Corporate responsibility report 2004 responsibilityCentrica

“Corporate responsibility contributes to long-term business success.” Sir Roy Gardner, Chief Executive 2004 highlights

08 Contents Marketplace 01 Chief executive’s Operating with integrity statement We understand that sustained commercial 02 What we do success must be underpinned by a 04 Business principles responsible approach. 06 Engaging stakeholders 08 Marketplace 14 Workplace 14 20 Environment 28 Community Workplace 34 Next steps Valuing our people 36 Assurance statement By being an innovative and caring employer we enhance our ability to deliver a superior experience.

Group turnover* up by 20 9% Environment Reducing our Operating profit** up by carbon footprint We are managing our environmental impact to contribute to the creation 16% of a sustainable low carbon future.

AA successfully sold for a profit of 28 Community £740m Engaged investment We are involved in a range of community initiatives that align with our core Total returned to business activities, skills and experience. shareholders

£1.5bn 12 months ended 31 December 2004

* from continuing operations, excluding Accord trading revenue Highlights ** before goodwill amortisation and exceptional items, including joint * ventures and associates Group turnover £11.8bn Operating profit** £1,227m Ordinary dividend per share 8.6p Basic earnings per share 33p Total number of employees 43,414 Contributions to community causes † £7.35m † Includes £850,000 in customer debt relief

For more detailed information on our corporate responsibility activities visit www.centrica.com/responsibility

Throughout this report references to British Gas include Scottish Gas. Earnings and operating profit numbers are stated, including joint ventures and associates, before goodwill amortisation and exceptional items where applicable. The directors believe this measure assists with better understanding the underlying performance of the group. All current financial results listed are for the year ended 31 December 2004. All references to ‘the prior year’, ‘2003’ and ‘last year’ mean the year ended 31 December 2003. Chief executive’s statement

To meet our goals and deliver the returns that our shareholders expect, a responsible approach must underpin our strategy and run through everything we do. Welcome to Centrica’s second corporate responsibility report, covering the year to 31 December 2004.

I believe we have made good It is precisely at such times that assets and investment in Your feedback will help us progress in understanding and a commitment to corporate renewable energy generation, to continue developing and managing our key corporate responsibility is vital. These supports our strategic improving our approach and I responsibility impacts during decisions were made in an open imperative of creating an would welcome your views the past 12 months. and transparent manner and international, integrated on any aspect of the report. Our corporate responsibility with an absolute determination energy company. Contact details are provided strategy enables us to address that our more vulnerable Increasingly, our throughout. the challenges of sustainable customers should not suffer determination to secure future Centrica’s approach to development and we continue unnecessary hardship and that energy supplies for our corporate responsibility has to engage with our employees affected by the customers, will require come a long way in a relatively stakeholders, working in restructuring should be fully significant changes to the way short time, and I’m very proud partnership to respond to their supported. we do things. We will, for of the distance we have views and concerns. The creation, for example, example, procure more gas travelled. I am also conscious At Centrica, corporate of the British Gas Energy Trust supplies from international that there is still a long way responsibility means: Fund is just one way in which markets, while our upstream to go. • providing our customers with we aim to help customers who investments in conventional a compelling experience; struggle to pay their bills modes of generation • ensuring that our employees (page 9). significantly increase our have the chance to maximise And the change management carbon emissions. their contribution and are process that we put in place to The changes necessary for recognised and rewarded for support necessary business growth will certainly doing so; organisational changes was pose a number of new Sir Roy Gardner • not just minimising any characterised throughout by challenges. But I am confident Chief Executive negative impact our employee involvement and that our core values and operations might have on the consultation, working closely principles will help us to thrive environment, but making a with trade unions, and by the on those challenges and fulfil positive contribution to future use of services such as career the expectations of our sustainability; and counselling and outplacement stakeholders. • finding innovative ways to support. As we continue to grow contribute to the communities I believe it is through such our business in 2005 and of which we are proud to be activities that corporate beyond – both in Britain and a part. responsibility is becoming internationally – we will strive In a fiercely competitive increasingly embedded in our to ensure that corporate marketplace, we have to take decision making, enabling us responsibility underpins all new tough decisions in the interests to manage the direct impact of activities and we will extend the of customers and shareholders. our operations on all our coverage of our reporting to In 2004 for example, rising stakeholders. new business areas. wholesale energy prices The business climate in which I hope you find this summary inevitably led to rises in the we are operating is changing interesting and I would retail prices we charge our and Centrica is changing with it. encourage you to visit our customers, while significant The decision, for example, to more detailed online report at group restructuring resulted in sell the AA along with our www.centrica.com/ a number of redundancies. acquisition of new upstream responsibility

Corporate responsibility report 2004 Centrica plc 1 What we do Our business

Across Centrica our focus is now entirely on energy and related services. The needs of our customers lie at the heart of everything we do, from sourcing and securing energy to providing a broad range of distinctive services to homes and businesses.

Key markets We serve customers in Britain, Spain, Belgium, Canada and the USA.

Centrica Energy British Gas Residential British Gas Business Turnover** £914m Turnover £6,906m Turnover £1,200m Operating profit* £512m Operating profit* £337m Operating profit* £64m Number of employees 816 Number of employees 24,098 Number of employees 1,369 www.centrica.com www.house.co.uk www.britishgasbusiness.co.uk

We source the gas and electricity Under the British Gas name in breakdown services provided British Gas Business, (formerly we need to supply our customers England, the Nwy Prydain and under our HomeCare range. Centrica Business Services) in Britain through a team of British Gas names in Wales, and We also provide HomeCare aims to meet the specific needs specialists working in Centrica Scottish Gas in Scotland, we for plumbing and drains, home of its customers, from the Energy. The business consists supply gas and electricity electrics and kitchen appliances largest industrial and commercial of our upstream gas production, to residential customers and are a national installer of operators to small and medium- electricity generation, wholesale throughout Britain. As well as domestic, monitored home sized enterprises. and industrial gas sales activities energy, we offer customers a security systems. We market gas and and our energy optimisation unit. wide choice of complementary British Gas directly employs electricity to businesses under Our gas reserves in Morecambe home services. over 8,000 engineers to carry the British Gas Business brand Bay are supplemented by We are the first choice gas out its gas, plumbing and across Britain, offering the production from several North supplier for millions of people, electrical services. flexibility of an open tariff or the Sea fields. Our interests in seven and since the market opened A range of on-demand security of a fixed-term contract. gas-fired power stations help to competition in 1998 we have drainage services are provided We are now the number one meet the demand of our become the largest supplier by Dyno-Rod, which became supplier of energy to the electricity customers. In addition, of electricity to residential part of British Gas this year. It commercial sector in Britain we are committed to investing customers in Britain. Apart from operates through a network of (measured by supply points). in renewable generation with supplying energy we are also franchises covering the UK and Alongside energy, we interests in offshore developments the largest domestic central Ireland. In addition, there are a provide heating care for in the Irish Sea and North Sea, heating and gas appliance growing number of Dyno-Locks businesses. and onshore in Scotland. installation and maintenance and Dyno-Plumbing franchises. company, with maintenance and

2 Corporate responsibility report 2004 Centrica plc Understanding our impact on society, the economy and the environment is at the heart of our strategy. It provides the foundation for defining our key responsibilities.

Our impact Climate change Security of supply Gas Safety Power generation storage Biodiversity and gas production Economy (global and local)

Skills, education and employment Safety Customers and Fuel poverty and inclusion communities Quality of life Economy (local and individual)

Safety Fuel poverty and inclusion Products and services Economy (local and individual) Quality of life Climate change

Centrica Storage Onetel Centrica North America Europe Turnover £133m Turnover £218m Turnover £2,375m Turnover*** £287m Operating profit* £69m Operating profit* £16m Operating profit* £134m Operating profit* £4m Number of employees 163 Number of employees 897 Number of employees 3,187 Number of employees 705 www.centrica-sl.co.uk www.onetel.co.uk www.directenergy.com www.luminus.be www.cplretailenergy.com www.luseoenergia.com www.wturetailenergy.com

Centrica Storage operates Onetel is the largest indirect Direct Energy is North We are active participants in the Rough gas storage facility – fixed-line competitor to BT in America’s largest competitive the liberalising energy markets a partially-depleted gas field residential markets. Our fixed- energy and home services of Belgium and Spain. in the southern North Sea. line customer base can choose provider. In Canada we serve Our energy supply joint The business provides storage from the UKTalk range of call residential customers in Ontario, venture, Luminus, supplies services for a wide range of plans, offering a no monthly fee Manitoba and Alberta. customers in both the customers, including businesses and free weekend calls option In the US, Direct Energy residential and business within the Centrica group. or unlimited usage. UKTalk supplies customers in markets of Belgium. The facility lies approximately customers also enjoy Onetel’s Pennsylvania, Ohio, Michigan Following the opening of the 18 miles off the coast of east free 118 111 directory enquiries and those parts of Texas not Spanish energy market at the Yorkshire, supported by an service. Mobile customers have served by our subsidiary start of 2003, Luseo Energía is onshore gas processing a broad choice of free handsets companies CPL Retail Energy focused on providing electricity terminal at Easington. and flexible tariffs and our and WTU Retail Energy. for small and medium-sized For regulatory reasons, internet service caters for Direct Energy Business businesses in Spain. Centrica Storage operates customers with a range of dial Services provides as a separate business from up and broadband packages. comprehensive energy *operating profit is shown before the rest of the group. Onetel also provides solutions to businesses goodwill amortisation and exceptional items, including joint ventures and telecoms services to British Gas throughout Canada and many associates customers. parts of the US. **excluding Accord trading revenue

***includes group share of Luminus joint venture turnover

Corporate responsibility report 2004 Centrica plc 3 Business principles A business with principl

Centrica’s strategy is focused on the creation of shareholder value. We believe that the interests of shareholders are best served by operating in accordance with the highest standards of business integrity.

In our view, commercial aligned and consistent with A successful business meets by engaging all its stakeholders, success is only possible strong business practice, and its commercial objectives by by playing a full part in the within an ethical framework. in which employees behave in competing fairly and with communities in which it A successful business is one in accordance with business integrity in the marketplace, operates and by respecting which strategic objectives are values. the environment.

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

Strategy Our distinctive strategy is to create value Our business priorities are: for our shareholders through: • maintaining and growing our home market • deepening our relationships with customers; position; • achieving a cost advantage for our • securing stable and cost-advantaged downstream supply business; and supplies of energy; and • sharing knowledge and best practice. • building our position in Europe.

Ultimately, of course, strategies are delivered by people and our company values guide the actions and behaviours of all our people.

Values • passion for customers underpins our ethos • challenge – we strive for continuous of delivering an outstanding customer service; improvement; and • pride – we are proud of the service we • support – we support each other in owning provide and of each other; and meeting challenges. • trust – we do what we say we will and act with integrity;

These values must be embedded in our business practice. It is important that employees have the scope to take decisions within a clear and accessible ethical framework consistent with the principles of the company.

Business Our published statement of business • competing fairly and respecting customers; principles sets out our commitment to • communicating openly and frankly with our principles operating responsibly and underpins our shareholders, customers, employees and values. society at large; • managing our environmental impact; and These business principles include: • meeting our community and broader • working within the law in all the countries social responsibilities. in which we operate;

Our principles help to ensure that our employees understand that behaving ethically, honestly and professionally are all equally important parts of the same job.

4 Corporate responsibility report 2004 Centrica plc “Understanding our impact on society, the wider economy and the es environment and building relationships with all key stakeholder groups is important to business success.” Grant Dawson, general counsel and company secretary

At the heart of our corporate responsibility (CR) strategy is The CR committee is the recognition that meeting responsible for: and exceeding our Board of Directors responsibilities to society as a • developing and managing whole contributes to long-term, our CR strategy; sustainable commercial success. • promoting effective Audit We believe that the successful communication and Committee implementation of an innovative measurement of our CR and well-managed CR strategy activities; Centrica Executive will help to build customer loyalty, • ensuring that social, ethical Committee increase support from investors, and environmental risks are motivate suppliers and business identified and managed partners to work with us and across all operating help to make us an employer businesses; and of choice. • reporting performance to Corporate There are four principal the Centrica executive Responsibility strands to our approach: committee and the Centrica Committee • identifying, consulting with board of directors. and responding to the views of stakeholders; • ensuring that we identify key impact areas and address those challenges and issues Committee members Janice Thomson, David Kendle, in an effective and consistent senior vice president, HR, director of home servicing manner throughout the group; Grant Dawson (chair), health, safety and environment, • gaining an objective and general counsel and and communications Alan Bennett, balanced view of our company secretary director of power generation performance by participating Judy Greevy, and renewables in independent Anne Minto OBE, head of diversity and benchmarking; and group director, human corporate responsibility Andrew McCallum, • measuring and publishing resources corporate responsibility information about our manager performance.

Measuring our performance

It is essential to monitor our Dow Jones Indexes BitC CR Index FTSE4Good Indices investments and measure The Dow Jones Sustainability We were ranked 50th (48th In 2004, Centrica continued the impact of our corporate Indexes evaluate companies’ in 2003) in the Business in the to be listed in the responsibility initiatives. ability to manage their social, Community CR Index in 2004. FTSE4Good indices, Our stakeholders expect ethical and environmental 132 companies took part confirming that we continued nothing less. We participate issues in a way that contributes and our overall score was 86%, to meet globally-recognised in a number of independent to commercial advantage. compared with 87.2% in 2003. CR standards. initiatives that enable our In 2004, Centrica was included stakeholders to see for in both the Dow Jones themselves how our Sustainability World and performance compares European Indexes. with that of our peers.

Corporate responsibility report 2004 Centrica plc 5 Engaging with stakeholders Engaging stakeholders

Structured engagement with all our stakeholders is fundamental to the way we do business and is essential to identifying and addressing the needs of various stakeholder groups.

Our principal stakeholder results presentations and consistent with our values and Government and parliament groups are: regular meetings with our business principles. In 2004, We maintain constructive investor relations team. for example, we trialled a relationships with Government Customers programme to assess the CR and MPs of all parties, primarily Two-way dialogue with our Regulators credentials of some of our through face-to-face briefings customers is essential if we are Centrica operates in regulated strategic suppliers, as a and discussions and also to fully understand and meet markets. Managed dialogue result specific measures will be through membership of such their needs. We continuously and the development of further embedded in our organisations as the Whitehall track a comprehensive range of one-to-one relationships with tendering processes in 2005. and Industry Group. We customer service and customer the regulatory authorities are contribute to policy satisfaction measures. Beyond essential if we are to meet Charities and non- consultations and participate this, British Gas, for example, our obligations, inform policy governmental organisations in parliamentary committee participates in research making and share best (NGOs) inquiries. conducted by MORI, which practice. We are also active We work with a range of helps us to understand the participants in a range of charities and NGOs to enhance Trade unions importance of CR to customers industry bodies. British Gas, for our understanding of key Constructive and open and other stakeholders. example, is a member of the social issues. Our continuing relationships with trade unions Energy Retail Association, the partnerships with National are essential to managing our Investors and shareholders trade association for suppliers Energy Action and Help the workplace activities. Regular Regular communication with of domestic energy in the UK. Aged in Britain, and Raising the face-to-face meetings provide our investors and shareholders Roof in North America, for the platform to discuss issues keeps them up to speed with Employees example, have enabled us to such as organisational change, developments in the business We believe that listening to, develop tailored propositions, business results, remuneration, and helps to reinforce their responding to and acting on products and communications and terms and conditions. commitment. For our retail the views of our employees is that meet the needs of our Where planned organisational shareholders, our main key to our continued success. more vulnerable customers. changes are likely to impact on channels of communication We maintain ongoing dialogue our employees, such as those include our annual general with employees through a Consumer organisations changes implemented during meeting, our annual report range of internal communication Regular dialogue with 2004, we brief trade union and annual review and the channels and they can make consumer organisations representatives in advance and shareholder pages on our their voices heard through our helps ensure that we are involve them in the change website www.centrica.com/ annual employee engagement addressing key consumer process. This forms part of shareholders. In addition to survey. In 2004 more than 80% issues. In 2004, for example, our layered communication our annual report and CR of employees responded. we continued to enhance our strategy, which aims to promote report, we engage with our relationship with ‘energywatch’ and enhance employee institutional investors through Suppliers – the UK energy consumers’ engagement through periods investor roadshows hosted by We work with our suppliers watchdog – to ensure fair and of change. our chief executive and group to ensure that they manage efficient implementation of retail finance director, half-yearly their operations in a manner price increases.

“ In 2004 we instigated consultations relating to the construction of wind farms in the Greater Wash, as part of our renewable energy strategy. Ongoing consultations have already involved more than a hundred stakeholder groups from national and local government, environmental and other specialist organisations.” Neville Barltrop, public affairs manager, renewables

6 Corporate responsibility report 2004 Centrica plc “It is good to see Centrica seriously grappling with the challenge of sustainable development. For a company of its size, it is a vast challenge and a huge responsibility. In particular, it is imperative for the company to develop a strategic and progressive approach to climate change. We look forward to continuing our programme of constructive, and sometimes critical, engagement to help Centrica deliver genuinely sustainable business operations into the future.” Jamie Wallace, principal sustainability advisor, Forum for the Future

Local communities This chart is an overview of the CR issues we believe are of most concern to our main Through our operations we stakeholder groups. It is not intended to be an exhaustive list, but to provide insight are active in thousands of into the issues that we typically debate and consult on. We would welcome your communities in the UK, North feedback on this area of our work. Please email us at [email protected] America and Europe. We engage with these communities in a variety of ways: • working in partnership with local government and social housing providers to address fuel poverty and related issues; • joining forces with educational establishments and local recruitment agencies to Charities & NGOsConsumer organisationsCustomers Employees GovernmentInvestors & Parliament & shareholdersLocal communitiesRegulators Suppliers Trade unions provide training and employment opportunities; Marketplace and Vulnerable customers • consulting with residents over Diversity and inclusion the development of new Product safety offices and operational assets. Fuel poverty For example, following the Standards of service acquisition of the Glens of Advertising and selling Foudland onshore wind farm Supply chain management Pricing and tariffs in Aberdeenshire last year, we distributed information on the Workplace construction project to all Skills development members of the local Diversity and equality community and discussed the Health and safety local impact through a series Reward and remuneration of face-to-face meetings. Work life balance Employment conditions Next steps Human rights We are committed to improving Recruitment Redundancies the ways we communicate our CR activities and performance. Environment In 2005, we will begin a formal Renewable energy programme, working with our Energy efficiency stakeholders to assess their Climate change views on Centrica’s current Emissions trading approach to CR reporting and Compliance with legislation communication. We will report Waste and recycling back on this in 2006. Resource efficiency Biodiversity Construction projects Noise

Community Skills and employability Education Customer focus Employee involvement Community investment Partnerships

Corporate responsibility report 2004 Centrica plc 7 Marketplace Operating with in

A passion for our customers is one of our core values and shapes the way we do business. All our businesses strive to win and retain the trust and loyalty of our customers. And we work to develop relationships with our suppliers and business partners based on mutual respect and integrity.

Centrica has millions of of which we are a part, we Key customers and we are are increasingly working in responsibilities committed to operating with partnership with our the highest standards of suppliers to ensure that • helping to alleviate fuel business integrity. the way they operate is poverty; This commitment runs consistent with our through all our advertising and values and business • working with our customers sales activities and is at the principles. to promote the safe and heart of our determination to responsible use of our continue to improve levels of products and services; customer satisfaction. It is also central to our determination to • recognising and valuing meet the diverse needs of our the diversity of our customers and informs our customers; promotion of customer safety and the responsible use of our • aiming to maintain high products and services. levels of customer In addition, and because satisfaction; of the impact a business of Centrica’s size inevitably • delivering a superior has on the supply chains customer experience;

• building responsible and rewarding relationships with our suppliers; and

• ensuring that our sales and advertising techniques are trusted and credible.

“ British Gas and all involved are to be praised ‘here to HELP’ for their very innovative scheme to help people Launched at the end of 2002, Direct support includes the who are not so well off. Caring for people like ‘here to HELP’ is a household installation of energy efficiency me gives such a boost to morale, which can be poverty programme run in measures, a benefits health collaboration with a number check and a range of services very low when ends just don’t meet.” of national charities. The from our charity partners, all of Eric, British Gas customer programme tackles a range of which are free of charge for issues affecting older people, qualifying customers. people with disabilities, By the end of 2004, 671 single parents and families communities had signed up to with young children. the programme, potentially

8 Corporate responsibility report 2004 Centrica plc British Gas funding of British Gas is investing up to £10m £290m has established a trust fund over the next three years to to help customers having assist vulnerable customers tegrity difficulty paying bills

Helping vulnerable customers Our service ethic is about helping to make life safe, warm and comfortable for all of our customers but particularly for families, older people and people with disabilities in some of Britain’s most disadvantaged communities. The decision by most energy in receipt of pension credit – service engineers, energy companies to raise retail gas can take advantage of capped efficiency teams and debt and electricity prices in 2004, gas and electricity prices until teams, for example – who are primarily as a result of sharp October 2007. The package in touch with vulnerable rises in the cost of wholesale also includes free home customers as part of their job. energy, has highlighted the insulation, assistance with Our field-based debt teams position of older and vulnerable claiming state benefits and have been trained to identify people on fixed incomes. access to British Gas’ range of potentially vulnerable customers According to one recent survey priority services. when they visit homes. by the Department of Trade If prices fall during this period, Processes are in place to and Industry, around 7% of customers will, of course, capture this information and households in the UK are in enjoy the benefits. provide appropriate support. arrears on payment of household bills. Better communications Energy Trust Fund Working with a number of Because we recognise that our British Gas has also launched partners, British Gas has more vulnerable customers an independent trust fund to developed a range of initiatives require advice, information and help customers who are having to help our most vulnerable support about all the services difficulty paying their bills. customers. Our aim is to find we offer, we are setting up the Established with initial funding innovative ways to manage the British Gas ‘Extra Care’ team – of £10 million for three years, impact on these customers of dedicated experts who can the British Gas Energy Trust difficult but necessary business connect customers to the Fund will provide a combination decisions and to protect and appropriate programmes. of grants and advice to help enhance their quality of life. The British Gas ‘Extra Care’ customers experiencing team will also provide problems with essential Price promise information, guidance household debt. In 2004, British Gas made a and support to our employees – ‘price promise’ that will protect our most vulnerable older “We already help more than half a million people who customers from any further are having difficulties paying their bills through our price increases for three years. regular payment schemes. The British Gas Energy Developed in partnership with Trust Fund is a valuable new initiative that goes UK charity Help the Aged, the further to help ease the worries of some of Britain’s promise means that eligible poorest households.” customers – those over 60 and Mark Clare, managing director, British Gas

“A key Government energy priority is to ensure benefiting 340,000 that every home in the UK is adequately and households. British Gas affordably heated. The British Gas ‘here to has recently committed HELP’ programme is an example of the a further £290 million over the next three years to assist corporate social responsibility we expect from vulnerable customers, energy suppliers in support of our objectives improve energy efficiency, and involves effective collaboration between the increase disposable income private, public and voluntary sectors to create and enhance quality of life. systematic, local solutions to fuel poverty.”

Mike O’Brien MP, UK energy minister

Corporate responsibility report 2004 Centrica plc 9 Marketplace

importance of our people taking full responsibility for their Listening to customers at the first point of contact, is repaying the investment we have made in it. Our 2004 customer satisfaction target in the SME (small and customers medium-sized enterprise) market was 72% and we We recognise the importance of listening to achieved 74%. Our target of 73% in the corporate market our customers at all times and maintain was also exceeded, with a ongoing consultation and dialogue with various result of 76%. consumer organisations, our industry peers, Direct Energy regulators and not-for-profit organisations. Each year Direct Energy has more than eight million This helps us to understand Onetel British Gas interactions with customers different perspectives on the In 2004, Onetel continued Retail price increases during that influence their perceptions marketplace, which in turn to focus on delivering the the year inevitably had a of the company. During 2004 enables us to find new and highest levels of customer negative impact on customer we exceeded our customer innovative ways of fulfilling the service. Initiatives in the year satisfaction levels; however, the satisfaction index target for expectations of our included the launch of a number of complaints made the second consecutive year. stakeholders. dedicated call centre team to to ‘energywatch’ (the UK The index measures our We continuously measure support new customers, the energy consumer’s watchdog) success in providing an levels of customer satisfaction, development of a new home- about British Gas fell by almost outstanding experience for our and monthly performance mover process and the 30%. Key service initiatives customers and is linked to indicators of service delivery are introduction of automated during 2004 included a focus employee reward programmes. reported to the Centrica board services for broadband on annual safety visits. In 2005 we will maintain our of directors. This helps to customers. Independent Customer satisfaction with the focus on developing the skills ensure that we track customer surveys showed increased annual safety visit was at an and processes necessary to service performance against customer satisfaction levels all-time high during the year. deliver continuous key performance measures and compared with 2003. ‘Overall improvements in customer identify and manage issues at performance’ was up 4% while British Gas Business satisfaction. an early stage. the number of complaints fell by British Gas Business’ 8%, exceeding our target for ‘Ownership’ customer handling the year. process, which stresses the

Attracting new customers We use a variety of sales and advertising techniques and are determined to observe the same high standards of responsibility in all of them.

British Gas British Gas is a member We ensure that our work Onetel British Gas is a founder of the Direct Marketing complies with the provisions of As a leading provider of member of the Association Association (DMA) and our the Disability Discrimination Act communication services, of Energy Suppliers (AES) direct marketing and outbound and require that any agencies Onetel has adopted the Office which seeks industry-wide telesales activities are we employ also comply. of Communications (Ofcom) resolution of energy conducted in accordance with All our advertising, which is voluntary code of compliance sales-related issues. the provisions laid out in the extensively researched with for sales and marketing since Our direct, face-to-face DMA’s code of practice. consumers to ensure that it inception. The code of sales agents operate in Our customer conveys an acceptable and practice aims to ensure good conformity with the AES communications are written positive image of Centrica, practice and the responsible code of practice. To reinforce in a clear way that is adheres to the Committee of selling and marketing of this commitment, all British appropriate and accessible Advertising Practice Code and fixed-line telephone services. Gas domestic energy sales for the target audience. we aim to ensure that it is In 2004, Onetel won the agents are fully trained and All British Gas television, honest and within the law. prestigious Direct Marketing accredited to ‘Energysure’ radio, print and online In 2004, one Advertising Association Gold Award. standards – the first, national marketing communications are Standards Authority (ASA) Five minor complaints to accreditation scheme. submitted to the appropriate complaint was upheld against a the ASA relating to Onetel Customer complaints external body as part of our British Gas TV commercial run were upheld during the year, received by ‘energywatch’ standard approvals processes. in the last quarter of 2004. two of which led to changes relating to British Gas energy We have an internal As this report went to press, in industry practice. sales fell by 60% during competition compliance team British Gas was invoking the 2004. which checks for conformity appeals process. with regulatory requirements.

10 Corporate responsibility report 2004 Centrica plc Carbon monoxide incidents 2000-2004

100 Total CO Incidents 80 British Gas Supplied

Leading the way on 60 customer safety 40 Safety is a key issue for our businesses and 20 we are developing new and innovative ways to 0 2000 2001 2002 2003 2004 promote the safe and responsible use of our Data from Health and Safety Executive products by our customers.

We are working with the Health agreement to publicise gas out how safe their home is. Home Energy Care and Safety Executive to assist safety matters. As part of the campaign, We operate a Home Energy in policy making in relation to British Gas is one of the few engineers have handed out free Care service which provides carbon monoxide (CO) incidents British companies to achieve bath thermometers to essential services for some of and, in conjunction with City company-wide ISO 9001:2000 customers with children and our most vulnerable customers. and Guilds, have designed and accreditation from the British have been leaving behind a These include annual safety developed a national CO Standards Institute. safety card of useful hints and checks and the provision of incident investigation training In 2004, British Gas launched tips when they visit the homes specially designed appliance programme and qualification. a new safety campaign to of customers with children. controls and adaptors for older We actively support the Gas highlight dangers in the home. people, people with disabilities Industry Safety Group, CO-Gas Supported by a website Vent or repent and those who are chronically Safety - an independent charity www.britishgassafety.co.uk The National Union of Students sick. More than 440,000 gas committed to reducing one of the campaign’s main got behind British Gas’ ‘Vent or customers and 249,000 accidents involving CO - and emphases is child safety. People Repent’ campaign, to raise electricity customers have other organisations such as the can use our online resources to awareness of the dangers of CO registered for the service. Royal Society for the Prevention build their own checklist of poisoning. Every year, up to 30 The service is underpinned of Accidents. Alongside other safety issues, check out the people in the UK are killed by by a comprehensive quality gas supply companies, we have sections for children, parents, CO poisoning. Students fall into assurance process to ensure signed a co-operative students and landlords and find the ‘at risk’ category because that customers with specific many landlords are not properly requirements receive a safe, licensed and provide high quality service in line with substandard and unsafe current regulations and accommodation. standards. As part of the campaign, students were advised to ‘Nag your landlord’ about the safety certificates that the law requires them to present to tenants, Almost confirming that gas appliances in rented accommodation have been checked and are safe. The campaign is continuing 700,000 with the further research into students’ awareness of CO energy customers have in 2005. registered for the British Gas Home Energy Care Service

“ Burns and scalds can lead to years of treatment and permanent scarring and disfigurement. I welcome any campaign that helps to make people aware of the dangers that could lie in their home and was happy to support the British Gas Child Safety Campaign.”

Mr Nicholas Parkhouse, burns specialist, Queen Victoria Foundation Trust Hospital

Corporate responsibility report 2004 Centrica plc 11 Marketplace Valuing the power of diversity We are working to ensure that we respond to the diverse needs of our customers and that an inclusive approach is embedded in all aspects of our customer service.

In June 2004, for example, British Gas announced a new language translation service for all households visited by our 8,000-strong engineering force. If there is difficulty communicating with a householder whose first language is not English, the engineer shows a card in a number of languages so that the customer can specify which language he or she would like to communicate in. The engineer can then contact a language translation company, by mobile phone and establish a three-way conversation in any one of over 250 languages, including Arabic, Bengali, Chinese, Hindi, Portugese, Punjabi, Somali, Spanish, Turkish and Urdu. This not only improves the customer service experience, but can also be a real boost to customer safety – the engineer is better able to give advice on, for example, the importance of CORGI registered engineers servicing appliances and raise awareness of the dangers of CO poisoning. It can also act as a deterrent against unscrupulous traders who might exploit the fact that a customer’s first language is not English. We also provide a language translation service in all our customer service centres.

“ British Gas’ language translation service recognises the diverse needs of many of our country’s ethnic minority citizens and is a positive contribution to the cause of social inclusion. I hope other service providers will follow this excellent lead.”

Parmjit Singh Gill MP, Liberal Democrat, Leicester South

12 Corporate responsibility report 2004 Centrica plc Supply chain Challenges and priorities for 2005 • Identify and report on customer experience performance partnerships indicators across all businesses.

• Further integrate CR assessment into the tendering process A business of Centrica’s size inevitably has an for new contracts and renegotiations. impact on the supply chains of which we are a part, and our wider corporate responsibilities • Assess stakeholder dialogue activities across Centrica and engage a range of key stakeholder groups to assess opinions extend into those chains. and expectations of our CR communications and reporting.

In 2004, we launched a environment, health and safety, • Improve internal processes to minimise complaints and seek programme to further engage diversity and inclusion and to share knowledge and good practice across our businesses. our suppliers in our CR strategy human rights. and to ensure that the way they Responses to the survey • Develop and implement action plans in each business to operate is consistent with our have been analysed and further embed diversity and inclusion good practice into the values and business principles. reviewed and we are now service we provide to our customers and adopt a proactive We developed a pilot survey working with suppliers to approach to fulfilling new legislative requirements. inviting a cross-section of 75 provide feedback and assess suppliers to participate. Our opportunities to improve the • Continue to raise awareness of key safety issues, including selection process was based process. carbon monoxide poisoning, through national campaigns and on a combination of strategic In 2005 we will introduce a work in collaboration with industry bodies to minimise numbers importance, contract value and CR risk assessment into the of safety incidents. specific risks identified. tendering process for new The survey focused on key contracts and the re-negotiation • Meet the agreed industry commitment not to disconnect the CR issues including of existing contracts. energy supply of a vulnerable customer and continue to develop innovative initiatives that help our most vulnerable customers.

• Continue to address the primary causes of fuel poverty through initiatives that combine heating, insulation and income related measures. And further develop partnerships with organisations that can support the targeting of those customers most in need.

What matters to you? We welcome your views on our activities in the marketplace:

[email protected]

www.centrica.com/marketplace

Alternative format communications The demand for alternative format communications from customers with specific requirements continues to grow, up 25% in 2004 compared with 2003 levels.

During the year, we sent out with hearing or speech disability. The booklet uses objectives on race. More than over 250,000 alternative impairments. British Gas’ simple language and graphics 180 private and public sector format communications to ‘Home Energy Care’, provides to explain how to improve organisations from across the our customers. We also services such as Braille or large energy efficiency in the home, UK participated and British developed an in-house print bills, a text phone service reduce energy consumption and Gas was the third highest alternative format and audio communications. save money. ranked of the 28 participating transcription service designed Around 7,000 large print bills for the first time. We scored to improve the customer and 350 Braille bills are sent out Race for Opportunity top in our sector for results experience whilst enabling every month. In 2004, British Gas and impact and for integrating us to reduce costs. demonstrated its commitment diversity into marketing In 2004, we spoke to Working with Mencap to diversity by taking part in the activities. more than 3,600 customers In partnership with UK mental Race for Opportunity (RfO) – RfO feedback is helping to in their preferred language health charity Mencap, British a benchmarking survey run by inform and shape British Gas’ and handled over 2,400 text Gas has produced a booklet on Business in the Community, to race action plan. phone calls from customers energy efficiency, designed to be measure the extent to which clearer for people with a learning organisations are meeting their

Corporate responsibility report 2004 Centrica plc 13 Workplace Valuing our peop

The calibre and conduct of our people is vital to building winning relationships with customers, shareholders, suppliers and the communities in which we operate.

Our ability to continue to Key recruit, reward, retain and responsibilities develop the right people is critical. We believe that by • promoting a safe and being an innovative and caring healthy working employer, we can enhance our environment; ability to deliver a superior customer experience in all • attracting talented our chosen markets. people with high-quality In 2004, we continued to reward packages; implement our global people strategy designed to help us • developing our meet our key business needs. employees and helping Its aim is to help us become an them to fulfil their potential; employer of choice for the most talented people in the • ensuring that our values employment market, by are embedded in our creating an environment that people’s behaviour; inspires and rewards achievement whilst supporting • ensuring equality of equality of opportunity for all. opportunity and respect for diversity, both in recognition of the inherent power of diversity and to aim to reflect the diversity of our customer base;

• ensuring a two-way dialogue with our people, listening to them and keeping them informed;

• developing leadership capability, ensuring that our leaders champion our values; and

• managing organisational “ Being able to work more flexibly really has helped me balance work change. responsibilities with my other commitments. I ran the London Marathon in April to raise funds for The National Osteoporosis Society. Having the opportunity to work more flexible hours, work from home and from different Centrica offices helped me maintain my training schedule in preparation for the race… without affecting my productivity at work.” Natalie Griffiths, marketing manager, British Gas

14 Corporate responsibility report 2004 Centrica plc More than We employ 1,000 43,414 employees people across working flexibly the world le through Work:Wise

Flexible working Caring for carers Our aim is to help our people enjoy a Flexibility is the key support that carers need. better work life balance and to ensure that they are able to give their best. There are around 200 known carers in Centrica, who look We are aware of the real of working that improve after family members or friends advantages that flexible productivity and morale, who are ill, frail or disabled. working can bring, both to increase diversity and reduce Forty per cent of these carers individual employees and to costs. Our ‘Work:Wise’ project, have been working for Centrica our business as a whole. The for example, is exploiting new for more than ten years and benefits include increased technology and new ways of fulfilling a caring role for as long. productivity, saved travel time working to offer greater To help us better understand and expense and greater flexibility to more than 1,000 the needs of carers in our flexibility of working hours. employees in Britain. This workforce, we recently Our policy, wherever initiative will be extended to conducted a survey which appropriate and consistent more employees in 2005. demonstrated how much with operational requirements, carers value the support of the In response, we have is to encourage new ways company in balancing their established a network, run by work and caring responsibilities. carers, offering the chance to We found that straightforward share experiences, or simply to support, such as the talk to others who are in the opportunity to keep mobile same position. Five initial phones switched on at work to meetings have taken respond to emergencies and place across the country and the chance to work more more activities are planned flexible hours, can make a for 2005. We were proud to significant difference. be one of five employers However, the survey also shortlisted for an Employer of revealed that some carers were the Year award for our provision unfamiliar with our carers’ policy of a carer-friendly environment. and the flexible working options available.

“We believe that there is a strong business case for supporting working carers. From the top down, there is a clear view that carers should not be discriminated against or disadvantaged on the grounds of caring responsibilities. Carers can have a particularly stressful time and whilst we can’t take away the need to care we can ensure our carers get as much support as possible.”

Judy Greevy, head of diversity and corporate responsibility

“ Flexible working arrangements can play a valuable role in organisational performance. Recent Chartered Institute of Personnel and Development (CIPD) research has indicated that desires to meet both business and employees’ needs drive employers’ use of flexible working. We are grateful to the organisations – including Centrica – that contributed to our research.” Rebecca Clake, CIPD adviser, organisation and resourcing

Corporate responsibility report 2004 Centrica plc 15 Workplace Managing organisational change Our aim is to ensure that our employees are kept informed about and involved in any major organisational changes.

In June 2004, we announced business areas and further redundancies and retain changes to the way in which support was provided with the talented people, we identified the business is resourced and engagement of a specialist as many redeployment Graduates structured, in order to support career counselling and opportunities as possible British Gas’ transformation outplacement support provider. throughout the group. are our programme and to reduce Line managers received training The emphasis on adopting a our service costs. on how to manage change in change management approach pipeline The subsequent difficult times and individuals to this major restructuring was organisational change whose roles were identified as reflected in the engagement programme emphasised ‘at risk’ were given personal scores from our annual for the employee consultation, career coaching to help them employee survey, in which openness and fairness. explore new career some parts of the business future Business proposals to opportunities both within recorded significant overall implement the changes were Centrica and through improvements while others shared and agreed with outplacement support. We also maintained 2003 levels. employee and trade union launched an employee forums, as part of a ninety-day assistance programme, Our graduate programme, consultation period. providing free access to a which offers general Online communication sites twenty-four hour personal management, finance and were set up in all affected support service. To minimise IS training, has received widespread media coverage during 2004 and has helped to enhance our brand as a progressive Health and safety at work employer. The programme won a The health and safety of our employees is number of awards during essential to the vitality and success of our 2004, including the Independent Newspaper’s business. ‘Graduate of the Year Award’ and the Association of Maintaining a rigorous focus It is with sadness that we Graduate Recruiters’ Best Lost time incidence Website Award – recognition on accident prevention and report the death of an per 1,000 employees providing expert support in experienced service engineer of our integrated online those parts of our operations in Toronto who sustained approach. which give rise to significant fatal injuries while working In July 2004 we invited our potential risks will continue to on a customer’s site. The 0 5 10 15 20 25 30 be priorities. findings of our detailed 48 graduates to give their The restructuring of our investigation have been personal views on the Total accidents programme and the occupational health service used to reinforce relevant 100,000 hours worked delivered substantial safety procedures results were very positive. employee and business throughout Centrica. Almost 50% said that the benefits in 2004. We will continue to set programme had greatly Accident and ill health stretching targets to deliver exceeded their expectations, 0 5 10 15 20 25 30 incidence and consequential improvement in our health 46% rated the career absence rates were reduced and safety performance. opportunities as excellent during the year, even though We are proud of the and 100% said they would the employee headcount and progress made and commit recommend the programme size of the industrial asset to subject our performance 2003 to a friend. base increased. to reward and rigorous 2004 management review. www.centricagraduates.com

16 Corporate responsibility report 2004 Centrica plc Employee development and talent management We aim to be a learning organisation and provide a range of training and development opportunities for all our people, from our front-line engineers to our support service specialists, at all stages of their careers.

Our academies customer service training by this process, 180 internal and insights on business The British Gas Engineering activities under one team. In a moves were made in 2004. operations and strategy Academy continues to provide competitive marketplace in These moves have supported development in a complex and a focus for our engineer which customer service is an the ongoing development of our challenging environment. recruitment and training increasingly vital differentiator, management team and have activities. In 2004, more than this new academy will support helped facilitate knowledge Supporting senior women 1,200 new engineers our drive to put the customer at sharing across the group. Centrica ranked joint first participated in training and the heart of everything we do. in the 2004 Female FTSE – an development activities at the Prison partners annual survey conducted by Academy. We also launched an Leadership development One of the more innovative Cranfield University, to assess education programme to raise The quality of leadership in the leadership development representation of women on awareness of the range of group is critical to Centrica’s programmes initiated in 2004 the boards of FTSE 100 engineering apprenticeship success. We provide a range was the Prison Partners companies. opportunities that British Gas of development opportunities Mentoring Scheme. This Our chief executive, Sir offers. Focusing on ethnic at all levels within an overall scheme, facilitated by Business Roy Gardner and chairman, minorities and females, the framework including a in the Community pairs senior Roger Carr are also actively programme is targeting 13-17 leadership programme for senior leaders from businesses with involved as mentors in the year olds in schools and local managers in partnership with management teams from the FTSE 100 Cross-Company communities. In the past two Duke University and Executive Prison Service. Our leaders Mentoring Programme, which years, we have doubled the Coaching. have developed one-to-one aims to support high potential number of female engineers, Our management talent coaching partnerships with women mentees in managing and tripled the number of black review process enables us to managers at Wormwood their careers to attain a and ethnic minority engineers. assess the performance and Scrubs to enable them to work non-executive or executive During the year, we also potential of our managers and together on business and director role. created the Academy of informs succession planning and personal leadership objectives. Customer Excellence, bringing senior level recruitment. As a In addition, the partners meet together all our site-based, result of information gathered collectively to share knowledge

British Gas Engineering Academy

Over the past two years 2,700 new engineer recruits have joined British Gas

Training spend at £3.3m for the year was 20% higher than 2003 1,361 engineers transferred into operational roles during 2004

Corporate responsibility report 2004 Centrica plc 17 Workplace Engaging our employees We promote active dialogue with our people and believe that the best way to find out what they think is to ask them.

In 2004, over 30,000 (around regular team meetings, change management 80%) of employees responded objective setting and personal processes during 2005. More than to our annual employee survey, development discussions. Following publication of the an increase of 8% on 2003. There was however a negative results in November 2004, The biggest rise was in online reaction to the organisational managers have reviewed the 30,000 responses. For the first time changes introduced by the outcomes with their teams the survey gathered employee company. To address this we and drawn up action plans to employees diversity data which enabled will continue to develop our address any issues raised. responded to our more detailed analysis of annual employee responses. survey, an increase Centrica donated 50 pence of 8% on 2003 to Cancer Research UK for “In times of change, it is very important for people to be able to express their views every completed survey, The overall employee raising more than £15,000. honestly and openly. The key is to identify engagement score The overall employee where we can improve and make sure the increased by engagement score increased improvements are made.” by 4% compared with 2003. This score is derived from employees’ responses to Anne Minto OBE, group director, human resources 4% questions covering issues such as performance and development opportunities, the quality of leadership in the company, customer focus and work life balance. The most significant improvements in the year were in the number of people responding positively to the performance management and development opportunities (up 7.7% on 2003), and the number with a positive view of local management impact (up 8.2% on 2003). There was clear evidence of improvements in local people management activity, including

Accounting for people

We are keen to develop as ‘human capital We have set up an internal programme to improve our better ways of understanding management’ (HCM) working group to identify systems and data capture. and measuring the impact of and, in particular, the HCM measures appropriate to We are also sponsoring our people initiatives and the recommendations of the Centrica and to ensure that a PhD student at the difference that these make Kingsmill Accounting for the mechanisms are in place Manchester Business to business success. We People Report, which has to collect the necessary data. School who is helping us welcome and support the been endorsed by the In 2005, this work will form to develop an HCM model industry-wide interest in Department of Trade and part of a wider human for Centrica. formalising what is known Industry. resources transformation

18 Corporate responsibility report 2004 Centrica plc Rewarding good Challenges and priorities for 2005 performance • Create talent pools for key roles, for example general management and advise on potential career paths for these roles. Further embed our talent review process to ensure An innovative, competitive and flexible reward policy greater consistency in assessment and development of our is critical to recruiting and retaining the best people managers.

From the moment an employee We operate three all-employee • Deliver a robust Human Capital Management process as joins Centrica, we make clear share schemes: ‘Sharesave’ part of the wider human resources transformation how individual performance will which is a save-as-you-earn programme to improve our systems and data capture. be evaluated and recognised. (SAYE) scheme over three or five Our objective is to continue to years (13,500 employees), the • Continue to scrutinise and challenge periodic health and offer a reward package that UK Government-backed ‘Share safety data reporting through the regular use of our encourages employees to give Incentive Plan’, which enables corporate audit. their best and recognises employees to buy shares with success. We also use bonus the company providing • Implement diversity awareness programmes and increase schemes to encourage matching shares (5,500 levels of flexible working across the group. employees to surpass employees) and the Share business and personal goals. Purchase Plan in North America • Continue to monitor best practice in the recruitment market In 2004, we extended our (800 employees). All schemes to ensure we maintain our competitive position to recruit and flexible employee reward benefit from tax advantages in retain talented individuals, whilst embedding and improving package to support our accordance with taxation reward and recognition policies that drive high performance. employee recruitment and guidelines. retention strategy and provide In 2004, we conducted a • Target improvement of 5% in the overall employee greater choice to our second comparative review of engagement score during 2005 through team building employees. As at 31 December the levels of pay for male and activities and by supporting managers and employees 2004, around 6,000 employees female employees, in line with through change. had access to the scheme, a our commitment in the Kingsmill figure we expect to increase Report. The 2004 results show over time. that the gender pay gap in Our flexible benefits package Centrica is much narrower than What matters to you? consists of core benefits and a national norms and that our We welcome your feedback on our workplace flexible spending account. current pay policies contain no policies and initiatives: Employees can ‘spend’ their gender bias. This review is a flexible reward on a range of regular report to our executive [email protected] benefits including additional committee. holiday, critical illness cover www.centrica.com/workplace and store vouchers.

Diversity and inclusion of our employees are from minority ethnic backgrounds We are committed to creating a truly diverse and 16% inclusive workplace with equality of opportunity for all.

Our diversity strategy infrastructure is in place to Improving cultural An exciting series of focuses on integrating enable the implementation awareness exhibitions and interactive diversity into our of our diversity strategy 16% of our employees are from displays organised by management and business throughout Centrica. ethnic minority backgrounds employees provided the practices, raising awareness Also in 2004, we launched and with such cultural diversity opportunity to learn more and understanding and an intranet site to increase it is important that we about the faiths, cultures, facilitating the sharing of understanding of diversity and continue to support greater food and music of the good practice across the share good practice. The site understanding and awareness. communities that constitute group. provides guidance on the One example was National twenty-first century Britain. Our commitment to impact of new laws, such Learning at Work Day on diversity is demonstrated, as the UK age discrimination 20 May 2004, when British Gas for example, by the setting legislation scheduled for employees in Solihull were able up of the diversity and 2006, as well as links to a to experience other cultures. inclusion action group in number of useful websites. January 2004. Chaired by Diversity training has been Jake Ulrich, board director introduced for senior managers “ Our employees really embraced the opportunity and managing director of and an e-learning package will to see how each other’s communities live. Ours Centrica Energy. The group be extended to all employees is a diverse workforce and there is much that ensures that the in 2005. we can learn from each other.”

Jazz Sehmi, British Gas, Solihull

Corporate responsibility report 2004 Centrica plc 19 Environment Reducing our carbon footprint

We are managing our environmental impact to contribute to the creation of a sustainable low carbon future.

We have a responsibility an EMS independently Key to manage – and, where certified to ISO14001 by responsibilities necessary, to mitigate – the the end of 2005. Stations direct impact of our activities with an existing, accredited on the environment and to EMS have been implementing • reducing our carbon help our customers use our new environmental standards profile by cutting our products and services in an to ensure conformity with a greenhouse gas environmentally responsible ‘common standards approach’ emissions; way. when making operational In the past four years, the decisions that could have an • enabling our customers acquisition of nine gas-fired impact on the environment. to reduce their carbon power stations – seven across In 2004, we made significant footprint by helping Britain and two in North improvements in energy them use energy more America – our gas fields in management, waste reduction, efficiently; Alberta and a major gas recycling and employee storage facility in Britain (in involvement. And we also • continuing to implement addition to our Morecambe began the process of and develop our Bay field) has significantly involving our customers renewable energy increased our impact on the in a number of green strategy; and environment. energy initiatives. To ensure that we run these • involving employees facilities in a manner consistent in championing with environmental protection, environmental we are introducing an improvements. environmental management system (EMS) across all upstream sites. All Centrica’s UK power stations will have

“ Developing a sustainable, balanced energy mix is essential to our strategy and our vision of how energy will be supplied in the 21st century. We are already making significant investments in renewable energy technologies to reduce our carbon profile and are seeking to meet the Government’s challenging climate change targets by leading the way in carbon emissions trading and energy efficiency. This is a very exciting time for Centrica.”

Gearoid Lane, director of power and gas procurement, Centrica

20 Corporate responsibility report 2004 Centrica plc In 2004 More than £87m 8,000 was spent on our energy trees were planted in 2004 efficiency commitment as a result of our paperless billing programme

Energy efficiency and our customers

Expenditure on our energy efficiency commitment (EEC) increased to over £87 million in 2004, compared with £61 million in 2003.

During the year, more than We also introduced online, six million energy efficiency paperless billing for British Gas products were subsidised from residential customers. For every EEC expenditure, benefiting 100 customers who sign up, around two million households. we contribute to the planting In a new partnership with and management of a tree. Currys – the electrical retailer – As a result of our customers’ we are providing subsidies on a support, over 8,000 trees were range of energy-efficient planted in 2004, which will products. Cavity wall and loft absorb around 6,000 tonnes of insulation sales reached record carbon during their lifespans. levels, with over 250,000 In our business-to-business households receiving free or markets in Britain and North subsidised products. And to America, we have introduced a date, 340,000 households have number of products to help our received a range of energy customers monitor and run efficiency products and other their buildings more efficiently. services through our ‘here to Additionally, in Britain we are HELP’ programme. able to provide Climate Change Levy-exempt energy from renewable resources to our business customers at no extra cost.

“ The threat posed by climate change cannot now be ignored and all industries responsible for large volumes of emissions must take their responsibilities to deliver reductions seriously. Integrated power companies like Centrica should be investing in renewable energy, introducing innovative ways to help customers to reduce demand for energy, actively supporting the development and implementation of robust emissions trading schemes and ensuring their own plant and processes are operating as cleanly and efficiently as possible.”

Bryony Worthington, senior climate campaigner, Friends of the Earth

Corporate responsibility report 2004 Centrica plc 21 Environment Power generation and gas production We continue to measure and seek ways to reduce the environmental impact of our power stations and gas production facilities.

Our aim is to ensure the safe, goals. Centrica is playing its 10% of carbon dioxide (CO2) price risk and an increased efficient and environmentally part in the scheme through its traded across the EU. need for new entry to ensure responsible operation of our gas plants and power stations, In the longer term, Centrica security of supply. Government power stations, which supply which are now required to believes the Government can help alleviate investor our residential and industrial surrender allowances to offset should maximise the number uncertainty by giving early customers with electricity. their emissions. By February of allowances auctioned. consideration and clarity on The need to reduce 2005, Centrica was Phase II will present tougher some key issues under emissions of greenhouse gases, responsible for approximately CO2 reduction targets, greater Phase II. air pollutants and waste is driving the development of new environmental legislation. In anticipation of the new Integrated Pollution Prevention and Control regulatory regime, which comes into effect in Britain in 2006, we have commissioned a major review of our power stations and gas production operations to ensure compliance with the new standards. We strongly support market mechanisms as a means of enabling us to meet our obligation to minimise emissions of greenhouse gases (GHG), and have been making preparations for the launch of the new European Union GHG Emissions Trading Scheme (EU ETS). The EU ETS is an important tool in enabling the Government to achieve its environmental

Direct Energy Business The aim of the project was Okanagan Services (DEBS) was asked to to improve the efficiency of be a partner in a leading-edge heating, cooling and ventilation energy conservation initiative systems on campus, while University challenge sponsored by the Okanagan reducing the amount of energy University College (OUC) and used and operating costs. the nearby City of Kelowna. OUC’s heating plant was Committed to making a range of energy In October 2002, following a fitted with new high-efficiency efficiency improvements in support of preliminary review of energy boilers, heat pumps and Canada’s Voluntary Climate Change conservation possibilities, DEBS chillers, tied in to the existing submitted an initial energy system. The upgraded system Challenge and Registry Program, initiative proposal to the takes clear water from the city’s Okanagan University College in British university’s management team. wastewater plant, heats it and Following approval, more delivers it through an existing Columbia approached Direct Energy detailed proposals were drawn underground pipe system that Business Services. up and the project launched. supplies all campus buildings.

22 Corporate responsibility report 2004 Centrica plc Supplier’s renewables obligation met by purchasing ROCs Renewable energy Source: Ofgem Renewables Obligation Annual Reports

Compliance Period 1 British Energy in the UK Compliance Period 2 Centrica

Currently, about 5% of the electricity we E.ON Powergen supply to our customers in Britain is EDF Energy associated with renewable sources. RWE npower

Scottish Power

Under the UK Government’s purchased has been generated Scottish Renewables Obligation (RO) all from renewable sources. In & Southern licensed suppliers must provide 2003/4 Centrica was the only Other a percentage of electricity large supplier to meet its 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% generated from renewable obligation entirely through Percentage of RO met by purchasing ROCs sources – approximately 10% presenting ROCs. by 2010 and 15% by 2015. Buying renewable energy in Centrica can meet its this way is only one part of our future security of supply as the In October 2004, we acquired renewables obligation by buying long-term strategy. UK becomes increasingly the 26 megawatt wind farm Renewables Obligation Our investment in wind farm dependent on gas from Glens of Foudland, currently Certificates (ROCs) or by paying developments will create overseas. The wind farms will being built near Huntly in north a buy-out fee. These certificates greater diversity of power also make a significant east Scotland. The first power guarantee that the power production, helping to improve contribution towards the from Glens is expected in reduction of the greenhouse mid-2005. gas emissions that contribute to The construction of our climate change and will help to offshore wind farms is subject meet Government targets as to full environmental impact set out in the Kyoto Protocol. assessment to ensure that We are in the final stages of our developments have no, negotiation on a construction or minimal, impact on the contract for two wind farms environment. We are carrying (Lynn and Inner Dowsing) off out detailed site surveys prior the Lincolnshire coast, and we to construction and will conduct are equal partners with Danish others during construction and energy group DONG on Barrow operation, while continuing Offshore Wind in the East Irish to liaise with stakeholders from Sea. Together, these three wind a wide variety of interest farms have the potential to groups. Where possible, such produce enough power for survey work will involve local around 180,000 homes per services. year. We have also begun the We are committed to working approvals process for three with local communities to raise much larger and longer-term awareness and promote offshore developments. understanding of renewable energy.

Centrica is investing This innovative conservation project – a contribution to Canada’s climate change obligations under the Kyoto £750m Protocol – will result in reductions in carbon dioxide alongside joint equivalent to planting over venture partners 400 acres of trees or taking to develop renewable around 160 cars off the road. electricity generation Initial costs for the project were C$2.4 million. OUC assets in the next will save over C$300,000 a year five years in energy costs, which means that the project will pay for itself in around eight years.

Corporate responsibility report 2004 Centrica plc 23 Environment

We have cut paper Involving use in our offices by 21% employees in one year

Centrica people found a variety of ways to generate additional ‘green momentum’ throughout the group.

Following the launch of the pilot is successful, it may employee engagement be rolled out more widely. campaign – ‘Natural Capital’ – • In March, our chief executive in 2003, 5,000 pledges to issued a challenge to all improve their environmental employees to ‘Green the Way behaviour were received from we Work’, with the aim of our people. In recognition of this achieving improved efficiency huge commitment, we planted and environmental 30 trees at our Windsor HQ. performance. We will report Other employee involvement back on this in 2006. initiatives in 2004 included: • We supported National • ‘Monitor the Monitors’ week in Recycling and Energy December, which achieved a Efficiency weeks in Britain. 23% reduction in the number • The Paperchase Challenge to of PC monitors left on out of reduce the amount of paper office hours. we use in our operations, • 140 people from British Gas which ran throughout 2004 at are taking part in a pilot ‘Eco our office sites, proved to be Teams at Work’ programme, a success and we will extend in conjunction with Global the scheme to additional Action Plan, an international sites during 2005. environmental charity. If the

Stockport’s going green

British Gas’ Area Service Centre (ASC) and National Installation Service Centre in Stockport is the first of our sites to produce its own environmental report.

The Newbridge Lane site is Stockport’s engineering fleet home to around 800 office has been working hard to

employees and acts as a base reduce its fuel use and CO2 for over 1,200 of our engineers. emissions. Top of the office agenda is The introduction of a new recycling, which has risen from engineering planning system 35% in 2002 to 51.7% at the is expected to lead to end of 2004, making Stockport further major cuts in one of the best performing engineer mileage and

ASCs in Britain. CO2 emissions.

“We want employees to do all they can to help us meet our environmental targets in the same way that they strive to succeed in meeting any other business objectives.”

Kirk Hudson, Green Team leader, British Gas, Stockport

24 Corporate responsibility report 2004 Centrica plc Transport and fuel efficiency We are committed to achieving major increases in fuel efficiency consistent with driver comfort and safety.

During 2004, our fleet grew to We believe that the increased standard in our vehicles. We During 2005, we will develop over 11,800 vehicles, which fuel consumption is will also continue to develop new environmental targets for covered 118 million miles. In compensated for by the our vehicle procurement and our fleet operation, with the the year, we achieved a 3.4% improvements in driver operating strategy in line with aim of meeting European improvement in average miles comfort and road safety. the environmental challenges Automobile Manufacturers per gallon compared with Our original target was to we face. Initiatives to support Association (ACEA) objectives

2003 and, since 2000, we reduce fuel consumption by this strategy include the of average fleet CO2 emissions have achieved an overall 13% by the end of 2005 relative purchase of vehicles powered of 140g/km for operational improvement in fuel efficiency to the 2000 baseline. However, by smaller capacity diesel vehicles by 2008 and 120g/km of 8.2%. the sale of the AA, coupled with engines and the use of by 2012. In addition, work is These results have been the introduction of air speed limiters. underway to reduce average achieved through our continued conditioning, has meant that The introduction of robust CO2 emissions from our investment in new vehicles and this target has become even fuel data management software company car fleet. new technologies such as more challenging. We anticipate means that we can accurately fuel-efficient, low-emission that, by the end of 2005, we evaluate the fuel efficiency We achieved an diesel engines. The continued will have achieved an overall improvements and reductions improvement in fuel efficiency 8% improvement in fuel in CO2 emissions of all new has been maintained against efficiency compared to 2000 – transport initiatives. In 2005, 8.2% the demands placed on the missing the target by 5%. we will also introduce satellite fleet by the introduction of air The challenge now is to make navigation for our operational improvement in conditioning for operational further improvements in fuel drivers, helping them plan average miles per vehicles. efficiency while continuing to journeys more efficiently. gallon compared specify air conditioning as with 2000

Corporate responsibility report 2004 Centrica plc 25 Environment

Edinburgh award

Scottish Gas, headquartered in Council. The building will now Edinburgh, is the first business receive a follow-up visit at least to achieve a gold standard in once a year to ensure that the the environmental awards run gold standard is maintained. by the City of Edinburgh

“I was particularly impressed with the steps Scottish Gas has taken to minimise the amount of waste produced on site, and with its commitment to supporting environmental initiatives promoted by local and national voluntary organisations.”

Robert Cairns, Scottish Executive Member for Environmental Services

Waste management and recycling It’s important that we continue to proactively manage our own environmental impact.

Our activities generate involved in minimising the furniture and computer 21% in one year, exceeding significant amounts of waste: environmental impact of our equipment to charities when our target of 10% by the end paper, cardboard, and food operations, so that we practice we refit an office (see page 33). of 2004. This is equivalent to waste from our offices and what we preach and give Employee involvement enabled saving almost 900 boxes of call centres; waste metals, credibility to our broader us to achieve a 2004 group- paper a month. The parts and packaging from environmental initiatives. wide recycling rate in our offices campaign was so successful our British Gas and Direct Our office waste recycling and call centres of 55%, while that we are again challenging Energy operations; and programme, for example, our print centres and national employees to try to save a waste oils and other ensures that paper, cardboard, parts centre achieved a rate of further 10% in 2005. commercial waste from our plastic cups, toner cartridges 78%. We have reduced the power stations. and mobile phones are reused amount of waste we send to It is vital that Centrica or recycled. We also have landfill by 12% since 2000. employees are actively schemes in place to donate We have cut paper use by

Office waste recycling in tonnes

4,000 51% 48% 3,500

3,000 32% 2,500

2,000

1,500 19% 1,000 17%

500 0 00 01 02 03 04 Year

26 Corporate responsibility report 2004 Centrica plc Energy and water Challenges and priorities for 2005 management The challenge for 2005 will be to continue to build on the significant progress we made in 2004 and to deliver our Energy for all our offices comes from certified five-year environmental programme and all 2005 targets. renewable sources and is exempt from the Our priorities include: Climate Change Levy. • ensuring that our higher-impact operations in the UK achieve As part of our energy by 15% by the end of 2005, certification to the environmental standard ISO 14001; efficiency programme, we have compared with a 2000 implemented projects which, baseline. • producing green electricity from our first onshore and together, have achieved savings In 2004, we introduced a offshore wind farm developments by the end of 2005; of more than £750,000 and target to reduce our water reduced our CO2 emissions by usage by 25% within two • reducing our energy use per employee in our buildings by 14.9% per full time employee years. To date, we have 15% by the end 2005, relative to our 2000 baseline; since 2000. These savings put achieved a reduction of 18% us on track to achieve and even per employee and are on track • reducing waste sent to landfill by 15% and maintaining our exceed our goal of reducing our to meet this ambitious target recycling rate at 50%; energy use per employee by the end of 2005. • improving our fuel use per mile travelled by 13%, compared with 2000; and

• integrating the requirements of new environmental regulations such as energy labelling, pollution prevention Biodiversity control and the European Union Emissions Trading Scheme that comes into force during the year. We are currently developing a new We have a programme of employee engagement activity biodiversity policy for launch in 2006. planned for 2005, including the introduction of fair trade coffee at all of our sites; the celebration of World Environment Day; We recognise the of wintering wildfowl in Britain. the launch of Paperchase Challenge 2 to further reduce our biodiversity opportunities We are working as part use of paper; and the refurbishment of our Leeds office using that exist in the vicinity of our of the Morecambe Bay environmentally-responsible controls and furniture. power stations and gas Partnership to ensure that this production facilities. important area is protected. We will also be reviewing our environmental strategy and the One of the larger In some cases, the targets that we originally set in 2000 and developing and biodiversity projects in which habitats or species found in publishing our vision for the future. we are currently involved is the bay are dependent on in the Morecambe Bay area, our activities. For example, where a number of our maintaining an ice-free, warm upstream assets are located. water dock as a result of What matters to you? Morecambe Bay is one of cooling water discharges from We welcome your feedback on our approach to the most important estuaries our Roosecote power station managing our environmental impacts: in Britain for seabird and has created a rich habitat for waterfowl populations and migratory birds. [email protected] has the third largest number www.centrica.com/environment

Corporate responsibility report 2004 Centrica plc 27 Community Engaged investm

In line with our overall corporate responsibility strategy, the theme of our community investment programme is ‘ensuring access to the essentials’. We are involved in a range of community activities that align with our core business activities, skills and experience.

Key Maintaining such a sharp focus helps us build a responsibilities compelling business case for community investment; enables We aim to contribute to our employees to identify with community projects and and participate in our programmes that promote: community activities; helps to build the coherent and • education, skills and sustained commitment that our employability – as a community partners value; and large employer we are really brings our brand values committed to investing to life. in this area; Our approach • employee involvement – Our community investment ensuring our employees activity has three principal have the support they characteristics: need to make a positive • we are committed to the impact in their community; systematic management of our community • customer focus – programmes, in line with working with charities and clearly stated objectives; community organisations • we are committed to building In addition, we believe that We measure our contribution to improve our service to long-term partnerships with every community project we to the community using customers; community organisations and are involved in should: principles developed by the charities; and • deliver tangible benefits; London Benchmarking Group. • sustainable enterprise – • we are committed to the • generate awareness through In 2004, we contributed £7.35 working with voluntary continuous evaluation of the communications activities; million† (0.61 per cent of our sector organisations to outputs and impacts of our and pre-tax profits) in cash, time encourage social community investment • change perceptions. and in-kind support to entrepreneurship; and programme. community causes. This represents an increase of • in-kind support – around £700,000 on 2003. donating equipment and time to assist charities, schools and community “ Everybody is delighted with this British organisations. Gas initiative. The work they have undertaken with the garden will help ensure that it provides a welcoming and tranquil setting for children and young people who are helped to understand what is happening when someone has a serious illness.” Peter Allinson, director of Barnardo’s Yorkshire

28 Corporate responsibility report 2004 Centrica plc Total employee Total community volunteering hours contributions †

2004 2004 ent 13,000 £7.35m

Supporting employee involvement Encouraging and supporting our employees to play an active role in their communities is at the heart of our approach. Their engagement in a broad range of issues of social concern is good for the community, contributes significantly to their development and consequently benefits us as a business.

Research shows that more days a year off to spend on than 90% of employees are volunteering assignments in aware of Centrica’s support for their local communities. In communities and charities and partnership with Community that around three quarters of Service Volunteers, we provide them are interested in a range of volunteering participating in community opportunities for individuals schemes. In 2004 – in line and teams from our offices and with the previous year’s contact centres throughout the commitment – we were UK, and also for our field- focused on encouraging and based employees. helping them to do so. In North America the During the year, our people ‘Donated Expertise’ were actively involved in all programme enables kinds of community and charity employees to take up to one support activities, from garden hour off each month to get makeovers and marathons, to involved in their local schools projects and health community. awareness campaigns. In January 2004, we launched our employee volunteering programme throughout British Gas, encouraging employees to take up to two working

Active involvement Getting involved And in Gwent, British Gas “ I was thrilled to have the opportunity to In April 2004, for example, a employees have been working make a difference in my local community team of volunteers from the with local children as part of British Gas service centre in Business in the Community’s through our employee volunteering Leeds helped to transform a ‘Watch this Space’ programme, programme – Centrica people have got a neglected plot into a designed to ease the transition peaceful garden of of children from primary to lot to offer outside their day to day roles remembrance for children secondary school, while raising and they really value the chance to use with terminally ill parents. their aspirations at an early their skills to benefit local people. ” stage in their school careers. Louise Wilson, British Gas customer service agent, Leeds

Corporate responsibility report 2004 Centrica plc 29 Community Addressing the issues at the heart of fuel poverty We’re challenging fuel poverty in Britain by providing simple, practical ways to help make hundreds of thousands of homes warm, safe and comfortable.

The British Gas ‘here to HELP’ Statistics alone don’t tell the received information about taking his first holiday for years programme provides a range of full story – ‘here to HELP’ is holidays and leisure activities at the RNIB’s Palm Court Hotel measures including free transforming the lives of real for blind and partially-sighted in Eastbourne, England. insulation and a confidential people in real situations. people. This summer, he will be benefits health check. It also Roland is 87 and lives alone aims to support some of our in rented accommodation. more vulnerable customers by Among the benefits he received “I think the ‘here to HELP’ project is a referring them to one of our from ‘here to HELP’ were: free marvellous idea and appreciate the help I’ve charity partners, which include cavity wall insulation, a white received. The more people that get to know Help the Aged, Royal National cane and halogen desk lamp about ‘here to HELP’ who can benefit from Institute of the Blind (RNIB), from the RNIB and advice on it, the better.” Scope and National Debtline. his eye condition. He also Roland, ‘here to HELP’ beneficiary

The ‘here to HELP’ programme has Direct Energy in the community generated In North America, Direct Energy is making a real contribution to 28,775 the problem of homelessness in the areas in which it operates.

referrals to charities Direct Energy, North America’s Homelessness website The aim of the site is to largest competitive energy www.sharedlearnings.org facilitate networking between and related services retailer, Raising the Roof is Canada’s agencies, activists and 90% combines charitable giving only charity dedicated to finding decision-makers, and to and activities designed to long-term solutions to improve the sharing of of which were new encourage employees to homelessness and the site information about effective contacts for the charity support community causes makes practical tools and policies and programmes and has identified through its ‘direct in the information available to the aimed at reducing community’ programme. frontline staff, managers and homelessness. There is also One major initiative is the volunteers who are working to a national directory of more support that Direct Energy address the problem of than 400 organisations £5.6m provides to Raising the Roof’s homelessness in communities working with and advocating Shared Learning on throughout Canada. the cause of the homeless. of unclaimed benefits. “ The dynamic relationship between Direct This equates to an Energy and Raising the Roof demonstrates average benefit gain the power of an exciting new partnership. for qualifying We’ve achieved a great deal and by working households of together our actions are helping to achieve our goal of every Canadian having an address £1,308 and a place to call home.” Sean Goetz-Gadon, president, Raising the Roof Figures correct at 31st December 2004

30 Corporate responsibility report 2004 Centrica plc Tackling avoidable winter deaths In partnership with Help the Aged, British Gas has been raising awareness of the issue of winter deaths affecting some of Britain’s most vulnerable older people.

2004 was the sixth year of voluntary sector and the energy behaviour can have a major British Gas’ partnership with industry, more than 24,000 impact – the partnership Help the Aged. During that people in Britain died as a developed an information pack, time, the partnership has direct result of the cold in 2003. ‘The cold can kill’, and developed a number of (source: ONS & General distributed it directly to older initiatives to address issues Register Office for Scotland). people. around fuel poverty, safety and Partnership activity sought to In addition to information on isolation amongst the most raise awareness of the issue practical measures to keep out vulnerable older people. British including the development of the cold, the pack contains a Gas has contributed more than some hard hitting visuals to thermometer to monitor heat £6 million of support to the target both the media and levels in the home, a calendar partnership since 1999, making government. Activity also of useful dates – such as when the lives of 1.7 million people centred around providing to get a flu jab – and useful warmer, less isolated and more practical solutions and advice numbers for services. secure. about how best to keep warm, 50,000 copies of the pack, In 2004, the partnership encouraging individuals to which has proved extremely focused solely on the issue of claim benefits they are entitled popular, were produced and avoidable deaths of older to and insulating homes. distributed during the winter The cold can kill pack is people from the cold every To influence people’s months and an updated edition available online at winter. In spite of concerted behaviour in dealing with the has been produced for 2005. www.helptheaged.org.uk/ efforts by the Government, the problem – small changes in winterdeaths Creating a better future for children with autism Onetel is working with UK autism charity TreeHouse to improve the educational opportunities available to children with severe autism.

Because educational facilities in Forms of support to Onetel’s directory enquiries opportunities in areas such as the UK for children with autism Onetel’s support comes in service, 118 111. Already this finance and media training. are seriously stretched, Onetel a number of forms. scheme has raised almost The partnership was formally is working in partnership with When, for example, the £30,000 and more initiatives launched in December 2004 by TreeHouse, which provides charity moved premises, a will be rolled out during 2005. best-selling author Nick Hornby, schooling for such children from team of volunteers from Onetel And Onetel people have who is a patron of the charity. the age of 3 to 19, and which is moved furniture, built sheds, raised funds through various committed to expanding the designed a playground mural activities including organising pool of teachers in autism and washed toys and bikes, raffles, running marathons and education. The objectives of while IT experts in the team even doing tandem sky dives this partnership are to helped install a new computer in support of TreeHouse. consolidate a national presence network with equipment Onetel has invested £15,000 for TreeHouse, develop income donated by Onetel. to buy books and materials generation opportunities and Cause-related marketing such as fleeces and t-shirts to create opportunities for Onetel initiatives are being developed help launch the partnership. employees to develop new to aid fundraising. The first of Beyond this, Onetel is offering skills. these is a donation of 1p to the charity further volunteer TreeHouse for every call made support and mentoring

“ My son, Danny, is profoundly autistic, but despite his disability he is fortunate enough to attend TreeHouse’s flagship school in North London. Currently, only 45 pupils can benefit from this education, but through a national programme, we are sharing the good work of TreeHouse which we hope will benefit many more of the thousands of other children and families coping with autism across the country.” Nick Hornby in a voice mail message to Onetel people

Corporate responsibility report 2004 Centrica plc 31 Community Touching lives – to the tune of £690,000

The support of our employees is helping Cancer Research UK – the world’s largest volunteer-supported cancer research organisation – touch the lives of even more people.

Our campaign in support of Cancer Research UK – our 2004 employee charity partner – broke through its target of £400,000 after just six months and raised a total of £690,000. Fundraising champions within Centrica chose to support five key areas of Cancer Research UK’s work – basic research, breast cancer, childhood cancers, psychosocial research and epidemiology – as well as a number of local projects. Research shows that cancer has touched the lives of almost 90% of our employees in one way or another. Through our partnership with Cancer Research UK, we’ve worked to dispel the myths about cancer and provide health awareness advice to customers, employees and the general public. Fundraising activities that raised £75,000 by Employees from all parts of the participating in the Centrica Our UK charity of the group have taken part in a wide Lakes Challenge in Cumbria year for 2005 is NCH range of fundraising activities, and the £30,000 raised in from quizzes to ‘wardrobe Cancer Research UK shops Employees aim amnesties’ of unwanted from the sale of clothes, books to raise clothing. and CDs donated by Centrica Hundreds of women employees. Many employees employees, for example, have also been actively involved participated in Cancer Research in promoting cancer awareness £250,000 UK’s ‘Race for Life’ events messages through local and throughout the UK. Other national media coverage. examples include 30 teams

“ Having survived breast cancer myself, I was absolutely thrilled when Centrica employees chose Cancer Research UK as their nominated charity. I took part in the Race for Life in Southampton wearing number 1. It was a very emotional day and I was very proud to be a part of it.” Sue White, team manager, British Gas, Southampton

32 Corporate responsibility report 2004 Centrica plc Focus of our contribution in 2004 Challenges and priorities for 2005

• Continue to work with our ‘here to HELP’ charity partners to develop innovative ways to address the root causes of household poverty across Britain and help improve lives by offering free home insulation, a benefits health check and a £7.35m range of charity partner products and services targeted at Charitable gifts 12% those that need help the most. Community investment 55% Commercial initiatives 33% • Continue to work in partnership with Help the Aged to raise awareness of and provide practical solutions to address the issues surrounding fuel poverty and excess winter deaths, and develop projects that improve benefits uptake amongst vulnerable older people. Quantifying our impact • Work with NCH to deliver a creative and engaging campaign that supports employees’ goal of raising £250,000 through We quantify and benchmark our community the ‘Helping Children Shine’ partnership and raise awareness of key issues affecting disadvantaged children impact through stakeholder consultations, and young people. benchmarking exercises, opinion surveys and awards. • Continue to develop our volunteering activities, forging new partnerships to facilitate an increased range and diversity of For example, we participate in peer companies. The Index is volunteering opportunities. the ProbusBNW Corporate compiled every two years and Community Involvement Index, in 2004 showed that Centrica • Identify new charitable partners in the north eastern United designed to provide a group is regarded as a ‘leading States to extend Direct Energy’s commitment to working of leading UK companies with company’ in seven of the eight with these organisations to find long term solutions to tackle an expert external assessment categories and as ‘meeting all the underlying causes of homelessness. of the quality and effectiveness reasonable expectations’ in of their community the eighth. • Develop further Onetel cause related marketing initiatives programmes, relative to involving new and existing customers to support business objectives and generate funds for TreeHouse whilst raising awareness of the charity’s work. Unwanted furniture • Continue to increase levels of in-kind support by extending our furniture and IT donation programme in communities goes to good causes where we have a business presence. • Implement a payroll giving promotion throughout our British In line with our commitment in 2003’s corporate businesses with the goal of increasing employee responsibility report, we continued to explore participation by 10%. further opportunities for in-kind support.

One of the key non-financial we extended the scheme to What matters to you? ways in which larger include furniture and office organisations can support equipment. We welcome your feedback on our community charitable and community Following the move of policies and initiatives: organisations is through British Gas Business from in-kind support. Thames Tower in Leicester [email protected] In 2003, for example, more to Spinneyside, around 120 www.centrica.com/community than 750 fully-reconditioned local groups, including local computers were donated to charities and schools, were a range of charities, delighted to take possession community organisations of everything from desks and schools and, in 2004, to fans and in-trays.

“ The new matching desks and furniture make our offices look much more up-to- date, co-ordinated and ordered. The style and quality of the donated furniture is way beyond what we could have hoped for and will make an enormous difference to the working lives of all of us here.”

Charles Elford, personnel and administration manager, Carers UK

Corporate responsibility report 2004 Centrica plc 33 Next steps What we said we’d do

Workplace

Introduce a more robust management talent review process, resulting in more internal promotions and appointments

Next steps Develop performance management systems to ensure identification of superior performance and tackle under-performance

Improve employee engagement scores

We are committed to the continuous Monitor progress in diversity including external measurement review and refinement of our approach Ensure more robust reporting of health and safety data to corporate responsibility. Extend flexible benefits to meet the growing needs of our diverse workforce and review the reward proposition for our engineers

In this report, we have tried to Our CR priorities for 2005 Develop human capital management (HCM) processes in line with the paint a straightforward and include: recommendations of the Kingsmill Report ‘Accounting for People’ comprehensive picture of our • developing innovative ways Marketplace CR performance in 2004. to tackle fuel poverty and We have described the support vulnerable customers; Work with Ofgem and industry competitors to agree a coordinated UK energy industry-wide approach to energy disconnections values and principles at the • continuing to reduce our heart of the Centrica carbon footprint; Continue to tackle fuel poverty through a range of energy efficiency programmes proposition and the processes • enhancing our quantitative by which we engage with our reporting of our people Increase our focus on key customer service performance issues stakeholders. management activities; We’ve provided a brief • identifying and acting on key Implement national campaigns to raise awareness of the dangers of carbon monoxide account of the challenging issues in our international (CO) poisoning and other home safety issues business climate in which upstream activities; and Centrica operates and insight • continuing to encourage and Set up a diversity and inclusion action group to oversee the implementation of into our strategic goals. support Centrica people to diversity and inclusion activities We’ve looked at the ways in make a real difference in their Capture and communicate data on how we develop appropriate advertising which we have strived to fulfil communities. campaigns and monitor complaints upheld per annum our responsibilities in the Capture and communicate more detailed information on how we manage CR marketplace, in the workplace, Reporting on our responsibility issues in our supply chain in the community and to the practice is, of itself, vital to environment. And we are keeping the momentum going. Promote our relationships with industry bodies to illustrate stakeholder engagement committed to subjecting our It’s often said that what gets performance to rigorous measured gets done, and the Environment improvement in all these areas publishing of targets and Reduce office energy use per employee by 15% in the years to come. commitments really does help We hope you have found to make things happen. Increase office recycling rate to 50% something in this report to The chart opposite shows the interest, surprise or entertain progress we have made against Achieve a 15% reduction in waste you. We’ve come a long way a number of key measures in the Deliver EMS across all upstream businesses and ensure they achieve accreditation but we’ve also come to past year and some of our most to ISO 14001 recognise the scale of the important commitments for the Continue to inform the company’s power generation strategy, quantifying risks challenge ahead. year to come. and impact by engaging key stakeholders We will regularly update our online reports to keep our Eliminate environmental data gaps and report agreed criteria from North America stakeholders in touch with progress and will report back Community in full in 2006. Improve lives by offering free home insulation and a benefits health check and working We invite you to judge us by with our ‘here to HELP’ partners to deliver targeted products and services what we have done and by what we commit to doing in Implement the British Gas volunteering programme as a blueprint for wider company involvement the future. Improve support for employee involvement schemes including charity of the year and payroll giving

Research how community investment builds personal motivation and employee skills development

Seek to improve levels of in-kind support as of the overall programme

Work with business units to encourage greater employee engagement

Participate in the 2004 Probus BNW Corporate Community Involvement Index and other relevant benchmarks

34 Corporate responsibility report 2004 Centrica plc What we’ve done What we plan to do next

180 moves made during 2004 (21% of internal moves related to managers identified Skill HR business partners to enable line managers to forecast future capability as ‘high potential’; lateral or upward promotions equated to 44% and 56% of moves requirements and develop plans to address deficiencies, whilst creating ‘talent pools’ were developmental) for key roles

Reduction in numbers of poor performers in 2004, due to the impact of performance Continue to implement performance improvement plans in all areas to reduce poor improvement programmes performance and identify development interventions for high performers

Overall employee engagement score improved by 4% with more than 80% Target improvement of 5% during 2005 by extending flexible working, team participation across the group building activities and supporting managers and employees through change

Assessed the composition of our workforce in relation to key diversity indicators and Develop and implement diversity and inclusion action plans in each business to British Gas participated in the Race for Opportunity Benchmark (see page 19) address key priorities

Implemented a new electronic reporting system to improve and reinforce the range Continue to scrutinise and challenge periodic health and safety data reporting through and quality of data collection, reporting and analysis the regular use of our corporate audit

Introduced flexible benefits to an additional 2,000 employees and implemented a Continue to monitor best practice in the recruitment market to ensure we maintain new reward package to our 8,000 engineers our competitive position to recruit and retain talented individuals, whilst embedding and improving reward and recognition policies that drive high performance

Internal working party is developing appropriate mechanisms and we are sponsoring Deliver a robust HCM process as part of the wider human resources transformation a PhD student who is helping design an HCM model for Centrica programme to improve our systems and data capture

Worked with members of the Energy Retail Association to agree an industry Meet the industry commitment and continue to develop innovative initiatives that help commitment not to disconnect the energy supply for vulnerable customers our most vulnerable customers

Invested £87m in energy efficiency programmes – six million energy efficiency Continue to address the primary causes of fuel poverty through initiatives that products benefited more than two million households combine heating, insulation and income related measures

Introduced hundreds of new processes and improvement initiatives resulting in Identify and report on customer experience performance indicators across our increased customer satisfaction across many parts the group (see page 10) businesses

Delivered a national campaign in partnership with NUS, targeting students with CO Continue to raise awareness of key safety issues, including CO poisoning, in awareness messages and launched the British Gas Child Safety Campaign collaboration with industry bodies

Diversity and inclusion action group established, comprising senior managers from Develop and implement action plans in each business to further embed diversity across the business and inclusion good practice into the service we provide to our customers

Continued to improve the rigour of our processes during 2004. A total of six Improve internal processes to minimise advertising-related complaints and share Advertising Standard Authority complaints were upheld during the year (see page 10) knowledge and good practice across our businesses

Pilot survey successfully implemented involving 75 suppliers Further integrate CR assessment into the tendering process for new contracts and re-negotiations

Maintained constructive and engaging relationships with hundreds of Engage a range of key stakeholder groups to assess opinions and expectations of stakeholders during 2004 (see page 6) our CR communications and reporting

Delivered 14.9% reduction Reduce energy use per person in our buildings by 15% compared to 2000

Achieved 50% recycling through a variety of initiatives Maintain 50% level

Reduced paper usage by 10% in 2004, targeting a further 10% in 2005 Reduce waste sent to landfill by 15% compared to 2000

ISO 14001 has been achieved across Hydrocarbon Resources, Killinghome, Kings Extend ISO 14001 accreditation to Roosecote and Barry power stations Lynn, Peterborough, Humber and Brigg power stations, and Centrica Storage.

Conducted environmental impact assessments on all asset acquisitions and wind Produce green electricity from our first onshore and offshore wind farm farm developments developments by the end of 2005

A full environmental report for our North American businesses is available at Integrate the requirements of new regulations such as energy labelling, pollution www.centrica.com/environment prevention control and the European Union Emissions Trading Scheme

‘here to HELP’ reached 340,000 households, resulting in 28,775 charity referrals and Continue to work with our ‘here to HELP’ charity partners to develop innovative completed 15,274 benefits health checks, identifying £5.6m of unclaimed benefits ways to address the root causes of household poverty across Britain

200 British Gas employees involved in a range of activities. During the year employees Extend volunteering activities across the group, developing new partnerships to across the group invested more than 13,000 volunteering hours increase the range and diversity of opportunities

More than 90% of employees were aware of our charity of the year partnership with Work with NCH to deliver a creative and engaging campaign that supports Cancer Research UK – almost 50% actively involved, raising £690,000 employees’ goal of raising £250,000

83% of employees are proud or very proud to support our charity of the year Identify new charitable partners in the north eastern United States to extend initiative and 85% of British Gas volunteers said the experience had developed Direct Energy’s commitment to tackle the underlying causes of homelessness their personal skills

In-kind support increased by more than 50% during 2004 as a result of increased Continue to increase levels of in-kind support in communities where we have a volunteering and donations of furniture and IT equipment business presence

Partnership with TreeHouse extended community investment activities to Onetel and Develop further Onetel cause related marketing initiatives to support business directly engaged employees through volunteering and fundraising activities objectives and generate fundraising income for TreeHouse

The Probus BNW Index rated Centrica as a ‘leading company’ in seven of the eight Continue to measure the outputs and impacts of all programmes through a categories. Centrica scored 100% for ‘performance and impact’ in the Business in the combination of external and internal surveys and benchmarks Community CR Index

Corporate responsibility report 2004 Centrica plc 35 Assurance statement Assurance

Centrica has commissioned The Corporate Citizenship Company to provide external assurance and commentary on its Corporate Responsibility Report 2004. This summary is supported by a longer statement available at www.centrica.com/responsibility

Assurance progress in meeting corporate each main commitment. performance indicators covering The Corporate Citizenship responsibility commitments. On marketplace issues, Centrica all operations, will help to Company is a specialist In 2004 advances were made presents a strong picture of its demonstrate future progress. management consultancy particularly in enhanced support for customers, These should include learning advising corporations that seek initiatives for vulnerable especially on issues such as fuel and development, diversity in to improve their economic, customers, improved employee poverty, energy efficiency and management and disability. social and environmental development, a stronger safety. Looking forward, we Last year we recommended performance around the world. approach to environmental believe the priority is to report that the company define its We have worked with Centrica sustainability and success in more fully on customer approach to sustainability and it since 1997. reducing negative environmental satisfaction and complaint levels has done so. The report clearly In our opinion, the report impacts. across all its major brands and sets out its commitment to provides a fair and balanced Commenting on last year’s to extend coverage of Direct carbon reduction, framed within representation of the progress report we highlighted the Energy’s performance in North the context of national targets, Centrica is making in living out importance of Centrica’s America as well as the growing and this provides a basis for its commitments to corporate commitments to improve and businesses in mainland Europe. greater engagement with responsibility. Where significant report performance The report explains that stakeholders. Centrica has gaps in available performance measurement against stated Centrica has begun to engage expanded its employee data and stakeholder views business principles; to with its commercial suppliers. programme on environmental exist, they are generally communicate better the Last year we recommended issues and has achieved and identified in the report or company’s commitment to including a ‘map’ of the supply surpassed many of its commented on by us. As there sustainability; and to gather, chain and focusing action on environmental targets. Looking are no statutory guidelines for assess and use stakeholder high risk areas. This remains a forward, work is underway social reporting, we have opinions more systematically. priority. Beyond this, as North on certifying environmental formed our judgements based We believe that progress has Sea gas supplies reduce, we management systems and on emerging best practice been made in this report. believe Centrica should identify on formalising the biodiversity among other companies, the We particularly commend the the sources of its natural strategy. principles of the assurance structure of the report. The map resources and show how its Centrica’s community standard AA1000, the approach of the company’s impacts and policies on human rights and programmes remain strong. of the Global Reporting Initiative, the overview of its process for endangered ecosystems, for We have separately assured the the stated views of principal stakeholder engagement example, operate in practice. company’s application of the stakeholders and our own provide context. Each section On workplace issues, LBG (London Benchmarking professional expertise and begins with a summary of Centrica has strengthened its Group) model to evaluate these experience. Centrica’s responsibilities and responsible business practices, programmes. This statement is ends with challenges and focused on the ‘global people available at www.centrica. Commentary priorities for 2005. Together with strategy’. This has seen com/community along with a This is Centrica’s second the summary table of last year’s enhanced leadership training more detailed account of the annual report on corporate commitments, success in and a focus on diversity: 16% assurance processes we have responsibility and it achieving them and next steps, of the workforce comes from adopted for this report. demonstrates continued this allows stakeholders to black and minority ethnic judge more easily if the communities, for example, while company is focusing on their an external pay review found no particular concerns. This gap between earnings of men approach can be strengthened and women. However, the in future by identifying key company’s stakeholder performance indicators for engagement shows women managers still perceive a gap to exist. In line with the principles www.corporate of human capital management, citizenship.co.uk we believe that more detailed April 2005

36 Corporate responsibility report 2004 Centrica plc Further information Further information

Our commitment towards Contact details corporate responsibility is detailed fully on our corporate website Judy Greevy www.centrica.com/responsibility head of diversity and corporate responsibility [email protected]

Andrew McCallum corporate responsibility manager [email protected]

Diana Montgomery head of environment strategy [email protected]

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Corporate responsibility report 2004 Centrica plc 37 Questionnaire General comments

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