LRQA auditor's assurance - Veolia Environmental Services UK

Terms of engagement

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Lloyd’s Register Quality Assurance Limited (LRQA) was commissioned by Veolia Environmental Services (UK) Plc (‘Veolia’) to assure its printed ‘Annual Review 2010’ and its web-based ‘Our Annual Review 2010’ (the Reports) for the year ending 31 December 2010.

The assurance engagement was undertaken against:

AA1000 Assurance Standard 2008 (AA1000AS), where the scope was a Type 2 engagement at a moderate level of assurance
Global Reporting Initiative Sustainability Reporting Guidelines (GRI G3), 2006

The objectives of the assurance engagement were to:

Review adherence to the AA1000 Accountability Principles of Inclusivity, Materiality and Responsiveness, and evaluate the reliability of the specified sustainability performance information
Validate Veolia’s self-declaration of GRI G3 application level B+

The scope of the assurance did not include:

The ‘Financial Statement’ section in ‘Finance and verification’
Data and information accessed through links that take the reader out of these Reports

Both of the Reports have been prepared and approved by Veolia, which was also responsible for the collection and presentation of information within them. LRQA’s responsibility was to carry out an assurance engagement on these Reports in accordance with our contract with Veolia. LRQA does not accept or assume any responsibility for any other purpose or to any other person or organisation. Any reliance a third party may place on these Reports is entirely at its own risk.

Our approach

To form our conclusions, the assurance was undertaken as a sampling exercise and covered the
following activities:

Reviewing Veolia’s stakeholder engagement process and the information collected from the various stakeholder groups
Challenging Veolia’s material issues against our own independent analysis of stakeholder issues, as identified by reviewing other sustainability reports written by Veolia's peers
Interviewing key personnel in the CR team and reviewing minutes to the CR meetings, to understand the processes for setting performance indicators and for monitoring progress made during the reporting period
Obtaining sufficient evidence, that we consider necessary for us, to give a moderate¹ level of assurance that the data, statements and assertions made in the Reports were balanced and accurate
Corroborating that the data and information disclosed in the ‘Environmental leadership’ tables for environmental data and Greenhouse Gas data were transcribed accurately from Veolia’s internal reporting systems into these Reports. Note that this data and information was provided to Veolia Environnement for inclusion in its ‘2010 CSR Performance Digest’, which is externally assured
Validating Veolia’s self-declaration, in ‘Finance and verification', for GRI G3 application level B+

¹ Definition for level of assurance is from the AA1000 Assurance Standard 2008.

Our conclusions and findings

Based on LRQA’s approach, Veolia has met the conditions for adherence to the AA1000 Accountability Principles and GRI Guidelines, specifically:

Inclusivity

We are not aware of any matters that would cause us to believe that Veolia is not committed to being accountable to its stakeholders. Veolia has effective processes in place to identify its stakeholder groups, and actively encouraged them to participate in the identification of material issues.

Materiality

The process for determining materiality includes evaluating the input from stakeholders for its significance to be included in the Reports. The evaluation criteria are aligned with both business and stakeholder needs. We are not aware of any material issues concerning Veolia’s sustainability performance that have been excluded from the Reports.

Responsiveness

Veolia has further developed its business response, in the form of strategies, plans and procedures, for addressing the material sustainability issues. We are not aware of any sustainability issues of interest to stakeholders that are not currently being managed by Veolia.

Reliability of specified sustainability performance information

The information presented in the Reports is fairly and accurately stated.

Global Reporting Initiative

We found nothing that would cause us to contradict our conclusion that Veolia’s web-based Report has met the requirements for GRI application level B+.

LRQA’s recommended improvements

It is our opinion that LRQA’s recommended improvements made in last year’s Annual Review 2009 have been addressed. In particular, Veolia has improved its governance by implementing the ‘Go further together’ programme, which embeds Veolia’s corporate responsibility policies and plans into its business management systems. This is further supported by Veolia demonstrating a strong commitment to corporate responsibility through its improvements in Quality, Health, Safety and Environmental (QHSE) performance, its partnership with the charity Mind and the employee volunteering programme.

Veolia should continue to develop its systems and processes for collecting, checking and reporting sustainability data and information. In particular, Veolia should:

Progress to fully integrate ‘Go further together’ with the QHSE Objectives
Provide UK performance indicators for those material issues associated with Society, Labour Practices, Human Rights and Public Policy in GRI G3

The above is an excerpt from the observations reported back to the management of Veolia for continual improvement. However, these do not affect our conclusions on the Reports.

S M Fletcher signature

S M Fletcher

LRQA Ltd

Hiramford

Middlemarch Office Village

Siskin Drive

Coventry

CV3 4FJ

28 July 2011

This document is subject to the provisions below:

This document is valid for one year from the date of verification.

This Assurance Statement is only valid when published with the Reports to which it refers.

Lloyd's Register Quality Assurance Limited has not been involved in the preparation of any material included in the Reports and does not accept or assume any responsibility for any other purpose or to any other person or organisation. Any reliance any such third party may place on the Reports is entirely at its own risk.

Lloyd's Register Quality Assurance Limited, its affiliates and subsidiaries, and their respective officers, employees or agents are, individually and collectively, referred to in this clause as the 'Lloyd’s Register Group'. The Lloyd’s Register Group assumes no responsibility and shall not be liable to any person for any loss, damage or expense caused by reliance on the information or advice in this document, or howsoever provided, unless that person has signed a contract with the relevant Lloyd’s Register Group entity for the provision of this information or advice, and in that case any responsibility or liability is exclusively on the terms and conditions set out in that contract.

Because of the inherent limitations in any internal control, it is possible that fraud, error or non-compliance with laws and regulations may occur and not be detected. Further, the verification was not designed to detect all weaknesses or errors in internal controls so far as they relate to the requirements set out above, as the verification has not been performed continuously throughout the period and the verification carried out on the relevant internal controls was on a test basis. Any projection of the evaluation of control to future periods is subject to the risk that the processes may become inadequate because of changes in conditions, or that the degree of compliance with them may deteriorate.

The English version of this statement is the only valid version. The Lloyd’s Register Group assumes no responsibility for versions translated into other languages.

LRQA's Competence and Independence

LRQA ensures the selection of appropriately qualified individuals based on a rigorous appraisal of their qualifications and experience. The team conducting the assurance of the Report was multi-disciplinary and has been involved in assurance assessments from the outset of external verification of non-financial performance reports.

LRQA's internal systems have been designed to manage and review assurance and certification assessments. This involves a review by senior management of the outcome derived from the process applied to the assurance of corporate reports.

Independence of LRQA from Veolia Environmental Services

LRQA provides Veolia with third-party certification assessment services to ISO9001, ISO14001, OHSAS18001, ISO/IEC 20000 and BS25999. The assurance and certification assessments are the only work undertaken by LRQA for Veolia.

Conflict of interest

LRQA is part of the Lloyd's Register Group. Lloyd's Register Group recognises that potential conflicts of interest may exist which could impact on its independent verification activities. Lloyd's Register Group is committed to identifying and managing such conflicts so that they do not adversely impact its independence and impartiality.

In order to protect the integrity, neither LRQA nor any other Lloyd's Register Group company will provide services that create a conflict and compromise the independence and impartiality of third-party certification and assurance. The Lloyd's Register Group will never verify its own solutions to a customer's problem.