In this section of our Annual Report we provide a summary of what we are doing to make our business more sustainable. A more detailed account is provided in our 2009 Sustainability Report, which will be published on our website www.carillionplc.com/sustainability in April 2010.

Strategy

We have a well-established strategy model for sustainable development, which is aligned with the four priority areas defined by the UK Government in its sustainable development strategy, ‘Securing the Future’, namely

• Sustainable communities and workforce
• Natural resource protection and environmental enhancement
• Climate change and energy
• Sustainable consumption and production.

We have identified 12 behaviours and activities across these four priority areas, as illustrated in the diagram opposite, which affect the delivery of our business objectives.

Managing sustainability

Our commitment to sustainability is driven by our Board, supported by a Sustainability Committee. This Committee is chaired by our Chief Executive, John McDonough, and includes a number of Executive and Senior Directors. The Committee also benefits from expert advice from two external members, Dame Julia Cleverdon, Vice President of Business in The Community (BITC) and Jonathan Porritt, Founder Director of Forum for the Future.

The Sustainability Committee is supported by a Sustainability Forum, comprising our senior business leaders, that informs the development of our sustainability strategy, shares best practice and ensures the effective dissemination of our sustainability strategy and policies to our business units. All our business units have a sustainability plan and objectives, which form an integral part of their annual business plans. Our seventh annual Sustainability Week was again organised to coincide with World Environment Day. In 2009, our focus for sustainability week was on carbon reduction and our chosen charity for the week was The Prince’s Trust, for which we raised over £6,500 from employees’ fundraising activities. We chose The Prince’s Trust, because we already support the work it does to promote more sustainable practices, for example the ‘Get Into Construction’ programme.

Our performance

In 2009, Carillion was included in the Top 20 UK companies in the Sunday Times Best Green Companies. We also continued to improve our ranking in BITC’s Corporate Responsibility Index, moving up from a ‘Gold’ to a ‘Platinum’ ranking, with a score of 96.5 per cent. The Corporate Responsibility Index involves a detailed, independent assessment of Carillion’s sustainability strategy, management processes and performance. Such assessments enable us to benchmark our performance against other companies, including those in different market sectors.

Carillion continues to be a member of the FTSE4Good Index and this year we submitted a full response to the Carbon Disclosure Project for the first time.

Our Middle East and North Africa (MENA) business won the Corporate Social Responsibility (CSR) of the Year Award and the Build Safe UAE Award for best practice, at the 2009 Construction Week Awards held in Dubai. To win this award, our MENA business had to demonstrate that it has its employees’ welfare and that of the community at heart. Our MENA business was specifically recognised for its efforts to protect the environment through efficient waste management techniques and a number of clean-up campaigns.

Our Joint Venture business, Al Futtaim Carillion, received The Health, Safety and Environment (HSE) award for ‘Build Safe UAE’ for its diligent and rigorous efforts to make its construction sites across the Middle East as safe as possible and by taking a very active role in the Build Safe UAE programme.

In 2009, as well as continuing to set specific sustainability targets for each of our business groups and for the Group as a whole, we focused on a number of important specific areas, namely

• embedding our carbon reduction strategy into all areas of our business with action plans to support the delivery of our target to reduce carbon emissions by 50 per cent by 2010, measured against a 2006 baseline
• delivering the commitment we have made to halve the volume of construction waste sent to landfill by 2012
• through the Business Action on Homelessness programme, enabling 100 candidates to gain valuable two-week work placements in our businesses and supporting their re-introduction to employment
• working with communities and in particular ensuring that at least one per cent of our pre-tax profits are given in cash or kind to community activities
• monitoring progress with implementing our apprenticeship charter to ensure at least 250 apprentices are gaining valuable work experience on our contracts and projects and
• delivering our commitments on sustainable procurement through applying the framework methodology developed by the UK Government’s Sustainable Procurement Task Force.

The Group’s sustainability targets for 2009 were based on 14 specific and measurable targets. In order to drive continuous improvement we set demanding targets and our performance against them is independently verified by Bureau Veritas. A full report on what we have achieved will be published in our 2009 Sustainability Report, in April 2010.

Sustainable communities and workforce

Creating a sustainable business requires the commitment of all our people. We seek to achieve this through our Health and Safety, leadership, personal development and employee engagement programmes, which are described in more in the Group Chief Executive’s review and the Report of the Directors.

How we do business is based on our belief that it is not only what we do that matters, but also how we do it, which drives our commitment to living our values in everything we do. We make Values Awards to our people to recognise the outstanding contributions they make to our success in delivering an excellent service to our customers and to creating a positive impact on the communities in which we operate.

We feel proud that our people are also winning prestigious awards. Our Group Chief Engineer, Professor Quentin Leiper, was awarded the CBE in Her Majesty the Queen’s 2009 Birthday Honours List. Quentin received the award for services to the Sustainability agenda as an employee of Carillion and also as a former President of the Institution of Civil Engineers.

Carillion Building’s Tony Fleming won the Business in the Community (BITC) Midlands Region, Volunteer of the Year Award. Tony received this award for showing exceptional commitment to volunteering, through Carillion, to make a positive impact on his local community. Tony, who was also a Business Action on Homelessness champion, has now retired from Carillion, but remains committed to his involvement in the Carillion programme.

Our commitment to sustainable communities also extends beyond the roles played by our own people. We have a community engagement strategy for all our major worksites and projects and we encourage our people to understand how Carillion can have positive impacts on the communities in which we operate and to participate in community activities.

Carillion gives over one per cent of its pre-tax profits in cash or in kind to community activities. We are a national partner in the Business Action on Homelessness (BAOH) campaign, designed to help homeless people break the cycle of ‘no home, no job’ and since becoming a partner in 2006 we have assisted over 100 homeless people every year on their journey to full employment. As 2009 marked Carillion’s tenth anniversary as an independent company, we donated £25,000 to charities in the UK, Canada and the Middle East. Donations of £500 were made to 50 different charities, nominated by our employees.

As one of the UK’s leading providers of training for support services and construction skills, we continue to work with the Construction Industry Training Board and contribute to the development of individuals and communities. In 2009, around 69 per cent of our apprentices successfully completed their training in one of our 18 UK training centres, including 258 people who were trained through The Prince’s Trust ‘Get into Construction’ programme.

National resource protection and environmental enhancement

What we do and how we do it can have significant impacts on the use of natural resources and the environment. We use our knowledge and skills to develop sustainable service solutions for customers to create positive impacts in these areas.

Carillion has developed and implemented environmental management systems across the Group and all our UK and Middle East and North Africa operations are accredited to ISO14001 by a registered third party.

The preservation of natural habitats and the wildlife they support is important both socially and environmentally. Since 2000, we have supported the UK Wildlife Trusts through the Carillion Natural Habitats Fund, and to date we have given over £255,000 to the Trust to support 44 projects. The local Wildlife Trusts, which care for almost 2,500 nature reserves across the country, are able to apply for a grant from the Fund to support a conservation project. We also encourage our employees to work with their local Wildlife Trusts on these projects to improve nature conservation, especially where projects are close to Carillion offices or worksites.

In recognition of our ongoing commitment to integrate sustainability into everything we do, we have adopted the UK Government’s Sustainable Procurement Taskforce (SPTF) ‘Flexible Framework’. This framework provides a step-by-step approach to demonstrating leadership in sustainable procurement and we have plans in place to achieve the requirements of each phase of the framework.

Carillion continues to be a member of the WWF-UK Forest and Trade Network (FTN) and during 2009 we continued to work towards ensuring we use timber products from sources certified by the Forest Stewardship Council on all our projects. We report the volumes and sources of the timber we use to the WWF-UK FTN annually and develop detailed action plans for improvement.

Climate change and energy

Climate change is increasingly recognised as the most serious long-term threat to human prosperity and lifestyle. The effective management and reduction of greenhouse gas (GHG) emissions has become increasingly important, as it is now widely accepted that companies will need to make substantial changes to the ways in which they operate, if we are to respond effectively to this threat.

In 2007, Carillion set the challenging target of reducing its direct carbon emissions by 50% by 2010. This target will be measured against the Group’s 2006 carbon emissions, adjusted for revenue growth. In order to achieve this target, we have developed a carbon reduction strategy and policy, which involves measuring and reporting our carbon footprint each quarter, in accordance with the Greenhouse Gas Protocol carbon accounting standard. Our carbon footprint covers our direct emissions generated from buildings, transport, travel, waste and from plant powered by fossil fuel on project sites.

We are focusing on our activities in areas where we can have the greatest direct impact by reducing carbon emissions generated by

• employee business travel
• commercial vehicles
• plant fuel
• Carillion offices.

In order to manage our carbon emissions effectively, we have begun a programme of work to understand our indirect impacts and in 2010 we will be trialling our models for managing these impacts on a selection of construction sites.

In 2009, we continued to develop our understanding of how our operations affect climate change, together with our commitment to developing new measures to reduce these effects. We regard this as fundamental to the development of our business and we have also linked this to other measures we are pursuing, including the reduction of our overall cost base. We continue to promote the use of telephone and video conferencing to reduce the need to travel, introduced more fuel efficient cars and procured all the electricity we use from renewable or climate change levy-exempt sources. We are also working with our customers to provide sustainable building, infrastructure and lifetime facilities management and services.

Our 2009 sustainability report provides more information on our carbon reduction programme and will be published in April 2010 on our website.

Sustainable consumption and production

Carillion’s leadership in developing and implementing its sustainability strategy model, which relates our impacts on the environment and on society to business performance, has made a major contribution to the Group’s risk management policies and processes.

These policies and processes address strategic risks and those specific to individual businesses and contracts, including economic, social, environmental and ethical risks, and are therefore fundamental to the management of the Group and all its operations.

We believe that our leadership in sustainability differentiates us from our competitors. We seek to understand the needs of our customers and their objectives in respect of sustainability and to use our knowledge and skills to meet their needs by developing sustainable service solutions. We also seek to promote sustainable solutions by explaining to our customers how a sustainable approach can not only create positive impacts on the environment and on society, but also reduce costs, increase efficiency and improve the quality of the services we offer.

For example, Carillion recently secured the prestigious Public Private Partnership project to finance, design, build and operate the new Southmead Hospital in Bristol. The delivery of sustainable solutions for all aspects of this project were key to Carillion’s success, as Carillion and the North Bristol NHS Trust are both committed to achieving the highest standards of sustainability. The project will involve creating a state-of-the-art building that will be the most sustainable major acute hospital in the UK, with low energy utilisation and a carbon footprint below the government target of 3.43Te CO₂ a year. This demonstrates how Carillion’s leadership in sustainability helps to differentiate us from our competitors and contributes to the strong positions we hold in our chosen market sectors.