Corporate Responsibility Report 2006 Thales - Corporate Responsibility Report

Thales - Corporate Responsibility Report 2006 CORPORATE RESPONSIBILITY REPORT 2006 Thales 45 rue de Villiers 92526 Neuilly-sur-Seine Cedex France Tél. : +33 (0) 1 57 77 80 00 www.thalesgroup.com THALES Message from the Chairman p. 1 Thales profile and key figures p. 2 Highlights of 2006 p. 4 Issues and vision p. 5 Corporate governance, ethics and corporate responsibility organisation p. 11 A responsible business growth p. 22 A company of choice p. 27 A broader vision of corporate responsibility p. 50 A responsible player in environmental protection p. 59 A global leader recognised as a responsible player p. 72 CONTENTS INTRODUCTION ĵ This document is the Thales Corporate Responsibility report for 2006. The report presents the Group’s businesses and key figures and reviews the action taken by Thales in 2006 with respect to the company's corporate responsibility. It reports on substantive measures by the company in the areas of finance, employee relations, employment, and social and environmental protection. In accordance with Group’s international involvement, supported by its multidomestic strategy, the report provides detailed information of french companies about social and environmental initiatives as well as actions in other countries where Thales has significant operations. Photos credits: Photopointcom • Design and production: - 7373. Publication date: September 2007. This document is available on www.thalesgroup.com > MESSAGE FROM THE CHAIRMAN his second edition of the Annual “ Corporate Responsibility Report T confirms Thales's commitment to a rigorous and proactive policy in the area of Confidence underpins Corporate Responsibility. the long-term growth and As Thales writes a new chapter in its history, performance of Thales. with the incorporation of Alcatel-Lucent's transport, security and space businesses, and the acquisition of an equity interest in DCNS to become that company's industry shareholder and partner, it is important to reiterate this commitment. The present report shows the determination This system of ethical compliance includes This commitment to responsibility helps to of Thales corporate management, with the numerous plans and programmes that have establish and maintain the confidence contribution of all employees, to ensure been launched by Thales last few years and of the Group's customers, shareholders, rigorous compliance with the laws in place in were pursued“ throughout 2006. In addition employees and other stakeholders. That all the Group’s Countries of operation, and, to the company's policy on the ethics trust is crucial to the long-term growth when the law is vague or incomplete, to of international trade, employment and and performance of the entire Thales deploy an approach of ethical compliance environmental protection, these plans and organisation. that is appropriate to its areas of business programmes include measures to strengthen and that revolves around a set of strict the organisation's internal control and corpo- Denis Ranque standards. rate governance processes. Chairman and Chief Executive Officer, Thales Thales 1 PROFILE World leader in Mission-critical information systems With operations in 50 countries and 68,000 employees, Thales is a world leader in Mission-critical information systems for the Aerospace, Defence and Security markets. Building on proven capabilities in large and complex software systems, Thales steps up to the security challenges of its customers in an increasingly interconnected, technology-driven world. Civil and military systems benefit from many of the same technologies and innovations. Developing these dual technologies has been a long tradition for Thales, with its global network of 22,000 high-level researchers. Leveraging a global presence and spanning the entire value chain, from prime contracting to equipment, Thales plays a pivotal role in making the world a safer place. THE NEW THALES World leader in mission-critical information systems Revenues A global player 68,000 of more than with employees €12 billion 50 > Operations in countries 2007 Three main markets Air Defence 50 % Land Naval Joint Security 25 % Aerospace 25 % Share capital 21 % 27,3 % Alcatel-Lucent French State Free float 51,7 % AGREEMENTS WITH ALCATEL-LUCENT AND DCNS Major milestones in the company’s development The agreements signed with these two Thales partners at the end of 2006 and finalised in early 2007 are crucial milestones in Thales’s growth strategy. > The acquisition of Alcatel-Lucent’s rail signalling, security and satellite businesses has strengthened Thales’s positions in security markets and its leadership in critical information systems for both military and civil customers. > In early 2007, Thales became the industry partner and shareholder in DCNS, with a 25% interest in the company. In return, DCNS acquired Thales’s naval businesses in France (excluding naval equipment). The operation strengthens Thales’s involvement in the naval industry and reinforces its position in this sector at the European level. Thales 23 HIGHLIGHTS CORPORATE GOVERNANCE, ETHICS AND CORPORATE RESPONSIBILITY ORGANISATION • Network of Compliance Officers launched to consolidate internal risk management organisation – page 13 & 17. • Internal control system strengthened – page 14. • Network of Ethics Officers launched to support internal ethics organisation – page 20. A COMPANY OF CHOICE Thales signed three innovative employment and employee relation agreements in 2006: A RESPONSIBLE BUSINESS GROWTH • Development of job profiles for diversified • Proactive export control system deployed – page 23. career opportunities. • Coherent set of directives and dedicated organisation • New dialogue rules with deployed to prevent corruption – page 23. employee representative bodies. • Responsible procurement policy defined – page 25. • Update social security provisions applying to Thales employees – page 38. CORPORATE RESPONSIBILITY A RESPONSIBLE PLAYER IN ENVIRONMENTAL PROTECTION A BROADER VISION OF CORPORATE RESPONSIBILITY • Environmental protection measures incorporated in all Thales management • Technology partnership processes and practices – page 62. driving R&D strategy – page 50. • First building designed to the French green • Operation Coup de Pouce building standard (HQE®) – page 61. ("helping hand") helps employees • Pilot study of CO2 emissions launched launch start-up companies in France to measure Thales performance – or turn around existing businesses page 69. page 53. • Launch of Thales Academia, a partnership between the Thales Group and the French Ministry of Foreign Affairs to host and support highly-qualified overseas graduate students in France – page 54. • Thales joins French standards organisation to define disability awareness requirements for companies – page 57. ISSUES AND VISION As an electronics specialist serving defence, aerospace and security markets worldwide, Thales and its business activities are intimately connected with the geopolitical context on a global scale: more than half of the company’s 68,000 employees are now based outside France, and international business accounts for three-quarters of its revenues. Responding to significant changes in the global geopolitical context in recent years, as well as the increasingly international dimension of the company’s activities, Thales has deployed a far-reaching operational change programme encompassing the management of its human resources, marketing and sales processes, industrial facilities, and relationships with stakeholders. New responsibilities bodies and the different national legislations, as well as “normative requirements” issued by various players A more complex strategic environment (stakeholders, NGOs, etc.). Throughout its history, Thales has shown its capability of regu- In the absence of a global model of governance, the variety larly adapting to developments in the strategic environment. and complexity of these different rules and requirements At the dawn of the 21st century, the company was one of makes the business environment even more incoherent – the first to recognise the major changes taking place in particularly considering that these “soft law” codes and the institutional framework of its sectors of activity, sponta- standards – many of them British or American in origin – neously introducing a structured Corporate Responsibility sometimes run counter to other countries’ legal systems. programme. In an increasingly globalised business, and a complex legisla- For decades, Thales and the companies it has progressively tive and normative environment that features a wide range acquired in the United Kingdom, the Netherlands, Australia of specifying bodies, demand for transparency is growing, and other countries operated within an exclusively national forcing companies to bring a much greater degree of regulatory context under close government supervision. openness and traceability to their business processes. As the company's primary customer, and even shareholder Ethical management in some cases, the State also influenced strategy, research & development funding, export licensing and other areas. As pressure on governance practices mounts around the world, public authorities – who possess a monopoly in As a result of the company's multidomestic strategy, Thales’s legislation, or “hard law” – are seeing their sphere of influence operations now also extend beyond national boundaries. gradually reduced as a result of the inability of the law to keep Operating in this broader strategic space

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