Carillion Sr2014 Full

7/24/2019 Carillion Sr2014 Full

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We continue to build a sustainable and

successful business by delivering on our six

positive outcomes, which support profitable,

responsible growth and underpin our values

as a responsible business.

Our positive outcomes

Building a successful business

Leading the way with our customers andsuppliers

Providing better prospects for our people

Supporting sustainable communities

Enabling low-carbon economies

Protecting the environment

We are making tomorrow a better place

OUR BUSINESS CUSTOMERS &SUPPLIERS

PEOPLE COMMUNITIES LOW-CARBONECONOMIES

ENVIRONMENT

Making tomorrow a better place

SUSTAINABILITY REPORT 2014

Sustainability is...


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Sustainability is so important to Carillion because

it makes a fundamental difference to our

business success. We estimate that itcontributed 27.2m to our profit in 2014. Given

our local commitments across contracts and

projects, this also created many wider benefits

for our communities, for our own people and for

our suppliers and partners.

RICHARD HOWSON, Chief Executive

READ MORE

It makes business sense

2014 Sustainability Review with Richard Howson

Sustainability in action

Linking sustainability to the bottomline

27.2M SUSTAINABILITY CONTRIBUTION TO PROFIT IN2014

Engaging and collaborating with theindustry supply chain

FUNDING PARTNER OF THE SUPPLY CHAINSUSTAINABILITY SCHOOL

An inclusive workplace

FAIR OPPORTUNITIES FOR EX-OFFENDERS WHENAPPLYING FOR JOBS

Investing in future skills5,000 APPRENTICESHIPS TO BE OFFERED DURING THENEXT FIVE YEARS

Climate performance A-list

99A SCORE IN CARBON DISCLOSURE PROJECT

Waste no more

WASTE-REDUCING INITIATIVES IN CANADA

27.2mnet profit contribution through

sustainability efficiencies

51%local spend including SMEs

49%reduction in our All AccidentFrequency Rate since 2011

87%of apprentices foundemployment or pursued further

education

17%reduction of our carbon

footprint since 2011

(normalised)

95%waste diverted from landfill

VIEW OUR KEY FIGURES AT A GLANCE VIEW OUR FULL PERFORMANCE AGAINST TARGETS

Our key impacts
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Carillion is...building a successful

Sustainability makes us

more profitable: fact

It helps us to win and deliver profitable work responsibly

and encourages collaboration around innovation, safety,the efficient use of resources and the creation of social

value. Increasingly, this is what our customers and society

expect from leading sustainable businesses, which is why

we choose to operate to standards that go well beyond

minimum requirements.

Chairing the Board Sustainability

Committee is an important

opportunity to make sure that

Carillions award-winning

Our Board SustainabilityCommittee

Materiality review

WHAT MATTERS MOST TO OURSTAKEHOLDERS?

Investing in integrity

INSTITUTE OF BUSINESS ETHICSAWARDS CARILLION THE INVESTING ININTEGRITY CHARTER MARK

Broker research note

IMPRESSING ANALYSTS WITH OURWORK AT BATTERSEA POWERSTATION

Sustainability in action

BUILDING A

SUCCESSFULBUSINESS

About us

2014 at a glance

Welcome fromour ChiefExecutive andChairman

Views from ourChiefSustainabilityOfficer andindependentadvisors

Our 2020 strategy

Targets andperformance

Governance andrisk



ENVIRONMENT




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sustainability progress to date

remains ambitious and relevant.

Resilience and balance will become

ever more fundamental to

responsible and forward-thinking

businesses.

DR CERI POWELL, Carillion Non-

Executive Director

READ MORE

5.1bnof new and probableorders2013: 4.9bn

216.9munderlying profit fromoperations2013: 214.3m

2014: 25m

2020: 40m

27.2mcontribution to net

profit through

sustainability strategyTargets

Target achieved

Our key figures

2014 performance highlights

Progress against targets

VIEW OUR FULL PERFORMANCE AGAINST TARGETS

Integrity andethics

About this report


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ABOUT US

TRIED/TESTED/TRUSTED

OUR VISION AND VALUES

OPERATING SEGMENTS

HOW DO WE CREATE ECONOMIC VALUE?

Carillion is one of the UKs leading integrated support services companies,

with a substantial portfolio of Public Private Partnership projects,

extensive construction capabilities and a sector-leading ability to deliver

sustainable solutions.

TRIED/TESTED/TRUSTED

We have a track record of delivering sustainable, cost-effective

solutions for our customers safely and of creating positive

legacies for the communities where we work and live. Whether

it is providing facilities management services for over 100,000

buildings, the management and maintenance of transport and

utility networks or delivering award-winning cultural,

residential, commercial or community developments we

strive to deliver high-quality services that make a positive

difference to people and communities.

We have continued to respond decisively to challenging market

conditions to create a leaner, stronger business, capable of

delivering growth over the medium term. As well as rescaling

some of our existing businesses to ensure they are aligned in

size to their markets, we have strengthened our positions in

markets that offer opportunities for growth. Strong corporate

governance, together with rigorous risk management

processes and our efficient central operating platform, help us

to deliver the most complex projects successfully.

We are a trusted partner when trust matters most. We providemission-critical facilities management services to public and

private sector customers, notably in the health, defence,

secure accommodation, financial services and energy sectors.

We keep transport and utility networks operating 24/7 and

4.1bnGroups annual revenue

42,000employees

BUILDING ASUCCESSFUL

BUSINESS

About us

2014 at a glance



Our 2020 strategy


Governance andrisk

Integrity andethics

About this report



ENVIRONMENT




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deliver new hospitals, schools, roads, railways and other

landmark buildings and structures. We build long-term

partnerships based on delivering value for money services that

our customers know they can rely on.

OUR VISION AND VALUES

Our Vision: To be the trusted partner for providing services,

delivering infrastructure and creating places that bring lasting

benefits to our customers and the communities in which we

live and work.

Our Valueshelp us build trust and set the standard for

sustainability in our sector:

We care: we respect each other and we do things safely

and sustainably. It is good for our people, our business

and our local communities.

We achieve together: we value the contribution of eachindividual and we work together to build strong, open

and trusting partnerships.

We improve: we listen, we learn and we adapt our ideas

and experience into better solutions and service for our

customers.

We deliver: we set ourselves stretching goals and we

take pride in doing a great job and helping our

customers and partners to succeed.

OPERATING SEGMENTS

Business units

At Group level, we report our financial results in four business segments.

Support services

Including our facilities management, facilities services, energy services, railservices, utility services, road maintenance and consultancy businesses in the UK,Canada and the Middle East.

Order book plus probable orders

14.1bn

Underlying operating profit

135.9m

Working andachieving together,caring and improving these values helpus to deliveroutstanding supportservices for ourclients, and to buildreal trust andstrength in ourteams.

NIGEL TAYLOR,Managing Director,Services UK


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Public Private Partnership (PPP) projects

Including financial returns generated by the investments we make in Public PrivatePartnership (PPP) projects in the UK and Canada, including those from the sale ofequity investments.


1.2bn


34.5m

Middle East construction services

Including our building and civil engineering activities in the Middle East and NorthAfrica.


0.9bn


25.1m

Construction services (excluding the Middle East)

Including our UK building, civil engineering and developments businesses and ourconstruction activities in Canada.


2.4bn


41.5m


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How do we create economic value?

m 2012 2013 2014

Total revenue (excluding Joint Ventures) 3,666.2 3,332.6 3,493.9

Operating costs 2,689.7 2,414.7 2,507.8

Employee wages and benefits 761.0 751.0 777.7

Payments to providers of capital 94.7 100.7 103.5

Payments to Government (taxes) 5.7 7.8 7.7

Charitable and community giving through a combination of employees time, cash,and in-kind donations

2.2 1.9 1.8

Economic value retained 115.1 58.4 97.2


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4.1bnGroup revenue 27.2mprofit contribution

through

sustainability

strategy

49%reduction in All

Accident Frequency

Rate (AAFR)

+37Net Promoter Score

measuring customer

satisfaction

99Anear-perfect score for

carbon disclosure

through the Carbon

Disclosure Project

Building Public Trust

Award (PWC)

retained for a 2nd

year for FTSE 250

Sustainability

Reporting

2014 AT A GLANCE

We are proud to be making progress on our sustainability journey that

began when Carillion was formed in 1999. From our first Sustainability

Policy in 2001; BITC Company of the Year in 2003, ISO 9001 and 14001

accreditations in 2004; and Platinum status in the BITC Corporate

Responsibility Index, we have shown we are serious about making

tomorrow a better place. These are some of the highlights from the

reporting period:


BUSINESS

About us

2014 at a glance



Our 2020 strategy


Governance andrisk

Integrity andethics

About this report



ENVIRONMENT




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Investing in Integrity

Charter Mark

17%reduction of our

carbon footprintsince 2011

(normalised)

95%of waste divertedfrom landfill

28%reduction in water

use since 2012

51%local supplier spend

1%pre-tax profit

donated to

community

activities


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PHILIP GREEN, CHAIRMAN

Our markets remained challenging in 2014 although we beganto see signs of improvement that we expect to continue this

year, subject to there being a sustained economic recovery.

We continued to be very selective in terms of choosing the

contracts for which we bid, as we have done throughout the

economic downturn, and this was reflected in our underlying

operating margin, which remains unchanged at 5.6%.

The Groups total revenue was also unchanged at 4.1 billion,

with underlying profit before tax marginally lower at 172.9

million (2013: 174.7 million) and underlying earnings per share

at 33.7 pence (2013: 34.7 pence). Basic earnings per shareincreased by 20% to 28.0 pence (2013: 23.3 pence) and the

Board is recommending a 1% increase in the full-year dividend

to 17.75 pence.

Overall, we delivered another solid performance, but recent

history tells us that we need to remain totally focused on

strong corporate governance, high standards of ethical

behaviour and rigorous risk management. Our balanced and

ambitious commitments to economic, social and

environmental responsibility underpin our drive to become

and remain a leader in sustainability.

Our balanced andambitiouscommitments toeconomic, social andenvironmental

responsibilityunderpin our drive tobecome and remain aleader insustainability.

PHILIP GREEN,Chairman

WELCOME FROM OUR CHIEF EXECUTIVE ANDCHAIRMAN

PHILIP GREEN, CHAIRMAN

RICHARD HOWSON, CHIEF EXECUTIVE OFFICER

Business-critical sustainability, local responsibilities and long-term trust:

our Chairman and Chief Executive reflect on performance over the last 12

months.


BUSINESS

About us

2014 at a glance



Our 2020 strategy


Governance andrisk

Integrity andethics

About this report



ENVIRONMENT




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RICHARD HOWSON, CHIEF EXECUTIVEOFFICER

2014 Sustainability Review with Richard Howson

Sustainability is so important to Carillion because it makes a

fundamental difference to our business success. It is not all

about the bottom line as the health, safety and welfare of our

people and those touched by our operations always comes

first. However, economic responsibility is a key element of a

balanced sustainability strategy, and we estimate that it

contributed 27.2 million to our profit in 2014. Given our local

commitments across contracts and projects, this also created

many wider benefits for the communities in which we operate,

for our own people and for our suppliers and partners.

We are helping to regenerate deprived neighbourhoods,

offering employment where its most needed and training

people to have the right skills to enter and stay in the job

market. We are also tackling carbon emissions from our sites,

offices, vehicle fleets and supply chains and I am pleased to

report a further 17% reduction in carbon emissions since 2011,

when normalised by turnover.

All these achievements are down to the skills and commitment

of our diverse workforce, which drives the creativity andinnovation we need to compete across all our markets and

geographies. Investing in safety, training and diversity is not

optional, but business critical, and we remain focused on our

target of zero accidents.

It is easy to say that ethics and integrity are of paramount

importance, but at Carillion we really mean it. In particular, we

were proud to win the PWC Building Public Trust award for the

second year in succession the first time that a FTSE 250

company has done so and gain the Investing in Integrity

Charter Mark from the Institute of Business Ethics.

I believe the breadth, depth and success of our sustainability

programme confirms that Carillion is a recognised leader in

sustainability. In this report we have set out the evidence to

It is easy to say thatethics and integrityare of paramountimportance, but atCarillion we reallymean it. In particular,we were proud towin the PWC BuildingPublic Trust awardfor the second year in

succession the firsttime that a FTSE 250company has doneso.

RICHARD HOWSON,Chief ExecutiveOfficer
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support our claim. At the same time, we know we still have a

great deal to do to deliver our sustainability strategy and its

positive outcomes, but I am confident we will do so.


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DAVID PICTON, CHIEF SUSTAINABILITYOFFICER

Now, more than ever, sustainability is not a nice-to-have, it is

critical for long-term business success. That critical nature

extends to making sustainability a strong, balanced approach

and delivering on the Three CBs integrated approach to drive

impact: changing behaviours, commercial benefit and

challenging balance.

Changing behaviours: in order for sustainability initiatives to

take root and make a longterm impact on both business and

the community, they have to change behaviours. In the

business sense, this begins internally by encouraging best

practice, responsibility and personal commitments among our

people. It means achieving positive change by acting early and

through regular commitment.

Commercial benefit: profit can have negative connotations but

profitable businesses are in the best position to share their

value not only with shareholders but with communities, the

environment, employees and supply chains. Evidence

emerged in 2014 specifically linking sustainability with

profitability and building positive customer relationships. We

took the step a few years ago to include sustainability metrics

in our financial reporting, demonstrating that a streamlined,

responsible, ethical business can (and should) also be a

profitable one for the long term. This year weve made

steady progress in measuring the value of sustainability againstour Sustainability 2020 targets.

Challenging balance: to achieve lasting change for itself, for

organisations and for communities a truly sustainable

Now, more than ever,sustainability is not anice-to-have, it iscritical for long-termbusiness success.Sustainability needs astrong, integratedapproach whichdelivers on the ThreeCBs: changing

behaviours,commercial benefitand challengingbalance.

DAVID PICTON, ChiefSustainability Officer,Carillion

VIEWS FROM OUR CHIEF SUSTAINABILITY OFFICERAND INDEPENDENT ADVISORS

DAVID PICTON, CHIEF SUSTAINABILITY OFFICER

A VIEW FROM DAME JULIA CLEVERDON

A VIEW FROM JONATHON PORRITT


BUSINESS

About us

2014 at a glance



Our 2020 strategy


Governance andrisk

Integrity andethics

About this report



ENVIRONMENT




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business must be ambitious, challenging preconceptions and

entrenched beliefs. In sustainability terms, that also needs to

be balanced across economic, social and environmental

responsibilities. Traditionally green or environmental

considerations remain high on the sustainability agenda, but

social responsibility creates longterm legacies in the

communities where we work and live.

This year weve made steady progress in measuring the value

of sustainability and aiming for our Sustainability 2020 targets.

In sectors like construction and services, which rely

fundamentally on working with partners, its important to

recognise that collaboration is key to success. Managing

resources wisely, developing new and competitive

innovations, engaging credibly with local communities and

building long-term economic success all require learning and

skills development. This fundamentally is at the heart of our

Sustainability 2020 strategy, and we know that there is a lot still

to tackle as we work to make tomorrow a better place.

Looking ahead, were still ambitious with what we want to

achieve through our sustainability expectations and targets.

The achievements to date have set a firm platform of evidence

and benchmarks in place so much so, that we often overlook

things that we now take for granted as our daily business and

values. Its the way that we do business, but were not

complacent.

Our new Sustainability Committee will bring even greater focus

to our strategic leadership, and we will continue to test and

develop what we believe it means to be leading the way insustainability. Our target to achieve a 40 million contribution

to profit from sustainability by 2020 is stretching, but this is

how we will build a successful business and continue to make

sustainability business critical. Well need to make it as easy as

possible for our people to volunteer and capture that

evidence if were to get 50% of them involved by 2020, so

well develop a mobile application and continue to link them to

practical, relevant opportunities with our strategic community

partners.

For carbon, we need to continue reducing our footprint to aminimum, and to understand how we can address and

minimise embodied carbon together with clients and suppliers.

As we look ahead to 2020 and beyond, we need to implement

a carbon strategy that delivers clear business relevance and

appropriate impact, as our business continues to evolve and

develop in a dynamic marketplace. As we close in on an

effective zero waste to landfill, we also need to remain focused

on reducing our absolute waste production, and particularly in

the Middle East where recycling infrastructure is less

advanced.

Collaboration can often be a clich, but our support for the

Supply Chain Sustainability School is anything but that it is a

clear commitment to raising sustainability skills and working

with our suppliers across the built environment. Building on


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that, we will continue to develop regional stakeholder

engagement to understand what matters most in sustainability

to the people who buy, deliver, advise on and supply to our

business. Of fundamental importance will be the need for

responsible resource management, including FSC timber,

water and materials, capturing and working with suppliers

innovations and implementing regionally appropriate ethical

sourcing plans.

Turning finally to people, we need to be sure that wereengaging both our own people and those who are outside our

immediate business. Much effort is focused on implementing

the recommendations from the Great Debate, and to further

develop the knowledge we gained from our Materiality

Review. Sustainability comes to life through our people, their

actions, commitments, behaviours and impacts, so well

continue to make sustainability as inspiring as possible for and

through them.

WHAT NEXT?Here is a snapshot of just some of the areas we will be working

on during 2015.

Reduce costs and increase efficiency to improve

margins and deliver 32.5 million to profitability

Deliver cash-backed profit

Embed the new Board Sustainability Committee

Undertake focused stakeholder engagement to

further understand the most important issues

across our regions, including a specific materiality

review in Canada

Understand better what matters to our clients in

sustainability, and how that can help improve

customer satisfaction

Increase expenditure with local UK suppliers to 60%

Install a further 16 EcoPods to serve 644 homes and

save 50,000 tonnes of carbon

Prepare for the introduction of Business Information

Modelling (BIM) across UK Public Service

Procurement including technical and project team

training; share experiences with suppliers andcustomers; and roll out whole-life contracts in the

Middle East

Engage supply chain partners in skills development

Building a successfulbusiness

Leading the way


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and innovative, sustainable solutions

Enhance our understanding of ethical sourcing and

implement region-specific ethical sourcing plans

Be a recognised leader in health, safety and

sustainability

Develop and attract excellent people to create a

vibrant, diverse and flexible workforce

Develop a Stress and Mental Health Charter,

accompanied by tools and a training module to

reduce work-related stress and promote positive

mental wellbeing

Make ePOD learning available in the Middle East;

extend it to suppliers, partners and clientsAddress challenges to releasing our people to

participate in volunteering

Measure and monitor actions that will have the best

positive impact for the communities where we work

and liveEnsure every site has a community needs plan,

bringing our total to 100%

Continue rolling out our plan to create 5,000 new

apprentice places across the 5 years to 2020

Develop and implement our plan for carbon

reduction towards 2020, such as green energy

production and consumption; addressing the

embodied carbon of our projects; and helping

customers reduce their carbon

Continue our focus on transparency and climate

change adaptation under CDP aiming to maintain

our lead of the Industrials sector

Tackle our target of sending effectively zero non-

Providing better prospectsfor our people

Supporting sustainablecommunities

Enabling low-carboneconomies



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hazardous waste to landfill by the end of 2015

Strengthen relationships with waste removal

providers

Maintain our focus on sourcing FSC timber, and

wider ethical sourcing initiatives

A VIEW FROM DAME JULIA CLEVERDON

In this tough year for business competitive advantage, Carillion

have made some important gains in the long-term

sustainability of the business not just in the UK but in the

Middle East and Canada as well. Visiting the Carillion team in

Canada I was impressed to see, at first hand, both the progress

on sustainability auditing through their supply chain and the

potential for leadership in ensuring quality aboriginal

employment and training opportunities. The acquisition of a

49% interest in the Bouchier Group will give an incredible

opportunity to develop more high-quality employment

practices for the First Nation people.

In the UK, Carillion are increasingly able to illustrate, measure

and monetise the benefits of employee engagement and

community impact, and investors are taking note. Richard

Howsons strategic leadership on the Board of Business in the

Community is driving forward the Business Connector

programme showing the social value of high-powered

business secondees building private, public and community

partnerships in some of the UKs most deprived communities.The social value for Carillion in pioneering the Community

Needs plans for all major contracts is clear Liverpool,

Battersea and Kings Cross are flagships already delivering

replicable results. Construction and rail businesses are

increasingly able to share the evidence of work winning

through collaborative partnerships with clients impacting on

communities. The target of employing 1% of all army reservists,

announced this year, in partnership with the MOD is both

strategic in attracting talent and builds our reputation as a

values-driven business.

Last year, I applauded our progress towards achieving the

target that the Board should be 25% female by 2015. However

important non-executive directors are as role models, what

has been termed pink parachute silk is not going necessarily

to build the executive pipeline. We need to achieve 29% female

executives by 2020 to achieve our goal so it is encouraging

that as a result of focused internal leadership we have made it

for the first time into the Times Top 50 employers for women.

A critical part of Carillions long-term sustainability will come

from winning the war for talent and skills and progress has

really been made this year!

A critical part of

Carillions long-termsustainability willcome from winningthe war for talent andskills and progresshas really been madethis year!

DAME JULIACLEVERDON DCVO,CBE, Vice Presidentof Business in theCommunity andSpecial Advisor toThe Princes Charities


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A VIEW FROM JONATHON PORRITT

Sustainability is a many-splendoured thing! And todays

sustainability reporting reflects that, getting both more

comprehensive (in overall scope) and more forensic (in its

detail) all the time. Carillions report is a model of its kind,

embracing the full gamut of environmental, social andgovernance issues, with constant connectivity back to a core

economic rationale.

As the report says: Sustainability makes us more profitable:

fact. And a 27.2 million contribution to net profit in 2014

makes for a good starting-point for the companys new Board

Committee for Sustainability itself an important and

innovative affirmation of the centrality of sustainability to

Carillions future success.

But theres a lot more than profit that has to be taken intoaccount when thinking about long-term value creation. Many

companies in the UK are now working hard on the metric of

social value, systematising the diverse ways in which big

companies can support the communities in which theyre

working (Carillion has very nearly reached its target of 100% of

big projects having a Community Needs Plan), their suppliers

(for whom the simple story behind prompt payment matters

enormously), and the local economies they can enrich by

guaranteeing high levels of local spend in Carillions case,

an average of 51% across all projects, and an outstanding 60%

at the Royal Liverpool Hospital.

All of which, and all its core project delivery in the UK and

internationally, has to be done in ways that keep driving down

Carillions overall carbon footprint. The results show how

stretching this can be, especially with its operations in Canada.

Overall, a reduction of 17% in carbon intensity (the amount of

greenhouse gas emitted per million dollars of turnover) is

impressive. But theres a long way to go before these relative

reductions are turned into absolute reductions, as part and

parcel of Carillions ambitious and still crucially important

target of becoming carbon neutral by 2020.

Ambitions of this kind can only be delivered through consistent,

top-down leadership from the Board and the CEO, combined

with opportunities for all Carillions staff,in whatever role, to

play their part in blazing this particular low-carbon trail.

Sustainability is amany-splendouredthing! And todayssustainabilityreporting reflectsthat, getting bothmore comprehensive(in overall scope) andmore forensic (in its

detail) all the time.Carillions report is amodel of its kind,embracing the fullgamut ofenvironmental, socialand governanceissues, with constantconnectivity back to acore economicrationale.

JONATHON PORRITT,

Founder Director ofForum for the Future


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We will increase shareholder value through our sector

leadership and focus on profit contribution through

sustainable efficiencies, value creation and waste

elimination.

We will be recognised as the benchmark in sustainability

and innovation, in turn driving demand as the service

provider of choice for our customers.

We will maximise the prospects of our people by offering

opportunities for continual learning and development, and

create safe, healthy places to work.

27.2mprofit contributionthrough sustainabilitystrategy

Carillion is a member ofthe FTSE4Good Index,which measures theperformance ofcompanies that meetglobally recognisedcorporate responsibilitystandards.

OUR 2020 STRATEGY

SUSTAINABILITY IS DRIVING PROFIT

ENGAGING WITH OUR STAKEHOLDERS

BROKER RESEARCH NOTE

STAKEHOLDER PRIORITIES

A structured plan and stretching targets: these are what our stakeholders

expect of us and what drive tangible benefits to our bottom line. Thats

why we launched our vision and strategy in 2011 and our six positive

outcomes to guide our work.

Building a successfulbusiness

Leading the way with ourcustomers and suppliers



BUSINESS

About us

2014 at a glance



Our 2020 strategy


Governance andrisk

Integrity andethics

About this report



ENVIRONMENT




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Our leadership in creating employment and skills

opportunities, coupled with our understanding of

communities needs, will have a significant and net

positive contribution everywhere we work.

Our services will help Carillions customers work towards

minimising carbon, so together we become the lowest

carbon producers in our respective sectors.

We will work with our customers and suppliers to be best

in class in reducing waste, managing use of water and raw

materials, and protecting biodiversity wherever we

operate.

The strategy is owned by our Board of Directors and delivered

at all operational levels through tight governance controls. We

set clear targets for each of the outcomes, which we reviewannually. Read more in Targets and performance.

Sustainability is driving profit

The sustainability initiatives and practices followed across

our businesses made a net contribution to profit of 27.2

million in 2014. Our target is to achieve 40 million by

2020. The target is a personal performance measure,

linked to remuneration, for our Chief Executive and for theBoard. This Key Performance Indicator is reported through

monthly trackers, approved by each Business Unit Finance

Director. It is built through cost efficiencies which include

fuel and travel cost reduction, waste management, lean

operational excellence, contract efficiencies and material

reuse.

Our first MaterialityReview gave us somevaluable insights intothe views of key

stakeholders wellbuild on that todevelop ourunderstanding andfocus our efforts as asustainable, forward-looking business.

JOHN PLATT,Strategic GrowthDirector

The profit

contribution from ourSustainability 2020strategy is significantand growing all thetime, proving that far from simply being

We are a member ofBusiness in theCommunity (BITC) andparticipate in the BITCCorporate ResponsibilityIndex, which ranked us aFour Star company.





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Impressive site visit to Battersea Phase 1

Construction project. Potentially more to come.

Sustainability clearly helped Carillion win the bid.

We also believe that Carillion has had a strong

period of contract news and is gradually moving

up the value chain.

The site visit coincided with the launch of Carillionssustainability report. It is easy to be cynical about

this. However, having spoken to the customer,

sustainability was very important to the customer,

as it was at the Royal Liverpool.

VIEW ALL CASE STUDIES

ENGAGING WITH OUR STAKEHOLDERS

At Carillion, our stakeholders include our people, clients,

shareholders and investors, supplier partners, charities,

industry organisations and people living in the communities

where we operate. We use a stakeholder framework to:

understand why engagement is required;

identify relevant stakeholders and impacts; and

decide on forms of engagement and record the

outcomes.

We involve stakeholders in developing and reviewing our

2020 sustainability strategy; in deciding which issues to focus

on; and in sustainability initiatives through the year (see case

studies).

Broker research note

The following summary is taken from a research note

published by Liberum after one of its analysts attended the

launch of last years sustainability report at Battersea

Power Station, where Carillion is building the first phase of

this major redevelopment.

nice to have building a sustainablebusiness is critical forshareholder valueand long-termcommercial success.

RICHARD ADAM,Group FinanceDirector
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The new Royal Liverpool Hospital is a Public Private

Partnership Project being delivered by Carillion.


STAKEHOLDER PRIORITIES

In 2014, we conducted our first materiality review to

understand our stakeholders most significant priorities and

report on what matters to them. The independent review

included workshops, interviews and an international online

survey for employees, clients, governments, investors,

suppliers, community groups and sustainability organisations.

We received 360 responses to our online survey. The majority(80%) of responses were from employees, and most of these

were based in the UK. We will be looking to diversify this going

forward. Some of the most material issues identified were:

people engagement: people want to hear more about

what were doing, and see even more progress around

diversity, retention and recruitment. Additionally, safety,

health and wellbeing were particularly significant

factors;

building a successful business: our financial

performance clearly matters, and we need to help

people see both the role that they can play and the clear

link to our strategy and reputation;

supply chain: continued progress on our early payment

facility, supplier relationship management and

sustainability upskilling through the Supply Chain

Sustainability School;

waste: making progress on the overall reduction of

waste produced to build on our achievements to date

with diversion from landfill;

skills and local engagement: people want to see the clear

delivery of local solutions for and with local companies

and their communities with a focus on providing

apprenticeships, education, employment and skills;
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human rights: we need to remain committed to and

investing in appropriate management processes to

deliver responsible labour, welfare and employment

practices; and

governance and management of sustainability: people

want to understand how our sustainability strategy is

managed throughout the various levels of the business.

The materiality review also included eight in-depth interviews

with key clients across both commercial and public sector

contracts. They told us that:

competence and delivery are critical to building trust,

creating long-term relationships and when selecting

suppliers;

sustainability is important in tenders but price remains

the dominant factor;

Carillions senior team are good at conveying

sustainability, its relevance to clients and sustainabilityas business as usual;

we need to challenge our contract partners and clients

to drive sustainability consistently from tender through

to design, delivery and service management.

The Materiality Review was reviewed in depth by our Integrated

Management Strategy (IMS) teams across the business units,

and by Carillions Group Sustainability Committee which then

helped to inform and determine the content of this report, as

well as re-focusing sustainability priorities, targets andchallenges.

Further to the Group process, in 2015 we will be undertaking

focused stakeholder engagement to further understand the

most important issues across our regions, starting with a

materiality review in Canada.


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EVOLVING PRIORITIES

Halfway through our 2020 strategy, our strategy continues to

evolve. This year, we have modified our targets and results

table to encompass new targets and set others aside where

they have now been achieved. Some original targets have also

evolved to reflect the dynamic nature of conducting our

business (for example, absolute fuel consumption, as detailed

in Enabling lowcarbon economies). Other targets have run

their natural course and are fully embedded and implementedas policy.

Target achieved

Behind schedule

Verified by Bureau

Veritas

Verified by other

external party

KEY

TARGETS AND PERFORMANCE

EVOLVING PRIORITIES

BENCHMARKING

Communicating performance is key to transparency and we update onprogress in areas that matter to our stakeholders. By celebrating

achievements and understanding where we can do better, we continually

shape our strategy to be even more ambitious.

Our key performance indicators (KPIs) are developed in collaboration with stakeholders as part of

our 2020 sustainability strategy, and data and other information for measurement against our

business unit KPIs is gathered and stored by our Capture system to enable accurate international

tracking and performance analysis.

VERIFIED 2014 TARGET2014PERFORMANCE

2015TARGET

LONG-TERMTARGET

Carillion will contribute 25 million toprofitability through sustainabilityactions

READ MORE

27.2million

32.5million

40millionby2020



BUSINESS

About us

2014 at a glance



Our 2020 strategy


Governance andrisk

Integrity andethics

About this report



ENVIRONMENT


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2015TARGET

LONG-TERMTARGET

Maintain Level 4 of Sustainable

Procurement Task Force FlexibleFramework and work towards Level 5

READ MORE

Achieved Level 5 Level 5

by 2015

10% of suppliers to respond positivelyto sourcing materials and productsfrom responsible and ethical sources

READ MORE

35% 40% 100%by2020


2015TARGET

LONG-TERMTARGET

39% reduction in All AccidentFrequency Rate (AAFR) against a 2011baseline

READ MORE

49% 56% 70% by2020

75% of employees feel proud to be

part of Carillion (Great Debate survey)READ MORE

65% 75% 80% by

2020

15% of employees utilise the Carillionspecial leave policy for volunteering inareas where we work

READ MORE

14% 22% 50% by2020


2015TARGET

LONG-TERMTARGET

45% local spend including small andmedium enterprises (SMEs) in the UK

READ MORE

51% 60% Maintainat 60%

88% of Carillion apprentices whocomplete their framework will have anemployment outcome

READ MORE

87% 90% 95% by2020

100% contracts to have a communityneeds plan

READ MORE




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1% pre-tax profits donated tocommunity activities either in cash orkind

READ MORE

1% 1% 1%

4% of schools, unemployed and hardto reach groups to develop skills toenter employment

READ MORE



2015TARGET

LONG-TERMTARGET

11% reduction on our carbonfootprint (against a 2011 normalisedbaseline)

READ MORE

17% 20% 24% by2020

19% reduction in gas consumptionfrom Carillion offices (against a 2011degree days normalised baseline)

READ MORE

11% 20% 20%reductionby 2015

15% reduction in electricityconsumption from Carillion offices(against a 2011 baseline)

READ MORE


100% contracts to have a CarbonReduction Plan

READ MORE



2015TARGET

LONG-TERMTARGET

96% waste diverted from landfill

READ MORE

95% 98%(zerowaste)

Zerowaste tolandfill

15% reduction in water consumption(against a 2012 normalised baseline)

READ MORE


100% sourced timber will meetForest Stewardship Council orequivalent standards

READ MORE


1. Hard to reach covers a wide range of groups and are those with real or perceived barriers toengagement/employment.

1



2

3

4
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BENCHMARKING

We also participate in benchmarking exercises, to understand

our performance against best practice and be the leader in our

industry sector. We are proud to be listed in leading indices,

including the FTSE4Good Index Series and Business in the

Communitys (BITC) Corporate Responsibility Index.

2. 2% of our waste is hazardous or non-recyclable therefore a 98% diversion rate is equivalent tozero waste to landfill.

3. Operational water reduction (using 2012 baseline and normalised by turnover) was 28%. TheCarillion Estate water consumption increased by 12% (using 2012 baseline and normalised bysquare footage).

4. Timber performance data from 2013 report as 2014 data not available at time of publication.

BITC CR Index

% 2013 2014 2015

Carillion score 96 96 97

All index participants 90 85 91


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GOVERNANCE AND RISK

MANAGING SUSTAINABILITY

OUR BOARD SUSTAINABILITY COMMITTEE

REMUNERATION

SHAREHOLDER RELATIONSRISK MANAGEMENT

Effective corporate governance is the basis of how we do business. It

provides confidence in what we are trying to achieve for the shareholders,

customers, partners, suppliers and the communities within which we

work.

Carillion has put in place comprehensive policies, management structures and processes that are

applied rigorously to ensure that the company complies with the requirements of the UKCorporate Governance Code (September 2012). Furthermore, our Chairman and Company

Secretary conduct a formal and rigorous annual evaluation of the Board, its committees, their

procedures and performance. Read more about corporate governance in our 2014 Annual

Report and Accounts(PDF 5.7 MB).

MANAGING SUSTAINABILITY

Our sustainability governance ensures our operations, targets

and plans are managed and delivered in a consistent,responsible and transparent way. Richard Howson, Carillions

Chief Executive, is responsible to the Board for sustainability,

while Chief Sustainability Officer, David Picton, is accountable

for sustainability across the Group. A Board Sustainability

Committee has been introduced, chaired by Dr Ceri Powell, a

Carillion Non-Executive Director, and is now in operation. This

will provide oversight on behalf of the Board for priorities,

targets and challenges material to the Sustainability 2020

Strategy and its management across the Group.

Our Board and Executive leadership teams are also advised bya Sustainability Advisory Committee, which includes directors

from our business units as well as two independent external

advisors Dame Julia Cleverdon DCVO, CBE (Vice President of

Business in the Community and Special Advisor to The Princes

Connectingindustry andParliamentCarillions ChiefSustainability Officer

David Picton wasappointed Commissionerto the Industry andParliament TrustSustainabilityCommission in


BUSINESS

About us

2014 at a glance



Our 2020 strategy


Governance andrisk

Integrity andethics

About this report



ENVIRONMENT


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Charities) and Jonathon Porritt (Founder Director of Forum for

the Future).

Philip Green was appointed to the Carillion Board in June 2011

and was elected Chairman in May 2014. Philip is also Chairman

of both the Nominations and Business Integrity Committees.

Philip was awarded a CBE in the 2014 Queens Birthday

Honours List. He received the award for services to business

and to charity in the UK and South Africa. Philip is the

corporate responsibility advisor to the UK Prime Minister,David Cameron.

The operational delivery of the Sustainability 2020 strategy is

overseen by the Group Sustainability Committee which

includes our operational Managing Directors, as well as key

functional heads from our corporate teams. The work of these

committees is underpinned by a rigorous set of policies,

procedures and operational tracking processes to deliver

business unit plans, each of which also has a steering group to

track progress against Sustainability Leadership Plan targets.

Our sustainability management systems are fully integrated

across the business. They govern our 2020 strategy, help

provide assurance for clients and suppliers, and support risk

management processes. All our operations in the UK, Middle

East and North Africa are certified to the ISO 14001

international environmental standard, as is Carillion Canadas

Roads Maintenance division in Ontario.

BOARD OF DIRECTORSThe Board reviews progress monthly. Richard Howson,

Chief Executive, has Board-level responsibility for

sustainability while Chief Sustainability Officer, David

Picton, has overall accountability for sustainability across

the Group.

SUSTAINABILITY ADVISORY COMMITTEEThe Sustainability Advisory Committee makes

recommendations to the Board. It is made up of

representatives from our business units as well as two

Chairing the BoardSustainabilityCommittee is animportant

opportunity to makesure that Carillionsaward-winningsustainabilityprogress to dateremains ambitiousand relevant.Resilience andbalance will becomeever morefundamental toresponsible andforward-thinkingbusinesses.

DR CERI POWELL,Carillion Non-Executive Director

September 2014. TheCommission exploreshow business andgovernments can worktogether to promotemore sustainablebusiness practices.

CSR LabelAl Futtaim Carillion has

recently been accreditedwith the Dubai ChamberCSR Label awardrecognising ourcommitment to operatingresponsibly.


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independent external advisors. See Independent Advisor

statements.

BUSINESS LEADERS SUSTAINABILITYCOMMITTEEThe Board also engages with the Business Leaders

Sustainability Committee, which is chaired by the Chief

Sustainability Officer and oversees the delivery of our

2020 sustainability strategy. The Chief SustainabilityOfficer implements the strategy via workstreams covering

the six outcomes, interfacing with working groups in each

of the business units.

BUSINESS STEERING GROUPEach of our businesses also has a steering group to track

progress against Sustainability Leadership Plan targets.

POLICY, PROCEDURES AND MANAGEMENTSYSTEMSSustainability is embedded across the Carillion Group via a

number of policies, procedures and use of our

management systems, which are certified to OHSAS 18001

and ISO 14001. In 2012, we launched Capture, a web-based

data collection system for each contract to report safety

and sustainability progress. See Health and Wellbeingand

Environmental Management.

However, the Board recognises that on their own policies

and procedures are not enough and, in order to achieve

consistently high standards of governance and service

excellence, we have to ensure that our values are at theheart of everything we do. Our values are helping to shape

the culture, character and beliefs of our business. For

more information on our values visit About us.

Our Board Sustainability Committee

Dr Ceri Powell was appointed to the Carillion Board as a

Non-Executive Director in April 2014. Ceri is a member ofthe Audit, Remuneration, Nomination and Business

Integrity Committees and Chair of the Sustainability

Committee. Ceri is also a member of the Advisory Board of

the United Nations Sustainable Energy for All initiative,

chaired by the Secretary General of the UN, Ban Ki-moon.

From 2015, Dr Powell will chair a new Board Committee for

Sustainability, set up to assess strategic issues, the delivery

and future development of Carillions sustainability

outcomes and advising on:

sustainability strategy, values and policies;

annual sustainability report;

annual management report from our sustainability
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auditors;

sustainability legislation and regulations; and

engagement with internal and external stakeholders

on sustainability.


REMUNERATION

In 2014, the Chief Executives objectives included, to lead the

Groups health and safety and sustainability strategies and aim

to deliver continuous improvement in performance.

Our target is to achieve by 2020 a 40 million contribution to

profit as a result of our sustainability programme. It is also one

of our Chief Executives annual bonus targets, sitting alongside

other social, environmental and governance measures to

create a balanced sustainability programme.

Our policy is to ensure that remuneration and other benefits

attract, motivate and retain Executive Directors and senior

managers of the calibre required to achieve the Boards

objectives, including economic responsibility and growth in

shareholder value. Our remuneration policy is derived from

our strategic objectives, which specifically include achieving

leading standards of sustainability, health and safety,

environmental and social performance.

We aim to ensure that pay is fair, consistent and appropriate to

our culture and community. For our full statement and more

details on remuneration, see our 2014 Annual Report and

Accounts(PDF 5.7 MB).

SHAREHOLDER RELATIONS

We welcome and encourage engagement with shareholders.Our contact details are available on our website.The Board

and senior management team communicate regularly with our

shareholders through:
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our Annual Report and Accounts;

our half-year report;

regulatory announcements;

presentations and site visits;

meetings with current and prospective shareholders;

and

our Annual General Meeting.

RISK MANAGEMENT

The Board is ultimately responsible for ensuring that the

Groups risk management systems are suitable for identifying

and evaluating significant sustainability risks. Alongside our

legal obligations and anti-corruption measures, we invest in

integrity with our rigorous business integrity policies and

procedures. Managing social, environmental and ethical risks

is also an integral part of delivering contracts successfully.

We evaluate risk at every stage, from initial thought processes

to assessing how suppliers and subcontractorsare likely to

perform through our supply chain managementsafeguards.

For our people, risk management is practical and structured

but also a reflection of their attitudes. We use the following

processes to manage risk correctly:

independent, external auditors review financial controls

and other business systems to ensure they are

operating effectively;

peer reviews are carried out within each business unit

by teams of impartial representatives from other parts

of the business empowered to ensure compliance with

comprehensive guidelines;

all our people are encouraged to raise genuine concerns

about malpractice at the earliest possible stage,

including a confidential whistleblowing hotline; and

robust anti-bribery and corruption policies. (PDF 95 KB)

See below for our table of sustainability-specific risks.

SUSTAINABILITY RISK MITIGATION

Reduction in public spending on

construction contracts

Potential growth in our services business as

governments look to subcontract work to help

deliver cost savings

New business opportunities in sustainable

products and services with new and existing

clients

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Difficulties operating in existing or new

overseas regions and markets where

there is potential for political unrest or

change

Employing people with appropriate experience

when tackling new markets and regions

Deploying high-quality project directors in new

regions

Ensuring that key joint venture partner

relationships are managed at the highest level in

Carillion

Carillion employees involved in

allegations of bribery or corruption,

leading to potential prosecution and

damage to reputation

Bribery and governance policies for all senior

management and operational teams, backed up

by specific, targeted training

Volatility affecting price predictions for

the duration of a contract

Hedging against price increases, assessing scope

for risk mitigation or sharing and continuing to

focus on optimising cost efficiencies


Losing or failing to win contracts as a

result of poor customer service

Winning and retaining contracts through our

proactive service and sustainable products

Reputational damage by association

with a supplier with poor sustainability

performance

Working with suppliers to enhance their

sustainability performance and continuing as a

funding partner to Supply Chain Sustainability

School

The financial stability of our customers,

partners and suppliers

Applying rigorous selectivity criteria in relation to

financial stability, security of project funding and

contractual terms and conditions; provision of

Early Payment Facility

Failure to support local and SME

businesses, resulting in loss of work

with public sector organisations and

lack of diversity in supplier base

Targets set for local and SME spend; SME charter

and support through initiatives such as Supply

Chain Sustainability School


Moral, legal and financial risks through

accidents or incidents to our people or

subcontractors

Continue to embed, develop and enforce our best

in class health and safety standards and practices

across our business

Employee dissatisfaction, leading to a

reduction in retention and our ability to

deliver on contracts

Great Debate survey and follow-up actions to

deliver upon feedback given




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Risks to health and wellbeing among

our people, affecting their welfare and

ability to perform their roles

Providing opportunities for a better work-life

balance through flexible working and Health Like

Safety campaign

Lack of diversity among employees not

reflecting customer base

Investment in diversity programmes, action plan,

targets and advisory programmes such as

Business in the Communitys Opportunity Now

Lack of compliance with local labour

laws, appropriate welfare and humanrights standards, evolving anti-slavery

legislation and employment practices

Ensure that our HR and procurement policies,

guidance and practices adhere to theInternational Labour Organisations core

conventions, align with international ISO

standards and regional laws, and can align with

Carillions values

Recruiting and retaining key people

throughout our businesses

Address key issues arising from employee

engagement; using the Carillion Leadership

Programme as a pipeline for future leadership

talent


Reputational damage in the

communities where we work, leading

to a reduction in repeat business

Enhancing our reputation in the community with a

strategic programme of investment in

sustainability and community engagement

Youth unemployment and skills

shortages

Ensuring a future pipeline of skilled individuals

through our education and training programmes,

plus our commitment to national initiatives such

as YourLife in the UK

Safeguarding when working with young

and vulnerable people

Increasing awareness on safeguarding through

training available to employees

Failure to understand our clients and

local community requirements and to

respond to them

Tailoring our community needs plans and

programme delivery to suit the local needs and

appropriate expectations


Trailing behind the market for low-

carbon products and services

Innovate and launch services that deliver financial

and carbon savings to clients

Climate change impacts affecting our

business

Continued commitment to climate change

mitigation and business continuity plans to

mitigate localised regional risks




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National carbon targets being set Continued commitment to carbon reduction and

minimising our footprint

Increase in costs as energy costs

increase

Investigate and invest in appropriate renewable

energy opportunities and other means to

optimise energy security


Biodiversity:

Failure to comply with local legislation

or contract biodiversity requirements

Biodiversity:

Building mutually beneficial partnerships with

organisations such as The Wildlife Trust to

develop environmental management policies,

backed up by specific, targeted training andsystems for managers and operational teams

Waste to landfill:

Financial implications as costs rise

Reputational risk of not taking enough

action to tackle waste

Waste to landfill:

Reduce costs by diverting waste and assess

scope to realise value from waste

Increase engagement with key stakeholders and

advisory groups to target an effective zero waste

to landfill and minimise waste overall

Resource management:

Loss or decline of resources needed for

our business, specifically timber and

water, and consequent price rises

Resource management:

Building mutually beneficial partnerships with

organisations such as the Forest Stewardship

Council (FSC-UK)

Investigate and invest in appropriate alternative

resource use

Pollution prevention:

Prosecution for failure to comply with

local legislation

Pollution prevention:

Environmental management policies, backed up

by specific, targeted training and systems for

managers and operational teams

Ethical sourcing:

Purchasing products and materials that

havent been responsibly and ethically

sourced

Lack of waste recycling facilities in

some of our Middle East operations

and geographical dispersal of our

operations in Canada

Ethical sourcing:

Timber strategy and policy through WWF Global

Forest & Trade Network, targets and evidence

for local spend with small and medium

enterprises, alignment to UK Flexible Framework

principles

Investigating opportunities to create the

infrastructure to support our operations in these

areas, or to partner with appropriate specialist

organisations



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Investing in Integrity

Our international operations were awarded the Investing in

Integrity (IiI) Charter Mark following a rigorous

accreditation process involving 3,000 of our people. The

Charter Mark enables us to reassure stakeholders that we

commit to acting with integrity at all times: we are the only

business in our sector to achieve it.

The independent accreditation included site visits,

interviews and surveys carried out by an independent

1,500hourstraining delivered to 330senior employees incompetition, ethics and

business integritypolicies in 2014

INTEGRITY AND ETHICS

INVESTING IN INTEGRITY

ZERO TOLERANCE APPROACH TO CORRUPTION

WHISTLEBLOWING

FALSE CLAIMS ABOUT BLACKLISTING

A range of policies and procedures mandate that everyone who works at

Carillion does so with high ethical and moral standards.

Our Board also expects suppliers and customers to share this commitment, as outlined in our

Ethics and Business Integrity Policy. An independent committee of the Board, the Business

Integrity Committee, reviews and oversees the implementation of the Groups Ethics and

Business Integrity Policy. It also monitors Carillions compliance with relevant legislation, such as

the Bribery Act 2010 and the Competition Act 2006.

The Business Integrity Policy applies to all Carillions businesses through a series of detailed

procedures. They allow us to maintain our reputation for conducting business to the highest

ethical standards, which are essential to its relationships with customers, business partners, our

people, shareholders and the public.

Our Ethics and Compliance Office provides dedicated support for this work, and our Directors

and senior managers complete annual compliance returns to ensure our approach remains

appropriate.

Carillions Ethics and Business Integrity Response Plan outlines the actions that should be taken in

the event of a suspected policy breach. It ensures investigations are conducted fairly anddecisions are taken by suitable individuals.


BUSINESS

About us

2014 at a glance



Our 2020 strategy


Governance andrisk

Integrity andethics

About this report



ENVIRONMENT




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assessor (the Good Corporation), alongside analysis of

ethical policies, procedures and practices.


ZERO TOLERANCE APPROACH TOCORRUPTION

We absolutely prohibit bribery or corruption of any kind,

including both the offering and accepting of bribes, through our

Disciplinary Policy. We mandate our people and others to

come forward if they witness or suspect unethical behaviour

that is in potential breach of our policy. Gifts and hospitality and

conflicts of interest must be declared and documented.

We continue to provide our people with face-to-face and online

training on our competition, ethics and business integrity

policies. In 2014 we delivered face-to-face training to over 330

senior employees, as part of a company-wide training rollout.

Carillion has a zero tolerance approach to fraud and

corruption. Internal Audit works alongside independent

managers to investigate allegations and prevent and detect

improper behaviour. Carillions Audit Committee receives

regular updates on all allegations reported, and investigation

outcomes.

RESPECT FOR HUMAN RIGHTS

We believe that human rights are universal and we support the

United Nations Declaration on Human Rights, as laid down in

our Ethics and Business Integrity Policy(PDF 98 KB). Employees

are trained on this policy and we report performance through

the Competition Act training statistics. All suppliers have to sign

up to the policy and monitoring compliance is the

responsibility of our Group Compliance Office.

We work hard to ensure that in all areas of interaction with

employees, clients, suppliers, third parties, interviewees and

joint venture parties, that everyone is protected and treated

By signing up toInvesting in Integrity,Carillion has begun ajourney which will bechallenging andrewarding. They haveworked hard acrossthe UK, Middle Eastand Canada to gain

accreditation. Byachieving IiI, Carillionhas demonstratedthey are seriousabout behavingethically.

PHILIPPA FOSTERBACK CBE, Director,Institute of BusinessEthics

Now more than ever,the public rightly

expects businessesto behaveresponsibly andopenly. For Carillionpeople, this is exactlyhow we operate across ourinternationaloperations and thiswas key to usachieving theInvesting in IntegrityCharter Mark.

RICHARD TAPP,Company Secretaryand Legal

PwC BuildingPublic TrustAwardfirst FTSE company toretain the FTSE 250Sustainability ReportingAward for a secondconsecutive year
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absolutely fairly. See the Promoting diversitysection for more

information.

WHISTLEBLOWING

We actively encourage our people to raise concerns about

fraud, corruption, or any other malpractice at the earliest

possible stage. They can do this by talking to their managers or

through monthly Team Talks and feedback sessions. We also

have a confidential whistleblowing hotline provided by an

independent third party. Details of our approach are in our

Whistleblowing Policy.

In 2014, 210 whistleblowing cases were reported across

Carillion. Of these cases, 122 related to fraud, 59 related to HR

and 29 cases were categorised as other.

As at 31 December 2014, 164 cases have been investigated and

closed, and among these closed cases, 51 resulted in either

disciplinary action taken against our people, thereimbursement of losses or the implementation of control or

process improvements to prevent or reduce the likelihood of

the impropriety occurring again. The remaining 113 cases were

either unfounded or required no action. As at 31 December

2014, 46 whistleblowing investigations were in progress.

FALSE CLAIMS ABOUT BLACKLISTING

Along with other companies in the construction industry, over

the past few years Carillion has been accused of beinginvolved in the illegal blacklisting of workers. This is not true.

Blacklisting relates to the use of the Consulting Association

database many years ago by companies in the industry. At

Carillion, we pride ourselves on our strong Values and high

standards of corporate governance and we do not condone or

engage in blacklisting. A former Carillion subsidiary did access

this database but this practice was stopped, voluntarily, over a

decade ago and before it became unlawful. Since then we have

apologised for our use of the database and any damage it may

have caused. To provide an accurate picture we have set up asection of our website with regards to false claims about

blacklisting.

We apply the sameglobally recognisedstandards of excellenceto all our operations,whatever thejurisdictions. See how wehave done this in Qatar.
http://www.carillionplc.com/response-to-blacklisting-accusations/blacklisting-what-actually-happened.aspx#.VHSmuYusW1Uhttp://www.carillionplc.com/response-to-blacklisting-accusations/blacklisting-what-actually-happened.aspx#.VHSmuYusW1Uhttp://www.carillionplc.com/response-to-blacklisting-accusations/blacklisting-what-actually-happened.aspx#.VHSmuYusW1Uhttp://www.carillionplc.com/response-to-blacklisting-accusations/blacklisting-what-actually-happened.aspx#.VHSmuYusW1U


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SCOPE

The report covers Carillions international operations during

the 2014 calendar year, encompassing the UK, Canada, the

Middle East and North Africa (MENA).

We have reported on activities and projects undertaken as part

of our various joint ventures, depending on our influence on

their operations and the size of our shareholdings in them.

Where Carillion people are seconded to a joint venture, we

include them in the data but exclude the Joint Ventures

operations.

GLOBAL REPORTING INITIATIVE

This report has been prepared in accordance with the GRIs G4

guidelines at core level, reporting against self-selected

indicators based on material aspects.

See our GRI Index. (PDF 224 KB)

ASSURANCE

Bureau Veritas, an independent professional services and

compliance specialist, has assured our performance against

specific sustainability targets, factual statements and

Carillions 2013sustainability reportdemonstrated thatsustainability is anintegral part of its

core business andthe company wantsto communicate theissues in an open andaccessible way. Thereport demonstratesa clear understandingof the sustainabilityimpacts of thebusiness and howthis links to futureviability of the Group,especially aroundresource usage. Inaddition, Carilliondemonstrated someinteresting andinnovative ways ofpresenting

We welcome yourfeedback on this report

and our approach tosustainability. If you haveany comments orquestions please contactus

ABOUT THIS REPORT

SCOPE

GLOBAL REPORTING INITIATIVE

ASSURANCE

This is our 15th sustainability report. It is structured around the six positive

outcomes of our 2020 strategy and aligned to our material issues, as

guided by our stakeholders. This report, alongside our sustainability

strategy and policies, is available on our corporate website.


BUSINESS

About us

2014 at a glance



Our 2020 strategy


Governance andrisk

Integrity andethics

About this report



ENVIRONMENT


http://sustainability2014.carillionplc.com/assets/files/carillion-sr2014-gri.pdfmailto:[email protected]:[email protected]:[email protected]:[email protected]://sustainability2014.carillionplc.com/assets/files/carillion-sr2014-gri.pdf


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performance data related to the targets within the content of

this report. See the assurance statement below.

BUREAU VERITAS INDEPENDENTVERIFICATION STATEMENTTo the stakeholders of Carillion plc.

INTRODUCTION AND OBJECTIVES

Bureau Veritas has provided independent verification over thestated achievement of a selection of Carillion plcs (Carillion)

2014 sustainability targets against a 2011 baseline, as reported

in its 2014 Sustainability Report (the Report), the methodology

and approach for gathering carbon footprint data. The

objective of our work is to assurance to Carillions

stakeholders over the level of achievement of the selected

targets and of the reliability and accuracy of the supporting

performance data.

SCOPE AND METHODOLOGY

The information and data reviewed for this verification processcover the reporting period: 01 January 2014 31 December

2014, and all the Carillion businesses across the UK, Middle

East and Canada.

In order to form its conclusions, Bureau Veritas conducted the

activities outlined below:

Phone interviews with key Carillion personnel (Head

Office and Regional Staff);

Review of data management and data accuracy through

interrogation of spreadsheets and sampling of selectdatasets;

Review of supporting documentation (including: policies,

procedures, minutes of meetings, email

correspondence, presentations, invoices);

Review of consolidated site and business unit

sustainability data sets.

Carillions sustainability targets and their stated level of

achievement, as subject to the verification, are presented in the

table below.

WHAT CARILLION SAID 2014

Maintain Level 4 of Sustainable ProcurementTask Force Flexible Framework and worktowards Level 5

Achieved

information andengagingstakeholders, such astheir 2020Sustainability Visionbrochure and theSustainability Talk &News initiative.

ALAN MCGILL,

Partner, Sustainabilityand Climate Change,PwC

Leading the way with ourcustomers and suppliers


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39% reduction in All Accident Frequency

Rate (AAFR) against a 2011 baseline

49%


45% local spend including SMEs in the UK 51%

100% of contracts to have a communityneeds plan

96%

1% of pre-tax profits donated to communityactivities either in cash or kind

1%


11% reduction in carbon footprint (against a2011 normalised baseline)

17%

19% reduction in gas consumption fromCarillion offices (against a 2011 degree daysnormalised baseline)

11%

15% reduction in electricity consumptionfrom Carillion offices (against a 2011baseline)

25%


96% of waste diverted from landfill 95%

15% reduction in water consumption (against

a 2012 normalised baseline)

28%

BUREAU VERITAS OPINION






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It is Bureau Veritas opinion, based on the verification activities

as per the scope and methodology above, that the stated level

of achievement reported by Carillion against the selected

targets is a fair reflection of its performance.

Nothing came to Bureau Veritas attention that would indicate

any material error or omission in the information reported, that

would affect stakeholders ability to make informed judgments

on Carillions performance in 2014.

LIMITATION AND EXCLUSIONS

The preparation of the Report is the sole responsibility of

Carillion. The verifier has an obligation to stakeholders and

users of the report and is exclusively responsible for the

content of this verification statement. Carillion has provided

access to the documentation and data required to undertake

the verification process and Bureau Veritas is confident that no

material information has been withheld.

Excluded from the scope of our work is:

Any information not directly linked to the selected

targets;

Activities outside the defined reporting period;

Company strategy and position statements (including

any expression of opinion, belief, aspiration,

expectation or aim);

Financial data which is taken from Carillions Annual

Report and Accounts.

A limited sample of site specific source data and records were

reviewed as part of this assessment.

This independent statement should not be relied upon to detect

errors, omissions or misstatements that may exist within

Carillions reported information. The scope of our work was

defined and agreed in consultation with Carillion. Our work

covers global operations and relies upon the accurate collation

of information at Carillions worldwide locations and its UK

offices.

STATEMENT OF INDEPENDENCEBureau Veritas is an independent professional services

company that specialises in quality, health, safety, social and

environmental management advice and compliance with over

180 years history in providing independent verification and

assurance services. Bureau Veritas has implemented a code of

ethics across its business which ensures that all our staff

members maintain high standards of integrity and

independence. We believe our verification assignment did not

raise any conflicts of interest. Our team completing the work

has extensive knowledge and experience of conducting

verification over sustainability information and systems.

London, 18th of March 2015


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Carillion is

the way with our customers and suppliers

Effective and innovative

collaboration

We work together with customers and suppliers to findmutually beneficial and dynamic solutions, which will help

us to win repeat business and gain new clients based on

our proven delivery credentials.

Launching our SmallBusiness Charter

We are currently exceeding the UK

Governments goal of 25% SME spend for

government contracts with 27% of our

spend going to SMEs. In 2014, we

launched a charter to engage 3,700 small

Prompt payment

977.6M IN EARLY SUPPLIER PAYMENTSIN 2014

Engaging and collaborat

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