Corporate Social Responsibility Annual Review for 2009 Corporate Social Responsibility Annual Review for 2009 TABLE OF CONTENTS 1. Welcome 5. Sense of About this Report Our Year in Summary – Highlights of 2009 Belonging & Trust Performance Highlights Our People About Us Our Communities Our Strategy Key Statistic 2. Corporate Ethics & 6. Safety & Reliability Responsibility Governance & Management Occupational Health Governance Health and Safety Standards How We Manage CSR Accidents & Injuries Stakeholder Engagement Safety Programmes Benchmarking and Recognition Plant Reliability & Energy Security Energy Security 3. Economic Results Key Financial Results 2009 Investment and Pricing Customer Bills 7. Customer Focus Customer Profile Ofgem Energy Supply Probe Pricing and Product Innovation 4. Respect for the Sales and Marketing Customer Information Environment Customer Service Environmental Policy Help for Vulnerable Customers Climate Change Acidification & Air Quality Resource Use and Waste Water 8. Assurance & Biodiversity Environmental Management Information Sites and Infrastructure Welcome A Message From Ann Loughrey, Head of Corporate Social Responsibility Welcome to our Corporate Social Responsibility Annual Review for 2009. The year was a challenging one as the UK suffered the effects of the economic recession – but despite this, we made huge progress in a number of areas. One of the most exciting developments was our progress towards making Carbon Capture and Storage (CCS) a realistic option in the fight against global climate change. This technology could have the potential to capture around 90% of the CO2 produced from burning coal to produce electricity and transport it by pipeline for long-term geological storage under the North Sea. During the year Longannet Power Station became the first major power station in the UK to capture CO2 from its flue gases, signalling a major step forward in this clean coal technology. Working closely with Norwegian CO2 removal specialists Aker Clean Carbon, by November 2009 we announced a major breakthrough in reducing the amount of energy required in the carbon capture process, which in turn will reduce the cost. We have ambitions to make Longannet Power Station a global centre of excellence for Carbon Capture and Storage and aim to develop a commercial scale demonstration plant by 2014. With several coal power stations the size of Longannet – over 2,000 MW – opening in other parts of the world every week – the results of this work could have a massive impact globally, removing billions of tonnes of CO2 from the atmosphere each year and creating engineering jobs in the UK. Global climate change and making the transition to a low carbon economy, while maintaining energy prices at affordable levels for customers continues to be the most significant CSR issue for ScottishPower and our stakeholders. Our response to this challenge is covered in detail in the Respect for the Environment section of this Review, along with information on other areas of stakeholder concern such as air quality, major projects, biodiversity and resource use. We are also continuing to invest hundreds of millions of pounds in upgrading our energy networks to support renewable energy developments and improve the security of customers’ supplies. Delivering this level of investment in the current economic climate and to a very demanding timescale is a key challenge for us – but one that we are determined to meet. Welcome and Introduction 1 Water is an environmental issue that has grown in significance during the past year, following the introduction of the Water Framework Directive and the drafting of River Basin Management Plans. We continue to have extensive dialogue with stakeholder groups at our Galloway Hydro-electric scheme and have introduced a new section on water in the environmental section of our Review. Energy prices and fuel poverty continued to be the most significant customer issues. During the year we continued to work with Energy Action Scotland, National Energy Action and the Fuel Poverty Advisory Group to help address the issue of affordable warmth. We spent over £79 million under mandatory government programmes to improve the energy efficiency of customers’ homes, helping many low-income families to reduce their energy consumption in the long term, and channelled a further £7 million into social tariffs to help those customers most in need. During the year we also targeted a further £5 million at projects to help people suffering from fuel poverty through our charity, the ScottishPower Energy People Trust and other community partnerships. To help all customers get the best value energy deals, we reduced prices in March 2009 and launched several new products, including discounted, fixed and capped price deals, as well as a new internet- based Pay As You Go service. Safety continues to be a key priority across our business. During 2009 there were no fatalities amongst our employees or contractors and we reduced the number of Lost Time Accidents across our businesses from 29 to 12. Process and asset safety are areas in which ScottishPower is investing time, effort and money, to ensure that our management systems are in line with best practice. We also invested around £3.5 million in our local communities, supporting projects that enhance education and employability, public safety, the environment, arts and culture, as well as many hundreds of charities that are close to the hearts of the people who live in the areas where we operate. We remain committed to doing business responsibly. In this CSR Annual Review and on our CSR TV station you will find details of some of the great initiatives our businesses have been involved in during 2009. I hope you find it interesting. As always, we would welcome your feedback on this year’s Review. Ann Loughrey ScottishPower’s Head of Corporate Social Responsibility Welcome and Introduction 2 Corporate Social Responsibility Annual Review for 2009 About this Report Our CSR Annual Review outlines our approach and reports on our performance against key environmental, social and economic indicators from January to December 2009, unless otherwise stated. We report on CSR annually – our last report was published in July 2009. The report covers the activities of Scottish Power Limited (ScottishPower) in the UK, but excludes ScottishPower Renewables and other IBERDROLA Group acitivties in the UK. This year, for the first time, we have aligned our reporting to the Global Reporting Initiative (GRI3) framework in line with the IBERDROLA Group. We have continued to report on issues not covered by the GRI framework where our stakeholders have indicated that this is important to them. We have sought to provide a comprehensive, accurate and transparent account of our approach to key issues, our performance over the period and to present this information within the context of current legislative, regulatory and market influences. Where we have not reported against a GRI indicator, this is generally explained within the appropriate section of the Review – for example, the use of child or forced labour is prohibited by EU law. We have presented the information under our six key values: Our Six Key Values • Corporate Ethics & Responsibility • Sense of Belonging & Trust • Economic Results • Safety & Reliability • Respect for the Environment • Customer Focus Materiality We continue to report on the issues that our stakeholders consider to be the most important. These were defined originally in 2004 through stakeholder workshops and in-depth interviews that identified ScottishPower’s 12 most significant impact areas: Our 12 Significant Impact Areas • Provision of Energy • Wastes & Resource Use • Climate Change & Emissions to Air • Sites, Siting and Infrastructure • Health and Safety • Customers With Special Circumstances • Customer Experience • Communities • Employment Experience • Economic • Biodiversity • Procurement Welcome and Introduction 3 Corporate Social Responsibility Annual Review for 2009 Feedback from these groups is channelled through our CSR Steering Committee to ensure that we continue to focus our CSR activities and reporting on the issues that are most significant to stakeholders and ultimately to the success of our business. These impact areas have been retained under our current report structure, with some changes in focus to reflect evolving stakeholder priorities. Wherever possible, we have compiled data to provide a like for like comparison on previous year’s reports. We continue to engage with stakeholder groups, through formal feedback sessions at corporate level, through our Environmental Forum of external experts and with various groups including government, regulators, NGOs, consumer groups, employees and community representatives at both corporate and operational levels n ScottishPower’s Head Office at Atlantic Quay, Glasgowº “Feedback is channelled through our Steering Committee to ensure we continue to focus our CSR activities and reporting on the the most significant issues to stakeholders and ultimately to the success of our business.’ Welcome and Introduction 4 Corporate Social Responsibility Annual Review for 2009 Our Year in Summary – Highlights of 2009 January “In May, ScottishPower • We signed a three-year, £40m coal deal with ATH Resources for the supply of 800,000 announced the launch tonnes of Scottish coal, strengthening our of its Carbon Capture support for the local economy. trials at Longannet • We launched an education project with Power