Corporate Responsibility

Chairman and Chief Executive's Statement

This is Balfour Beatty’s 8th Corporate Responsibility Report, continuing the Group’s commitment not only to fulfilling the full range of its responsibilities to all its stakeholder groups, but also to report, openly, on its progress in so doing.

Balfour Beatty’s business model continues to be enhanced and developed with the aim of guaranteeing a sustainably successful company for the long-term.

Sustained success requires appropriate structures and behaviours to be embedded in a number of key areas. There needs to be an appropriate balance between our core financial objectives, increasing our alignment with key stakeholder groups and fulfilling the full range of our responsibilities to society and the communities in which we operate. In order to do this we must achieve a consistency of desired behaviours across all our people.

Our Business Model

Our 2008 financial results demonstrate that we have a very resilient business model, based on enduring partnerships with long-term investors in infrastructure, predominantly government and regulated industries. Our ability to deliver services from front-end planning and design right through to whole-life management is increasingly valued by these customer groups.

We have a clear strategy, which is thoroughly reviewed every three years. Our financial structure is strong with growing shareholders funds, substantial net cash assets and excellent support from a wide range of blue-chip owners.

We lead in most of the markets in which we operate and are able to attract and deploy first-class people at all levels and in all disciplines. Sophisticated and well-timed operating and risk-management procedures, together with the high quality and determination of our people gives us a first-class reputation for delivery.

On these strong fundamentals, we continue to build appropriate programmes and disciplines to address our wider responsibilities. 2008 has seen substantial progress in this regard.

Ethics and Values

For some time, we have had a clearly communicated structure of corporate principles, required individual behaviours and best operating company practice guidelines. During 2008, the majority of our UK employees have undertaken an e-learning programme to ensure that required behaviours are embedded throughout the organisation. At the same time we have undertaken an exercise to clearly define our values. During the course of 2009 these, too, will be the subject of a comprehensive, company-wide communication and learning programme.

During 2008, we reached a full and final settlement of £2.25m with the Serious Fraud Office in respect of the Bibliotheca Alexandrina project completed in 2001. We also agreed to implement certain compliance measures and appointed the Global Infrastructure Anti-Corruption Centre (GIACC) to monitor and report on our anti-corruption practices. A full account of this settlement has been made available on our Corporate Responsibility website.

Balfour Beatty is co-operating fully with the Office of Fair Trading’s investigation into the tender activities across the construction sector. This investigation is on-going.

Safety

We were deeply saddened by the deaths of eight workers across our sites in 2008. Keeping our people and members of the public safe is at the top of our agenda. Over the last 10 years, our safety performance has improved consistently. In 2008 we launched a new safety vision - Zero Harm. Our aim is to eradicate, completely, serious accidents from the business by the end of 2012. Management and staff across the Group have been mobilised towards this goal with a Group Managing Director dedicated solely to leading the programme.

Environmental Limits and Engagement

The critical importance of a comprehensive sustainability programme was recognised in 2008 with the appointment of Forum for the Future to help a high-level working group scope required objectives and actions. A clear sustainability vision for the Group has been developed together with a road map to take us to defined destinations in 2012 and 2020, in terms of environmental limits, community engagement and our role in and influence on the markets we serve.

Community Relations

Balfour Beatty has always been a proactive member of the communities in which it operates. During 2008, a number of programmes were initiated to bring greater coherence to our efforts in this area. In our centenary year, we have, for example, set up a charitable trust, through which company and employee contributions will be channelled to charities which focus on helping young people. In 2009, in the UK, these will be the Prince's Trust and Action for Children. We have become a patron of the Prince's Trust. Our sponsorship of the London Youth Games is now in its second year. During 2009 we will be developing a comprehensive approach to our community engagement activities across the Group.

People

Our future success depends, critically, on the quality, organisation and motivation of our people. In 2008 a number of major initiatives were taken to ensure that we attract the best, offer them interesting and rewarding long-term careers and use their energies in support of all aspects of the company's business.

Reporting

Our key performance indicators for corporate responsibility performance are increasing in number and our data is improving. On almost all of those already in existence, we are able to demonstrate good progress in 2008.

The scope and depth of our reporting continues to increase. This year, we are, as usual, subjecting our report to external independent assurance. Additionally, we have asked a panel, made up of key Balfour Beatty stakeholders, to provide a commentary on the report. In addition, we are reporting against GRI indicators for the first time, and declare ourselves to be reporting to level C+.

The Future

You may rest assured that we will continue to do whatever is necessary to make sure that all aspects of our business responsibilities are appropriately fulfilled.