Veolia Water UK Corporate Responsibility Report 2005 by Veolia Water

Veolia Water UK Corporate Responsibility Report 2005

Key

Target >> Veolia Water UK target

Highlights: where our programmes and targets contribute to the UK Government’s Sustainable Development Framework Indicators, part of its Sustainable Development Strategy

Highlights: progress measured against the water industry’s sustainability indicators

Highlights: progress in meeting Veolia Environment’s sustainable development commitments (p.10)

Contents

Climate change – how will it affect the butterfly? 1 2 4 6 7 9 12 14

Statement from the Rt Hon John Gummer An introduction by the Managing Directors Highlights of the year The Veolia Water UK Group Veolia Environnement Policy development & implementation Managing the Veolia Water UK Group responsibility Our business Our goals … to manage water resources to preserve their social, ecological and economic value and to meet our customers' expectations in terms of the provision of water and related services.

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

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

30 In the environment Notes on text and symbols This report contains information on social, economic and environmental performance during the reporting year 1st April 2004 to 31st March 2005. It is also available from www.veoliawater.co.uk.

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

36 Verification Statement 37 Glossary 40 Invitation to comment

The activities described took place during this period unless indicated otherwise. Key statistics and other information reflect either the average during the year or the position at the end of the year as the context indicates. Unless indicated otherwise the sources of this data are reports published by the Director General of Water Services.

Statement from the Rt Hon. John Gummer

Whether you believe that the science of global warming and the link to the man-made emissions of greenhouse gases is proven or not, the fact is that the climate is changing. Yes, I hear the dissenters say, but the climate has always changed. If it had not, man could not have evolved and existed on the third planet in the Solar system. True, but the point is that the rate of climate change is increasing. with significant impact on human life on the planet. To survive and develop mankind must change its behaviour and adapt to this emerging threat. The climate is a highly complex subject and only in the last twenty years have we begun to achieve the smallest understanding of its mechanisms. The famous parable of a butterfly flapping its wings in Tokyo causing a hurricane in Mexico is used to describe Chaos Theory. The fact that climate is used in this example emphasises the real issues surrounding climate change. Yes, it is complex; yes, there is much we don’t understand; yes, all models are bound to be inadequate if not wrong, but are we prepared to risk massive changes in civilisation as we know it until we get the science right? A number of politicians and commentators have stated clearly that climate change is the major challenge we face in coming decades (even greater than terrorism: David King). We are, however, truly arrogant to believe that we can control the climate; some even say our influence has gone too far. So what to do? Firstly, we need to understand the impact of climate change on our business. The principal challenge is maintaining sources of fresh water

Veolia Water UK Corporate Responsibility Report 2005

against a background of potential drought, pollution and growing population in the South East of England. Secondly, we need to plan what we can do about it. In our industry this is primarily about managing the supply/demand balance. It involves protecting existing water resources and developing new sources and technologies. At the same time we have to encourage people to use clean, treated water wisely and not waste it. We must also invest in innovative treatment technologies. It is important to increase the efficiency of our treatment and distribution systems because this reduces the amount of water we abstract and pump. All this must be done in an economic and environmentally efficient manner. Constantly seeking to reduce the amount of energy we use to deliver our service means that we can reduce energy costs and emissions of carbon dioxide. Only by effective planning and management of water resources and encouraging a change in consumer behaviour can we guarantee a sustainable source of fresh drinking water. Perhaps then the butterfly will flap its wings in another direction.

Rt Hon. John Gummer MP Chairman of the VW UK Corporate Responsibility Advisory Committee

Innovation and creativity, the keys to our success An introduction by the Managing Directors

This year has seen a whole range of industrious and successful activities in our core water businesses. The regulated water businesses submitted their final business plans to Ofwat which has issued its notice of the price limits for the period up to 2010. Although the outcome did not match our expectations we are confident that we can continue to meet our own high standards of service delivery whilst maintaining and improving assets and meeting challenging efficiency targets. With the first truly multi-utility contract at Corus, Trostre, the industrial outsourcing business now operates 10 contracts in the UK. This is the tenth report in a series of environmental, environmental and social and now Corporate Responsibility reports. This evolutionary process has allowed us to develop and integrate the concepts of sustainable development, business ethics and transparency into all our activities. Corporate Responsibility is about the business in totality and how it is grown in a successful and sustainable manner whilst meeting the expectations of its shareholders. The two are inextricably linked. We believe that we now have a practical model of Corporate Responsibility management and systems of information gathering and reporting that truly reflect the performance of the Group. In simple terms we have identified and responded to the requirements and expectations of our stakeholders. For example, we have met the demands of our regulators as far as submitting all the information required by them in a timely manner, responding to questions and queries on this information and

Veolia Water UK Corporate Responsibility Report 2005

cooperating fully in all aspects of these relationships. We have continued to respond to the expectations of our communities by increasing our support for local and national activities. Our core business of drinking water supply and sustainable industrial solutions consistently deliver products and innovative services that are of a high quality. In addition, we provide healthy financial returns for our investors and financial stakeholders. Our parent company, Veolia Environnement, has developed a clear set of corporate values and ethics which are built into our management systems and programmes. Whilst the core values and ethics represent the foundation principles of our corporate responsibilities, the way in which we implement them continues to evolve in a positive and creative manner. For example, training programmes now include specific courses on topics such as the Ethical Framework and Diversity at Work. Going forward into a new year we can reflect on our success as measured by our performance in the Business in the Community Index of Corporate Responsibility in which we were again in the top ten of the ‘Top 100’ companies. This is just the end of the beginning, however, as we strive to address the challenges of the future. All our water companies are in areas of water stress. This results from both an increasing scarcity of water resources due to climate variations and pollution and ongoing demand by an increasing number of consumers. Managing this effectively will demand more innovation and creativity in order to strike a balance and meet our stakeholders’ expectations.

David Alexander Managing Director, Veolia Water UK PLC

Peter Darby Managing Director, Three Valleys Water PLC

David Walton Managing Director, Folkestone & Dover Water Services Limited

Andy Smith Managing Director, Tendring Hundred Water Services Limited

François Darley Executive Officer, Veolia Water Partnership Limited

David Wright Managing Director, Veolia Water Industrial Outsourcing Limited

Veolia Water UK Corporate Responsibility Report 2005

2004 £m

2003 £m

Turnover 212.00 201.00 Profit before tax 64.00 66.00 Capital expenditure 56.00 61.00 Expenditure on R&D 0.68 0.65

out of 6 new environmental targets set for the year were met, 1 was progressed

Top 10 placing in The Sunday Times’ “Top 100 Companies that Count”

£71k Group companies donated £71,000 to charities in 2004, compared to £35,000 in 2003

£86k Group companies gave away £86,000 in sponsorship in 2004, compared to £79,000 in 2003

Highlights of the year Our Statement of Corporate Responsibility Policy and Principles (p.10) incorporates our environmental, social and economic policies and principles which underpin our goal of continuing to develop in a sustainable manner. How did we perform this year?

Environmental

Social

Economic

• For the tenth year running none of the companies was prosecuted under environmental legislation nor were any water pollution enforcement notices served.

• Folkestone & Dover Water and Tendring Hundred Water were judged best performing companies by Ofwat for customer service and performance. (p.18).

• We supplied drinking water of the highest 1 quality and above the industry average (p.17).

• Three Valleys Water won an award for their communications campaign to support the water quality improvement programme in Epping (p.35).

• Turnover for the 12 months to December 2004 was £212m, compared to £201m for the previous year. Ordinary profit before tax was £64m (2003: £66m). This will allow companies to invest in significant capital programmes to improve water quality and supply.

• We continued with our installation programme of state-of-the-art filtration treatment plants at Rickmansworth to increase further the quality of our water supplies (p.17). • We reduced the risks of incidents principally through catchment protection and upgrading treatment works (p.30). • All three companies met their leakage targets; we continue to perform better than the industry average. Tendring Hundred Water has the lowest leakage levels in England and Wales (p.16). • The Environment Agency approved our Water Resources and Drought Plans. • We improved the fuel efficiency of our vehicles (p.32). • We continued to foster priority species and habitats targeted in Biodiversity Action Plans (p.34).

’industry average’ means the average of all the water service companies and water supply companies in England and Wales

• Three Valleys’ Environment & Education Centre received a Green Apple environmental award for a recycling project for visiting schools (p.28). • Our score for the Business in the Environment Index of Corporate Environmental Engagement 2004 was above the average of FTSE 100 companies (p.21). • Of 6 new environmental targets for the year, 5 were met and 1 was progressed. Of 27 ongoing targets we are on track with 13 and made progress with 11 others. Three were not progressed. We have set 10 new targets for completion in future years.

Veolia Water UK Corporate Responsibility Report 2005

• Capital expenditure was £56m (2003: £61m). • The Group participated in and benefited from research undertaken by other companies within the Veolia Environnement SA Group. Expenditure in the UK in the year exceeded £678,000 (2003: £646,000).

• Three Valleys Water was commended for its liaison with local and health authorities on water quality issues (p.17). • Three Valleys Water was prosecuted during the year under the New Roads & Street Works Act 1991 as a result of a contractor’s failure to meet the requirements of the legislation.

• Veolia Water UK companies have suffered financially from the introduction of the Climate Change Levy despite significant efforts to conserve energy (p.31).

• We continued to develop programmes to support education (p.27).

• The Group complied with its policy to settle terms of payment with suppliers when agreeing terms of business and to pay in accordance with contractual and other legal obligations. The payment policy applies to all payments to creditors for revenue and capital supplies of goods and services (p.20).

• The education team at Three Valleys Water’s Environment & Education Centre received an award for its support in providing opportunities to develop schoolchildren’s life skills. • We updated our Safeguard Register to ensure we continue to satisfy the individual requirements of vulnerable and special needs customers (p.18). • We are on target to meet the industry-wide initiative ‘Clearwater 2010’ target to reduce accidents by 30% by 2010 (p.24). • Three Valleys were once again awarded RoSPA Gold Award for Occupational Safety (p.24). • We launched a Well Being programme for our employees (p.25). • Staff turnover increased to 19.9% • Our score for the Business in the Community Corporate Responsibility Index 2004 placed us joint ninth in the ‘Top 100 Companies that Count’, as joint leading water company (p.21).

From Veolia Water UK Plc Annual Report & Accounts 2004

Invitation to comment We would like to hear from anyone who has comments to make on our environmental, social and economic performance. Please contact: Corporate Responsibility Services Veolia Water UK plc 37-41 Old Queen Street London SW1H 9JA Tel: 020 7393 2700 Fax: 020 7393 2805 Email: info@veoliawater.co.uk or comment online www.veoliawater.co.uk

• The Veolia UK Pension Plan provides employees with a selection of benefits based upon final pensionable pay or money purchase according to the members’ wishes and date of entry to the scheme. The final pensionable pay scheme is now closed to new entrants. • Donations for charitable purposes made by Group companies during the year amounted to £71,000 (2003: £35,000), together with £86,000 (2003: £79,000) of sponsorship. The Group made no political contributions. • One new economic target for the year was met and one ongoing target was progressed.

• Of 11 new social targets for the year, 10 were met and 1 was progressed. Of 9 ongoing targets we are on track with 5, and made progress with 4 others. We have set 10 new targets for completion in future years.

Veolia Water UK Corporate Responsibility Report 2005

Veolia Environnement is listed in a number of socially responsible investment indices: FTSE4Good, ASPI Eurozone, and Ethibel Sustainability. It has also been selected by the managers of the socially responsible funds Storebrand and Innovest. It was ranked top among French companies and 16th worldwide for its sustainable development reporting by the Global Reporters 2004 survey.

The Veolia Water Group

Folkestone & Dover Water Tendring Hundred Water Three Valleys Water Veolia Water UK Veolia Water Partnership Veolia Water Industrial Outsourcing

The Veolia Water UK Group The Veolia Water UK group comprise three water supply companies, Folkestone & Dover Water Services Limited, Tendring Hundred Water Services Limited and Three Valleys Water PLC. Together with Veolia Water Partnership (VWP), Veolia Water Industrial Outsourcing Ltd (VWIO) and Veolia Water UK plc (VW) they form the Veolia Water UK Group.

For a detailed explanation of the organisation and ownership of the Veolia Water UK plc group, as well as economic performance, please see the Annual Report and Accounts

Veolia Environnement

Supply companies

Veolia Water is part of Veolia Environnement, the world’s leading environmental services group. VE celebrated 150 years of business in December 2003.

Folkestone & Dover Water Services Ltd supplied 46 million litres of water per day to 158,340 people in 2004-5. It has 75 employees.

Tendring Hundred Water Services Ltd supplied 30 million litres of water per day to 150,250 people in 2004-5. It has 67 employees.

Three Valleys Water PLC supplied 877 million litres of water per day to 3,039,020 people in 20045. It has 913 employees.

Veolia Water UK PLC is the corporate head office, based in London. It has 26 employees.

Veolia Water Partnership (VWP) provides planning, engineering, scientific and laboratory services. It has 161 employees.

Veolia Water Industrial Outsourcing Ltd (VWIO) Provides sustainable solutions to water and wastewater management problems for industry. It has 44 employees.

Veolia Water UK companies

Veolia Environnement is the world leader in environmental services. 252,000 employees, operating in 65 countries, serving over 225 million people worldwide.

Veolia Environnement

Veolia Environnement companies

k Veolia Water World no. 1 in water services. 67,800 employees, in 55 countries, serving 110 million individual customers.

Veolia Environmental Services (formerly Onyx) World no. 2 in waste management. 78,770 employees, in 38 countries.

Veolia Transport (formerly Connex) Europe’s no. 1 private passenger transport company. 61,300 employees, in 24 countries.

Veolia Energy (formerly Dalkia) European no. 1 in energy services. 43,300 employees, in 34 countries.

Each of the water companies supplies water to customers within a designated supply area; they do not provide sewerage services. Veolia Water Partnership provides planning, engineering, scientific and laboratory services; Veolia Water Industrial Outsourcing provides sustainable solutions to water and wastewater management problems for industry; Veolia Water UK oversees the three water supply companies, as well as Veolia Water Partnership and Veolia Water Industrial Outsourcing, providing support in relation to corporate matters.

In addition to water, Veolia Environnement’s other activities comprise water equipment design and supply (Veolia Water Systems), waste management (Onyx), energy services (Dalkia) and transport (Connex). Worldwide, Veolia Environnement employs around 270,000 people. It is listed on the Paris and New York stock exchanges. Net revenues for 2004 were €24.7 billion.

Veolia Water UK Corporate Responsibility Report 2005

Veolia Environnement companies, VWS, Onyx, Dalkia and Veolia Water, have been developing a strong presence in the UK since the mid-1980s. Together the UK companies employ approximately 10,000 people and had a turnover of £1.1 bn in 2004.

Veolia Environnement and Sustainable Development Veolia Environnement is a member of the World Business Council for Sustainable Development (WBCSD) and Entreprises pour l'environnement (EPE). The group supports the following initiatives: Global Reporting Initiative (GRI), Greenhouse Gas Protocol Initiative, United Nations Global Compact, Global Business Coalition on HIV/AIDS, and the World Resources Institute (WRI).

Our Corporate Values These are the Fundamental Corporate Values of Veolia Environnement to which the Group adheres.

Customer focus Responsibility Innovation

Performance Cohesion

Policy development and implementation VE translates the principles and goals of sustainable development into concrete action around the world. Here in the UK the Charter’s ten commitments inform the development and implementation of Veolia Water UK’s policies, procedures, goals and targets (where you see this symbol ).

Veolia Environnement Institute The Veolia Environnement Institute aims to contribute to the thinking and debates about the future of our environment. Constituted in France as a non profit organisation, the Veolia Environnement Institute operates from a long-term perspective. With the help of its Foresight Committee, made up of renowned specialists, the Institute’s mission is to anticipate changes in various fields such as environment and health, sustainable economics, climate change and urban growth. Since its creation in 2001 it has launched more than 15 studies and created an important network with academia in Europe, China, North America and North Africa. The Institute organises conferences with international partners. Events programmed for 2006 include Public services and management: implications for local governance, to be debated by 30 international economists in Toulouse in January, and Energy, environment and development: opportunities for reducing poverty in Bangalore, India, in December. For more details see www.institutveoliaenvironnement.org/en/ Sustainable Development reporting In early 2005 Veolia Environnement published its 2004 Sustainable Development Report, its fifth such report, covering the activities of the group worldwide. It is available at www.veoliaenvironnement.com. The water group in the UK contributed information from its own performance measurement systems.

Veolia Water UK Corporate Responsibility Report 2005

VE’s sustainable development approach allows stakeholders’ expectations to be taken into account and contribute to business development. It is founded on a 10-point Sustainable Development Charter: 1. To protect the environment, to preserve natural resources and encourage biodiversity. 2. To establish and deploy an environmental management system enabling objectives to be identified, action plans to be implemented and progress to be monitored. 3. To ensure that our facilities and services comply with relevant legislation, taking account of standards as they develop. 4. To go beyond minimum legal requirements in terms of improving personal health and safety protection. 5. To increase our efforts in terms of research, development and innovation in order to improve our ability to respond to environmental challenges. 6. To develop our employees’ skills, to encourage them to take responsibility and to promote corporate innovation. 7. To encourage our partners, subcontractors and suppliers to abide by our sustainable development commitments. 8. To anticipate the needs and expectations of the public for environmental services. 9. To participate in the social development of communities where our facilities are based. 10. To promote the commitments made in the UN Global Compact and to work with all stakeholders in facilitating access to essential services and towards the respect of fundamental rights.

In addition to reporting on how we contribute to VE goals and targets, we report also (where you see this symbol ) on how our programmes and targets contribute to achieving the UK Government’s Sustainable Development Strategy. The UK Government’s strategy for sustainable development has influenced strongly a project by Water UK, the industry’s trade association, to report annually on the water industry’s contributions to sustainability. We have taken the opportunity in this report to measure our progress against the indicators developed for this report (where you see this symbol ).

VE Sustainable Development Charter

Policy, goals & objectives

UK Government Sustainable development strategy

Water industry sustainability indicators

Regulators: Drinking Water Inspectorate, Environment Agency, Ofwat, CCWater

VW Sustainable Development Commitments

VWUK Corporate Responsibility Policy

Three Valleys Water

Folkestone & Dover Water

Tendring Hundred Water

Veolia Water Industrial Outsourcing

Policy, objectives & targets Veolia Water Partnership

The UK Government’s Sustainable Development Strategy

What do we mean by corporate responsibility?

The Strategy, issued in 1999, was re-launched in March 2005. It includes actions to follow up the United Nations World Summit on Sustainable Development in 2002, and covers four priorities of sustainable consumption and production, climate change, natural resource protection and sustainable communities. Progress towards achieving these objectives is measured using a range of indicators.

Corporate responsibility is good management, or the means by which an organisation fulfils its obligations to its stakeholders – see our policy overleaf. A stakeholder is an individual or group who has a legitimate interest in influencing or being affected by a decision.

Veolia Water UK Corporate Responsibility Report 2005

Veolia Water UK plc Corporate Responsibility Summary of the Companyâ&#x20AC;&#x2122;s Statement of Policy and Principles (The full Statement of Policy and Principles can be viewed at www.veoliawater.co.uk.)

The primary objectives of our business are to deliver sustainable water management services to our customers and a financial return to our investors. We will conduct our business in accordance with the highest standards of corporate responsibility and Veolia Environnement company values, in order to protect and enhance the welfare and interests of our stakeholders and the environment. We will maintain efficient and effective systems for risk management to contribute, among other objectives, to the implementation of this policy. We will regularly review this statement, its implementation and effectiveness, and modify it in the light of practical experience. We will strive to improve our performance continuously, monitor key aspects of this policy and publish a full report regularly. More generally, we will communicate openly about our policies, plans and performance. This statement is a key part of the companyâ&#x20AC;&#x2122;s overall strategy and operating policy. It will be taken into account in setting performance objectives of subsidiaries and individual units.

Environmental policy We will seek to contain the negative environmental impacts of our activities to the practicable minimum through applying our environmental principles. We will strive to meet the environmental standards required by legislation, regulation and codes of practice. Where practicable, we will seek to enhance the environment, encourage conservation of, access to and recreation on our landholdings, and communicate with environmental groups, local government and the community on environmental matters.

Veolia Water UK Corporate Responsibility Reports

3V CR Report

FD CR Report

Veolia Water UK PLC Board

External Verification

VWUK summary leaflet

TH CR Report

VWUK investors sheet

Veolia Water UK PLC Corporate Responsibility Advisory Committee

Safety, Health & Environment Managers

Social policy We will act in a manner consistent with maintaining the welfare and interests of stakeholders and, where possible, we will seek to make a positive contribution to them. Economic policy In the interests of our stakeholders, we will conduct our activities as efficiently, effectively, ethically and profitably as possible on a longterm basis. We will seek to maintain our assets to ensure that high standards of service can be ensured both now and in the longer term.

Folkestone & Dover Water (ISO 14001)

Tendring Hundred Water (internal management system)

Three Valleys Water (Balanced Scorecard)

Veolia Water Partnership (internal management system)

Veolia Water Industrial Outsourcing (ISO 14001)

EXTERNAL REGULATORS Environment Agency

Office of Water Services (OFWAT)

Consumer Council for Water (CCWater)

Drinking Water Inspectorate (DWI)

Health & Safety Executive (HSE)

Department for Environment, Food & Rural Affairs (DEFRA)

We will ensure that our employees act in accordance with the policy.

Veolia Water UK Corporate Responsibility Report 2005

Veolia Water UK

Managing the Veolia Water UK Group responsibly At Veolia Water UK we aim to manage our businesses in line with our statement of policy and principles on corporate responsibility (see summary at p.10) and applying the principles of risk management.

The Managing Director of each company has overall responsibility for corporate responsibility performance and reports on this to the company’s Board. Each company has one or more Corporate Responsibility Champions responsible for promoting initiatives, monitoring performance and internal communication. Particular attention to corporate responsibility is also paid at Board level, thanks to: The Right Honourable John Gummer MP, nonexecutive Chairman of Veolia Water UK PLC with special responsibility for the environment and chairman of the Corporate Responsibility Advisory Committee to the Board. Dr Neil Summerton CB, non-executive director of Three Valleys Water, where he takes a close interest in corporate responsibility, and of Folkestone & Dover Water Services, where he has specific responsibility for environmental policy and performance. He advises Veolia Water UK on economic and environmental regulation and is a member of the Corporate Responsibility Advisory Committee. Engaging with our stakeholders Our companies engage with their stakeholders about their requirements and expectations, using various means, including this report.

Veolia Water UK Corporate Responsibility Report 2005

Examples of how we engage • Customers: information leaflets sent out with bills, company Internet sites, media press releases, call centres, and regular contact with the Consumer Council for Water (formerly WaterVoice), the organisation that represents the interests of customers on issues such as price, service and value for money. • Employees: regular staff satisfaction surveys; statutory safety committees; Joint Negotiating Consultative Committee; monthly Team Briefing; internal magazine Splash; employee feedback sessions on fulfilling our corporate responsibility (for which a summary of this report is produced). • Local communities: –The water companies employ communication strategies to support disruptive work in the community. Three Valleys Water’s campaign to support the £19 million Water Quality Improvement Programme in the Epping area won an award (p. 35). –Three Valleys Water’s award-winning Environment & Education Centre educates both existing and future customers in water efficiency and environmental conservation (p. 28) –Working with local management groups, eg Friends of Stockers Lake, Wraysbury Lakes Liaison Group (Three Valleys Water), the White Cliffs Countryside Project (Folkestone & Dover Water), Essex Biodiversity project and Essex Wildlife Trust (Tendring Hundred Water)

“It is often difficult to get the full picture of a company’s attitude and approach to corporate responsibility when looking in from the outside. Reports like this are a window into the business, and that is helpful. However, reports can’t always illuminate the less quantifiable aspects of Corporate Responsibility – things like strong leadership, clear vision, embedded values, employee empowerment and the extent to which the organization looks beyond its own walls and engages with its many stakeholders. The best businesses find a way to combine these to enable them to deliver shareholder value in parallel with improved social and environmental impact.

• Regulators: eg we work with English Nature when laying a main through a specially designated area such as a Site of Special Scientific Interest • Industry & agriculture: we have developed communications strategies with the hydrocarbons industry, agriculture, and the chemicals industry to prevent pollution of water resources • Government partnerships: Folkestone & Dover Water is a partner organisation to Partners for Water & Sanitation, a UK trisector partnership initiative (between Government, civil society and private sector organisations) to assist developing countries, initially from Africa, to provide clean water and adequate sanitation. • Local government: we liaise with Local Area and Health Authorities so that there is a better understanding of local water quality issues. Meetings are accredited as continuing professional development for those attending (p. 17). • Investment community: we prepare a one-page summary of our policies and performance, inviting feedback.

I think Veolia Water UK does this effectively. This is borne out by a number of things: for example, its consistent top-line performance in both our Corporate Responsibility Index and Environment Index and the lead and direction shown by the Managing Director as part of our environmental (BiE) Leadership Team. The environment and society are at the heart of Veolia Water UK’s business and, from our knowledge of Veolia Water UK as an active member of Business in the Community, I believe that what it says is what it does.” Jim Haywood Director, Business in the Environment December 2005

We are in turn engaged by a number of bodies, eg: • Industry: Water UK, CBI, Environmental Analysis Co-operative, Business in the Environment, Business in the Community, Business Council for Sustainable Development UK. Peter Darby, Managing Director of Three Valleys Water, chaired the Kent Sustainable Business Partnership in 2004/5. • Peer group companies: we took part in Essex & Suffolk Water’s stakeholder consultation event in 2005. • Customers: we took part in GlaxoSmithKline’s stakeholder panel. • Charities: Groundwork, WaterAid, KitAid, Herts Community Foundation. • Government: Thames Regional Environmental Protection Advisory Committee, Associate Parliamentary Environment Group, Kent Sustainable Business Partnership. • NGOs: National Society for Clean Air, Oxfam. • Regulators: working groups of the Environment Agency, Ofwat and DWI. • Academia: Universities of Herts, Surrey and Brunel.

Veolia Water UK Corporate Responsibility Report 2005

Target >> Tendring Hundred Water is committed to achieving ISO14001 by 2006.

Per capita water consumption (litres per head per day) (excl. supply pipe leakage)

Folkestone & Dover Water Measured

200

Measured

200

Unmeasured

Target >> Folkstone and Dover Water has adopted a twin-track strategy to secure long-term high quality water supplies by developing new water sources and promoting water conservation.

Unmeasured

150

100

150

100 97/98

98/99

99/00

Measured

200

Unmeasured

150

Checking for leaks

Three Valleys Water

Tendring Hundred Water

00/01

Industry average

01/02

02/03

Measured

03/04

04/05

100 97/98

98/99

99/00

00/01

01/02

02/03

03/04

04/05

97/98

98/99

99/00

00/01

01/02

02/03

03/04

04/05

Unmeasured

Our business Our goals … to manage water resources to preserve their social, ecological and economic value and to meet our customers' expectations in terms of the provision of water and related services. These goals underpin the companies’ business plans for 2005-10 and the longer term. Our plans, as approved by Ofwat and the Environment Agency, tackle supply and demand imbalances using a twin track approach to develop our water resources whilst also encouraging careful water use. We plan to increase meter penetration to manage demand whilst making better use of existing water resources and investing in infrastructure to improve our ability to transfer water across our supply areas to the places where it is needed most at any particular time. We are also conscious of the ageing of our network, and have established long-term investment plans to improve the sustainability of our product and service. Consistent with the UK Government’s Sustainable Development Framework indicator for river quality, and the indicator for water resource use Relates to water industry sustainability indicator for managing environmental and sustainability issues

We are also increasing investment in pipe renewals, targetting our works in areas suffering most from high rates of mains bursts. This investment will reduce the inconvenience caused by supply interruptions and by streetworks to repair burst mains.

suppliers must be treated. VWUK companies have adopted as far as practicable the Group purchasing policy, mindful of Ofwat’s requirement for water companies to have a transparent system to show trading at arm’s length from associated companies. We have developed environmental and social criteria for use in supplier selection and performance procedures.

Folkestone & Dover Water Services’ integrated management system meets the requirements of ISO 9001 (quality management) and ISO 14001 (environmental management). During the year the company integrated also the health and safety management system into its overall system.

Managing for sustainable development

>> Veolia Industrial Water Outsourcing’s environmental management system is certified to the ISO 14001 standard. Tendring Hundred Water is committed to achieving the standard by 2006. Three Valleys Water’s health and safety, quality, and environmental management system is integrated into the overall company Balanced Scorecard, the key management tool which enables the Board to monitor performance in a comprehensive way. Managing the supply chain

Management systems Meets VE commitment to deploy an environmental management system

businesses have upgraded their quality systems to meet the new ISO 9001:2000 standard. The introduction of systems that are compliant with the ISO 14001 standard at priority sites is a target set by the Veolia Environnement group. It is essential that certification to the standard adds value to our business and undergoes a detailed analysis of benefit and cost.

Formal environmental, health and safety, and quality systems are fundamental to continuous improvement in 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. All the regulated

Veolia Water UK Corporate Responsibility Report 2005

Veolia Environnement is committed to encouraging partners, subcontractors and suppliers to adhere to its sustainable development commitments. The VE Purchasing Charter sets out the values to be applied in purchasing goods and services from others. These include health, safety and environmental considerations, and the way

Water industry sustainability indicator The security of supply index is also a water industry sustainability indicator Figures from 2000/01 onwards are for the new Three Valleys Water company which merged with North Surrey Water in October 2000.

We manage our business to satisfy the needs of existing and future stakeholders. We do this by balancing the demand for water against the availability of water resources in the areas where we operate, while protecting water resources and the environment generally. Due to the pressure on water resources in South East England, this requires innovative solutions. We do not act alone; the Environment Agency plays a major role in determining the availability of resources and determines licence applications to abstract water between competing demands, while Ofwat and the Consumer Council for Water are concerned for the interests of our customers. Our companies submit detailed Water Resource Plans to the Environment Agency, as well as drought contingency plans every three years. These plans are reviewed annually, and an update supplied to the Environment Agency. An important measure of companies’ water resources positions is the security of supply 2 index, as reported to the regulator Ofwat . This gives information on a water company’s headroom (see glossary), that is its ability to supply customers in dry years without

Veolia Water UK Corporate Responsibility Report 2005

introducing restrictions such as hosepipe bans. According to the index Tendring Hundred Water’s supply:demand balance is adequate. Three Valleys has a potential shortfall. The company’s approved plan is intended to ensure security of water supplies in all resource zones. Despite delivering an increase in the amount of water available for use in 2004-5, Folkestone and Dover Water continues to have a large deficit against headroom. >> The company has adopted a twin-track strategy to secure long-term high quality water supplies by developing new water sources and promoting water conservation. It has also applied to the government for its area to be recognised as one of water scarcity, the first UK water company to pursue this route. This will enable it to meter more customers faster than would be possible under its existing powers, thus strengthening its ability to manage demand in the interests of its customers and the environment. Domestic Demand for Water Other indicators used in forward planning water resource management are: • per capita consumption rate. As the Government expects 1.1 million additional households to form in the South East & London by 2021, future household demand is a key driver of water resource planning. • changes in climate patterns, with increased unpredictability in the areas in which our companies operate. • changing patterns of land use such as urbanisation and land drainage.

Total leakage achievements (incl. communications pipes) Actual and target rates of total leakage: megalitres/day

Case Study Good practice The Drinking Water Inspectorate highlighted two examples of good practice by Three Valleys Water in 2004 for:

Folkestone & Dover Water Target

Three Valleys Water

Tendring Hundred Water 8

Actual

Target

250

Target

• consultation of local authorities on water quality issues. The company has an arrangement with the Faculty of Public Health Medicine and Chartered Institute of Environmental Health for its meetings to be accredited as continuing professional development for those attending. “By meeting the needs of local health professionals in this way the company is rewarded by a high level of attendance at its meetings and everyone benefits from a greater shared understanding of local water quality issues.” • work with consumers during mains renewal work in the Epping area resulted in the company winning a ‘Class Winner’ award for customer communications. See page 35.

Actual

Actual 7

200

150

8 96/97 97/98 98/99

99/00 00/01 01/02 02/03 03/04 04/05 05/06

100 96/97 97/98 98/99 99/00 00/01 01/02

02/03 03/04

04/05 05/06

96/97 97/98 98/99 99/00 00/01 01/02

02/03 03/04 04/05 05/06

Our business continued

To plan for these effects, our companies’ Water Resources plans considered different climate scenarios, development patterns and demand conditions. As a consequence of this planning and effective management, the companies have not imposed hosepipe bans in recent years. Average demand for water in 2004/5 was approximately 5% lower than the previous year, reflecting a summer of average temperatures, after the previous year’s record-breaking summer. Three Valleys Water’s customers continue to exceed the industry average for per capita water consumption; Tendring Hundred Water’s customers continue to have the country’s lowest per capita water consumption rates. Using water more efficiently…actions

Water industry sustainability indicator 4

Figures from 2000/01 onwards are for the new Three Valleys Water company which merged with North Surrey Water in October 2000 Consistent with UK Government’s Sustainable Development indicator for domestic water consumption

Water efficiency measures help to bridge the potential gap between demand and supply. During the year the number of customers with metered supply increased. All three companies operate a number of repair, maintenance and water conservation programmes. Three Valleys Water introduced an on-line water audit during the year to enable customers to calculate how much water they use in the home , and how much they can save by making small changes to normal daily activities. It also invited customers to join a customer panel which provides the company with information to help predict future water use and identify trends. Folkestone & Dover Water participated during the year in a regional sponsorship initiative with a leading DIY chain to promote water saving to gardeners.

Veolia Water UK Corporate Responsibility Report 2005

for water scarcity status to enable it to introduce compulsory metering. It will aim to have 90% of its 170,000 customers metered by 2015.

Leakage During the year all three water companies met a Veolia Environnement network efficiency target set at 80%.

Drinking water quality During the year we provided drinking water to over 3.3 million people. In its report ‘Drinking Water in England 2004’, the Drinking Water Inspectorate (DWI) details the performance of water companies in delivering high quality drinking water. In addition, the new style report covers issues consumers raise with their water companies, and the expectations of health and local authorities. All three Veolia Water companies’ compliance with the drinking water standards in 2004 exceeded the industry average, with Folkestone & Dover Water and Tendring Hundred Water achieving mean zonal compliance of 100%. It should be remembered that UK water standards are among the highest in the world.

All three companies met leakage targets set by the regulator, Ofwat, with Three Valleys Water and Tendring Hundred Water achieving rates better than their targets. Three Valleys Water’s target for 2004/5 was increased as a result of revised base data. >>Having achieved consistent levels of leakage, they intend to continue to achieve these levels in 2005/6. Tendring Hundred Water continues to have the lowest level of leakage per property in the industry. Its performance is very close to the minimum achievable. Metering is an important demand management tool as surveys show that households fitted with a water meter use approximately 10-15% less than those without a meter. Its use is however limited due to current legal restrictions. All three companies continue to offer metering free of charge, installing over 23,370 in 2004/5. Sixty three per cent of all Tendring Hundred Water’s customers now have a meter, 43% of Folkestone & Dover Water’s and 26% of Three Valleys’. On average across the group, one in three customers now has a meter. As part of the targets to guarantee water supply security in a region that has half the average nationwide rainfall, Three Valleys Water will increase metering, aiming to have 44% of domestic properties across its region metered by 2010. Folkestone & Dover Water has applied

Consistent with the UK Government’s Sustainable Development Framework indicator for river quality

There were no water quality incidents at Folkestone & Dover Water or Tendring Hundred Water during the year that affected drinking water quality. Of the Three Valleys Water tests that did not comply, out of more than 196,000 tests carried out, none were considered harmful to consumers’ health. There were four incidents of a deterioration in drinking water quality, each of a short duration and the company took remedial action. Three Valleys Water was formally cautioned during the year under section 70 of the Water Industry Act for an incident that took place in February 2003. This involved a failure of equipment which resulted in discoloured water being put into supply to villages near Royston, Herts. The company reacted

Veolia Water UK Corporate Responsibility Report 2005

promptly and resolved the problem by flushing the system.

Treating water All water that enters the public water supply has to be disinfected. This is normally achieved through filtration and the use of chlorine or ultra violet light. The Veolia Water UK companies’ approach to water quality is based on the precautionary principle of applying controls wherever assessments indicate that a risk may be present. Twenty per cent of the water Three Valleys Water put into supply is now treated through membrane plant. Folkestone & Dover Water has the highest proportion of membrane treatment capacity compared with other water companies. Ultrafiltration and microfiltration membrane plants can reduce the quantities of chlorine required for disinfection, thereby reducing the environmental impact associated with the use of chlorine compounds. Another advantage is the significant reduction in water loss, chemical usage and solid waste produced in the treatment process. Membrane plants allow for washwater from the plant to be recycled to the head of the works instead of running to waste. During the year Three Valleys Water installed a membrane treatment plant at Mill End pumping station, near Rickmansworth, as part of work that will bring an extra 40 million litres of water a day back into supply. The need for ever more complex water treatment (such as ozonation, double stage filtration for pesticides etc, granular activated carbon adsorption, airstripping of volatile organic compounds, orthophosphate dosing

10-15%

Target >>All three water companies have a target to maintain their 5-star ratings for customer service.

Case Study EOS

£32K

households fitted with a water meter use approximately 10-15% less than those without a meter

Folkestone & Dover Water and Tendring Hundred Water have joined with four other water companies in the south-east to fund a charity that aims to help people reduce the burden of debt and meet future bills. The Eos Foundation offers financial assistance to reduce or clear arrears of domestic water charges.

At Three Valleys Water, a Customer Assistance Fund assisted 101 applicants in 2004/5 to the sum of £32,000

Our business continued

for lead, ultrafiltration for cryptosporidium etc) inevitably results in using more energy per unit of water produced. This additional energy use has in turn to be minimised. To counteract the increase in greenhouse gas emissions, however, we use energy generated from renewable sources. Chlorination Our companies use two methods to chlorinate water: chlorine gas (either generated on site or delivered in cylinders) or a sodium hypochlorite solution. Since 1995 they have monitored and greatly reduced their use of chlorine gas, because of the handling, storage, environmental, health and safety issues associated with chlorine gas, in favour of less hazardous sodium hypochlorite. During the year Three Valleys Water’s water treatment plant at Iver reduced its environmental and social impacts by ceasing to use chlorine gas.

Meets a VE commitment to increase R&D in order to be able to respond to environmental challenges 1

Water industry sustainability indicator for investment in research Water industry sustainability indicator for number of vulnerable customers

Research and development In the UK, Veolia Water’s companies invested over £0.68 million during the year in research projects devoted to specific company and 1 collective industry issues . One such project involved developing a method of analysis for acrylamide in water which has been validated by the Water Research Centre. This will help Three Valleys Water optimise its treatment process at Egham.

Emergencies Each company has procedures in place to provide appropriate responses to incidents, ranging from a major burst to a breakdown of IT systems and terrorist action. Drills are

Veolia Water UK Corporate Responsibility Report 2005

carried out regularly to test their effectiveness and communication/cooperation with external agencies and service providers.

In recognition of the fact that not all customers are able to install a meter if they would like one, Three Valleys Water and Tendring Hundred Water have developed an assessed tariff based on estimated consumption.

Customer service OFWAT, the water industry’s economic regulator, assesses companies' overall delivery of service to customers annually. In the 200405 Overall Performance Assessment report, Folkestone & Dover Water and Tendring Hundred Water achieved the highest scores of all the companies in England and Wales. >> All three companies achieved a maximum five-star rating for their performance on key customer service measures which include water pressure, unplanned interruptions, complaint handling, and telephone contact. They intend to maintain this performance. During the year, all three water companies introduced new customer information leaflets to accompany water bills. For customers who do not have English as a first language, information can be translated into 100 different languages. Special needs customers registered 2 on Three Valleys Water’s Safeguard Scheme benefit from additional services such as a password scheme for entering a customer’s property, priority deliveries of bottled water in the event of supply interruptions, and bills in large print and Braille. The water companies notify measured customers who may have a leak in their pipework (as identified by a high meter reading). They also offer free supply pipe repairs to domestic customers, plus a leakage allowance. If the pipe condition is too poor to mend, the customer is offered subsidised replacement.

Three Valleys Water was one of the first water companies to sign up to an agreement with Transco which promises a faster response to customers if water gets into their gas pipes. This was prompted following several incidents which led to customers’ losing their gas supplies for a number of days. The agreement, signed in 2004, sets out a procedure for prompt management of incidents and agreed actions to be taken.

rather than the actual measured bill. At Three Valleys Water, a Customer Assistance Fund assisted 101 applicants in 2004/5 to the sum of £32,000. The scheme provides customers in debt with a fresh start provided that they make regular payments for an agreed period (typically 6-12 months) beforehand.

Household debt

From Household Debt in the Water Industry, a Water UK Briefing Paper, February 2005

Affordability and household water debt are serious problems for the water industry and its paying customers. In 2002/03, companies calculated that about 3% of household charges (or £164m) were not recoverable. This is equivalent to the charges from 700,000 households. The cost of managing and financing this debt has an impact on all paying customers, working out at just under £10 for every paying customer. The problem is expected to worsen 5 in 2005/6 with increasing water charges . All three companies offer a comprehensive range of payment methods for those experiencing problems in paying their water bills. This is communicated by information leaflets which accompany all final and reminder bills. Customers can make payments local to their home, free of charge, and at intervals that suit their budget. Assistance is also available to vulnerable customers which involves capping their charges at the average household charge

Veolia Water UK Corporate Responsibility Report 2005

Case study VWIO’s solution for Onyx landfill site

Case Study Corus - a multi-utility contract

Onyx is a world leader in waste management, serving 270,000 industrial and commercial customers in 33 countries. Its main activities are collecting, treating and recycling solid and liquid waste for local authorities and industrial clients.

Corus Packaging Plus has engaged Veolia Water Industrial Outsourcing (VWIO) to manage the treatment of its waste water, its energy needs and waste disposal at the Trostre site in South Wales. Corus Packaging Plus is a leading supplier of high quality light gauge steels to the packaging markets across the world. The Trostre plant employs 1,200 staff and accounts for over a third of Corus Packaging Plus production with an output of 500,000 tonnes a year.

Onyx required a plant to treat leachate at its landfill site in Candles, near Telford. Leachate is any liquid that percolates through deposited waste and is emitted from or contained within a landfill. The new plant was needed to remove pesticides, ammonia and methane from the leachate before it was discharged to sewer.

Under the 10-year contract VWIO will optimise the existing effluent treatment plant; construct, operate and maintain a new boiler facility; and provide on-site waste management services. The multi-utility contract calls on the know-how, expertise and resources of three Veolia Environnement divisions: Veolia Water, Dalkia and Onyx. Improving the ways in which Corus manages its utility needs will bring significant cost savings to the Corus Group, allowing them to concentrate on their core business, as well as social and environmental benefits to the local area.

VWIO designed and installed a new leachate treatment plant, which it will operate and maintain for the next 15 years. The next phase of the development will involve harnessing the power from the gas generation to treat the leachate.

Our business continued

Industrial and commercial clients Veolia Water Industrial Outsourcing (VWIO) works in partnership with industry to provide customised, environmentally aware, costeffective water processing, recycling and wastewater management. The company operates ten contracts in the UK. VWIO’s objectives are to reduce clients’ costs and operational risk, to provide access to proven technology and specialist resources, and to ensure the highest environmental and social standards and best practice are achieved. VWIO’s range of services comprise: • Improving reliability and efficiency of existing equipment and networks • Optimising recycling and re-use • Operation and maintenance of existing facility over the long term • Design, build, ownership, operation and financing of new dedicated plant • Development of alternative water sources • Effective sludge management and product recovery • Assistance in meeting environmental objectives and targets • Delivering remediation solutions

Veolia Water UK Corporate Responsibility Report 2005

Three Valleys Water provides an emergency mains repair service to 12 industrial and commercial customers in the event of a burst or leak on their premises. For customers with older networks, this service is invaluable in keeping the volume of water lost to a minimum. The company’s Developer Services department works with property developers on the design, pricing and construction of water mains. This includes advice on how to help their customers to be water efficient. A good working relationship with developers is essential in view of the half million new homes due to be built in the south-east in the next few years.

Payments to suppliers The Group companies are aware of the need for timely payment for goods and services received. The Group has a policy to settle the terms of payment with suppliers when agreeing terms of business and to pay in accordance with contractual and other legal obligations. During 2004 the average time taken by Group companies to settle suppliers’ invoices was 36 days, compared with 44 days for 2003.

Benchmarking Each year the Veolia Water UK group benchmarks itself against peer companies in order to understand its performance in relation to ‘best in class’ companies and identify good and better practice to help improve performance.

All three companies visit their industrial and commercial customers regularly to offer advice on water consumption and conservation.

Business in the Community Corporate Responsibility Index 2004 We took part for the third year in Business in the Community’s Corporate Responsibility Index. The results were published in the Sunday Times as the ‘Top 100 Companies that Count’. Our score of 94% was the fifth highest, making us joint leading water company. Business in the Environment Index of Environmental Engagement 2004 In 2004 we took part for the 9th year in succession in the Business in the Environment Index, scoring 94%, an 8% improvement on our 2003 score, and above the average score of FTSE100 companies.

Relates to water industry sustainability indicator for responsible contracting

Veolia Water UK Corporate Responsibility Report 2005

Case Study Staff development

8.9

Folkestone & Dover Water’s practice of continually upgrading skills at all levels was rewarded during the year when it won two Learninvicta Awards. The Awards are designed to mark success in training and personal development.

Average number of days absent

Ethics Veolia Water’s parent group, Veolia Environnement, expects that the staff of its four divisions will behave professionally at all times. This expectation is embodied in our shared guiding principles: • respect for the law • honesty and integrity • social responsibility • risk management

• transparency of information and corporate governance, and • commitment to sustainable development.

At Veolia Water UK these principles are built into our policies, programmes and practices to ensure that we live the values. 1.

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

Meets VE commitments to develop employees’ skills, to encourage them to take responsibility and to promote corporate innovation; and to respect fundamental rights 1

Water industry sustainability indicator for employee turnover Water industry sustainability indicator for workforce diversity The 2003 Benchmarking Report into gender equality in the workplace was organised by Opportunity Now, a Business in the Community campaign

Workforce profile The social element of sustainable development concerns an organisation’s impacts on the social systems within which it operates. For our current and future employees, this translates to an objective 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. This policy is consistent with Veolia Environnement objectives to anticipate demo-graphic challenges and improve competency management, and to offer secure jobs. Net employment across the Veolia Water UK group during the year fell by 74. Average 1 turnover was 19.9%, up from 13.5% in 2004 . This increase was primarily due to an absence management programme that was implemented during the year (p.24). In line with other industries, turnover in call centres is relatively high when compared with the turnover of operational staff. Low turnover can lead to a lack of up-to-date skills and experience in the businesses. Diversity

workforce (as in 2003) and 27% of managers (29% in 2003). This compares with averages of 49% and 47% from over 200 private and public enterprises who took part in a benchmarking exercise of gender equality in the workplace.6 Employees registered as disabled make up 0.38% (0.36% in 2003). A review of the equal opportunities and recruitment policies during the year resulted in revised policies on dignity at work, conduct at work, managing absence (see below) and public interest disclosure. Company websites will be reviewed in 2005/6 to check that information is accessible to all users.

In anticipation of European legislation on age discrimination and to ensure a balance of experience and career progression, we measure the age profile of our workforce. The average age is 40.

Training and career development Veolia Environnement has adopted a number of objectives aimed at reducing staff turnover and absenteeism through offering secure jobs, developing high quality social protection, and offering job mobility.

Veolia Water UK Corporate Responsibility Report 2005

All VWUK companies have introduced the personal development system to provide a more structured approach to employee learning and career development.

based training package developed to deliver employee awareness and understanding of environmental and safety issues.

Employee consultation Veolia Environnement has objectives to ensure employees have representation at all levels and to monitor and evaluate employee satisfaction.

In 2004 , 2,497 Veolia Water UK employees received training (some employees were trained more than once), of whom 536 were managers. The total annual cost of training to the water companies (excluding salaries) as a percentage of total gross annual salary was 1.5% . During the year, in addition to vocational and professional courses, training was provided on revised equal opportunities policies, ‘Managing for Continued Success’, and ‘Learning to Manage’. Eighty six potential team leaders attended the latter course, reporting an increase in subsequent skill levels of 21%. The courses will be continued in 2005-6.

For the third year, we recorded the percentage of the workforce from ethnic minorities: 5%. This compares with estimates that the ethnic minority population in the South East region as a whole is 4%.

In line with a Veolia Environnement commitment to promote diversity and combat discrimination, we record the composition of our staff. Women make up 37% of the

As part of its balanced scorecard approach to performance measurement (see page 14), Three Valleys Water is committed to becoming the employer of choice, ie a company where people want to work. It seeks to achieve this by developing a working environment that attracts, retains and rewards talented people who live the company’s values.

Figures refer to the 2004 calendar year Relates to water industry sustainability indicator for investment in staff

Other courses planned for 2005-6 will focus on refresher programmes for managers on diversity at work, health and safety, work-related stress, and the disciplinary and grievance policy. In addition, each water company continues to train its new entrants on the company’s environmental policies and performance through sessions at the company induction programme. Folkestone & Dover Water staff regularly participate in environmental awareness and safety training as part of the company’s maintenance of the environmental management standard ISO14001. Veolia Water Industrial Outsourcing’s management system includes a computer-

Veolia Water UK Corporate Responsibility Report 2005

Veolia Water UK companies continue to work positively and progressively with trade unions. During the year Three Valleys Water agreed a two-year pay deal with the unions, enabling it to improve its budgeting. Findings from the employee survey in 2003, which invited staff to contribute ideas for the future of the company, were actioned during the year. As a result a Well Being initiative was introduced, along with a new training package and an employee sponsorship programme (p.25). Three Valleys Water launched an updated Performance Review system during the year for all staff, with personal objectives clearly linked to team, departmental and corporate values, objectives and goals.

Whistleblowing In line with UK good practice Three Valleys Water, Tendring Hundred Water and Veolia Water Partnership have put in place whistleblowing procedures. These aim to encourage an environment in which all employees are able to raise their concerns about acts of malpractice or misconduct within the companies, without fear of reprisal or victimisation. Folkestone & Dover Water intend to adopt a similar procedure in 2005/6.

Target >>A Veolia Environnment commitment to improve health and safety performance underpins a target for all Veolia Water UK companies to improve existing accident rates.

Accident incident rate* Annual number reportable incidents* per 1,000 employees Key

100

Folkestone & Dover Water Tendring Hundred Water

Three Valleys Water VWIO

60 VWP - No reported incidents

VW - No reported incidents

20 0 99/00

00/01 01/02

02/03 03/04

04/05

Note: Within the smaller water companies even one accident among a small number of employees will lead to an apparent large percentage increase.

In the workplace continued

Health & safety

Managing absence

Health and safety must play an important part in the everyday culture of our companies.

With the contracting out of operational services such as mains replacement etc over the last decade and the growth of call centres, the water industry has developed from a largely manual-based workforce to an officebased one. An office environment presents a different range of health issues, the most common being stress. These are linked to increased levels of staff absenteeism.

>>A Veolia Environnement commitment to 1 improve health and safety performance underpins a target for all Veolia Water UK companies to improve existing accident and incident rates. In addition from 2005 Ofwat, in conjunction with the Health & Safety Executive, requires water companies to report on health and safety management and performance and that of their core contractors. There were no fatalities in our water companies in 2004/5. Work days lost due to work accidents amounted to 238, compared with 451 in the previous year. In 2005/6 Three Valleys Water will monitor the health and safety performance of its contractors working on core operational activities.

Water industry sustainability indicator for occupational health and safety VE targets: to reduce frequency of accidents at work by 12% by 2006, and severity rate of accidents by 20% Water industry sustainability indicator for the working environment Contributes to Veolia Environnement target to reduce absenteeism by 30% by 2006

* ‘Reportable incidents’ are deaths, major injuries, accidents resulting in 3 days off work, diseases and dangerous occurrences [as defined by the Reportable Injuries, Deseases and Dangerous Occurrences Regulations 1995 (RIDDOR)].

During the year Folkestone & Dover Water and Tendring Hundred Water continued work on integrating their Health and Safety Management Systems into their respective Integrated Management Systems. Folkestone & Dover Water’s management team received IOSH-accredited training in Managing Safely or Directing Safely. Three Valleys Water were awarded a Gold Award for the eighth consecutive year by the Royal Society for the Prevention of Accidents in recognition of the low accident rate. The company is on target to meet the industry-wide initiative ‘Clearwater 2010’ target to reduce accidents by 30% by 2010.

Veolia Water UK Corporate Responsibility Report 2005

Case Study Well Being programme Three Valleys Water introduced a programme of initiatives to promote the awareness of Well Being topics, as having a healthy workforce who maintain a positive work/life balance is a key objective for the company. The sessions, ranging from antismoking to reflexology and giving blood, were well attended. The programme will continue in 2005/6 with a broader range of topics and with links to charities, eg water for health in conjunction with the charity WaterAid.

for Parents Policy which enables parents to be able to apply to work flexibly. New flexible working policies were introduced in 2004/5. The companies are also committed to reducing overtime.

Pension schemes The Veolia Water businesses are committed to offering, and encouraging employees to participate in a good quality occupational pension scheme .

Three Valleys Water addressed its increasing 2 2 during the levels of staff absenteeism year – an average of 10.3 days per employee in 2003/4 - by training line managers in absence management and making greater use of its Occupational Health Scheme. The average number of days absent in 2004/5 fell to 8.9 days. This improvement was counterbalanced by an increase in staff turnover. This should however stabilise and reduce in future years. Folkestone & Dover Water provided training in attendance management for line managers. Tendring Hundred Water continued to implement an Occupational Health Scheme under which non-office based staff received health surveillance checks. The company installed a fitness room during the year for use by all staff, with fitness assessments provided by a professional trainer.

Work/life balance Three Valleys Water and Veolia Water Partnership are committed to supporting employees who are working parents and understand the difficulties that can sometimes be associated with this. To support working parents in managing their working hours, the company has introduced a Flexible Working

Tendring Hundred Water’s in-house gym

They recognise the need for employees to make adequate provision for their retirement – as recently highlighted in the Turner Report. The water companies have provided occupational pensions for many decades. As a result, more than a generation of our workers have had financial provision for a more comfortable retirement.

Consistent with UK Government’s Sustainable Development indicator for pension provision

Veolia Water also recognises that that some of its employees do not wish to participate in employer-sponsored pension arrangements, and for those, it maintains a basic level of life assurance cover to provide some basic protection for the employees’ dependants in the unfortunate event of the employee’s death. In all, Veolia Water recognises that the employee market is fast changing and believes it has altered its pensions’ offering to meet the needs of both the long serving employees and the newer, often younger and shorter serving employees, who, nevertheless, provide a significant contribution to the businesses’ success.

In recognition of both (i) the significant sustainability issues on cost for Defined Benefit (DB) Schemes, and (ii) the changing needs of a more demographically diverse workforce, a review of pension options for new employees was carried out during the year. As a result, the Defined Benefit Schemes were closed to new joiners, and improvements made to the more flexible Defined Contributions scheme. This Scheme enables members to save at flexible levels and also to take their benefits at retirement in a manner best suited to each person’s own financial needs. The Pension Scheme Trustees will keep member investment options under the DC Scheme under review and will consider the changing needs and preferences of members when determining the available investment options.

Veolia Water UK Corporate Responsibility Report 2005

Case Study Tsunami relief

Case Study KitAid

With the aid of Oxfam, Three Valleys Water and Tendring Hundred Water sent over half a million chlorine water purification tablets to Indonesia, one of the areas affected by the Boxing Day tsunami. Each tablet can treat 50 litres of tainted water to make water that is fit to drink. On the east coast of Sri Lanka, Veolia Water Partnership’s senior hydrogeologist, Lucy Lytton, worked with a team from Veolia WaterForce, Veolia Water’s emergency humanitarian aid unit, to quickly re-establish water supplies. As salt water had penetrated most of the groundwater supply, little could be done to improve the quality of the groundwater before it happened naturally with the onset of the next monsoon, in late 2005. Veolia WaterForce therefore concentrated its efforts on treating non-saline surface water sources to enhance the emergency drinking water supply provided by the Sri Lankan government and various NGOs.

KitAid is a charity set up in 1998 by Three Valleys Water employee Derrick Williams, who was awarded an MBE in 2004 for his enthusiastic efforts for KitAid and WaterAid. The charity sends recycled football kits from professional football clubs to children and adults across Africa, India and other parts of the developing world. In 2004/5 around 2,500 shirts, kit and related items were sent to Ghana, South Africa, Madagascar, the Gambia and eastern Europe. The company aims to double this number in 2005/6.

Target >>Veolia Water UK companies have an ongoing target to develop programmes to support education. Surrey cricketer James Benning hands over cricket kit for the KitAid appeal

In the community Our goal… to work with and support communities, charities and government towards improving the quality of life . 1

Working with the community

Employee volunteering

Three Valleys Water

Tendring Hundred Water

All Veolia Water UK companies give extensive support to the communities in which they operate. All the water companies work with the police, local authorities, crime prevention groups and the local media to raise awareness 2 of doorstep crime .

Veolia Water UK companies actively encourage employees to become involved in local community initiatives, in the belief that there are benefits for both the community and employees. In this way, they contribute to a Veolia Environnement objective to foster social cohesion and sponsor good causes.

At Three Valleys Water fundraising activities for the charity are co-ordinated by a WaterAid Committee. The company again matched the amount raised by employees on sponsored monthly dress down days. Other fundraising events included the annual Rickmansworth Road Run which is organised by company employees, now in its 21st year, and the Samaritan’s Purse Christmas Shoebox Appeal. Staff also gave up their free time to man the company telephones for the BBC’s Children In Need appeal.

Tendring Hundred Water raised money for WaterAid through its annual golf day, mobile phone recycling and a charity mountain challenge.

Charitable donations Charitable donations made by our companies 8 in 2004 totalled £71,000, together with £86,000 of sponsorship . Three Valleys Water and Folkestone & Dover Water match sums raised for charity by employees. Sponsorship Three Valleys Water continued its support of Groundwork Hertfordshire and Groundwork Thames Valley. These are two of 50 Trusts in England, Wales and Northern Ireland, which work with partners in deprived areas to improve the quality of the local environment, the lives of local people and the profitability of local businesses. Meets a VE commitment to participate in the social development of communities where our facilities are based 1

The Veolia Water companies’ social and community initiatives are consistent with the UK Government’s Sustainable Development Framework indicator for active community participation

Consistent with UK Government’s Sustainable Development indicator for fear of crime For calendar year ended 31 December 2004

Three Valleys Water also provided funding for a number of charity and community activities during the year, including the British Disabled Water Ski Association, Earthworks, and the Rickmansworth Canal Environment and Community Festival.

All three water companies 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.

During the year Three Valleys Water launched a new sponsorship scheme, whereby each month each staff member can nominate a community project with which they have personal involvement to receive £200.

Folkestone & Dover Water Folkestone & Dover Water’s fundraising events for WaterAid included a sponsored cricket tournament, recycling mobile phones and printer cartridges, and subscriptions to the payroll lottery. The company is a partner organisation to Partners for Water & Sanitation, a UK tri-sector partnership initiative (Government, civil society and private sector organisations) to assist developing countries, initially from Africa, to provide clean water and adequate sanitation.

Veolia Water UK sponsored the 2004 FrancoBritish School Partnership Prize which aims to promote links between French and British schools by addressing environmental issues.

Water industry sustainability indicator for investment in communities

Veolia Water UK Corporate Responsibility Report 2005

105,000 Since its opening in 1998 more than 105,000 children and adults have either visited the Centre or used its resources to deliver the National Curriculum.

In the community continued

Winners of the Lunchbox Challenge

Three Valleys Water’s purpose built Environment & Education centre at Clay Lane

Schools programme >>Veolia Water UK companies have an ongoing target to develop programmes to support education. Folkestone & Dover Water worked with the local community during the year to promote environmental education. The company made five presentations during the year to local plumbing students to improve skills and ensure compliance with water regulations. Tendring Hundred Water’s community programme focussed on upgrading its Environment Centre to incorporate a ‘Bug Room’, continuing to run the Maths Trail for schoolchildren at Horsley Cross pumping station, and sponsorship of local cultural activities.

Veolia Water UK plc took part for the third year in a scheme aimed at raising levels of achievement in schools serving the most disadvantaged pupils by mobilising targeted support from London employers. VW UK plc employees helped children with their reading and maths at a local primary school situated on the edge of Westminster’s largest council estate. The school has a high proportion of pupils for whom English is an additional language, putting them at risk of social exclusion. Feedback from the school shows measurable progress in the children’s abilities and behaviour. Employees report they have learnt new skills, have a better understanding of the local community and its needs and experience personal satisfaction. A similar programme involving a local school will be launched for VWP employees in Bushey in 2005/6.

Three Valleys Water Environment & Education Centre Three Valleys Water’s purpose-built Environment & Education Centre at Clay Lane, Bushey, was set up in 1998 to educate the next generation of customers in the value of water as a precious resource. The Centre has designed tailored education programmes to meet primary schools’ curriculum needs and show how environmental and especially water-based activities can be integrated into all lessons. They can be of value to all members of the school – from headteachers and caretakers to parents and pupils. With the single classroom fully booked for most of the year the education team increasingly makes visits to schools. This year, more than 20,000 children and adults were able to participate in some of the water-based activities at more than 120 different schools. Since its opening in 1998 more than 105,000 children and adults have either visited the Centre or used its resources to deliver the National Curriculum. The day-to-day working of the Centre contributes also to research into the use of water-saving technologies, including rainwater collection and dual flush toilets. During the year plans were drawn up for a partnership project with Hastoe Housing Association to produce a joint water efficient garden in 2006/7 to demonstrate good practice throughout Hastoe Housing UK. The Centre’s education team involved schoolchildren in testing local river water quality as part of World Water Monitoring Day 2004. Results from the day were sent to a central database, run by America’s Clean Water Foundation, who will produce a report of results from around the world. The Centre achieved Eco Centre status in 2002, an education award for environmentally friendly organisations. In 2004 it won a fourth consecutive Green Apple Award for its 'Lunchbox Challenge', aimed at reducing the amount of waste generated from children’s packed lunches.

Veolia Water UK Corporate Responsibility Report 2005

The principal environmental costs of the water business To deliver 1 cubic metre = 1000 litres (1 tonne) of water to a customer:

1998-99

2004-05

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

0.77

0.86

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

1.08

- (of which) kg landfilled

0.8

0.37

- (of which) kg recycled

0.21

0.71

kg of carbon dioxide emitted into the air

0.35

0.39

litres of fuel used in fleet vehicles

0.005

0.003

23% Water consumption in our Group company offices has been reduced by 23% since 1999

100% Our water companies reached their target to secure 100% of their energy from sustainable sources

Folkstone and Dover’s Chairman John Bonomy and Environment Agency Manager Binny Buckley sign the agreement, watched by Dover MP Gwyn Prosser

In the environment Our 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 Environment Agency issued no caution letters or enforcement notices to Veolia Water companies during the year. There were no prosecutions for pollution.

Main environmental costs of water Our environmental data measurement systems are maturing and the confidence we can place in the data is improving each year. For the sixth year we present a summary of the main resources used, the key discharges, waste products and releases to the environment for each cubic metre of water we deliver to our customers. Whilst this table is not a complete picture of the resources used, we believe it indicates the principal impacts. The increases in energy use and CO2 emissions are due to the requirements to treat water using increasingly complex processes. The following sections examine in more detail action being taken to reduce environmental impact under each of the key components.

Meets a VE commitment to protect the environment, conserve resources and reduce pollution The Veolia Water companies’ social and community initiatives are consistent with the UK Government’s Sustainable Development Framework indicator for active community participation Water industry sustainability indicator for river water quality

Catchment protection The water resources balance is not just threatened by rising demand, droughts and climate change. If raw waters become polluted, they may become temporarily or permanently unavailable, reducing the amount of water available for use. Protecting the quality of raw waters, therefore, is a key part of sustainable water resources management. Our companies do not act alone in this. The Environment Agency has a role in monitoring and protecting the catchment and prosecuting those responsible for pollution offences. Veolia Water Partnership continued to manage extensive catchment protection programmes

Veolia Water UK Corporate Responsibility Report 2005

on behalf of the water companies. Three Valleys Water also actively supported research programmes into groundwater quality trends.

Owing to longstanding concerns about the low flow in the River Dour in the Folkestone & Dover area, Folkestone & Dover Water has been active in researching and piloting possible improvements. The company has now signed a formal memorandum of understanding with the Environment Agency on how the water flow in the River Dour should be managed, which involves augmenting the low flows and reducing abstraction volumes. The first stage is due to be implemented in September 2005.

In our offices We have an ongoing target to reduce water consumption at our offices. Overall, the group companies have achieved a level of 33 litres per employee which represents a reduction of 23% on 43 litres achieved in 1999/2000.

Energy consumption Greenhouse gases

Relates to the UK Government’s Sustainable Development indicator for water resource use

Relates to the UK Government’s Sustainable Development Framework indicator for greenhouse gas emissions Water industry sustainability indicators on total energy use and percentage from renewable sources

7 6 5 4 00/01 01/02 02/03 03/04 04/05 Key Folkestone & Dover Water Tendring Hundred Water Three Valleys Water

In line with a Veolia Environnement objective to control industrial water consumption, the companies again recorded the amount of water taken from the environment relative 1 to water put into supply . At Three Valleys Water water lost during transport to and at treatment works amounted to 2.3% of the total abstracted.

Protecting rivers

Veolia Water Partnership has maintained its ongoing dialogue with the Environment Agency. This year Veolia Water Partnership provided information on groundwater levels, operation of low flow schemes, water quality, volumes abstracted. It also helped the Environment Agency to develop water resources models.

Energy consumption in water supply: Kilowatt hours/megalitre (net of imports)/ metre water pumped

Water losses

While single point pollution is closely monitored by regulators, an important issue for future catchment protection is the risk of diffuse pollution from a number of sources such as farmland fertilisers, nitrates and phosphates. We endeavour to control this through education, managing our landholdings efficiently and involvement in industry-wide initiatives.

Society's demand for water has to be met efficiently and economically; this is the function of the water companies, and they have statutory duties to that effect. This must be done at the same time as ensuring that there is enough water in the environment to maintain good quality rivers, lakes and wetlands. Following an investigation into low flows at the River Brett, Tendring Hundred Water constructed a pipeline during the year from a nearby borehole which will enable it to augment low flows. Three Valleys Water continued to operate similar schemes on a number of rivers in their area at risk from low flows, pumping 115 Megalitres of water during the year.

Case Study River Dour Low Flow

The annual carbon dioxide emissions associated with all our energy requirements, for water supply, offices and transport, were 111,500 tonnes, which is a 24% fall, or 35,200 tonnes reduction since 1995/96. This fall is associated with changes in the mix of fuels used to generate electricity supplied through 2 the public electricity network . Energy consumption in the supply of water Pumping water 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. Energy represents therefore a major cost to our businesses (coming second only to staff costs) and to the environment. As well as a being a Veolia Environnement target, it is in the companies’ interest to make every effort to economise energy use, especially as they are

Veolia Water UK Corporate Responsibility Report 2005

subject to the full rigour of the Climate Change Levy. Despite our best efforts however to use energy efficiently, usage is dependent on climatic conditions, customer demand and operational requirements, including regulatory requirements. For these reasons we have to date not been able to define a realistic quantitative target for reduction of carbon dioxide emissions. We do, however, seek to ensure that we maximise supply of electricity from renewable sources. During the year the water companies were successful in meeting a target to secure all their electricity from renewable sources which represented a 2% saving on their Climate Change Levy costs. Energy consumption per unit of water put into supply has increased over the past five years. This can be attributed to the use of different water sources (water lying deeper in an aquifer requires more energy to pump it to the surface), and to an increased number of membrane plants, as a result of the need to treat to ever higher standards. The main effort to reduce energy consumption will continue to be focused on water treatment and pumping because this accounts for 98% of electricity used by the companies. To increase the energy efficiency of pump motors, all three water companies have a phased inspection and replacement programme and install variable speed pumps where possible. At Tendring Hundred Water the Carbon Trust, an independent company set up by Government to help UK business and the public sector to cut carbon emissions, carried out an energy assessment of the

DRAFT 2 20.02.06 Target >>All three companies have an ongoing target to maintain improvements in fuel consumption.

Fuel consumption by fleet vehicles

Generation and Consumption of Aggregate Material in Streetworks

Annual consumption (litres) per property connected

Waste diverted from landfill (%)

1.0

54% of excavated material was recycled by our companies rather than their being sent to landfill in 2004-2005

Folkestone & Dover Water

Tendring Hundred Water

Folkestone & Dover Water

Excavated & landfilled

Tendring Hundred Water

Excavated & reused

Key

1.2

Three Valleys Water

100

0.8 0.6 0.4 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05

0 99/00

In the environment continued

We also measure our consumption in offices and seek ways to reduce energy use where cost-effective to do so. At Folkestone & Dover Water, a rolling energy review identifies energy savings and promotes best practice in energy reduction. Despite a 15% increase in staff numbers at the company during the year there was no impact on electricity use, which was maintained at the previous year’s level. During the year, the Green Teams at Three Valleys Water and VWP, made up of volunteer staff, continued to encourage colleagues to reduce waste and water and energy usage (see above).

Transport and travel Fuel consumption Veolia Environnement has an objective to promote the use of cleaner fuels and 1 vehicles .

Consistent with the UK Government’s Sustainable Development indicators for road transport, and air quality and health Water industry sustainability indicator on management of materials from excavations (diversion from landfill)

Moving away from disposal of waste towards waste reduction, reuse, recycling and recovery is consistent with the UK Government’s Sustainable Development Framework Indicators for waste and resource use LPG produces between 30 and 90% less carbon monoxide and 50% fewer pollutants than petrol

00/01

01/02

02/03

03/04

04/05

0 99/00

00/01

01/02

02/03

03/04

04/05

99/00

00/01

01/02

02/03

03/04

04/05

Note: Waste figures include some estimation.

company’s pumping programme during the year. It concluded that the company’s operations were highly efficient.

Three Valleys Water

Both Three Valleys Water and Folkestone & Dover Water can demonstrate a general downward trend in fuel consumption per property connected since 1995/96. In the case of Three Valleys Water, the transfer of work to contractors is thought to be a contributing factor. At Folkestone & Dover Water, the reduction has been achieved by the use of route planning technology in a number of its vehicles and raising staff awareness of the need to reduce fuel use. >>All three companies have an ongoing target to maintain improvements in fuel consumption.

>>All Veolia Water UK companies have an ongoing target to reduce waste going to landfill.

Three Valleys Water has a programme of active maintenance and routine replacement of fleet vehicles with vehicles which meet the latest emission levels.

VWP’s contracts to maintain the distribution network include provisions to encourage the use of trenchless technology and the reuse of excavated material.

Following on its policy decision in 2001 to replace all vehicles on renewal with those powered by LPG, Tendring Hundred Water now has 10 vehicles running on dual fuel. Ultra-low sulphur diesel and LPG (liquefied 9 petroleum gas) make up approximately 95% of the fuel consumed.

Waste production and disposal in water treatment

Travelling at work… All the water companies and Veolia Water Partnership have introduced tele- and videoconferencing in order to reduce the amount of time and energy spent in travelling to inter-company meetings. Three Valleys Water estimate this saved 224,300 km travel in the year; Folkestone & Dover Water saved 5,400 km, which included car sharing, and Tendring Hundred Water 2,125 km.

Waste Aggregate use and recycling in streetworks We are able to monitor the use of aggregates by measuring our own purchases and increasingly by contractually obliging and encouraging our streetworks contractors to record the amounts they use, re-cycle and dispose of. In 2004-05, we estimate 54% or 128,660 tonnesof excavated material were recycled by our companies and contractors, 2 rather than their being sent to landfill , compared to 59,000 tonnes last year. This increase is mainly due to the use of more accurate calculation methods. The amount of infill material purchased was 118,000 tonnes.

Tendring Hundred Water recycles paper, cardboard, mobile phones and printer cartridges. All paper purchased for office use comes from a sustainable source.

Three Valleys Water’s Green Team ‘Skip Dip’, part of their campaign to reduce waste

Water treatment wastes are variable, depending predominantly on the quality of raw waters and treatment processes that are used. They may contain river solids, filtrates or sludges from treatment. All the treatment wastes generated during the year (10,570 tonnes) were re-used as a soil conditioner on agricultural land . Office waste

Consistent with VE objective to increase the amount of waste recycled to agricultural use Water industry sustainability indicator for sludge management (diversion from landfill) Consistent with UK Government’s Sustainable Development indicators for domestic water consumption, household energy use and household waste

Across the group we used 31 tonnes of photocopying paper in main offices, and 128 tonnes of all other paper. This was mainly used for billing and marketing purposes. Of this amount, 63% came from a sustainable source.

Case Study World Environment Day More than 200 staff at Three Valleys Water signed up to an environmental pledge to mark World Environment Day on 5 June 2004. They were joined by Melanie Johnson, MP for Welwyn Hatfield and Minister for Public Health. Employees committed to making small changes to their daily lives for a year in order to help the environment . The simple actions included fitting energy efficient light bulbs, taking showers instead of baths, and turning the tap off when brushing teeth.

Volunteers from Three Valleys Water and VWP formed a ‘Green Team’ in 2003 in order to reduce the amount of waste generated by the two companies. Actions taken during the report year include 75% of plastic cups recycled, 5.3 tonnes of paper collected for recycling and 326 toner cartridges returned for reuse. Folkestone & Dover Water’s purchasing policy maximises the purchase of materials that can be recycled. The company recycles stationery, plastic piping, vending machine cups, mobile phones and printer cartridges.

MP Melanie Johnson and David Alexander sign the pledge 32

Veolia Water UK Corporate Responsibility Report 2005

Priority Habitats

Priority Species Folkestone & Dover Water

Dormouse, Silver-spotted Skipper, Chalkhill Blue, Adonis Blue, Great Crested Newt

Folkestone & Dover Water

Tendring Hundred Water

Water Vole, Dormouse, Stag Beetle, Great Crested Newt, Skylark, Song Thrush, Pipistrelle Bat

Three Valleys Water

Barn Owl, Reed Bunting, Grasshopper Warbler, Water Vole, Otter, Pipistrelle Bat, Bittern, Great Crested Newt, White Clawed Crayfish, Black Throated Grebe

Case Study Horsell Common

Chalk grassland, woodlands, Dungeness shingle

Some projects that our water companies undertake may at first sight appear to be destroying habitats rather than enhancing them. The companies therefore seek to involve local stakeholders so that all parties can understand the constraints and issues that have to be managed as part of the project.

Chalk rivers, grazing marsh, fen, lowland calcareous grassland, lowland dry acidic grassland, lowland heathland, reedbeds

At Horsell Common, near Woking, Three Valleys Water had to lay a new water main across a stretch of land that had become overgrown with mature trees. The company

In the environment continued

Respecting our surroundings Major capital schemes are planned and managed on behalf of the four water companies by Veolia Water Partnership. Each scheme is carefully designed and planned from the outset, with an objective of minimising disturbance to local residents and to the 1 environment . This is consistent with Veolia Environnement’s objective to curb local nuisance by enhancing quality of life and ensuring installations are integrated within the local landscape.

Biodiversity Our policy is to give particular priority to projects and activities that foster species and habitats which are the subject of Biodiversity Action Plans (see glossary) and are found on 2 our own and adjacent land . The tables show a selection of species and habitats that we are helping in this way.

Consistent with Veolia Environnement’s objective to curb local nuisance by enhancing quality of life and ensuring installations are integrated within the local landscape 1

Consistent with UK Government’s Sustainable Development indicator for local environment quality

Relates to the UK Government’s Sustainable Development indicator for biodiversity conservation Consistent with UK Government Sustainable Development Framework indicator for bird populations

Three Valleys Water and VWP continued to review ways of assessing the biodiversity of company landholdings during the year. Funding has been secured for surveys which will start in 2005-6. >>A simple methodology to score the biodiversity of sites and identify potential enhancements will be trialled at a selection of sites. Management of our landholdings The companies have for the fifth year recorded the amount of land owned which has a statutory designation, eg SSSI, SPA, SAC, including ancient woodlands and sites of high wildlife value. They have also recorded the

Veolia Water UK Corporate Responsibility Report 2005

percentage of this land which is subject to a management plan. This is to ensure efficient management of our landholdings.

Prior consultation with the interested parties meant there were no delays to the work and an enhanced habitat was created.

Case Study Replacing water mains in Epping, with minimum disruption The communications campaign deployed by Three Valleys Water and VWP during mains replacement work in the Epping area in 2004 received an Award of Excellence in the 2005 Communicators in Business Awards (British Association of Communicators in Business Communication Strategy). The judges commended the company for its ‘straightforward, honest communication’.

Folkestone & Dover Water continued to be a partner in the White Cliffs Countryside Project which works to enhance and protect the countryside in south east Kent. The company also supports Water for Wildlife, a Water UK and the Wildlife Trust project working to ensure wetlands habitats are protected for the future.

The £19m investment programme to replace water mains and improve water quality was scheduled to take place over a number of months in 2004, involving major disruption to the water system and the road network in Epping, Essex.

During the year Tendring Hundred Water committed to a three-year sponsorship of the Essex Biodiversity project, a partnership of over 40 local organisations. In return the project will look at ways of assisting the company with its biodiversity programme. The company continued to promote conservation through visits to schools and receiving schoolchildren at its nature area in Manningtree. The long-standing partnership between Three Valleys Water, Friends of Stockers Lake and Herts and Middlesex Wildlife Trust is an excellent example of business and the community working together. The partnership has succeeded in providing an outstanding conservation site at Stockers Lake to help 3 maintain the wetland bird population . Another partnership between Three Valleys Water, Groundwork Thames Valley and English Nature continued its scrub clearing work during the year at Wraysbury Site of Special Scientific Interest (SSSI), providing a range of habitats for wildlife.

worked with the local conservator, landowners and other interested parties to agree the site’s clearance, creating a new habitat and improving access. Materials generated from clearing the pathway were used to create natural habitat woodpiles, which now provide habitats for a variety of insects. Left-over timber was gifted to Horsell Common Preservation Society to enable them to reinvest in the area. Finally, a public footpath was reinstated across the common using an environmentally friendly stone.

Three Valleys Water and Veolia Water Partnership worked with contractors to design an awareness campaign to keep all affected stakeholders informed about the potential disturbance. This involved working with: • highway and local authorities, and business groups to ensure that any roadwork was undertaken at the same time as other utilities. • customer groups to keep local residents and businesses informed of progress. • schools in the affected area to raise awareness of the reasons for the work and resulting benefits. The curriculum-linked activities included information about the various pipereplacing processes, as well as the importance of using water wisely. As a result of this careful planning and continual communication with various groups, the project was completed on time and with minimal disruption.

Further information Do you want more information about our business and biodiversity? Each water company prepares Conservation, Access and Recreation reports which describe policies, plans and performance relating to conservation, access and recreation within their supply areas. These are included in the annual Corporate Responsibility reports which give more detail on matters discussed in this Group report. Please see page 40 for details.

Veolia Water UK Corporate Responsibility Report 2005

Verification statement Introduction Det Norske Veritas (DNV) has been engaged by Veolia Water UK for the purpose of providing assurance on the environmental and social indicators prepared by Veolia Water UK covering the period April 2004 – March 2005 in its Corporate Responsibility Report. DNV’s terms of reference were to assess the appropriateness and accuracy of the data, claims and commitments made by Veolia Water UK against each of the indicators and to ensure that the information provided is representative. Process This is the fifth year that DNV has verified Veolia Water UK’s environmental and social indicators on a site-level basis. The verification process involved: 1.Conducting visits to the Veolia Water Partnership and to each of the water companies presented in the report. 2.Reviewing each company’s environmental and social indicators and the accurate transfer of this data to the Veolia Water Corporate Responsibility Report 2004-05. Findings DNV commends Veolia Water UK for the progress it continues to make with respect to accuracy and completeness of data reported and the robustness of reporting mechanisms used against each of the indicators. To build on Veolia Water UK’s development of good practice, a number of recommendations to strengthen its environmental and social indicators as well as the reporting process are suggested: • DNV recognises the need to streamline the data gathering process at each of the sites. In

Veolia Water UK Corporate Responsibility Report 2005

Glossary order to enhance the traceability and transparency of reported data, however, the effectiveness of audit trails and the availability of supporting evidence could be improved. • DNV notes that Veolia Water UK continues to positively engage with its key stakeholder groups. DNV considers that this could be enhanced further by defining better how stakeholder dialogue is built into the decision-making process. • Solid waste generation is one of the more significant environmental impacts of Veolia Water UK’s activities. Progress has been made in gathering waste data from contractors. However, further improvements could be made to enhance the reliability of the data reported and improve the efficiency of the reporting mechanism between waste contractors and the constituent companies.

Abstraction licence The authorisation granted by the Environment Agency to allow the removal of water from a source of supply

Conclusion

Business in the Environment An organisation set up in 1989 as an initiative of Business in the Community. It promotes practical steps that will support the UK’s progress towards understanding and applying the principles of sustainable development through action and partnership between business and its stakeholders. It has developed the Index of Corporate Environmental Engagement, which gauges how businesses manage environmental issues

Overall, it is DNV’s opinion that the information reported against each of the environmental and social indicators at the constituent company / site-level provides a credible and fair reflection of the way Veolia Water UK has addressed and managed these indicators during 2004-05.

Aquifer A porous water-bearing underground formation of permeable rock, sand or gravel capable of yielding significant quantities of water Business in the Community Business in the Community is a business-led charity comprising over 700 companies. Its purpose is to inspire, challenge, engage and support business in continually improving its positive impact on society. In 2002 it developed the Corporate Responsibility Index, a voluntary benchmark of responsible business practice

Biodiversity The variety of life forms we see around us. Encompasses the whole range of mammals, birds, reptiles, amphibians, fish, insects and other invertebrates, plants, fungi and micro-organisms such as protists, bacteria and viruses Biodiversity Action Plans Plans which set out proposals and targets for the conservation of priority species and priority habitats identified under the UK's National Biodiversity Action Plan Carbon dioxide The most important of the greenhouse gases (see below). Carbon dioxide is produced when fuels are consumed (eg to generate electricity or to power a vehicle) Catchment protection activities Actions to reduce the risk that water from a catchment will be degraded (in quality or quantity) as a result of land-use change, pollution, etc Cryptosporidium A microscopic protozoan parasite which can infect humans and may cause gastro-enteritis

Demand management Controlling or influencing the amount of water needed to meet the requirements of society. Demand management measures are hugely varied and can include controlling leakage, promoting the use of water-efficient appliances, charging for water on a measured basis ("metering"), encouraging waterefficient gardening techniques and promoting water recycling Distribution input Average daily flow from water treatment works into the water company’s distribution system. Also known as “water put into supply” Distribution losses The water loss from that part of the distribution system which is the responsibility of the water company. It is the difference between distribution input and water delivered (after allowing for operational uses such as flushing of mains following repair work) Drinking Water Inspectorate (DWI) A body formed by Government in 1990 which monitors water companies’ compliance with the Drinking Water Standards Drinking Water Standards The legal requirements governing the quality and wholesomeness of drinking water

Dr. Eric Pape Vice President, DNV Consulting, London December 2005

Veolia Water UK Corporate Responsibility Report 2005

Glossary continued

Environment Agency A non-departmental public body with major responsibilities for the management and regulation of the water environment and for the control of industrial pollution and wastes Greenhouse gases Gases which, when present in the atmosphere, trap warmth from the sun and maintain the temperature of the earth Groundwater Water held in water-bearing rocks, in pores and fissures underground Headroom This is the difference between the amount of water a company has available for supply (‘water available for use’) under certain conditions, and the volume of water it is required to put into its network (‘distribution input’) under the same conditions. Kilowatt-hour (kWh) A unit of electricity. One Kilowatt-hour is the same as 1000 watts of electricity used for one hour and is, for example, the amount of electricity used by a typical single bar electric fire in one hour

Kilowatt-hours/megalitre (net of imports)/metre head pumped A measure of the amount of energy used to treat and distribute water put into supply after allowing for water that is imported from other companies. It is a useful measure for comparing year-on-year performance and performance between different companies because it takes into account factors such as variation in gradients within the supply area and the depth of the water table Landfill The process of disposing of rubbish by placing it in the ground, either in specially-designed excavations or in old mineral workings that are adapted for the purpose Low-flow rivers Rivers which are identified by the Environment Agency as “having unacceptably low flows caused by authorised abstraction” Megalitres/day (Ml/d) Megalitres (1 million litres) per day. The usual method of measuring the consumption or the flow of water Meter penetration The installation of meters to measure the consumption of water

Veolia Water UK Corporate Responsibility Report 2005

Ofwat Office of Water Services. A body established by Parliament with legal duties to ensure that water and sewerage companies can carry out their functions, to protect customers, to promote efficiency and economy, to facilitate competition, and to further environmental conservation and enhancement. Priority species Species which are of the highest priority for conservation action and for which a Biodiversity Action Plan (see above) is in place Public electricity supply Electricity obtained from the public distribution network which includes the “National Grid” and local networks. The amount of carbon dioxide associated with electricity obtained from the public supply depends on the mix of fuels used by those who generate electricity to provide the supply. In recent years, the mix has shifted away from fuels which produce the highest amounts of carbon dioxide (such as coal) towards those (such as gas) which produce less carbon dioxide per unit of electricity generated

Security of supply index This index is designed to give information on a water company’s ability to supply customers in dry years without making demand restrictions such as hosepipe bans. Site of Special Scientific Interest (SSSI) An area of land designated under the Wildlife and Countryside Act 1981 as of special interest because of its flora, fauna, or geological or physiographical features Streetworks Work necessary to repair, renew or otherwise improve the distribution system which takes place on or near the public highway Supply pipe The length of service pipe from the boundary of the property to the curtilage of the building; this part of the service pipe is the responsibility of the householder Surface water Water which flows or is stored on the ground surface Sustainable development Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

Tonnes Metric measure of weight; equivalent to 0.98 tons Total leakage The total amount of water lost from the distribution system including "distribution losses" (see above) and losses from the customers’ part of the distribution system Treatment wastes Waste materials produced as a result of treating raw water to ensure that it is safe to drink and complies with the Drinking Water Standards (see above). Examples include coagulant sludges, sludges from iron removal plant and river silt Water available for use Reliable yield of water resources based on the quantity or yield of water that can be supplied continuously from developed resources. Calculated using guidelines issued by the Environment Agency; takes account of the characteristics of each source and its ability to support abstraction under drought conditions without detriment to the needs of other water users or the environment Water delivered Water delivered to the customer at the limit of the Water Company’s responsibility. (Water delivered will comprise water used by the customer, water lost due to internal plumbing losses and supply pipe losses)

Veolia Water UK Corporate Responsibility Report 2005

Invitation to comment We would like to hear from anyone who has comments to make on our environmental, social and economic performance. Please contact: Corporate Responsibility Services Veolia Water UK plc 37-41 Old Queen Street London SW1H 9JA Tel: 020-7393 2700 Fax: 020-7393 2805 E-mail: info@veoliawater.com or comment online at www.veoliawater.com

Three Valleys Water PLC

Folkestone & Dover Water Services Ltd

Tendring Hundred Water Services Ltd

Veolia Water Partnership

Veolia Water Industrial Outsourcing Ltd

PO Box 48, Bishop's Rise, Hatfield Herts AL10 9HL

The Cherry Garden Cherry Garden Lane Folkestone CT19 4QB

Mill Hill, Mistley Manningtree, Essex CO11 2AZ

Blackwell House, 1 Three Valleys Way, Bushey, Herts WD2 2QD

Blackwell House, 1 Three Valleys Way, Bushey Herts WD2 2QD

Supply area

3738 km2

420 km2

352 km2

N/A

Properties connected

1,241,041

73,490

70,920

N/A

Number of people supplied

3,039,020

158,340

150,250

N/A

Water put into supply

877 Ml/day

46.3 Ml/day

30.1 Ml/day

N/A

Percentage from groundwater/ surface water resources

59%/41%

98%/2%

82%/18%

N/A

Length of main

14,352 km

1,085 km

908 km

N/A

Employees

913

161

Turnover

£174.5 m

£14.2 m

£13.6 m

£13.8 m

N/A

£200.7

Website

www.3valleys.co.uk

www.fdws.co.uk

www.thws.co.uk

www.vwio.com

www.veoliawater.co.uk

Veolia Water UK Corporate Responsibility Report 2005

Veolia Water UK PLC

37-41 Old Queen St London SW1H 9JA

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Veolia Water UK plc 37-41 Old Queen Street, London SW1H 9JA