veolia water uk plc corporate responsibility report 2008

Veolia Water UK PlcCorporate Responsibility Review 2008

Veolia Water UK Plc Corporate Responsibility Review 20082

Statement

In these recessionary times there are those who think the downturn will sink sustainability. Staying in business and making a profit, they say, will take precedence over the concerns of corporate responsibility and ‘nice-to-do’ environmental and social projects. Of course, in those companies where corporate responsibility is not integrated into the business and central to its strategy, it will be sidelined because it was never central. But for companies, like Veolia, where it is fully integrated into the way they do business, sustainability will help them to survive and prosper in the coming years. For sustainability is about business “doing more with less” – a necessary formula for surviving a

downturn. It is what profitability is about and precisely what businesses need. So the downturn does not contradict the demands of sustainability, rather it forces businesses to look much more carefully at the way they invest, how they prepare for the future, and the policies and programmes they have – above all for procurement. By seizing the opportunities presented by the new industrial revolution, with the vital role offered by environmental technologies, businesses can prosper and help to change the planet for the better. These technologies can contribute to a future in which we have avoided the worst dangers of climate change, countered ecological degradation, and provided real hope for future generations.

Rt Hon John Gummer MP Chairman, Veolia Water UK Plc

Independent assurance statement

Ken SmithDirector, Consultancy ServicesBureau Veritas UK LtdFebruary 2009

Bureau Veritas has been engaged by Veolia Water UK Plc (VWUK) to conduct an independent review of the accuracy of the data and information presented in its 2008 Corporate Responsibility (CR) Report relating to the regulated water businesses of Three Valleys Water UK PLC, Tendring Hundred Water Services Ltd and Folkestone & Dover Water Services Ltd.

The overall aims of the assurance process are to assure Veolia Water UK stakeholders that the company understands and is responsive to its material issues, that the information and statements contained in the report are accurate and communicated appropriately and that the systems and processes used to collect and report data and information are robust.

Bureau Veritas undertook this review in line with the requirements of the AA1000 (2003) Assurance Standard (AS).

Our findings and recommendationsBased on our review, it is our opinion that:VWUK continues to communicate clearly on those material issues impacting the regulated water industry (e.g. metering, pricing, climate change) as identified by formal stakeholder dialogue. Bureau Veritas would recommend that a formal materiality assessment is undertaken to review stakeholder issues across the three regulated water businesses so as to determine priority areas for future reporting.

The process by which VWUK sets and defines its CR

objectives and targets is robust, and performance against targets reported in 2008 is accurate. There is an opportunity for VWUK to more formally define the links between VWUK corporate CR objectives and targets and the three regulated business so as to further drive CR performance.

Based on our review, the data and information contained in the 2008 CR report accurately reflects VWUK operations and CR reporting. Bureau Veritas commends VWUK on the publication of this summary report and recommends that the scope and content of future year’s reporting is reviewed so as to provide stakeholders with improved accessibility to key material issues and information.

Statement of independence, impartiality and competenceThere is no conflict between any other services provided by Bureau Veritas (none of which are CR related) and that of our assurance team.

Bureau Veritas has implemented a Code of Ethics across its business which is intended to ensure that all our staff maintain high ethical standards in their day to day business activities.

Competence: Our assurance team has extensive experience in conducting assurance over environmental, social, ethical and health and safety information, systems and processes in accordance with best practice.

Veolia Water UK Plc Corporate Responsibility Review 2008 3

To become a sustainable company is to embark on a journey that doesn’t always go in a straight line. Along the way investment choices have to be made that are influenced by a range of fluctuating variables, occurring separately or together, such as the availability of technology, the economic, political and meteorological climates.

The vehicle we are taking for our journey is corporate responsibility. In this review we aim to show how we have integrated corporate responsibility into all our activities to create value for our investors, our employees, the local and national community, and the wider environment. We show how we have successfully met the demands of our regulators and increased our support of local and national community activities. Our core business of drinking water supply and sustainable industrial and commercial solutions consistently provide high quality products and innovative services.

In November 2007 we acquired the non-regulated, commercial interests of Thames Water. These include contracts for other water companies in England, Wales, Northern Ireland and Scotland, which will now benefit from Veolia’s worldwide expertise in water and wastewater management.

Our regulated businesses continued to perform well in 2007/8. This is reflected in our top ranking (Platinum band) in Business in the Community’s Corporate Responsibility Index, with a score of 96.5%. We continued to outperform the rest of the industry for customer service and water supply, with Tendring Hundred Water judged best performing company by Ofwat. We reduced leakage ahead of our targets set by Ofwat, and continued to encourage our customers to use water wisely. Our Education Centre won a silver Green Apple award for its work with Surrey County Council to change wasteful behaviour. We continued to identify areas for improvement and to develop innovative solutions. We will always need to rise and adapt to the many challenges of resources, climate variances and unforeseeable events; but we know that we are going in the right direction.

Introduction

Frédéric Devos CEO, Veolia Water UK Plc


Regulated water supply companies

Three Valleys Water PLC Customers 3.1 million Turnover £224.3m Capital expenditure £107.6m Employees 1,100 www.3valleys.co.uk

Folkestone & Dover Water Services Limited Customers 158,000 Turnover £17.3m Capital expenditure £4.4m Employees 93 www.fdws.co.uk

Tendring Hundred Water Services Limited Customers 155,000 Turnover £14m Capital expenditure £6.1m Employees 65 www.thws.co.uk

Each of the regulated water companies supplies water to customers within a designated supply area; they do not provide sewerage services.

Commercial companies

Veolia Water Industrial Outsourcing Employees 46www.vwio.comVeolia Water Industrial Outsourcing works in partnership with industry to provide sustainable, cost-effective water processing, recycling and wastewater management. The company operates nine contracts in the UK.

Veolia Water Outsourcing Employees 275www.veoliawater.co.uk Veolia Water Outsourcing was created in November 2007 following the acquisition of Thames Water’s commercial business interests. The company’s contracts and joint ventures provide sustainable solutions to water and wastewater management problems for industry, commercial companies, local authorities, government departments, and other water companies in England, Wales, Scotland and Ireland. Following the acquisition, Veolia Water is now the UK’s second largest provider of outsourcing solutions to the water industry, operating in the UK’s four capital cities.

Parent companies

Veolia Water Veolia Water UK is part of Veolia Water, the world No. 1 in water services. Over 150 year history.Operates in 60 countries and across five continents.83,000 employees.Provides water to 78 million people worldwide and wastewater services to 53 million.www.veoliawater.com

Veolia Environnement Veolia Water is part of Veolia Environnement, the world leader in environmental services: Operates in 68 countries.320,000 employees.Specialises in providing sustainable service in water, waste, energy, transport.Consolidated revenues for 2007: €32.6 billion.R&D budget in 2008: €158 million.

Veolia Environnement companies in the UK:20,000 employees.Turnover for 2007: £1.9 billion.www.veoliaenvironnement.com

Who we areThe water businesses of the Veolia Water UK group supply high quality drinking water to customers in the south east of England, and operate commercial, water-related services throughout the UK. www.veoliawater.co.uk

Notes on textThis review contains information on the social, economic and environmental performance of the regulated water businesses. The economic and environmental information covers the reporting year 1st April 2007 to 31st March 2008; the social information is for the 2008 calendar year. More detail on our performance is available on our website www.veoliawater.co.uk. As the non-regulated interests of Thames Water were acquired in November 2007, information is provided for social performance alone.


Three Valleys Water

Folkstone & Dover Water

Tendring Hundred Water

Veolia Water UKHead offi ce - London

Veolia Water UKContracts

Veolia Water Industrial Outsourcing Offi ce

Veolia Water Industrial Outsourcing Contracts

Veolia Water Outsourcing Offi ce

Veolia Water Outsourcing Contracts

Veolia Water JVContracts

Dyr Cymru Customer Services

Three Valleys Water

Folkestone & Dover Water


Veolia Water UK Head office – LondonVeolia Water UK Contracts

Veolia Water Industrial Outsourcing OfficeVeolia Water Industrial Outsourcing Contracts

Veolia Water Outsourcing OfficeVeolia Water Outsourcing Contracts

Veolia Water Joint Ventures Contracts


Three Valleys Water

Folkstone & Dover Water


Veolia Water UKHead offi ce - London

Veolia Water UKContracts

Veolia Water Industrial Outsourcing Offi ce

Veolia Water Industrial Outsourcing Contracts

Veolia Water Outsourcing Offi ce

Veolia Water Outsourcing Contracts

Veolia Water JVContracts



These goals are reflected in our business plans and long-term strategies. They tackle supply and demand imbalances using a twin track approach of increasing our water resources and encouraging careful water use. They include increased meter penetration to manage demand, reducing leakage and making better use of existing water resources by investing in infrastructure.

Good customer service is central to all our businesses. During the year Tendring Hundred Water was judged best performing company for customer service and water supply by Ofwat for the sixth time in seven years. Three Valleys Water achieved sixth place, its highest ever position. We achieved leakage rates better than the targets set by Ofwat, and better than the industry average; Tendring Hundred Water has the lowest leakage level in England and Wales. We fitted over 35,000 water meters as they represent a fairer way to charge for water and can reduce customer demand. Metered customers use on average 10% less water than unmetered.

None of our regulated companies was prosecuted under environmental legislation. Three Valleys Water and Tendring Hundred Water improved their processes for regulatory reporting after uncovering errors in data reported to

Ofwat; both companies compensated their customers. Three Valleys Water was prosecuted by the Drinking Water Inspectorate for mistakenly connecting two new properties to a raw water main.

We were pleased to achieve leading status (Platinum ranking) in the Business in the Community Corporate Responsibility Index 2007, for the sixth year in succession, with a score of 96.5%.

Veolia Water Industrial Outsourcing (VWIO) works in partnership with industry to provide sustainable, cost-effective water processing, recycling and wastewater management. The company operates nine contracts in the UK.

Our business

We scored 96.5% in the Business in the Community Corporate Responsibilty Index 2007.

96.5%

Meters installed in 2007/8.

35,000

Our goals… to manage water resources so as to preserve their social, ecological and economic value and to meet our customers’ expectations for water and related services.


Addressing water scarcity innovatively at Folkestone & Dover Water

Folkestone & Dover Water is the only water company in the UK whose area has been granted Water Scarcity Status due to serious water stress in the region. The status allows the company to invest in new infrastructure and resources, and implement a phased programme of compulsory metering, opening the way to sustained and significant water savings. The company aims to have 90% of customers receiving water on a metered basis by 2012. This should bring average water use down to 120 litres per person per day from the current UK average of 150 litres without any significant change in customers’ lifestyles.

Some 3,800 meters were installed in 2007/8 and a new stepped tariff and ‘smart’ bill introduced to further raise awareness of water use and the savings that customers can make. The tariff differentiates between water for ‘essential health and hygiene’ and ‘discretionary use’.

Case study

• Become the industry benchmark for operational excellence

• Submit Business Plans to Ofwat for Price Review 2010-2015

• Maintain the highest standards of service for our customers


Climate change Ensuring the security of water resources and the efficiency of our assets and those of our clients is vital to our business. The impacts of climate change are factored into our plans for adapting to the effects of extreme temperatures and weather events, more intensive rainfall, flooding, coastal erosion and sea water intrusion.

Water is heavy to move around; pumping it from underground and surface sources, treating it and distributing it around the network uses large amounts of electricity, which is mainly generated from fossil fuels. To increase energy efficiency we have a phased inspection and replacement programme for pump motors. Where appropriate we install variable speed pumps.

We have recorded our annual carbon dioxide emissions associated with our energy requirements for water supply, offices and transport since 1996. In 2007/8 these amounted to just over 119,000 tonnes, a 3,000 tonne reduction since 1995/96.

During the year we signed up to the Prince’s May Day Network, a group of over 1,300 businesses in the UK committed to taking action to reduce the UK’s carbon emissions. Despite using energy efficiently, our consumption is dependent on climatic conditions, customer demand for water and operational requirements, such as the need to treat water to ever higher standards. For these reasons our efforts to date to reduce emissions have focussed on using energy and fuel

In the environmentOur goal… to seek opportunities to reduce our consumption of natural resources by using alternatives where possible, and by optimising efficiency of use, whilst protecting and enhancing the environment.

The principal environmental costs of the water businessEnvironmental managementFormal environmental, as well as health and safety, and quality systems, are fundamental to our aim of continuously improving our performance. These systems are at various stages of maturity throughout our businesses and are being integrated into the overall systems for managing the business.

At Three Valleys Water the environmental management, health and safety, and quality system is integrated into the company Balanced Scorecard, a management tool which is presented to the Board and Executive Management regularly. During the year the environmental management system at a pilot site was successfully certified to ISO14001; the remainder of production sites will be certified in 2008.

Both Folkestone & Dover Water and Veolia Water Outsourcing operate integrated management systems that meet the requirements of ISO 14001 (environmental management), ISO 9001 (quality management), and OHSAS 18001 (occupational health management).

Veolia Water companies continued to work with local community groups to foster species and habitats which are the subject of Biodiversity Action Plans and are found on our own and adjacent land.

This year we achieved leading status (Platinum) in Business in the Community’s Environment Index for the third year in succession.

To deliver 1 cubic metre = 1,000 litres (1 tonne) of water 1998-99 2007-8 to a customer:

kWh of energy (electricity, gas & heating oil) used 0.77 0.82

Cubic metres of water lost from our pipes in distribution 0.13 0.11

Cubic metres of water lost from customers’ pipes 0.07 0.06

kg of treatment wastes, excavates & aggregates generated 1.01 0.41

- (of which) kg landfilled 0.8 0.17

- (of which) kg recycled 0.21 0.24

kg of carbon dioxide emitted into the air 0.35 0.43

litres of fuel used in fleet vehicles 0.005 0.003

efficiently, reducing waste, reducing customer demand for water and continuing to reduce leakage. Going forward, our business plans take account of operational and embedded energy in planned investment. We are pleased that the regulator, Ofwat, endorsed Three Valleys Water’s processes for accounting for carbon when reviewing the draft Business Plan.

WasteWe monitor our use of aggregates and encourage our contractors who maintain the distribution network to use ‘no dig’ trenchless technology where possible and to re-use excavated material. In 2007-8, we estimate that 53% of the material excavated by us and our contractors were recycled rather than their being sent to landfill. We have an ongoing target to reduce waste going to landfill. Three Valleys Water won the ‘Best Utility Company’ Award at the London Transport Awards 2007 for its promotion of recycled material for reinstating holes, in order to reduce their environmental impact. The company has produced good practice guidance for utility companies on the re-use of excavated materials which has been accepted by the Highways Authorities and Utilities Committees (HAUC) in London and the Anglian region; it is estimated that 95% of all excavated material will be recycled across the region.

All our treatment waste generated during the year was re-used as a soil conditioner on agricultural land.


It appears that you have a good understanding of carbon accounting.Ofwat

• All production sites certified to ISO14001

• Implement the climate change strategy

• Prepare a green travel plan

CO2 emissions associated with our energy use for water supply, offices and transport in 2007/8.

Estimated amount of excavated material which we recycled.

119,000tonnes

53%


The health and safety of our staff is paramount and we continually train and urge our staff about the need to work safely. There were no fatalities in our water companies in 2008. During the year we decided to make a step change in our health and safety performance so that no harm comes to anyone as a result of our activities. With the help of the leading specialist in health and safety, Dupont Safety Resources, we have reviewed our whole approach and started the change to a “zero accident” culture.

Investing in our employees through training and personal development is a high priority. We have introduced the personal development system to provide a more structured approach to employee learning and career development. In 2008, over 2,800 Veolia Water UK employees attended training courses including competent operator training, health and safety in practice, driving assessment, stress management, and diversity at work. We also run a successful graduate development programme.

We aim to ensure that no employee or applicant for employment receives less or more favourable treatment, whether through direct or indirect discrimination, on the grounds of race, gender, disability, sexual orientation, religious beliefs, creed, marital or parental status. Our recruitment and selection policy is therefore based on objective criteria consistent with applicants’ skills, abilities and potential. No applicants or employees will be unfairly discriminated against on

grounds of criteria not relevant to the performance of the job.

We continue to work positively and progressively with trade unions. We also consult our workforce annually for views on a range of company and personal issues. The response rate to the 2008 employee survey was 69%, an increase of 2% on the previous year. The overall score for staff satisfaction increased to 64%, from 59% in 2007.

In the workplaceOur goal… to provide employees with the opportunities, resources and environment to allow them to make an effective contribution to the business.

• Introduce comprehensive company bonus scheme

• Introduce flexible working scheme, WorkWise

• Relocate to new offices in London and Hatfield

• Increase staff satisfaction score to 70% by 2010

• Zero accidents by 2012


We give extensive support to the communities in which we operate through education programmes, working with the police and local groups to raise awareness of doorstep crime, and actively encouraging employees to become involved in local community initiatives, in the belief that there are benefits for both the community and employees.

Three Valleys Water’s award-winning Education Centre celebrated its 10th birthday in 2008. During the year the Centre’s teaching staff educated more than 17,000 schoolchildren and adults in water efficiency and sustainability issues.

We are long-standing supporters of the charity WaterAid, which funds projects in 15 of the poorest countries of the world to provide clean drinking water, sanitation and hygiene education. Staff activities to raise money for the charity included organising an annual road run, subscriptions to the payroll lottery, recycling mobile phones and printer cartridges, and sponsored dress-down days, with the company matching the amounts raised.

Dwr Cymru Customer Services in Cardiff is a member of Business in the Community Wales. Staff involvement in the local community includes nominating a monthly charity day, a “right to read” programme in a local primary school, and taking part in the MacMillan Nurses annual fundraising event, the World’s Biggest Coffee Morning.

In the communityOur goal… to work with and support communities, charities and government towards improving the quality of life.

Green Apple award for the Environment Centre

Three Valleys Water’s Education Centre won an environmental award, a silver Green Apple, for its part in Surrey County Council’s ChangeLAB (Changing Lifestyles, Attitudes and Behaviour) project. Presented by David Bellamy, who also opened the Centre in 1998, the award is the 14th that the Centre has won.

The project involved the Centre’s manager, Ted Casey, on David’s right, spending a couple of days teaching schoolchildren at West Byfleet School about water efficiency and related sustainability issues. Following on these lessons, the children developed their ideas to create a water-saving exhibition. With the help of Woking Borough Council they booked the local village hall for a Saturday to display the exhibition to the public. The event was reported by the local media and even made it onto the BBC website.

Case study

• Extend education services

• Hold liaison meetings with community stakeholders

• Organise focus groups and surveys of customers

• Improve the customer experience

• Identify a charity to partner with in 2009

This review is printed on Mohawk Options White PC100m iTone, a 100% recycled product, FSC accredited, carbon neutral and manufactured using wind power.

Design www.airdesign.co.ukPrinted by Mtadigital

Veolia Water UK PlcKings Place, 90 York Way, London N1 9AG

veolia water uk plc corporate responsibility report 2008

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