Views from our Chief Sustainability Officer and independent advisors

David Picton, Chief Sustainability Officer

Now, more than ever, sustainability is not a nice-to-have, it is critical for long-term business success. That critical nature extends to making sustainability a strong, balanced approach and delivering on the Three CBs’ integrated approach to drive impact: changing behaviours, commercial benefit and challenging balance.

Changing behaviours: in order for sustainability initiatives to take root and make a long–term impact on both business and the community, they have to change behaviours. In the business sense, this begins internally by encouraging best practice, responsibility and personal commitments among our people. It means achieving positive change by acting early and through regular commitment.

Commercial benefit: ‘profit’ can have negative connotations but profitable businesses are in the best position to share their value not only with shareholders but with communities, the environment, employees and supply chains. Evidence emerged in 2014 specifically linking sustainability with profitability and building positive customer relationships. We took the step a few years ago to include sustainability metrics in our financial reporting, demonstrating that a streamlined, responsible, ethical business can (and should) also be a profitable one – for the long term. This year we’ve made steady progress in measuring the value of sustainability against our Sustainability 2020 targets.

Challenging balance: to achieve lasting change – for itself, for organisations and for communities – a truly sustainable business must be ambitious, challenging preconceptions and entrenched beliefs. In sustainability terms, that also needs to be balanced – across economic, social and environmental responsibilities. Traditionally ‘green’ or environmental considerations remain high on the sustainability agenda, but social responsibility creates long–term legacies in the communities where we work and live.

This year we’ve made steady progress in measuring the value of sustainability and aiming for our Sustainability 2020 targets.

In sectors like construction and services, which rely fundamentally on working with partners, it’s important to recognise that collaboration is key to success. Managing resources wisely, developing new and competitive innovations, engaging credibly with local communities and building long-term economic success all require learning and skills development. This – fundamentally – is at the heart of our Sustainability 2020 strategy, and we know that there is a lot still to tackle as we work to make tomorrow a better place.

Looking ahead, we’re still ambitious with what we want to achieve through our sustainability expectations and targets. The achievements to date have set a firm platform of evidence and benchmarks in place – so much so, that we often overlook things that we now take for granted as our daily business and values. It’s the way that we do business, but we’re not complacent.

Our new Sustainability Committee will bring even greater focus to our strategic leadership, and we will continue to test and develop what we believe it means to be leading the way in sustainability. Our target to achieve a £40 million contribution to profit from sustainability by 2020 is stretching, but this is how we will build a successful business and continue to make sustainability business critical. We’ll need to make it as easy as possible for our people to volunteer – and capture that evidence – if we’re to get 50% of them involved by 2020, so we’ll develop a mobile application and continue to link them to practical, relevant opportunities with our strategic community partners.

For carbon, we need to continue reducing our footprint to a minimum, and to understand how we can address and minimise embodied carbon together with clients and suppliers. As we look ahead to 2020 and beyond, we need to implement a carbon strategy that delivers clear business relevance and appropriate impact, as our business continues to evolve and develop in a dynamic marketplace. As we close in on an effective zero waste to landfill, we also need to remain focused on reducing our absolute waste production, and particularly in the Middle East where recycling infrastructure is less advanced.

Collaboration can often be a cliché, but our support for the Supply Chain Sustainability School is anything but that – it is a clear commitment to raising sustainability skills and working with our suppliers across the built environment. Building on that, we will continue to develop regional stakeholder engagement to understand what matters most in sustainability to the people who buy, deliver, advise on and supply to our business. Of fundamental importance will be the need for responsible resource management, including FSC timber, water and materials, capturing and working with suppliers’ innovations and implementing regionally appropriate ethical sourcing plans.

Turning finally to people, we need to be sure that we’re engaging both our own people and those who are outside our immediate business. Much effort is focused on implementing the recommendations from the Great Debate, and to further develop the knowledge we gained from our Materiality Review. Sustainability comes to life through our people, their actions, commitments, behaviours and impacts, so we’ll continue to make sustainability as inspiring as possible for and through them.

What next?

Here is a snapshot of just some of the areas we will be working on during 2015.

Building a successful business

  • Reduce costs and increase efficiency to improve margins and deliver £32.5 million to profitability
  • Deliver cash-backed profit
  • Embed the new Board Sustainability Committee
  • Undertake focused stakeholder engagement to further understand the most important issues across our regions, including a specific materiality review in Canada
  • Understand better what matters to our clients in sustainability, and how that can help improve customer satisfaction

Leading the way

  • Increase expenditure with local UK suppliers to 60%
  • Install a further 16 EcoPods to serve 644 homes and save 50,000 tonnes of carbon
  • Prepare for the introduction of Business Information Modelling (BIM) across UK Public Service Procurement including technical and project team training; share experiences with suppliers and customers; and roll out whole-life contracts in the Middle East
  • Engage supply chain partners in skills development and innovative, sustainable solutions
  • Enhance our understanding of ethical sourcing and implement region-specific ethical sourcing plans

Providing better prospects for our people

  • Be a recognised leader in health, safety and sustainability
  • Develop and attract excellent people to create a vibrant, diverse and flexible workforce
  • Develop a Stress and Mental Health Charter, accompanied by tools and a training module to reduce work-related stress and promote positive mental wellbeing
  • Make ePOD learning available in the Middle East; extend it to suppliers, partners and clients
  • Address challenges to releasing our people to participate in volunteering

Supporting sustainable communities

  • Measure and monitor actions that will have the best positive impact for the communities where we work and live
  • Ensure every site has a community needs plan, bringing our total to 100%
  • Continue rolling out our plan to create 5,000 new apprentice places across the 5 years to 2020

Enabling low-carbon economies

  • Develop and implement our plan for carbon reduction towards 2020, such as green energy production and consumption; addressing the embodied carbon of our projects; and helping customers reduce their carbon
  • Continue our focus on transparency and climate change adaptation under CDP – aiming to maintain our lead of the Industrials sector

Protecting the environment

  • Tackle our target of sending effectively zero non-hazardous waste to landfill by the end of 2015
  • Strengthen relationships with waste removal providers
  • Maintain our focus on sourcing FSC timber, and wider ethical sourcing initiatives
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Now, more than ever, sustainability is not a nice-to-have, it is critical for long-term business success. Sustainability needs a strong, integrated approach which delivers on the Three CBs: changing behaviours, commercial benefit and challenging balance.”

David Picton, Chief Sustainability Officer, Carillion

A view from Dame Julia Cleverdon

In this tough year for business competitive advantage, Carillion have made some important gains in the long-term sustainability of the business not just in the UK but in the Middle East and Canada as well. Visiting the Carillion team in Canada I was impressed to see, at first hand, both the progress on sustainability auditing through their supply chain and the potential for leadership in ensuring quality aboriginal employment and training opportunities. The acquisition of a 49% interest in the Bouchier Group will give an incredible opportunity to develop more high-quality employment practices for the First Nation people.

In the UK, Carillion are increasingly able to illustrate, measure and monetise the benefits of employee engagement and community impact, and investors are taking note. Richard Howson’s strategic leadership on the Board of Business in the Community is driving forward the Business Connector programme showing the social value of high-powered business secondees building private, public and community partnerships in some of the UK’s most deprived communities. The social value for Carillion in pioneering the Community Needs plans for all major contracts is clear – Liverpool, Battersea and King’s Cross are flagships already delivering replicable results. Construction and rail businesses are increasingly able to share the evidence of work winning through collaborative partnerships with clients impacting on communities. The target of employing 1% of all army reservists, announced this year, in partnership with the MOD is both strategic in attracting talent and builds our reputation as a values-driven business.

Last year, I applauded our progress towards achieving the target that the Board should be 25% female by 2015. However important non-executive directors are as role models, what has been termed ‘pink parachute silk’ is not going necessarily to build the executive pipeline. We need to achieve 29% female executives by 2020 to achieve our goal so it is encouraging that as a result of focused internal leadership we have made it for the first time into the Times Top 50 employers for women. A critical part of Carillion’s long-term sustainability will come from winning the war for talent and skills – and progress has really been made this year!

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A critical part of Carillion’s long-term sustainability will come from winning the war for talent and skills – and progress has really been made this year!”

DAME JULIA CLEVERDON DCVO, CBE, Vice President of Business in the Community and Special Advisor to The Prince’s Charities

A view from Jonathon Porritt

Sustainability is a many-splendoured thing! And today’s sustainability reporting reflects that, getting both more comprehensive (in overall scope) and more forensic (in its detail) all the time. Carillion’s report is a model of its kind, embracing the full gamut of environmental, social and governance issues, with constant connectivity back to a core economic rationale.

As the report says: ‘Sustainability makes us more profitable: fact.’ And a £27.2 million contribution to net profit in 2014 makes for a good starting-point for the company’s new Board Committee for Sustainability – itself an important and innovative affirmation of the centrality of sustainability to Carillion’s future success.

But there’s a lot more than profit that has to be taken into account when thinking about long-term value creation. Many companies in the UK are now working hard on the metric of social value, systematising the diverse ways in which big companies can support the communities in which they’re working (Carillion has very nearly reached its target of 100% of big projects having a Community Needs Plan), their suppliers (for whom the simple story behind ‘prompt payment’ matters enormously), and the local economies they can enrich by guaranteeing high levels of ‘local spend’ – in Carillion’s case, an average of 51% across all projects, and an outstanding 60% at the Royal Liverpool Hospital.

All of which, and all its core project delivery in the UK and internationally, has to be done in ways that keep driving down Carillion’s overall carbon footprint. The results show how stretching this can be, especially with its operations in Canada. Overall, a reduction of 17% in carbon intensity (the amount of greenhouse gas emitted per million dollars of turnover) is impressive. But there’s a long way to go before these relative reductions are turned into absolute reductions, as part and parcel of Carillion’s ambitious and still crucially important target of becoming carbon neutral by 2020.

Ambitions of this kind can only be delivered through consistent, top-down leadership from the Board and the CEO, combined with opportunities for all Carillion’s staff, in whatever role, to play their part in blazing this particular low-carbon trail.

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Sustainability is a many-splendoured thing! And today’s sustainability reporting reflects that, getting both more comprehensive (in overall scope) and more forensic (in its detail) all the time. Carillion’s report is a model of its kind, embracing the full gamut of environmental, social and governance issues, with constant connectivity back to a core economic rationale.”

Jonathon Porritt, Founder Director of Forum for the Future

Carillion plc, Company No. 3782379. Registered Office: Carillion House, 84 Salop Street, Wolverhampton WV3 0SR. Place of Registration: England and Wales

Copyright 2015 Carillion plc