Corporate responsibility review

Managing our business impact

Our society is resolved to reduce levels of carbon in the atmosphere and to secure energy supplies for the future. Centrica can help achieve these goals and is keenly aware of its responsibilities.

Mary Francis CBE,
Senior Independent Director and Chair of the Corporate Responsibility Committee

At Centrica, we believe that a business must be alert to the impact it has on the society and the physical environment in which it works and that it should do what it can to contribute to the health and sustainability of both. That is what we mean by corporate responsibility.

We believe that being a responsible business is fundamental to our long-term success and contributes to a healthy business environment. It is essential to maintaining our reputation with customers, investors, regulators and other external stakeholders – because it reflects the principles which they value. For the same reason, it enables us to recruit and retain the most talented and capable people. Consequently, we set ourselves high standards in all areas of responsible behaviour, including business integrity, environmental stewardship, fairness to customers, employment and community support.

Even in a year in which all businesses were preoccupied with short-term financial and economic concerns, we held true to these principles. In particular we continued to develop and expand our workforce to install the low carbon technologies of the future, including solar panels and microCHP units, and to advise our customers on using energy more efficiently. Leadership in these services will position Centrica both to contribute to and benefit from, the progressive transition to a low carbon economy which our society has set as its goal.

We also took further steps to reduce the carbon intensity of our energy generation and to improve the security of the UK’s energy supplies. We expanded Centrica’s investment in wind power and consolidated our upstream base through our acquisitions of Venture and a 20% stake in British Energy.

Below is a summary of Centrica’s corporate responsibility (CR) performance in 2009. Further details can be found at www.centrica.com/responsibility.

Case study: Green Streets

The UK carbon reduction target is 80% on 1990 levels by 2050. To find out what could be achieved at a local level we ran a year-long project called ‘Green Streets’, a competition between eight communities that promoted awareness of low carbon solutions for householders and showed how different energy efficiency solutions, allied to changes in behaviour, can deliver benefits to customers.

The results published in March 2009 demonstrate how much can be achieved using current commercially available technologies.

Building on these findings, we launched the ‘Green Streets 2010’ community initiative in January 2010, in which 14 communities will compete to reduce their energy use and carbon emissions.

Picture of the residents of Green Lane

25%

The project showed demonstrable benefits for consumers through lower energy bills and, most importantly, an average reduction in carbon footprint of almost 25%.

35mt CO2

If the Green Streets savings were replicated across UK households, we estimate that 35 million tonnes of CO2 would be cut from the national carbon footprint.

£6 billion

At 2009 prices this would save £6 billion per annum.

Picture of the residents of Green Lane

Strategy and governance

In 2009 we reviewed carefully where we should focus our corporate responsibility efforts, aided by feedback from external stakeholders in the UK and North America. We gave highest priority to the seven areas where Centrica is expected to have the greatest long-term impact and where our stakeholders have the highest expectations of us. These were:

  • to contribute to the transition to a low carbon society;
  • to invest in secure energy supplies for our customers;
  • to be trusted by our customers and support the most vulnerable;
  • to keep our employees safe and healthy at work;
  • to develop our employees;
  • to support local communities; and
  • to ensure responsible procurement.

The Board of Directors continued to exercise oversight over the CR programme through the Corporate Responsibility Committee. The Committee approves our overall CR strategy, sets stretching targets and challenges the Group’s performance and alertness to external developments. The Executive Committee, chaired by the Chief Executive, has overall responsibility for implementing the CR strategy.

Our business principles are the foundation of our responsible approach. We reviewed our business principles in 2009 to ensure that they continue to embody the highest standards of ethical behaviour. We are following this up with a programme to raise awareness and compliance with the principles across the Group in 2010.

Business Unit Managing Directors have provided strong operational leadership for our CR work in 2009, supported by specialist functions at Group level such as risk management and internal audit. View further details on how our CR-related risks are managed.

During the year, the CR Committee agreed a set of high level key performance indicators (KPIs) to monitor our progress and help us continually improve performance. The KPIs and performance against them are included in this report.

We keep our targets and KPIs under review and in some areas we have changed the way 2010 performance will be measured to better reflect our business aspirations or to challenge ourselves against more relevant metrics. Further work is still required to develop a set of KPIs that fully reflects our commitment to setting clear targets and objectives across the Group. Making progress in this area will remain a priority for the Committee in 2010.

 

Mary Francis CBE
Senior Independent Director and Chair of the Corporate Responsibility Committee
25 February 2010