

Total direct and indirect + 8% GHG emissions

39.5 Mt 42.8 Mt + 14% Revenue

28.6 M€ 32.6 M€

2006 2007

Global reduction of GHG emissions The carbon efficiency ratio was 58% in 2007, Carbon efficiency = = 58% Total direct and indirect GHG emissions compared with 53% in 2006. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:15 Page 45

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 45

In 2007, the Group emitted 42.8 million metric tons of CO2 eq., an increase of 8% compared with 2006, while the revenue increased by 14%. N2O emissions (waste incineration) are included for the first time, together with CO2 emissions from SNCM ships (France).

3.3 39.5 3 36.5

Methodology 0.3 0.3 20.7 21 For each of its activities, the Group measures on the one 0.3 hand direct emissions from managed processes, vehicles, 0.3 16 facilities or equipment and on the other hand indirect 13.7 emissions due to electricity consumption. The greenhouse gasesG concerned are: • CO2 emitted by combustion installations, incineration of 2.1 2.4 0.4 0.4 the fossil part of waste and fuel combustion by mobile 0.2 0.2 1.8 2.3 sources; • CH4 contained in landfill gasG that are not captured by 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 installed collection systems and combustion of NG (natural gas for vehicles) of mobile sources; Water Waste Energy Transportation Veolia Management Environnement • N2O originating from the waste combustion process.

Direct emissions Indirect emissions (electricity)

/ DIRECT AND INDIRECT EMISSIONS OF TOTAL GHG 2006 AND 2007 (million metric tons of CO2 eq.)

Méthodologie The Group contributes to an global reduction in GHGG by 24.6 reducing its own emissions and by avoiding third party emis- 20.2 sions.The scope of the contribution of Veolia Environnement’s 16.2 division has changed since last year. 13.9 Veolia Water: distinction made in the energy production (originating from renewable energy or recovery of biogasG) 4.6 3.7 between on-site consumed energy and sold energy. 0.09 4.2 2.1 Veolia Transport: extension of the perimeter of the “eco-effi- 0.04 cient travel”to 92% of Veolia Transport passengers and 79% of kilometers travelled (apart from road and railway freight) and including sea transportation. Water Waste Energy Transportation Veolia Management Veolia Environmental Services: accounting for reductions in Environnement emissions generated by the capture of landfills biogas and by 2006 2007 on-site consumption of part of the electricity produced due to energy recovery from waste. CO2 avoided by material recovery / GLOBAL REDUCTION OF GHG EMISSIONS was quantified on the following fractions starting from their (in million of metric tons of CO2 eq.) life cycle analysis: paper / cardboard, plastics, ferrous metals, non-ferrous metals, glass, wood and bottom ashes originating from incineration. Externally verified figure (see page 94). Veolia Environnement’s global reduction of GHG for 2006 was recalculated with a homogeneous basis, the 2006 value being 20.2 million metric tons of CO2 eq.

In 2007,Veolia Environnement contributed 24.6 million metric tons of CO2 eq.to the global reduction of GHG emissions. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:15 Page 46

Floating icebergs, Island

CO2 storage: a important research and development challenge

Thermal power stations supplying heating and cooling networks In the framework of preliminaty studies, potential European managed by the Group,municipal waste incinerators and landfills sites were identified in 2007 for the construction of a pilot burning landfill gasG are all significant emitters of carbon dioxide. plant that can be used to: Since 2005, Veolia Environnement has initiated a research pro- • find capture solutions appropriate for the different types and gram on the capture, transportation, storage and recovery of CO2 sizes of facilities belonging to the Group; produced by these types of medium size industrial facilities. • study the different transportation and recovery systems adapted to the geographic spread of our facilities; Acquiring expertise • define a framework acceptable to everyone considering the risks and challenges of this solution. Carbon storage is expected to reduce GHG emissions around the world by between 20 and 30% by 2050. This aims at pro- This study was completed in 2008 with the selection of a site viding new solutions to reduce the Group’s GHGG emissions, in Claye-Souilly in Seine et Marne, France. The pilot capture acquiring recognized expertise in this field, and exploring new and storage plant will handle 200,000 metric tons of CO2 per markets. year.The gas will be injected into a saline aquifer at a depth of more than 1,500 meters for several years.

/ CAPTURE, TRANSPORTATION, RECOVERY AND STORAGE OF CO2

1 - Capture of CO2 by 2 post-combustion, Transportation by ship oxy-combustion 2 or pre-combustion 3 Transportation 1 2 - Transportation by ship Capture by pipeline of CO 3 - Transportation by pipeline 2

Storage4 4 - Storage in tank Fuels in tank 5 - Recovery: use of CO2 Recove5 use of COry: in production process 2 6 of some industries Injectionead (petrochemicals, etc.) well h 7b in unused coal 6 - Injection well head seams 7c eposits at end oil d ation 7 - Storage in gas orof exploit 7a - in deep saline aquifers

in deep7a saline 7b - in unused coal seams aquifers 7c - in gas or oil deposits at end of exploitation 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:15 Page 47

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 47 Contribution by Veolia Energy-Dalkia

/ DIAGRAM OF VEOLIA ENERGY-DALKIA’S ENERGY MANAGEMENT SYSTEM

4 Ener servicegy s • ADAPTATION TO T • REDUCTION IN CO HE NEED FOR HEAT AND SHOPPING STS BY CENTER MA INTENA NCE ANTO REDUCE THE ENERGY BILL D OPERATIO Landfill gas 1b b1 Municipal N waste HOS Renewable and incineration PITAL alternative 2 energy plant gy SCHOOL Ener 3 Landfill b6 ation rgy CULTURAL Ene CENTER b5 transform LARGE HOTEL Thermal distribution STORES b4 2b b3 installation

b2 Cogeneration gy Ener 2a 1a efficiency sil Fos energy a2

a4 a3 a1

1- INPUT ENERGY 2 - ENERGY 1a - Fossil energy TRANSFORMATION a1 - Fuel oil a2 - Gas 2a - Cogeneration a3 - Coal a4 - Others Reduction of CO2 b - Renewable and alternative energy by the use of cogeneration b1 - Wind b2 - Solar 3 - ENERGY DISTRIBUTION 4 - ENERGY SERVICES Reduction of CO2 related to b3 - Biomass b4 - Geothermal Distributed heat energy efficiency (EE) CO2 reduction related to b5 - Incineration b6 - Landfill gas Generated and distributed optimization of energy 2b - Thermal installation CO2 reduction by the use of renewable electricity services and alternative energy (boiler, cooling unit) Distributed cold CO2 emissions from combustion of input energy

The energy management system comprises four steps repre- ted by Veolia Energy-Dalkia several years ago, and it largely sented by the following energy flows: compensated for this mechanical trend. The carbon efficiency • choice, purchase and supply of fuel; ratio for this year is 21.7%, which is 8% higher than 2006. • transformation of energy; • distribution of energy; Reducing GHG emissions • use of energy. The following actions are taken to reduce GHG emissions (see The percentage of the overall reduction of GHGG emissions, as infograph): a percentage of all Veolia Energy-Dalkia emissions, is calculated • use of renewable and alternative energy whenever possible by means of a carbon efficiency ratio applied to energy activities. (1); A significant percentage of Veolia Energy-Dalkia’s development • efficient use of the best production equipment (energy effi- takes place in areas such as Eastern and Central Europe in ciency) (2) (3) which coal is the most frequently used fuel.This has a negative • combined production of heat and electricity (cogenerationG) impact on the carbon content of our energy mix. However, in (2a); 2007, the increase in the percentage of renewable and alterna- reducing energy consumption (public lighting of cities, G • tive energy used was a remarkable development (for example global management in buildings) (4). an increase of 42% for biomassG) as a result of the policy adop- In 2007, primary energyG savings generated by Veolia Energy- Dalkia achieved a overall reduction of GHG emissions equal to 23% 4.6 million metric tons of CO2 equivalent. 21.7% % 19.7% 20.1 This was achieved by: • an increase in renewable and alternative energy in the energy mix (7.2% in 2007 compared with 4.9% in 2006, namely a reduction of 1.4 million metric tons of CO2); • savings made proportional to the quantity of electricity and heat sold (overall reduction of 2.7 million metric tons of CO2); • an increase in the percentage of energy services (services 2005 2006 2007 Target after meter) in delivered energy quantities (overall reduction 2011 of 0.5 million metric tons of CO2). CARBON EFFICIENCY RATIO FOR OUR ENERGY ACTIVITY Veolia Energy-Dalkia has fixed itself a target of 23% by the year 2011. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:15 Page 48

Contribution of Veolia Environmental Services

SHOPPINGTER CEN 1

HOTEL 3 CUL TURAL 4 CENTER 2 Incineration LAR 8 STO GE Sorting RES 5 3 Ener 3 center 3 recoverygy 11 recovery Energy from landfill gas Biological6 treatment Recove9 of materialry 10 ing Landfill Agricultural7 recovery ll gas capture Landfinetwork

1 - Municipal clients 7 - Agricultural recovery of compost 2 - Industrial and commercial clients 8 - Sorting center

3 - Waste collection CO2 originating from consumption of fuel CO originating from consumption of fuel 9 - Material recovery (recycling of plastics, metals, 2 7 - Agricultural recovery of compost 4 1 - Incineration - Municipal clients bottom ashes, wood, paper-cardboard and glass)

2 - COIndustrial2 originating and from commercial combustion clients 8 - Sorting CO 2center avoided by material recovery 3 - ofWaste waste andcollection supplementary fuel 10 -CO Landfilling2 originating from consumption of fuel

CO2 originating from consumption of fuel 9 - Material recovery (recycling of plastics, metals, 4 - Incineration bottom ashes, wood, paper-cardboard and glass

CO2 originating from combustion CO2 avoided by material recovery of waste and supplementary fuel 10 - Landfilling

N2O originating from combustion of waste CO2 originating from consumption of fuel

5 - Energy recovery from incinerated waste CH4 (methane gas) not captured

CO2 avoided by energy recovery 11 - Energy recovery from landfill gas

6 - Biological treatment CO2 avoided by energy recovery from landfill ga

CO2 originating from consumption of fuel Reduction of CH4 by capture of landfill gas

/ DIAGRAM OF REDUCTION AND AVOIDANCE OF GHG EMISSIONS BY VEOLIA ENVIRONMENTAL SERVICES

Integrating the carbon challenge Biological treatment (6): • production and use of compost (7) (1 million metric tons of Our clients are increasingly interested in the carbon footprint of compost produced in 2007); the services we provide. In this context, Veolia Environmental energy recovery from methane derived from methanization G • Services is undertaking work to estimate the GHG emissions systems. of its services and to integrate carbon aspects into our offers. Sorting and recycling (8): • material recovery (9); Reducing GHG in the life cycle of waste • recovery of substitute fuels (waste oil, refuse-derived fuels). The following activities are currently being undertaken (see Landfilling (10): infograph). • capture and treatment of landfill gasG (10) (449,735 metric Collection and transportation (3): tons of methane were captured and treated in 2007), giving a • rationalization of collection operations; reduction of 9.44 million metric tons of CO2 eq.; • use of alternative fuels (1,512,000 liters of biodiesel to reduce • recovery of landfill gas to produce electricity or thermal CO2 by more than 4,000 metric tons); energy (11) (162 GWh of thermal energy and 994 GWh of elec- • development of alternative means of transportation (rail- tricity were sold in 2007, originating from 79 sites). way or waterway); In 2007, Veolia Environmental Services reduced its CO2 emis- • training in fuel-efficient driving techniques. sions by 9.92 million metric tons by capturing landfill gas and Incineration (4): by on-site consumption of part of the electricity produced by • energy recovery derived from the combustion of waste (5) energy recovery from waste. (2,566 GWh of thermal energy and 4,099 GWh of electricity were Furthermore, recycling of raw materials and the sale of energy sold in 2007, for 12.4 million metric tons of waste incinerated); recovered from waste (landfills and incinerators) have avoided • recovery of metals and slag. the use of fossil fuels by third parties; avoided emissions of GHG associated with this consumption were equal to 6.31 million metric tons of CO2 in 2007. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:15 Page 49

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 49 Experience of Veolia Environmental Services in Kyoto project-based mechanisms

Veolia Environmental Services has been working on “Clean have already been registered with the United Nations and Development Mechanism” (CDMG) projects since 2001, before nine other projects are currently in the process of being devel- the Kyoto protocolG came into force enabling developing coun- oped. They consist mainly in the installation of landfill gas col- tries to reduce their GHGG emissions through investments lection and treatment systems and possibly of leachatesG made by developed countries under constraint. Four projects evaporators.

DNAG REQUEST FOR REGISTRATION DELIVERY OF PREPARATION PDD VALIDATION VERIFICATION AGREEMENT REGISTRATION OF EMISSION CERSG REDUCTION

> 1 project > 2 projects > Tijuquinhas, > Merida project, > Tremembe in China in Mexico project, Mexico project, Brazil Brazil 745,000 t CO2 eq. 700,000 t CO2 eq. > 1 project in > 2 projects over 7 years renewable over 10 years Cameroon in Colombia twice > Alexandria > 1 project in Chile > Fachinal project, project, Egypt Argentina > 1 project in China 3.7 Mt CO2 eq. 370,000 t CO2 eq. over 10 years over 10 years

MEXICO

CHINA

Merida

COLOMBIA

EGYPT CHILE CDM projects ARGENTINA BRAZIL Alexandria Under preparation

CAMEROON Project design document (PDD) Registration request Registered

Fachinal Tijuquinhas Tremembé Source :Source Services 2007. Environmental Veolia

Beyond the positive impact CDM projects have on GHG emissions, they also create a new income from the sale of carbon credits, and can improve the environmental quality of waste treatment infrastructures in developing countries. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:15 Page 50

Contribution of Veolia Transport

Transportation on demand

G 5 ARE

4 3 Station terminus Bus 2 Train Tramway

6 STATIO 8 N TERMI NUS 9

MÉ TRO Car sharing Metro

1 - Village Bicycle 2 - City Center 3 - Suburb Private car 4 - Bus station

5 - Park and ride car park and country train station CO2 emitted by public transportation 6 - Terminus station in city center

7 - Public transportation management satellite CO2 avoided due to the use of public transportation 8 - Car sharing car park 9 - Smooth transit modes

/ OPTIMIZATION OF THE DIFFERENT TRANSPORTATION MODES OF VEOLIA TRANSPORT

The three main strategic approaches developed by Veolia ... by measuring travel eco-efficiency Transport to maximize its contribution to GHGG emissions reduction are firstly to increase the use of public transportation Veolia Transport has developed an “eco-efficient travel” indica- (frequency, attractiveness, complementarity of transportation tor to manage its GHG emissions, estimating the amount of modes, etc.), secondly to improve carbon generation by trans- CO2 avoided by passengers travelling daily within the served portation by precisely adjusting means to meet needs (for regions. This indicator is defined by measuring what the same example transportation on demandG), and thirdly to facilitate passengers would have emitted if they were in a private car. In the change towards "clean" vehicles. 2006, "eco-efficient travel" was calculated over a restricted scope of urban and inter-urban networks for which the data and average distance travelled per passenger was reliable. Prioritizing public transportation This scope was extended in 2007 to cover 92% of Veolia A bus emits an average of between 80 and 90 grams of CO2 Transport passengers and 79% of kilometers travelled. equivalent per person per kilometer travelled, whilst a private Since 2001 several urban freight transportation initiatives car emits twice this amount. In this view, Veolia Transport have been set up, for example an urban distribution platform offers solutions to the responsible authorities to encourage a (Elcidis) in La Rochelle, with electric vehicles making deliveries mode switch from private car to public transportation (for to the city center. example the use of park and ride car parks). Thus, over the scope considered in 2007, Veolia Transport Reducing GHG emissions… avoided 3.7 million metric tons of CO2 which is the equivalent of 1.4 times the GHG emissions originating from its activities The following are developed within managed networks: within the same scope. • reduction of fuel consumption (training in energy efficient driving techniques, driving assistance tools); • promotion, use or production of biofuelsG (advice to local communities, use of alternative waste food oil fuels, recovery of biogasG derived from landfills and sludge from wastewater treatment plants). 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 51

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 51 Contribution of Veolia Water

Managing the energy intensity Adapting services to climate change of treatments Furthermore, Veolia Water has embarked on the path towards The activities of Veolia Water do not emit large quantities of adaptation to climate change and is developing drinking GHGG directly. However the greater sophistication of neces- water and wastewater management solutions for use by com- sary treatment due to increased pollution and higher quality munities and companies (see infograph). standards is tending to increase the amount of energy needed Encouraging the fight against resource wastage (water, energy, for water treatment. Furthermore, the reduction of energy inten- chemical products) and their use: sity for alternative techniques such as desalination is crucial in • increased awareness of efficient use of water (10); determining the extent to which they are economically and • repair and maintenance of the water network (1). environmentally viable. In this context,Veolia Water is working on two issues: Adaptation of wastewater management: • energy efficiency optimization of installations (actions on • optimizing the use of wastewater collection networks during pumping, optimization of pond aeration and energy recovery); extreme rain events (3a and 3b) (5); • production of renewable energy (recovery of biogas derived • anticipation and management of sanitationG networks dur- from digestion of sludge, recovery of potential energy from ing severe heat waves, particularly in urban environment water by microturbining or by a pressure exchange). (smells, corrosion, etc.); Promotion and development of alternative resources: • recharge of water tables (7) (8a and 8b); • recycling of treated wastewater for non-domestic uses and reuseG of rain water (6) (9); • desalination of seawater and brackish water combined with a source of renewable energy (11).

1 - Repair of the drinking water network 7 - Active groundwater recharge (under pressure) 2 - Drinking water reservoir 8a - Groundwater recharge by infiltration 3 - Rain water storage ponds 8b - Recharge of wet zones 3a - Multi-function pond 9 - Agricultural reuse of treated wastewater 3b - Landscape storm pond 10 - Information center (increased awareness action) 4 - Actiflo™ (patented treatment system) 11 - Solar panels

5 - Infiltration node (drainage) 6 6 - Planted roofs 5 ING SHOPPTER CEN 2

Riv er desalinationSeawater plant 1 10 Treatment River plant 8b Drinkingplant water Riv Sea er 11

3b 3a 7 9 4

Aquifer

8a 8b

Aqu ifer

Drinking water network Water infrastructures Farmland

Wastewater network Users: industry, activity centers, Solar panels residential zones Treated wastewater network

/ CHANGES TO WATER FLOWS AND TREATMENT CAUSED BY CLIMATE CHANGE 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 52

Preserving biodiversity

Worldwide biological diversity is shrinking at an unprecedented rate. According to the Millennium Ecosystem Assessment, the rate of extinction of species is one thousand times higher that it would be naturally. Faced with this major challenge,Veolia Environnement is developing an approach based on characterizing the impacts of its activities and integrating biodiversity management within its environmental management system.

This challenge applies to all of the Group's activities. ucts (organic fertilizers and secondary raw materialsG). • Veolia Environnement has adopted a policy of integrating EcotoxicityG tests used for forecasts are complemented by protection of biodiversityG on land occupied by its facilities at biological tools indicating the condition of the aquatic or land the project design stage, particularly through its approach environment. towards sustainable urban planning. When the Group takes over existing facilities, it works in cooperation with its munici- The Group is also working with many university and institu- pal or industrial clients to improve their integration within the tional partners to benefit from the most advanced expertise, natural environment. particularly in the field of ecosystems modelling, a discipline • Through its activities,Veolia Environnement is making a pos- that enables us to better understand their complexity and to itive contribution to the protection of biodiversity by reducing predict changes to them. the amount of pollution affecting ecosystems and taking into account its secondary impacts (residual pollution contained in our waste, consumption of natural resources) that we need to Urban biodiversity control and reduce. The development of cities often leads to intensive occupancy of Protection of biodiversity is included in the commitments space that leaves little room for nature. However, these urban made in the company's Sustainable Development Charter, that environments are not necessarily poor in biodiversity and para- can be viewed at www.sustainable-development.veolia.com. doxically, have even become a refuge for many threatened species appearing in the red list of the International Union for Characterization of our impacts Conservation of Nature (IUCN). Veolia Environnement R&D is continuing to make progress in Therefore, an evaluation of the urban biodiversity situation is evaluating its impacts. In addition to classical physicochemi- essential to determine appropriate management.The use of tools cal and bacteriological approaches, the Group has now such as the "green registerG", enables stakeholdersG concerned acquired good expertise of tools for evaluating its releases with urban development to adapt their strategies (ecological into aquatic environments, its GHG emissions and its prod- analysis and list of green space occupancy within a region).

BEST PRACTICE

Preservation of ecosystems on Veolia sites

Veolia Water UK in the United Kingdom pays special attention to protected species and natural habitats present on its sites. Since 2002, Veolia Water UK has been working on a classification of its sites with regard to the British national system, which enables delimitation of protected zones and appropriate management of natural areas. Several partnerships have also been initiated between subsidiaries of Veolia Water UK and environmental associations working towards the preservation of biodiversity. For example, the partnership between Three Valleys Water, Friends of Stockers Lake and Middlesex Wildlife Trust has lead to the creation of a protected zone at Stockers Lake, to preserve the population of birds living close to this wet environment. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 53

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 53

Treatment of effluents by plant means (Organica)

The Hungarian Organica company has been a subsidiary of Veolia Water Solutions & Technologies since 2007, and is specialized in a biological technique to treat domestic wastewater through the use of complex ecosystems. Organica designs wastewater treatment plants making use of the immersed roots of aquatic plants and a very special type of fauna (earthworms, shellfishes, snails). More and more small or medium size communities are interested in this technology because these plants are 100% natural and also because of their small ground occupancy (0.3m2 per equivalent inhabitant).

Noortalje in Sweden

Veolia Environnement is thus interested in the characteristics Importance of biodiversity and functions of urban biodiversity so as to encourage the development of green areas within its sites. Experiments will in our activities be carried out on some Veolia Water sites in 2008. Every species performs a number of functions that are fundamental for a balanced ecosystem. In doing so, nature performs services that are useful for our activities, for example Management of biodiversity through the ability of ecosystems to clean water or regulate in our facilities air quality. Our geographic information system (GIS) references our main Biodiversity thus contributes to facilitating our work (biolog- facilities’ position relative to areas of ecological interestG and ical treatments of untreated water and wastewater, the use already includes more than 1,200 priority facilities. The pro- of ponds or grassy strips for their self cleaning capability, gressive integration of this tool into our environmental infor- etc.), and can enable the use of simpler and less expensive mation system (used for environmental reporting and audits) treatment processes (water and energy consumption). will enable its broader use by operational staff. Since 2005, Veolia Environnement has been implementing Economic valorization of ecosystem actions aimed at increasing awareness of its managerial grade services employees and promoting good practices. The Group deploys a The Orée associationG, the French Institute of Biodiversity (IFB) questionnaire to collect quantitative and qualitative informa- and Veolia Environnement initiated a workgroup in 2006 enti- tion about actions related to biodiversity. The results collected tled "How to integrate biodiversity into business strategies"; by Veolia Environmental Services from more than 300 sites are this association is composed of about twenty companies, pub- useful for evaluating the awareness level of operational staff lic communities and associations. The objective is to evaluate towards this challenge and for identifying actions that can be relationships between business and biodiversity. A guide on shared (for example developing best practices guides). economic tools to be implemented in order to benefit from The Group is developing a methodology for systematically this type of interdependence will be published in 2008. G evaluating the impact of its priority facilities on biodiversi- Veolia Environnement has also initiated cooperation with the ty. This methodology will integrate local characteristics of economic research laboratory of the University of Columbia, the natural environment and methods of development and New York (CEMTPP) on the subject of economic applications of management of the site so as to enable the definition of an ecosystem servicesG. adapted action plan and measurement of results obtained through the definition of performance monitoring indicators. The methodology will gradually be enriched by the results of R&D work currently in progress. The Group will define a deployment scope in 2008, and implementation objectives for 2011. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 54

Saving resources

Natural resources and raw materials are being consumed more and more intensively around the world.The activities of Veolia Environnement are increasingly being integrated into an economy of scarcity; the solutions that we are developing can help to rationalize exploitation of resources or substitute renewable resources, for more sustainable and economically viable management.

Preserving water resources natural phenomena of evaporation and condensation in the form of rain. Desalination by reverse osmosisG is more recent and consists of retaining salts, bacteria and particles in membranes Rationalizing withdrawal and obtaining very pure water. In all cases,Veolia Environnement Efforts to reduce waste can benefit from technical solutions to is working on making continuous improvement to the energy improve the efficiency of drinking water networks and con- efficiency of the process and management of the saline concen- sumption of water in facilities. Veolia Water applies a continu- trate to give better control over the environmental impact and ous improvementG approach on these two elements. production costs. The extension of these techniques to less Awareness-raising and education aimed at consumers encour- extreme situations than those from which they originate (rich age the rationalization of use and savings of water in regions in countries with abundant and inexpensive energy but with which there is pressure on water resources. severe pressure on water) requires continuous work to lower process costs and particularly their energy intensity. Developing alternative resources Veolia Water concentrates its efforts on the development of alternative resources so as to limit pressure on water supplies. + 42% 7.4 Recycling G Recycling (reuse ) of wastewater maximizes the use of with- 5.2 drawn water before it is returned to the natural environment, creating a lever effect between the volume of water withdrawn and the volume of water used. It can be used for industrial purposes (process water, cooling water, etc.) or for rural applications (crop irrigation, irrigation of golf courses, green spaces), or even some domestic uses for which drinking water is not necessary. For example this is the case in Adelaide, Australia, where the Bolivar wastewater treatment plant managed by Veolia Water reprocesses 43,000 cubic meters wastewater per day and irri- gates horticultural plantations, to recharge groundwater in win- ter and supply non-drinking water for domestic purposes in a 2005 2007 residential area. Veolia Water thus recycles 3 million cubic / EVOLUTION OF THE QUANTITY OF DESALINATED meters per day (namely 20% of the current world market). WATER PRODUCED BY VEOLIA WATER These reuse solutions require rigorous technical control to avoid (IN MILLIONS OF CUBIC METERS) any sanitary risk. Psychological and cultural barriers that still limit their use also need to be addressed. Groundwater recharge Desalination Groundwater recharge techniques artificially input water to the 97.5% of water reserves on the planet are seawater. water table, in order to protect groundwater.They use the ground's Desalination can considerably increase the available water natural functions, namely its filtration and storage capacity. For resource and provide a solution in case of drought or shortages. coastal aquifers, replenishment also prevents penetration of sea- It also reduces dependence on water from other regions by water into groundwater and consequently salination of this avoiding water imports and transfers over long distances. groundwater. Artificially replenishing water tables makes them Veolia Water is developing two major types of processes to more productive and provides a solution to chronic or seasonal desalinate sea water. Thermal desalination is the traditional deficits and limits imports of water from other procurement method, and consists of separating salt from water by evapora- basins. As an illustration, the Berlin water service managed by tion in a distillation system. Distillation artificially reproduces Veolia Water is based largely on the principle of filtration on banks. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 55

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 + 34.7% 55 10.03

7.45

Other recycled materials Compost produced Alternative fuel Wood, glass, plastic Construction Metals Paper, cardboard 2006 2007 / MATERIALS RECOVERED BY VEOLIA ENVIRONMENTAL SERVICES (IN MILLIONS OF METRIC TONS)

Saving raw materials Veolia Environmental Services is developing recycling particularly in paper/cardboard and metal industries (+39% and +20% respectively in 2007). The increase in the recycling rates is A significant part of industrial and waste contains useful based on continuous improvement of treatment processes, materials (paper, cardboard, plastic, metals, wood, glass) that and the creation and development of new activities. Treated can be reused directly in the production process, and conse- waste quantities are reducing and metric tons of recycled quently have a significant economic value. Veolia Environmental waste are increasing (+35% in 2007, namely 10 million metric Services is encouraged to develop recycling and recovery activ- tons). ities by an increase in the global demand for recycled materials, related particularly to growth of emerging countries. It At the same time, Veolia Environmental Services is working thus contributes to reducing exploitation of natural resources. with its industrial clients to reduce the quantity of waste produced and therefore the quantity of raw materials used in production processes and their hazardous nature.

FOCUS

Reconciling saving of resources and creation of value

This graph, illustrating the typical situation of an urban heating contract in Central Europe, shows the positive impact obtained on consumptions by a policy of continuous improvement of energy efficiency and thermal insulation at private clients and at manufacturers. This economical resource management coexists with strong 130 added value due to expansion 120 of the network into new districts +67% 110 and urban renovation, new services 100 and connection of new industrial 90 clients. +34% 80 70 N N + 1 N + 2 N + 3 N + 4 N + 5 N + 6 N + 7 N + 8

Planned and real heat sale Natural change to heat revenue basis 2002. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 56

Recovering biomass Recovering green waste BiomassG includes a large number of materials originating from Green waste provides an opportunity for new products that better forestry or farming, and the organic part of industrial and munici- respect the environment, by developing substitute products with a pal waste flows. lower environmental impact. The collection of biomass flows derived from waste, and particularly recovered wood, is continu- Developing renewable energy sources ously increasing; Veolia Environmental Services is developing methods of recovery for the wood industry, grinding and paper Increasing interest is being shown in biomass. After treatment, it works. Furthermore, the recovery of biomass derived from waste can be transformed into fuel to produce heat, cold, and electricity provides a means of providing complex biomolecules to chemical G G (via biomethanization and cogeneration ). Moreover, captured industries, thus replacing molecules with mineral or synthetic ori- G biogas originating from the decomposition of rotting waste can gin by renewable molecules. Biomaterials (composites, fibers, G be recovered in the form of energy,so that GHG emissions can be hemp concrete, linen, etc.) can be used by the automobile, con- limited. struction and packaging sectors. Direct recovery of forestry or farm biomass is a strategic priority for the energy sector. It can be used as a fuel by heat production sys- Protecting soils: recovery for farming tems, particularly in boilers supplying urban heating networksG,in addition to or as a replacement for fossil fuel.The structure of the Use of organic materials derived from waste provides a means of forestry industry and in particular the development of very short maintaining or improving soil quality.It protects water resources by rotation scrubs, are key development themes for Veolia Energy- retention of nitrates and pesticides,and reduces erosion and deple- G Dalkia. Furthermore Veolia Environmental Services is designing tion of soils. Therefore, the addition of enrichment from Veolia G new biodiesel and biofuelG production methods originating from Environmental Services composting systems (+24% composted used animal fats and grease from treatment plants. sludge in 2007) which satisfies high quality standards, contributes to enriching the earth with organic materials. Veolia Environnement is developing several systems for the treatment and recovery of sludge produced by treatment plants, the most important being agronomic recovery through spreading and compost.

BEST PRACTICE

9% Recovery of sludge 18% from wastewater treatment 22%

plants 5%

Veolia Environnement has demonstrated its capacity to propose reliable and financially viable solutions for the treatment and 46% recovery of sludge produced by wastewater treatment plants. The agronomic recovery system is the most important, representing 46% of the tonnage. Its benefits are recognized (fertilization, limitation of additional chemicals, reduction of soil erosion, etc.). Agronomic recovery Incineration Solid substitute fuels and incineration with energy recovery can or coincineration Recovery of solid fuel sometimes avoid consumption of fossil fuels. Furthermore, digestion Storage of sludge, that reduces the final volume of sludge, can produce Others biogas that can be used for energy and thus reduce GHG emissions. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 57

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 57

Contributing to the protection of health and lifestyle

The World Health Organization claims that 25% of preventable diseases are linked to the environment. Urban hygiene and a reduction of diffuse pollutions, contribute to keeping a healthy and balanced environment that protects everyone’s wellbeing. Environmental health is an important aspect of Veolia Environnement's businesses.

Health in urban areas is a fragile but vital task to maintain the Controlling health risks wellbeing of all inhabitants. Factors damaging to health tend to concentrate in modern cities such as an increase to chemi- Sanitary risks with drinking water are related partly to micro- cal exposure in daily life, infectious agents such as legionella, biological risks (bacteria, virus, parasites), and also to chemical and degradation of outdoor and indoor air quality. Therefore risks (arsenic, fluorine, nitrates, etc.). The entire challenge of a sustainable city must be clean and healthy. Veolia water control consists of monitoring a large number of differ- Environnement contributes to this through better manage- ent substances continuously (and not just after treatment). ment of waste, preservation of the quality of drinking water Therefore, Veolia Water is implementing approaches conform- and treated water released into the natural environment, and ing with Water Safety Plans, so as to have preventive manage- reduction of nuisances related to transportation and energy ment of sanitary risks related to upstream water quality distribution infrastructures. affecting the supply. For example, the HACCP (Hazard Analysis Critical Control Point) method provides a means of evaluating sanitary risks on the input side of the water intake, taking account of potential risk factors (plants, farm activities, etc.) Water quality, from the source to as far as the consumer's tap. This approach is now being the tap deployed on facilities operated by Veolia Water. 2.3 billion people suffer from poor water quality; 1.96 million die every year from diarrhoea type diseases mainly related to water. Water quality plays a fundamental role in health , in terms of food but also for hygiene (body, clothes). Therefore supply of drinking water must be maintained at all times and sanitary checks should be carried out (see page 82).

Hygiene in hospitals

The hospital concentrates risk factors related to hygiene in a limited and closed space. Water and air quality, cleaning, disinfection and sterilization are all of overriding importance in the effort to maintain a high level of hygiene and to resist acquired infections that affect between 5 and 12% of all people in hospital. Veolia Environnement is now a key player in environmental safety at hospitals and clinics. For example, in Saint Joseph hospital in France, one part of the partnership between Veolia Energy-Dalkia and its client deals with improved health and safety with a plan to fight nosocomial infections (air treatment, cleaning) and a "legionella" prevention program in partnership with the ‘Comité de lutte contre les infections nosocomiales’ (CLIN) (Committee to fight against nosocomial infections) and the operational hygiene unit. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 58

Veolia is involved in implementation of the REACH regulation

REACH, the European regulation on the Registration, Evaluation, Authorization and restrictions of Chemical substances, came into force on June 1st, 2007. This regulation will enable better knowledge of chemicals circulating in the European market and aims to guarantee better protection of health and the environment. Veolia Environnement has initiated an active approach to meet the requirements of this new regulation that involves several of the Group's divisions. REACH is perceived as being a genuine opportunity to improve the management of chemical products used in our activities, particularly due to new information that will become available. The Group is particularly concerned because it is a producer of materials originating from waste, and is also a user of chemicals (for water treatment, waste treatment, cleaning and disinfection of heating or cooling production systems). REACH will provide a means of replacing the most concerning substances by less harmful alternatives.

Reducing pollution upstream Sanitation essential for health In addition to the conventional sanitary monitoring of water, Without sanitationG, wastewater that is returned directly into Veolia Water is working to reduce water contamination by the environment pollutes natural aquatic environments and organic materials, since organic contamination is a source of threatens the quality of drinking water produced down- bacterial proliferation, and interaction between such bacteria stream. Sanitation also provides a means of significantly and chlorine can have harmful long-term effects on health. reducing exposure to some diseases such as diarrheic dis- Veolia Water also offers complete analyses of their process to eases. The health impact of sanitation also has an effect on its industrial clients to encourage recycling of water, raw the quality of bathing water, for which the economic risks for materials and to limit polluting releases. example for tourism are large. Veolia's R&D management is concentrating its efforts particularly on saline industrial effluents that are very widespread and complex to be treated (for example polluted water from Reducing atmospheric pollution landfills). Many diseases (cancers, allergies and lung diseases) are directly related to atmospheric pollution.

Contribution of public transportation R&D to urban air quality Veolia Transport contributes to reducing local pollution in city centers by encouraging the development of public transportation, management of transportation systems running on elec- Atmospheric trical energy and providing vehicles with particle filters or biofuelsG. In Australia, Veolia Transport is the first company pollution working in this sector to be officially recognized by local Australian authorities as having a high performance ecological Towards real time modelling of atmospheric policy. Its vehicle maintenance program, designed to improve air dispersion of pollutants quality by reducing emissions from diesel vehicles, received the "Clean Fleet" accreditation in September 2007. Incinerators, landfills, treatment plants, compostingG centers and cooling towers emit gas effluents into the atmosphere. Veolia Environnement's research is developing software to model atmospheric dispersion of pollutants and smells. This tool is currently being developed and will provide a means of modelling dispersion of emissions into the atmosphere in real time, and determining their impacts on the environment, if any. The results will be used to adapt the activities of sites accordingly. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 59

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 59

Controlling emissions of pollutants from Indoor air quality: an emerging incineration plants challenge Veolia Environmental Services is working to continuously Veolia Energy-Dalkia is assisting its clients in controlling and improve the treatment of exhaust gases from waste inciner- improving indoor air quality, by operating and maintaining ators. Since 2005, investments made to apply European stan- zones with a controlled atmosphere, disinfecting forced air dards, particularly demanding in terms of emissions, have ducts, and performing biological and physicochemical tests for considerably reduced the residual health hazard related to continuous monitoring of air quality. emissions from waste incinerators. In 2007, the quantity of Veolia Energy-Dalkia also has a unit specialized in controlled pollutants emitted per metric ton of incinerated waste atmosphere environments used in many industrial sectors and dropped by 15% for SOx, 3% for NOx, 1 % for HCI, and remained that require a particularly high air quality, such as microelec- stable for dust particles. tronics, food processing and pharmaceuticals. The development of high energy efficiency buildings will reinforce the need to test indoor air quality. Veolia Energy-Dalkia is Preventing the development continuing important R&D programs in this field.These concen- of legionella trate particularly on cleaning and disinfection techniques for air distribution systems, and the definition of health thresholds Veolia Energy-Dalkia has implemented a specific methodology and air quality indicators based on specific measures. with its clients, particularly in hospitals and tertiary sectors, to measure and manage the risk of legionella developing in their facilities. See also "Performance" part in page 82.

INTERVIEW

Christian Cochet, at the Centre scientifique et technique du bâtiment (Building Scientific and Technical Center)

Why is the impact of the indoor air quality on health so Christian Cochet, important at the moment? Assistant Director, Energy Health Environment, CSTB Several factors explain this increased awareness. Work on environmental health has demonstrated the importance of the indoor environment on health. Questions such as asbestos have introduced the idea that building can be a What solutions can be implemented and what role can factor in the health hazard. Finally, the need to improve the Veolia Environnement play in the subject? energy efficiency of buildings will cause stricter Contamination sources must be reduced in the building requirements for the management of indoor air. design phase, with the choice of air management systems appropriate for use. The operation of buildings affects What are the sources of indoor air contamination, and energy efficiency, and is also of overriding importance what are the consequences on health? to assure good renewal of indoor air; this is a challenge The range of effects on health is enormous, varying from at the core of the business of Veolia Energy-Dalkia. allergies to cancer. There can be several types of sources of contamination (chemical, microbiological, radiological, etc.) They depend on the outdoor air quality, the building itself (construction materials, paints, etc.), the content of the building (furniture, electronic equipment) and finally building management (maintenance, ventilation in particular). 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 60

Promoting respect of Human Rights Access to essential services

These are defined as vital services essential for a dignified and decent life.The UN’s International Covenant on Economic, Social and Cultural Rights (ICESCR) includes collective drinking water and sanitation, waste management and waste disposal, energy distribution and public transportation services in the definition of essential services. Although frequently mentioned in the context of the developing world, the problem of access to these services is also an issue for urban services management in the developed world.

An important presence in emerging Solutions for social support countries In Africa, Veolia Water AMI (Africa, Middle East, India) is developing appropriate solutions for the poorest populations. "Mobile Although Veolia Environnement earns most of its revenue in developed countries, its presence in emerging or developing offices", that are actually buses outfitted as offices, are used to countries measured in terms of industrial and human realities, visit associations and inhabitants of under-equipped and is very significant. Veolia Environnement has a large economic remote districts; automatic water fountains, with prepaid fixed influence in some of these countries, which reinforces the fees, are used to reduce waste while allowing access of poor extent of our company responsibility. families to water. Since initial contact in 2002, Moroccan subsidiaries of Veolia Facilitating financial access Water have connected 198 995 inhabitants to the drinking water network and 66 180 inhabitants to the sanitationG net- to the service work through subsidized connectionsG. A similar policy is imple- Social support mechanisms must be created in developing mented in Niger. Finally in March 2008, Veolia Water agreed countries to meet the needs of the worst off populations. with the Grameen Bank to create a new company, Grameen - Veolia Water Ltd.

/ ECONOMIC PRESENCE OF VEOLIA ENVIRONNEMENT IN SOME COUNTRIES CZECH REPUBLIC NORWAY SLOVAKIA UNITED KINGDOM LITHUANIA POLAND FRANCE ROMANIA UNITED STATES GERMANY ARMENIA JAPAN CHINA MOROCCO ISRAEL MEXICO NIGER

GABON

AUSTRALIA

2.5% 0.8% 0.4% 0.1% 0.05%

Revenue in PPP (purchasing power parity) as a percentage of the gross national product in PPP

Our activity as a percentage of the wealth of a country is an indicator of our social and environmental responsibility. In several countries in Africa and Eastern Europe, it is greater than what has been achieved in France after 150 years of development. Veolia Environnement contributes to the local economic activity by redistributing its revenue to the stakeholdersG . In Gabon, the 2006 revenue of 101 billion CFA Francs (154 million Euros) is distributed with 43.2% to suppliers and service providers, 19.5% to employees, 2% to tax administrations (excluding VAT), 1.7% to banks and 33.5% for investments. Sources: UNDP 2005, Bank 2006, World Environnement Veolia 2007. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 61

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 61 FOCUS

Emergency humanitarian assistance and technical support Veolia Environnement makes its expertise available for emergency humanitarian assistance (Veolia Force) and development (Veolia Waterdev) through its network of 450 volunteer employees. Emergency action has been taken to enable access to water in partnership with Unicef (North Korea, Congo Democratic Republic), Solidarity and Initial Urgency (Bangladesh, Pakistan, and Sudan), the French Red Cross (Indonesia, Central Africa) and the Ministry of Foreign Affairs (Pakistan, Peru, Mexico). Veolia has also participated in the Alliance for development’s activities (Madagascar, Niger, Vietnam) and has provided technical support for more than 10 French local authorities engaged in decentralized cooperation programs. Combining the activities of the Veolia Environnement Foundation and organizational skills of Waterdev Waterforce under the same management in 2008 will strengthen the actions of Veolia Environnement in the field and make them more consistent and efficient.

Madras in India

This innovative partnership will enable to provide drinking In some countries in which climate conditions make heating water to poor rural populations in Bangladesh. At the end an essential service,Veolia Energy-Dalkia breaks charges down of 2008, the first unit should supply 25,000 inhabitants of individually, to enable better control over heating costs that Gaolmari with drinking water from water fountains, at a price are very important for low-incomes. In Lithuania, the installa- calculated as a function of the financial capability of the com- tion of individual meters is financed by a fund for "efficient munity. All profits shall be reinjected into the project to energy consumption", subsidized by the World Bank and with finance its expansion. up to 100% of the cost (for more than 500 buildings equipped). Adapting rates Veolia Environnement does not determine rates for access to Identifying models that take into services for users of water, energy or transportation; they are account traditional local context fixed by the public authorities within the framework of each contract. But we propose special rate arrangements in cooper- In developing countries, our businesses are encouraging infor- ation with local authorities and possibly associations, to mal craft activities that can play an important role in maintain- enable better access of the population to these services. ing social and economic balance.The waste management sector with Egyptian zabaleen or pepenadores (ragmen) in Venezuela Thus in Africa, Veolia Water contributed to applying: are very typical of this phenomenon. New modern systems • rates adapted to the capability of inhabitants and the type must adapt to these realities, and either eradicate their most of consumption considered (essential or leisure) to reduce the unacceptable aspects such as child labor by accompanying it cost for the poorest; with social and education monitoring, or search for means of • free connection to the drinking water networks, or cost conciliation and balance. The simplest tasks can be carried out spread out over up to 7 or 10 years, to determine monthly con- by traditional means as soon as a framework is set up to guar- tributions that inhabitants can afford; antee legitimacy and health and safety. • combination of multiple levels of financial solidarity – between subscribers to the water service (in Morocco); Practices from the South deserve attentive consideration; the between large cities and isolated centers (in Niger), between Transmilenio in Bogota has demonstrated that financial con- developed and emerging countries through international soli- straints can lead to the invention of effective and economic darity, for example as in Burkina Faso, in which the difference solutions that can be perfectly transposed to developed coun- between the contribution requested from inhabitants and the tries. Waste recycling requires large financial support from pub- real cost is paid by the ONEAG and then the World Bank. lic authorities in the richer world, whilst it is done spontaneous- ly in the developing countries. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 62

/ ACCESS TO DRINKING WATER AND SANITATION FACILITIES IN URBAN ENVIRONMENT AS A % OF URBAN POPULATION

ROMANIA ARMENIA

CHINA MOROCCO MEXICO NIGER INDIA

COLOMBIA GABON

ARGENTINA

/ WORK DONE BY VEOLIA WATER IN SOME EMERGING OR DEVELOPING COUNTRIES NIGER GABON MEXICO > 1 service concession > 1 concession contractG > 1 concession contract (affermage) contractG > Drinking water: 0.97 million > Drinking water: 0.75 million > Drinking water: 1.48 million inhabitants served inhabitants served inhabitants served by connections > Increase in the number > Sanitation: 0.73 million inhabitants served and water fountains of inhabitants served since 1997 > Increase in the number + 555,000 of inhabitants served since 2001 COLUMBIA + 352,000 > 3 concession contracts INDIA > Drinking water: 0.48 million > Karnataca performance contract inhabitants served ARGENTINA > Drinking water: about > Sanitation: 0.11 million inhabitants served > 1 concessionG contract 240,000 inhabitants served > Drinking water: 0.21 million > Increase in the number inhabitants served of meters installed since 2006 CHINA > SanitationG: 0.13 million + 25,000 > 15 contracts inhabitants served > 4 service concession (affermage) contracts MOROCCO > 5 concession contracts ROMANIA > 3 concession contracts > 6 BOTsG > 2 concession contracts > Drinking water: 2.84 million > Drinking water: 23.87 million > Drinking water and sanitation: inhabitants served inhabitants served 1.95 million inhabitants served > Sanitation: 2.87 million inhabitants > Sanitation: 11.5 million inhabitants served > Increase in the number of served connections since 2000 > Increase in the number of inhabitants + 29,751 served since 2002 ARMENIA + 705,000 > 1 service concession (affermage) contract > Drinking water: 1.5 million inhabitants served > Sanitation: 0.8 million inhabitants served

More than 50% of the population does not have access to drinking water nor Acceptable access to drinking water, but at least 30% of the population does to decent sanitation facilities not have access to sanitation facilities Limited access to drinking water very poor access to sanitation facilities for Good access to drinking water, but between 20 and 30% of the population more than 40% of the population does not have access to sanitation facilities Better access to drinking water and sanitation facilities but still less than the Very good coverage of drinking water and sanitation equipment world average Data not available Significant improvement in access to drinking water and sanitation equipmentG (better than the world average in both cases)

Facilitating access to water supply and sanitation Access to drinking water is only really efficient in terms of development if it is also accompanied by access to sanitation; about a billion people in the world do not have access to drinking water and 2.6 billion do not have access to basic sanitation. In the strict framework of responsibilities granted to it in exercise of public service management throughout the world (1.8% of the world population served with drinking water and sanitation facilities), Veolia Water makes a commitment to actively contribute to achieving the Millenium Development Goals. In emerging countries, Veolia Water pays special attention to improving the quality of drinking water; setting up or restoring service continuity; increasing the number of connections (drinking water supply and sanitation). Sources: and UNICEF (WHO) Health Organization 2004, World and sanitation target Meeting the MDG drinking water 2006;Water. Veolia 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 63

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 63

Gothenburg: regional transportation and territorial development

Public transportation connections contribute to de-isolation of regions and revitalization of their economic activity. In the absence of any river transportation system, a sea or a river can become an obstacle to development. This is not the case of the islands in the archipelago to the south of Gothenburg (Sweden); development of maritime public transportation enables the inhabitants of these islands to participate in the daily economic activity of Göteborg, one of the largest ports in Scandinavia. Veolia Transport operates five ferry lines connecting islands in the archipelago to the city center. Each ferry can carry 450 people and operates every day, even in bad weather; this service is an essential link between the islands and the rest of the region. Some districts on the Göta river bank that have been unused for long periods are now the sites of new activity facilitated by ferry connections: several big companies have decided to set up in these districts. Finally, ferries can help to give better service to the university located on the North bank, and achieve continuity with the traditional Gothenburg city center on the south bank.

We believe that one of the keys to success, in improving urban transportation on demandG services, for example an inter- facilities in large cities throughout the developing world is to municipalities transportation on demand service operating in successfully balance both the modern and the traditional in rural or suburban areas in eastern France. These services are an organizational framework that uses rigorous standards in particularly appropriate for transportation of the elderly. terms of financial and environmental efficiency and social Services are also developed for the disabled ; this is the case in balance. Oakland (United States) where 2,200 people are transported per day. Welcoming disabled customers requires specific training. Campus Veolia, in partnership with Veolia Transport and Adapting and developing availability associations of disabled people, set up a first session in 2007 of our services for training in welcoming and dealing with these customers. The problem of service availability can arise in some developing In developed countries, Veolia Water sets up initiatives to maintain access to water services for people in a vulnerable regions and parts of the population of developed countries. situation; education on usage with underprivileged people, Divisions of Veolia Environnement adapt their services to pro- involvement with social services, spreading of payment of pose technical solutions and services to the local context or to bills, contact with consumers in difficulty, and cancelling debt specific populations. when necessary. Thus in terms of mobility, Veolia Transport is developing its range of services so as to make it more accessible. When it is impossible to set up a regular line for remote geographic areas, or in areas with special access, the company develops

FOCUS

Jerusalem tramway: exercising our responsibility in a difficult context Veolia Environnement operates in 68 countries, and sometimes conducts its activities in very sensitive contexts in which it has social and environmental responsibilities, and special vigilance is necessary. This is the case for future operation of the Jerusalem tramway. The 13 km long line will pass through the center of Jerusalem and the old city, and will serve built up areas to the north east of the "green line" that has marked the boundary between Jerusalem and the "occupied territories" since 1967. After several years of consensus, in January 2006 the National Palestinian Authority (ANP) opposed the construction project. Veolia’s main responsibility is the operation of the future line now planned for 2010. An enquiry carried out by TNS-Sofres in May 2007 at the request of Veolia Transport shows that 81% of inhabitants in the Shoafat and Beit Hanina areas, where the population is essentially Arab, support the construction of the tramway. People surveyed emphasize its importance in reducing their travel time, allowing them easier access to the center of Jerusalem and encouraging economic development of the area. In our opinion, such elements are important in an area in which the ease of transportation is important. At the same time, Veolia Environnement is continuing the process of engaging with local authorities, non-governmental organizations and local associations in a context of transparent and open communication with all stakeholdersG . 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 64

/ VEOLIA ENVIRONNEMENT’S EMPLOYEES PER MAJOR REGION

North America 28,868

Pacific Ocean Western Europe Eastern 195,777 Europe 34,112 Asia Pacific 15,661 Ocean

Other Western European Oceania France countries 9,023 117434 78,343

Atlantic Ocean Middle East Indian 3,409 Ocean Africa 13,436 Latin America 19,216

Circle sizes are proportional to the number of employees per major region Human development index (HDI)

Data not available 0.25 0.50 0.65 0.78 0.85 1.00 Sources: Development United Nations (UNDP), Programme Environnement Veolia 2007.

Fundamental social rights

Every employee has fundamental social rights, regardless of their qualification level and the country in which they perform their activity.

Veolia Environnement respects the basic human rights Thus, further work will be done in five major fields involving all defined by international authorities such as the ILOG and stakeeholders within the company: OECDG. In particular, the Group only accepts contracts if it is • safety and work conditions sure that it can comply with these rights. • guarantee of a decent income and minimum social protec- The Group determines whether: tion; employee representation and right of expression; the remuneration is sufficient for a decent standard of living • • non-discrimination and equality of opportunities; (see graph); • • long-term employment and professional progress. • there is any social protection (retirement, health); • basic skills are possessed and enable acquisition of minimum autonomy in one’s work; there is no discrimination when hiring or when making 2.27 • 2.21 2.24 promotions within the company; • work conditions are appropriate (minimum risks of accident, stress, etc.); • there is an opportunity for stating individual or collective opinions. In 2007, the Group decided to give itself minimum social standards applicable to all countries in which it operates. The creation of these standards takes account of the nature of our activities and they will be implemented progressively in coop- 2005 2006 2007 eration with union organizations.

/ RATIO BETWEEN THE AVERAGE REMUNERATION OF VEOLIA ENVIRONNEMENT AND THE MINIMUM LEGAL WAGE (STUDY PERFORMED IN 19 COUNTRIES) 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 65

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 65

Assessing our corporate responsibility in Africa and Latin America

Environmental and social rating campaigns carried out at Veolia Environnement’s request in 2007 enable the Group to have an inventory of conditions under which it exercises responsibility in Africa and in South America.The results of these audits will be used in 2008 as a basis for considering further details of our sustainable development policy in these sensitive areas.

AFRICA LATIN AMERICA

Veolia Environnement has mandated BMJ Ratings has carried out Vigeo to measure its degree of manage- an evaluation of companies rial commitment on the African conti- in the Proactiva subsidiary nent regarding its main social responsi- present in Latin America. The bility objectives that it is obliged to waste and water businesses were analyzed in Argentina, maintain. Three separate audits were carried out in Morocco Brazil, Chile, Colombia, Mexico and Venezuela based on envi- (Water), Niger (Water) and Egypt (waste management), and ronmental, social and society criteria to identify challenges they were extended by a documentary analysis and inter- faced by the Group. The evaluated companies represent views with managers of the Water subsidiary in Gabon. 46% of the workforce and revenue for the Latin America The evaluated entities represent 76% of the workforce and area. 81% of the revenue of the Group in the Africa-Middle East Risk mitigation and opportunity maps have been drawn up area. to rate the performance of actions carried out and the rele- Specific social and environmental features expose the vance of sustainable development policies adopted. Group to high risks in these fields. In this context, the "probative" level 3 rating on our 4-level scale corresponds to a reasonable assurance of risk control. Analysis BMJ has recognized technical leadership and high quality "Advanced" rating for objectives: integrated management of environmental challenges. With comparable degrees of engagement, the different sub- contribution to the development of access to water for • sidiaries have identified their responsibilities for managing the poorest these local impacts in terms of nuisance and pollution. On a quality of the remuneration and social protection systems • continent in which national GDPs are growing at between 4 for employees; and 10%, the need for treatment of municipal and industrial safety and continuity of services provided to users. • waste and problems related to the management of water is rapidly increasing, with consequences that Proactiva's sub- "Probative" rating for objectives: sidiaries have anticipated. protection of water resources and fight against climate • Despite the lack of strict regulations and legislation, manage- change; ment methods meeting the highest international standards contribution to economic and social local development; • have been adopted to deal with social and community prevention of corruption; • aspects. Employee safety is defined as a priority objective, and quality of employment management; • the results achieved are better than the average observed in quality of the relation to delegating authorities. • the sector.

"Initiated" rating for objectives: Recommandations • protection of health & safety of employees (deployment Two projects are still to be completed under this favourable of embryonic safety management in a country); context. Firstly the organization of the management • improvement to social employment conditions for processes that are still too informal to guarantee efficiency subcontractors (Group programs deployed partially); and advantaged perceived by stakeholdersG concerned, and • social communication quality (in a country, no commit- secondly the organization of a complete steering and report- ment observed for emergence of elected representatives of ing system enabling the transfer of knowledge and good personnel); practices. • quality of the relation with the client user (heterogeneous maturity of client care systems). 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 66

Reinforcing our social attractiveness

The Group’s main attraction for employees is its business: the service of the environment, society and sustainable development. Currently, in a context of growth and increased globalization, the women and men who have chosen this sector and make up the company community are at the heart of our performance. By 2015, we will employ about 600,000 people, which is twice our current workforce.

For new talents and diversified profiles Recruiting or integrating almost 500,000 talented new employees by 2015 assumes a human resource policy concen- France will continue its growth and will employ a quarter of trating on several major challenges. our total number of employees in 2015. However, at the same time it is expected that three quarters of our employees will In a context in which available talent on the market is rarify- work outside France in about a hundred countries, due to the ing, and our business is facing tougher competition, our first strong international development of our Group. challenge will be to attract, train and keep the best talent in all the socioprofessional categories that form our company's structure and in all job areas in which we work. To achieve this, we will need to deploy and reinforce our employer identity by a forceful communication on our jobs, FOCUS our social policy and our opportunities. We are also carrying out an ambitious professionalizing recruitment policy for all candidates, regardless of their age Our priority and their initial training. Thus in 2007, the Veolia Competence projects operation recruited 6,600 people in France. The vitality of these approaches in different parts of the world These major challenges have been the reason can easily be seen by looking at Veolia Energy - Dalkia’s nurs- ery of international managers working in more than thirty for a number of priority projects: countries, and Veolia Transport’s European recruitment cam- • anticipate hiring and management of talents paign. to meet our needs by the year 2015 and deploy our career management principles, by making our employer message more visible; For the development of skills and • manage our performance better and produce a more obvious link between performance professional progress and reward of our employees; We have developed the Campus Veolia Environnement dedi- • assist our managerial grade employees by more cated to training, so as to develop our human resources and appropriate assessment and payment principles, give our employees the opportunity to achieve professional clarify their prospects for progress; and social progress matching their efforts. • manage our skills and expertize to make the best use of the asset of Campus Veolia, by putting it at Campus Veolia is a genuine skills platform, and offers initial work-study contracts and continuous training courses. Three the heart of the evolution of needs and of the apprentice training centers were opened in France in 2007. steering system, with the objective of improving They are the first operational bases for regional campuses. recruitment and professional progress. Throughout the world, Campus Veolia Environnement already unites a network of twenty campuses in eleven countries (United States, Czech Republic, Morocco, etc.). A large number of academic partnerships between Group subsidiaries and local universities are supporting this ambitious policy at the service of the development of skills. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 67

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 67

Apprentices at the Veolia Environnement Campus, France

This commitment contributes to increasing the ratio of inter- Encouraging employee-employer nal promotions. This ratio has been increasing regularly since 2005, and was 4.6% in 2007. communication This commitment contributes to increasing the ratio of internal This entire policy, its results and its prospects for the future promotions. This ratio has been increasing regularly since demonstrate our commitment to social communication. 2005, and was 4.6% in 2007. Employee-employer communication is essential to our model and our efforts are helping us to make continuous progress. Thus, there has been a significant increase in the number of Diversity, a development asset collective agreements signed since 2005. Our cultural, economic and social diversity is our strength. We There were 16,072 personnel representatives in 2007, which is are firmly established in all regions in which we have branch 12% more than there were in 2005, illustrating the strength of offices throughout the world, and we would like to further our commitment to employee-employer communication. Another sign of the magnitude of our mobilization is the strengthen this asset for our development. breakdown of collective agreements by theme, particularly Thus, in 2007, an ambitious work program was launched: concentrating on remuneration. "To respect differences and equality of opportunities", which after a preliminary review, has demonstrated three lines of progress; • keep disabled workers in jobs and integrate new disabled workers; • access of women to responsibilities and to certain profes- sions; FOCUS • make managing teams more international. We are making recruiters more aware of the integration of those with disabilities and we are working on the production of transverse tools; this is why we have strengthened our Promoting ‘Handicap’ operation. social mobility Fair and equitable remuneration We want to reinforce and identify our role in social mobility, with all employees in our company including Our salary policy is attractive, to attract and keep our employees. managerial and non-managerial grades . Its guiding principles include equitable remuneration, reducing The objective is to set up special tools to encourage disparities, and facilitating access to savings from earnings. this strategy. Our employees must be able to benefit In 2007, this policy resulted in the signature of 1,020 agreements from professional progress at all hierarchical levels in our different countries of operation. regardless of their initial level of training, to match 195,500 employees in twenty-seven countries were also offered their ambitions and their capabilities. the opportunity to benefit from the increase in the Group's 2007 capital. The percentage of Veolia Environnement's capital held by employees is now 1.63%, held by 33,000 people, and in eight countries more than in 2006. 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 68

Protecting health and safety at work

Our commitment: to provide better protection for our employees against work safety and health risks throughout the world.

A permanent requirement: safety and • integrate health and safety themes as essential components health of our employees of our training courses; • monitor the smooth deployment of this policy to all our The health and safety of our employees has been the subject entities throughout the world. of increased attention since 2007 to limit the number of acci- Health and safety of our employees is everyone’s responsibili- dents that occur annually in our teams, at client sites and on ty. Veolia's ambition is now to develop new behaviours and to the road. apply daily the best practice everywhere. The Group's Executive Committee declared the year 2008 as the "World Safety Year for Veolia Environnement". This com- Measuring the exposure of Veolia's mitment will include three main actions: • strengthen the involvement of managers through a system employees including targets, performance review and financial incen- Recommended collective or individual protection measures tives; necessary for safeguarding the health of Group’s employees • define and deploy safety and health standards throughout requires better knowledge about methods of exposure to haz- the Group; ardous elements, that may be chemical, biological (e.g. • demonstrate the Executive Committee's commitment bioaerosolsG) or physical (e.g. noise). Veolia Environnement’s towards these problems through communication to at all Research (Health R&D) is working on characterization of work employees; environments and development of tools for understanding health hazards, in partnership with Veolia Environnement's environmental analysis center and the Group's safety departments. BEST PRACTICE Exposure to bioaerosols Studies have been initiated for employees working at materials recovery facilities and at wastewater treatment plants. Recommendations on threshold levels that must not be exceed- Hygiene for Health ed are still to be more precisely defined.Targeted prevention and campaign protection solutions have been defined. Exposure of employees in research centers In May 2006, Veolia Environnement launched an to chemical substances international Hygiene for Health campaign to increase A computer tool specially adapted to working conditions of awareness of its employees about washing hands. employees in Veolia research centers was developed, following This campaign forms part of the Group's ambition an analysis of the different work stations and chemical sub- to improve health at work by applying preventive stances present. This tool provides a valuable working basis for measures, and particularly by the dissemination other activities performed in the Group. of good behavior in terms of hygiene. Managers and supervisors responsible for safety and health and for communication were mobilized in operations centers and in head offices. Finally, more than 100,000 employees have been sensitized in our different countries of operation. Deployment of this campaign participants in safety was followed by many local initiatives, with 157,611 training actions presentations on the theme of hygiene and stronger initiatives to improve sanitary equipments.

bodies dedicated to the study 2,971of health and safety problems 3-Veolia RDD-Challenges (42-69)-E5 2/07/08 15:16 Page 69

CHALLENGES Veolia Environnement ••• Sustainable development report 2007 69

Jiamusi : actions to improve safety at work

Veolia Energy-Dalkia was awarded a contract for operation and development of the Jiamusi heating network in north-eastern China, in May 2007. Apart from the reconditioning of technical infrastructure, one of Veolia Energy – Dalkia’s immediate actions was to set up safety standards for its employees equivalent to those applied in Europe, including widespread use of personal protective equipment (protective Jiamusi in China goggles, protective masks, safety shoes, etc.), setting up safety devices (barriers, signs, etc.). The increased awareness of employees was reinforced by display panels summarizing instructions and good practices. Safety procedures were formally defined with the organization of safety exercises. Eleven safety training courses (management of industrial accident situations, the use of personal protective equipment) were organized in 2007 and were attended by more than 500 people.

Veolia Environnement does the maximum to reduce the frequency and severity of work accidents

2005 2006 2007 42.6

37.43 33.78

26.05 24.67 23.94 24.05

20.62 21.09 22.55 18.61 18.55 18.08 17.62 15.56

Veolia Total Veolia Water Veolia Energy Veolia Environmental Veolia Transport Services / VARIATION OF THE FREQUENCY RATIO OF WORK ACCIDENTS BY DIVISION (NUMBER OF ACCIDENTS PER MILLION HOURS WORKED)

2005 2006 2007 1.12 0.97 1 0.85 0.7 0.81

0.74 0.72 0.71 0.51 0.52 0.52 0.46 0.46 0.47

Veolia Total Veolia Water Veolia Energy Veolia Environmental Veolia Transport Services / VARIATION OF THE SEVERITY RATIO OF WORK ACCIDENTS BY DIVISION (NUMBER OF DAYS LOST FOR WORK ACCIDENTS PER THOUSAND HOURS WORKED) 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:16 Page 70

P 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:16 Page 71

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 71

Progress is impossible unless we measure what has been done, evaluate what remains to be done, manage performance by making ambitious commitments, produce accurate and complete reports and take into account external views and judgments. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:16 Page 72

Self-evaluation for progress

BMJ Ratings has upgraded the Veolia Environnement Group’s rating to AA+.

2004 2005 2006 2007 Evaluation of Veolia Environnement’s rating A+ A++ A++ AA+ by BMJ Ratings.

BMJ Ratings DEEPP Model® Rating

The BMJ Ratings agency has led a rating analysis of our sub- Environment sidiaries in the four activities in China, Germany, France and 82/100 Human resources Mexico. 78/100 The rating tools used are the DEEPP Model® used for the CSR Commercial function (Corporate Social Responsibility) rating and the GlobalView® 79/100 rating used to evaluate the contribution of the Group’s global Purchasing and subcontracting 81/100 performance (economic and extra-financial) to sustainable Civil society Rating by field Rating development. 78/100 Company governance The update of the 2007 extra-financial evaluation of the Veolia 82/100 Environnement Group carried out in 2008 confirms the good Leadership value 86/100 results and the previously observed trend of performance Organization of responsibility improvements in all sustainable development fields. 84/100

A A+ rating Information transparency 75/100 CSR Rating using the DEEPP Model® Commitment towards stakeholders 84/100 The BMJ Ratings agency has upgraded the Group’s rating to Independent control AA+. The “AA” rating indicates strong management of environ- 78/100 mental and social issues. The “+” trend expresses the Group’s Innovation positive dynamique. 72/100 Long-term vision Rating by managementRating principle The recognized leadership of Veolia Environnement is rein- 81/100 forced by its position on climate challenge, and through the ambitious approach adopted towards social cohesion. The internal organization accompanying this strategic ambi- Integrated rating according tion clearly identifies the responsibilities engaged and provides to GlobalValue® an efficient solution to expectations expressed by the Group’s stakeholdersG. The BMJ Ratings agency ameliorates the Global Value Index, which evaluates the Group’s capacity to make a commitment Although the principles adopted for innovation and informa- to sustainable development, to create value and improve per- tion transparency can still be improved, the Group’s vision of its formance. The Index improved from 1.15 to 1.19: the 11 indexes future and its commitments must enable it to improve the effi- are moving in a positive direction and show considerable con- ciency of its sustainable development policy in the short term. sistency. The performance is significant in terms of manage- Its performance is improving in all fields and particularly in the ment of activity cycles in all the Group’s divisions. environmental one and in the area of the relationship between the Group and civil society.These changes are the result of successes particularly in America and Asia and the Pacific, where GV. Index 1.19 the Group’s expertise and business ethics are resulting in resounding successes. 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40 BMJ Ratings highlights the evidence of changes to our business model, moving from a purely economic model to one combined Veolia Environnement’s rating is determined over a year starting with high environmental efficiency. from the 31st of March 2008. The evaluation does not take account of information about commitments made after this date.

Nanterre, 31/03/2008 Pascal Bello, General Manager 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:16 Page 73

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 73 Extra-financial rating

Veolia Environnement’s selection in sustainable development indexes

Extra-financial rating provides the means of measuring the Ethibel Sustainability sustainable development performance of companies Index (Vigeo) through their selection in specific stock exchange indexes. The main evaluation areas are governance, management of Veolia Environnement is included in the human resources, environmental performance, ethics, human Ethibel Sustainability Indexes, and has rights, customer care, supplier relations and the communica- been since 2002. The Ethibel Pioneer tion with civil society. Veolia Environnement is listed in the Index is composed of the shares of approximately 200 compa- main extra-financial indexes. nies and the Ethibel Excellence Index is composed of the shares of around 280 companies quoted in Europe, North America and Pacific Asia. These are companies with the best performance or with performances above the average for social and environ- FTSE4Good mental matters, and which meet ethics criteria produced by the independent Forum Ethibel organization. Veolia Environnement has been listed in the British FTSE4Good index since 2004.This index is composed of companies quoted in the FTSE Global Equity indexes and considered to have the highest performance in terms of The Sustainabiliity sustainable development. Margins for improvement have been Yearbook 2008 identified in terms of management of human rights and anti- The Sustainability Yearbook 2008 is a classification of compa- corruption procedures. nies produced by the SAM rating agency in partnership with PricewaterhouseCooper, and rewards Veolia for its exceptional achievements in the field of sustainable development by granting it three awards: SAM 2008 Leader in the Water DJSI Utilities Sector, SAM 2008 Sector Mover, and SAM 2008 Silver In 2007,Veolia Environnement Class for good overall performance. once again appears on the American DJSI World and Stoxx indexes, and was identified as the leader in the Water Utilities sector. The Group improved its global score in 2007.Its performance was underlined for its com- Our position with respect to the market mitment to human resources, its social and environmental Veolia Average of eight companies reporting, its commitment to stakeholders and access to water. Environnement with which Veolia Environnement is regularly compared* Revenue 32.628 billion euros Approx 20 times less Percentage of the Water ASPI Eurozone (Vigeo) activity in total revenue 33.39% Approx 77% Number of countries The European ASPI Eurozone index is concerned 68 Approx 3 times less composed of the 120 companies in the Workforce 319,502 Approx 38 times less Euro zone with the highest ratings for sustainable develop- Source : Utopies. ment. Veolia Environnement was listed again in 2007, based on the rating made in 2006. This table shows the size, complexity and diversity in which Veolia Environnement performs its activities.

* This concerns eight other companies evaluated in the DJSI Centre Français d’Information sur les Water Utilities sector. Entreprises (CFIE)) (The French center for Note: data presented for Veolia Environnement is 2007 data: information on companies) data presented for its peers is the most recent available information. The Group was awarded first place in the 2007 French business classification for the quality of its social end environmental information. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 74

Improving the quality of service: a daily attention

Customers’ satisfaction is one of the Group’s major priorities. Various indicators contribute to the improvement of our performance: e.g. service quality monitoring, complaints management or real time information.

Veolia Environnement is committed to continuous improve- Monitoring satisfaction in all our sites ment of its customer satisfaction levels through welcoming of customers, access to services (call centers, dedicated teams) Client satisfaction is now monitored regularly by every divi- and meeting increasingly strict quality requirements (service sion based on indicators identified, in 2005 and 2006, when commitments, customer service charters, passenger charters, survey methodologies were harmonized (see graph 1). The etc.). The Group is defining service standards to meet con- Group has developed special training courses to increase the sumers’ expectations, and is harmonizing its reporting tools, to awareness of its employees in customer relations (see graph 2). get a better understanding of population expectations. One of In particular,Veolia Transport has made a strategic priority of it. the major aspects of this policy is diffusion of good practices Furthermore, Veolia Water has organized consumer trophies and experiences. They can be more easily identified through to identify, award and share specific practices carried out the use, since 2003, of annually consolidated “customer”indica- worldwide. tors. This reporting enables an annual inventory of actions implemented to improve the quality of service, and encourages the Group’s different sites to make progress in this area. Being available to listen to our customers The reporting process and indicators identified five years ago Veolia Environnement has developed expertise in the manage- need to be changed. An independent audit of tools during ment of customer service centers (see graph. 3). Apa Nova 2008 will provide a basis for adapting them to meet the expec- (Veolia Water) in Ploeisti, Romania, received the prize for the best tations of our customers and local authorities. customer service in 2007 for the Europe, Middle-East and Africa area awarded by Contact Center World. This prize was awarded particularly for the synergies with the activities of Veolia Energy -Dalkia and Veolia Environmental Services.

/1 /2 /3

96% 95% 95% 95% 91% 89% 87% 87% 79%

2005 2006 2007* 2005 2006 2007* 2005 2006 2007*

/ SATISFACTION SURVEYS / CUSTOMER RELATIONSHIP TRAINING / CUSTOMER SERVICE POINTS Consolidated scope of Veolia Consolidated scope of Veolia Consolidated scope of Veolia Environnement Environnement Environnement

* Performance for new scope 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 75

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 75

98%

% 96% 95 89% 91% 87 % 89% 82% 83% 81% 77 % 70% 73% 68 % 67% 60%

/ 4 51%

85% 83% 80%

Increased Communication, Internet Customized Databases Customer service awareness of publishing, etc. services principles and responsible charters consumption 2005 2006 2007* see best practices p. 34 2005 Performance 2006 Performance 2007 Performance* / COMPLAINTS HANDLING Consolidated scope of Veolia Environnement / VARIATION OF OTHER CUSTOMER PERFORMANCE INDICATORS

Managing complaints more efficiently Informing our customers in real time Responses given to our customers following failures or com- Veolia Environnement has made a commitment in recent plaints must be systematic, fast and effective (see graph. 4). years to set up customized information systems. For example, Veolia Transport and Veolia Water have made a commitment Veolia Water communicates with its customers through text to a new process for management of complaints with dedi- messaging in Morocco, the Czech Republic and China to cated teams. In particular Veolia Transport has produced a answer their questions about billing, payment, consumption multidisciplinary program to increase professional behaviour. and leakage monitoring. Similarly, Veolia Transport informs in After the success of experiments carried out in 2006 and real time (text messaging, email) its customers about any delays 2007, Veolia Environmental Services has integrated the “i- and incidents in most countries in which it has activities. oscar” complaint management program into its customer relationship web solution set up in France.

BEST PRACTICE

67%

57% “Going for Green” 58% 48% Developing a customer care culture 43% 42% This Veolia Transport program ensures that employees in contact with passengers and their managers are focussed on the same objective: satisfaction of passengers. Its success is based on adapting customer relation situations to the local context. The “Going for Green” program consists of: • a training course; General satisfaction Customer Customer • a measurement of passengers satisfaction and personnel handling in case handling in case of incident of service motivation (before and after training); interruption • an internal communication system. Before implementation “Going for Green” was successfully tested in transportation networks After implementation in Dublin and Las Vegas in 2005 and 2006, and was implemented in Germany, France and the United States in 2007. It is also planned to / CUSTOMER SATISFACTION BEFORE / AFTER THE be applied to the Stockholm metro and the Barcelona tramway in 2008. “GOING FOR GREEN” PROGRAM IN KIEL (GERMANY) 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 76

Economic performance

A value creation for our activities… and Veolia Transport in France and in the United States (161 million Euros). The build up in strength of the biomassG industry Sustainable development intrinsically forms part of Veolia for Veolia Energy-Dalkia justifies strategic decisions made Environnement’s commercial development. The financial per- about renewable energyG, with the renovation of the Vandoeuvre formance of our businesses is based on the ability to promote heat network and acquisition of PanPower in Hungary. Other a genuine circular savingG, particularly by systematically ana- acquisitions marked the year 2007, particularly the acquisition lyzing material and resource flows in regions, in the context of of Sulo (recycling) in Germany and several companies in the actions involving local communities, public services and com- transportation business in the United States. panies. The Group’s international growth accelerated in 2007 with an These exchanges require that the quality of our contracts and increase in the share of the total turnover now equal to 56% of acceptance of our services and solutions are optimized. the total (compared with 53% in 2006). Contractual relations are subject to a permanent and transparent evaluation of the quality and suitability of the delivered This overseas growth is also boosted by the start up of new services.Therefore, the financial performance depends on close contracts signed in 2006, particularly in Central Europe, Asia Pacific (water contracts for Shenzhen, Lanzhou and Kumming), cooperation between responsible partners within a value cre- South Korea (a metro line in Seoul) and the United Kingdom ation chain, based on cooperative models. with integrated waste management contracts (Shropshire, East Sussex, Nottinghamshire). …that can be seen in the Group’s Activity was also strong due to Veolia Water AMI’s (Africa, results Middle East, India) development of activity in Morocco, the construction of seawater desalination plants by reverse The Group’s consolidated revenue was equal to 32.6 billion Euros osmosisG in the Sultanate of Oman, and by thermal desalina- st on the 31 of December 2007.This was 14% more than in 2006. tion in Saudi Arabia (800,000 m3/d). External growth is due particularly to acquisitions made by See annual report www.veoliaenvironnement.com Veolia Environmental Services in the United Kingdom and in Germany (contribution of the order of 1,200 million Euros), Veolia Energy in Europe and in Australia (254 million Euros)

(1) Income from ordinary activities. (1) (2) This income is equal to the sum of 2007 provisions and Revenues depreciation expenses plus the 2007 net profit minus profits 2007 32,628 M€ 2006 28,620 M€ of associated companies and dividends paid to shareholders in 2007 (group and minority shareholders).

(3) These data are calculated by taking the difference with all components of “income from operations distributed to the stakeholdersG”. Income from Income from (4) This amount is equal to expenses observed in consolidated operations operations available (2) accounts for company tax. redistributed for the company to stakeholders (5) This amount is equal to net cost of the financial debt reported in consolidated accounts in 2007. € € (6) This is the sum of industrial investments and net operational 2007 30,129 M 2007 2,499 M financial assets for transfers and reimbursements made 2006 26,270 M€ 2006 2,350 M€ for 2007.

Employees Suppliers, Tax Banks and bond Shareholders Net investments (6) (personnel costs) external service administrations (4) investors (5) including minority providers and shareholders indirect taxes (3)

2007 10,061 M€ 2006 8,993 M€ 2007 18,271 M€ 2007 416 M€ 2007 817 M€ 2007 564 M€ 2007 4,003 M€ 2006 15,766 M€ 2006 331 M€ 2006 701 M€ 2006 479 M€ 2006 2,884 M€

/ DISTRIBUTION OF OUR INCOME AMONG OUR STAKEHOLDERS IN 2007 This table presents how the income from our activities is redistributed to our different stakeholders. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 77

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 77 Environmental performance

The Environmental Management System (EMS)G is a tool used In 2008, the Group will achieve the last of the twelve commit- to implement the Group’s policy in the fields of the environment ments that were defined in 2002. Considering the major chal- and health. It is common to all activities and is structured lenges consisting of climate change, renewable energy, health, and around three levels of responsibility (Group, division, business waste recoveryG, the Group began to define a new generation units). It enables the Group to determine, manage and reduce of indicators with quantified objectives in 2007 following a logic of the impact of its activities on environment and health. An measuring performance rather than developing additional means. environmental management committee, composed of the envi- The Group’s commitment applies to trends: reduction, constant ronment departments of the Group and its divisions, manages or growth. It is complemented by the definition of a guiding the implementation and organization of the EMS, encourages target value that can be revised depending on the rate of sharing of information and good practices between divisions, implementation of the EMS and any significant changes to the and ensures that objectives and actions taken in 239 different scope. In 2008, the Group will complete production of its next business units remain consistent. environmental management plan by including ongoing In 2007, the group: research on the production of minimum standards applicable • set up a team of internal auditors with direct control over to all our activities. Within this framework, a liaison committee returned information (implementation of the EMS, conformity controlled by Executive Management and composed of the with regulations, relevance of the action plan); Vice President of the sustainable development department, • finalized implementation of its environmental information a member of the Executive Committee of each division and system (EIS) to improve the indicator reporting process and the representatives of the different managements concerned interpretation of environmental data. This tool will also be (Legal and R&D), will validate strategic plans in terms of strengthened by a specific module for monitoring how environ- environmental management, and will report to the Veolia mental audits are performed. Environnement Executive Committee annually.

Division State Definition Achieved Trend 2011 target value on 31.12.07 Veolia Environnement Existing Implementation of the EMS 75% 60% Scope increased in 2008 90% Existing Percentage of priority facilities audited 89% Scope increased in 2008 New Energy supplied by the production of renewable and alternative 17% energy as a percentage of total energy consumption 13% Revisable in 2008 New Carbon efficiency ratio* (global reduction of GHG emissions / 58% Defined in 2008 / total GHG emissions) Veolia Water Existing Water distribution network efficiency in the EU (15 countries) 82% >80%

Existing Wastewater treatment efficiency (BOD5) 90% >80% New Overall Wastewater treatment efficiency 80% Defined in 2008 New Percentage of the population evaluated with quality classes 79% 100% coverage Veolia Environmental Services New Percentage of waste treated in incinerators scope with dioxin emissions lower than 0.1 mg/Nm3 98% >95% (all sites) New Methane capture rate from landfills 50% Defined in 2008 New Percentage of waste treated (landfill or incineration) without recovery 56% Defined in 2008 Veolia Transport Existing Reduction of polluting emissions from CO: 2.51 g/km vehicles: CO, HC, particles HC: 0.65 g/km Redefined in 2008 Particles: 0.31 g/km New Scope of eco-efficient travel 92% 100% coverage (% passengers) Veolia Energy New Carbon efficiency ratio* (Overall reduction of GHG emissions / 22% 23% total GHG emissions)

* See pages 44 to 51 “Combating climate change” 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 78

Managing environmental Indicator with quantified target performance N New indicator

80% % 72% 75 66%

The implementation ratio of the Environmental Management System (EMS)G was 3% higher in 2007 and is on line with our 80% target for the end of 2008. The change in the indicator takes into account the fact that in general, there is no environmental management in place at most of the sites that we are asked to manage under new contracts. Therefore, a minimum time is neces- 2005 2006 2007 Target 2008 sary to put in place the Group’s internal approach. / EMS IMPLEMENTATION RATIO (INCLUDING The percentage of ISO 14001 certifications has remained constant, thanks to ISO 14001 CERTIFIED FACILITIES) OF RELEVANT the achievement of external certification for a number of sites that were ACTIVITIESG (% relevant revenue covered by an EMS) implementing the Group’s internal EMS.

100% 87% 89% 80% The percentage of the 1,285 priority facilitiesG that have been audited since 2002 is now 89%, which is on track for the 2008 target of 100%. 578 sites were audited in 2007. An action plan is produced during the first audit. Audits are then carried out to monitor the implementation of action plans, so that they can be corrected if necessary. The Group’s significant growth, resulting in 110 new facilities being brought 2005 2006 2007 Target into the scope, makes it difficult to perform the audit during the first year 2008 despite rigorous planning.

/ PERCENTAGE OF PRIORITY FACILITIES Thus, the percentage of audits completed on the 2007 scope with the pro- AUDITED (cumulative since 1/1/2002) forma 2006 was 91.4%.

Drinking water production plant, Linjang, Shangai-Pudong, China. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 79

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 79

Conserving natural resources Conserving raw materials

0.4% 0.4% 0.3% Agricultural recovery 12.1% 11.4% 12.6% (spread sludge)

Material recovery (recycling) 28.6% 28.8% 30.7% Veolia Environmental Services facilitates the development of Energy recovery material, agricultural and energy recovery, respecting the hierarchy (incineration and landfill of treatment methods. gas from landfill sites) 58.9% 59.4% 56.3% Selective collection and sorting of waste (wood, paper, cardboard, Landfill or incineration without recovery glass, metals and plastics) produced by industrial companies and 2005 2006 2007 households, recover materials by recycling waste to transform it into reusable materials. / PERCENTAGE OF THE TONNAGE OF WASTE BY TREATMENT SYSTEM Waste that cannot be integrated into material recovery systems will be recovered for energy, thanks to the capture of heat produced by incinerators equipped with recovery systems and the capture of N landfill gasG derived from decomposition of landfillG waste. Finally, the organic fraction of industrial or municipal waste flows 24.5% may also be recovered for agricultural use, so as to restore the 20.2% Material recovery content of organic material in soils and to limit the need for added (recycling) enrichmentG derived from fossil fertilizers (nitrogen, phosphorus, Energy recovery potash). (incineration and landfill gas from landfill sites) Veolia Environmental Services has made a commitment to reduce 6.9% the percentage of waste treated (landfill or incineration) without 5% Landfill or incineration without recovery recovery.

Agricultural recovery This strategy is boosted by changes to treatment systems between (spreaded sludge) 2006 and 2007.The percentage of material recovery systems (particularly due to the integration of the new Sulo subsidiary) and / INCREASE IN THE TONNAGE OF WASTE BY TREATMENT energy recovery systems will increase.The percentage of unrecovered SYSTEM 2006-2007 landfill or incinerated waste is +5% less than it was in 2006.

3.3% 3.2% 3.5% 96.7% 96.8% 96.5%

Without energy recovery With an incinerator equipment ratio exceeding 92%, energy is With energy recovery recovered from almost the entire tonnage treated in this type of facilities. 2005 2006 2007 Most facilities that are not fitted with energy recovery systems are hazardous waste incinerators in which priority is given to the / ENERGY RECOVERY FROM INCINERATED WASTE reduction of polluting emissions. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 80

Saving water resources Indicator with quantified target N New indicator

80.7% 81.1% 81.7% 77% 77.7% 75.3% 80%

The efficiency ratio of Veolia Water’s drinking water networks in the European Union remains greater than 80%, in line with the commitment made in 2002 and carried forward until 2011. This illustrates the high performance level in

EU mature markets. (15 countries) Development in countries in which water services require major upgrades over World several years is incompatible with commitments taken on a global scale.Thus in 2005 2006 2007 Target 2007, the addition of a new contract for a city of 1.5 million residents with an (EU 15) efficiency ratio of 15.4% has reduced our worldwide efficiency by 2% that would / WATER DISTRIBUTION NETWORK have been equal to 78.5% and therefore higher than 2006, if this contract had EFFICIENCY not been included.

Preserving energy resources

% 54 6,807 + Veolia Energy – Dalkia’s consumption of renewable and alternative energyG has 4,433 increased by two thirds in two years, and by 54% since 2006, due to three factors: 5,026 • an acquisition and development policy giving preference to operations making significant use of biomassG, particularly in Hungary and Germany; 2,468 Renewable energy • continuation of a policy to substitute biomass for fossil fuels in our operations, either through the development of biomass boilers or by including a certain Alternative 1,965 1,781 energy percentage of biomass into burned coal; • development of heat recovery in municipal waste incineration plants (MWIP)G 2006 2007 Note: Heat recovered in MWIPs is now taken into account by assigning 50% into the renewable energy / RENEWABLE AND ALTERNATIVE ENERGY category, instead of assigning 100% into the alternative energy category previously. CONSUMPTION This breakdown complies with international recommendations, and this is why we have updated (Veolia Energy-Dalkia - thousands of MWh) the 2006 figures.

% + 29 N 15,377 + 2 points 13% 11,969 494 11% 322 8,849 Energy 7,631 Waste management 6,034 4,016 Water

2006 2007 2006 2007 / RENEWABLE AND ALTERNATIVE ENERGY PRODUCTION (thousands of MWh heat and electricity) / ENERGY SUPPLIED BY THE PRODUCTION OF RENEWABLE AND ALTERNATIVE ENERGY AS A PERCENTAGE OF THE TOTAL ENERGY CONSUMPTION Production of renewable and alternative energy by the Group is almost 29% (Electrical and thermal) higher and has reached 15,377 thousand MWh (thermal and electrical). Energy recovery of incinerated and landfillG waste is 16% higher than it was in 2006 and In 2007, Veolia Environnement produced 15.4 still forms the main source of the Group’s production (57.5% of the total). million MWh of renewable and alternative However, its part in the total production of renewable and alternative energy is energy out of a total energy consumption of 117.6 5% lower due to the strong increase in energy produced by Veolia Energy derived million MWh. Energy produced from renewable from biomass (+50%). and alternative energy sources provides 13% of Within a restricted volume,Veolia Water’s policy to produce renewable energyG Veolia Environnement’s total energy (energy recovery from biogasG and microturbines) has increased production by consumption, which is 2% more than in 2006. more than 53%. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 81

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 81 Limiting our impacts Combating climate change

N 0.337 52% 0.331 50.2% 47.4% - 1.8 %

0.309

- 3.4 %

2005 2006 2007 proforma 2005 proforma 2005 2005 2006 2007

/ CARBON PERFORMANCE OF FACILITIES OF MORE THAN 20MW / METHANE CAPTURE RATE FROM LANDFILLS (metric tons of CO2 / MWh thermal produced) (in operation, and for which Veolia Environmental Services controls investments)

Veolia Energy-Dalkia is continuing its efforts to reduce the carbon In 2002, Veolia Environmental Services made a commitment to intensity of heat produced by facilities larger than 20 MW. For a equip its landfill sites (in operation, accepting biodegradable constant scope (base 2005), the carbon content per MWh produced waste, and for which Veolia Environmental Services controls dropped by 1.8% in 2006 despite adverse climatic conditions, and by investments) with landfill gasG capture and treatment systems, 3.4% in 2007 due to improvement in efficiency, management of the with a target of 100% by the end of 2006. energy mix, better use of co-generation and development of 82% of landfill sites were equipped in 2007, which is equivalent renewable and alternative energy. to 92% of all buried waste. 20 sites still remain to be equipped, Note: based on a 2006 proforma, the carbon content per MWh produced would and an investment plan has been produced for them. In have dropped by 5.3%.Without the proforma and if the new contract in Hungary particular, this plan includes five Clean Development MechanismG is included (wood heating), the 2007 performance is even better with an increase projects in progress. of 6.4%, namely 0.32 metric tons of CO2 per MWh thermal. The challenge has now moved to two complementary fields: N • Methodologies for calculating the production of methane and for measuring captured and emitted methane: Veolia Environmental Services uses different methodologies for 21.7% 23% 19.7% 20.1% calculating the production of methane from landfill sites depending on its regulatory obligations, but none of them offers a precise measurement. There are also uncertainties with the measurement of captured methane. Due to the importance of this issue, innovative work was initiated on modeling methane production, better reliability in the measurement of captured methane, and the development of a precise methodology for measuring diffuse emissions of methane. • The efficiency of capture devices: 2005 2006 2007 2011 The Group made the decision to provide information about the target effective capture ratio of theoretical methane emissions starting from 2007 (despite necessary reserves for the calculation and / CARBON EFFICIENCY RATIO (Veolia Energy-Dalkia - overall reduction in GHG emissions / total GHG emissions) measurement methods used), so as to evaluate our progress in this field. The Group has committed itself to improving its capture ratio, In 2006,Veolia Energy-Dalkia created an indicator quantifying the which was 50.2% in 2007, between now and 2011. Without overall reduction of GHG emissions and converting primary energyG Proactiva(1), the capture ratio is 58.4% on the scope of Veolia savings achieved into metric tons of CO . 2 Environmental Services alone. Veolia Environmental Services and Efforts made to reduce GHG emissions, particularly due to energy Proactiva have initiated action plans designed to: management systems and renewable energy , have been - install capture and treatment systems on sites that are not represented as a “carbon efficiency” ratio that measures the equipped (particularly through CDM projects); percentage of the overall reduction of emissions, as a percentage of - deploy methods of efficiently operating landfill gas capture Veolia Energy-Dalkia’s total GHG emissions. In 2006, the small systems. increase in comparison with 2005 is explained by the acquisition of In 2008, the Group will deliver a target value of its capture rate new coal facilities. A value of 21.7% was achieved in 2007 due to the for the 2011 deadline, although this target may be revised if reduction in the percentage of coal, the 42% increase in the significant changes to the scope are made or if any measurement percentage of wood and the 12% reduction in the percentage of fuel methodologies are changed. oil in the energy mix. Veolia Energy-Dalkia has set itself a “carbon efficiency”ratio target of 23% by the year 2011. (1) Proactiva is a 50% subsidiary with the Spanish FCC Group that operates in Latin America. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 82

Indicator with quantified target Environmental health N New indicator

97.9% 95% 87.3% 88.9%

Management of dioxin emissions related to waste treated in incinerators is a public health challenge. Because there is no scientifically accepted value, Veolia Environmental Services has adopted the strictest regulatory reference, which is the value adopted by the European Union, to measure its performance.

2005 2006 2007 Target In 2007, Veolia Environmental Services decided to extend the indicator to include all managed facilities, even when it does not / PERCENTAGE OF WASTE TREATED IN INCINERATORS WITH control investments for these sites (this represents a total of DIOXIN EMISSIONS LOWER THAN 0.1 NG/NM3 (all site) 78 incinerators compared with 23 in the past) and to fix a permanent target of more than 95% for this new scope.

Sanitary quality Percentage of the 21.22% N population evaluated with of drinking water a compliance ratio only The ratio of compliance with the regulations is used Percentage of the universally to take account of the sanitary quality population evaluated of water. However, this indicator has some limits with quality classes that Veolia Water would like to improve. Veolia Water 78.78% has created a new indicator based on chemical and bacteriological parameters that the World Health Organization has considered to be priorities (E-coli, arsenic, fluorides, nitrates and selenium), in order to evaluate the quality of the water that it distributes. The method of calculating this indicator includes the intensity by which thresholds recommended 12.25% 0.62% by the WHO are exceeded, and the duration. Therefore, it reflects the capability of the operator to initiate 0.09% appropriate corrective actions as quickly as possible, to enable permanent control of the sanitary quality of distributed 87.04% 0.00% water.In 2007, the indicator was calculated for 78.8% of the total population served by Veolia Water throughout the world. The objective is to adapt tools and organizations so as to quickly reach a 100% coverage ratio. 99.3% of the entire population served by Veolia Water for which this indicator was calculated benefited from excellent Excellent quality water Water with insufficient quality in the short term quality or high quality water. For the remaining 0.7%, High quality water Poor quality water solutions will have to be found with our clients Water with insufficient quality so as to achieve internal standards of Veolia Water over the long term concerning the quality of distributed water.

Managing the legionella risk in our facilities The risk prevention system developed by Veolia Energy-Dalkia is based on: • the existence of a prevention plan adapted to each country and conforming with the Group’s system; • increased awareness of personnel to the risk of Legionella; • an audit of each of its sites at-risk and implementation of our consultancy obligation towards our clients; • implementation of technical devices complying with the prevention plan. The progress rate in 2007 was 89.7%, which was almost 5% better than 2006. The constant improvement to the indicator reflects Veolia Energy – Dalkia’s efforts to maintain high quality monitoring and good prevention at its facilities. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 83

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 83

Limiting air pollution

27 80 20 21 55 54 Dust

1,172 965 933 HCI

NOx 147 106 90 SOx Emissions from incineration plants per metric ton of treated waste 2005 2006 2007 are continuously being reduced due to improvements in the performance of treatment systems. This is the case particularly / EMISSIONS FROM WASTE INCINERATION PLANTS for nitrogen oxides, for which treatment has significantly improved (hazardous and non-hazardous waste in g/ metric ton of waste incinerated) in Asia.

2.69 2.53 2.51 2.48

0.73 0.69 0.65 0.62 Veolia Transport is continuing its efforts to reduce polluting 0.36 0.33 0.31 0.30 emissions from its fleet of passenger transportation vehicles. Compared with the target fixed in 2005 (80% of the vehicle fleet), reduction objectives for 2008 are 8% for carbon monoxide (CO), 14% Unit emissions Unit emissions Unit emissions for hydrocarbons (HC) and 15% for particles. of CO of HC of particles 2007 results have improved by 1%, 6% and 5% for CO, HC and 2005 2006 2007 2008 target particles respectively, which is on track to achieve the objectives for the end of 2008. / PASSENGER TRANSPORTATION VEHICLE EMISSIONS Note: 2005 and 2006 values have been updated to include a correction to the PER UNIT (grams per kilometer) 2005 target.

Limiting the discharge of pollutants into water

90.1% 90% 80% 78% 79.7%

Veolia Water has developed a composite indicator that better reflects the performance of treatment systems used, taking account of and weighting different forms of pollution, following the approach used by water agencies in France. The chemical oxygen demand (COD), nitrogen (N), phosphorus (P) and suspended solids (SS) are thus included alongside the biological oxygen demand (BOD), to represent a global efficiency ratio. 2006 2007 BOD objective The global treatment efficiency ratio this year is 79.7%.The treatment BOD wastewater treatment Overall wastewater treatment efficiency (BOD) remains stable at 90%. efficiency efficiency / WASTEWATER TREATMENT PLANT EFFICIENCY (capacity larger than 50,000 population equivalent) 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 84

Management of our own impacts and consistency with regard to our activities

In all of its activities, the Group generates impacts on the envi- The Group’s commitments ronment, over which the degree of control determines its level of responsibility. Veolia Environnement manages three types of A sustainable buildings policy facilities: The construction of tertiary buildings (offices, research centers, • industrial facilities for which the Group controls investment; training premises, etc.) for which the Group is the owner, will be • industrial facilities for which the Group does not control invest- based on sustainable construction criteria. A typical specifica- ment and which require cooperation with the delegating authori- tion has been produced defining minimum requirements to be ty; respected (obtaining the NQ HQE® Tertiary certification).Veolia • tertiary sites,functional and administrative centers for which the Environnement would then like to go further and construct Group is fully responsible. “zero energy” buildings. Veolia Environnement’s five new Industrial facilities are integrated into the EMS,which makes it pos- campuses now integrate this commitment. sible to control and reduce the impact of the Group’s activities on Rationalizing procurement the environment through action plans. Tertiary sites are not included in the EMS at the moment, but an Veolia Environnement’s head office has undertaken an estimate of their impacts gives the following values: approach to improve its purchases of paper (reports, internal • consumption of water, 1 million cubic meters; publications, brochures, etc.) by setting up a reference list of • consumption of energy, 325,000 MWh; printers which includes sustainable development criteria. The • production of waste, 21,000 metric tons; Group will only purchase paper from IMPRIM’VERT labeled suppliers, guaranteeing absolute elimination of toxic prod- • CO2 emissions, 0.1 million metric tons. ucts, and security of product and hazardous waste storage A more detailed analysis of the nature of the impacts of all the sites. The Group also makes a commitment to print docu- Group’s sites (particularly through mapping) will be made within ments for internal and external communication purposes (and the framework of a global action plan with associated research on in minimum numbers) using only paper derived from sustain- the Group’s responsibilities. ably managed forests (FSC).

Renewing the fleet of light vehicles The CO2 emissions reduction policy has already improved the FOCUS environmental and economic performance of 28,000 vehicles in France. Since 2006, renewal of the fleet has had a positive effect on the reduction of CO2 emissions through the use of a new vehicle selection table. The average emissions of the Decision making 6,000 new vehicles that came into service in 2007, all categories combined, was 145.6 g of CO2/km, in other words 8.9% tool to build an less than vehicles bought in 2005 before this policy was set up. The Group has made a commitment to reduce total emissions environmentally friendly from its entire fleet by 10% from 2006 levels by 2010. bus deposit Best practice sites The sustainable development department and Veolia Transport have been working with a Saving water specialized design office to develop a decision Veolia Environmental Services has set up a system for washing making tool to build an environmentally friendly bus collection points for glass and paper in Nancy, France, which depot. This tool makes use of the technical and recovers wastewater and filters it before carrying it to the treatment plant. geographic characteristics of the depot, and helps to make structured choices as a function Veolia Transport uses recycled water for washing 25% of its of environmental factors, and to evaluate fleet of vehicles, which represents more than 8,200 public the resulting return on investment. transportation vehicles. In Bordeaux, France, Veolia Transport has developed biological fountains for cleaning mechanical parts, thus limiting emis- 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 85

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 85

sions of liquid and gas releases into the environment and Environmental training and increased eliminating the use of detergents. awareness of sustainable development Optimizing energy consumption Training courses provided by Campus Veolia Environnement Veolia Environnement’s head office has produced a program increase awareness of sustainable development. In 2007,60 stu- to increase the awareness of employees of eco-actions. dents (future Veolia Operations Managers representing 96% of Energy saving measures have been set up based upon the persons attending the course) were awarded a “Environmental improved lighting (installation of low energy bulbs, move- Services Management and Engineering” master degree diplo- ment detectors in washrooms, time programming in some mas. 20% of the teaching time in this master’s degree is set aside rooms). Electricity consumption was thus 33% lower in 2007 for the environment and sustainable development areas. than in 2005. Veolia Environnement integration days (JIVE) offered to all new In France, Veolia Transport has provided manually recharge- employees working with the Group include workshops in which able standalone torches using “low voltage” bulbs for use by participants are evaluated based on their ability to integrate bus drivers. sustainable development areas into their work. Veolia Environmental Services has included an environmental Limiting emissions from private transportation awareness module in its training program for its employees. Veolia Water has put five hybrid vehicles into circulation in Agen, France, to reduce polluting emissions and achieve fuel Divisions also pass on these messages. Thus, Veolia Water has savings. developed a network of correspondents that pass on the Veolia Water is developing a travel plan in the United Kingdom, Group’s sustainable development strategy, modified to suit the to encourage car sharingG between its employees. local context. These procedures are particularly well developed in the United Kingdom (Three Valleys Water), France (in the Recycling waste South-West region), Germany and Niger. In China, Veolia Water has joined the Planet Partners program developed by its computer supplier in partnership with a local NGO that encourages responsible recycling and is increasing the awareness of its local teams about the benefits of this practice. In France, Veolia Energy-Dalkia has installed cardboard kits supplied by Veolia Environmental Services to collect small toxic waste following maintenance work.

INTERVIEW

The Veolia Environmental Services Resources project

Bernard Harambillet, Assistant Regional Manager Can you describe the Resources project and how it is for the Veolia Environnement Services Center-West deployed within your region? Region (VPCO) A Carbon balance® and an energy diagnostic were produced and used to create an inventory and an associated action plan for three pilot sites. This included What is the motivation behind Veolia Environmental the setting up of performance indicators and the mobilization Services Center-West Region setting up the Resources of all teams (training of 500 people). All commercial agents project? in the region (100 people) attend training courses produced Above all, the objective is to use sustainable development in cooperation with the sustainable development team. as a management and innovation lever to achieve It is planned to deploy this project throughout two main objectives, namely to limit our own impacts Veolia Environmental Services Center-West as a function (particularly our CO2 emissions), and to improve of the results obtained on pilot sites, and in the Group’s our commercial proposals in response to the new other businesses in the France West Region. expectations of our clients. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 86

Social performance

Working towards our objectives These studies emphasized the need to adapt our indicators to match local reality in the countries in which we operate, and to It is essential to understand the Group’s social performance and take better account of company acquisitions and operations operational practices to be able to deploy homogenous mana- taken over, that make significant and continuous changes to gement of our human resources on a global scale, or within pro- Veolia Environnement’s operations scope. jects to share best practice. Our worldwide network of 600 cor- In this context, it became necessary to apply minimal stan- respondents collects, processes and consolidates 160 social indi- dards, which maintain the possibility of controlling the Group’s cators. Dedicated software improves the reliability of the collec- commitment to match local realities. These standards provide tion and validation of data. This information gives rise to analy- more relevant criteria for a Group anchored in a diversity of ses by geographic area, by country and by activity type. Veolia contexts and a variety of activities. Environnement is one of the leaders of companies included in the CAC 40 stock exchange index in terms of the quality and coverage of published social information. Strong areas identified by Executive Management guide our social policy. Thus, special Minimum social standards investigations were carried out on different issues, concentra- for diversity ting on efforts made by our businesses: Operating in extremely varied local context and involved in the increased loyalty of employees; • promotion of diversity, we are in the process of developing reduction of absenteeism; • minimum social standards. For example, since 2002 Veolia safe working conditions; • Environnement has committed itself to a comparatively trans- • reduction of temporary labor (fixed term contracts, temporary parent remuneration policy.We compare the average remune- employees); ration of our employees to minimum local wages. This 2006 • development of professional training and skills, particularly by comparison between guaranteed minimum or actual wages means of work-study contracts. in 19 countries in which we operate shows that the Group’s salaries are 2.2 times higher than the average minimum legal salaries in these countries (namely an average weighted salary Diversity: driving force of 26,566 Euros for Veolia Environnement compared with of our social policy the minimum legal average salary of 12,008 Euros). Two-thirds Diversity forms part of our social model. The special features of of Veolia Environnement’s employees are employed in these our four activities, the diversity of our local sites, and the hete- 19 countries. rogeneity of data that they produce, all confirm difficulties in monitoring general indicators applicable to the entire Group, as mentioned in studies carried out in 2007.

FOCUS

Social data verification The number of participants in our training increased significantly between 2005 and 2007, and an increasing number of by the official auditor, KPMG women benefited from it. Training encouraged internal mobility within the Group: The quality of social reporting has been confirmed 82% of inter-company transfers and 18% of intra-company by an external evaluation. KPMG, one of Veolia transfers demonstrate our employees’ loyalty to the Group. Environnement’s auditors verified 11 key social data In this context, the professional promotion ratio is increasing chosen by the Group. KPMG’s report (moderate slowly, but regularly. assurance level) concludes that there are no Our social policy is aimed at reducing differences and pro- significant anomalies in the verified data. moting equality of opportunities. Salary differences within It emphasizes good control over existing reporting the Group are generally less than or very much less than, dif- procedures, the quality of the software used, ferences determined by Eurostat across Europe. The average the reliability of data collection, and the strong difference in France is 18.9%, while the difference among Veolia Environnement’s employees is only of 12.6%. monitoring and verification environment. Furthermore, the average participation in the new share The evaluation external to KPMG is included issue offering to our employees in 2007 was 20.5% (com- in Veolia Environnement’s 2007 social report. pared with 17.1% in 2006), which is a sign of the confidence of employees in their Group. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 87

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 87 Structure of workforce

6% 19,216 5% 16,845 France 8% 8% Europe outside France 24,684 Administrative North America employees 9% % 15% 37% Asia Oceania 65 Workers / 28,868 operations agents 117,434 South America Executives Africa and the 12% 35% Middle East Supervisors / 112,455 technicians

/ BREAKDOWN OF WORKFORCE BY GEOGRAPHIC AREA IN 2007 / BREAKDOWN OF WORKFORCE BY PROFESSIONNAL GRADE, DEC. 31, 2007

Number of full 21% 7% time equivalent employees with permanent 65,519 contracts.

93% Number of full 79% time equivalent employees with 253,983 fixed term contracts Men 93% of the company’s Women employees had a permanent contract in 2006

/ BREAKDOWN OF FULL TIME EQUIVALENT EMPLOYEES BY TYPE OF CONTRACT / BREAKDOWN OF WORKFORCE BY GENDER, DEC. 31, 2007

The number of employees on December 31st 2007 was 319,502, recruited under a fixed-term contract, which is in accordance with which was 7% more than in 2006. Almost two thirds of the work- the Group’s social policies. The ratio of men to women employed force is outside France. The largest percentage increase was in the varies by business and reflects the sometimes difficult conditions South American zone (+13.2%). However, the largest increase in the of the work available (21% of women throughout the world). number of the Group’s employees was in Europe (outside France) However,more than half of the Group’s employees working in gen- (+7.7%). The breakdown of employees by socioprofessional catego- eral functions and administrative services are women. In 2007, this ry reflects the activities of a group anchored in practical realities, disparity was tending to reduce and the general trend is towards requiring a high ratio of salaried employees. The company higher growth in the female workforce than in the male workforce increased the number of employees with unlimited-term contracts (12.8% compared with 6.1%). between 2006 and 2007.Only a small minority of its employees are

Compensation and professional development

Women Men Women Men

18% 132,152 25,318 25,966 26,786 75,032 311,347 22,127 22,823 22,117 48,970 283,785 221,813

82%

Intra-company mobility 2005 2006 2007 2005 2006 2007 Inter-company mobility

/ AVERAGE GROSS ANNUAL / TRANSFERS WITHIN THE GROUP / NUMBER OF EMPLOYEES WHO COMPENSATION BY GENDER BENEFITED FROM TRAINING SINCE 2005 (IN EUROS) 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 88

Job dynamics Encouraging employer -employee dialogue

New hires Fixed-term contract*, 29,019

New hires 2,070 Unlimited-term contract, 60,072 , , 1 505 Departures 1 341

Intakes Voluntary departures - 30,071 Dismissals End of contracts - 10,532 (Fixed term ** and loss of contracts - 20,283 Retirement 2005 2006 2007 - 3,570 Departure for other reasons / NUMBER OF COLLECTIVE AGREEMENTS SIGNED SINCE 2005 - 3,150

/ SUMMARY OF HIRES AND DEPARTURES * Not including hiring converted into unlimited-term contracts (8,030 throughout the world) ** not including termination of fixed-term contracts due to employment with an unlimited-term contract 16,072 12% 15,687 14,296

7% 6%

2005 2006 2007

/ NUMBER OF EMPLOYEE REPRESENTATIVES SINCE 2005

2004/2005 2005/2006 2006/2007

/ NET JOB CREATION

17.4% 28% 15.7% 14.3% 13%

10% 49%

Compensation Employee-employer communication Health, safety or working conditions Other 2005 2006 2007

/ TURNOVER OF PERSONNEL ON UNLIMITED-TERM / DISTRIBUTION OF COLLECTIVE AGREEMENTS CONTRACTS BY SUBJECT IN 2007

After a net creation of jobs equal to 12% (compared with 7% in The Group places the communication with its employees at the 2006), Veolia Environnement is making a strong contribution to core of its social model. The very significant increase in the employment in the countries in which it is operating, while number of collective agreements signed between 2005 and consolidating its internal growth trend. The total number of 2007, the regular increase in employee representatives since people hired in the world is 89,091 (of which 67% are unlimited- 2005, the breakdown of collective agreements largely centered term contracts). The acceleration in the turnover is largely around the question of compensation certify the dynamics of explained by a growing labor market and an increased number of this employee-employer communication policy. people leaving for retirement. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 89

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 89 yer Diversity of local contexts e 5% Countries with average Countries with low limits protection against dismissals on working hours (with very and redundancies 25% flexible working hours) 24% Countries with low protection Countries with average limits against dismissals and on working hours (with redundancies medium working hours 61% flexibility) 60% Countries with very low protection against dismissals 14% Countries with strong limits on and redundancies working hours (with very rigid 11% working hours) Countries with strong protection against dismissals and redundancies

/ BREAKDOWN OF VEOLIA ENVIRONNEMENT’S WORKFORCE / BREAKDOWN OF VEOLIA ENVIRONNEMENT’S WORKFORCE BY LEVEL BY LEGAL LIMITS ON WORKING HOURS OF PROTECTION AGAINST DISMISSALS AND REDUNDANCIES

6% 6% Countries with very high 11% level of education Countries with strong women’s % 81 Counties with high level 57% representation 2% of education Countries with average women’s representation Countries with moderate 37% level of education Countries with low women’s Country with low level representation of education

/ BREAKDOWN OF VEOLIA ENVIRONNEMENT’S WORKFORCE / BREAKDOWN OF VEOLIA ENVIRONNEMENT’S WORKFORCE BY LEVEL OF EDUCATION BY LEVEL OF WOMEN’S REPRESENTATION COMPARED WITH THE TOTAL WORKING POPULATION Training on subjects other than safety vary as a function of the level of education of the countries.When this level is low, the emphasis is placed on basic knowledge (reading, writing, arithmetic).Therefore, every employee has the opportunity to improve his/her skills, regardless of his/her origin, seniority or initial training.The Group creates work contracts complying with national legal durations, to match local reality as reasonably as possible.The use of overtime depends on local practice in each country and the specific nature of different activities. Individual layoffs remained limited (3.2% of the total workforce) in 2007 and the number of collective layoffs (326 in all) was 17% less than it had been in 2006.

Labor organization 11.3% 9.1% Analyzing the organization of labor by geographic area, one could see that criteria vary depending on specific features and cultural 6.3% practice in different local contexts.The variety of social situations 3.8% obliges Veolia Environnement to set up a work organization specific to each country, depending on local features. 0.2% 0.2%

Africa / Europe Total VE Middle East North AmericaSouth AmericaAsia / Oceania

197 / PERCENTAGE OF PART-TIME EMPLOYEES BY REGION IN 2007

12.1% 136 101 103 7.4% 7.0% 74 6.3% 7.0% 50

0.3%

Africa / Europe Total VE Africa / Europe Total VE Middle East Asia / Oceania North AmericaSouth America Middle East North AmericaSouth AmericaAsia / Oceania / AVERAGE ANNUAL NUMBER OF OVERTIME HOURS WORKED PER EMPLOYEE IN 2007 AND BY REGION / PERCENTAGE OF FIXED-TERM CONTRACTS BY REGION IN 2007 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 90

SOCIAL PERFORMANCE DATA

UNIT 2006 2007 2007 VEOLIA VEOLIA ENVIRONNEMENT ENVIRONNEMENT WATER ENERGY ENVIRONMENTAL TRANSPORT FRANCE SERVICES

Total headcount at December 31, 2007 298,498 319,502 82,867 54,375 100,032 81,532 117,716 Number of employees with unlimited-term contracts 278,597 298,008 78,950 50,575 92,302 75,524 110,413 Number of employees with fixed-term contracts 19,901 21,494 3,917 3,800 7,730 6,008 7,303 Number of fixed-term contract converted into unlimited-term contracts 7,689 8,030 1,420 1,318 3,423 1,853 3,065 Number of male employees 239,352 253,983 63,861 45,021 79,540 65,261 91,946 Number of female employees 59,146 65,519 19,005 9,354 20,493 16,271 25,770 Number of managerial grade employees 24,007 27,048 10,627 6,359 6,704 2,897 13,393 Number of non-managerial grade employees 274,491 292,454 72,239 48,016 93,329 78,635 104,323 Number of employees with work-study contracts at December 31, 2007 4,787 5,922 1,725 2,120 923 1,146 2,909 • of which employees with apprenticeship contracts 2,766 3,104 1,255 855 644 345 1,902 Number of employees with disabilities at December 31, 2007 4,513 4,980 1,425 774 1,625 1,155 3,103 Total weighted annual average number of employees (full-time equivalent) 268,746 291,140 80,147 50,882 85,823 73,660 110,520 Weighted annual average number of employees with unlimited-term contracts 252,728 270,880 74,896 46,626 79,830 68,936 103,964 Weighted annual average number of employees with fixed-term contracts 16,018 20,260 5,251 4,256 5,993 4,724 6,556 NEW HIRES Total number of new hires 71,036 89,091 12,056 14,026 39,715 23,045 33,457 • of which with fixed-term contracts 29,927 37,049 3,993 4,219 20,347 8,384 22,046 • of which with unlimited-term contracts 41,109 52,042 8,063 9,807 19,368 14,661 11,411 DEPARTURES Total number of departures 66,561 77,991 9,846 10,175 36,912 20,919 29,103 • of which number of dismissals 8,564 10,206 1,051 1,967 4,272 2,912 2,814 • of which redundancies 394 326 86 70 98 72 8 JOB MOBILITY Total number of transfers 13,057 16,154 3,638 3,635 6,558 2,257 6,853 • of which managerial grade employees 2,353 2,920 904 750 795 423 1,321 OVERTIME Total number of overtime hours Hours 21,900,015 23,760,578 3,775,847 2,217,179 10,455,878 7,308,219 3,636,641 Average number of overtime hours per employee per year Hours 73 74 46 41 105 90 31 TEMPORARY EMPLOYEES Number of temporary employees (full-time equivalent) 12,506 14,026 3,968 2,617 6,560 865 7,648 Payment to temporary staffing agencies Euros 392,477,199 492,810,333 124,029,192 105,552,275 226,824,735 35,511,718 336,572,880 ORGANIZATION, WORK TIME, ABSENTEEISM Weekly work time Hours 38.4 40.0 38.1 47.1 39.2 38.2 35.5 Number of part-time employees (full-time equivalent) 14,970 15,839 2,562 676 6,086 6,478 7,704 Total number of work days lost through absence (unlimited-term contracts) Days 3,251,287 3,492,789 831,932 529,694 1,080,895 1,045,335 1,671,955 • of which total number of work days lost through sick leave (unlimited-term contracts) Days 2,210,145 2,394,092 573,790 402,077 696,156 719,854 1,129,280 COMPENSATION, SOCIAL SECURITY CONTRIBUTIONS, PROFITSHARING AND EMPLOYEE STOCK PURCHASE PLANS Average gross annual compensation Euros 25,247 26,039 26,767 24,555 24,979 27,037 28,977 Average gross annual compensation (men) Euros 25,966 26,786 27,773 25,564 25,455 27,785 29,698 Average gross annual compensation (women) Euros 22,127 22,823 23,221 19,159 22,640 23,926 25,965 Gap between average compensation (men and women) % 14.8 14.8 16.4 25.1 11.1 13.9 12.6 Ratio of average compensation to average minimum compensation in 19 countries that have a legal minimum wage 2.2 2.2 Social security contributions as % of total payroll costs % 22.3 30.4 32.7 33.8 26.7 29.3 44.0 Total amounts paid in respect of bonus payments (France) Euros 57,367,743 59 386 297 36 212 935 7 428 850 8 610 271 5 316 771 59,386,297 Total amounts paid in respect of employee stock purchase plans (France) Euros 57,611,395 61 263 468 26 592 971 9 067 823 15 926 501 9 664 269 61,263,468 LABOR RELATIONS AND COLLECTIVE AGREEMENTS SUMMARY Number of collective agreements signed 1,505 2,070 434 618 367 648 641 • of which related to compensation 876 1,020 218 179 250 370 389 • of which related to health, safety or working conditions 194 197 58 56 37 46 68 • of which related to employee-employer dialogue 158 266 72 34 24 136 73 • of which related to other subjects or several of the above 277 587 86 349 56 96 111 Total number of employee representatives 15,687 16,072 4,366 2,963 4,803 3,904 10,394 OCCUPATIONAL HEALTH AND SAFETY Number of work accidents with sick leave 11,273 11,848 2,120 1,785 4,927 3,012 5,805 Total number of days lost through work accidents Days 327,096 351,880 62,889 41,027 141,430 106,516 231,616 Accident frequency rate 24.7 23.9 15.6 20.6 33.8 24.1 30.9 Accident severity rate 0.72 0.71 0.46 0.47 0.97 0.85 1.23 Number of employees trained in safety procedures 143,468 157,611 48,004 26,330 47,717 35,456 56,279 Number of organizations dedicated to the study of health and safety problems 2 634 2,971 513 556 1,190 709 659 TRAINING Total training expenditure as a percentage of total payroll costs % 2.28 2.25 2.45 2.52 1.98 2.15 3.03 Number of employees who benefited from training 358,817 443,499 128,565 80,418 126,439 107,335 125,571 • Managerial grade 47,877 47,347 20,115 13,063 8,863 4,891 15,308 • Non-managerial grade 310,940 396,152 108,450 67,355 117,576 102,444 110,263 • Men 283,785 311,347 92,410 62,623 99,566 56,540 105,853 • Women 75,032 132,152 36,155 17,795 26,873 50,795 19,718 Expenditure per employee trained Euros 431.6 385.1 409.6 391.0 334.9 398.7 772.1 Total number of training hours Hours 5,560,907 6,210,061 1,467,345 1,142,892 1,448,486 2,136,617 2,052,473 Average duration of training activities Hours 15.5 14.0 11.4 14.2 11.5 19.9 16.3 COMMUNITY INVOLVEMENT ACTIVITIES Subsidies for community involvement activities Euros 57,295,982 62,267,656 28,020,706 13,756,533 8,800,027 11,338,158 45,490,079

* Veolia Environnement 2006 and 2007 data include data for the VE SA Head Office, for the CAE and for Campus Veolia Environnement (not described in detail here). 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 91

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007

ENVIRONMENT PERFORMANCE DATA 91 UNIT 2005 2006 2007 2007 VEOLIA ENVIRONNEMENT WATER ENVIRONMENTAL ENERGY TRANSPORT SERVICES

EMS implementation ratio (including ISO 14001 certified facilities) on relevant sites (1) % relevant revenue 66% 72% 75% 80,9% 63,1% 92,7% 55,6%

Relevant revenue covered by a certified management system (ISO 9000 or 14001)(4) % 65% 68% 67% 85% 74% 75,3% 31% Number of sites covered by an ISO 14001certificate (2) Nb 705 853 939 254 559 85 41 Drivers (Veolia Transport) who have received training in environmental performance % 70% 64% 56% - - - 55,9% Percentage of priority facilities audited (cumulative since 01/01/2002) (1) % 80% 87% 89% 84,9% 87,2% 97% 85,2% Revenue from relevant activities billions of Euros 17,4 19,2 21,3 6,1 3,9 6,3 5,0 AIR

Direct CO2 emissions (1) Million metric tons CO2 26,1 27,9 29,2 0,2 5,8 21 2,3 Direct CH4 emissions kt CH4 362,4 405,3 482,1 - 480,9 - 1,3

Direct N20 emissions (Veolia Environmental Services) kt N2O - - 0,57 - 0,57 - - Total direct greenhouse gas Million emissions (1) (2) metric tons eq. CO2 33,7 36,5 39,5 0,2 16 21 2,3 Indirect emissions of greenhouse gases Million related to consumption of electricity (1) metric tons CO2 2,7 3 3,3 2,36 0,30 0,31 0,35 Total direct and indirect (electricity) Million emissions of greenhouse gases (1) (2) metric tons eq. CO2 36,4 39,5 42,8 2,5 16,3 21,3 2,6 Global reduction of greenhouse gas emissions (1) (5) (9) Million metric tons CO2 - 20,24 24,64 0,09 16,22 4,64 3,70 • of which overall reduction of greenhouse effect gas emissions (5) (9) Million metric tons CO2 - 13,02 14,62 0,07 9,92 4,64 - • of which avoided emissions of greenhouse gases (5) (9) Million metric tons CO2 - 7,21 10,02 0,02 6,31 - 3,70

Carbon performance of facilities of more metric tons CO2/MWh than 20 MW (world) (1) (3) thermal produced 0,337 0,342 0,320 - - 0,320 -

CH4 capture rate from landfills (in operation and for which Veolia Environmental Services controls investments) % 52% 47,4% 50,2% - 50,2% - - Landfills (non-hazardous waste) equipped with biogas recovery and treatment systems (in operation and for which Veolia ES has control over capital investments) (1) (2) % 70% 80% 82% - 82% - - Emissions from waste incineration plants (hazardous and non- hazardous waste) per metric ton of incinerated waste • SOx (2) g/incinerated metric tons 147 106 90 - 90 - - • NOx g/incinerated metric tons 1172 965 933 - 933 - - • Dust g/incinerated metric tons 27 20 21 - 21 - - • HCl g/incinerated metric tons 80 55 54 - 54 - - Passenger transportation vehicles emissions per unit • CO (1) (10) g/km 2,69 2,53 2,51 - - - 2,51 • HC (1) (10) g/km 0,73 0,69 0,65 - - - 0,65 • particles (1) g/km 0,36 0,33 0,31 - - - 0,31 Completion of Legionella risk prevention plan (1) % 80% 85% 90% - - 90% - Percentage of waste treated in incinerators with dioxin emissions lower than 0.1 ng/Nm3 (all sites) (2) % 87,3% 88,9% 97,9% - 97,9% - - WATER Water distribution network efficiency (world) (1) % 77% 77,7% 75,3% 75,3% - - - Water distribution network efficiency (EU 15) % 80,7% 81,1% 81,7% 81,7% - - - Industrial water consumption (2) Million m3 210,3 391,4 452,6 394,4 22,6 34,1 1,6 Wastewater treatment efficiency (biological treatment plants with a treatment capacity of over 50 000 PE) (1) % - 78% 79,7% 79,7% - - - BOD5 overall wastewater treatment efficiency (biological treatment plants with a treatment capacity of over 3 metric tons of BOD5 per day – 50 000 PE) (1) (2) % 91% 90,1% 90% 90% - - - Percentage of clients equipped with water metering device % 93% 93% 95% 95% - - - Landfills collecting and treating leachates (internally or externally) (in operation and for which Veolia ES has control over capital investments) % 96% 98% 99% - 99% - - Percentage of the population served by excellent quality or high quality water (1) % - - 99,3% 99,3% - - - Bacteriological compliance rate % 99,3% 99,3% 99% 99% - - - Overall compliance rate % 98,7% 99,1% 98,6% 98,6% - - - ENERGY Total energy production (electricity and heat) (1) Million MWh 71,5 73,9 77,9 0,5 8,8 68,6 - Production of renewable or alternative energy (electricity and heat) Million MWh 11,2 12 15,4 0,5 8,8 6 - • of which renewable energy (1) Million MWh - - 9,5 0,5 4,7 4,3 - Total energy consumption (electricity and heat) (1) (2) (6) (8) Million MWh 105,6 111,3 117,6 6,7 6,3 95,1 9,5 Renewable and alternative energy consumption (7) (8) Million MWh - - 8,5 0,5 1 6,8 0,2 • of which renewable energy (1) (7) (8) Million MWh - - 6,1 0,5 0,5 5 0,1 Percentage of renewable and alternative energy (7) (8) % - - 7,2% 6,8% 16,5% 7,2% 2,4% • of which renewable energy (1) (7) (8) % - - 5,2% 6,8% 8,7% 5,3% 1,1% Percentage of incineration plants equipped with energy recovery systems % 91,2% 90,3% 92,3% - 92,3% - - WASTE Quantity of sludge dealt with Thousand metric tons MS 806 866 942 942 - - - Waste recycled % 12% 11% 14% - 14% - - Quantity of waste recycled Million metric tons 6,8 7,1 10 - 10 - - Quantity of compost produced (2) Thousand metric tons 764,3 851,6 1006,1 26,3 979,8 - - SOILS Sludge produced recycled for agriculture (1) (2) % 40% 47% 46% 46% - - - Landfill surface restored ha 190 195 220 - 220 - -

(1) Indicator for which an external check has been made(7) The scope used for indicators was broadened in 2007 (5) See climate change pages (p. 44 - 51)(-) Indicators not available, not significant or not applicable to include Veolia Water and Environmental Services (6) The Group’s thermal self-consumption is not included because it is marginal (2) Indicators satisfying NRE requirements(8) Values do not include the energy of incinerated waste (7) The scope used for indicators was broadened in 2007 to include Veolia Water and Environmental Services (3) 2007 value 2006 proforma: 0.324 metric tons of CO2/MWh(9) The 2006 value has been updated to be consistent with (8) Values do not include the energy of incinerated waste the 2007 calculation scope (9) The 2006 value has been updated to be consistent with the 2007 calculation scope (4) Includes Veolia Transport NFS service certificates in France(10) 2005 and 2006 values have been updated to inte- (10) 2005 and 2006 values have been updated to integrate a correction on the 2005 reference scope grate a correction on the 2005 reference scope (-) Indicators not available, not significant or not applicable 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 92

Methodological clarifications

In the absence of any recognized and relevant reporting baseline for Choice of indicators its activities, the Group has defined its own reporting procedures developed from good practice and draft international standards. The following indicators were chosen listed in order of priority: • the Group’s commitments and policy (EMS, environmental audits, etc.) Methodological procedures • performance related to Group’s main challenges and impacts; The Group’s procedures are composed of: • the effects of the Group’s labor practices • regulatory obligations (NRE law in France) • for environmental indicators: a company-wide measurement and reporting protocol, available on the (http://www. Consolidation and checks sustainable-development.veolia.com/en), supplemented by specific instructions for individual Divisions; Environmental data is consolidated and monitored by each • for social indicators: a methodology for compiling, monitor- Division and by the Environment Department based on data ing, analyzing and consolidating the data, using a reporting collected from the business units. For certain indicators, data software package including a workflow process. is calculated or estimated directly at the divisional level. Human resources data is consolidated and checked by the Consolidation scope Divisions and by the Company’s Human Resources Department. The scope of environmental reporting covers all worldwide activ- Automated checks are also performed at the business unit ities over which the Company has operational control.Jointly con- level. The data is then checked by Salustro Reydel, the trolled (50-50) water companies in France, and the design and Company’s independent auditor. The most relevant environ- operation of industrial water systems are excluded from the mental indicators have been audited for the last six years by scope of reporting. Some subcontracted activities may also be Ernst & Young, the Company’s independent auditor (see the included in the scope of reporting, in particular in the field of report on page 94). waste management (e.g., biogasG conversion) or transportation. The scope of social reporting covers all consolidated companies Limits to the methodology whose human resources are managed by the Company, and There can be limits to environmental and social indicators due to: those of the jointly controlled (50-50) water companies in which • the lack of standardized definitions and national and interna- Veolia Environnement is responsible for human resources. In the tional legislation case of Proactiva (water and waste management activities in • the unrepresentative nature of certain measurements and esti- South America), companies owned 50-50 by Veolia mates Environnement and a Spanish company partner have been kept • definition changes that may affect their comparison in the Company in 2006 to ensure the comparability of the data. • practical collection methods Consolidation method As a result of these limits, we consider the accuracy of most of our Environmental and social data within this scope are 100% con- data to be within 5 to 10%. solidated. The main limits and uncertainties for the current year are related to: Scope variations • methane emissions, which are estimated on the basis Scope variations are taken into account on the date on which of national or international models that are subject to high they become effective. Acquisitions, the creation of companies or levels of uncertainty. contracts won may, however, only be taken into account after a full year of operation. For 2007, the main changes in scope or activity were: • Veolia Water - operation for a full year of contracts in Armenia, China, Guam, Japan; Slovakia and new contracts in Spain and in Italy; • Veolia Energy - operation for a full year of contracts in China and integration of new projects in Australia, Saudi Arabia, Bahrain, Bulgaria; • Veolia Transport - acquisition of contracts in France and Chile,and transfer of contracts in Lebanon and Denmark; • Veolia Environmental Services - operation for a full year of contracts in the United Kingdom, Belgium, Romania, Italy and acquisition of new contracts in China, United States, Poland, Baltic Countries, United Kingdom, Czech Republic, Switzerland, Sweden and Singapore. 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 93

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 93

The challenges dealt with in this report have been selected according to their level of relevance to the expectations ons of stakeholders. The process of preparing the sustainable development report takes account of the Global Reporting Initiative G3 guidelines (www.globalreporting.org).

CORRESPONDING GRI PAGES REASON FOR CORRESPONDING GRI PAGES REASON FOR INDICATORS OMISSION INDICATORS OMISSION

BUSINESS STRATEGY AND PROFILE EN14 52-53 PROFILE EN15 – EN16 45, 91 1,1 2, 3 EN17 45, 91 1,2 4-5, 8-21, 31-35, 40-41, 76 EN18 44-51, 81, 91 ORGANIZATION PROFILE EN19 – EN20 83, 91 2,1 COVER EN21 82, 91 2,2 11, 14-21 EN22 79, 91 2,3 11, 14-25, 28-31 + EN23 – 2,4 98 EN24 – 2,5 10-13, 61, 62, 64 EN25 – 2,6 + EN26 16-23, 44-56 2,7 10-13 + EN27 – 2,8 10-13, 30-31, 76-77,92 EN28 + 2,9 92 EN29 85 (partiel) – 2,10 72-73 EN30 – REPORT PARAMETERS SOCIAL PERFORMANCE: WORKING CONDITIONS 3,1 30-31 LA1 13, 86-87, 90 3,2 30-32, 92 LA2 13, 86-87, 90 3,3 30-32, 92 LA3 – 3,4 97 LA4 88 (part time) 3,5 40-41 LA5 + 3,6 92 LA6 68-69 3,7 92 LA7 68-69, 90 3,8 92 LA8 68-69 3,9 92 LA9 89-90 3,10 92 LA10 90 3,11 92 LA11 66-67 3,12 93,97 LA12 + 3,13 94 LA13 28, 86-87, 89 GOVERNANCE AND COMMITMENTS LA14 88 4,1 28-31 SOCIAL PERFORMANCE - HUMAN RIGHTS 4,2 2 HR1 – 4,3 28 HR2 32-33 4,4 28-29 HR3 32-33 4,5 28-29 + HR4 4,6 28-31 + HR5 – 4,7 28, 30-31 HR6 – 4,8 28-31 HR7 – 4,9 28-31, 40-41 HR8 32-33 4,10 28 + HR9 – 4,11 22-23, 28-29, 40-41 4,12 37,64 SOCIAL PERFORMANCE - IMPACT ON SOCIETY 4,13 36-37 SO1 65, 34-35, 60-64 4,14 32-35, 60-61, 88 SO2 65, 72 4,15 32-35, 37 SO3 29 4,16 4-5, 32-35, 37 SO4 4,17 4-5 SO5 36-39 ECONOMIC PERFORMANCE SO6 – SO7 + EC1 61,76 SO8 + EC2 4-5, 12, 18-19, 45-51 EC3 + SOCIAL PERFORMANCE - IMPACT OF PRODUCTS EC4 – PR1 57-59 EC5 64 PR2 – EC6 61 – PR3 – EC7 – PR4 – EC8 60-63,76 PR5 74-75 EC9 60-63,76 PR6 – ENVIRONMENTAL PERFORMANCE PR7 – PR8 – EN1 – PR9 – EN2 91 EN3 91 EN4 91 Indicator insufficiently relevant to the specific nature of our business EN5 44-56 EN6 44-56, 18-21 – Indicator not collected or not consolidated EN7 44-56, 80-81 Veolia Environnement does not wish to report on this indicator EN8 91 EN9 15 (world level) + Data available in our 2007 annual report, our 2007 reference document or our EN10 54 DE L’OMISSION Internet site: www.veolia.com EN11 52-53 EN12 52-53 EN13 52-53 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 94

External assurance Financial year ended on December 31, 2007

Statutory auditor’s assurance report on a selection of environmental indicators

Further to Veolia Environnement’s request and in our capacity as statu- • Indicators related to waste recycling (treated or produced) could be cla- tory auditor of Veolia Environnement, we have performed a review in rified, in accordance with Group objectives. order to express the limited assurance that the environmental indica- • Some activities (engineering and works, wastewater network manage- tors for the financial year 2007 identified by the(1) symbol in the 2007 ment, industrial water management, waste collection, other energy ser- environmental performance report situated page 91 of the sustainable vices) are yet to be fully covered by the Group’s environmental reporting. development report (the “Indicators”) have been prepared in accor- The Group could also strengthen its accounting of the environment dance with the reporting protocol applicable for 2007 (the “Criteria”), a beyond the scope of its operational activities:demand management,man- summary of which being included in the “information about metho- agement of subcontractors, eco conception, etc. dology”chapter on page 92. Our review was conducted in accordance with the professionnal prac- Completeness tice defined by IFAC’s (International Federation of Accountants) ISAE • The reporting perimeter is described in the « information about 3000(2). It is Veolia Environnement‘s responsibility to establish the methodology » section on page 91, most importantly regarding the Criteria, ensure its accessibility on its website(3) and establish the perimeter of activities controlled by the Group worldwide. Indicators according to the Criteria.It is our responsibility to express,on • The Group could be more specific as regards the notion of operational the basis of our review, a conclusion on the Indicators, in accordance control, in particular in the case of joint control (for example, Proactiva in with the Criteria. A higher level of assurance would have required more South America),subcontracted activities or financial year acquisitions and extensive work. cessions. Nature and scope of our review Understandability and neutrality To express our conclusion, we conducted the following review: • The Group provided detailed information in the « information about • We have assessed the Criteria with respect to its accuracy, understan- methodology » section on page 91, in the footnotes of the environmental dability, neutrality, completeness and its relevance towards the group’s performance data table on page 92 or in associated comments in the pre- activities and the environmental reporting practices of a selected sample sentation of the environmental indicators in the “Environmental of nine comparable environmental services companies (water, energy, Performance”(pages 77 to 83) and “Combating climate change”(pages 44 waste managment services and transport). to 51) sections, most importantly regarding limits of the methodology • At the level of the Group and its four divisions (Water, Environmental associated with Indicators, in particular for methane fugitive emissions, Services, Energy and Transport), we have interviewed those in charge of estimated using national or international models. environmental reporting. At these levels, based on a materiality and risk • The indicator “Global reduction of greenhouse gases emissions” mea- analysis,we have verified the application of the Criteria,implemented ana- sures the gap between emissions that would be emitted in the framework lytical procedures and verified,on a sample basis,the calculations and con- of reference scenarios defined by the Group and the reported emissions. solidation of data. This indicator is innovative but remains complex to manage. • We have selected a sample of twenty business units(4) or equivalent in • The Group could clarify standards for the accounting of environmental nine countries (Germany, Australia, Spain, United States, France, Mexico, management systems and environmental audits, taking into account Poland,Sweden and Venezuela) ,based on their activity,their geographical available operational feedback. location,their contribution to the Indicators and the results of the verifica- • The Group could systematize constant perimeter analysis for the indica- tion works carried out over the past six years. tors (business units, contracts or sites). • The selected business units account for an average 22% (between 13% and 49%,according to the Indicators)(5) of the total value of the Indicators. Reliability At their level, we have verified the appreciation and application of the • The Indicators reporting reliability has been strengthened by the Criteria, and tested the data by means of random checks which consisted deployment of the Group environmental information system in all divi- in verifying calculations and comparing source data with supporting do- sions and in most business units.Its deployment is yet to be systematized cuments. in the rest of the business units. • Environmental data management could be reinforced, in particular Information about the Criteria with a follow-up of synthetic dashboards several times a year. The Criteria begets from our part the following remarks. • The Group must better anticipate methodological modifications and validate the Criteria update before the reporting campaign begins. Relevance • The Group publishes indicators related to the management of sani- Conclusion tary risks related to Legionella, dioxins and drinkable water quality. We can not express a conclusion on the indicator “Global reduction • The Group has innovated in the field of measurement of sanitary of greenhouse gases emissions”, given the late inclusion of avoided quality of drinkable water (percentage of the population served by excel- emissions thanks to waste material recycling in the calculation, that lent quality or high quality water) and wastewater treatment efficiency accounts for more than 13% of the indicator, on which we could not (overall efficiency) perform all the required verification works. • The Group has clarified the presentation of its energy consumptions Based on our review,and except for the above qualification,nothing has and productions, especially regarding renewable energies. come to our attention that causes us to believe that the Indicators were Notwithstanding, energy consumptions do not account for the energy not established, in all material respects, in accordance with the Criteria. coming from waste whereas waste treatment plants energy production is accounted. • The Group has published this year an indicator on the performance of landfill gas collection systems (CH4 capture rate from landfills). The Neuilly-sur-Seine (France), April 14, 2008 Group could also enhance the reporting of equipment ratio for other sites by measuring their performance. The Statutory Auditor Assisted by ERNST & YOUNG • Indicators related to NOx and SOx emissions measure the impact of ERNST & YOUNG et Autres Environment and Sustainable waste incineration activity but do not cover the impacts of energy pro- Development duction and transport. Transport performance indicators (passenger transportation vehicle emissions per unit) could be stated in more ope- Jean Bouquot rational terms (for example, typology or renewal rate of vehicle fleet). Patrick Gounelle Éric Duvaud

(1) Protocol for the measurement and reporting of environment indicators 2007, Veolia (5) 33% of relevant activities turnover, 25% of priority facilities; 21% on average (direct and indirect Environnement, updated in April 2008 (French version). CO2 and greenhouse gases emissions, global reduction of greenhouse gases, carbon performance of (2) ISAE 3000 “Assurance Engagement other than audits or reviews of historical data”, International more than 20 MW facilities of energy consumption and production, including renewable energy); 13% Federation of Accountants, International Assurance Board, December 2003. of landills for which the group has control over capital investments; 49% of sites involved in Legionella risk prevention plan (hot sanitary water production plants and cooling towers of Veolia (3) www.sustainable-development.veolia.com ; « Publications » chapter. Energy); 15% on average (volumes of drinkable water introduced into networks, water network length (4) In France, the Banlieue de Paris and Sud-Ouest regions (Water), the main facilities of the Ile-de- and population served); 16% of indicators related to water treatment and sewage sludge (polluting France, Nord, Est, Centre-Méditerranée and Atlantique regions (Energy), the Sud-Est and Ile-de-France charge -DBO5-received by more than 3 metric tons per day capacity wastewater treatment plants, regions (Environmental Services), and the Ile-de-France region (Transport); in Europe, Berliner Wasser quantity of sewage sludge produced); 24 % of road transport vehicles taken into account for Betriebe (BWB and Veolia Wasser Deutschland business units(Germany), Dalkia Poland and Dalkia passenger transportation vehicle emissions (accounting for 72% of the total road vehicles fleet) Spain, Veolia Transport Sverige AB (Sweden) ;in the rest of the world, United Water et Veolia Water Australia (Australia), Proactiva Medioamabiente Mexico and Venezuela (Environmental Services) and Veolia Transportation (United States). 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 95

PERFORMANCE Veolia Environnement ••• Sustainable development report 2007 95 cember 31, 2007 Glossary

Cogeneration Process that consists of simulta- Fossil energy Energy produced from rock A neously producing thermal energy and electrical originating from the fossilisation of living beings: energy from a single fuel. oil, natural gas, coal. Their combustion creates Ademe Agence De l’Environnement et de la greenhouse effect gases. Maîtrise de l’Énergie, France (Agency for the Composting Biological process used to treat Environment and Energy Control, France). organic waste (green waste, fermentable fraction Fundamental values of Veolia Environnement of municipal waste, sludge from urban treatment Derived from the « ethics, conviction and responsi- Alternative energy Energy sources from plants, etc.), by degrading them in an accelerated bility » program; commitment towards sustainable natural or industrial origin (biogas, flare gas, etc.). manner. development, respect of regulations in force in the AquaFed International association of private countries in which we work, loyalty to clients and water operators. Concession Operating contract for a public service consumers, social responsibility, risk control. contract between a public authority and an operator Areas of ecological interest Sectors charac- (concession company). The concession company is terized by the presence of species or remarkable responsible for operation, renewal and mainte- environments forming part of the national, regional nance of the facilities, and for invoicing. It also G-H or worldwide natural heritage. finances necessary investments (unlike service concession (affermage) contracts. The operator’s remu- Green certificate The producer is issued with a neration is derived from users of the service. green certificate for each MWh of electricity generated from renewable energy (hydroelectric, photo- DNA (Designated National Authority) voltaic, wind, geothermal, biogas, wood energy). It is B Entity (often forming part of the Ministry of the then sent to the consumer to certify the source of its Bioaerosols Micro-organisms are present every- Environment) of the government of a CDM project electricity. In France, OBSERV’ER is the institute that where in the environment, and are called bioaerosols host country made responsible for approval of such issues green certificates. when they are in suspension in air. projects within its national area. Greenhouse gases (GHG) Gas absorbing Biodiversity Refers to the variety and variability Domestic project Project to reduce emissions some solar rays and responsible for climate change of living organisms and ecosystems. Biological set up in France, so as to encourage reductions of (CO2, CH4, N2O, water vapour). diversity is studied at three levels (genetic, specific CO2 emissions in diffuse emission sectors (trans- City planning document used to or ecosystemic). Green register port, buildings, agriculture). produce maps of the citie’s green spaces. Bioenergy Energy produced mainly from biomass Household wastewater Refers to soapy resi- and used in the form of fuel, heat or fuel. dual water. It includes wastewater from showers, Biofuel Liquid or gaseous product designed for use dishwashers and washing machines. in the engine of a vehicle, containing products derived E-F from vegetable or animal crops. Ecosystemic services Knowledge of ecosys- Biogas Gas resulting from the biological degradation tem functions and services that human beings process of organic materials with an oxygen deficit, obtain from them. I-J-K containing a large percentage of methane and with a Ecotoxicity Property of a substance to cause IFRS Standards (International Financial high calorific and energy potential. harmful effects on living organisms or their physio- Reporting Standards) International accounting Biomass Vegetable and organic animal waste. logy (biochemical effect) and their functional orga- standards adopted by companies quoted in the nization (ecosystem). European Union. Biomethanisation See methanisation. Emission quotas of greenhouse effect ILO International labor organization. BOT (Build Operate Transfert) Type of contract gases These quotas correspond to the authorization Joint implementation (JI) Flexibility mecha- in PPP in which the private operator is responsible to emit a metric ton of carbon dioxide equivalent nism defined by the Kyoto protocol, similar to the for construction and operation of a project that it during a given period. In particular, they are CDM. It enables developed countries to invest in will be required to retrocede to the public authority assigned to operators of energy facilities in applica- other developed countries, particularly in countries at the end of the contract. tion of the Kyoto Protocol. with a transition economy in Central and Eastern Europe, and to obtain carbon emission credits that Emission Trading Scheme (ETS) European they can use to respect their commitments in terms system for the exchange of GHG emission quotas. of emission reductions. C-D Enrichment Product added to soil to improve its Kyoto protocol Protocol that came into force in Car sharing Service based on pooling of a fleet physical qualities and correct its acidity. 2005 in extension of the United Nations outline of vehicles (in practice, short period car rental). Environmental management system (EMS) agreement on climate change. In particular, it fixes limiting values for greenhouse gas emissions in CER (Certified Emission Reduction) Name System that an organization can use to implement industrial countries. given to carbon credits corresponding to emission its environmental policy and achieve associated reductions achieved through a CDM project. 1 CER objectives to control environmental impacts signifi- corresponds to one metric ton of avoided CO2 equivalent. cant of its activities and to respect regulatory requirements. Circular saving Saving that maintains a ba- L lance between the economic development and Epe Entreprises for the environment (association). preservation of resources (according to the United Landfill Sites that replace tips, enabling storage Nations program for the environment). Factor 4 In France, the objective of dividing national and treatment of waste and energy recovery from greenhouse gas emissions in 1990 by a factor of 4 biogas. Clean development mechanisms (CDM) by 2050. Mechanism used for projects in the framework of the Landfill gas See biogas. Facts (Field Action Science) Initiative Kyoto protocol. It enables countries under constraint Resource cycle governed by started by the Veolia Environnement Institute in Large water cycle and companies in these countries to obtain emission natural phenomena (rivers, lakes, groundwater May 2007 aimed at distributing good practices in credits by investing in projects to reduce emissions in tables, clouds, oceans, ice). host countries (developing countries, large emerging an international publication, FACTS Reports. The countries) that have ratified the Kyoto protocol but subjects discussed deal with development, humani- Leachates When stored and under the combined have no objectives to reduce their GHG emissions. tarian aid, health, education, and the environment. action of rain water and natural fermentation, 4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:17 Page 96

waste produces a liquid fraction called “leachates”. • Waste treatment activities (sort, composting, a fixed route and do not have a precise timetable, These materials are rich in organic materials and incineration, storage, treatment of hazardous waste). except sometimes to meet particular needs. trace elements, cannot be released into the natural • Energy services (heating and cooling networks, Urban heating networks Central boilers that environment directly and must be treated. thermal and multi-technique services, industrial supply buildings connected to them through a net- utilities and facilities management). work of pipes. • Transport of passengers and goods. M-N-O Renewable energy Energy produced from natural elements (sun, wind, water, earth): solar and Methanisation Biological process for degrada- wind energy, hydroelectricity, geothermal, biomass, V-W tion of organic material by microbial flora, in the tidal, biogas from landfills, etc. Waste recovery There are three types of recovery: absence of oxygen. • material recovery or recycling that consists of Reuse Reuse of treated wastewater (that has MWIP Municipal Waste Incineration Plant. using the materials contained in waste for a second been treated in a treatment plant and that can be life; Network efficiency ratio Ratio between the released into the natural environment). • energy recovery, that consists of generating elec- sum of invoiced and non-invoiced water volumes to Reverse osmosis Process for separation of tricity or supplying a heat network; the total volume input into the distribution network. water and dissolved salts by means of semi-perme- • agronomic recovery that consists of transforming the fermentable part of organic waste into com- OECD Organization for Economic Cooperation and able membranes under the action of pressure (54 to post. Development. 80 bars for the treatment of sea water). Whistleblowing system System by which ONEA National Office for water and sanitation in employees who observe a failure to observe func- France. tional rules of the ethics, conviction and responsi- Operational Entity Organizational and geo- S bility program, can send alerts to the ethics graphic entity forming a level of management and Sanitation Collection and depollution of waste committee, if recourse to management is insuffi- consolidation with the division. and drain water. cient. Orée French association composed of enterprises Sanitation equipment Systems for treatment of White certificates French system used to and communities to develop a common research on wastewater or waste, or well ventilated toilets, or toi- demonstrate and evaluate energy savings made. how the environment is taken into account by these lets connected to a septic tank, according to the defini- These certificates must enable savings of 54 TWh bodies. tion of the World Health Organization and the UNICEF. by 2008. Sapiens (Surveys and Perspectives Integrating Environment and Society) P Multidisciplinary scientific journal issued by the Veolia Environnement Institute publishing articles Primary energy Incoming energy before trans- written by the best specialists describing significant formation. progress in the field of environmental prospecting. Priority facilities Facilities with the most sen- Secondary raw materials Raw materials sitive environmental impacts for the Group. derived from recycling of waste and that can be Public private partnership The abbreviation used in manufacturing of a new product. PPP also refers to a very wide variety of methods of Service concession (affermage) contracts production and management of infrastructures, faci- Contract for operation of a public service (for exam- lities or public services. In terms of public service, the ple drinking water services) drawn up between a de- objective is a financing method by which a public authority calls upon private service providers to legating public authority and an operator. The local finance and manage facilities providing or contribu- authorities makes investments, the private company ting to public service. In return, the private partner is responsible for operation, renovation of facilities receives payment from the public partner and / or and invoicing. The operator’s remuneration is users of the service that he manages. This financing derived from users of the service. method is present in many countries in various forms. Shared ride Refers to three types of transport inclu- Public service concession Method of ding car pool, car sharing, and transport on demand. operating public services or general interest Small water cycle Cycle of agricultural, indus- services originating from public authorities and for trial and domestic uses. the benefit of residents, who pay the price directly to the concession. The concession is responsible Stakeholders Internal and external parties for operation of the service and, if applicable, for concerned by operation of the enterprise: employees, making some investments. clients, suppliers, shareholders, associations, civil partnership, public authorities, etc. Purchasing power parity (PPP) Method used to produce a comparison of the purchasing Subsidized connection In the most general power of national currencies in different coun- case, this refers to connection of low income tries. It consists of measuring the amount of goods households offered at a low price and / or with and services that can be purchased using a cur- payment facilities. rency (standard shopping basket of goods in the different compared countries). T-U Transportation on demand (TOD) Particular Q-R transport mode including traditional or collective Relevant activities taxis, school buses, car sharing and self-service • Production and distribution of drinking water, bicycles. TOD services are different from other pub- collection and depollution of urban wastewater. lic transport services in that vehicles do not follow www.Corporateregister.com 04/07/2008