2008 Corporate responsibility report Centrica plc Corporate responsibility report 2008 www.centrica.com/cr08 Contents 3 Chief Executive’s introduction 4 Assurance and scope 5 Excerpt from Corporate Citizenship’s Assurance Statement 6 2008 Highlights 7 Business overview 8 Our approach 14 CR Committee and Governance 17 Business principles 22 Key Performance Indicators 25 Key impact areas 26 Climate change and the environment 44 Customer service 56 Securing future energy supplies 64 Health and safety 72 Employees 83 Supply chain 87 Local impact 92 Our stakeholders 94 Customers 97 Investors 99 Employees 101 Suppliers and business partners 103 Governments and regulators 105 Communities 107 NGOs and consumer organisations 109 Media 110 Trade unions 111 Appendix – Memberships 2 Centrica plc Corporate responsibility report 2008 www.centrica.com/cr08 Chief Executive’s introduction Introduction from Sam Laidlaw 2008 was my first full year as a member of the Corporate Responsibility Committee. Throughout the year, the Committee challenged our current performance and debated areas of future activity across a range of critical business issues. Through this continual process of improvement, I have confidence that we are making good progress in developing the necessary structures and processes, allied to a management commitment that will build a sustainable and environmentally aware business for the future. In this report, you can read about our initiatives and performance over the year, as well as our forward- looking plans for 2009 and beyond. As our CR programmes mature, there is an increasing amount of available information to present to our internal and external audiences. As in previous years, we have chosen to use the online environment to report. Through Welcome to Centrica’s corporate responsibility report our website we believe we can disclose the most for 2008. information in the easiest to use format, leaving users to choose the level of detail appropriate to their interests. It has been a very challenging year with changing economic circumstances and extraordinary turbulence I hope you find the report useful and encourage you to in the commodity markets. As a result there has been an provide any feedback that you may have so that we can increased focus on many corporate responsibility (CR) continue to improve both our performance and how we issues and, in particular, how companies continue to communicate it. manage these issues in and embed them into everyday business performance during times of recession where cost efficiencies are very much a global priority. In a year of sharply rising fuel prices the areas of highest impact for Centrica were our support programmes for our most vulnerable customers and our long term efforts to ensure security of energy supply. We also continued to take a Sam Laidlaw lead role in our generating power through low emission Chief Executive technologies, minimising climate change as we move towards a low-carbon future. 3 Centrica plc Corporate responsibility report 2008 www.centrica.com/cr08 Assurance and scope Scope Independent assurance This report covers our corporate responsibility (CR) Centrica has commissioned Corporate Citizenship to performance from 1 January 2008 to 31 December 2008. provide it with external assurance and commentary on It updates our last CR report, which was published in its 2008 Corporate responsibility report. The 2008 report May 2008. For the sixth consecutive year, our report is is embedded within the ‘Responsibility’ section of the externally assured by Corporate Citizenship. Centrica.com website. 2008 performance is denoted by the ‘2008 Reporting’ badge. The scope of the report covers our global operations. Our main operations are in the UK and North America and, as a result, the content of this report focuses on these activities. However, we also provide detail on our operations in Nigeria and our outsourced activities in India; and we have increased reporting on Belgian energy company SPE, in which we acquired a 51% stake. In Centrica’s management has prepared the report and is future reports, as our international businesses continue responsible for its contents. Our objectives were to review to evolve and grow, we will report our activity and and advise on aspects of content and presentation, to performance accordingly. conduct selected checks to underlying corporate records, and to provide this statement for which we have sole Where appropriate, we have reported the activities of responsibility. our individual business units but we have chosen not to produce separate reports for each of these. Further details Corporate Citizenship is a specialist management of their corporate responsibility activities can be found on consultancy advising corporations that seek to improve each of the business unit websites. their economic, social and environmental performance around the world. We use external guidelines and frameworks to inform our reporting where relevant. Although we do not explicitly Corporate Citizenship base our report on the Global Reporting Initiative (GRI) www.corporate-citizenship.com guidelines, we have included a GRI index to show which 1 May 2009 elements of the guidelines we cover and to enable comparison with other companies’ reports. We have Centrica 2008 Assurance also indexed the report against our Group strategy, our An excerpt from Corporate Citizenship’s assurance Group business principles and the principles of the United statement is included in this report. For the full statement, Nations Global Compact, to which we are a signatory. please visit www.centrica.com/cr08/assurance We encourage you to contact us with your views through our feedback tool. We will publish our next corporate responsibility report in May 2010. 4 Centrica plc Corporate responsibility report 2008 www.centrica.com/cr08 Assurance and scope Excerpt from Corporate Citizenship’s Assurance Statement Opinion and conclusions Comparability of data In our opinion the Centrica Corporate Responsibility Report The Exposure Draft of Guidance for the Use of AA1000 AS 2008 reflects the principles of AA1000 (2008), namely (2008) cites comparability, also a GRI principle as a test inclusivity, materiality and responsiveness. The specified of information quality, as a positive attribute of a report. In sustainability performance information is reliable and particular, the guidance notes that comparability includes: accurate. The level of assurance is that defined by AA1000 year-on-year comparability, comparability with industry peers, as moderate. and comparability with appropriate benchmarks. Centrica engages with key stakeholder groups, gives Centrica has developed a style of reporting that is built upon a balanced consideration to their views and issues, assesses broad base of performance data. The quantity which are material, and responds by altering practice and of data disclosed has grown. Centrica as a norm gives innovating as appropriate. a five-year range of data showing changing performance over time. Currently Centrica includes relatively few comparisons Commentary with peers or external benchmarks and should, we believe, Our work was considerably assisted by the thorough, consider including comprehensive benchmarking of a limited deep and ordered way in which the Centrica Corporate number of key performance indicators in future reporting. Responsibility Committee engages with the corporate responsibility agenda. Within the work of the Committee, Process for deciding what issues to include in the report the regular presentation by businesses of their responsibility The section Our approach provides a succinct explanation engagement, agenda and response was a notable feature, of how Centrica judges what are its material corporate providing significant evidence of the application of relevant responsibility issues. policies and targets within the businesses. Some leading reporters include a brief section explaining how In our opinion future reports could be strengthened by further and why they decided on what information to include in the addressing the five aspects that we identify below. report and where other relevant information may be found. Inclusion of such a section in future report would further Climate change strengthen the materiality and responsiveness of Centrica’s As a member of the Carbon Disclosure Leadership Index, reporting. Centrica has an independently acknowledged claim to leadership in this field. In our judgement the current report Review of report and underlying documentation against meets current expectations of stakeholders with regard to the scale of business activities climate change. However, Centrica should note that this We considered whether the contents of the report fully area needs to be held under review. A shift upwards in the reflected the balance of Centrica’s different businesses and generally reported assumptions about the likely extent of geographies. We concluded that the report was appropriately climate change is evident, and 2009 will be marked by the balanced. However, the review raised two issues. Centrica Copenhagen Climate Conference. has made progress on management information and key performance indicators. Whilst good progress has been made In particular, future coverage should show the extent to over the last 12 months in Direct Energy, Centrica’s North which Centrica’s policies and programmes seek to maintain American business that accounts for roughly one-quarter of a leadership position by addressing the latest public