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  • Glossary

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    Glossary

    SYM

     $

    Refers to US dollars unless specified otherwise

     <1 year

    Less than 1 year

     >1 year

    Greater than 1 year

     2P

    Proven and probable

    A

     AFS

    Available-for-sale

     Associate

    An entity in which the Group has an equity interest and over which it has the ability to exercise significant influence

    B

     BCF

    Billion cubic feet

     bbl

    Barrels of oil

    C

     CER

    Certified emissions reduction (carbon emissions certificate)

     CERT

    Carbon emissions reduction target

     CGU

    Cash generating unit

     CPI

    Consumer Price Index

    E

     EBITDA

    Earnings before interest, tax, depreciation and amortisation

     EUA

    European Union allowance (carbon emissions certificate)

    F

     FSA

    Financial Services Authority

     FTSE 100

    Financial Times Stock Exchange 100 share index, an average of share prices in the 100 largest, most actively traded companies on the London Stock Exchange

     FVLCS

    Fair value less costs to sell

    G

     g CO2/kWh

    Grammes of carbon dioxide per kilowatt hour

     GFRMC

    Group Financial Risk Management Committee

     GWh

    Gigawatt hour

    I

     IAS 19

    The International Accounting Standard related to Employee Benefits. These financial reporting rules include requirements related to pension accounting

     IAS 39

    The International Accounting Standard related to financial instruments (recognition & measurement)

     IFRS

    International Financial Reporting Standard

    J

     Jointly controlled entity

    A joint venture which involves the establishment of an entity to engage in economic activity, which the Group controls jointly with its fellow venturers

    L

     Level 1

    Fair value is determined using observable inputs that reflect unadjusted quoted market prices for identical assets and liabilities, for example exchange-traded commodity contracts valued using close-of-day settlement prices. The adjusted market price used for financial assets held by the Group is the current bid price

     Level 2

    Fair value is determined using significant inputs that may be either directly observable inputs or unobservable inputs that are corroborated by market data, for example over-the-counter energy contracts within the active period valued using broker-quotes or third-party pricing services and foreign exchange or interest rate derivatives valued using market-based data

     Level 3

    Fair value is determined using significant unobservable inputs that are not corroborated by market data and may be used with internally developed methodologies that result in management's best estimate of fair value, for example energy contracts within the inactive period valued using in-house valuation techniques

     LNG

    Liquefied natural gas

    M

     mmboe

    Million barrels of oil equivalent

     mmth

    Million therms

     MWh

    Megawatt hour

    N

     NBV

    Net book value

     NGO

    Non-governmental organisation

    P

     PP&E

    Property, plant and equipment

     PRT

    Petroleum revenue tax

    R

     ROC

    Renewable obligation certificate

     RPI

    Retail Price Index

    S

     Securities

    Comprised of Treasury gilts designated at fair value through profit or loss on initial recognition and available-for-sale financial assets. The fair values of securities are based on quoted market prices, when available. If quoted market prices are not available, fair values are estimated using observable market data

     SCT

    Supplementary charge associated with UK Corporation Tax

     Spark spread

    The difference between the price of a unit of electricity and the cost of the gas used to generate it

    V

     VAT

    Value added tax

     VIU

    Value in use

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Centrica's corporate responsibility ambition is to be the most trusted energy company. Although we are facing significant challenges across our businesses, we understand the impact our activities have on the societies we serve and the environments in which we operate, and we know we must contribute to their health and sustainability.

During 2011, we continued to focus on our most material issues: treating our customers with fairness, with a focus on the cost of energy and supporting vulnerable customers; securing future energy supplies; and reducing carbon emissions through decarbonising our power generation activities and helping customers cut their energy usage.

We expect energy pricing to continue to have a high profile in 2012 and helping our customers manage their energy costs will be a priority. However, we will not neglect other important challenges. We know British Gas does not currently enjoy the level of trust to which we aspire and we will therefore devote significant effort in 2012 to strengthen faith in our business.

The following pages describe the progress Centrica made in managing corporate responsibility issues in 2011.

Mary Francis CBE
Chairman of the Corporate Responsibility Committee

Mary Francis CBE

Centrica's corporate responsibility ambition is to be the most trusted energy company. Although we are facing significant challenges across our businesses, we understand the impact our activities have on the societies we serve and the environments in which we operate, and we know we must contribute to their health and sustainability.

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

 

TRUST

Our corporate responsibility (CR) ambition 'to be the most trusted energy company' is rooted in sound business sense. We need to be trusted by our customers for them to continue to choose us as their supplier, and by governments and regulators for our views and recommendations to carry weight. In achieving a broad foundation of trust we can ensure sustainable business success.

To build our stakeholders' trust, we must:

  • work harder to communicate clearly with them; and
  • recognise the key social and environmental issues which concern them, and deliver on our commitments.

2011 saw a continued erosion of British consumers' trust in all energy suppliers. Research shows the reputation of UK energy companies, including British Gas, is increasingly affected by energy prices and the perceived lack of fairness in pricing structures. In response, we reassessed the key issues essential to our vision of becoming the most trusted energy company. These are set out in the diagram below with each area examined in more detail in the following sections, along with information on our approach to CR governance.

External Assurance and performance indicators

We want our stakeholders to be confident that our metrics accurately reflect our performance. Therefore, we asked Deloitte LLP to provide limited assurance, using the International Standard on Assurance Engagements (ISAE) 3000, on the most important key performance indicators that have a material impact on our business. Key performance measures are included in this section, with a full table available in Performance Measures.

See Deloitte's full independent assurance statement PDF (0.03Mb) and the Basis of Reporting PDF (0.48Mb)

 

Our Material Issues

To be the most trusted energy company; Level 1 (Lead issues): Energy for a low carbon world, Treating customers fairly; Level 2: Safety, Energy supply, People; Level 3: Supported by responsible business practices eg stakeholder engagement, respsonsible procurement, assessment of new technology and business; Leave 4: Underpinned by values, business principles and behaviours

 

CR GOVERNANCE, STRATEGY AND RISK

We have strong governance and internal communications systems to make sure we apply our values consistently and can reconcile conflicting priorities in a responsible manner. Effective governance also helps us ensure CR is integral to our normal business activities.

Centrica's Executive Committee, chaired by the Chief Executive, has overall responsibility for implementing CR strategy. The Board of Directors oversees the strategy and programmes through its Corporate Responsibility Committee, chaired by the Senior Independent Director. This Committee makes recommendations on CR strategy to the Board, and monitors the implementation of strategy and Group performance. In 2011, we intensified the Committee's focus on longer-term strategic issues.

Details of the Committee members are set out in Committee Memberships. We regularly review the Committee's composition and, during 2011, Margherita Della Valle joined the Committee. Grant Dawson, Centrica's General Counsel & Company Secretary, joined the Committee on 1 January 2012 in succession to Catherine May who left in December 2011.

Assessing material risks and opportunities

Our business involves us in a wide range of social, environmental and ethical issues. Individual business units are responsible for identifying material issues of concern to stakeholders and assessing the robustness of our risk management. The Centrica Executive Committee and our CR teams contribute to these assessments, working closely with our business risk teams.

We engage regularly with stakeholder groups, including governments, regulators, investors, business partners, local communities and non governmental organisations (NGOs), to maintain a comprehensive understanding of our material issues and their impact in the wider environment.

1.7 Million

During 2011, 1.7 million vulnerable households were helped by British Gas initiatives

 

Stakeholder engagement

In late 2010, we strengthened our links with stakeholders by establishing a CR Advisory Group. Members are drawn from our key stakeholder groups and provide regular feedback and guidance on CR issues, strategy and performance. The group met three times in 2011, and advised on issues including biomass power generation, climate change policy and customer privacy.

British Gas' Customer Panel, created to gain deeper insight into customer opinion, discussed a range of topics in 2011 including future pricing trends, smart metering, British Gas community projects and central heating installation.

We maintained our dialogue with socially responsible investment organisations and covered CR issues at a number of mainstream shareholder presentations. We will continue to participate in selected indices such as FTSE4Good and the Carbon Disclosure Project (CDP) demonstrating transparency and benchmarking our performance. We were pleased to improve our CDP score for the fifth successive year and to achieve a top 10 position in the 2011 CDP Leadership 'Global 500' Index.

Business principles

Centrica's business principles define our culture and guide our decision-making. All senior managers must sign a declaration that they understand and will adhere to the principles.

We have a thorough anti-bribery and corruption training programme to embed high standards of behaviour in our external dealings and ensure compliance with the US Foreign Corrupt Practices Act and the 2010 UK Bribery Act. More than 97% of Centrica senior managers have so far completed the training.

We operate a 24/7 'Speak Up' programme that enables any employee to raise concerns regarding non-compliance with our business principles, with an independent third party. In 2011, 41 contacts were handled. All cases were resolved and closed, leading to disciplinary action for one employee and the dismissal of three employees.

Smart meter on a kitchen worktop
 

TREATING CUSTOMERS FAIRLY

Trust is essential to the health and growth of our business. Unless customers trust our service expertise and advice, they will not have confidence in the innovative products we provide to help them change the ways they use energy. Unless they trust our ability to source sustainable and reliable energy supplies and price them fairly, they will not choose us to supply gas and electricity to their homes and businesses. Unless they trust our skills and reliability, they will not call on our engineers to install and maintain their energy appliances.

In the UK, the reputation of energy companies, including British Gas, is increasingly dominated by the question of energy prices and by perceived levels of complexity and fairness. We understand the concerns and in 2012 will focus on:

  • addressing – and where possible reducing – the complexities of energy pricing;
  • supporting our more vulnerable customers to help them pay for energy, manage their energy consumption and better insulate their homes; and
  • improving customer service and communicating clearly with all our customers in our marketing and billing.

Addressing the complexities of energy pricing

The UK has the most competitive residential energy market, and the lowest residential gas prices in Europe. We cannot shield our customers from the long-term trend towards higher energy prices, but we will continue to price fairly and work harder to explain energy prices clearly.

A small proportion of the customer's bill in the UK, averaging around 5%, represents the post-tax profit we make – a figure that we have consistently stated is necessary to maintain our business on a sustainable basis.

We also recognise that some stakeholders nevertheless believe that energy suppliers are too quick to increase customer prices when wholesale prices rise, and too slow to pass on reductions. We buy gas in advance in order to secure supplies, and this means that there is a recurring lead/lag element between price changes and current market movements. We review all price changes with great care to ensure that they are fair and transparent. This is reflected in the stable levels of our profit margins in recent years. When we can reduce prices, we do and we have cut them four times since 2009.

Price changes are also subject to close external scrutiny and we note that the UK Regulator, Ofgem, has found no evidence of price collusion in the market in successive industry investigations. In January 2012, an independent review of suppliers' energy accounts by the accountancy firm BDO LLP, commissioned by Ofgem, found that the financial information provided by suppliers was fair, appropriate and consistent with official numbers. We had already welcomed Ofgem's moves to increase transparency on the reporting of energy company profits as this is important in building customer trust.

Working with the Regulator

The role of Ofgem is to protect the interests of consumers, wherever possible by promoting competition. Centrica is committed to working with Ofgem to ensure that the Regulator's concerns and the needs of our customers are met. As well as promoting fairness and competition, one of our key objectives is to ensure that we remain able to run our business profitably. This is essential so we can invest in costly but necessary future energy supplies and maintain the confidence of our shareholders and lenders who provide us with capital.

During 2011 we engaged fully with Ofgem's review of the UK retail energy market, and continue to do so. As described within 'Price structures and clearer communications' to the right, British Gas is already acting to simplify its tariffs and make them easier to understand and compare. This is in addition to our ongoing work improving the energy efficiency of our customers' homes and the financial support we provide to those considered fuel poor.

While supporting the intent behind Ofgem's proposals, we believe the proposals as they stand may have serious unintended consequences, specifically the Regulator's proposals to introduce wide-ranging restrictions to the tariff market. We believe it is in our customers' interests to offer them a reasonable choice of tariffs, dual fuel discounts and further discounts (for example if they choose paperless billing through an online tariff). Unless customers are prepared to be tied into a fixed term contract, all of these offerings will disappear should Ofgem's proposed approach be implemented.

The development of new tariffs is also an important way to ensure benefits can be realised from new technologies. We are particularly concerned that one of the important benefits of smart meters, to enable customers to take advantage of time of use pricing, will be removed by the proposals. As well as making the adoption of smart meters less attractive, this will reduce customers' incentive to consume more energy in off-peak periods.

We will continue to work with Ofgem on these issues in 2012 with a view to developing a package of reforms that meets the needs of all customers.

Helping our vulnerable customers

In the UK, our strategy is to provide targeted assistance to vulnerable customers to ensure the help they receive is appropriate to their needs. We do this mainly through the energy efficiency and financial support schemes described below. We also provide a range of initiatives such as payment plans and assistance for disabled customers which we deliver both directly and through charities and other third parties. In 2011, 1.7 million vulnerable households (1.6 million in 2010) were helped by British Gas initiatives.

Energy efficiency

Energy efficiency support for low-income and vulnerable customers is primarily provided through two UK Government schemes: the Carbon Emissions Reduction Target (CERT) and the Community Energy Saving Programme (CESP). Although mandatory, the schemes represent a significant social investment for British Gas and are a core part of our responsibility to customers.

Through our CERT scheme, we provide energy efficiency services such as installing new boilers and heating appliances, as well as insulation, energy saving light bulbs, home appliances and devices. Part of the CERT commitment involves the provision of insulation and other measures to our most vulnerable households. In 2011, we provided household energy efficiency products with equivalent lifetime carbon savings of 14.6 million tonnes.

CESP eligibility is based on geographic locations derived from deprivation indices and British Gas works closely with local authorities and registered social landlords to deliver our obligations. CESP aims to retrofit energy efficiency measures in some of the most deprived communities in the UK. In 2011, we delivered almost 1.4 million tonnes of lifetime carbon savings through the scheme.

Financial support

We provide direct financial support to vulnerable customers through the Warm Home Discount scheme (WHD) which was introduced during 2011 under the UK Energy Act, 2010.

We support the UK Government approach of enabling the £120 WHD credit to be paid to those on Pension Credit Guarantee and are proud to have introduced the most extensive WHD 'broader group' criteria in the industry which allow more families to benefit. In 2011, we spent more than £80 million providing 250,000 customers with the WHD and supporting more than 330,000 vulnerable customers on 'Essentials', our social discounted tariff. This was considerably more than any other UK energy supplier spent and far beyond our equivalent market share.

In addition, we ae helping more than 500,000 vulnerable households in debt through flexible payment plans and wider support through our British Gas Energy Trust, a registered charity funded by donations from British Gas to which we contributed £20 million at the end of 2010. We have maintained our prepayment tariffs at the same rate as conventional cash or cheque tariffs since early 2010 even though these accounts cost us more to service.

We go to extensive lengths to keep customer supplies connected and have not disconnected a single UK customer for debt in nearly two years. As a result of our proactive approach and talking to customers who are having difficulty with their bills, fewer customers were in debt at the end of 2011 than 2010, despite the worsening economy.

Where does your money go? External costs: 56% Gas bought from wholesale market, 21% delivery to your home, 10% Government obligations and tax; Our costs: 8% operating costs, 5% our profit
 

Breaking down the bill

More than 80% of the costs that make up a UK customer's bill – both gas and electricity – are outside our immediate control. This includes the cost of wholesale energy (around half the bill) plus regulated transportation costs, and government obligations and taxes. Costs of regulatory environmental initiatives amounted to £77 on the average dual fuel bill in 2011. Under current policies, these are likely to increase substantially, doubling over the next three years.

* Example based on industry average consumption of 16,500 kWh per year and on average regional prices. Breakdown figures are indicative as at September 2011 and are based on actual costs from January to September 2011 and forecast costs for October to December 2011. Profit figure based on average profits for gas and electricity supply after tax from 2006 to 2010.

 
Female reading British Gas booklet
 

Price structures and clearer communications

We also recognise that there is concern and potential confusion about the number and structure of energy tariffs. British Gas has responded to this.

We reduced the number of tariffs we offer and introduced a simple online tariff checker to help customers find the best tariff for their needs. We are also reviewing our 'two-tier' tariff structure with a view to developing one that is easier for customers to understand and compare with other offers. We provide a full breakdown of costs in customer bills and have advertised widely in the national press to highlight our initiatives and communicate key messages.

In November 2011, the Managing Director of British Gas made a direct commitment to UK customers to communicate clearly, to explain underlying movements in energy prices, and help them reduce their energy costs. We called this initiative the 'honest conversation' and have pledged at the same time to do all we can – working with the UK Government and Regulator – to meet the challenge of securing national energy supplies.

Our online tariff checker is @ www.britishgas.co.uk/betterdeal

 

In Texas, Direct Energy's 'Neighbor-to-Neighbor' programme supports customers facing financial hardships. The programme works with more than 30 community agencies to screen recipients and administer the funds – up to $600 per home a year – available to help vulnerable customers pay their energy bills. In 2011, we spent $425,000 on this programme and Direct Energy customers can also support the programme by making donations to Neighbor-to-Neighbor through their energy bills.

Ethical sales

In the UK, our dedicated sales quality team oversees compliance with the 'Treating Customers Fairly' principles, British Gas' sales code of practice and Ofgem's requirements for best practice.

Despite our efforts, we do still receive complaints. Typical issues in our sector include inadequate explanation of contracts and payment terms. In 2011, there were only 28 accepted sales complaints, a reduction from 62 in 2010.

After reviewing our sales operation, we announced in August 2011 that British Gas would terminate unsolicited doorstep selling. We now only visit customers at home with a prior appointment.

In North America, where door-to-door sales remain a more accepted sales channel, energy suppliers are subject to stringent consumer protection laws and mandatory sales processes. We are working with legislators to implement consistent consumer protection laws across our markets and employ third-party verification and quality checks on sales agents.

Customer service

We have made significant improvements in standards of service in recent years. Our innovations in 2011 included addressing customer service queries through social media and providing 'how to' videos on basic central heating maintenance.

Our aim is to maintain a culture where our employees strive to offer customers the best possible service. We track customer perception of our service by using net promoter scores (NPS), which measure a customer's willingness to recommend us. NPS enables us to compare our performance with direct competitors in each market and with our own performance year-on-year. The British Gas NPS improved in 2011 with an annual average score of +26*, despite customer concerns around increasing energy prices. Direct Energy NPS ended 2011 at +28, a significant improvement on 2010.

We also track the volume of complaints across all our businesses and accept there have been failings within our British Gas Business (BGB) division. Since discovering we were not operating in line with the regulations in 2010, BGB has upgraded all its complaints handling systems, processes and training in order to identify all expressions of dissatisfaction. This investment has seen a step change in our approach to complaint handling with systems in place to ensure that we comply fully with Ofgem rules.

* NPS calculation methodology and scope for British Gas has altered in 2011, 2010 data in the Performance measures section has been restated at the new scope

$425,000

In 2011, we spent $425,000 on the 'Neighbor-to-Neighbor' programme which supports vulnerable customers facing financial hardships to pay their energy bills with up to $600 per home a year

 

SECURING UK ENERGY SUPPLIES

New forms of energy, such as shale gas, wind and biomass, present opportunities for energy security and a lower-carbon future. However, they also raise significant social and environmental concerns. We are working hard to ensure that all our gas production and energy generation activities are carefully planned and managed to avoid adverse impacts. For example, we agreed with Natural England to use specialised trenching equipment to install cable ducts under the salt marsh and sea defences for the Lincs offshore wind farm construction.

Centrica Energy is also seeking consent to build and operate a new dedicated biomass-fuelled electricity-generating station on the site of our existing gas-fired power station at Barrow-in-Furness, in Cumbria. We are conducting wide-ranging local consultation to ensure the proposal is transparent and the project fully understood by stakeholders.

Large trenching equipment on wind farm construction site
 

ACHIEVING REDUCTIONS IN CARBON EMISSIONS

Our business has a substantial environmental impact. In 2011, we were responsible for approximately 7.9 million tonnes of carbon dioxide (CO2) equivalent emissions (down from approximately 10.9 million tonnes in 2010) arising from our gas and oil operations, our electricity generation and the energy we use in our business activities. We continue to work towards a low carbon society by promoting customer energy efficiency, decarbonising our generation mix and cutting our own emissions from property, fleet and travel.

Customer carbon

The most significant carbon emissions associated with the energy industry arise from customers' gas and electricity usage. Helping our customers to manage their energy use and generate their own energy from renewable sources is essential to achieving a low carbon society.

We offer a range of services to increase energy efficiency, including insulation and energy efficient appliances. These are the most effective ways for residential and business customers to cut energy use and reduce energy bills. The UK Government sees energy efficiency as key to meeting its carbon reduction targets and has regulated accordingly. Our support for the main domestic energy saving schemes – the CERT and CESP – is described above within Energy efficiency.

Power generation

Most electricity is still generated by burning fossil fuels. To achieve a low carbon future, use of fossil fuel energy sources, particularly coal, must be greatly reduced. To move towards that goal, we are investing in offshore wind capacity and evaluating options in new nuclear and biomass.

Decarbonising power generation will take time. Throughout the process, we must maintain our ability to meet our customers' immediate energy demands. Gas will remain an important part of the energy mix because it is the least carbon-intensive of the fossil fuels, it helps achieve energy security and can provide the essential flexible back-up to intermittent wind generation.

We measure progress towards our ambition to decarbonise energy by monitoring the carbon intensity of the power we generate. This includes the carbon emissions from all our own generation facilities and from other facilities where we have site-specific power purchase agreements.

In 2011 our Group carbon intensity was 221g CO2/kWh, compared to 277g CO2/kWh in 2010, a significant 20% reduction. We continued to reduce the carbon intensity of our UK power generation fleet, achieving 200g CO2/kWh. This reduction was mainly due to the first full year's offtake of nuclear power from our 20% stake in EDF Energy Nuclear Generation (formerly known as British Energy) and the effect of placing a number of gas-fired power stations into preservation mode for periods of the year.

14.6M Tonnes

In 2011, we provided household energy efficiency products in the UK with equivalent lifetime carbon savings of 14.6 million tonnes

Two male employees discussing work
 

We continue to work towards a low carbon society by promoting customer energy efficiency, decarbonising our generation mix and cutting our own emissions from property, fleet and travel

 

Carbon footprint from buildings, company vehicles and travel

We measure emissions relating to our operations by calculating our internal carbon footprint, including emissions from office energy use, company vehicles and business travel. We are working hard to reduce this footprint by raising awareness among employees, making our offices more energy efficient, investing in lower-carbon vehicles and providing alternatives to business travel.

Our target is to cut the emissions from buildings, company vehicles and travel in our core business by 20% by 2015 (from the 2007 baseline). In 2011 we achieved a 5% reduction year-on-year, (a 19% reduction against the baseline). Total carbon emissions were 95,234 tonnes.

MAKING SAFETY A CORE VALUE

Our operations – both upstream and downstream – are inherently hazardous and we fully accept our responsibility to protect the health and safety of our employees, contractors and customers, as well as the wider public. Safety is a top priority with the Centrica Board which has direct oversight of our health and safety performance.

Safety risks range from slips, trips, falls and road safety incidents in our customer-facing businesses to a major incident at our oil, gas and power-generation facilities. The majority of Centrica employees work in our customer-facing businesses within British Gas and Direct Energy. The safety of our customers in their homes is also of critical importance to us.

We report the total recordable injury rate (TRIR) in addition to the standard lost time injury rate (LTIR). Recording a broader range of injuries, not just those that result in lost time, provides a more complete picture and aids future prevention.

Initiatives across the Group in 2011 led to a reduction in our LTIR to 0.25 per 100,000 hours worked, down from 0.43 in 2010. Our TRIR was 1.66 per 100,000 hours worked in 2011. The majority of incidents continue to occur among our service and repair workforce, who face particular risks from driving and working in the unfamiliar environment of customers' homes or businesses. We also expanded our reporting scope for 2011, incorporating safety performance for our third party managed activities not directly controlled by Centrica.

There were no fatal incidents among Centrica Group employees or associated third party activities in 2011. Very regrettably, in the US a member of the public was killed in a road accident involving one of our employees.

20%

We aim to reduce the carbon footprint of our existing offices, company vehicles and travel by 20% by 2015

Total carbon emissions in 2011 was 95,234 tonnes, a 5% reduction from 2010.

 

Safety at our assets and operations

High-profile incidents such as the blowout on the Deepwater Horizon drilling rig have put the spotlight on process safety. After a thorough review of our systems and procedures in high-hazard operations, we enhanced the monitoring of safety performance among our contractors and further promoted a culture in which employees and contractors feel able to challenge unsafe practices.

Our 20% stake in the nuclear joint venture with EDF involves specific safety challenges at existing nuclear power stations. While we do not operate any of these facilities, we have a responsibility as a minority shareholder with board representation on EDF Energy Nuclear Generation Group Limited to monitor and oversee safety performance. After the tragic events at the Fukushima power station in Japan, the joint venture and the Office for Nuclear Regulation (ONR) conducted thorough 'stress tests' to ensure the continued operation was safe. For more detailed information, visit EDF Energy's website at www.edfenergy.com.

In September 2011, the UK Government published the Weightman report, which was positive for the UK nuclear industry, giving a clear endorsement of the safety culture and current performance. We have pledged, with our partner EDF Energy, to proactively implement the 26 recommendations in Dr Weightman's report.

Driver safety

Driving is one of the most hazardous activities that many of our employees face. Road accidents are a significant risk for British Gas and Direct Energy engineers who regularly drive to support our customers. We prioritise high mileage employees, together with new drivers, those changing vehicle type and other high-risk drivers, to complete driver development training. We are also enforcing a policy to prevent the use of any form of mobile phone while driving on company business.

In 2011, we recorded a low severity road safety incident rate of 7.5 per 1 million kilometres driven, and 10 incidents of high severity. We aim to reduce this in 2012 through continued focus on working practices, training and communications campaigns.

Centrica employees training in swimming pool
 

OUR EMPLOYEES

In 2011, we employed an average of 39,432 employees during the year. The retention rate was 89.5%, compared to 89.9% in 2010.

During 2011, we conducted a thorough review to ensure our cost base remains low so we can offer competitive prices and products. The review concluded that accountability for decision-making should lie with our operating businesses, supported by a leaner corporate centre. To achieve these goals, we needed to make some difficult decisions that resulted in some employees leaving the business. This is never an easy process and we made every effort to support those affected.

 

Skills and development

Continuous learning and development is essential to ensure all our employees have the opportunity to fulfil their potential and are equipped with the right skills and behaviours to help us grow our business and implement our strategy.

Developing our leaders is important to us. Our talent boards, general management programme and leadership master classes are designed to identify and nurture our high-potential managers.

The services we provide for customers, such as installing and maintaining their heating, electricity, plumbing and meters, require specific technical knowledge. Across the UK, British Gas' network of engineering academies trains apprentices to become service engineers. In 2012, we will be offering up to 500 new apprenticeships in 'smart' technologies.

Employee engagement

We measure employee engagement through Group surveys. Feedback enables us to gauge the level of commitment to the Company and identify areas where we need to improve.

In 2011, as planned, we did not conduct a Group-wide employee engagement survey but undertook a strategic review of how we measure employee engagement as a tool to drive business performance. The outputs of this review will inform how we use the survey results to improve and increase the quality of our future engagement.

Employees receive regular communication and consultation through a wide variety of media. Company business and financial performance is communicated to all employees using online media, printed materials and face-to-face briefings with members of the Executive Committee. Most employees are eligible to participate in employee share schemes to further their commitment to Centrica's performance.

Centrica employees training on wall mounted boilers
 

Diversity

We aim to provide an inclusive and diverse workplace and are committed to making the principle of equal opportunity a reality in our business. We will not tolerate discrimination against people with disabilities, subject to health and safety considerations, or any other group. We give full and fair consideration to applications for employment made by disabled people. If an employee becomes disabled while in our employment we offer, wherever possible, support, retraining, equipment and facilities to enable their employment to continue. Our Diversity and Inclusion policy further outlines our commitments on diversity.

Age discrimination can be a barrier even among younger workers. We encourage the retention and recruitment of older people, recognising the valuable experience they bring to Centrica. British Gas has taken a leading role in removing upper age limits for our apprenticeship schemes in the UK. More than a third of our apprentice engineers are over the age of 25 when they join.

Improving women's representation at all levels remains a priority. We focus on leadership training, recruitment, flexible working and employee network groups. Achieving gender balance among engineers is particularly challenging because engineering remains a predominantly male profession. A dedicated diversity and inclusion team at our British Gas Academy is working to improve the representation of female engineers.

Corporate Responsibility Performance Measures

MORE CR

Read more about other significant aspects of our businesses and CR activities which include management of the supply chain, environmental management and community engagement and investment. Please see our online CR Report

Please note: The 2011 Corporate Responsibility report will be online from early May 2012.