Shaping the Future of Mobility

Transportation Sustainability Report

(Including HSE Data for 2005/06)

This report covers 42 locations under the control

of Bombardier Transportation, with one or more

production/service facilities, that have around 100

employees or more. Smaller sites of the Services

and the Total Transit Systems divisions, mostly

located on customer premises, as well as office

locations are included in the health & safety sta-

tistics and may belong to the group of “certifiable”

facilities (if > 150 employees). Provided they have

more than 50 employees (150 until 2004), and

they are not solely offices, they are also subjected

to Legal Compliance Surveys.

In preparing the report we took into consideration

the 2002 Guidelines of the Global Reporting

Initiative (GRI). The table on page 51 presents the

degree to which the present report covers the GRI

3 (2006) indicators.

This is Bombardier Transportation’s first Sustain-

ability Report, although we published a Health,

Safety and Environment (HSE) Report in 2005

based on data from the previous year. In addition,

in compiling the present report we have benefited

from the cumulative environmental reporting expe-

rience of companies we acquired in the past.

For our production plants in Germany (Aachen,

Bautzen, Görlitz, Hennigsdorf, Kassel, Mannheim

and Siegen) environmental statements according

to the Eco-Management and Audit Scheme

(EMAS) are available separately from our website

(www.transport.bombardier.com > About us >

Sustainable Mobility).

The editorial deadline for this report is October 1,

2006. Our next sustainability and social responsi-

bility report is scheduled for 2008. An HSE report

(data for civil year 2006) will be published in 2007.

Regular sustainability reporting forms part of our commitment as a signatory of the International Association of Public Transport (UITP) Charter on Sustainable Development.

OverviewThis report documents the major elements and activities of Bombardier Transportation’s

sustainability management and social responsibility. In line with the fiscal business year,

data-reporting covers the period ending January 31, 2006.

Contents 2 Foreword

4 Company Profile

10 Strategy, Policies and ManagementSystem

18 Stakeholder Dialogue

22 Product Responsibility and Customer Orientation

32 In Focus: Climate Change

34 The Environmental Impact of Production

Global Reporting Initiative (GRI) www.globalreporting.org

Eco-Management and Audit Scheme (EMAS) www.ec.europa.eu/environment/emas

40 Responsibility for our Employees

46 A Responsible Citizen of the World

50 GRI Content Index

1

Bombardier Transportation is pleased to present its first

Sustainability Report. This report has been prepared tak-

ing into consideration the 2002 Global Reporting Initiative

(GRI) guidelines. It follows on from the Health, Safety and

Environment (HSE) Report published in 2005, and forms

part of our voluntary commitment as a signatory to

the International Association of Public Transport (UITP)

Charter on Sustainable Development. Bombardier

Transportation was the first rail vehicle manufacturer to

subscribe to the charter in May 2003.

As the global leader in rail technology, we strive to be

profitable, while delivering our promise to customers for

safe and competitive products, to be a preferred employer

and to provide healthy and safe workplaces for all our

employees. In addition, it is our goal to leave to the next

generations a natural environment unspoiled by our indus-

trial activities and products, to the greatest extent possible.

Rail transport is generally considered to be one of the

most ecologically sound means of motorized transport

for people and goods. Working together with our major

customers and research institutions worldwide, we

seek to optimize the environmental performance of our

vehicles and in this way support our customers in the

achievement of their environmental objectives. This

is a particular responsibility of our Engineering teams

in cooperation with our Design for Environment expert

network.

André Navarri President Bombardier Transportation

Wolfgang Tölsner Chief Operating Officer Executive Representative for HSE and Quality Bombardier Transportation

“We seek to optimize the environmental performance of our vehicles and in this way support our customers in the achievement of their environmental objectives.”

Foreword

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When it comes to health and safety, our ultimate goal

is to become entirely accident-free. With this commit-

ment our manufacturing sites have considerably reduced

their safety risks. The number of accidents and lost

workdays decreased by a factor of 10 over the last five

years, reaching world-class status at the end of 2005. All

sites with more than 150 employees operate under HSE

management systems and performance indicators that

are tracked monthly.

More than 90 % of our sites are externally certified

according to the ISO 14001 standard and OHSAS 18001.

These standards provide the foundation for legal compli-

ance and continuous performance improvement.

To ensure legal compliance, Bombardier Transportation

subjects its sites to independent checks every three

years. In Europe, legal compliance checks regarding the

environment are covered by the European Eco-Manage-

ment and Audit Scheme (EMAS) at several sites.

As a global manufacturer and competitor we believe that

we have an obligation to transfer our knowledge and best

practice especially to the less-industrialized countries

where we have a presence. This extends not only to local

technology transfer and employment in the production

of state-of-the-art products, systems and services, but

also in line with our high HSE standards. We are proud to

have been acknowledged by the United Nations Confer-

ence on Trade and Development (UNCTAD) for the HSE

standards we achieved in the transfer of our locomotive

propulsion technology to India. We will seek the same

standards of excellence in our work with partners in the

construction of the Gautrain mass transit system for

Gautang Province, South Africa.

Bombardier Transportation, as a part of Bombardier Inc.

takes pride in designing, manufacturing and servicing

products and systems that facilitate the sustainable

mobility of people and goods. It is our continuous chal-

lenge to protect the health and safety of our employees,

to improve the environmental performance of our activi-

ties and to apply a total life-cycle view in the design of our

products. We consider this to be a fundamental social

responsibility.

We hope that the facts and data reported in the following

pages will allow you to gain a better understanding of the

commitment and progress we are making in environmen-

tal and social responsibility. Please feel free to comment

or ask for more information, either by sending an e-mail

to hse@de.transport.bombardier.com or by calling our

Communications & Public Affairs department.

André Navarri Wolfgang Tölsner

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Fore

wor

d

Company Profile The Bombardier Transportation Group is a unit of Bombardier Inc., a global

corporation headquartered in Canada. A world leader in innovative transportation

solutions, Bombardier Inc. is structured around two almost equal-sized activities:

Aerospace and Transportation. From its early beginnings in the Eastern Town-

ships of Quebec, the company’s story spans over six decades of growth and

expansion. Today, some 55,800 people work for Bombardier Inc. worldwide and

millions of people around the world use Bombardier products every day.

�

B

Bombardier Inc. is a world-leading manufacturer of

innovative transportation solutions, ranging from

regional aircraft and business jets to rail transportation

systems and solutions. The company is a global

corporation headquartered in Montréal, Canada, with

total revenues of about $14.7 billion. The major

shareholders are members of the Bombardier family.

Details on the shareholders of Bombardier Inc. can be

found in the corporation’s Annual Report. Bombardier

sells its products on all five continents, with a high

concentration in Europe and North America. More than

94 % of revenues are from markets outside Canada.

Bombardier Inc. consists of:

> Bombardier Transportation providing rail transportation systems and solutions

> Bombardier Aerospace producing regional and business aircraft

The Bombardier Company

ombardier Transportation, headquartered in

Germany, is the global leader in rail technology. Its

comprehensive product portfolio includes the full

range of passenger rail vehicles and total transit systems

for airport, urban and mainline operation. This includes

metros; regional and commuter trains; trams and light

rail vehicles; electric and diesel single and double deck

multiple unit trains; passenger coaches, locomotives and

high speed trains; bogies; propulsion and controls as well

as rail control solutions. Bombardier Transportation is one

of the world’s largest providers of fleet services including

full train and fleet maintenance, materials and logistics

programs, the refurbishment, re-engineering and overhaul

of vehicles and components and predictive asset manage-

ment and maintenance.

Bombardier Transportation entered the mass transit mar-

ket in 1974 with the first contract for the metro system for

the city of Montréal, Quebec. Over the years, its growth

has been the result of internally generated international

expansion and acquisition, culminating with the purchase

of DaimlerChrysler Rail Systems GmbH in 2001. Today,

Bombardier Transportation has a presence in over 60

countries with an installed base of over 100,000 vehicles

worldwide.

Picture (left side): Global Headquarters Bombardier Transportation, Berlin, Germany

5

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Bombardier Transportation Divisions and Group Functions

Chief Information Officer

Procurement / Chief Procurement Officer

Contracts & Legal Affairs

Finance

Human Resources

Mainline & Metro Chief Operating Officer ServicesProject Management & Chief Technical Officer

North America

Total Transit Systems

Rail Control Solutions

Bogies

Operations & Quality

Australia

Propulsion & Controls

Locomotives

Light Rail Vehicles

London Underground Projects

Sales

Strategy

Communications & Public Affairs

Bid Approval Process

President

Health, Safety & Environment

Bombardier nameplate on AGC regional train, France

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Market PositionBombardier Transportation’s divisions hold the No. 1

global market position in eight of the 10 markets in which

the Group operates.

Business LocationsBombardier Transportation currently employs some

28,600 staff at 42 major production and service locations.

Several of these host more than one production/service

facility under separate management. Three plants in

China are joint ventures with only a 25 % Bombardier

share and, due to that, limited influence.

There are around 40 generally smaller sites of the Services

and the Total Transit Systems divisions (most of them <100

employees and mostly located on customer premises), as

well as a few strictly administrative locations.

Worldwide Presence Europe remains the largest market in the world for rail and

therefore Bombardier Transportation’s main focus is in

Europe. Around 21,550 employees are currently employed

in the region. Approximately 5,150 employees work in

North and Central America, while 1,900 employees are

based in Australia/Asia and other parts of the world.

In response to market realities and to remain competitive,

the company carried out a restructuring program in

2004/05. This resulted in a reduction of the workforce

by 7,600 worldwide and the closure of seven facilities.

The sites affected by closure were the production plants

in Amadora, Portugal; Ammendorf, Germany; Kalmar,

Sweden; Pratteln, Switzerland; Derby Pride Park,

Doncaster, and Wakefield, UK. The exercise was under-

taken in a socially responsible manner, ensuring that

employees were treated with respect and fairness.

Financial PositionBombardier Transportation’s total revenue for the financial

year 2005/06 was US$ 6,653 million earnings before

interest and taxes (EBIT) before special items were

US$ 179 million. The majority of turnover (US$ 4,365 mil-

lion) was generated from the sales of rolling stock (includ-

ing mainline and metro vehicles, trams and locomotives)

followed by services such as maintenance and delivery of

spare parts. The business with European transportation

companies – who remain our most important customers

– generated 72 % of turnover.

As of: January 31, 2006Europe 72%

North America 19%

Other 2%Asia-Pacific 7%

Segmented Revenues by Regions (Bombardier Transportation)

Source: Bombardier Transportation, Annual Report 2005-06, www.bombardier.com > Investor Relations > Financial Reports

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HQ Bombardier Inc.HQ Bombardier AerospaceCanadaMontreal, Quebec

CanadaThunder Bay, Ontario

CanadaLa Pocatiére, Quebec

USAPlattsburgh, New York

USAPittsburgh, PennsylvaniaMexico

Sahagún

BrazilHortolãndia

United KingdomCentral Rivers

United KingdomChart Leacon

United KingdomCrewe

United KingdomDerby

United KingdomIlford

United KingdomPlymouth

NorwayStrømmen

GermanyHennigsdorf

GermanySiegen

GermanyAachen

GermanyBautzen

GermanyKassel

GermanyMannheim

Bombardier Transportation around the WorldProduction Sites/Services Sites/Global Headquarters (Status: July 2006)

BelgiumBruges

FranceCrespin

SpainTrapaga

SwitzerlandVilleneuve

Global Headquarters (HQ)

Production/ Services Sites

DenmarkRanders

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HQ Bombardier Transportation GermanyBerlin

GermanyGörlitz

ItalyVado Ligure

Austria Vienna

Czech RepublicCeská Lípa

HungaryDunakeszi

HungaryMatranovak

PolandKatowice

PolandLodz

PolandWroclaw

SwedenStockholm

SwedenVästerås

AustraliaDandenong (Melbourne)

AustraliaMaryborough

IndiaVadodara

ChinaChangzhou

ChinaQingdao

ChinaChangchun

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Strategy, Policies and ManagementSystem

Under the leadership of our parent company, Bombardier

Inc., we have adopted a number of policies that demonstrate

our commitment to socially and environmentally responsible

behavior and which govern our day-to-day working practices.

10

he Bombardier Inc. Mission Statement,

created in 2004, gives direction to Bombardier

Transportation in our daily business operations.

To fulfill this mission, we adhere to four Core

Values which inspire our actions and decisions,

and which provide a benchmark for everyone.

> Integrity: We behave with integrity and in an ethical

manner in everything we do and say, thereby earning and

maintaining the trust and respect of customers, share-

holders, suppliers, colleagues, partners and communities.

> Commitment to Excellence: Our commitment is to dem-

onstrate excellence in all spheres of our work and in our

interactions with customers, shareholders, suppliers,

colleagues, partners and communities. In addition, we

commit to exercising judgement, professionalism, rigour,

self-discipline, perseverance and team spirit.

> Customer Orientation: We promote a customer-centered

culture that emphasizes outstanding service and meets

our commitments at every level of our organization.

> Shareholder Focus: We are focused on creating sustain-

able shareholder value through developing profitable

products and projects, and soundly managing the busi-

ness for the benefit of customers, shareholders, suppliers,

colleagues, partners and communities.

Core Values www.bombardier.com > About us >Mission Statement and Values

> Our mission is to be the world’s leading manufacturer of planes and trains.

> We are committed to providing superior value and service to our customers and sustained profitability to our shareholders by investing in our people and products.

> We lead through innovation and outstanding product safety, efficiency and performance.

> Our standards are high. We define excellence – and we deliver.

Bombardier Inc. Mission Statement

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Bombardier’s approach to corporate governance has

always ensured that the Corporation’s affairs are effec-

tively managed to enhance value for all shareholders.

This is carried out in a manner that guarantees full

compliance with relevant reporting and regulatory

requirements and the highest ethical standards.

Chief Executive Officer (CEO): The CEO is responsible

for managing and monitoring Bombardier’s strategic

and operational plans. The specific responsibilities of

the CEO include implementing the Board’s resolutions

and policies and providing long-term strategic

orientation.

Office of the President: In December 2004, the Office

of the President was created to help ensure that

Bombardier’s focus is closely aligned with the best

interests of all shareholders and to provide continuity

of leadership while the Corporation’s long-term

strategy for value creation is implemented. The

Office of the President groups strategic and executive

management responsibilities around Chairman and

Chief Executive Officer, Laurent Beaudoin, and

the leaders of the two main operating groups, Pierre

Beaudoin, President and Chief Operating Officer

of Bombardier Aerospace, and André Navarri,

President of Bombardier Transportation.

Board of Directors/Committees: The Corporation’s

Board of Directors has a majority of independent

directors, and all Board committees are comprised

entirely of independent directors. Further details can

be found in the Annual Report of Bombardier Inc.

Corporate Governance at Bombardier Inc.

Code of Ethics and Business Conduct www.bombardier.com > About us > Code of Ethics

Code of Ethics and Business ConductThe Bombardier Code of Ethics and Business Conduct

sets the standard for our ethical business practices and

behaviour. High standards of conduct are demanded

and expected from all employees in their daily activities

and dealings with others. As an international group with

manufacturing and customer operations in over 60 coun-

tries, we are working to have the code adopted in every

country in which we have a presence.

In early 2004, Bombardier Inc. appointed a Corporate

Compliance Officer to ensure full adherence to applicable

laws and regulations and strict compliance with

Bombardier’s Code of Ethics and Business Conduct.

Since then, the Code has been made available to

employees and posted in 12 languages on Bombardier’s

website. In addition, a program of in-depth awareness

training was launched for all managers. The Code outlines

a series of guidelines regarding anti-corruption, political

activities and relations based on a partnership with exter-

nal stakeholders.

The Sustainable Business CaseModern and sustainable mobility is not only a key factor

in the success of an economy; it also forms the basis for

quality of life. Increasing private and commercial traffic

on our roads is having a major negative effect – e. g.

noise and CO2 emissions. Congested roads and cities

also lead to higher levels of stress and lost time.

There’s no easy solution to the problem of congestion

and pollution. Simply building more roads means using

an increasingly large surface area and eroding the coun-

1�

We are also involved in several projects, collaborating

with other similarly dedicated organizations in our sector,

under the umbrella of the International Union of Public

Transport (UITP). The UITP is devoted to improving the

benefits of mass transport and its members include

operators and manufacturers. In 2002, it established a

sustainability working group which developed a strategic

document on contributions by mass transit to sustainable

mobility. It encouraged its members to subscribe to a

sustainability charter launched at the 2003 UITP congress

in Madrid, Spain. The standards for acceptance were

high (including visible top management commitment).

Bombardier Transportation was the first vehicle manufac-

turer to sign the UITP Sustainability Charter.

“This Charter acknowledges the work UITP mem-

bers have already done and its signatories commit to

ensure that the three principles of sustainable devel-

opment – social, economic and environmental – are

embedded in their activities and the development

of the public transport sector remains sustainable

in terms of its social, economic and environmental

impact.”

Charter members commit to:

> Fostering leadership on sustainable development through dialogue and exchange of best practices with all stakeholders.

> Exerting influence on international and government policy to develop a responsible balance between social, environmental and business considerations.

> Facilitating training and mentoring through activities and forums focused on sustainable development practices.

> Adhering to a process of regular reporting on sustainable development practices.

UITP Sustainability Charter

Double-deck coach at Berlin Main Station, Germany

tryside, which in turn poses a great danger to animal

and plant life. It also encourages increased volumes of

vehicular traffic.

For a rail vehicle manufacturer such as Bombardier

Transportation, the concept of a “Sustainable Business

Case” is a significant step forward to more long term

environmentally responsible mobility. Ecological compati-

bility is a major competitive advantage of rail transport

vis-à-vis other modes of motorized travel. This advantage

must be further embedded through continued environ-

mental improvement within the production chain and also

by raising public awareness of the benefits of choosing

the train. That’s why Bombardier Transportation has put

sustainable mobility at the heart of its design, engineering

and operating philosophy.

UITP Sustainability Charter www.uitp.com/Project/susdev_Charter.cfm

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The all-encompassing policy replaced the previously

separate environmental and workplace safety policies.

With the HSE policy we are committed to saving our

natural resources, avoiding environmental damage and

providing our staff with appropriate health provisions. We

also urge our suppliers to adhere to similar principles.

HSE OrganizationIn 2001, Bombardier Transportation combined the areas

of Health, Safety and Environment, a decision that made

the General Managers at all the plants responsible for

adherence to the internal regulations such as developing

HSE improvements and ensuring advanced training is

available for staff.

Bombardier Transportation oper-

ates locally through legal entities,

but is structured along business

units. Maintaining a legally com-

pliant organization with regard to

HSE is a significant task. We have

accomplished it by establishing

a link between the business and

legal entity organization via the

Chief Operating Officer with the

Group HSE department reporting

to him directly. Authorized by the

parent company, Bombardier Inc.,

both of them are entitled to over-

see every legal entity as well as the

divisions and sites of the company

regarding HSE issues.

Legal entities nominate a member

of their management team respon-

sible for HSE and assign HSE

responsibilities to plant general

managers who in turn do the same

vis-à-vis their direct reports. By

delegating the respective respon-

sibilities, Bombardier ensures

that all legally required organiza-

tional regulations, particularly the

appointment of qualified staff and

representatives, are met within the

independent legal entities.

How Bombardier Transportation Meets Its HSE-Related Legal Requirements

Meridian diesel-electric multiple unit, UK

We have made great progress since signing the charter

in June 2003, namely reducing the number of accidents,

developing more efficient resource consumption as well

as publishing an HSE report in 2005. This Sustainability

Report for 2005/06 is the latest demonstration of our

progress.

HSE Policy With coherent and accountable company leadership

growing increasingly important, Bombardier Inc. intro-

duced a new policy for occupational health and safety as

well as environmental protection in 2003, which applies

to all parts of the corporation.

1�

* Under Bombardier Inc. regulations production/service facilities which

have 150+ employees and are under our management control

HSE policy www.bombardier.com > About us > Social Responsibility

Environmental Statements www.transport.bombardier.com > About us > Sustainable Mobility

HSE coordinators and other experts for workplace safety

and environment protection (in particular, representa-

tives required by legal obligations) support those efforts,

reporting directly to the General Managers.

HSE experts based at the different sites and divisions

report regularly to the head of HSE at the Group’s head-

quarters in Berlin (who in turn has a direct reporting line to

the company’s Chief Operating Officer). If necessary, the

experts have the right to report directly to the respective

management.

HSE CouncilCoordinating all HSE demands and policies of Bombar-

dier Inc’s two groups, Aerospace and Transportation, is

facilitated in the corporation’s HSE Council, under the

leadership of the Senior Vice President Human Resources

and HSE of Bombardier Inc.

Management SystemLiving up to our commitment to deliver superior products

and services – from the initial product strategy through to

the end of the product life cycle – is key for Bombardier

Transportation. To that end, we utilize clearly defined

business processes and a common, integrated Business

Management System.

An important focus of our strategy is the deployment

of the Bombardier Transportation Integrated Processes

(BTIP). BTIP is a business system that integrates all func-

tions and their respective initiatives in order to establish

common processes and systems at every step of the

product life cycle, thus ensuring a smooth workflow and

close collaboration among the various members of our

project teams.

Certified ConformityThe success of this approach in providing effective

control over all aspects of our activities is reflected by

our receipt of a consolidated, multi-site certification in

compliance with the international standards for quality

(ISO 9001:2000), the environment (ISO 14001:2004),

and the British guidance standard OHSAS 18001:1999

(Occupational Health and Safety Management System).

39 of the 41 company facilities eligible for certification*

have been certified according to the environment stan-

dard ISO 14001. The number differs from the number of

locations as there can be several entities under different

management at a location. This means that over 90 % of

our staff work within the perimeters of externally certified

environment-management systems. The seven German

sites (Aachen, Bautzen, Görlitz, Hennigsdorf, Kassel,

Mannheim and Siegen), which in total represent approxi-

mately 40 % of the company’s overall staff in Europe,

are applying the European Eco-Management and Audit

Scheme (EMAS) in addition. They publish their Envi-

ronmental Statements, updated annually. Several other

European sites are currently preparing to apply EMAS.

Strategic Governance and Leadership Systems

Products and Services Delivery Systems

Measuring and Controlling Systems

Support Systems

Continuous Improvement Systems

Superior Products and Services Delivery Process

Bombardier Transportation Integrated Business Process and Systems

Value Creation for Customers

5 Reali-zation� Design3 Start-up1 Product

Strategy

CustomerNeeds � Field

Support� Bid

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Striving for excellence involves

continuously improving the way

we do business, how we apply our

processes, and how we design,

produce and maintain our prod-

ucts. Our Six Sigma program

provides a structured approach to

continuous improvement across

Bombardier. We launched our

comprehensive Six Sigma initiative

as part of an ongoing drive to sat-

isfy and even surpass the chang-

ing needs and expectations of our

customers. The methods and tools

within Six Sigma are applied at

all sites and enable us to give the

highest priority to our customers’

demands as well as to maintaining

low costs. We are convinced that

high-quality production is also the

most cost-effective. For example,

a production system performing

at a level between 2 and 3 sigma

will have a rate of defects cost-

ing some 20 to 30 % of turnover.

These costs can be dramatically

reduced through the systematic

elimination of waste and varia-

tion from processes and products

using the Six Sigma methodol-

ogy. Central to this are statistical

methods that reveal faults in repeti-

tive work processes that would

otherwise go unnoticed. These

techniques where used to great

effect in the HSE sector is the

TTS Division’s development of a

computer-aided process for acci-

dent investigation.

Six Sigma – A Success Factor

Health and Safety certificates according to OHSAS

18001, are already available at 39 of the 41 sites men-

tioned, corresponding to 95 % of staff.

Independent Checks of Compliance with Legal and Other RequirementsSince 2001, all production and service sites with more

than 150 employees have been subjected to legal compli-

ance surveys. Commissioned by the HSE group function,

external, independent experts examine whether all legal

HSE-related requirements have been adhered to, and

monitor the implementation of the parent company’s HSE

policy obligations. In addition, they evaluate the imple-

mentation of HSE training programs and the progress

made from year to year.

In the first cycle, legal compliance surveys were con-

ducted at 52 sites, including manufacturing facilities as

well as some TTS Operations & Maintenance sites. The

legal compliance surveys have emerged as an important

step in minimizing risk, and have also fostered the ongo-

ing improvement process.

The second audit cycle started in 2006. For the first time,

four sites were put to the test in conjunction with an

EMAS audit. Previous surveys had revealed that EMAS

sites did not register any violations in the environment

sector, which was confirmed by the compliance surveys.

We will continue our reviews on a three-yearly basis. At

the EMAS-validated sites, every second review will go

hand-in-hand with EMAS certification. The results of the

compliance surveys and the follow-up reviews are made

available to the Bombardier Inc. Audit Committee and

Bombardier’s Corporate HR/Compensation Committee

on a yearly basis.

Supply Chain ManagementSuppliers contribute a substantial portion to Bombardier

Transportation products and services, which means they

not only have a major impact on the value chain but also

on environmental burdens and social aspects. The

Bombardier Procurement System is designed to ensure

that suppliers fulfill their role as part of a complete team.

Starting with the selection of suppliers, we place ambi-

1�

tious demands on performance which include a cata-

logue of technical and business-oriented criteria relating

to quality guarantees, internal learning processes, pricing

systems and the ability to deliver the goods. Using these

criteria, Bombardier Transportation strives to learn more

about the status and scope of its suppliers’ environment

and safety management systems.

Our highest assessment goes to suppliers who work with

an externally audited environmental management system

and to cases where a series of ecological criteria have

been considered at the product development stage. In

terms of workplace safety, we prefer suppliers who use

a management system according to OHSAS 18001 or a

comparable standard.

We also expect our suppliers to adhere to the principles

outlined in Bombardier’s Code of Ethics and Business

Conduct, including equality and non-discrimination.

However, HSE criteria currently do not play a decisive

role in the assessment process unless, for example, two

competing suppliers have an identical rating.

Human Resources SystemAs with every company, our success is driven by the

integrity, motivation and enthusiasm of our people.

Bombardier Transportation devotes considerable effort

to its human resources.

The following key processes define our Human

Resources System:

> To identify, qualify, select and hire the best and bright-est to have the right employees in the right role.

> To integrate and support employees in the company and to retain them with efficient processes and procedures.

> To provide an optimal performance environment and to ensure that competencies are aligned with organizational needs, business strategy, culture and core values.

> To transfer, realign, retire or release staff in a manner that is aligned with the organizational needs, business strategy, culture and core values.

> Human Resources identifies and harmonizes the interaction of these elements with other functions. All of the elements are defined in directives, procedures and instructions documented as part of our overall management framework.

Human Resources also works with the Communications

& Public Affairs function on internal communications

programs. The effectiveness of the Human Resources

System and the impact on the organization overall is

monitored through an employee survey conducted every

two years in cooperation with the Communications &

Public Affairs department.

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Stakeholder Dialogue

At Bombardier Transportation we are convinced that a sustainable development and

future-oriented mobility strategy can only be achieved if all participants involved work

together and if an open dialogue and learning process is in place. We rely upon

partnership and cooperation with all our stakeholders. Among these are our employees,

customers, suppliers, neighbors and communities, where we have operations.

1�

s a member of numerous associations and organi-

zations and a partner in related projects, we strive

to share our experiences and to consolidate and

expand our knowledge. At the same time, an ongoing

dialogue with customers, politicians, the scientific com-

munity and non-governmental organizations is an impor-

tant tool within our early warning system for identifying

risks and opportunities.

Shared ExperiencesForum for Corporate Sustainability Management (CSM): Following a long tradition of fruitful collaboration with one

of the worlds’ leading business schools, the Institute for

Management Development (IMD) in Lausanne, Switzerland,

Bombardier Transportation is currently a member of IMD’s

Forum for CSM, which is headed by Prof. Dr. Ulrich Steger.

The forum focuses on three key issues of sustainability

management: managing stakeholder dialogue, driving

sustainability through leadership and linking it to business

performance. Corporations participate in the Forum to

build a sustainable business advantage through social

and environmental strategic action.

As a participant, we benefit from IMD’s faculty and staff

expertise when conducting hands-on pilot projects, and

we learn from other companies that participate in CSM

through benchmarking. We also share ideas with organi-

zations outside our traditional business area and are able

to participate in a range of learning forums.

Some of the CSM’s current research topics include

multi-stakeholder dialogues and public private partner-

ships (PPP), sustainability challenges and dilemmas for

companies, managing product responsibility as well as

human rights issues. Bombardier’s participation in the

CSM’s Health & Safety and Environment groups has

proven to be an ideal forum for exchange of best practice

and benchmarking with other companies.

Conference Board: The North America-based Confer-

ence Board creates and disseminates knowledge about

management and the marketplace to help businesses

strengthen their performance and better serve society.

Working as a global, independent membership organiza-

tion in the public interest, it conducts research, convenes

conferences, develops forecasts, assesses trends,

publishes information and analysis, and brings executives

together to learn from one another.

The Conference Board operates via a number of councils.

We participate in the European Council on Environment

and Product Stewardship, created in 1991, in response

to public, government and corporate concern about the

environment and sustainability as well as product stew-

ardship issues. Bombardier Transportation is especially

involved with issues such as eco-design and product

declarations, environmental reporting, and sustainability.

We also attend the European Council on Health and

Safety which gives European safety managers the oppor-

tunity to exchange ideas on increasing the effectiveness

of their health and safety programs, and on promoting

the active participation and commitment of employees.

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Institute for Management Development (IMD) www.imd.ch/csm

Conference Board www.conference-board.org

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Standardization European legislation in the environmental field is increas-

ingly based on standards. Bombardier Transportation’s

HSE staff contribute to several standardization initiatives

such as the current development of the ISO 14005 stan-

dard, the revision of ISO Guide 64 or work in CENELEC’s

TC 111X on environmental standardization.

Industry Associations / Environmental Initiatives Union of the European Railway Industries (UNIFE):

The industry association represents the majority of rail

vehicle, systems and components manufacturers on a

European level. Its working group, Environment &

Transport, which is led by Bombardier Transportation,

advises on European legislation and acts as a forum for

exchanging knowledge and cooperation with customers’

environmental experts via close links to the operators’

organization International Union of Railways (UIC).

Bombardier Transportation President André Navarri has

been the Chairman of UNIFE since 2005.

Union of Public Transport (UITP): The UITP is an

association devoted to mass transport, with membership

including operators and manufacturers. In 2003, UITP

members approved a Sustainability Charter (see page

13). Bombardier Transportation was the first rail vehicle

manufacturer to subscribe to the charter in 2003.

International Network for Environmental Management (INEM): INEM is a non-profit federation for environmental

management and sustainable development that aims

to help companies improve their environmental and

economic performance. In Germany, INEM is represented

by B.A.U.M., the German Environmental Management

Organization. Its members subscribe to the B.A.U.M.

ethical code of practice. In 2000, the head of our HSE

department received the B.A.U.M. award which is given

to managers contributing to future-oriented environmental

protection.

Allianz pro Schiene: The association Allianz pro Schiene

(Alliance for Rail) promotes environmental protection by

educating the public on the environmentally sound nature

of railway transport. With its efforts focusing on Germany,

the group aims to increase the share of railway networks

in the traffic system.

Allianz pro Schiene also encourages the exchange of

information on railway traffic issues and technological

development for rail systems on a national and interna-

tional level. Peter Witt, Chairman of the Supervisory

Board of Bombardier Transportation, Germany, entities,

is a member of the board of Allianz pro Schiene. Similar

initiatives with Bombardier Transportation participation

exist in several other countries.

CENELEC www.cenelec.org

UNIFE www.unife.org

UITP www.uitp.com

INEM www.inem.org

B.A.U.M. www.baumev.de/baumev/portrait/Englisch/d_Code_of_Practise.pdf

Allianz pro Schiene www.allianz-pro-schiene.de

New Standards for the future – Bombardier ZEFIRO high-speed train (artistic rendering)

�0

s a manufacturer of rail vehicles, Bombardier is in the

fortunate position of enjoying the goodwill of many

stakeholders. Of course that does not release them

from the responsibility of leading by example, both exter-

nally and internally, in the sphere of environmental protec-

tion. Beyond the mere manufacturing process, what can

the company do in the realm of new technologies and

innovative concepts to overcome the public preference

for cars and trucks over rail?

Just to be clear: waiting for miracles or taking business

risks are not on the agenda. What is on Bombardier’s

agenda, however, is a strong commitment that ranges

from the fight against noise pollution to creating innovative

transportation concepts that include proactive preparation

for future developments.

While common sense would dictate that rail traffic is the

way to go, the opposite is currently true. Railways have a

distinct disadvantage in an increasingly individualized

society: The transportation of people and freight by rail is

marked by circuitous routes and interruptions, while cars

and trucks can travel directly from one destination to the

next. That’s another reason why it is necessary to develop

new technologies and traffic concepts.

Sustainability alone is no guarantee for success. Particu-

lar issues of sustainability can only be implemented in the

long-term, and very often they are controversial. Everyone

knows that climate change is on its way, but no one can

gauge its impact in terms of when it will strike, who will be

affected, and what the overall effects will be. In this very

context, another factor, however, is a fixture: The pressure

on achieving short-term financial success is constantly

mounting. In many cases these pressing matters are

addressed while the important issues are neglected. A

successful management is characterized by the ability to

strike a balance between short- and long-term planning.

A company’s core values are an important prerequisite to

be able to pursue a profit-oriented but also sustainable

economic policy.

As a family-owned business, Bombardier displays a num-

ber of good starting points, not only when it comes to its

business responsibility but also its drive to demonstrate

sustainable development. Equally important is the ability

not only to recognize future trends at an early stage but

also to make strategic use of them. That, in turn, requires

an open mind for new developments and diversification.

Finally, but perhaps most crucially for sound manage-

ment, is the ability to find committed employees who

know they can rely on proven structures and processes in

order to do their jobs effectively.

Prof. Dr. Ulrich Steger

Prof. Dr. Ulrich Steger, International Institute for Management Development (IMD), Lausanne, Switzerland

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Sustainability Alone is No Guarantee for Success

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Product Responsibility and Customer Orientation

The ecological benefits of rail transport are consider-

able. Since energy is transferred most efficiently

between a steel wheel and the steel track, energy

consumption of rail vehicles, and therefore the related

emissions, are much lower than other forms of

motorized land transportation.

��

he average eco-efficiency of modern intercity trains

is comparatively much higher than for other types of

motorized freight or passenger transport, in terms

of energy consumption and pollution output. In addition,

land use by private cars and buses is significantly higher

than compared to rail, e. g. trams and metros.

A few numbers will help to illustrate the point. While a

metro can transport 50,000 passengers per hour (pph)

using a 3 – 5 m wide strip of land, only 9,000 pph can

be transported by buses, but even much less (2,000/h)

by private cars (see UITP, “Ticket to the future” and

diagram on page 25). Assuming the same transport need,

it means that 25 lanes, each 3 m wide, would be required

when cars are used instead of a metro system. Interest-

ingly, use of bicycles would increase capacity to 14,000

passengers/h. This demonstrates the dilemma countries

like China and India are facing by increased car traffic.

Even though rail transportation comes out on top in all

the relevant measures of environmental protection when

directly compared to other modes of transportation, there

is still more work ahead. We must continue to improve

our ecological standards. Working actively to protect the

environment is not only a commitment towards society; it

should also create competitive advantage for our custom-

ers, the rail operators.

T

UITP, “Ticket to the future” www.uitp.com/project/pics/susdev/brochureUK.pdf

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Bombardier Regina electric multiple unit, Sweden

Environmental Improvement of our ProductsInternally, we have now been measuring and reporting

improvements of environmentally relevant processes

at our facilities for over five years. Although this has

allowed us to follow up with specific action plans, we

are convinced that environmental improvements on the

product side are far more relevant, and that there is still

room to grow.

In order to provide a better framework for this goal, we

introduced two performance indicators in 2006. They

measure issuing of Environmental Product Declara-

tions – at least one per new product platform – and

whether energy efficiency or other environmental items

are included in product roadmaps which describe the

technical evolution of vehicle platforms, over time.

All industrial activities – whether

manufacturing processes, product

use or service provision – have an

impact on the natural environment.

In qualifying and quantifying this

impact, two concepts are particu-

larly important. The term “environ-

mental aspect” is used to describe

processes or items that influence

or disrupt the environment, such

as energy consumption, waste

generation and emissions of

gaseous and liquid substances.

“Environmental impact” refers to

the change (positive or negative)

resulting from a particular activity,

such as the deterioration of the

ozone layer or the greenhouse

effect.

The two terms are connected in

the sense that environmental

aspects can generally be related to

specific environmental impacts,

although this depends on the

evaluation model used. Thus, the

primary goal of our environmental

management system is to minimize

the negative environmental impact

of our activities by means of a

process of continuous improve-

ment. This goal applies equally to

the Group’s finished products –

both during their use phase and

following decommissioning – and

to the manufacturing processes

employed, regardless of whether

this happens at Bombardier

Transportation itself or on the

suppliers’ premises.

Environmental Aspects and Associated Impacts

��

Energy Consumption

Reducing energy consumption has become increasingly

relevant to our work with our customers, not only because

of its environmental impact but also for its effect on cost

and availability. Energy costs, calculated over an extended

period, can often equal the usual maintenance costs or

the capital investment for new vehicles. Minimizing energy

consumption has traditionally been done by aiming for

lower weight, decreasing aerodynamic drag, recovering

brake energy and reducing losses for all propulsion com-

ponents. In addition, power meters can be installed in the

vehicle to control the energy consumption.

Predicting PerformanceOne problem regarding energy consumption in rail

vehicles is that it is not possible to produce prototypes for

extensive testing. This means that typically energy con-

sumption is calculated and not actually measured until we

are in the final production stage. To better estimate energy

consumption, we have invested in the development and

improvement of advanced software tools. These allow us

to calculate the energy consumption of our vehicles with

a high degree of accuracy. However, only real-life test-

ing can show whether our measures are applicable and

successful.

Testing on the GroundA recent project in Scandinavia, which was conducted

with involvement of our Design for Environment Compe-

tence Center, measured the actual energy consumption

of several modern trains, including our Regina trains in

Sweden and the Öresundstoget that links Denmark and

Sweden (KTH Stockholm, Andersson & Lukaszewicz,

2006), against benchmark data for a study of locomotive-

hauled trains conducted in 1994. The energy consump-

tion for propulsion and for comfort functions such as

Heating, Ventilation and Air Conditioning (HVAC) and

also for idling were measured, as was the energy lost in

railway operation.

In general, these studies showed that for comparable

operations, energy consumption on the newer trains had

been reduced by 25 to 30 % per passenger kilometer.

Several new and innovative design factors influenced

these results:

> Improved aerodynamics (energy consumption reduced by more than 20 %)

> Regenerative braking (energy consumption reduced by nearly 20 %)

> Improved efficiency in the propulsion system (energy consumption reduced by 5 to 10 %)

> Increased capacity/length due to wider car body (energy consumption reduced by about 25 %)

Without all these measures, energy consumption, due to

higher speeds and more comfort functions, would have

increased by 60 %. The key challenge in product develop-

ment is to balance passengers’ demands for high speed

and climate-controlled comfort with the operators’ need for

energy-efficient solutions, while remaining competitive and

improving environmental performance.

Transport Efficiency in Urban Environment *

50,000

37,500

25,000

12,500

02,000

Car

9,000

Bus

22,000

Tram

50,000

Metro

* Number of people crossing a 3 – 5 m wide space in an urban environment during a 1 hour period

Source: UITP, “Ticket to the future”, www.uitp/com/project/pics/susdev/brochureUK.pdf

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Design for Environment (DfE)Given our vehicles’ long life – as much as 40 years –

Bombardier Transportation places great emphasis on

creating environmentally compatible products. Our focus

is certainly on comfort and design but simultaneously on

meeting or exceeding specific environmental demands

during product development. Current laws require that

companies achieve higher energy efficiency, lower noise

emission levels and use risk-free materials.

Counting on DfEBombardier Transportation goes above and beyond

government regulations. As a company devoted to con-

tinuous improvement of environmental performance, we

have been committed to improving our products through

Design for Environment (DfE) for the past 15 years.

The primary goal of DfE is to develop vehicles that

contribute to a sustainable mobility, such as those that

reduce energy consumption and noise emissions. What is

the key to achieving this goal? The environmental impact

that the product will have throughout its whole life cycle is

factored in at the development phase.

DfE was first introduced in our engineering branches in

Scandinavia and Germany and has now spread through-

out the organization. Since then, we have done much to

reduce energy consumption during the product’s use.

We aim to use DfE to help us produce environmentally

compatible vehicles and to anticipate any future, more

stringent legislation in this regard.

Rail Vehicle RecyclingRecycling is one of Bombardier Transportation’s highest

priorities. The company strives to make products even

more reusable, and it achieves this goal by using recy-

clable materials as much as possible, avoiding the blend-

ing of materials and marking polymers and batteries.

DfE GuidelinesIn order to help our engineers accomplish the task of

designing eco-friendly products during the design

process, several tools exist. Some are publicly avail-

able, like the leaflet called Design for Environment (DfE)

Guidelines. This document contains some “quick and

easy” principles on how to obtain more sustainable prod-

ucts and services.

In essence, the principles address 11 design challenges

such as energy efficiency, lifetime expectancy and the

reduction of material diversity. Each designer is called

upon to set up his or her own “DfE action plan” based

on the guidelines. Through our Electronic Book of

Knowledge, more detailed documents are available for

all design engineers and staff in supply management.

Commuter train for the Ile-de-France region

Design for Environment (DfE) Guidelineswww.transport.bombardier. com > About us > Sustainable Mobility

��

Directive on Prohibited and Restricted Substances In 2002, we implemented the first Bombardier

Transportation Directive on Prohibited and Restricted

Substances. The directive implements the Prohibited and

Restricted substances list which defines substances that

are either forbidden for use or that should not be used

according to voluntary restrictions in all new designs/re-

designs.

The first revision of the Bombardier Transportation Pro-

hibited and Restricted substances list was made in the

fall of 2004 and came into effect on June 1, 2005, for all

new designs and design changes. This revision takes into

account changes in legislation and risk assessments as

well as customer requirements over the past two years.

Initiated in 2004, the project “Competitive Rail Argu-

ments for Sustainable Mobility” is an important study

involving the use of environmentally friendly products.

The aim of the project is to promote the railway sector

by applying environmental issues and arguments.

The study demonstrates the competitive environ-

mental advantage of rail products compared to other

modes of transport, and shows how Bombardier

Transportation contributes to Sustainable Mobility.

This knowledge is helpful for communicating the

superior environmental performance of Bombardier

Transportation products to new customers during the

tender process. Other objectives are to communicate

the environmental improvements that have been made

over the last decades of rail travel and to monitor the

commitments made with regard to HSE Policy and the

UITP Charter.

Project for Sustainable Mobility

Bombardier Transportation Environmental DatabaseEquipped with a web-based interface, CEMat is a central

database for gathering, storing and tracking the environ-

mental performance and passive fire safety requirements

of Bombardier Transportation products. The system is

an integral part of the Bombardier Transportation Data

Acquisition System (B-DAS), which is the company stan-

dard for applications with external accessibility.

The Bombardier Transportation Environmental Database

involves suppliers directly and thus reduces the time

needed for tasks such as creating a material inventory.

The system was launched in 2006 and not only enables

us to reuse existing data but also to share data between

Items Covered by Bombardier Transportation DfE Guidelines

- Metals - Polymers- Natural/Organic materials- Composites- Glass and Ceramics- Insulation- Adhesives- Oils and other liquids- Corrosion preventing agents- Surface treatment- Cleaning agents- Cooling media and Fire extinguishers- Electrical and Electronical equipment

Components and

Materials

DesignFunction/Need Production Use End of

life

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the business divisions. In addition, it transparently and

efficiently stores fire certificates linked to the components

in a product’s structure.

Design for Environment Training Since the DfE Training Module was launched, several

hundred engineers and supply managers have been

trained. We expect the training to become an increasingly

important pillar of our environmental strategy and

are working to broaden its application at all our sites.

Communicating Excellence: Environmental Product Declarations Most people are aware that traveling by rail has environ-

mental benefits, and it is important for Bombardier and

the entire rail industry to uphold this perception. We use

Environmental Product Declarations (EDP) to provide cus-

tomers, operators and other stakeholders with relevant,

reliable and objective environmental information.

These declarations deliver concise information about the

manufacturer’s environmental management system and

also describe the environmental aspects of the product’s

lifecycle (production, use – with special focus on energy

consumption – and end-of-life). An environmental profile for

each respective product is then put together based on that

information. In order to set up such a product declaration,

our staff performs a lifecycle assessment (LCA) that includes

manufacturing, operating (including maintenance) and end-

of-life treatment. It is based primarily on a thorough material

inventory and a calculation of energy consumption.

The structure and content of the product declarations are

based on international standards. We have expanded the

Bombardier TALENT 2 electric multiple unit

��

application of standards from ISO 14021 (self-declared

environmental claims), to now include the new standard ISO

14025:2006 in certain projects. We apply this new interna-

tional norm not only because it is the most advanced and

demanding one in this field but also because it allows us

to have our products’ environmental performance verified

externally according to an acknowledged scheme.

We believe that such external verification is required as soon

as the product is of relevance for the general public (like rail

vehicles). For systems/components that are delivered to

other businesses (B2B), ISO 14021 may be sufficient. How-

ever, even in these cases, ISO 14025 may be preferred as it

has the advantage to allow for compiling an EPD from infor-

mation modules which reflect a modular product structure.

This enables us to use input data from suppliers provided in

a standard, and even validated, format.

Generally, EPDs are developed with support from our

Design for Environment Center of Competence.

Whenever feasible, they are verified according to the

European EMAS regulation. Details on the corresponding

Program and product category rules according to ISO

14025 can be found on the Internet. With regard to EPD’s

we believe we are ahead of the curve. We introduced the

concept of EPDs to the rail sector in 1999. The first EPDs

fulfilling the requirements of the ISO 14025:2006 standard

were distributed at the Innotrans trade fair in Berlin in

September 2006.

Environmental Fact SheetsAn Environmental Fact Sheet (EFS) allows us to evaluate

the environmental performance of a customer-specific

version of a vehicle and/or component. It is especially

suited for reporting environmental performance informa-

tion in the early design stages.

Such an EFS typically deals with customized adaptations,

material changes and improvements. The first EFS was

introduced by Bombardier Transportation in September

2004. It was produced for the Locomotive Class Re 484

(Swiss Cargo) and is based on the EPD for the Locomo-

tive Class 185.1. While relevant ISO standards provided

guidance of the contents, the EFS was also validated

through EMAS.

EMAS logo poster on Bombardier TRAXX P160 DE, Germany

Program and product category ruleswww.transport.bombardier.com > About us > Sustainable Mobility

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Bombardier Transportation has worked on numerous

projects to make our products even more environmentally

compatible and to improve our transportation systems’

sustainability. We do this either hand-in-hand with our

customers and suppliers or, in the case of a consortium,

with our partners.

Electrical Multiple Units for ChinaBombardier is set to deliver 20 sets of eight-car Electrical

Multiple Units (EMU) to China. The vehicles are being

produced at our facility Bombardier Sifang Power in

Qingdao, which is a joint venture between Bombardier,

the Chinese company Sifang and Power Corporation

of Canada. The project started at the end of 2004.

The first EMU were delivered in 2006. The Chinese

Ministry of Rail has ordered a train built according to

European standards. So the environmental issues

should be considered in accordance with European

standards. All suppliers are requested to comply with

the Bombardier Transportation List of Prohibited &

Restricted Substances. They are also required to mark

all polymers and batteries.

London UndergroundIn the Victoria Line Upgrade (VLU) project (part of the

London Underground system), Bombardier Transportation

is asking all suppliers to comply with its list of

Prohibited & Restricted Substances and the marking of

polymers. They can declare their conformity by filling out

Bombardier Transportation’s “Supplier Declaration Form”.

Although due to the relatively low quantities used there

is no direct hazard from Chrome VI applied for plating

of screws, nuts, and washers, there is a phase-out

program similar to the automotive industry (which is

subject to legal obligations in this respect). As an exam-

ple, in our product PURD EMU Western Australia that

was delivered to the customer in September 2004, the

customer specified that chromates were not allowed

in the vehicles. The stainless steel vehicles, in total 31,

were manufactured by Joint Venture of Bombardier

Transportation Australia in Brisbane, Australia and EDI

Rail in Granville, New South Wales, Australia. The pro-

pulsion equipment was designed and manufactured

in Västerås, Sweden. It is estimated that Bombardier

Transportation had managed to reduce the total

amount of chromated surfaces by more than 95 %.

Chromates can still be found mainly in external stan-

dard components where no alternatives are available.

Actions Taken to Minimize the Use of Chromates

Design for Environment Project Examples

Electric multiple unit for Perth, Australia

30

Another part of the London Underground contract is the

Sub Surface Line (SSL). Here, the same base requirements

have been defined as in the VLU project. In addition, a full

material inventory will be carried out using a Bombardier

Transportation material inventory tool. The customer has

also requested an environmental report (i.e., a kind of EPD).

New OperaIn Europe, the railway system plays an increasingly

important role. Because of this, the European Transport

Policy’s goal is to encourage long-term sustainable

mobility and to promote a competitive environment. In order

to achieve this, a modal shift towards rail is necessary, in

particular reversing the negative trend of the rail freight’s

market share. New Opera is a research project funded

completely by the European Commission on a new

European rail infrastructure dedicated to freight. A three

and a half-year program, New Opera began in January

2005 and provides an excellent opportunity for study-

ing long-term and cross-border cargo mobility as well

as for developing scenarios for the next five to 15 years.

Bombardier Transportation’s role in the project is to share

its DfE expertise with the goal of identifying and evaluating

environmental criteria for assessing the sustainable New

Opera freight system.

PROSPER and REPIDThe PROSPER and REPID “twin” projects are the result

of a unique cooperation between railway operators and

manufacturers to improve environmental performance

of new rolling stock. In order to do this, project partners

developed common guidelines, specifications, indica-

tors, tools and data formats. Bombardier Transportation

participated in both PROSPER and REPID.

The UIC-(International Union of Railways) funded project

PROSPER ( Procedures for Rolling Stock Procurement

with Environmental Requirements) intended to improve

the environmental performance of rail transport by provid-

ing process support for all relevant steps when procur-

ing rolling stock. The results of the project have recently

been compiled as an environmental guideline for railways,

including a set of harmonized environmental specifica-

tions, in the UIC leaflet 345 “Environmental Specifications

for new Rolling Stock”.

In order to implement these environmental specifications

efficiently, railways and manufacturers need a common

environmental methodology. Based on the methodology

defined in a predecessor project under Bombardier’s lead,

which included environmental performance indicators, the

REPID (Rail sector framework and tools for standardizing

and improving usability of Environment Performance Indi-

cators and Data formats) project developed a software

tool for handling DfE. It also came up with a web-based

solution for environmental communication between the

different railway stakeholders. This has formed the basis

for the Bombardier CEMat tool.

PROSPER and REPID: Future of Eco-Procurement in the Rail Sector

Environmental

and

technical expert

information

Environmental

performance

of new rolling

stock

PROSPEREnvironmental Procurement Guideline

NETWORKMembers Board Website

REPIDMethodology Indicators IT-Tool

New Opera www.newopera.com

Procedures for Rolling Stock Procurement with Environmental Requirements www.railway-procurement.org

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In Focus:Climate Change

Climate change is one of the most critical challenges of our times. With its

potential impact on our health, economy and ecology, global warming is a major

risk. Some of the consequences are already visible; for example, an increase

in extreme weather patterns, and the rise in the average temperature. Scientists

have warned that greenhouse gases are one of the main culprits, notably CO2,

whose emissions result from burning fossil fuels such as coal, oil and gas.

he need to protect the climate provides Bombardier

Transportation with important incentives for product

planning. However, low emissions are equally impor-

tant to the whole of Bombardier Inc. on an operational

level. On Feb. 16, 2005, just after our parent company’s

fiscal year ended, the Kyoto Protocol on climate change

came into effect, providing added impetus for the corpo-

ration to recommit to reducing its environmental footprint.

With total yearly emissions in the 400 – 500 kiloton range,

Bombardier’s global manufacturing network produces

a relatively minor amount of greenhouse gas emissions

(mainly CO2).

However, in keeping with its sustainability agenda, the

corporation is devoted to reducing emissions even further.

Over a five-year period, Bombardier Inc. has set an annual

corporate-wide energy-reduction objective of 3 % to

reduce its greenhouse gas emissions accordingly.

Coinciding with the United Nations Climate Change

Conference 2005 in Montreal, a number of prominent

Canadian business leaders called for a raft of measures

regarding climate change and global energy policies.

One of the co-signatories of the appeal was Laurent

Beaudoin, Bombardier’s Chairman of the Board and

Chief Executive Officer.

In 2006, Bombardier Inc. joined the Carbon Disclosure

Project and disclosed all data relating to low-level emis-

sions and its strategies on climate protection. The project

– backed by several high-profile institutional investors –

aims to recognize at an early stage all climate-relevant

opportunities and risks for companies.

TBiLevel commuter train operated by GO Transit in Toronto, Canada

3�

Mobility and Climate ChangeTraffic and travel are one of the main reasons why CO2

emissions continue to increase. An estimated 18 % of the

global anthropogenic CO2 emissions are a direct result

of transporting people and goods. In certain countries,

e.g. Germany, that figure is closer to 30 %. Road traffic

is responsible for two-thirds of that volume, proving yet

again that it is the least energy efficient mode of transpor-

tation.

In contrast, rail travel is extremely climate-friendly. The

CO2 emissions resulting from long-distance train journeys

are nearly two-thirds lower than travel by car. If the freight

traffic of each has the same volume and performance, the

railway produces a mere one-fifth of the CO2 emissions

generated by a truck.

Bombardier Transportation’s Products and CO2 Reduction In order to maximize the inherent environmental advan-

tages rail enjoys in terms of relieving traffic congestion,

reducing energy consumption and producing fewer emis-

sions, Bombardier Transportation is working successfully

on innovative public transport solutions.

For example, in order to allow for more efficient use of

braking energy on our light-rail vehicles, we developed

the Bombardier* Mitrac* Energy Saver Solution. This

innovative technology can help reduce the energy con-

sumption of a light-rail system by up to 30 %.

Furthermore, Bombardier Transportation is a leading

contributor to the “Rail Energy Project” in the fields of

energy components and energy operation as part of the

6th EU Research Framework Program. The project aims to

develop energy saving hardware and control systems, as

well as to define standardized driving cycles. It’s esti-

mated that the results will lead to an overall six-percent

reduction in energy consumption.

That said, our research efforts to develop climate-friendly

transportation systems are not exclusively rooted in ethi-

cal responsibilities, though those are certainly a priority.

They also represent significant business opportunities

for Bombardier Transportation. Given that passenger

rail transportation – in particular mass transit – is rightly

regarded as a solution to reduce greenhouse gas emis-

sions, Bombardier’s leadership position in this sector will

serve all its stakeholders well.

Bombardier Transportation and EU CO2 Emission Trading The transport sector is exempt from EU emission

trading. However, in many countries of Europe the

inclusion of power generation in the trading scheme has

a direct impact on some of our customers. Together,

by working with our customers, through new product

development “designed for environment” as described

throughout this report, and through industry initiatives

we are addressing the issues presented by the need to

reduce CO2 emissions.

Carbon Disclosure Project www.cd-project.net

33

In F

ocus

: Clim

ate

Chan

ge

The Environmental Impact of Production

Production has long been an important lever in helping to protect

the environment. A reduction in our use of resources offers plenty

of opportunities to lower costs. Here at Bombardier Transportation,

we have yet to fully exploit that potential. That is why we have

defined clear reduction targets for all our sites worldwide over the

coming years.

3�

Energy Consumption

In general, Bombardier Transportation has continuously

reduced the overall energy consumption at all of the plants

reported here for a number of years. However, due to

changes in the number of sites we have as a result of the

acquisition of Daimler Chrysler Rail Systems in 2001 and

new developments in process and plant loading, energy

consumption has risen between 2003 and 2004, whereas

from 2002 to 2005, a decrease of 1 % annually as com-

pared to a target of 3 % was observed.

Special Measures at Select SitesBombardier Transportation invited the British government-

funded group Action Energy to our site in Derby, UK, to

help identify potential savings associated with energy

use. The resulting report highlighted examples for reduc-

ing energy consumption; for example, determining the

amount of leakage from compressors.

To cite other measures, an information session was held

in Bruges, Belgium, explaining good practices to our

employees. The internal objective is to reduce energy

costs by 10 %. In Randers, Denmark, 212 smaller low-

heat insulating windowpanes were replaced by high-

insulating ones. We installed automatic light switches in

changing rooms and bathrooms in several buildings and

equipped the light in some buildings with a timer so they

turn off automatically. We also replaced an insulated brick

wall with a heat-insulating gate in one of the buildings.

A workshop building in Trapaga, Spain, received a new

heating system with radiant panels on the roof, thus

replacing the former water-run central heating. That

generated savings in natural-gas consumption of almost

50 %. We also saved energy by replacing the old roof

with a new one with better insulation.

Energy Consumption per 200,000 Hours*

in Gigajoules

12,800

9,600

6,400

3,200

0

11,841

2002

11,036

2003

11,858

2004

11,437

2005 2006target

Energy Consumption in Absolute Figures*

in Gigajoules

3,600,000

2,700,000

1,800,000

900,000

0

2,335,393

20052004

2,907,777

2003

2,827,566

2002

3,100,054

* Reporting years from February 1 to January 31 ** Referenced to 200,000 work hours

OUR TARGET

Reducing specific energy consumption/greenhouse gas emissions** by 3 % annually.

35

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And also at our Hennigsdorf site, Germany, we managed

to reduce heat consumption by improving insulation of the

roofs.

Water Consumption

The water consumption at our sites is not especially high,

and it is usually limited to our sanitary facilities. Of course,

more water is used at sites where we have paint shops

and, more obviously, vehicle cleaning operations, but

consumption is also higher in areas where water tightness

tests of vehicles are carried out without reclaiming

water. All of the above also place great demands on

reprocessing and the purification of effluents. The

ecological impact of water consumption also depends

greatly on regional particularities. The majority of our

sites are in regions that typically have medium to high

precipitation. Nevertheless, we make sure that we use

water frugally − and our statistics certainly back that up.

The potential to save water is best highlighted at our site

in Crespin, France, where we have managed to lower

water consumption by 50 % since 2002. In total, we

achieved from 2002 to 2005 a reduction of specific water

consumption by 6 % annually, instead of a planned 3 %.

Use of ResourcesThe different materials specified in the design phase need

to be considered, including those contained in supplied

parts and components. Typical materials found in a rail

vehicle include steel, aluminum, copper, various plastics,

insulation materials, paints, adhesives, sealants, wood

and fabrics. The composition of the different materials

is as follows: metal (about 80 %), plastics (about 5 %),

wood (about 5 %) and glass (2 %). Our vehicles also

contain about 1 % of chemicals and around 0,5 % of

electronic parts.

For example, our production of locomotives in 2005

with an average weight of 84 tons required the following

resources per vehicle: 72 tons of steel, 13 tons of other

metals and 3.5 tons of plastics (see EPD TRAXX* F 140

MS, e.g.). Typical annual production output of the Kassel

assembly site is in the range of 100 vehicles. Luckily, the

Water Consumption per 200,000 Hours*

As of: January 31, 2006

5,000

3,750

2,500

1,250

0

4,629

2002

4,126

2003

4,024

2004

3,764

2005 2006target

Water Consumption in Absolute Figures*

As of: January 31, 2006

1,400,000

1,050,000

700,000

350,000

0

768,590

20052004

986,665

2003

1,057,186

2002

1,212,011

OUR TARGET

Reducing specific water consumption** by 3 % annually.

Greenhouse Gas Emissions per 200,000 Hours*

As of: January 31, 2006

1,000

750

500

250

0

867

2002

922

2003

985

2004

919

2005 2006target

Greenhouse Gas Emissions in Absolute Figures*

As of: January 31, 2006

260,000

195,000

130,000

65,000

0

187,631

20052004

241,636

2003

236,153

2002

226,989

* Reporting years from February 1 to January 31 ** Referenced to 200,000 work hours

3�

high use of natural resources is compensated by the

ability to recycle around 95 % of the materials used.

Hence, when it comes to environmental issues and natu-

ral resources, our focus is not so much on reducing their

use, but on limiting the amount of environmentally risky

substances (see List of Restricted Substances), such

as heavy metals, solvents, and other critical substances.

Hazardous and Critical Materials

Sometimes hazardous or critical materials have to be

used because various key technical requirements must

be met. However, according to our list of restricted

substances, engineering must report the use of these

materials and the reason for using them. While we must

follow legal obligations and customer requirements,

Bombardier Transportation policy is to also carefully

manage the use of those hazardous substances that

are not subject to such restrictions. The reduction of

hazardous waste quantities over time reflects this policy,

at least when excluding the service operations and the

waste generated through them. The fact that for new

build activities, a decrease only took place from 2004 to

2005 (18 %) is attributed to changes in categorization of

hazardous waste, as well as activities in conjunction with

site closures.

Waste Generation

Avoiding or reducing waste clearly is one of the crucial

areas for production improvement. It not only results in

a reduction of environmental loads, it also helps us to

significantly reduce our costs. Any material that must

not be disposed of as waste must not be purchased

Hazardous Waste per 200,000 Hours*

in metric tonnes

32

24

16

8

0

27

2002

18

2003

22

2004

21

2005 2006target

Hazardous Waste in Absolute Figures*

in metric tonnes

8,000

6,000

4,000

2,000

0

4,335

20052004

5,330

2003

4,620

2002

7,115

Waste per 200,000 Hours*

in metric tonnes

100

75

50

25

0

64

2002

65

2003

80

2004

83

2005 2006target

Waste in Absolute Figures*

in metric tonnes

20,000

15,000

10,000

5,000

0

16,902

20052004

19,550

2003

16,760

2002

16,712

* Reporting years from February 1 to January 31 ** Referenced to 200,000 work hours

Environmental Production Declaration (EPD), TRAXX F 140 MS www.transport.bombardier.com > About us > Sustainable Mobility

List of Restricted Substances www.transport.bombardier.com > About us > Sustainable Mobility

OUR TARGET

Reducing specific general waste** by 3 % annually.OUR TARGET

Reducing specific hazardous waste** by 5 % annually.

37

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organic compounds contribute to the greenhouse effect

and aid the formation of ground-level ozone.

Replacing solvent-based paints with water-based alter-

natives has been part of Bombardier Transportation’s

continuous improvement strategy for several years.

However, some clients specifically request solvent-based

paints, due to perceived advantages regarding corrosion

resistance and surface finish. The switch from solvent-

based to water-based paints and glues is one example of

how environmental improvements are linked to changes

in the production processes or customer requirements.

Therefore, it is not only Engineering and Design that has a

bearing on customer wishes; our sales force can also play

an active role in overcoming “historic” customer specifica-

tions and requirements, instead providing new, environ-

mentally-sound alternatives.

In addition to the data presented above, our environ-

mental reporting system covers any significant spills.

None were recorded during the reporting period. Fines

and sanctions for non-compliance with environmental

laws/regulations are followed by the reporting system as

well. During the reporting period (2005/6), their amount

was less than US$ 15,000.

and handled beforehand. Similar to what was said

regarding hazardous waste, the increase in specific

amounts at certain points in time can also be related

primarily to site closures in the case of general waste. It

is also obvious from comparing figures without service

activities that these contribute over-proportionally

to waste generation due to cleaning of vehicles and

scrapping of components prior to vehicle refurbishment.

Materials sent for recycling increased from twice the

amount of disposed materials to three times, again

primarily related to site closure and restructuring activi-

ties. From 2004 to 2005, however, their specific amount

decreased by 21 %.

Emissions to the AtmosphereThis topic focuses on emissions resulting from direct

and indirect energy consumption. At Bombardier

Transportation, we are in the process of reducing our own

heating energy and instead opting for district heating.

Generally, this leads to a reduction in CO2, sulphur dioxide

(SO2) and nitric oxide (NOX) emissions.

Furthermore, we are also committed to a reduction in vol-

atile organic compounds (VOC) from agents used in clean-

ing and degreasing or as solvents in paints and adhesives.

These also pose a threat to the respiratory health of our

employees. When emitted into the atmosphere, volatile

Recycled Material per 200,000 Hours*

in metric tonnes

240

180

120

60

02002

91

2003

233

2004

165

2005 2006target

Recycled Material in Absolute Figures*

in metric tonnes

60,000

45,000

30,000

15,000

0

33,601

20052004

57,198

2003

23,220

2002

* Reporting years from February 1 to January 31

3�

Wroclaw Locomotives plant,

Poland: Here we managed to

reduce the EP (epoxy-resin)

solvents in the preparative paint

process for BR 185 locomotives by

using novel painting methods

(warm painting). The total quantity

of solvents used for the top coat

has been reduced by 5 liters per

carbody.

For BR 185.2, Bombardier

Transportation pool, a reduction of

paint materials containing isocya-

nate was possible by exchanging

PUR (polyurethane) sealant for

MS (modified silicones) sealant,

resulting in the total elimination of

isocyanate emissions.

For the E 405 locomotive (Trenitalia,

Italy), we also managed to reduce

the quantity of paint materials

per carbody. We achieved this by

reducing anti-slip epoxy and anti-

slip hardener from 12 kilograms to

8 kilograms per unit, respectively.

At the Crespin bogies facility,

France, we selected a water-based

paint for some customers. Follow-

ing approval of this painting pro-

cess with lower VOC emission by

French customers, it has also been

approved by other customers.

Our mainline plant in Crespin

defined a new painting process

with lower VOC emission and

foresees a 15-percent reduction of

VOC emissions.

The Görlitz site, Germany

modernized the painting installa-

tions and is now able to use water-

based paints as well. For example,

we used water-based paint on

Israel-bound double-decker cars

produced at the site. As a result,

we managed to reduce solvent

emissions and also complied with

the limits set by the German

Solvent Directive.

Several measures to reduce VOC

emissions were implemented at

the Bautzen site, Germany. The

increase in use of water-based

paint reduces consumption and

emission of solvents; electrostatic

painting at the small parts paint

shop reduces overspray losses,

while using glues with less solvent

content reduces hazardous sub-

stances at the workstations.

At the Siegen bogies site, Ger-

many, more than 60 % of the

painting is done with water-based

paints.

In Plattsburgh, U.S., – and at

other sites where a total switch to

water-based paints is not feasible

– we installed a solvent distiller

to reuse solvents from painting

operations. That cut the amount

of virgin materials and ultimately

reduced the amount of hazardous

waste generated by the process.

Examples for Reducing Emissions to the Atmosphere

39

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Responsibility for Our Employees

The health and safety of our employees around the world is of

paramount importance to Bombardier Transportation. This responsi-

bility for our staff manifests itself in a sophisticated system of health

protection and workplace safety. But that’s not all: As a company

operating on a global scale, Bombardier Transportation also strives

to promote and protect diversity and equality.

�0

ccupational health and safety of employees and

environmental protection are considered to be

fundamental to corporate social responsibility.

The Bombardier Inc. Code of Ethics & Business Conduct

addresses self-set requirements for the work environ-

ment, business practices and relationships with external

stakeholders.

Rules and RegulationsBombardier Transportation and its employees are

expected to comply with all applicable laws and regula-

tions. We adopt standards, procedures, contingency

measures and management systems ensuring that our

operations are managed safely, ecologically and in a

sustainable manner.

To protect their own safety and that of their colleagues

and communities, employees are aware of a zero toler-

ance policy with regard to the use of any substance that

could impair their judgment or prevent them from carrying

out their duties efficiently and responsibly.

Accidents per 200,000 Hours (frequency)*

4

3

2

1

0

2.5

2002

1.6

2003

1.2

2004

0.9

2005 2006target

Lost Days per 200,000 Hours (severity)*

40

30

20

10

0

14.6

20052004

16.8

2003

24.1

2006target

2002

31.6

O

* Reporting years from February 1 to January 31

41

Resp

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Em

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Indicators and TargetsBased on a benchmark with best-in-class companies,

in 2000, Bombardier Inc. set corporate-wide targets

for health and safety performance. Two indicators were

defined and used throughout the Bombardier company,

from plant to Group Office level:

> Loss Time Accident (L.T.A.) Frequency: This indicates the total of Loss Time Accidents resulting in at least one day of absence plus the total of Loss Time Accidents with temporary assignments multiplied by 200,000 work hours and divided by the total number of hours worked.

> Loss Time Accident (L.T.A.) Severity: This expresses the total number of lost days away from work (from the first to max. 180 days) plus temporary assignments multiplied by 200,000 work hours and divided by the total number of hours worked.

These definitions differ from the U.S. OHSA definitions for

L.T.A., which would not include temporary assignments.

We have put in place detailed measures to reduce the

accident frequency and severity for all plants. Bombardier

Transportation health and safety performance targets for

2004/05 were 1.25 in terms of frequency and 17 in terms

of severity. For 2005/06, we reduced the frequency target

to 0.5, and to 15 for severity which proved very challeng-

ing. Both frequency and severity have been reduced by

90 % over the last five years.

Near MissesIt is a well-established fact that accidents are usually pre-

ceded by a number of incidents that could have

With the support of the European

Union, Bombardier Transportation

carried out a project designed to

prevent accidents in 2003 at the

plant in Randers, Denmark. The

HSE manager very closely moni-

tors the quality of the investigation,

the analysis and the follow-up on

accidents and near miss accidents

carried out by the safety organiza-

tion and the employees, and Bom-

bardier gives increased attention

to near-miss accidents; the results

are printed in the respective site’s

newspaper. Also, “near-miss” inci-

dents are recorded and analyzed

in the production area where the

“near-miss” was observed.

Product Responsibility and Customer Orientation

Welder working on a metro carbody, Germany��

happened but fortuitously did not. These are called “near

misses”. Employees may detect dangerous situations that

could easily result in an accident. Many of our sites have

already implemented systems for reporting and following

up on such near-misses/dangerous situations. Over time

we expect to eliminate near-miss situations.

Dealing with Severe AccidentsWhile we do all that we can to ensure the health and safety

of our employees and the creation of safe working environ-

ments for both employees and contractors. Unfortunately,

severe accidents do happen. Accidents are taken very

seriously, regardless of whether our own employees or

those of external contractors are involved. The Group has

a very thorough Accident and Incident Directive which

must be followed. All significant cases are reported to the

President of Bombardier Transportation as well as to the

Chairman of the Board and CEO of our parent company.

Improving PerformanceOver the past four years, we have delegated the respon-

sibility for improving their individual accident situations to

our divisions. To assist them in measuring their improve-

ment we have also introduced checks on implementing

certain good practices.

Health and safety performance is an element in the

annual performance assessment for managers.

We started to implement the following procedures

in 2006:

> regular written HSE information for employees.

> regular, documented workplace audits by superiors.

> system for incentives for HSE achievements.

Respective indicators are adhered

to at each site and reported regularly.

43

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Personal EducationTraining and development are vital parts of any contem-

porary “learning organization”. Drawing from the pro-

cesses in the Human Resources System, we evaluate

appropriate training and development needs, the evalua-

tion process itself being fully aligned with the Performance

Management Program (part of our Strategic Governance

and Leadership System).

To ensure training and education is efficient, the Human

Resources department works closely with all Bombardier

Transportation functions and divisions. Training and

development are on offer both internally and via external

sources.

“Building Effectiveness” is a management seminar con-

sisting of two three-day modules and is on offer at various

sites. It focuses on how management can use the means

and skills at its disposal to lead staff effectively and with a

clearly defined aim. The agenda also includes customer

orientation and integrity.

So far, these seminars have been offered in German and

English but French and Spanish are scheduled to be

added in the near future.

“Building Leadership” is a 12-month program aimed at a

select group of “High Potential” managers. The first block

started early in 2006, with the second module to follow

in autumn 2006. Some of the areas overlap with “Build-

ing Effectiveness” but with the additional components of

involving top management directly and utilizing real-life

case studies.

A global company like ours has to integrate a wide variety

of cultures. That is why we place special emphasis on our

intercultural responsibility. As a result, our trainers have

developed a seminar on “Intercultural Awareness” which

is adapted according to each division’s individual needs.

Health and safety is a subject of training activities also.

On average, we provide three hours of training annually

per employee.

Equal OpportunitiesWe consider ourselves to be the most international rail

system manufacturer, a characteristic we can back up

with hard facts. At our company, a total of 75 different

nationalities speak 20 different languages. We are able

to supply a team covering everything from engineering

and project management to financing and strategy. The

common characteristic of all our teams, anywhere in the

world, is that they deliver excellent results, customer

satisfaction and a high-performance, reliable product.

We treat all our employees fairly, ethically, respectfully

and with dignity. The Group offers equal employment

opportunities regardless of age, gender, sexual orienta-

tion, disability, ethnicity, religion, citizenship, marital status,

family situation or country of origin. We adhere to that

standard in accordance with the laws and regulations of

each country where we do business.

Percentage of Trainees 2003–2005*

including apprentices and management trainees (lower figure)

2.0

1.5

1.0

0.5

0

1.62

20052003

1.60

2004

1.62

* Data as of December 31

��

Our code of ethics and business conduct protect employ-

ees from harassment, bullying and victimization in the

workplace. This includes all forms of sexual, physical and

psychological abuse. Employees are entitled to work in –

and are expected to preserve – a positive, harmonious

and professional work environment.

On average worldwide, women fill around 10 % of our

middle and upper management positions. Currently

24 % of our staff in South America are female, with

North America (over 12 %) and Asia (11 %) next in line.

In Europe, where Bombardier Transportation has most

of its staff, the quota is 10 %, and 6.5 % in Australia.

There are no women among the 17 employees in Africa.

As a corporate policy, Bombardier is opposed to all forms

of child labor and compulsory labor.

Staff InterestsBombardier Transportation introduced a European-wide

works council in 2001, which meets once a year to dis-

cuss the Group’s development. The council is made up

of employees’ representatives from all the European sites

who meet to coordinate the concerns and requests they

want to present to the management. Those issues are

often workplace- and environment-related.

All these concerns are also subject to open debate at

regular meetings of the works councils that are part of

Bombardier Transportation legal entities in each country.

Bombardier Transportation

embarked upon a global restruc-

turing program between 2004 to

2006 to improve its competitive-

ness. This resulted in the reduction

of 7,600 jobs worldwide and

the closure of several production

plants. About 3,350 jobs in

Germany were shed between

2003 and 2006. It proved to be a

considerable challenge to maintain

the morale and motivation of those

unaffected by the measures, as

well as to support the ones losing

their jobs.

Bombardier Transportation was

fully aware of the situation and

agreed to social plans to com-

pensate the losses. We not only

offered the standard redundancy

payments but also the possibility of

joining a job creation program with

a guaranteed running time of 24

months (or 12 months as of 2006).

At the same time, the company

exploited every possible internal

solution which resulted in some

300 employees moving to other

jobs within the organization.

Bombardier Transportation also

organized job fairs at a number of

sites enabling potential employ-

ers and the Federal Labor Office

to offer job positions to those

affected by the cuts.

We also applied for and obtained

the permission to hire out staff to

other companies which meant that

some employees could work for

other organizations on a trial basis.

During those trial periods, the

company took over all the person-

nel costs, and its good relations

with other companies in the region

and close ties with the employers’

association provided an added

impetus to those measures, as did

management’s personal commit-

ment to the matter.

Whenever there were gaps in the

qualifications of employees who

were asked to perform a certain

task, Bombardier organized and

financed training programs.

Outplacement advisors often

helped provide employees with

new jobs, bypassing the jobs

creation program. We also guaran-

teed psychological and sociologi-

cal support for our staff with the

help of our own doctors or social

workers throughout the entire

restructuring process.

Capacity Adjustments

45

Resp

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A Responsible Citizen of the World

As the global leader in the rail sector, we recognize that our

business goals must include making a positive difference to the

communities in which we work. This extends beyond the creation

of jobs and wealth, to include the transfer of our knowledge and

expertise where needed, to the demonstration of best practice

in every aspect of our operating behaviour at every level, to the

��

creation of environmentally driven products, systems and services

and to the development of an on-going dialogue with the many

stakeholders with whom we interact. We acknowledge that these

are ambitious objectives that we have set for ourselves. Neverthe-

less, we are working with our employees, customers and suppliers

around the world to turn these statements into reality.

ombardier Transportation’s divisions and sites

around the world are committed to playing a con-

structive role within their communities. However,

in general, the focus for community investment is to con-

sider projects with long-term impact that support youth

and education, local culture and arts, and the environ-

ment. The education-assistance project of Bombardier’s

Chinese joint venture Bombardier Sifang Power (BSP) is

one example.

Following a proposal by company management, BSP’s

labor union offered to help some schools in need of assis-

tance. The Safety and Organization Committee visited six

schools and came back with a list of nearly 40 issues that

needed to be tackled. After consulting with the schools

and company management, the committee finally picked

out a kindergarten and two primary schools to assist, with

projects including installing new lights in the classrooms,

repairing desks and chairs and erecting a soccer goal.

This report is about the future of sustainable mobility and

we believe that there is no better way to secure the future

than to invest in and support education and research.

The Group’s divisions have partnerships with a number of

universities and research institutes internationally.

B

47

A Re

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sibl

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tizen

of t

he W

orld

Our investment in educational and research partnerships

is directly related to the work we do. We provide funding

for individual scholarships as well as for research into

engineering, materials technology, design and manufac-

turing, at some of the world’s major schools of science

and engineering.

Bombardier Transportation was also pleased to become

the founding partner for PlaNet Finance Deutschland

in 2006. This is a brand new initiative for us targeted at

poverty alleviation and economic development in associa-

tion with the micro-finance sector. We expect to report on

more tangible investments in this area in our next report.

In Canada, our divisions may refer worthy projects to the

J. Armand Bombardier Foundation, a non-profit organiza-

tion set up by the founder of our company which provides

student bursaries as well as scholarships and donations

to colleges and universities in Quebec and across

Canada. The Foundation also supports several charity

and relief organizations each year.

IntegrityBombardier Transportation has built its enviable reputa-

tion not only on the excellence of its products and ser-

vices, but also on the honesty and integrity of its people.

India: An Example for the Transfer of Standards and Know-How in Emerging Markets

For over three decades, Bombardier Transportation

India has been working closely with Indian Railways,

earning a solid reputation as a quality supplier of

Propulsion and Signaling equipment. The factory at

Maneja, Vadodara was among the first Bombardier

Transportation facilities to achieve ISO 14001 and

OHSAS 18001 certification and the site has been

accident-free for five years, winning several awards for

outstanding HSE performance.

With the revamped tap changers it introduced recently,

Bombardier Transportation India is contributing to sustain-

ability. Tap changers are electro-mechanical devices used

for varying the voltage on the primary side of the trans-

former to control the speed of a conventional locomotive.

Their typical life expectancy is 18 years after which they

are usually scrapped.

Bombardier Transportation India introduced a refurbish-

ment process that produces near-new equipment at

approximately 60 % of the cost of new ones. About

Vadodara site, India

��

The Bombardier Code of Ethics and Business Conduct

sets the standard for the ethical business practices and

behaviour expected of every employee.

As a global competitor, Bombardier Transportation is sub-

ject to the laws of many jurisdictions, including nations,

provinces, states, municipalities and international bodies.

Bombardier Transportation employees must obey the law

in each jurisdiction in which we operate. We also comply

with anti-corruption legislation in all the jurisdictions in

which we operate. This legislation includes the Corruption

of Foreign Public Officials Act of Canada (and its amend-

ments), which applies to Bombardier’s global business.

Bombardier’s Code of Ethics and Business Conduct

clearly defines how our staff should deal with our cus-

tomers. Employees are not permitted to accept or offer

gifts, invitations or trips abroad. The Code applies at all

times, without exception, to all employees at every level.

Our suppliers and partners, as well as third parties such

as agents are also expected to adhere to the Code.

Any employee who is aware of any breach of the

Bombardier’s Code of Ethics and Business Conduct

must report it to the Compliance Officer at our parent

company. All information is treated anonymously and

confidentially.

India: An Example for the Transfer of Standards and Know-How in Emerging Markets

80 % of the parts and components can be re-used, only

requiring re-machining or re-coating. The whole process

results in the conservation of resources at a high value-

added level, and has significant social aspects: The

cleaning and reworking of the parts is carried out by small

suppliers, helping their business grow while having a

positive knock-on effect for those working at transport

companies.

This activity contributes to all three pillars of sustainability:

environmental protection, economic benefits, and social

development. In addition, Bombardier Transportation

India decided to purchase and re-furbish the facility

that had previously been rented out, and it now serves

as a role model for companies in the neighborhood.

Indian Railways have recognized and appreciated the

huge success of this initiative, and the company is

using that experience in its long-term strategy

planning for maintenance.

49

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1. Strategy and analysis1.1 Statement from the CEO and the COO 2/31.2 Description of key impacts, risks and opportunities * 21, 23-25, 32, AR 99

2. Organizational profile2.1 Name of the company 42.2 Primary brands, products and/or services 52.3 Operational structure and major divisions 5/62.4 Location of organization’s headquarters 4/52.5 Countries with major operations (or relevant to sustainability issues) 7-92.6 Nature of ownership * 52.7 Markets served 5/72.8 Scale of the reporting organization 4/5, 72.9 Significant changes regarding size, structure, or ownership 7, 452.10 Awards received in the reporting period N/A

3. Report parameters a) Report profile3.1 Reporting period interior of front cover3.2 Date of most recent previous report interior of front cover3.3 Reporting cycle interior of front cover3.4 Contact point for questions regarding the report back cover b)Reportscopeandboundary3.5 Processes for defining report content (e.g. materiality, priorities)* interior of front cover3.6 Boundary of report interior of front cover3.7 Statement on specific limitations concerning the scope of the report not applicable3.8 Basis for the reporting on joint ventures, subsidiaries etc. inside cover, 73.9 Data measurement techniques and bases of calculations N/A 3.10 Explanation of the nature and effect of any restatements of information not applicable3.11 Changes from previous reports (boundary, measurement methods) not applicable c)GRI-Index3.12 Table identifying the location of the disclosures in the report 50/51 d)Assurance3.13 External verification of the report none 4. Governance, commitments, and engagement a)Governance AR 184.1 Governance structure, including responsibility for sustainability 12*, AR 184.2 Independence of the supervisory board chairperson 124.3 Number of independent supervisory board members 124.4 Mechanisms for shareholders to provide recommendations to the Board N/A4.5 Link between senior management compensation and sustainability 434.6 Processes for the Board to ensure conflicts of interest are avoided AR 184.7 Expertise of the highest governance body in terms of sustainability issues N/A4.8 Corporate mission, values, and codes of conducts 11/124.9 Board-level processes for overseeing sustainability related risks/opportunities 12*4.10 Processes for evaluating the Board’s performance on sustainability matters N/A b) Commitments to external initiatives4.11 Implementation of the precautionary principle 24*, 26-29*4.12 External initiatives that the organization endorses 13, 19, 204.13 Significant memberships in industry and business associations 13, 20 c) Stakeholder engagement4.14 List of stakeholder groups engaged by the organization 18*4.15 Basis for identification of stakeholders to engage 19*/20*4.16 Approaches to stakeholder engagement (type/frequency) 19*/20*4.17 Key topics raised through stakeholder engagement and response by company 19*/20*

5. Management approach and performance indicators a) Economic performance indicators EC1 Economic performance – Direct economic value created and distributed AR 109/110EC2 Economic performance – Financial implication of climate change 32/33*EC3 Economic performance – Coverage of benefit pension plan obligations AR 89, 97EC4 Economic performance – Significant financial assistance received from government N/AEC6 Market presence – Spending on locally-based suppliers 48*/49*EC7 Market presence – Local hiring, incl. senior management positions N/AEC8 Indirect economic impacts – Infrastructure investments and services provided primarily for public benefit N/A

GRI Content Index (G3 disclosure items—core indicators only)

50

b) Environmental performance indicators EN1 Materials – Weight/volume used 36/37*EN2 Materials – percentage used that are recycled 38EN3 Energy – Direct consumption: primary sources used by company 35*EN4 Energy – Indirect consumption: primary sources used through energy purchased 35*EN8 Water – Total withdrawal by source 36*EN11 Biodiversity – Land used in protected areas N/AEN12 Biodiversity – Significant impacts of activities on protected areas N/AEN16 Emission, effluents, and waste – Total direct and indirect greenhouse gas emissions by weight 32, 36EN17 Emission, effluents, and waste – Other indirect greenhouse gas emissions by weight, e.g. business travel N/AEN19 Emission, effluents, and waste – Ozone-depleting substances by weight N/AEN20 Emission, effluents, and waste – NO, SO, and other significant air emissions by weight N/AEN21 Emission, effluents, and waste – Total water discharge by quality and destination N/AEN22 Emission, effluents, and waste – Total weight of waste by type 37EN23 Emission, effluents, and waste – Total number and volume of significant spills 38EN26 Products and services – Initiatives to mitigate environmental impacts 22-28EN27 Products and services – Percentage recycled 37EN28 Compliance – Fines/sanctions for non-compliance with environmental regulations 16, 38

c) Social performance indicators Labor practices & decent work performance indicatorsLA1 Employment – Total workforce by employment type, employment contract, and region 44/45* LA2 Employment – Breakdown of employee turnover by age group, gender, and region N/ALA4 Labor/management relations–Percentage of employees covered by collective bargaining agreements N/ALA5 Labor/management relations–Minimum notice period(s) regarding operational changes N/ALA7 Occupational health and safety – Injuries, absentee rates and work-related fatalities by region 41-43LA8 Occupational health and safety – Prevention and risk-control programs regarding serious diseases not applicableLA10 Training and education – Hours per year per employee by employee category 44LA13 Diversity and opportunity – Composition of senior management and breakdown of employees (gender/culture) 45*LA14 Diversity and opportunity – Ratio of basic salaries of men to women by employee category N/A Human rights performance indicatorsHR1 Investment and procurement practices – Investment agreements with human rights clauses or HR screening N/AHR2 Investment and procurement practices – Suppliers and contractors that underwent screening on human rights N/AHR4 Non-discrimination – Incidents of discrimination and actions taken N/AHR5 Freedom of association and collective bargaining – Operations with significant risks to collective bargaining and actions taken N/AHR6 Child labor – Operations with risk incidents of child labor and measures taken 45HR7 Forced and compulsory labor – Operations with significant risk for incidents of forced labor and measures taken 45 Society performance indicatorsSO1 Community – Policy to manage impacts in areas affected by activities N/ASO2 Corruption – Business units analyzed for risks related to corruption 49*SO3 Corruption – Employees trained in organization’s anti-corruption policies 12*SO4 Corruption – Action taken in response to instances see 49, not applicableSO5 Public policy – Positions, participation and lobbying 13, 20, 32*SO8 Compliance – Fines/sanctions for non-compliance with laws/regulations 38 Product responsibility performance indicatorsPR1 Customer health and safety – Life cycle stages in which health and safety impacts of products and 15, 27, 37 services are assessed for improvementsPR3 Product and service labeling – Principles/measures 28/29, WebPR6 Marketing communications – Procedures and programs for adherence of laws and voluntary codes 49PR9 Compliance – Fines for non-compliance with regulations concerning the use of products and services N/A

GRI Content Index (G3 disclosure items—core indicators only)

Disclosure on management approach Economy Environment Labor/decent work Human rights Society Product responsibility

Goals and performance 14-16 24, 35-39 14, 42-44 N/A 11/12 15, 26

Policy 11 14 14, 44 N/A 11/12 24, 26/27

Organizational responsibility 14 14 N/A 48/49 26, 29

Training and awareness 13/14, 17 14, 44 N/A 12 28

Monitoring and follow-up 15/16 16/17, 42/43 N/A 12 28/29

Additional contextual information 12 15 42-45 N/A 11/12, 48/49 23, 25, 30/31

AR = Bombardier Annual Report 2005/06 * No complete presentation as per GRI criteria or only examples N/A = No information available

51

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Bombardier Transportation

Transportation Sustainability Report 2005/06

Schöneberger Ufer 1

D-10785 Berlin

Germany

Tel + 49 30 98 60 7-0

Fax + 49 30 98 60 7-2000

Contact:

Sharon Christians

Vice President Communications & Public Affairs

Schöneberger Ufer 1

D-10785 Berlin

Germany

E-mail hse@de.transport.bombardier.com

Editorial deadline: October 1, 2006

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www.transport.bombardier.com

* Bombardier, BiLevel, MITRAC, Regina, TALENT, TRAXX and ZEFIRO are trademark(s) of Bombardier Inc. or its subsidiaries.

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