Our vision is to be a construction to services company renowned for working in a spirit of openness, collaboration and mutual dependency to deliver solutions that ensure our customers’ success becomes our success.

We believe that sustainable development can bring a better quality of life for us all. We understand that, to continue to strive towards sustainability, all aspects of our business need to be pro-active in creating sustainable practices and encouraging change in the wider community. This is made possible by the continuation of honest and strong commitment to the principles of sustainable development from our company’s senior team.

Today, our Sustainability Programme brings together the vision, values and objectives of Carillion’s business under the guiding principle:

Carillion provides sustainable solutions for the way we live.

This principle is the driving force for our Sustainability Programme and has been instrumental in the focus of the activities undertaken during 2001. One of our most significant achievements during 2001 was the development and communication of our Sustainability Policy. The policy is the focal point for our Sustainability Strategy and has allowed us to re-establish the fundamental basis and focus of our Sustainability Programme. Delivering the Policy will further embed the principles of sustainable development into our everyday business activities.

The Government, through its white paper ‘A Better Quality of Life’ recognised that there are four main areas that bring focus to the issues of sustainable development and we have based the implementation of our vision upon these areas:

Protection of the Environment - We seek to minimise pollution and increase biodiversity in the areas in which we operate.

Prudent use of Natural Resources - We will minimise the use of natural resources through the adoption of environmental management systems, effective environmental supply chain management, waste minimisation techniques and sustainable design.

Social Progress - We will improve the quality of life for our employees, their families and local communities where we work.

Economic Growth & Prosperity - We will maintain our position as a leader in the construction to services sector and use sustainable development principles to deliver enhanced shareholder value.

In addressing these aspects of sustainability, Carillion’s strategy involves not only identifying the vision, but also turning it into reality, sharing and progressing with the ideas and motivation behind it and allowing it to become an instrument for change.

Corporate Social Responsibility

In line with our 2000 sustainability report, we are following the Global Reporting Initiative. In addition to this international initiative, we are participating in the Business in the Community pilot project, ‘Impact on Society’ along with 20 other major UK companies. The project aims to help companies identify how their impact on society can protect or enhance reputation, improve business competitiveness and help to avoid or reduce risk. We are also members of the ‘PerCent Club’ and as such we contribute over 1% of our profits (cash or in kind support) to environmental and community activities.

These initiatives are part of our continued commitment to and development of a holistic approach to social responsibility and are allowing us to develop key performance indicators (KPIs) to describe our performance in this area.

Key Performance Indicators

During 2001 our Sustainability Operations Group selected and agreed several Key Performance Indicators (KPIs), which were taken from a range of sources, including Carillion internal KPIs, Construction Industry Research and Information Association (CIRIA), the Global Reporting Initiative and the Business in the Community "Working with Integrity" initiative.

To bring a clear focus to the business benefits to be gained from measuring our sustainability performance, a review of each KPI was recently undertaken to establish how it links into our corporate objectives. As a result the business benefits associated with each KPI have been established. These business benefits have then been linked to the achievement of four of the Group’s objectives:

• Attract, develop and retain excellent people
• Deliver year on year growth in earnings per share
• Develop leading market positions
• Differentiate through consistently exceeding customer expectations

Objectives and Targets

New two-year sustainability objectives and annual targets have been set for 2002 and work towards achievement has commenced. Analysis of the need and appropriateness of the targets was undertaken at the highest level within the group to ensure that they provide business benefit to Carillion. In addition to these strategic targets each of our Business Groups, through their individual management systems, have developed operational level targets. These operational targets are linked to the identified significant aspects and are the driving force for continual improvement in environmental performance.

Challenges and Obstacles

We accept that the delivery of our vision will not be a simple or instantaneous action, rather that our vision will only be achieved if we think long term about our business actions, from selection of employees to the design and operation of sustainable buildings. Therefore, we recognise that we must engage our staff, customers, suppliers, communities and shareholders to ensure that we deliver a sustainable organisation, which is financially, socially and environmentally successful.

As the majority of our businesses operate transient and medium to short-term contracts we are continually striving to overcome the short-term view of the benefits of sustainable development. Indeed through our vision and strategy we are communicating to our employees, suppliers and clients the long-term benefits of sustainable development.

In addition, we are striving to engage stakeholders and the industry to embrace the principles of sustainable development and to highlight and communicate the true benefits of sustainable construction. For example, we produced a short video at the Princess Margaret Hospital contract where we detailed the benefits of the adoption of sustainable development at contract level. This video was communicated to clients, local communities, industry bodies, our staff and our supply chain.

We are also continuing to more clearly link the benefits of environmental and social initiatives with economic performance. This will be achieved by our Partners in Innovation Project focusing on Sustainable Accounting, which will be completed in December 2002.

The Future

The very nature of sustainability is about making changes today to improve our tomorrows. The processes highlighted in this report are designed to continue and grow in a framework to guide all our activities. From this framework we can think coherently about the way we move forward and take greater responsibility for all our actions.

Carillion is a market leader on sustainable issues, but we are not complacent about our position and wish to continue with our leading role. Partnership is a key factor in maintaining this status and we will need to create and accommodate new relationships while consolidating the old ones formed with groups such as The Natural Step ,Business in the Community ,The Wildlife Trusts and CIRIA. Together we can spread and develop the ideas of sustainability.

Our sustainability programme will continue to be driven by our Sustainability Committee. The committee is chaired by our Chairman, Sir Neville Simms, and consists of Roger Robinson, a main board Director whose responsibilities include sustainability, and other members of the senior management team. The Committee retains an external perspective through membership of a new Independent Advisor, Jonathan Porritt, who is also Chairman of the UK Government’s Sustainable Development Commission.

Jonathan Porritt our external advisor outlines his view of the future challenges facing Carillion.