Co rporate Res ponsi bility Re port - Naturgy · 2020-06-18 · photography and GPRS technology)...

CorporateResponsibility

Report

CorporateResponsibility Report

Summary Letter from the Chairman 3

Process for Drafting this Report 5

The Gas Natural Group 10

Organisation Profile 11

Gas Natural Group’s Strategy 14

Contribution to Development 17

Corporate Responsibility 21and the Gas Natural Group

Key Corporate Responsibility Indicators 22

Gas Natural Group's Corporate 24Responsibility Policy

Management of Corporate 27Responsibility

Dialogue with Interest Groups 30

How to Read the Corporate 33Responsibility Report

Corporate Responsibility 35Commitments

Customer orientation 36

Commitment to Results 47

The Environment 53

Interest in People 71

Health and Safety 85

Social Responsibility 93

Integrity 101

Additional Information 112

The Millennium Development 113Goals and the Gas Natural Group

Awards and Recognition 115

Contents and GRI Indicators 117

Global Compact, MDGs and GRI 124

Independent Review Report 125

I am pleased to present you with the

Gas Natural Group's Corporate

Responsibility Report for the year 2008,

a year characterised by the economic

uncertainty that brought about the crisis

on international financial markets,

especially during the second half

of the year.

The solution will not be unique, simple or

immediate, for returning to the road of

growth will be a complex task that will

require the joint efforts of governments,

institutions, enterprise and citizens alike.

And although the market economy can

help build a more prosperous world, it is

also necessary and unavoidable for the

construction process to be based on

ethics, integrity and responsibility.

These principles define the culture,

business model and approach applied by

the Gas Natural Group. Our function is to

contribute to the progress of society,

supplying the market with the energy

services and products that best satisfy

the needs of people and communities

alike. Our Group's main activity is the

supply, distribution and marketing of

natural gas, a clean, efficient and safe

energy that also contributes to reducing

the effects of the climate change.

The Gas Natural Group's 2008 Corporate

Responsibility Report summarises the

efforts we are making to be more

efficient, more responsible and more

transparent every day, and to be more in

touch with the needs of the people we

serve. This commitment to society was

formalised through the definition of a

Corporate Responsibility Policy, which

was adopted by our Board of Directors in

keeping with the Group's 2008-2012

Strategic Plan.

The qualitative and quantitative information

contained in this report has been reviewed

by PricewaterhouseCoopers, the Group's

financial auditor. It has been drawn up in

accordance with the recommendations

and principles for preparing such reports as

laid down in the 2006 Guidelines issued by

the Global Reporting Initiative and, in our

opinion, it offers a fair and reasonable view

of our performance in corporate

responsibility.

I would like to highlight the Group's

participation in projects related to new

energies, such as hydrogen, and the

application of natural gas as a fuel for

transport. I would also like to underline

the important support provided for

reducing the effects of the climate

change, which has enabled us to reduce

our carbon emissions in relation to our

turnover for yet another year. Elsewhere,

we have developed the Professional Talent

Management Model, which we plan to

implement in 2009.

3

2008 Corporate Responsibil ity Report. Letter from the Chairman

Letter fromthe Chairman

Salvador Gabarró SerraChairman of the Board of Directors

Despite our progress, we do not intend

to stop here.The future of the world

energy sector depends on its

companies' capacity for satisfying the

growing demand for energy and

minimising its impact on the

environment.We believe that it is

possible to foster the development of a

new energy model that does not

compromise our planet's sustainability.

Our commitment to sustainable

development and corporate

responsibility goes hand-in-hand with

our excellent economic results. In 2008,

despite the high-level market volatility,

the Gas Natural Group's net profits

were up 10.2%, in excess of

1,050 million euros, and its gross

operating profit (EBITDA) was up

12.6% and reached the figure of

2,560 million euros.

On the road of growth we have taken, I

would also like to highlight the

takeover of Unión Fenosa, which we

began at the end of July 2008.The

merger of GAS NATURAL and

Unión Fenosa will create one of the top

three Spanish utility companies and the

largest integrated gas and electricity

company on the Iberian Peninsula. It

will also notably increase the

company's presence on international

energy markets.

We have absolute confidence in the

advantages of this transaction for all

the countries in which we operate, as

well as for the shareholders,

customers, employees and suppliers

of both companies. Once it has been

completed, the Gas Natural Group

will have more than 20 million

customers all over the world, more

than nine million of which will be

located in Spain.

Our efforts in corporate responsibility

have also been recognised by the

markets.The Group participates in the

most respected and selective

sustainability indices in the world, such

as the Down Jones Sustainability Index

and the FTSE4Good. It is also listed on

the FTSE4Good Ibex, which comprises

only Spanish companies and was

presented last year.

All this is possible thanks to the efforts

of all the individuals that make up the

Gas Natural Group.Their enthusiasm

and commitment make our Group

more efficient, more responsible and

more transparent on a daily basis.They

also make the Group capable of

providing a better response to the

millions of customers who place their

trust in our services.

Our goal is for this document to allow

all those who want to find out more

about our Group to form a more exact

image of our activities, challenges and

successes. Accordingly, we want this

Corporate Responsibility Report to

show the Group's real situation and the

sincerity of its commitment, and to

help readers reflect on the role we can

all play to build a more responsible and

more sustainable society.

4

2008 Corporate Responsibility Report. Letter from the Chairman

Scope and Focus ofReport

This report provides reliable, fair

information on the Gas Natural Group's

performance with regard to the main

challenges posed by corporate

responsibility and sustainable

development. It covers all the

Gas Natural Group’s activities in the

different countries in which it operates. In

this respect, the information which

appears includes gas and electricity

distribution and commercialisation

operations, international gas supplies and

transportation, and activities carried out in

Spain, France, Italy, Algeria, Morocco,

Angola, Portugal and Latin America. The

companies that make up the Group are

listed in an annexe to the Annual Report.

It also includes activities performed by the

Gas Natural Foundation.

The report has been drawn up on the

basis of the third version of the

Sustainability Reporting Guidelines issued

by the Global Reporting Initiative (GRI-G3)

and on the principles of the AA1000

AccountAbility standard.

The content of this report refers mainly to

the year 2008. Depending on its relevance

and availability, it also includes information

on previous years so that readers can

form an opinion on the Company's

performance. The quantitative indicators

show the Group's performance in the

previous three years, except for those

that were included for the first time in

2008 or 2007.

In Spain, the report specifies the

environmental issues associated with

hydrocarbon exploration and extraction

(except for minority shareholding activities

where the Gas Natural Group does not

control management), gas transportation

and distribution, electrical generation

5

2008 Corporate Responsibil ity Report. Process for Drafting this Report

Process forDrafting thisReport

The Gas Natural Group's activities

Gas Energy Electricity Multi-productExploration Production Transport Distribution Storage Regasification commercialisation generation offer

Angola •Algeria •Argentina • • •Brazil • •Colombia • • •France •Italy • •* •Mexico • • • • •Morocco • •Portugal •Puerto Rico • •Spain • • • • • • • •(*) In process.

processes and management and support

activities (work centres and own fleet of

vehicles). The information with respect to

the generation of electricity contemplates

the combined-cycle power plants in

operation during 2008, the wind farms

and the co-generation plants managed by

the Group. The countries that make up the

international area are Argentina, Brazil,

Colombia, France, Italy, Morocco, Mexico

and Puerto Rico.

The structure of the 2007Corporate ResponsibilityReport has been changedin the 2008 version tobring the contents intoline with thecommitments laid downin the new policy onthe subject

Verification

In order to ensure the integrity and

credibility of this report, the

Gas Natural Group has incorporated a

number of policies and procedures into its

internal control system to guarantee the

correct presentation of the indicators and

information it includes.

In the said policies and in accordance with

the GRI recommendations, the

Gas Natural Group commissions an

annual external verification of the

contents of the Corporate Responsibility

Report. This review is made by an

independent expert,

PricewaterhouseCoopers, which reviews

the adaptation of the contents of the

Corporate Responsibility Report to the

provisions laid down in the GRI-G3

Guidelines and the AA1000 AS (2003). As a

result of the said process, an independent

review report is drawn up to include the

goals and scope of the process, as well as

the verification procedures used and the

corresponding conclusions.

For the year 2008, in keeping with the

process for the continuous improvement

of the quality of the information in the

report, the independent expert has

applied the reasonable assurance level for

certain indicators (see the “Independent

Review Report” section).

Changes to theStructure of the Report

The structure of the 2007 Corporate

Responsibility Report has been changed

in the 2008 version to bring the contents

into line with the commitments laid down

in the new policy on the subject.

This report replaces the traditional focus

on stakeholders with a more transversal

approach that looks to the commitments

the Company has assumed in its strategic

management.

The main changes to the structure are as

follows:

• Inclusion of the chapter on “Health and

Safety”.This comes from the combination

of the epigraphs on health and safety

included in the 2007 report.

• Inclusion of the chapter on “Integrity”.

This includes the epigraphs on the

internal audit, corporate governance, the

code of conduct and risk management,

as well as a new section that focuses on

the penalties and breaches of 2008.

• Inclusion of a chapter on suppliers

regarding the other commitments.

Notes at the bottom of the page are used

to indicate the contents that have been

modified by this change, especially in the

Action Plan that corresponds to each

commitment.

6


Principles for Draftingthis Report

The GRI-G3 Guidelines lay down the

principles to be used for the definition of

the contents of the report: materiality,

stakeholder participation, sustainability

context and exhaustiveness.

•Materiality. The Gas Natural Group

understands that the material issues on

which it should provide information in its

2008 Corporate Responsibility Report

have not been modified in any

substantial way regarding those

identified in the materiality study the

Company carried out in 2007. The said

study identified and categorised the

issues related to corporate responsibility

and sustainable development that are

particularly relevant for a company of the

Gas Natural Group's characteristics in

accordance with the AccountAbility

AA1000 standards.

• Participation of stakeholders. The

establishment of active dialogue with

stakeholders is a fundamental principle

of the Group's strategy. The Company

has defined its stakeholders, identified

its expectations and defined actions to

establish dialogue. This process is

explained in the “Dialogue with

Interest Groups” and “Corporate

Responsibility Governance” sections.

The results of this dialogue with

stakeholders and the internal

consultancy work are applied to every

department. The Gas Natural Group

has introduced the following

improvements to this Corporate

Responsibility Report:

The establishmentof active dialogue withstakeholders is afundamental principle ofthe Group's strategy

7


Economic

Corporate Governance.Risk Management.Code of Conduct/Corruption.Customer relationship management.Business opportunities.Balance scorecard.

Environmental

Eco-efficiency.Environmental management systems.Environmental performance.Storage, transportation anddistribution infrastructure.Infrastructure developments.Climate change strategy.Biodiversity.

Social

Labour relations.Human capital development.Talent attraction and retention.Social action projects.Stakeholders relations.Health and safety.

RelevanceLow

Generalised

Emerging

I II

IV III

Necessary

Urgent

High

Maturity

Low

High

Material issues for the Gas Natural Group as identified in 2007

• Sustainability context. Owing to the

strategic importance of corporate

responsibility for the Gas Natural

Group, the report has sought to

analyse the Company's performance in

the context of the economic,

environmental and social requirements

of its social and market environment.

The sections on “Strategy” and

“Contribution to Development” focus

specifically on this issue.

• Exhaustiveness. The definition of the

contents scheme with the participation

of the persons responsible for the

Company's main management areas

guarantees consideration of the

essential impacts and issues of the

Gas Natural Group's activity.

8


Section Improvement

The Gas Natural Group Graphic representation of the Group's activity, its strategicdevelopment and the generation of value.Direct economic value generated (Contribution to Development).

Corporate Responsibility and List of the key indicators that make up the control panel inthe Gas Natural Group corporate responsibility.

Customer orientation Diversification of supplies.

The Environment Improvement to information in the report on indicators thatrefer to the climate change.

Interest in People Report on the working environment surveys and employeeparticipation.Comunication of on the corporate responsibility training plan.

Health and Safety Contractor accident rate.Measures for guaranteeing industrial safety.

Social Responsibility Report on business-related initiatives.

Integrity Report on the inclusion of the Code of Conduct in the2008Training Plan.Inclusion of a section on penalties and breaches that reportsthe penalties received by the Group in every area in 2008.

Verification Process Extension of the level of review in indicators the independentexpert has verified with a reasonable scope of assurance.

Quality of theInformation Given

Similarly, the Gas Natural Group's 2008

Corporate Responsibility Report has

followed the recommendations for

ensuring the quality of the information

that is disclosed.

• Balance: the report shows the positive

and negative issues of the Company's

performance in the last year, helping

readers attain a reasonable

assessment of the Company's overall

performance level.

• Comparativeness: the information in

the report is consistent. This means

that, depending on availability,

information from previous years has

been included in order to analyse the

evolution of the most relevant

parameters.

• Precision: all the information

described in the report is presented in

detail and with all accuracy so that

stakeholders can make a correct

assessment of the Group's

performance.

• Clarity: the report presents the

information in such a way that it can be

easily understood, accessed and used

by stakeholders. To enable its correct

understanding, it uses clear, simple

language and avoids the use of

technical language as far as possible.

In addition, it uses graphs, diagrams,

tables and indicators to describe the

Company's most relevant impacts. The

meaning of the technical terms that

appear in the report can be consulted

on the Gas Natural Group's website

(www.gasnatural.com).

• Frequency: the Gas Natural Group

draws up its corporate responsibility

reports on an annual basis. In general,

the Company publishes the reports as

soon as the information is available so

that stakeholders can take their

decisions on the basis of recent

information.

• Reliability: the reliability of the figures

given in this 2008 Corporate

Responsibility Report has been verified

by PricewaterhouseCoopers, the

company that has carried out the

verification process. The preparation of

this report has taken into account the

three principles required by the

AccountAbility AA1000 standard on the

materiality or relevance of the issues

being reported; whether or not they

are exact and complete, and whether

or not they meet stakeholders'

requirements and concerns.

Queries and AdditionalInformation

In addition to this 2008 Corporate

Responsibility Report, the

Gas Natural Group has published the

Annual Report, the Corporate Governance

Report and the Audit and Control

Committee Report pertaining to 2008, and

offers a website (www.gasnatural.com)

with up-to-date information regarding the

Company. In addition, the Company

publishes corporate responsibility reports

for all its Latin American subsidiaries.

The readers of this report can

send their doubts, queries and

requests for further information to

[email protected]

9


The Gas NaturalGroup

Organisation Profile 11

Gas Natural Group’s Strategy 14

Contribution to Development 17

11

2008 Corporate Responsibil ity Report. The Gas Natural Group

OrganisationProfile

The Gas Natural Group is an energy

services multinational. It started its

activities more than 165 years ago and

focuses on the supply, distribution and

commercialisation of natural gas. It is the

leading company in the gas sector in

Spain and Latin America and the fourth-

ranking company in the world by volume

of gas transported. The Group is also one

of the main combined-cycle operators in

the world and an outstanding operator in

the generation and commercialisation of

electricity in Spain, Puerto Rico and

Mexico, as well as in the

commercialisation of other energy

services and products.

Besides, the Gas Natural Group is

majority shareholder in Metragaz and

EMPL, companies that operate and carry

out the maintenance on the Moroccan

section of the Maghreb-Europe gas

pipeline linking the Algerian Hassi R'Mel

fields with the Iberian Peninsula.

At present, the Group operates in

twelve countries and has more than 11

million customers, approximately half of

whom are located in Latin America.

Gas Natural SDG, is the Group’s parent

company. At 31 December 2008, its core

shareholders were the following:

• Criteria CaixaCorp: 37.46%.

• Repsol YPF: 30.847%.

• Suez: 8.837%.

• Caixa d’Estalvis de Catalunya: 3.026%.

The Gas Natural Group in the world

FrancePortugal

Italy

Spain

Mexico

Puerto Rico

Colombia

Brazil

Argentina

Morocco

Algeria

Angola

12


In July 2008, the Gas Natural Group

signed an agreement with the company

ACS for the purchase of a 15.3% holding

in Unión Fenosa. This transaction implies

the subsequent launch of a takeover bid

for the rest of the said company's share

capital. The takeover will represent a

significant step forward in the Group's

development and will allow it to speed up

fulfilment with its 2008-2012 Strategic

Plan, exceeding the goals set for the said

date. The takeover will double its size and

turn it into one of the main integrated gas

and electricity operators, with more than

20 million customers all over the world.

For detailed information on the

Gas Natural Group's activities and

the 2008 results, please see the Annual

Report and the corporate website at

www.gasnatural.com.

The Group operates intwelve countries and hasmore than 11 millioncustomers,approximately half ofwhom are located inLatin America

Contribution to EBITDA by activity (%)

Distribution in Spain

Distribution in LatinAmerica

Wholesale & Retail

Electricity in Spain

Up & midstream

Electricity in Mexico

Electricity in Puerto Rico

Distribution in Italy

Others

35

112

4

7

14

18

18

The Gas Natural Group: main figures

Operations 2008 2007 2006

Gas supply (GWh) 292,629 292,730 294,451

Gas transportation/EMPL (GWh) 133,497 124,150 129,499

Gas distribution supply points (in thousands) 11,492 11,115 10,662

Gas distribution network (km) 115,295 109,759 104,528

Electricity generated (GWh) 31,451 18,700 19,514

Contracts per customer in Spain 1.39 1.37 1.43

Personnel 2008 2007 2006

Number of employees 6,842 6,699 6,686

Financial (millions of euros) 2008 2007 2006

Net turnover 13,544 10,093 10,348

Gross operating profit (EBITDA) 2,564 2,277 1,912

Operating profit 1,794 1,567 1,263

Total investments 3,697 2,323 1,164

Profit attributable to the Group 1,057 959 855

Stock information (euros/share) 2008 2007 2006

Share prices as at 31 December 19.29 40.02 29.99

Profit 2.36 2.14 1.91

Reasonable assurance.


13


Gas Natural Group management structure

The Gas Natural Group has an efficient organisational structure, adapted to the strategic challenges of a growing company.

ChairmanSalvador Gabarró Serra

Chief Executive OfficerRafael Villaseca Marco

Communication Managerand Head of Chairman's Office

Jordi García Tabernero

Chief Financial OfficerCarlos J. Álvarez Fernández

Director of Internal AuditCarlos Ayuso Salinas

Manager of Legal ServicesManuel García Cobaleda

Manager ofStrategy and Development

Antonio Basolas Tena

Repsol-Gas Natural LNGCD: Alberto Toca

Managing Director ofGas ManagementJosé Mª Egea Krauel

Managing Director ofWholesale Business

Manuel Fernández Álvarez

Managing Director ofRetail Business

Josep Moragas Freixa

Managing Director ofRegulated BusinessAntoni Peris Mingot

Managing Director ofLatin America

Sergio Aranda Moreno

Chief Corporate OfficerAntonio Gallart Gabás

14


Gas NaturalGroup’sStrategy

Last year included the start of the new

2008-2012 Strategic Plan, which

replaces the current 2004-2008 Plan.

With regard to the previous plan, special

mention must be made of the high level

of fulfilment of the goals that were

established for EBITDA, net profits

and payout.

2008-2012 StrategicPlan

The main aim is to consolidate the Group

as a world gas and electricity operator,

vertically integrated along the energy

value chain.

It is based on the following main lines:

• Consolidation of its position in

Spain, Italy and Latin America. Based

on the maintenance of leadership in gas

distribution; on a competitive, flexible

gas supply based on multiple sources

and access routes; on the development

of an integrated generation and

commercialisation model in the

electricity business; and the

maintenance of its leadership position

on the energy services and product

markets; and finally, on a focus based on

organic growth and on businesses that

complement the gas activity.

• Vertical integration in upstream &

midstream. The aim is to increase the

availability of competitive, flexible gas.

The diversification and strengthening

of the availability of gas requires

various supply sources with

upstream & midstream assets that

enable the control of the market

segment.

• Exportation of the Spanish model to

other markets. The Gas Natural Group

has developed a business model based

on the international operation of natural

gas and LNG, the convergence of gas

and electricity and advanced know-how

in the downstream business.

• Positioning in renewable energies.

The Company intends to achieve an

appropriate position in high-efficiency

and renewable energies with the

development of wind farms and

renewable energies that complement

the gas chain, such as biogas, biomass

and solar thermal power. It will also seek

to achieve a position of leadership in

high-performance co-generation.

• Continued emphasis on efficiency.

The Group is one of the most efficient

world operators with supply point ratios

per employee higher than other large

international operators. This growing

ratio constitutes one of the pillars that

maintain the Company's competitive

edge and on which it will continue to

focus its efforts.

15


regasification plants of Sagunto (42.5%)

and Reganosa (21.5%), and its holdings in

the liquefaction plants of Damietta (80%),

in Egypt, and Qalhat (7.3%), in Oman.

Furthermore, Unión Fenosa will add a gas

supply portfolio of 6.5 bcm to the more

than 25 bcm the Group has at the

present, and two tankers to the current

fleet of eleven methane carriers managed

by Repsol-Gas Natural LNG, Stream.

In the electricity business, Unión Fenosa

has an installed capacity of almost

12,000 MW, which will turn the new

company into the third-ranking utility

company on the Iberian Peninsula and one

of the largest in Europe. Overall, adding

together the installed power, the new

company will have 18,200 MW of

installed power all over the world.

The combination of both companies'

electricity business will give rise to a

balanced and competitive generation mix

in which the combined-cycle gas power

plants will continue to play a key role

thanks to the supply of gas on the

competitive conditions. The new company

will be one of the leading combined-cycle

operators in the world.

The integration processwith Unión Fenosa willdouble the Group's size,and position it as one ofthe top three Spanishutility companies and oneof the largest in Europe

Once the takeover has been completed,

the Group will draw up a new Strategic

Plan to lay down the basis for its

positioning and the challenges facing the

new company in the future.

Support principles forthe Strategic Plan

The Gas Natural Group has defined four

action principles that are to help

strengthen the organisation and its culture

to achieve the ambitious targets it

pursues:

• Strengthening the Company’s real

situation as an international energy

services group, leader in Spain with

lengthy experience in customer service.

• Strengthening a company culture based

on responsibility, teamwork and

professional development.

• Increasing the Group’s capacity for

innovation and its presence in new

technologies and businesses.

• Basing the Company’s business activity

in any country or region in the world on

social responsibility, economic

development and environmental

sustainability.

Level of fulfilmentof the goals set inthe 2008-2012Strategic Plan

The evolution of the Group's business in

2008 exceeded the goals set in the

2008-2012 Strategic Plan for the main

financial magnitudes. However, the most

important event of the year was the

agreement signed with ACS on 30 July

2008 for the purchase of its 45.3%

holding in Unión Fenosa. The Company

also obtained the finance required to

purchase the remaining shares after the

transaction had been approved by the

competent authorities.

The takeover of Unión Fenosa will

represent a significant step forward in the

Group's development and will allow it to

bring forward its fulfilment of the

Strategic Plan in one single year,

exceeding the challenging targets set for

the year 2012.

The integration process will double the

Group's size and position it as one of the

top three Spanish utility companies and

one of the largest in Europe. It will reach

the figure of 20 million customers, 9

million of which will be located in Spain. In

addition, it will consolidate its role as one

of the leading LNG and combined-cycle

gas operators in the world.

The integration in 2009 will furnish the

Group with the critical mass required to

make sound progress with the greatest

guarantee of success in an adverse

economic environment, consolidating its

presence on the electricity and gas

markets of Spain and Latin America,

notably expanding its up & midstream

business and generating important

operative and financial efficiencies.

In particular, the transaction will

strengthen the Group's position as the

leading operator on the LNG market in the

Atlantic basin. Unión Fenosa will provide

key assets to the up & midstream

business, such as its holdings in the

Gas exploration, production and supplyGas exploration, production and supply

Gas transportGas transport Gas distributionGas distribution Marketing of gas, electricity and other services

Marketing of gas, electricity and other services

Electricity generationElectricity generation

Natural gas filling station for vehicles

New energy vectors: use of hydrogen and energy storage Signposting

Regulation and meter station

Underground LNG storage Satellite cartography

(Goenet-geodistribution)

Commitment to society: contribution to cultural, social and economic development of the local communities

Gas supply with LNG satellite plants

Industrial zone supplied with natural gas, electricity and related services

Compression station

Underwater high pressure gas pipelines

International gas transport pipeline

Fleet of vessels for transporting LNG

New reading technologies (tele-measurement, digital photography and GPRS technology)

Integrated energy management of the needs of industrial and commercial customers

Ino

Emergency services

Mobility device (GPS)Distribution Control Center

Gas Natural Centers

Scheduled inspections

Medium and low pressure gas pipelines

Commercial zone supplied with natural gas, electricity and related services

Cogeneration plant

Liquefaction plant

Regasification plantHigh pressure terrestrial gas pipelines

Biogas processing plant

Off-shore platform

On-shore platform

Pipeline installation

Renewable energy (wind)

Combined cycle thermal gas plant

Gas supply (long-term contracts, spot markets, trading)

Natural Gas for Vehicles

Solar panels for hot water and heating

The Gas Natural Group's activities16


17


Contribution toDevelopment

The companies in the energy sector are

facing two fundamental challenges. On

the one hand, they need to satisfy the

growing demand for the energy required

by modern societies for their

development. On the other, the growing

social concern for protecting the

environment is turning the search for

cleaner energy sources into a necessity.

Given its characteristics, natural gas is in a

privileged position as a source of energy

that responds to the two energy

challenges mentioned above.

The Gas Natural Group is aware of this

two-sided challenge. It understands that

its main contribution to development and

well-being lies in cooperating with the

supply of energy in a way that is

sustainable, efficient and safe.

Accordingly, the Group's main social

function is to develop the distribution and

commercialisation of gas as the cleanest,

most efficient fossil fuel with proven

reserves and which, given its

characteristics, is to be a key source of

energy in this century.

The cleanest fossil fuel

The chemical composition of natural gas

makes it the least aggressive fossil fuel

as far as the environment is concerned.

During combustion, it emits between

40 and 45% less carbon dioxide than

coal and between 20 and 30% less than

oil. It is therefore one of the best energy

solutions for the effects of the climate

change and enables progress in fulfilling

the targets set by the Kyoto Protocol

and those that may be set in the

Copenhagen summit.

Furthermore, the NOx emissions of

natural gas are considerably lower than

those of coal and oil by-products. Its

emissions of SO2, solid particles and ash

are almost zero. These characteristics

highlight the advantages of natural gas

when dealing with problems such as the

acidification of atmospheres and acid rain,

the destruction of the stratospheric ozone

and the particle or photochemical

contamination of urban atmospheres.

The chemicalcomposition of naturalgas makes it the leastaggressive fossil fuel asfar as the environment isconcerned. Duringcombustion, it emitsbetween 40 and 45%less carbon dioxide thancoal and between 20 and30% less than oil

18


An abundant formof energy

The proven reserves of natural gas stand at

around 182 billion m3, and their upward

trend of three decades ago has been

stabilised. At present, the reserves exceed

those recognised in 2000 by 16% and

those estimated 20 years ago by 90%.The

figures that are available confirm that the

current volume of reserves is capable of

satisfying the anticipated world demand for

natural gas for more than six decades.

An efficient energy form

The use of natural gas involves high-

performance technologies. This factor,

together with its inherent

characteristics, means that it can offer

an energy balance that is better than

other fossil fuels. Accordingly, the

greater efficiency of natural gas

combined-cycle power plants, which

exceeds that of conventional thermal

power plants by 20%, and that of co-

generation processes, which reaches

levels of performance of almost 80%,

mean that natural gas is the ideal fuel for

producing electricity. Thus, the

advantages of natural gas as far as

efficiency is concerned produce positive

environmental effects in terms of the

reduction of emissions, since in order to

achieve the same amount of energy, a

lower quantity of natural gas has to be

burned than other fossil fuels.

CO2 produced in the combustion of fossil fuels (kg/GJ)

120

100

80

60

40

20

0

Source: IPCC-Eurogas.

102

ı

Ligniteı

Fuel oilı

Gas oilı

Anthraciteı

Natural gas

Evolution of proven world reserves of natural gas (thousands of millions of m3) (1)

200

180

160

140

120

100

80

60

40

20

0

(1) Figures for the beginning of each year.Source: SEDIGAS. Anuario del gas 2009.

39.4

ı

1970ı

1975ı

1980ı

1985ı

1990ı

1995ı

2000ı

2005ı

2007ı

2008

156.8

178.5 181.8 181.9

147.1

63.176.9

96.3

129.3

78.5 73.3

91.3

55.9

CO2 emissions by technology (kg/MWh)

1,0009008007006005004003002001000

Source: Study on the environmental impact of the natural gas combined-cycle power station in Arrúbal (La Rioja). 2002.

920

ı

Conventionalcoil

ı

Conventionalfuel oil

ı

Conventionalnatural gas

ı

Gas turbine in combinedcycle (natural gas)

760

505

369

19


An energy form whoseuse is on the up andwhich has greatpotential for differentapplications

According to the estimates that are

available, in 2030, natural gas will be the

energy whose demand will have

undergone the greatest increase all over

the world. In Spain, natural gas today

represents more than 21% of the total

demand for primary energy. However, it

has great potential for growth owing to its

increased use in every sector, the

progressive extension of the gas pipeline

network and its use in processes for

generating energy through combined

cycles and co-generation, as well as its

use as a fuel for transport.

The Gas Natural Group isan active creator ofemployment and wealthin the countries in whichit operates

Special mention must be made of the

fact that the Gas Natural Group is an

active creator of employment and

wealth in the countries where it carries

out its activities. All this is thanks to the

payment of salaries and taxes, as well

as the investments made or the creation

of value along the entire energy chain.

In addition, the Group has designed

projects in keeping with its own

business aimed at directly contributing

to the development of the communities

in which it operates. Accordingly, there

are initiatives in Latin America for

providing access to energy, transforming

waste, training suppliers and fitters and

reducing environmental contamination in

certain sectors.

Anticipated increase in the demand for natural gas inthe European Union (Mtep)

800

700

600

500

400

300

200

100

0

Source: EUROGAS. Natural gas demand and supply. Long term outlook to 2030.

Contribution to society (in millions of euros)

Demand for natural gas in the EU by sector (Mtep)

700

600

500

400

300

200

100

0

Residential. Industrial. Electricity generation. Others (vehicle fuel, co-generation processes).

Source: EUROGAS. Natural gas demand and supply. Long term outlook to 2030.

438

ı

2005

ı

2010

ı

2015

ı

2020

ı

2025

ı

2030

ı

2005

ı

2010

ı

2015

ı

2020

ı

2025

ı

2030

493

535 578 603625

118

175

438

180

493

128 137 145 150 156

181191

193 194

239

625

226

Operatingincome13,639

Employees 338

Cash flow2,023

603

209

578

187

535

158123

Publicadministrations 481

Suppliers 9,796

Raw materials supply8,902

Shareholders580

Dividends

Development and growthof the business 2,652

Inversions 2,829

Divestitures and othercollections 177

Collection/Payment forfinancing activities 1,318

Supply of other goods andservices 894

c

c

c

c

c

c

c

Taxes

Salary costs


20


Contribution to GDP by country (%)

0.90

0.80

0.70

0.60

0.50

0.40

0.30

0.20

0.10

0.00

2006. 2007. 2008.

0.090.080.11 0.090.090.09

0.26 0.270.22

0.84 0.750.69

0.01 0.010.000.06 0.010.03 0.060.070.06

0.22 0.210.19

ı

Argentina

ı

Brazil

ı

Colombia

ı

France

ı

Italy

ı

Mexico

ı

Puerto Rico

ı

Spain

Contribution to society (in millions of euros)

400

350

300

250

200

150

100

50

0

Intangible investment. Corporate Income Tax.

ı

2006

ı

2007

ı

2008

57

351

63

14

217

328

Total purchase volume awarded (in millions of euros)

2,500

2,000

1,500

1,000

500

0ı

2006

ı

2007

ı

2008

936

2300

1632

Substitutionof furnaces inRáquira, Colombia.

In the town of Ráquira, in Colombia,which has a population of approximately13,000 inhabitants, most live from thepottery, mining and textile industries.These activities represent the area'sattraction for tourists, although the lack ofa quality services infrastructure meansthat visitors do not stay for as long aswould be desirable. The problem of thelack of infrastructure is joined by anotherproblem arising from the craft methodsthat are used: environmentalcontamination.

The production of pottery requires hightemperatures that are achieved mainly byburning coal and wood. The mainenvironmental consequence of usingthese fuels is the generation of solidparticles that remain in suspension and,in time, can cause acid rain with seriousnegative consequences for plants,animals and people.

There is a municipal order that prohibitsthe installation of new furnaces andlimits the burning processes in existingfurnaces. Accordingly, in order to improveworking conditions and the life quality ofthe town's inhabitants, the Gas NaturalGroup carried out a pilot test in 2003 tostudy the viability of converting thetraditional wood and coal furnaces toother, more modern apparatuses that usenatural gas as a source of energy. Theresult was so positive that six of thesefurnaces have now been converted.


CorporateResponsibility and

the Gas NaturalGroup

Key Corporate Responsibility Indicators 22

Corporate Responsibility 24Policy Management

Management of Corporate 27Responsibility

Dialogue with Interest Groups 30

How to Read the Corporate 33Responsibility Report

Key Corporate Responsibility Indicators

Customer orientation 2008 2007 2006

Percentage of satisfied customers

Spain (%) 87.5 88.7 87.2

Latin America (%) 88 87 -

Italy (%) 87.5 84 81.4

Suppliers with contracts currently in force 4,608 4,274 4,561

Total purchase volume awarded (millions of euros) 1,632 2,300 936

Commitment to Results 2008 2007 2006

Net turnover (in millions of euros) 13,544 10,093 10,348

Gross operating profit. EBITDA (in millions of euros) 2,564 2,277 1,912

Total investments (in millions of euros) 3,697 2,323 1,164

Net profit (in millions of euros) 1,057 959.4 854.5

Dividend (in millions of euros) 573.2 510.7 438.8

Evolution of the Gas Natural Group's classification on the DJSI 76 73 70

The Environment 2008 2007 2006

Generation of Greenhouse Gas Emissions (GHG) (t CO2) 12,625,374.36 8,221,125.99 8,859,000.11

GHG emissions/net turnover (t CO2/millions of euros) 932.17 814.54 856.11

Energy consumption (TJ) 238,491.93 138,428.56 144,825.59

Generation of waste (t) 1,188,242.26* 7,792.02 4,809.81

Hazardous waste (%) 0.20* 42.07 35.79

Water consumption (Dm3) 18,028.63 14,939.58 14,852.21

Interest in People 2008 2007 2006

Staff rate. Number of employees 6,842 6,699 6,686

Men/Women (%) 69/31 68/32 69/31

Women in management posts (%) 18.9 17.7 16.5

Personnel costs (in millions of euros) 338 308 277

Training hours per employee 44.52 40.62 41.11

Annual investment in training (euros) 3,480,300 3,397,500 3,193,605

* Variation due to the change in methodology. For further information, please see the commitment to the environment.

22

2008 Corporate Responsibil ity Report. Corporate Responsibil ity and the Gas Natural Group

Health and Safety 2008 2007 2006

Accidents requiring medical leave 85 77 94

Days lost 1,668 1,644 2,430

Mortalities 0 0 2

Frequency rate 6.26 5.85 7.28

Seriousness index 0.12 0.12 0.19

Incident rate 12.25 11.53 14.05

Absenteeism rate 1.94 2.23 2.4

Social Responsibility 2008 2007 2006

Evolution of the contribution from the Gas Natural Group (in millions of euros) 16.8 16.1 13

Integrity 2008 2007 2006

Communications received by the Code of Conduct Committee 22 22 23

Number of messages received per 200 employees 0.64 0.66 0.92

Geographical origin of communications:

Argentina (%) 5 5 13

Brazil (%) 0 5 4

Colombia (%) 0 23 4

Italy (%) 5 0 0

Mexico (%) 50 23 4

Spain (%) 40 44 75

Average time for dealing with communications 46 42 60

Audit projects analysed on the basis of the risk of fraud 35 28 N/A

23


Gas NaturalGroup'sCorporateResponsibilityPolicy

24


We dedicate our efforts to learning about andmeeting the needs of our customers.We want toprovide them with excellent service and be ableto offer them an immediate, effective response.The principles of responsible action which governour customer relations are based on:

• Building trust through close and accessiblerelations.

• Listening to their opinions in order toanticipate their needs.

• Working all along the value chain tocontinuously improve the quality and safetyof our products and services.

Customer orientation

We encourage a working environment which is respectful with our employees and aimed at theirtraining and professional development. We foster diversity of opinions, perspectives, cultures, agesand sexes within our organizations. The principles of responsible action which govern our relationswith employees are based on:

• Providing our employees with professional development opportunities commensurate with their skills.• Creating a motivating working environment in which employees feel safe and respected and theirinitiatives are welcomed.

• Fostering clear objectives, effective leadership, competitive compensation and the recognition ofachievements.

• Providing conditions which are conducive to a fair balance between professional and personal lifewithin a framework of equality and dialogue.

Interest in people

We foster policies for the development of a culture of prevention to guarantee specific health andsafety conditions all along the value chain, based on the following principles:

• Guaranteeing safety is everyone’s responsibility.• Proper training and information are key elements of prevention.• Integrating preventive actions into all activities and decisions to ensure continuousimprovement.

• Rejecting any conduct that may create an unsafe, intimidating or offensive working environment.

Health and safety

We accept our social responsibility by contributing our knowledge, management capabilities andcreativity to society. We invest a proportion of our profits in social activities, maintaining an ongoingdialogue with society to determine and satisfy its needs in order to increase the Group's credibilityand prestige. The principles of responsible action are based on:

• Positive integration in society in those countries where we do business by respecting theircultures, laws and the environment.

• Generating value by conducting our business and by forging alliances with local communities,particularly in those countries where we maintain a presence.

• Fostering the education, training, cultural wealth and inclusion of the most disadvantaged groupsthrough social investment.

Social responsibility

Insisting that all members of the Gas Natural Group conduct themselves ethically, with honesty andintegrity, respecting the Group’s values, principles and professional codes of conduct, thus help toincrease society’s trust in our company. The guiding principles in this regard include:

• Rejecting corruption and bribery in our business dealings and establishing measures to prevent andcombat them.

• Upholding the principles of the United Nations Global Compact and the OECD’s corporategovernance principles.

• Respecting all aspects of the United Nations Universal Declaration of Human Rights and theDeclaration of the ILO regarding basic rights in the workplace.

IntegrityWe conduct our business with a strategic horizon that transcends any immediate economicinterest, thus contributing to economic, environmental and social development both in the shortand long term. Respect for the environment goes beyond continuously adapting to the currentlegislation. In areas where no specific legislation exists, we encompass international standardsand legislative trends when planning actions that could have a significant impact on theenvironment. We therefore abide by the following principles:

• Combating effects of climate change by minimizing the impact of our activities.• Incorporating environmental criteria, into our business management, to achieve maximumefficiency.

• Ensuring that the applicable procedures are known and complied with all along the value chain.• Preserving natural biodiversity in the locations where we operate.• Promoting continuous improvement by evaluating the Environmental Management System andreporting internally and externally on our efforts.

The environment

We prepare plans, set collective and individualobjectives and make decisions in accordancewith their impact on the achievement of thepurposes of our Vision, ensuring that allongoing commitments are fulfilled and thatthe minimum uncertainty levels needed toachieve those objectives are assumed. Theprinciples of responsible action which governour relations with shareholders are based on:

• Working to consistently obtain profitabilitylevels that are in keeping with marketexpectations.

• Applying best practices in terms ofinformational transparency at all times,establishing channels of communication,with the markets and with otherstakeholders, in order to strengthen ourcredibility and reputation.

Commitment to results

Corporate responsibility is integrated in

the corporate strategy approved by the

Gas Natural Group. The Company’s policy

in this issue firmly formalises and

demonstrates its commitments to

stakeholders.

The Gas Natural Group's Corporate

Responsibility Policy includes the seven

commitments assumed by the Company.

These commitments are:

• Customer orientation.

• Commitment to Results.

• The Environment.

• Interest in People.

• Health and Safety.

• Social Responsibility.

• Integrity.

The contents of this 2008 Corporate

Responsibility Report have been

structured in accordance with the above

commitments.

The Company has developed a specific

control panel for monitoring the Corporate

Responsibility Policy, reporting on its level

of fulfilment and setting the

corresponding targets. The indicators,

which are reported in the various chapters

of this Corporate Responsibility Report,

were defined by a 360° methodology,

which took into account internal and

external criteria for the assessment of

corporate responsibility and was based on

RepTrak, a methodology used by the

Group to measure its reputation.

The indicators cover all the relevant areas,

go back three years and make it possible

to inform the various bodies of

government and management about the

results of the actions that are carried out,

detect areas for improvement and set

new targets.

With regard to the publication of the

Corporate Responsibility Report, special

mention must be made of the fact that,

internally, it corresponds to the Corporate

Responsibility Committee and to the Code

of Conduct Committee.

Its external publication focuses mainly on

the publication of reports, the

presentation of information on a variety of

media and the company's participation in

work groups and forums.

Corporate responsibilityis integrated in thecorporate strategyaproved by theGas Natural Group'sBoard of Directors

25


Strategic management of corporate responsibilityin the Gas Natural Group

2008-2012 Strategic Plan

Corporate Responsibility Policy

Performance monitoring and setting of improvement targets

Customerorientation

Commitment toResults

EnvironmentalConservation

Interest inPeople

Reporting and communications plan

Leader inefficiency

SocialResponsibility

Health andSafety

Integrity

Mission,Vision andValues

The Gas Natural Group understands

corporate responsibility as the set of

actions developed to establish relations of

trust with its concurrent stakeholders that

are stable, sound and of mutual benefit.

The appropriate relationship with the

environment constitutes a priority

strategic issue for the Company; it is

essential for the generation of value and

for guaranteeing the Company's long-

term sustainability.

In the past, the Company has laid down

commitments to strengthening and

improving its relations with each of its

stakeholders. In 2008, the

Gas Natural Group formalised its position

and its commitments to defining a new

Corporate Responsibility Policy. It is based

on the Company's Mission, Vision and

Values, and is in line with the

commitments laid down in the 2008-2012

Strategic Plan.

The policy, whose approval was preceded

by an intense process of assessment and

internal consultations, is the declaration of

a corporate responsibility management

system that covers the entire Group. In

addition and in accordance with the

recommendations laid down in the

Unified Code of Good Governance, it was

adopted by the Board of Directors, who

assumed the regular supervision of

its fulfilment.

In 2008, the Gas NaturalGroup formalised itsposition and itscommitments to defininga new CorporateResponsibility Policy

26


Internal Communications Plan

Key indicators(internal performance)

Audit andControl

Committee

ManagementCommittee

CommunicationsDepartment

and Chairman´sOffice

InternalAudit

Department

Board of Directors/Executive Committee

RepTrak(internal values)

CR Local Committees CC Local Committees

Annual basis

CorporateReputationCommittee

Code ofConduct

Committee

c c

c c

c

c

Governing bodies

Corporate responsibility is integrated in the

corporate strategy adopted by the Gas

Natural Group's Board of Directors and is

applied across the organisation by order of

the highest bodies of government.

In addition, the Company has a Corporate

Reputation Committee and the Code of

Conduct Committee, with important

responsibilities in the area.

Corporate ReputationCommittee

Made up of representatives of some of the

departments that are directly involved in

managing these matters. It is chaired by the

Communications Department and

Chairman’s Office.

The Corporate Reputation Committee is the

body responsible for developing the

corporate responsibility procedures and

policies, coordinating the Company's

reports in the matter and supervising the

Independent third-party verification

process. It reports to the Management

Committee, which, in turn, reports to the

Board of Directors.

Code of ConductCommittee

Its mission is to contribute to the effective

implementation of the Code of Conduct

across the Group.

The Committee is chaired by the Internal

Audit Department and involves

representatives from the departments that

are directly involved in monitoring the Code

of Conduct. It reports to the Management

27


Managementof CorporateResponsibility

Milestones 2008 Challenges 2009

Adoption of the new CorporateResponsibility Policy and preparation of amanual on relevant indicators.

Design of a Latin America CorporateReputation Committee to promote theseissues through the co-ordinated action of thelocal committees.

Extension of the RepTrak methodology toMexico. 81% increase in internalconsultancy services provided in corporateresponsibility.

Redesign of the corporate responsibilitysection on the website in accordance withthe Group's new policy.

Adoption and launch of the Latin AmericanCorporate Reputation Committee made up ofthe country managers in each country.

Study of the application of the RepTrakresults with other opinion-monitoring studiesinvolving different stakeholders.

Functions of the Corporate Reputation Committee

Implement corporate responsibility and reputation management throughout the organisation, bymeans of responsible actions which create value for stakeholders.

Analyse the risks and reputational opportunities in each business division and geographical area,exchanging information which is used to direct the Company’s management.

Ensure the construction of a corporate culture that is committed to protecting reputation andpromoting corporate responsibility.

Committee and to the Audit and Control

Committee.

For further information, please see the

section on the Code of Conduct in the

chapter on “Integrity.”

Internal consultancy incorporate responsibility

In 2008, activities continued for the

internal consultancy services provided to

the Company's subsidiaries and different

departments. The aim, based on the

philosophy of continuous improvement, is

to strengthen the Group's practices in


Functions of the Code of Conduct Committee

Promoting the distribution and awareness of the Code of Conduct.

Providing a communication channel to all employees who wish to send queries or notifybreaches of the code.

Contributing to the solution of disputes concerning the application of the Code of Conduct.

Composition of Local Committees (1)

Argentina - Brazil - Mexico - Colombia - Italy

Chairman Human ResourcesBoard Member Internal AuditBoard Member External Relations DepartmentBoard Member and Secretary Legal Services

(1) The queries and notifications from France, Morocco and Puerto Rico are processed by the Code of Conduct Committee.

28

Corporate responsibility governing structure of the Gas Natural Group

Board of Directors/ExecutiveCommittee

Audit and ControlCommitteec

c

cc

c

ManagementCommittee

CommunicationsDepartment andChairman’s Office

InternalAudit Committee

CorporateReputationCommittee

Code ofConduct

Committee

Members of the CorporateReputation CommitteeInternal Audit.Investor Relations.Accounting and Fiscal Policy.International Corporate Affairs.Communications Department andChairman’s Office (Committee Chair).Corporate Reputation (Secretary's Office).Expansion North Zone.Contracting and Resources.Risk Control and Management.Studies and Regulation Latin America.Corporate Governance Matters.Wholesale Business Promotion.Industrial Safety, Prevention andEnvironment.Engineering andTechnologyCustomer Service.Human Resources Development.

Members of the Code of ConductCommitteeInternal Audit (Chair of the Committee).Customer Service.Corporate Reputation.Investor Relations.Labour Relations.Executive Development (Secretary’sOffice).

Internal consultancy services provided by theCorporate Reputation Subdepartment

35

30

25

20

15

10

5

0ı

2006

ı

2007

ı

2008

9

16

29

The Group started to use this tool in

2007. It forms part of the analyses used

by the Corporate Reputation Committee

and the internal consultancy

methodology. In 2008, coinciding with

the launch of the new Corporate

Responsibility Policy and given the fact

that it provides relevant information on

its public perception, the Company

agreed to raise the annual results of

RepTrak to the Board of Directors.

corporate responsibility management. It

focuses on dialogue with stakeholders

and the assessments of the Company's

activity made by third parties, such as

responsible investment indices, social

analysts and image and reputation

tracking.

The Subdepartment of Corporate

Reputation is responsible for providing

these personalised consultancy services

to any department that requests them.

The service is structured into four areas:

1. Context analysis.

2. Identification of risks and opportunities.

3. Action Plan.

4. Communication.

In 2008, 29 internal consultancy services

were provided to eight different

departments, nine more than in 2007.

RepTrak

This tool is of particular importance in

corporate responsibility management in

the Gas Natural Group. Developed by

the Corporate Reputation Forum and the

Reputation Institute, the RepTrak model

provides systematic information on the

Company’s reputation.

The methodology includes a

measurement of the emotional

reputation (RepTrak Pulse) according to

the esteem, admiration, trust and

impressions generated by the Gas

Natural Group in society. It also

assesses 26 attributes grouped together

in seven dimensions: government, work,

innovation, supply, finance, leadership

and citizenship, which constitute the

rational analysis of the Company's

reputation (RepTrak index).

The model allows for continuous

assessment and the application of

specific measures for improving the

company's performance in the key

dimensions of reputation.

29


RepTrak Methodology

RepTrak Pulse: the Gas Natural Group's corporatereputation in society

100

90

80

70

60

50

40

30

20

10

0ı

1T07

ı

2T07

ı

3T07

ı

4T07

ı

1T08

ı

2T08

ı

3T08

ı

4T08

75.776.976.476.873.476.274.477.0

Performance

Lead

ersh

ip

Citizenship

Governance

W

orkpla

ce

Innovation

Products & Services

Positive fin

ancial resultsGenerates profit

Future

growth potential

Wel

l org

anis

ed

Cle

arvi

sio

nof

itsfu

ture

Stro

ng

and

resp

ecte

dle

ader

Protects theenvironment

Contributes positively to society

Supports goodsocial causes

Behaves ethically

Open and transparent

Responsible use of its power

Good place

tow

ork

Has goodem

ploy

ees

Pays emplo

yees

fairl

y

Offers

equaloppor

tuni

ties

Emplo

yee

wel

l-bei

ng

InnovativeAdapts

easilyto

chan

ge

Launchesinnovative

pro

du

cts&

services

Treats customer well

Positive price/quality ratio

High quality products & services

Meets customer needs

Stands behind products & services

Satisfactory claims resolution

Feel

ing

Trust

Admin

istración

Esteem

1. Analysis

ReportingInternalAdvisoryProcess

4. Reporting 3. Improvement plan

2. Identification

The Gas Natural Group is aware of the

importance of society's trust for the

development of its activities. It

understands that dialogue with

stakeholders is critical for learning their

concerns, anticipating their expectations,

foreseeing risks and identifying new

business opportunities.

The Gas Natural Group's actions as far as

dialogue is concerned are divided into the

following:

• Consultancy actions. These are

bidirectional: the Company and its

stakeholders interact to exchange

information quickly and fluently. The

conclusions are considered in the

improvement and adaptation of the

Company's processes and, in particular,

in the selection of the content that is to

be included in the corporate

responsibility reports.

• Informative actions. These are

unidirectional: the Group transmits

information to its stakeholders.

The following are the main actions as far

as dialogue is concerned carried out by

the Gas Natural Group in 2008.

Dialoguewith InterestGroups

30


31


Consultancy actions

Customers

Customer surveys aimed at assessing the satisfaction provided by the Company's different services and identifying needs and expectations.

Surveys for customers and non-customers to measure the image of the leading energy companies and adapt the brand messages and product range to thepreferences of current and potential customers.

Studies to find out the main disadvantages of installing natural gas in new homes.

Redesign of the "Letters to the Chairman" communication channel in Mexico. This makes it possible to collect comments and suggestions from customers.

Shareholders/Investors

Contact with leading stock market analysis firms to draw up reports on market perception and estimates for results.

One-on-one meetings with investors.

Continuous replies to the requests for information from analysts and consultations with the Investor Relations Unit.

Employees

Maintenance of the Internal Communications Consultative Group as a tool for detecting and assessing employee communication needs.

Workgroups with employees to validate and determine the questions for the Commitment and working Environment Survey.

Commitment andWorking Environment Survey in every company in the Gas Natural Group.

Meetings between Labour Relations Department and workers’ representatives from the Group’s various companies and with union sections andfederations. Creation of Health and Safety Committees.

Survey for studying factors of psychosocial risks.

Workgroups to assess risk awareness.

Launch of the communication project for health and safety incidents/suggestions via NaturalNet, the Group´s Intranet.

Suppliers

Meetings with collaborator companies to find out their concerns and look for solutions to speed up processes.

In Brazil, audits on suppliers to guide them towards better management.

Workgroups in Argentina with representatives from the Company's main stakeholders to hear their opinion on the corporate responsibility reports.

Society

Continuous monitoring of corporate reputation among public opinion using RepTrak.

Service provided to 30 different organisations and institutions for the publication of articles, indices and rankings in the energy sector and corporateresponsibility.

32


Informative actions

Customers

Publication in NaturalNet of the results of the unified customer satisfaction measurements in Latin America.

Presentation of theTechnical Solar Power Guide in collaboration with the Junta de Andalucía Autonomous Government and the Andalusian Energy Agency.

Creation on the web and in the newsletter of specific areas for the publication of tips on the efficient use of energy.

Meetings with consumer organisations and representatives to inform them about the final stage of the deregulation of the gas market.

Informative campaigns on gas savings in Mexico.

Institutional awareness campaigns in Argentina to prevent accidents and foster the rational use of energy.

Shareholders/Investors

Retransmission over the Internet of quarterly presentations of results.

Specific presentations by the Group’s senior management.

Multi-conference held after the agreement reached with ACS for the purchase of its holding in Unión Fenosa.

Employees

Sending of information on the new features/areas of NaturalNet, the Group's Intranet.

Advance of commercial campaigns and advertising to employees in Spain before their publication in the media.

Launch of the project for the publication of the health, safety and the environment magazine, which is to be distributed to employees.

Publication of the survey on the perception of the Joint Risk Prevention Service.

Publication of the Group's accident figures on NaturalNet.

Publication of the Prevention Sheets on NaturalNet.

Electronic information to workers on the emergency plans for their work centres.

Suppliers

Publication of the Gas Natural Group's environment and quality policies.

Distribution of the Gas Natural Group's Code of Conduct in Argentina, Brazil, Mexico and Morocco.

Presentation in Spain of the document on good environmental practices in the construction of gas networks in polyethylene and steel and on the facultymanagement of civil engineering work.

Publication and explanation of the law on subcontracting.

Society

Promotion of dialogue between businesses, NGOs, universities and business schools in matters related to corporate responsibility. The actions were carriedout in collaboration with ASEPAM, the Carolina Foundation, ESADE, Ramon Llull and the Corporate Social Responsibility Committees of the Chamber ofCommerce, Industry and Navigation of Barcelona, CEOE and the Catalan employers’ association Fomento del Trabajo, among others. Meetings were alsoheld with various consumer protection associations, such as FACUA, UCA, UCE, CECU and OCUC, to name a few.

The Gas Natural Group analyses the deregulation of the market withrepresentatives from consumer associations

On 1 July 2008, the deregulation of the gas sector was completed in Spain. As a result, employees from the Gas Natural Group met in Barcelonawith representatives from the municipal consumer information offices and consumer associations in Catalonia to analyse the new legislation.

During the meeting, the Company emphasised its desire to avoid all kinds of inconveniences for its customers as a result of the deregulationprocess. In this new stage, the quality of the service provided to customers becomes a key objective for the Group's differentiation.

An assessment was also made of the actions taken by the Customer Service Guarantee Office, which was created to improve and speed up thereplies to the queries made to the municipal consumer information offices and consumer associations. Accordingly, special mention must be madeof the fact that the Company meets on a regular basis with representatives from consumer organisations so that it can hear their concerns andrequirements firsthand.

The Gas Natural Group's Corporate

Responsibility Report provides clear,

reliable information about the way in

which the Company responds to its main

challenges in the area of corporate

responsibility.

The contents of the document have been

structured around the commitments laid

down in the Gas Natural Group's

Corporate Responsibility Policy, adopted

in 2008. The chapters have the same

structure to enable easy reading and so

that information can be found more

quickly and easily. Although the

information may be organised in slightly

different ways depending on the subject,

the chapters have certain elements in

common.

33


How to Readthe CorporateResponsibilityReport

IntroducctionThis section presents both the Group's positionand the principles included in its CorporateResponsibility Policy.

Main indicators and relevant actionsThis section deals with the indicators chosen bythe Company to report on the putting into practiceof the commitments in question, together withthe actions carried out and targets set for thefollowing financial year.

34


ChapterDetailed information on the commitment inordered sections that make the informationeasier to understand.

Tables and graphsThese provide readers with a simplified way ofevaluating trends and reaching conclusions onthe Company's performance.

Case studyDetailed description of activities takingplace during the year that the Groupunderstands to have been particularlysignificant, either owing to their originalityor because they are outstanding examplesof the management approach.

Information supportsIn order to provide more extensive information,readers are occasionally referred to othersupports. They may include the Company'swebsite or previously-published reports.

CorporateResponsibilityCommitments

Customer orientation 36

Commitment to Results 47

The Environment 53

Interest in People 71

Health and Safety 85

Social Responsibility 93

Integrity 101

2008 Corporate Responsibil ity Report. Corporate Responsibil ity Commitments

Customerorientation

The Gas Natural Group understands that

its main social function is to contribute

to the supply of energy in the countries

in which it operates, providing a supply

that is efficient, sustainable and safe and

in keeping with its customers'

expectations in terms of quality, service

and safety.

The Company places customers at the

centre of its business strategy and

devotes its efforts and resources to

reaching its customers' highest possible

satisfaction. Accordingly, it works to

continuously improve its operations and

processes in order to provide a service

that is more and more in line with the

specific needs of its different

customers.

The scope of the customer-oriented

culture includes suppliers, contractors

and collaborator companies so that they

can also contribute to the quality and

safety of the service. This means that

the Company's efforts focus on

offering its customers the best service

at all times.

To know more about its customers, the

Gas Natural Group has set up efficient

communication channels that search for

excellence when solving incidents and

attending requests.

36


Principles of responsible action

With customersCustomer orientation is one of the commitments laid down in the Gas Natural Group's Corporate Responsibility Policy, and is based on the followingprinciples:

• Building relationships based on trust, employing a friendly and accessible manner.• Listening to their opinions to anticipate their needs.•Working all along the value chain to continuously improve the quality and safety of its products and services.

Main indicators (*)

2008 2007 2006

Percentage of satisfied customers

Spain (%) 87.5 88.7 87.2

Latin America (%) 87.8 87 N/A

Italy (%) 87.5 84 81.4

Suppliers with contracts currently in force 4,608 4,274 4,561

Total purchase volume awarded (millions of euros) 1,632 2,300 936

(*) Key indicators defined by the Group to monitor its performance in corporate responsibility.

Relevant actions

Proposed actions for 2008

Consolidation of the Lean Six Sigmamethodology to improve the quality of thebusiness areas and improvement projects.

Guaranteeing that the concept of energyefficiency is present in all ourcommunications and actions.

Publication for customers of information onsafety and the new channel for reportingcomplaints and filing claims.

Progressive incorporation of new suppliers inthe Supplier Portal, development of itsfeatures and implementation of the featuresin the Group's subsidiaries. (*)

Actions taken 2008

Preparation of the new Gas Natural GroupQuality Manual to replace the manuals inforce in each country.

Fostering energy efficiency and saving withthe result of the publication of the SolarPower Technical Guide, among others.

Publication for customers of tips and actionguidelines if they smell gas and thepublication of the "Gas sin peGas" DVD tofoster a culture for the responsible use ofnatural gas.

Development of the purchasing features ofthe Supplier Portal and the implementationof any improvements that are found.

Actions planned 2009

Identification of the main factors forsatisfaction among Spanish energycompanies in order to foster service quality.

Inclusion of the concept of energy efficiencyin communications and actions taken withcustomers.

Personalised advertising plan based on directonline and off-line marketing in accordancewith customers' requirements.

Consolidation of the features developed in2008 and incorporation of new suppliers inthe use of those that have beenimplemented.

Level of compliance: high medium low

(*) High-level incorporation of suppliers and development of features. This has not been extended to the Group's subsidiaries.

37


Customer satisfactionthrough service quality

In 2008, the Gas Natural Group

developed numerous projects and

actions aimed at increasing customer

satisfaction. Special mention must be

made of the fact that the overall

satisfaction index of the Gas Natural

Group reached 87.6% in 2008.

With regard to the improvement actions

implemented in 2008, we may highlight

the integration of all the quality

measurements corresponding to the

Latin American subsidiaries, which

means that the figures obtained in the

area can be homogenised and

compared. Particular mention must also

be made of the improvements carried

out in Spain and Argentina to foster the

efficiency of processes and those

carried out in Colombia and Mexico to

improve customer service quality and

trained personnel in the said task.

In 2008, the technology was renewed for

reading domestic meters on-site, marking

the progress made by Gas Natural

México. The changeover to mobile

telephones (equipped with cameras and

GPRS/GPS communication) increases the

quality of the service provided by

guaranteeing the reading for customers

through photographs taken of their

meters, as well as by processing claims

with precise knowledge of the

consumption that has been recorded.

In 2008, the Gas NaturalGroup developednumerous projects andactions aimed atincreasing customersatisfaction

The organisation'scommitment to itsquality objectives

In order to guarantee maximum quality

in all the Company's internal and

external actions, the satisfaction of the

internal customer was measured for the

second time in 2008. The process drew

conclusions that focused on improving

the quality of the services provided to

the aforementioned collective. Training

focused on highlighting the importance

of process management and

improvement, intensifying efforts for

those responsible for processes and for

experts in the Lean Six Sigma

methodology.

In addition, in order to enable the correct

understanding of documentation on

quality, all the quality manuals in force in

Percentage of customers by country (*)

Argentina

Brazil

Colombia

Italy

Mexico

Spain

51

17

7

3

12

10

(*) Number of customers (in thousands): 11,458.

Overall satisfaction with service quality (%)

1009080706050403020100

In 2008, the Group progressed in the homogenisation of the measurement systems used in Spain and Latin America.

91.1

ı

Argentinaı

Brazilı

Colombiaı

Italyı

Mexicoı

Spain

87.9 92.3 87.587.5

77.1

38


the different countries in which the

Gas Natural Group operates were

grouped together into one single

document in 2008.

On an international scale, efforts were

made to bring the classification of the

quality indicators into line with those

established by the Group, especially in

Italy and Brazil. Likewise, the

assessment was extended to new areas

in Colombia and Mexico and

improvement plans were established on

the basis of the results obtained.

Progress in qualitymanagement

In 2008, the integration of the

management of the Group's business

model quality continued. Accordingly,

special mention must be made of the

quality assurance and environment

certificate that was obtained by the

combined-cycle power plant of Arrúbal

(La Rioja, Spain).

In Italy, a self-assessment was carried

out in accordance with the EFQM

model, after which strong points and

areas for improvement were defined.

The results were integrated into the

LICEO plan (Leadership, Innovation,

Change/Quality/Growth,

Efficiency/Effectiveness, Opportunity).

The energy management processes

were also certified as part of the quality

assurance certificates for the company

Gas Natural Vendita Italia.

In Latin America, within the framework of

the quality control and assurance

processes in the key business areas, the

audits for renewing the corresponding

ISO certificates were passed and new

certificates were received for the quality

assurance and environment processes.

Corporate image (%)

100

90

80

70

60

50

40

30

20

10

0

Spain. Latin America. Italy. % Total responses good or very good image.

ı

2006

ı

2007

ı

2008

56.2

80.7

64.7

82

84.3

85.7

85.4

84

Satisfaction rate with main processes. Spain (%)

100

90

80

70

60

50

40

30

20

10

0

2006. 2007. 2008. % Total responses from highly satisfied, satisfied or somewhat satisfied customers.

94.9 95.494.9

ı

Continuity ofsupply

ı

Telephone customerservice

ı

Maintenanceservice

ı

Centres

ı

Emergencies

ı

Inspection /revision

ı

New customers

78.2 78.976.5

93.2 9493.390.8 88.188.6 90.5 88.489.7 85.7 84.58686.3 86.585

39


Implication of thevalue chain in thecommitment to quality

In 2008, in Spain, the implementation of

the Q-Model continued, allowing the

management of the quality of the

services provided by suppliers and the

reduction of the no-quality costs resulting

from suppliers' actions. The analysis is

taken into account in the adjudications

and in the design of the penalties.

Similarly, the information on no-quality is

used by the Asigna project as a decision

parameter when assigning workloads. All

this makes it possible to know which

suppliers are more efficient and provide a

better service.

In short, the Q-model allows for greater

efficiency and an increase in the service

quality provided to customers. In this

respect, the Company has implemented a

control panel in the model to help with

the diagnosis and direct monitoring of the

costs and targets that are set.

In Colombia, a supplier development

project was started. An ideal profile was

determined and used to make a diagnosis

and propose actions for improvement for

five suppliers.

In Brazil, technical audits were performed

on suppliers to identify opportunities for

improvement and reduce possible risks

affecting the quality and safety of the

activities that were contracted.

Satisfaction rate with main processes. International (%)

Argentina Brazil Colombia Italy Mexico

Continuity of supply 93.3 94.6 92.8 97.9 85.0

Billing and payment 88.9 87.3 87.6 83.2 73.5

Telephone Customer Service 80.8 76.0 66.5 85.8 63.9

Centres 84.5 86.6 79.5 83.8 68.3

Emergencies 88.5 83.0 82.3 95.8 73.7

Satisfaction index. Industrial customers. Spain (%)

100

90

80

70

60

50

40

30

20

10

0

2006. 2007. 2008. % Total responses from highly satisfied, satisfied or somewhat satisfied customers.

93.5 93.892.6

ı

Global

satisfaction

ı

Negotiating andcontracting

ı

Supplyquality

ı

Measuringconsumption

ı

After-saleservice

92.1 90.588.495.4 97.395.9

88.6 88.591.787.3 92.585

40


Supply of a range ofproducts and servicesadapted to customers'requirements

In 2008, the Group maintained its

leadership on the market with a range of

segmented natural gas tariffs, designed

to offer its customers the most

appropriate option for their

requirements.

The main tariffs offered were as follows:

• Mini Gas, for low-consumption users.

• Basic Gas, for consumers without

heating.

• Optimum Gas, for customers with

heating.

• Family Gas, for homes with high gas

consumption.

• Business Gas, for small businesses

with high consumption.

The range of tariffs is completed with

the Online Saving Plan, aimed at

customers who wish to process their

requirements over the Internet (Virtual

Office, online bill or communication with

the Company by email). The aim of this

plan is to reduce the environmental

impact, increase convenience and save

on the bill, since the customer

contracting the service is given a

discount. In 2008, pilot tests were also

performed to offer gas subscriptions

with their corresponding equipment to

enable access for new customers. If the

tests are successful, the idea will be

extended on a general scale in 2009.

In 2008, various analyses were

performed to find out the expectations,

preferences and levels of satisfaction of

current customers in order to adapt the

range and specifications of the products

and services on offer.

Accordingly, on a scenario of promotion

and development of energy services

companies, the Group offers an

integrated energy management service

to more than 1,500 clients.

In 2008, significantprogress was alsomade in theimplementation of naturalgas as a vehicle fuel

In 2008, significant progress was also

made in the implementation of natural

gas as a vehicle fuel. The first public

service station for serving rubbish-

collection vehicle fleets, professional

vehicles, such as taxis, and business

vehicles was opened in the city of

Valencia. Mention must also be made

of the extension of the agreement with

the Barcelona City Council, whereby

the fleet of city buses, which run on

natural gas, is to be increased by

45 units in 2009.

General customer indicators

Variation %Argentina Brazil Colombia Italy Mexico Spain Total 07-08

Gas activity sales (GWh) 71,964 75,866 16,719 2,933 43,857 270,042 481,381 6.22

Network renewal (km) 0.2 48.1 6.7 - 48.8 33 136.8 27.60

Distribution network (km) 22,360 5,881 17,052 5,518 15,903 48,578 115,292 5.04

Increase with regard to 31/12/2007 (km) 505 246 497 743 393 3,149 5,533 5.92

Regulatory inspections 0 0 391,043 - 22,260 1,329,877 1,743,180 7.24

Network overhauled (km) 12,624.9 3,790.5 4,216.2 2,679 14,493 22,217 60,020.6 2.96

Renewal of connections (km) 15,035 1,458 0 2 5,096 3,898 25,489 29.37

Number of calls to Telephone 1,353,053 874,306 1,831,971 432,559 1,105,245 7,397,159 12,994,293 6.66Customer Service

The satisfaction of the industrial customer,a priority

In 2008, the Company performed an online survey to find out the level of satisfaction of itsindustrial customers. Mention must be made of the fact that 95% of participants declared theirsatisfaction with the quality and service provided by the Gas Natural Group. Furthermore,93.9% are generally satisfied with the Company and 90.5% declare their satisfaction with thenegotiation and contracting process. 95% of those taking the survey would recommend theGroup to other companies in their sector.

97% of those that took the survey valued the Company's overall image in a positive way. Theresults of the survey with regard to information on the website and the operation of the virtualoffice were also highly positive.

Those taking the survey were encouraged to take part in an initiative that focused on solidarity:for each survey that was completed, a donation was made to the Spanish Confederation ofOrganisations for the Disabled. Approximately 4,500 euros were collected as a result.

41


Effectivecommunication withcustomers

Fluent communication with customers is

vital for detecting their priorities and

anticipating their requirements.

The communication channels set up by

the Gas Natural Group focus on

attending customers, finding out their

requirements, listening to and attending

their claims and establishing a

relationship of trust. The main actions

carried out in this area in 2008 were as

follows:

• Adaptation of the Group's

communication processes to the new

legislative framework.

• Improvement of the efficiency when

solving requests, including a

commitment to a date for the solution.

• Implementation of digitalisation for

storing documents.

• Adoption of improvements to browsing

through the Virtual Office.

In accordance with the Personal Data

Protection Act (LOPD), the Group

provides the means to ensure that all

communications with customers take

place under the principles of information

security and confidentiality. Through its

Data Protection Committee, the

Company regularly reviews its fulfilment

with the LOPD and its correct

implementation in all its subsidiaries.

During the first half of 2008, efforts in

communication with customers in

Spain focused on guaranteeing

transparent information on the

deregulation of the market and the

changes to the legislative framework.

During the second half, efforts focused

on transferring customers to the

reference commercialises, as laid down

in the new law.

Customer indicators. Spain

2008 2007 2006

New municipalities supplied 55 69 56

No. of electricity contracts 125,439 127,689 305,621

No. of preventive maintenance inspections 1,222,216 1,081,056 1,159,168

Customer Service ratios. Spain

2008 2007 2006

Customer requests solved immediately (%) 95.5 95 N/A

Level of customer satisfaction with the 78.9 78.2 76.2Telephone Customer Service (%)

Average time for solving requests (days) 7.0 7.9 8.4

Calls answered within 10 seconds (%) 89.7 90 81

The Gas Natural Group website indicators (in thousands)

2008 2007 2006

No. of customers registered at the end of the year 587.8 490 400

No. of online transactions at the Virtual Office 6,431 2,650 2,300

No. of customers registered with the online billing service 60.5 N/A N/A

42


Long-term relations oftrust with suppliers


fact that maintaining long-term relations

of trust with its suppliers is vital for

guaranteeing service quality. The

Company upholds a contracting policy

that generates stable, long-lasting

commercial relations with its suppliers

and, at the same time, encourages

competition among them. The aim is to

achieve the greatest possible efficiency

for the ultimate benefit of its customers.

In Spain, contracts were maintained for

piping, Community Receiver Installations

(IRC), Comprehensive Distribution

Contractors (CDI) and maintenance to

ensure the provision of services for a

maximum term of five years to a total

number of 61 suppliers, as long as the

required standards of quality and service

are maintained.

Spain also took part in the work group

coordinated by the Spanish Global

Compact Network to publish the

Implementation Guide titled The

Company and its Supply Chain: a

Management Alternative. The main aim

of this publication is to help companies

manage their supply chain in a more

responsible manner in order to generate

sustainable profits in every business

activity and area.

In Italy, thanks to the framework piping

and maintenance contract, the provision

of services to a total number of 20

suppliers was guaranteed for a

maximum term of five years (3+1+1).

In Mexico, most of the contracts with

suppliers were extended by one year to

provide continuity to the good service

offered in 2008. Improvements are also

being implemented in relation to the

suppliers of the electricity companies

taken over by the Gas Natural Group in

Mexico in 2008 through contracts with

preset terms.

The three companies the Group owns in

Brazil started joint purchasing processes,

which has reduced the number of

suppliers. The best are selected through

the framework piping (MECOM) and

installation tender. In Morocco, six

contracts were signed in 2008, five of

which were of the 1+1+1 type.

With regard to the extension of the

Code of Conduct to suppliers, special

mention must be made of the

introduction of various related issues in

the general terms and conditions for the

contracting of works and services.

During the year, informative letters were

sent to the main suppliers in Mexico,

Morocco and Argentina, highlighting the

scope and importance of the code.

Supplier indicators

2008 2007 2006

Mercantile contracts (current at the end of the year) 780* 1,215 1,321

No. of total agreements with installers 667 712 884

Installers with customer service centre 212 198 216

Installers without customer service centre 455 514 668

* Data from Spain.

Taking natural gas to a growing numberof homes. Extension of the supply inAndalusia, Castilla-La Mancha and Galicia

In 2008, the Gas Natural Group extended its supply network in Spain to favour access tonatural gas to a larger number of towns.

In Andalusia, where it now has a distribution network of 3,733 km and more than 339,000customers, the Company continued its expansion with the installation of distribution networksin the towns of Espartinas and Palomares del Río in the province of Seville, thus increasing itssupply network by 48 km and providing a service to 2,900 new families.

In Galicia, the gasification project was presented in the town of Cee, where the Company hasinstalled a liquefied natural gas plant. It is part of the Energos II Plan of the Xunta de GaliciaRegional Government and the Agreement for the third phase of the Gasification Plan of theRegion of Galicia, with a planned investment of 19 million euros.

In Castilla-La Mancha, a region with more than 190,000 homes in 48 towns, the Companycontinued to expand its supply network in 2008 through the investment of 23 million euros inthe installation of networks that are to provide a service to fourteen new towns.

43


Training on thevalue chain

The Gas Natural Group understands that

training suppliers helps to improve their

performance, increases the quality of

products and services and reduces costs.

Accordingly, in Argentina, technical

and/or commercial training courses were

given to works contractors and to those

responsible for implementing the

framework of use contract. Surveys

were also carried out on selected

suppliers to establish a free training

programme.

In Spain, through the Energy Training

Centre of the Gas Natural Foundation,

various training programmes were

carried out and involved the participation

of 2,629 of the Group's suppliers'

employees. Also in Spain, the

certification company CONAIF-SEDIGAS

Certificación S.L. was incorporated to

examine agents specialising in apparatus

maintenance and repair. In 2009, there

are plans for obtaining the ENAC

certificate (National Certification

Organisation that has an independent,

strict and global mechanism for

guaranteeing the trust and credibility of

assessment organisations).

In Colombia, the "Supplier Development"

programme was started to train

competitive and socially responsible

suppliers that comply with the Group's

objectives, policies and values. Along

the same lines, Mexico designed an

action plan for improving critical

activities that were detected in the

corresponding audits.

In Brazil, a training programme was

developed to improve the qualification

of services suppliers. 81 courses were

given and training was provided to

2,570 people.

Establishment ofobjective selectionmechanisms

The process for selecting the

Gas Natural Group's suppliers is

governed by the following principles:

• Effectiveness.

• Efficiency.

• Flexibility.

• Equal opportunities.

• Transparency.

The Group's Awarding and Contracting

General Standards are based on the

above-mentioned five principles and are

designed to select the most appropriate

suppliers for each type of activity, with

the ultimate aim of maximising the

quality offered to the customer.

For the Gas Natural Group, there are

three mandatory requirements as a

preliminary for contracting a supplier:

• Observance of the quality and

environmental standards established

by the Company.

• Compliance with the Occupational Risk

Prevention Act.

• Preparation of an Occupational Health

and Safety Plan in all the work and

services envisaged in the laws in force.

In 2008 and as part of the Asigna

project, the tool was launched for

allocating civil engineering work in

Madrid and Catalonia. The tool

strengthens the correct selection of

workloads for the works that are

allocated and those that are pending

allocation to suppliers, thus providing

information on their performance and

capacity, among other concepts.

Also in Spain, the use of the

aforementioned Q-Model was

consolidated to manage the quality

associated with suppliers.

With regard to the Supplier Portal, the

following features have been

implemented in 2008:

• Bid management.

• Publication and acceptance of orders.

• Exchange of documentation associated

with orders.

• Acceptance of technical standards

associated with contracts.

The Group's relevant suppliers have been

incorporated into this channel and a

monitoring process has been applied to

guarantee the fluency of this work tool.

In accordance with the commitments

that have been established and in order

to contribute to the development of the

local communities and countries in

which it operates, the Gas Natural Group

encourages the contracting of local

suppliers.

44


Suppliers with contracts currently in force

2,500

2,000

1,500

1,000

500

0

2007. 2008.

328333

ı

Argentina

ı

Brazil

ı

Colombia

ı

Italy

ı

Morocco

ı

Mexico

ı

Spain

423356 428395622512 646433

165155

2,0292,090

Suppliers with quality and environment certificates

Variation %Argentina Brazil Colombia Italy Morrocco Mexico Spain Total 07-08

Suppliers with ISO 27 39 N/A 103 46 20 154 389 (1.27)9001:2000 certification

Suppliers with ISO 0 6 N/A 26 8 2 37 79 79.5514001:2000 certification

Companies registered on the Supplier Portal

900

800

700

600

500

400ı

2006

ı

2007

ı

2008

625695

863

Strengthening of the channels. Launch of thenew Supplier Portal and the newVirtual Officefor customers

As part of the Gas Natural Group's continual improvement process, in 2008, the new SupplierPortal was launched and the Virtual Office for customers was renewed.

The portal offers advantages in terms of management and efficiency for the Gas Natural Groupand for its suppliers. It extends and speeds up purchasing processes, certification processes andprocesses for monitoring the quality provided and billing processes.

The purpose of the Gas Natural Group's Virtual Office, launched in 2002, is for customers to managethe main services over the Internet. It has made it possible to improve the quality of the serviceprovided to customers and lead to savings in paper equivalent to more than three million bills. Theimprovements implemented in 2008 offer much more intuitive browsing, with an attractive, practicaldesign that enables faster access to information.The aim is to provide functionality, speed andsimplicity for the service. In order to present the novelties and improvements of the virtual office tocustomers, the Company launched the campaign titled "Even easier".

These initiatives are part of the objective for promoting the online channel along the entire valuechain. The Company understands that it is a more sustainable communication procedure fromthe environmental point of view and involves lower costs for users.

45

When the Gas Natural Group signs a

contract with one of its suppliers, a

relationship is established between both

parties that goes beyond delivering the

gas as agreed. In order to provide the

best possible service to its customers,

the Company and its suppliers maintain

regular contacts and establish measures

for improvement together.

All the contracts signed by the

Gas Natural Group adapt to the

provisions laid down in the System

Technical Management Rules. These

rules are published by the Ministry of

Industry and Energy and constitute a

mandatory framework for all the players

on the Spanish gas market.

The Gas Natural Group'ssupply mix is optimisedfrom the point of view ofits exposure to the risk ofinterruption and itsultimate aim is toguarantee the continuityof the supply


Supply safety anddiversity

The guarantee of a regular gas supply is

essential for providing a quality service

and for fulfilling the Group's social

function. The suppliers are a key part of

the process and must supply gas

continuously and in a stable manner. The

Company has a large portfolio of

suppliers, all of which belong to the first

level and furnish the energy supplied to

customers with the corresponding

reliability.

The natural gas can be supplied either in

gaseous state, via gas pipelines, or

through liquefied natural gas (LNG)

tankers. In 2008, 47% of the Group's

supply was made through pipelines and

the remaining 53% was made as LNG.

The Gas Natural Group's supply mix is

optimised from the point of view of its

exposure to the risk of interruption and

its ultimate aim is to guarantee the

continuity of the supply.

Relations with suppliers are based on

stable, long-term contracts. Accordingly,

the Group guarantees a regular gas

supply and suppliers can have a

continuous flow of income, which is

essential for completing the large

investments required in the energy

sector.

Diversification in the sources of the supply (%)

Trinidad andTobago

Nigeria

Libya

Algeria

Others (GNL)

Others (GNL) (1)

Norway

Qatar

15

16

2

36

6

2

9

14

(1) Including net purchases in France.The supply in 2008 totalled 288,908 GWh.

46


47

The Gas Natural Group is committed to

the creation of value for all its

stakeholders. It understands that their

participation in tenders, collaboration

and cooperation are essential for

attaining the business targets set in the

Company's Strategic Plan.

In its future project, the Group seeks to

reach growing, sustained profitability,

taking the principles of responsibility,

efficiency and transparency as its initial

starting point. This commitment has led

the Gas Natural Group to assume

outstanding practices in information

transparency, establishing advanced

communication channels so that the

markets can form a complete,

objective and truthful image of the

Company's perspectives and

performance at all times.

The Group's business model is based on

guaranteeing sustained growth from

strict social and environmental criteria

and has been recognised by the main

socially responsible investment indices.

Accordingly, the Company has

successfully gained the trust of

investors who understand that advanced

practices in corporate responsibility

constitute a good indicator of a

company's government and

management quality.

Commitmentto Results

48



With shareholders and investorsThe focus on results is one of the commitments laid down in the Gas Natural Group's Corporate Responsibility Policy and is based on the followingprinciples

• Working to consistently obtain profitability levels that are in keeping with market expectations.• Applying best practices in terms of informational transparency at all times, establishing channels of communication with the markets and with otherstakeholders in order to strengthen its credibility and reputation.

Main indicators

2008 2007 2006

Net turnover (in millions of euros) 13,544 10,093 10,348

Gross operating profit. EBITDA (in millions of euros) 2,564 2,277 1,912

Total investments (in millions of euros) 3,697 2,323 1,164

Net profit (in millions of euros) 1,057 959.4 854.5

Dividend (in millions of euros) 573.2 521.3 438.8

Evolution of the Gas Natural Group's classification on the DJSI (*) 76 73 70

(*) Key indicator defined by the Group to monitor its performance in corporate responsibility.

Relevant actions (*)


Payout 2008: 52-55%. New objective for the2008-2012 period: 55-60%.

Consolidation of the efforts made as part ofthe programme for visits to investors andintroduction of the matters of interest in thepresentations.

Improvement of the assessment of the areaswith a low sectoral score on the sociallyresponsible investment indices (DJSI andFTSE4Good).

Reach an EBITDA of 2,500 million euros in2008 and of 3,900 million euros in 2012.

Actions taken 2008

Payout 2008: 54.2%.

Increase in the number of meetings withshareholders and investors (180 meetingsmore were held in comparison with theprevious year).

Introduction of strategic improvements inareas with lower scores on the DJSI,obtaining an improvement of 60%.

EBITDA of 2,564 million euros. Signing of theagreement with ACS for the purchase of its45.3% holding in Unión Fenosa.


To hold road shows for thecommunication/publication for the investmentcommunity of the Group's new size aftertaking over Unión Fenosa, as well as the newobjectives and challenges for the future.

To hold meetings with stock market analyststo review the Group's assessment modelsafter the takeover of Unión Fenosa.

To continue the consultancy services forimproving management and reducing thenumber of areas that are more distant fromthe higher sectoral scores.

Preparation of a new Strategic Plan to laydown the bases for the Company'spositioning and the challenges it facesin the future.


(*) The structure of the 2008 Corporate Responsibility Report is based on the commitments of the Group's new Corporate Responsibility Policy. Consequently, since this edition of thereport has a new structure, four of the actions proposed for 2008 do not appear.


49 Focus on growing andsustained profitability

Providing growing and sustained

profitability is one of the Group's main

objectives. In 2008, the Gas Natural Group

continued its consolidation and expansion

process in Spain and abroad. Growth was

mainly brought about by the generation of

electricity and the distribution activity in

Latin America.

In Spain, the generation of electricity with

combined cycles was up 7% on the

previous year. Special mention must be

made of the process for taking over the

five combined-cycle power plants

purchased in Mexico.

Furthermore, there was an increase of

6.9% in the gas distribution network in

Spain in comparison with the previous

year and the extension of the supply to

55 new towns. In Latin America, the

distribution network was increased by

1,641 km (2.8%) and sales grew 16.2%

more than in 2007. In Italy, the

Company's distribution network now

reaches 184 towns.

The Gas Natural Group's total

investments reached 3,697 million euros,

used mainly to finance the purchase of

14.7% of Unión Fenosa in 2008. In July

2008, the Company agreed to purchase of

45.3% of the electric company and

announced a takeover bid for 100% of its

share capital, which is planned for

completion in 2009.

The Group's net profits maintained their

two-digit growth in 2008, despite the

high-level volatility of energy prices and

the financial and currency markets.

Accordingly, net profits in 2008 grew

by 10.2% and reached the figure of

1,057 million euros.

For its part, the EBITDA reached

2,564 million euros, up 12.6% on 2007.

The explanation for this significant growth

lies in the generation of electricity and

distribution activities, which were

particularly strong in Latin America.

With regard to the evolution on the stock

market, the Gas Natural Group's shares

closed the year at 19.29 euros. This

represents a fall of 51.8% in comparison

with the close of the previous year. This

fall occurred in parallel with the other

securities listed on the Spanish Stock

Exchange. The prices of all the securities

have been affected by the current

situation of the financial markets.

The Company allocated 573.2 million

euros to the payout of dividends in 2008,

12.3% up on the previous year. These

figures imply a payout of 54.2% and a

profitability of 6.6%, taking the close at

31 December 2008 as a reference. For its

part, capitalisation totalled 8,638 million

euros, which makes the

Gas Natural Group one of the largest

Spanish companies in terms of

capitalisation and one of the safest,

soundest and most attractive securities of

the Ibex 35 index, the Spanish Stock

Exchange and the financial markets of

Latin America.

New scenarios in relations with investorsand shareholders: Asia

The Gas Natural Group organises regular roadshows or visits to institutional investors in themain financial capitals of the world. The aim is to attract the attention of the marketsregarding the Company's current affairs. In 2008, representatives of the Company'smanagement team and the Investor Relations Unit organised meetings in Boston, Frankfurt,London, NewYork and Paris.

In addition, a roadshow was organised in Asia for the first time in the Company's history,with meetings held in the cities of Tokyo, Hong Kong, Sydney and Singapore. Thepresentations focused on the Company's results during the first quarter of 2008 and theevolution for the year. Discussions also looked at the Company's outlook and thedevelopment of the 2008-2012 Strategic Plan.

Shareholders and investors (*) (%)

Criteria CaixaCorp

RepsolYPF

International institutionalinvestors

Minority shareholder

Spanish institutionalinvestors

Caixa d’Estalvis deCatalunya

Suez

38

9

3

2

5

12

31

(*) At 31 December 2008.

50


Communicationchannels adapted to theneeds of shareholdersand investors

The transparency of information is the

basis for the Gas Natural Group's

commitment to its shareholders, investors

and markets.

Accordingly, with a view to offering its

shareholders and investors the best

service, the Company has laid down

specific communication procedures. The

following are worthy of special mention:

• Investor relations. The Group provides

the same information to institutional and

minority investors, guaranteeing the

principles of equality and the

simultaneous publication of information.

The Shareholder Assistance Office

provides a continuous service to

minority shareholders.

• Communication programme with

institutional investors and financial

analysts. The purpose of this

programme is to generate relations of

trust between the Company and the

aforementioned collectives, providing

rigorous and transparent information

on the Group's situation and outlook.

Stock market indicators

2008 2007 2006

No. of shareholders (in thousands) 27 32 40

Share prices at 31/12 (euros) 19.29 40.02 29.99

Profit per share (euros) 2.36 2.14 1.91

Share price-profit ratio 8.2 18.7 15.7

Share capital (no. of shares) 447,776,028 447,776,028 447,776,028

Stock market capitalisation (in millions of euros) 8,638 17,920 13,429

Financial ratios

2008 2007 2006

ROACE (1) 17.9 17.7 14.50

ROE (2) 17.0 16.4 15.40

Borrowing (3) 42.2 36.5 33.99

EBITDA/Net financial results 9.7x 10.1x 7.2x

Net debt/EBITDA 1.9x 1.6x 1.6x

P/E 8.2x 18.7x 15.7x

(1) Return on average capital employed.(2) Return on equity.(3) Net financial debt/Net financial debt + Net worth + Minority interests.

Profit index (in millions of euros)

2008 % 2008/2007

Net profit Gas Natural Group 1,057 10.2

Evolution of payout (%)

ı

2004

ı

2005

ı

2006

ı

2007

ı

2008

49.5

50.2

51.4

53.2

54.2


51• Corporate website. A specific section

with information for shareholders and

investors includes, among others,

economic and management figures, the

results of the last five years and other

information of interest. It contains the

documentation required by the

Transparency Act and the corresponding

consolidating legislation. Special

mention must be made of the launch of

the tool called "financial calculator",

which provides the relevant indicators

in real-time.

The transparency ofinformation is the basisfor the Gas NaturalGroup's commitment toits shareholders,investors and markets

The Company also makes important

efforts to strengthen other

communication channels with its

investors and shareholders:

• Meetings held anywhere in the world to

provide information on the Company's

outlook or on relevant events.

• Participation in conferences and

seminars of interest.

• Regular sending of information of

interest to the analysts and investors

that monitor the Group more closely.

• Possibility of voting electronically at the

General Meeting of Shareholders of

Gas Natural SDG, S.A.

Two shareholder identification studies

were also carried out in 2008 to discover

the typical investor in the Company and

focus actions on attracting investors that

are more appropriate as a result of their

characteristics.

Inclusion in thesocially responsibleinvestment indices

Socially responsible investors are those

that add other social, environmental or

ethical criteria to the traditional financial

parameters. Their growing importance

has to do with the idea that integrity,

responsibility and transparency are good

indicators of the management quality

and governance practices of listed

companies. From this point of view,

socially responsible investors

understand that investing in securities

that stand out in the foregoing areas

generates greater confidence and can

provide an additional premium of

sustained profitability.

In 2008, the Gas Natural Group

maintained its presence on the socially

responsible investment indices with the

best reputation on the international

scenario: Dow Jones Sustainability Index

and FTSE4Good.

Mention must be madeof the Company'spresence on the newFTSE4Good Ibexinvestment index, whichwas launched in 2008

With regard to the Dow Jones

SustainabilityWorld Index, the Group

improved its classification by around 4%.

Of particular significance is the

outstanding evaluation received in the

area of risk management, integrity and

codes of conduct, customer relations

management, biodiversity and information

transparency, among others. The

Company was also included in the

selected European index DJSI STOXX in

2008, despite the tightening up of the

conditions for the utilities sector.

For its part and for the seventh year

running, the Gas Natural Group was

included in the FTSE4Good index, which

represents further recognition of its

advanced management practices in social,

environmental and ethical issues.

Similarly, mention must be made of the

Company's presence on the new

FTSE4Good Ibex investment index,

launched in 2008.

The Gas Natural Group is also part of

other socially responsible investment

indices, such as the EPCI Ethical Index

Euro, and it is included in the Ethical

Investment Universe of Triodos Bank. It is

worth underlining the Company's

presence in the KLD Climate Change

100 Index, which comprises the

100 companies which, in the founders'

opinion, show greater potential for

Communication channel indicators

2008 2007 2006

Meetings with shareholders and investors 320 140 200

Meetings with analysts 10 35 34

52


contributing to the short-term and long-

term reduction of the causes behind the

climate change.

The Gas Natural Group's presence in the

above investment indices constitutes

important recognition of the Company's

business and management model, as well

as its efforts in corporate responsibility

and information transparency.

Assessment of the Gas Natural Group on DJSI

Economics

Environmental

Social

100

80

60

40

20

0

Corporate Governance

Scorecards/Measurementsystems

Price Risk Management (IS)

Price Risk Management (IS) Codes ofConduct/Compliance/Corruption and Bribery

Market opportunities (IS) Customer Relationship Management (IS)

100

80

60

40

20

0

Environmental Report

Biodiversity (IS) Policies/EnvironmentalManagement Systems (IS)

Climate changestrategy (IS)

Eco-efficiency (IS)

Manufactured gas plants (IS) Storage, transport and distributioninfrastructures (IS)

100

80

60

40

20

0

Labour Practice Indicators

Occupational healthand safety

Human capital development

Stakeholderscompliance (IS)

Talent attraction andretention

Social report Corporate citizenship/Philanthropy

Gas Natural. Sector average. Sector top score. (IS) Specific section for the sector.

The GasNatural Groupin the newFTSE4Good Ibex

The Gas Natural Group is among the27 Spanish enterprises that form part ofthe new FTSE4Good Ibex index,presented in April 2008. It is the firstsocially responsible investment indexaimed specifically at the Spanishmarket. The companies on the indexmust certify good practices in thevarious areas of sustainability.

The world of listed companies eligiblefor this new index comprisesapproximately 85% of the companieslisted on Spain's continuous market, inaccordance with liquidity and free floatcriteria.

The methodology and transparencycriteria of the FTSE4Good Ibex arebased on the general standards of theFTSE4Good Index Series. They aretherefore related to risk managementon the supply chain, environmentalmanagement and the companies' focuson the climate change, as well asrelations with stakeholders and thedefence of human rights, among others.

The creation of this new index is aresponse to investors' demand forinvesting and knowing whichcompanies implement responsiblebusiness practices, identified throughtransparent inclusion criteria anddeveloped with the consensus of thevarious stakeholders.


53

TheEnvironment

Throughout 2008, the Gas Natural Group

continued to take measures to make

essential energy development

compatible with environmental

protection and, in particular, in the

struggle against the effects of climate

change.

This way of understanding business

development goes hand in hand with

stringent environmental control in all its

activities and operations.

• Gas exploration and extraction

activities.

• Gas transportation and distribution.

• Generation of electrical power.

• Management and other Group

activities.

In 2008, some environmental indicators

have varied significantly in terms of

absolute value in comparison with the

previous year. This is due to the

incorporation into the Group of five


were purchased in Mexico. As indicated

in the previous report, these new power

plants were not considered for the

preparation of the forecast for 2008.

However, the relative indicators and

ratios continue the upward trend of

previous years as a result of the

important efforts made in energy

optimisation by the Company.

54



The environmentThe environment is one of the commitments laid down in the Gas Natural Group's Corporate Responsibility Policy and is based on the followingprinciples:

• Combating climate change by minimising the impact of its activities.• Incorporating environmental criteria into its business management to achieve maximum efficiency.• Ensuring that the applicable procedures are known and complied with all along the value chain.• Preserving natural biodiversity in the locations where it operates.• Promoting continuous improvement by assessing the Environmental Management System and reporting internally and externally on its efforts.

Main indicators (*)

2008 2007 2006

Generation of greenhouse gas emissions (GHG) (t CO2) 12,625,379.36 8,221,125.99 8,859,000.11

GHG emissions/net turnover (t CO2/millions of euros) 932.16 814.54 856.11


Generation of waste (t) 1,188,242.26 (**) 7,792.02 4,809.81

Generation of waste (% hazardous) 0,20 42.07 35.79

Generation of waste (m3) - 639,187.20 -

Water consumption (thousand m3) 18,028.63 14,939.58 14,852.21

(*) Except for the rubble from civil engineering work, these are the key indicators defined by the Group to monitor its performance in corporate responsibility.(**) In 2008, the Gas Natural Group modified its methodology for calculating waste. As from this year, they are all calculated by weight. This change in methodology explains the significant

increase in the tonnes of waste generated.

Relevant actions


Registration of eight CDM projects(Colombia, Mexico and Brazil), which canpotentially reduce total emissions by 300,000tonnes of CO2/year.

Elimination of 7,500 emission focal points inthe period 2006-2008 in Mexico to decreaseCH4 emissions caused by leaks in networks.

Diffusion of the technical, economic andenvironmental viability of the solar-gasbinomial for refrigeration in buildings.

Foster the use of CNG in bi-fuel vehicles(petrol-natural gas).

Actions taken 2008

Certification by the United Nations of twoof the Company’s CDM projects (Sombrillaand Quimvale), which generated48,000 emission rights.

Elimination of the total number of 58,855leaks during the three-year period of 2006-2008 in comparison with the 7,500 that wereinitially planned.

Publication in different forums and at variousevents of the viability of the solar power-gasconcept as an efficient, environment-friendlysolution for complying with the directives ofthe newTechnical Building Code.

Incorporation of 80 bi-fuel vehicles into theGroup's fleet in Spain. Construction of a newCNG cargo plant to guarantee savings inelectricity consumption of 90%.


Progress in the execution of the CDMprojects registered by the Group in Colombia,Mexico and Brazil to achieve the UnitedNations certification of new emission rightsin 2009.

Control and reduction of the hazardouswaste generated in the off-line washingprocesses for the gas turbines of thecombined-cycle power plants.

Development of the Neutral CarbonProgramme, quantifying GHG emissions atwork centres with a view to providingvoluntary compensations. Initialimplementation in Colombia.

The voluntary adhesion to the GoodEnvironmental Practices in DistributionNetwork Construction document wasextended to new contractors, together withthe monitoring of the activities carried out bythose that were included in 2008.



55

Measures intended toreduce greenhouse gasemissions


risks involved in the climate change.

Accordingly, it maintains its commitment

to reduce the greenhouse gas emissions

caused by its activities.

Proof of this commitment is its

subscription to the programme titled

“Caring for Climate: The Business

Leadership Platform” in October 2008.

This platform is made up of the business

managers who took part in the UN Global

Compact. Its aim is to progress in the

fight against climate change by improving

efficiency and reducing greenhouse gas

emissions.

The actions carried out by the Group in

the area include the following:

Reduction of methane emissionson networksMethane emissions occur in the gas

exploration, transport and distribution

operations. In 2008, they totalled

1.37 million tonnes of CO2 eq,

0.46 million of which occurred in Spain.

In the last two years, thanks to the

appropriate management of the

networks, the Company has

successfully reduced emissions per GJ

by 69.36%. Overall, the emissions of

CH4 per GJ of gas processed total value

of 0.27 kg of CO2 eq/GJ.

The use of better materials and the

establishment of a comprehensive pipe

monitoring and renewal plan have allowed

the Company to reduce its emissions of

CH4 per unit and network length by

31.76% in comparison with 2003.

With a view to maintaining the trend

towards reducing its CH4 emissions, the

Group planned new field tests in 2008;

on this occasion, in Brazil. The purpose

of the tests was to improve and update

the method for calculating atmospheric

CH4 emissions, considering the

particularities and specifications of the

networks and supply pressures in the

different countries in which it operates.

Use of the best technologiesavailable and promotion of moreenvironmentally-friendly energyThe use of less carbon-intensive energy

sources and the best technologies

available are the two basic pillars for

reducing greenhouse gas emissions.

Accordingly, the Gas Natural Group's

2008-2012 Strategic Plan fosters the

generation of electricity at combined-cycle

or natural gas co-generation power plants

as a source of primary energy.

The Group has 6,484 MW installed at


makes it one of the leading operators in

the world. The Company is also

committed to the generation of electricity

using renewable energy sources. This is

the case of wind energy, where the Group

has 363 MW installed on 21 wind farms.

Overall, with the above electricity

generation mix, the Group's emission

factor is 0.096 t CO2/GJe, a figure that is

down slightly on previous years.

The Group has 6,104 MWinstalled at combined-cycle power plants,which makes it one ofthe leading operators inthe world

Fostering the use of natural gasThe current demand for energy in the

world makes the use of fossil fuels for

generating electricity unavoidable. Of

such fuels, natural gas is the option that

emits the lowest level of CO2: 41% less

than coal and 28% less than fuel oil.

Accordingly, it is ideal for complementing

renewable energies, reducing greenhouse

gas emissions and lessening the effects

of the climate change.

The Group has an "Energy Management"

service, a line of business that

develops energy solutions for managing

and operating its customers' central

heating installations. In 2008, its

installations avoided the emission of

128,413 tons of CO2.

Transport and distribution losses(% natural gas leakage out of total)

2008 2007 2006

Transport 0.0017 0.0018 0.0011

Distribution 0.2604 0.1944 0.3540

56


In addition, the Company collaborated

with a large number of homeowners

associations to transform central coal and

fuel oil heating installations into natural

gas installations, which meant a saving of

84,755 tons of CO2.

Compressed natural gas can be used in

motor vehicles as a replacement for diesel

or petrol. It offers savings of more than

28% and reduces the emissions of NOx,

CO2 and solid particles in suspension by

80%, 20% and 100%, respectively, which

represents a reduction of greenhouse gas

emissions and improves air quality.

Accordingly, special mention must be

made of the Gas Natural Group's

subscription to the Pro Clima Madrid

Forum, which fosters the use of natural

gas in distribution vehicle fleets.

The Gas Natural Group is pioneer in the

introduction of natural gas as a fuel for

automobiles in Spain. At present, more

than 1,600 public vehicles refill with this

fuel at 40 filling stations in cities such as

Madrid, Barcelona, Salamanca, Burgos,

Seville and Valencia. Through "gn auto",

the Company offers the complete

management of projects for building

compressed natural gas supply stations.

The first public station was opened in

2008. Agreements were also reached for

the study of supply installations at

conventional petrol stations and

agreements were signed with various

local authorities to replace their diesel

vehicle fleets with natural gas. This

replacement avoided the emission of 938

tonnes of CO2eq in the period 2004-2008.

Control of emissions inmanagement and other activitiesIn 2008, the emissions of CO2 by the

Group's fleet vehicles (mobile sources)

totalled 9,443.52 tonnes. In Spain, the

said emissions were reduced to

4,318.94 tonnes, which represents an

emission ratio of 0.78 tonnes of

CO2/thousand customers. The reduction

can be attributed to the renewal of the

vehicle fleet and the introduction of

bi-fuel automobiles (natural gas-petrol).

At present, the Group has 80 units of

this type in Spain.

The emissions of fixed sources at work

centres in Spain increased by 36.66% in

2008 in comparison with the previous

year. For its part, the year-on-year

increase of indirect emissions totalled

0.66%

The notable increase in fixed-source

emissions in 2008 is due to the launch

of humidifier units at the Group's

offices. The Company strives to

rationalise the consumption of energy by

replacing the less efficient equipment,

adopting good practices and controlling

the consumption of electricity, water

and gas using monitoring systems.

The Group fosters the use of video

conferencing to reduce CO2 emissions

as a result of employees travelling to the

Group's other work centres. In 2008,

4,380 video conferences were held in

comparison with the 678 of 2007.


57

Compliance with the legislation ontrading of emission rightsThe Gas Natural Group uses every

mechanism within its scope to fulfil its

commitment to reducing emissions. At

the end of 2008, the Group had eight

projects under way as part of the Clean

Development Mechanism programme

(CDM). In 2008, the United Nations

certified two of them (Sombrilla and

Quimvale), which generated

48,000 emission rights. Notable

progress was also made in the work on

the network for collecting biogas in the

Doña Juana Landfill, where the

Company hopes to obtain

340,000 certified emission rights

in 2009.

The Company continued to contribute to

the Community Development Carbon

Fund, organised by theWorld Bank, and

the Spanish Carbon Fund, promoted by

Spain’s Ministry of the Environment. In

addition, the Gas Natural Group takes part

in the Multilateral Carbon Credit Fund.

The post-Kyoto climate changeThe Gas Natural Group is aware that the

climate change is an issue whose

importance exceeds that of the

commitments fulfilled in the Kyoto

Protocol and, therefore, it should remain

in place after its expiry in 2012. The

Company understands that the main

areas of action on the post-Kyoto

scenario are as follows:

• Investigating new sources of energy

and technologies for collecting and

confining carbon dioxide.

• Fostering renewable energies.

• Making a commitment to sustainable

forest management: forestation and

reforestation.

• Promoting the reduction of emissions

in transport.

• Promoting the transfer of technology

and environmentally advanced

procedures to developing countries.

• Cooperating on investigation projects

to reduce the uncertainty related to the

effects of the climate change.

• Providing public knowledge and access

to information on the subject.

The Gas Natural Group isaware that the climatechange is a matterwhose importanceexceeds that of thecommitments fulfilled inthe Kyoto Protocol

Indicators for generation of greenhouse gases (GHG)

Forecast 2009 2008 2007

Stationary sources (t CO2) 12,633,221.51 11,228,382.34 6,910,910.02

Indirect sources (t CO2) 20,962.90 20,494.15 19,974.08

Mobile sources (t CO2) (Fleet of vehicles) 9,482.73 9,443.52 9,813.20

CH4 (t CO2 eq) emissions 1,374,524.99 1,367,054.35 1,280,428.69

Total 14,038,192.13 12,625,374.36 8,221,125.99

Other indirect GHG emissions (t CO2 eq)

12,000

10,000

8,000

6,000

4,000

2,000ı ı ı

2007 2008 p.2009

9,813.20

3,024.86

9,443.52

4,426.93

9,482.73

4,185.82

Fleet. Plane.

The Gas Natural Group's carbon footprint (t CO2)

14,000,000

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0ı ı ı

2006 2007 2008

Group’s emissions. Avoided emissions.


Rationalisation ofenergy consumption

The rationalisation of energy consumption

is one of the Gas Natural Group's

priorities. The Company supervises and

submits all its processes to strict control

in the area.

The Group’s main sources of energy

consumption are:

• Exploration activities.

• Gas transportation and distribution

system.

• Generation of electricity.

• Management and support services

(work centres and fleet).

The quest for high efficiencyin processesIn 2008, the Group reached a level of

efficiency of 99.88% in its exploration,

transport and distribution activities, since

it consumed 6,217TJ to operate

5,055,882TJ of natural gas.

The Group pays particular attention to

improving its energy efficiency in

cogeneration plants, and with regard to

customers, in energy management

facilities.

The overall efficiency of the electricity

generation operations was 55.24%, a

figure that is down slightly on 2007

as a result of the introduction into the

calculation of the five combined-cycle

power plants purchased in Mexico. The

energy performance of the generation

operations in Spain was 57.51% in

2008, with the consumption of

114,697 TJ of natural gas to produce

65,960 TJe.

The Company's generation activities

avoided the atmospheric emission of

3,288,831 tonnes of CO2 in comparison

with the 761,509 that were avoided in

the previous year. The avoided emissions

are calculated on the basis of the

following: the Group's electricity

generation portfolio; the production of

electricity in each of the countries in

which it operates; the emission factors

included in the document titled The GHG

Initiatives for reducing GHG emissions

ReductionInitiative (t CO2 eq)

Distribution: renewal of materials with high emission rate. 841

Technology: biogas energy treatment and use in the Doña Juana Landfill 340,000in Bogotá (Colombia).

Technology: Sombrilla project. Substitution of fuel oil with gas in furnaces, 38,000boilers, drying rooms and other equipment at eight industrialplants located in Bogotá (Colombia).

Technology: Quimvale project. Substitution of fuel-oil with natural 10,000gas in the drying boiler of a calcium carbonate plant in Rio de Janeiro (Brazil).

Energy management: transformation of boiler rooms with fuels such 128,413as gas oil, propane or coal to installations that use natural gas.

France: half of the meetings were held by video conference. 5

Brazil: replacement of non-priority travel with video conferencing. 244

Annual electricity balance

Peninsular Extra-peninsular Nationalsystem systems total

GWh %08/07 GWh %08/07 GWh %08/07

Hydraulic 21,175 (19.6) 0 - 21,175 (19.6)

Nuclear 58,756 6.6 - - 58,756 6.6

Coal 46,364 (35.5) 3,380 5.8 49,726 (33.7)

Fuel/gas (1) (2) 2,454 2.4 8,404 (0.5) 10,858 0.1

Combined cycle 91,821 34.8 4,184 1.7 96,005 32.9

Ordinary regime 220,552 (1.5) 15,967 1.3 236,520 (1.3)

(-) Consumption in generation (8,412) (3.9) (868) (2.8) (9,280) (3.8)

Special regime 66,536 17.9 807 13.6 67,343 17.9

Wind power 31,102 15.3 405 12.8 31,508 15.3

Rest of special regime 35,434 20.3 402 14.4 35,836 20.3

Net generation 278,677 2.6 15,906 2.1 294,583 2.6

(-) Pump consumption (3,494) (19.7) - - (3,494) (19.7)

(+) International (11,221) 95.1 - - (11,221) 95.1exchanges (3)

Demand 263,961 1.0 15,906 2.1 279,868 1.0

Spain’s generation mix. Source: The Spanish Electricity System: Preview of 2007 Report, by Red Eléctrica de España.(1) Includes GICC (Elcogás).(2) In electrical systems of the Balearic and the Canary Islands, includes generation with auxiliary sets.(3) Positive figure: import balance. Negative figure: export balance.

58


59Indicator: UNEP Guidelines for

calculating GHG Emissions; and, finally

the Group's electricity generation

mix factor.

Fostering the use of renewableenergies and the best technologiesThe Gas Natural Group is aware of the

importance of fostering renewable

energies and the use of the best

technologies for increasing the energy

efficiency of all its processes. In 2008, the

Group invested 5.89 million euros in

investigation work.

Besides the combined-cycle power plants

and wind farms, the following initiatives

have been carried out in:

• Installation of the first solar cooling plant

in Europe with dual-effect technology to

allow greater efficiency in the use of

solar energy for climate control systems.

• Installation of the first experimental

plant in Europe for the production and

storage of hydrogen. Study of the

suitability of hydrogen as a means for

storing energy in gas form, using the

surplus from the ExperimentalWind

Farm of Sotavento, in Galicia.

• Installation of a 200-kW hydrogen fuel

battery at the Group's offices in

Barcelona.

• SPHERA investigation project for

obtaining hydrogen from renewable

resources (biomass) or using CO2emission-free procedures (thermal-

catalytic decarbonisation of CH4) and its

use in the generation of electricity.

• Publication of Technical Guide for

Thermal-Solar Power Installations. This is

a free-distribution computer application

for calculating and dimensioning solar

cooling installations.

• Development of specific solutions for

the use of natural gas as a fuel in the

airport sector and progress in its

implementation in the fishing industry.

• Development of high efficiency

poly-generation solutions for the tertiary

sector, and specific energy solutions for

hotel and leisure complexes.

Total energy consumption

Forecast 2009 2008 2007


Direct energy consumption

Forecast 2009 2008 2007

Non-renewable sources

Natural gas (TJ) 237,499.71 235,609.94 136,560.30

Oil derivative fuels (TJ) 422.39 293.86 196.73

Renewable sources

Ethanol (litres) 20,319.37 20,319.37 9,509.45

Indirect energy consumption

Forecast 2009 2008 2007

Non-renewable sources

Electricity (TJ) 2,595.74 2,588.14 1,671.63

Global energy efficiency (%)

Forecast 2009 2008 2007

Electrical generation efficiency:

Energy performance Spain 57.38 57.51 57.57

Energy performance Group 55.16 55.24 56.28

Network operating performance:

Energy performance Spain 99.99 99.99 99.99

Energy performance Group 99.88 99.88 99.87

60


Strict control of energyconsumption in the workplaceThe average energy consumption at the

Group's work centres in Spain was

540.78 kWh/m2, which is slightly down on

the values established for newly built

offices. On an international scale, it was

down slightly on 2007. Overall, the

Company's centres consumed

49.02 GJ/employee.

In 2008, energy savings were increased

and the real-time control of the

consumption of gas, electricity and water

was consolidated through the remote

metering system at 36 work centres.

Other significant actions included the

publication of good practices for energy

saving, the installation of presence-

detection systems, the optimisation of

lighting and climate control systems, the

incorporation of lighting-reduction

systems at off-peak hours in car parks,

the replacement of monitors with LCD

screens and the improvement of thermal

insulation.

At the fore of solar energy. First solarcooling plant in Europe

Within the framework of its commitment to innovation and as a clear commitment to thedevelopment of cleaner and more efficient technologies, the Gas Natural Group completed adual-effect technology solar cooling plant in 2008.

The project was the first of its kind in Europe and aims to establish the technical, economicand environmental parameters for the design and implementation of cooling systems usingsolar energy. This would make it possible to displace the consumption of electricity on thenetwork, reducing summer peaks in the demand for electricity. The project was developedin collaboration with ETSI (Higher Technical School of Industrial Engineers of the Universityof Seville) and financed by CTA (Andalusian Technology Corporation). In 2009, theanticipated savings in energy at the plant are estimated at 158,700,000 kWh (571.38 GJ).The Group also published a technical guide for thermal solar installations for developers andconstructors in 2008.

Pioneers in new energies. First experimentalplant for the production and storage ofhydrogen in Europe

An agreement by and between Gas Natural and the Xunta de Galicia enabled the opening of anexperimental plant for the production and storage of hydrogen in 2008 at the ExperimentalWind Farm of Sotavento.

The plant is the first of its kind and required an investment of almost 1.7 million euros. Thepurpose of the plant is to study the production and storage of hydrogen on the basis ofsurplus energy to improve the energy management of wind farms. At present, there are notechnologies available for storing electricity in large quantities and, with this initiative, theGas Natural Group seeks to help improve the technical and economic viability of windpower projects.

The experimental installation that was built makes it possible to use the surplus electricityproduced by the wind farm when the generation of electricity is in excess of the anticipatedquantity. The plant uses the excess energy to produce hydrogen, which is compressed andstored for reuse when there is little wind or when demand is higher.

Energy saving arising from efficiency maintenanceand improvement (GJ)

Forecast 2009 2008 2007

Energy saved 1,431.11 6,074.43 8,555.92


61

Identification andminimisation of otherenvironmental impacts

The reduction of the environmental

impact of its activities is one of the

Gas Natural Group's main commitments.

It can be seen not only in the reduction

of greenhouse gas emissions and in the

improvements to energy efficiency, but

also in the control of NOx and CO

emissions, the consumption of

resources and the generation of waste.

Control of NOx and CO emissionsin all processesThe co-generation plants and

combined-cycle power plants are the

main sources of the Group's emissions

of NOx and CO.

In 2008, a total amount of

1,985.58 tonnes of CO were emitted into

the atmosphere mainly due to the

co-generation plants and combined-cycle

power plants in Mexico. Overall, it

represents a ratio of 14.95 g/GJe, a

figure that is slightly higher than that

recorded in 2007.

The Group's NOx emissions in 2008

totalled 7,580.36 tonnes, a figure that

was up on 2007 owing to the inclusion of

the new combined-cycle power plants

purchased in Mexico and the variation of

the concentration factor in the Metragaz

transport activities. These emissions

represent a ratio of 57.19 g of NOx/GJe

generated.

SO2 emissions are considered negligible.

As natural gas does not contain sulphur,

it does not generate this compound after

its combustion.

NOx emissions (t)

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000ı ı ı

2007 2008 f.2009

3,496.6

7,580.4 7,846.3

62


Reduced consumption of water inthe generation of electricityThe process for generating electricity

uses water in the cooling system through

provisions in the process.

The overall consumption of cooling water

was 13,901.06 Dm3 in 2008, whereas, in

the process, it totalled 3,960.87 Dm3. Of

the latter, 90.82% was returned to the

environment. The difference between the

consumption value used and the quantity

returned to the environment is due to the

losses from evaporation at combined-

cycle power plants, irrigation of the

surrounding area and direct discharge into

the drainage system.

The strict saving measures in place

have allowed the Group to maintain the

same water consumption ratio per unit

of electricity generated over the last

five years.

In addition, the Group generates

freshwater, which is returned to the

exterior as domestic water in Puerto

Rico. In 2008, the volume of water

returned was 854,039.41 m3, 9.27%

more than in 2007.

Control and improvedmanagement of process wasteBy making improvements to

measurement systems, the Company

was able to collect information on its

distribution activities, combined cycle and

cogeneration plants and wind farms.

In 2008, 1,183,950.22 tonnes of waste

were generated in Spain at the

aforementioned installations. This figure

includes non-hazardous waste, in the form

of construction work rubble, which was

calculated by volume in the previous year.

The purpose of applying a valuation

method by weight is to enable the

comparison of the figures and to calculate

the ratios that refer to turnover. Only

0.04% of the waste generated in 2008

was hazardous.

In 2008, the Group generated

1,186,500.42 tonnes of process waste,

due mainly to land movements as a result

of civil engineering work on the

distribution network, as well as the usual

maintenance work. Of this figure, only

0.2% was hazardous.

All the hazardous waste generated by the

Group's activities is processed by

authorised handlers in accordance with

the legislation in force in each country.

During the year, 2,363.5 tonnes of

hazardous waste were transported, which

represents a reduction of 27.79% in

comparison with the previous year.

Water reused and returned to source (%)

30

25

20

15

10

5

Collection by source (Dm3/year)

Forecast 2009 2008 2007

Surface 18,313.58 17,417.13 14,647.52

Underground 454.54 379.07 98.75

Supply network 175.22 232.43 193.31

Total 18,943.34 18,028.63 14,939.58

Water consumption (Dm3/year)

Forecast 2009 2008 2007

Total water volume 18,943.34 18,028.63 14,939.58

Total volume of water reused/recycled 3,933.35 3,960.87 3,875.94

Generation of waste

Forecast 2009 2008 2007

Generation of waste (t) 1,187,826.51 1,188,242.26 7,792.02

% hazardous waste 0.19 0.20 42.07

Generation of waste (m3) - - 639,187.20

ı ı ı

2007 2008 f.2009

% volume of water reused/recycled. % volume of water returned to source.

23.91

19.95 18.75

25.94

21.97 20.76


63 Initiatives for reducing the environmental impact of products and services

Initiatives relating to the use of materials Results

Initiatives relating to water consumption Results

Cogeneration plants (Hornillos and La Andaya): processing, purification, drying and/or cleaningof effluents from pig manure.

Distributors in Mexico: promotion of the purchase of low-toxicity, rechargeable batteries, as wellas mercury-free fluorescent lamps.

Colombia: project for the study, impact, assessment and implementation of a technology thatreduces the amount of paper associated with works documents.

Revaluation of waste and minimisation ofchemical products.

Minimal use of hazardous materials.

Reduction of the consumption of paper, ink,energy and filing space.

Combined-cycle power plants: the design of the Malaga power plant allows the use of regeneratedwater, from a waste water treatment plant (WTP), for cooling and use in the process.

Cogeneration plants: processing and treatment of the liquid effluents from pig manure for reuse ascooling, cleaning and irrigation water.

Engineering: use of purified water for irrigation at the site to avoid the lifting of dust instead offreshwater at the combined-cycle power plant of the Port of Barcelona.

Distributors in Mexico: rationalisation of water consumption inWCs. In addition, as long as it does notaffect the processes, treated water is used.

Colombia: development of a multimedia application on the Intranet explaining the alternatives forgreater environmental awareness.

Valuation of a scarce resource that would havebeen dumped into the sea.

Improvement of the value of a waste andminimising water consumption.

Reduction of freshwater consumption.

Reduction of water consumption.

Efficient use of resources.

Initiatives relating to emissions Results

Cogeneration plants: revision of the motor generators for maintenance.

Distributors in Spain: sectorisation projects and installation of valves to improve the reduction of leaktimes through third-party damage.

Distributors in Spain: installation of solar panels on equipment.

Distributors in Mexico: regular maintenance and monitoring of Calderas de Monterrey III, and of theleaks detected.

Distributors in Mexico: preventive maintenance of vehicles in addition to the systematic fleetverification programme.

Colombia: replacement of coal with natural gas in the brick industry and use of the biogas from theDoña Juana Landfill for the energy replacement of coal.

Argentina: campaigns for raising awareness and providing information concerning good use of gas.

Italy: procedure for converting the climate control management installation at the HermanasCapuchinas Institute by replacing traditional fuel with LPG.

Morocco: improvement to the quality of the programmed maintenance, especially in the monitoring oftransport networks and stations.

Brazil: renewal of the cast iron network with polyethylene.

Control of the quality of atmospheric emissions.

Improvements in the event of leakages and reductionof emissions.

Reduction of emissions.


Control of the quality of atmospheric emissions.


Reduction of emissions and improved efficiency ofcombustion engines.



Reduction of methane emissions.

Initiatives relating to effluents Results

Cogeneration plants: channelling water contaminated with oil to a separator, treating the floatingmaterial as a hazardous waste.

Distributors in Mexico: use of treated water in hermetic tests and verification of water quality for theoptimal development of the process.

Minimising contamination from spillages.

Use of waste water, once treated.

64


Rationalisation of consumption ofnatural resources and thegeneration of waste in theworkplaceOther environmental effects of the

management and support activities come

from the consumption of natural

resources (water and paper) and the

generation of waste at work centres.

The Gas Natural Group consumed

151,219.27 m3 of domestic water,

94.56% of which came from the supply

network. This figure is 11.34% down on

2007. All the waste water generated by

the Group is dumped into the public

sewage system.

The consumption of paper at the

Company's work centres totalled

232.46 tonnes, 127.71 of which

correspond to Spain and 104.75 to the

rest of the world. 97.25% of the paper

consumed is an environment-friendly.

In 2008, 2.11% less paper was consumed

than in 2007, largely due to the campaigns

and initiatives implemented to promote

the use of digital media, the actions for

sending electronic information to

customers and suppliers and the

suggestions sent to employees on

printing out emails.

In addition, 1,741.84 tonnes of waste were

generated at the work centres over the

year, 954.12 tonnes in Spain and

787.72 tonnes elsewhere. Only 3.92% of

the waste was considered hazardous.

Overall, the generation of waste at the

work centres was reduced by 4.93%.

Initiatives relating to noise Results

Distribution: preparation of a noise map based on figures from the measurement and regulationstations and reanalysis of building methods.

Colombia: project for updating the compliance of VNG service stations with legislation.

Noise reduction.

Updating of legal requirements, applyingcorrective measures.

Initiatives relating to waste Results

Cogeneration plants: channelling water contaminated with oil to a separator, treating the floatingmaterial as a hazardous waste.

Cogeneration plants: installation of the stripping system and fixed tanks for the removal of chemicalproducts.

Distributors in Spain: reduction in the volume of rubble through the use of a small-sized ditch.

Colombia: development of an on-site good practices manual for environmental control, quality,occupational health and industrial safety.

Colombia: development of standards for the comprehensive management of solid waste and ahazardous waste management plan.

Morocco: control of the consumption of chemical products and the reduction of contaminated waste,used oil and fuel.

Minimising contamination from spillages.

Elimination of the use of mobile containers forcertain chemical products.

Reduction of building rubble by 75%.

Improvement of consumption levels andincreased safety.

Reduction of waste generation.

Reduction of the generation of hazardouswaste.

Materials used (kg)

Forecast 2009 2008 2007

Direct

Odorisers (kg) 141,285.57 144,076.77 149,454.83

Non-renewable

Oil (kg) 121,339.37 121,484.87 61,053.19

Biodiversity conservationThe Gas Natural Group carries out

environmental impact studies and

surveillance programmes which ensure

compliance with preventive measures

and minimise the possible impacts of

projects and processes which are not

subject to environmental impact

assessments.

Beyond the legalrequirements applicableto biodiversity, the Grouphas designed its ownprocedures in the areaaimed at identifying andassessing environmentalissues or performingdetailed archaeologicalstudies


65 Hazardous waste managed

Type Amount (kg) Treatment method

Used oil 149,406 Regeneration of mineral oils.

Aerosols 420 Physical-chemical processing by incineration,degasification and the recovery of gases, metalsand metal compounds.

Waste waters 270,794 Specific processing, physical-chemical or biologicalprocessing.

Lead batteries 3,473 Recycling or recovery of metals or metalliccompounds. Recovery of lead by melting.

Contaminated fuel 7,321 Waste incineration.Contaminated containers 1,423,630 Recovery, reuse and regeneration of containers.Electronic or contaminated 8,940 Recycling or donation of electronic equipment andequipment recovery of metal or metal compounds.Used or contaminated filters 9,920 Storage prior to recycling and incineration of

non-halogenated waste.Lamps and fluorescents 687 Recycling and recovery of metals.Contaminated earth and slurry 369,292 Final deposition and recovery of oil.Isolating, contaminating or 39,810 Final deposition and incineration ofabsorbent material non-halogenated waste.Button batteries 1,390 Recovery of mercury and valuation of

components.Paint and varnish 125 Dumping in specially designed sites.Organic and inorganic 27,845 Incineration, sterilisation, crushing and dumping inchemical products authorised tip.X-rays 1,822 Recovery of photographic products.Aqueous solutions 15,083 Storage prior to specific processing and

incineration.Toner and cartridges 607 Recycling and reuse.Contaminated cloths 19,593 Processing by evaporation and incineration of

non-halogenated waste.Others, unspecified 13,345 Various treatments.

Total 2,363,502

Non-hazardous waste managed

Type Amount (kg) Treatment method

Used oil 16,650 Incineration and recycling.Waste waters 140,089 Stabilisation and deposition.Banal 1,184,368,857 Deposition of non-special waste in dumps or

landfills.Ash 2,553 Incineration.Scrap 189,793 Recycling and recovery of metals or metallic

compounds.Electronic equipment 35,867 Selection, decontamination, crushing and

dumping.Filters 11,424 Deposition in industrial landfill sites.Lamps and fluorescents 3,005 Deposition in industrial waste dumps.Wood 72,541 Recycling and reuse of wood.Insulating material 3,886 Deposition in industrial landfill sites.Contaminated material 5,090 Incineration.Paper and cardboard 758,139 Recycling.Alkaline batteries 19,083 Delivery to recycling point and recovery of

batteries and accumulators.Clean plastic 123,961 Recycling.Toner, carttriges or CDs 3,566 Recycling and reuse.Glass and tins 643 Storage in safety deposit and recycling.Others, unspecified 123,611 Various treatments

Total 1,185,878,758

66


Description of land owned, leased, managed or adjacent to protected naturalspaces or unprotected high biodiversity areas

Location Status Position Type of operation Size (km2) Value of biodiversity

Seville: distributionnetwork, aeronauticalpark.

La Algaba (Seville):supply antenna.

Hinojos (Huelva).

Aznalcázar (Seville).

Carmona (Seville).

Bollullos de la Mitación(Seville).

Carmona (Seville).

Almazán (Soria).

Bahía Guayanilla (PuertoRico).

Managed.

Managed.

Leased.

Leased.

Leased.

Leased.

Owned/leased.

AdministrativeContractPrivate Use ofPublic Asset.

Owned.

Adjacent.

Partially.

Specially regulatedarea of DoñanaNatural Park.

Located on theedge of theecological corridorof the GuadiamarRiver. Outside theNatural Park.

Located outsidethe natural park onland making up the"Altiplanos de Écija"hydrogeologicalunit.

Located on theaquifer of theAljarafe, whichconstitutes theeastern extensionto the aquifersystem ofAlmonte-Marismas, outsidethe Natural Park.

Outside theNatural Park.

Outside a naturalprotected area.1.2 km from theleft bank of theRiver Duero andits tributaries.

Within area.

Distribution.

Distribution.

Production/extraction.




Office/production/extraction.

Power station.

Terminal and plant.

0.03

0.01

0.01

0.01

0.01

0.003

0.02

0.009

0.15

Low.

Average.

Area catalogue by the UNESCO as abiosphere reserve and special area for theprotection of birdlife. (High-value).

Area of intensive farming and undergrowthanimal life, home to the lynx (Linxpardinus), a species in danger of extinction.

The area can be classified as pastureland – brush land with trees. Steppe aviaryfauna included in the Andalusia list ofendangered species, which are alsoprotected by national and EU regulations.

This area is heavily anthropised withextensive farming and it has no speciesincluded in the National Catalogue ofEndangered Species.

Cereal farmland, heavily anthropised. Thearea can be classified as pasture land –brush land with trees.Steppe aviary fauna included in theRegional Catalogue of Endangered Speciesof Andalusia, which are also protected bynational and EU regulations.

In a catalogued wetland.It is not a habitat of community interest andthe installation has a very low-level impacton animal life (noise, traffic).

Habitat of two species in danger ofextinction.

In 2008, intakes of water in sources

considered to be reserves were as

follows:

Italy:

• Pertusillo lake, considered to be a site

of community interest.

Brazil:

• The Guando River, which supplies the

Rio de Janeiro metropolitan area.

• The Paraíba do Sul River.

• The Itupararanga reservoir.

The Gas Natural Group did not make any

spillages into any hydraulic body or

resource in 2008. Nor did it do so into

underground waters, including those of

the Guadalquivir valley, where the

Company carries out extraction and

injection activities.


67

Dumping of waste waters

Nature Destination Treatment method

Combined-cycle power plants inSpain. Treated process water.

Puerto Rico combined-cycle powerplant. Treated process water.

Combined-cycle power plants inMexico. Treated process water.

El Romeral cogeneration plant(Seville). Treated process water.

Exploration. Treated process water.

Storage for firefighting, serviceswater and demineralised water forthe water-steam cycle and theclosed component cooling circuit.

Water-vapour cycle and tower.

Untreated water: supply of thewater treatment and firefightingwater storage elements.Industrial water: supply for thedemineralisation post andfirefighting water.Demineralised water: supplyto the air condenser condensatetank and reserve waterstorage area.Freshwater: domestic use.The Altamira power plant has aforced flue cooling tower.

Purification plant.

Purification plant.

a) Filtration of silt+desalinisation by mechanical compression of vapour+multilayer filter+mixed bed demineralisation+neutralisation of effluents.

b) Filtration of silt desalinisation by inverse osmosis+demineralisation byelectro deionisation+neutralisation of effluents.

c) Clarification by coagulation-flocculation with drying of silt with filter press+filtration of silt+filtration by active carbon+demineralisation by cation resin+desgasification+anionic resin+mixed bed+neutralisation of effluents.

Demineralisation for boilers with cation and anionic resins.Sea: the treatment method is chlorination, dechlorination, antifoam,biodispersant and other chemical agents to prevent the formation of scale inthe condenser.

Multimedia filter (sand/coal).Inverse osmosis.Ionic exchange units.At all the power plants, except for Altamira, the water has a preliminary“estuary” for adjusting the pH and temperature. At the Altamira power plant,the final provision of the water takes place in evaporation ponds.

Formation water produced by the well with high saline content.

Delivery to discharge outlet.

Species in danger of extinction

Danger level Origin Species

Critical danger. Spain. Iberian lynx and Iberian imperial eagle.

In danger. Italy. Griffon vulture.Puerto Rico. Sea cow, pelican, turtle and giant grouper fish.

Vulnerable. Spain. Great bustard, white willow, white poplarmantagu’s harrier, little bustard, stone curlew,spectacled warbler, Iberian sandgrouse, bat, goldeneagle, peregrine falcon, marsh harrier and lesserkestrel falcon.

Almost threatened. Spain. Iberian toothcarp, kingfisher, black stork, dove andlesser short-toed lark.

Lower concern. Spain. Hedgehog, rabbit, fox, heron, blackbird, Anaecyprishispanica, partridge, hoopoe, field mouse and rat.

The Company's activities and processes

do not have any significant effect on

biodiversity. Furthermore, the

Company’s priority is to use bodies of

water which do not pose a risk to

neighbouring ecosystems or habitats.

Water intake is occasionally performed

in systems considered to be reserves,

but always complying with the limits

stipulated by the pertinent bodies, and

without jeopardising their richness in

terms of biodiversity.

68


In 2008, the Gas Natural Group carried out

142 environmental impact studies, 4.41%

more than in 2007. Of these studies, 101

were performed in Spain.

Beyond the legal requirements applicable

to biodiversity, the Group has designed its

own procedures in the area aimed at

identifying and assessing environmental

issues or performing detailed

archaeological studies (palaeontology and

ethnography).

A total of 1,268.64 m2 of landscapes were

restored. Various archaeological remains

were also found in Gandía, Cartagena and

Montmeló (Spain).

In Colombia, the 3,000 m² of land that

was re-forested with local species in

Quebrada San Antonio, in Cogua were

monitored, together with 6,000 m2 of the

land that was replanted in Quebrada

Chucua, in Sopo. Moreover, 9,100 m²

were re-forested on the banks of the

Bogotá River in the town of Zipaquira.

In Puerto Rico, EcoEléctrica plays an

active role in protecting coral reefs,

marine flora and sea cows in Guayanilla

Bay. The introduction of new

transplantation techniques for herbs and

coral reefs has meant that the sea cow, a

species on the red list of endangered

species of the International Union for the

Conservation of Nature (IUCN), has

reached outstanding levels of survival.

Environmental breaches and finesIn 2008, four fines were applied in Spain

totalling the amount of 10,851.14 euros.

The Group has another seven disciplinary

proceedings against which it has appealed

and which are pending decision. On an

international scale, no fines or disciplinary

proceedings were registered.

With regard to small environmental

incidents, there were

514 non-conformities in Spain

in 2008. They were related to, among

others, the protection of pedestrian

crossings and traffic roadways, with the

piling up of materials and earth, the

segregation of waste, oil spillages and

the replacement of gardens and

pavements. In all cases, the incidents

were considered to be minor. The

ground was cleaned and the fault

corrected at source. On an international

scale, there were 28 minor incidents.

Reforestation projects in Spain,Colombia and Mexico

The Company's subsidiaries in Colombia and Mexico have developed a number of activities forsowing and planting trees, aimed at recovering landscapes and improving air and water quality.This experience was based on the initiative carried out in Spain in 2007 to re-forest the burntforests in Galicia.

Within the framework of the campaign titled "For a Natural Forest. Adopt a Tree", the Group'scollaborators in Colombia planted 700 trees in the upper basin of the Bogotá River. The aim ofthe campaign was to recover the natural river countryside, prevent avenues, reduce watererosion and partially decontaminate the main source of the capital city's river.

In Mexico D.F., one of the largest and most contaminated cities in the world, "A ReforestationDay" was organised in the park of La Loma. The aim was to strengthen one of the few greenareas that remain in the city. To achieve this, 1,000 trees were planted in the park from a forestthat had recently suffered several fires.

Significant spillages

Material Volume Impact

Spain: spillages of oil 92 incidents. Oil spillages on the ground, correctedon ground. without impact.

Brazil and Colombia: Three incidents. Cleaning and collection of the odoriserodoriser spillages. using the on-site spillage kit, without

impact.

Puerto Rico: unloading of Two lots of foam Without repercussions or consequences.unloading of foam into were unloaded.Guayanilla Bay.

Breaches of environmental laws (euros)

2008 2007 2006

Fines or sanctions (euros) 10,851.14 8,092.00 6,669.37

Promotion ofenvironmentalmanagement systemsthroughout the valuechain

Progress made in theimplementation of environmentalmanagement systems in accordancewith international standardsThe majority of the companies that

comprise the Gas Natural Group are

certified under the UNE-EN ISO 14001

standard. The activities arising from the

implementation of these environmental

management systems are regulated in

the manuals and in internal general

environmental procedures.

The UNE-EN ISO 14001 environmental

standards certification applies to

Gas Natural SDG, S.A., the parent company

of the Group, to eleven gas distribution

companies in Spain, to three energy

commercialisation companies, to

Metragaz and to Gas Natural México and

its commercialisation company. The

certificates for five combined-cycle power

plants in Mexico have also been included.

In 2008, the combined-cycle power plant

of Arrúbal (La Rioja) was certified and

progress was made in the certification

process for Gas Natural Soluciones.

Certification processes have also begun

for the combined-cycle power plant of

Sant Adrià de Besòs (Barcelona), as well

as for other of the Group's lines of

business.

In 2008, 75% of the maincontractors andcollaborating companiesvoluntarily adhered toGood EnvironmentalPractices in DistributionNetwork Construction

Supplier and retail customerinvolvement in responsibleenergy useThe Gas Natural Group's commitment to

sustainability also runs along its entire

value chain. In their dealings with

contractors or external collaborating

companies, Group employees convey the

principles that stem from the Company's

environmental management policy and

require compliance with any applicable

environmental procedures and

requirements.


69In 2008, 75% of the main contractors and

collaborating companies voluntarily

adhered to Buenas prácticas de

actuación medioambiental en obras para

construcción de redes de distribución

(Good Environmental Practices in

Distribution Network Construction).

The involvement of customers in the

responsible use of energy is one of the

Gas Natural Group's objectives. To reach

it, campaigns and days are held under the

initiative of "Natural Commitment". In

2008, duringWorldWater Year, a

campaign was launched for customers to

create awareness of the importance of

the efficient use of water.

Promotion of energy efficiency andsaving in the residential sectorIn 2008, the Gas Natural Group continued

to work on the implementation of the

remote metering system for managing

demand in Spain.

The remote metering system provides

detailed information on the trends in

consumption of 1,550 customers in

different towns and cities. This improves

the effectiveness of the tools used to

predict the daily demand for natural gas

and the efficiency of the gas infrastructure

management processes in our country.

Furthermore, the Company continued to

deploy different radio remote metering

technologies in towns in which the gas

supply was started. This involved the

installation of remote metering systems

in just over 1,000 new customers in

various towns.

Environmental outlayIn 2008, the Gas Natural Group spent

56.58 million euros on environmental

management activities. This amount

enabled the financing of activities such as

the following: environmental impact

studies; environmental and waste

management monitoring plans; projects

for reducing emissions; the renewal of


70networks and vehicle fleets; reforestation

and the recovery of territories; and

improvements to the efficiency of the

Group's different processes.

Investments and spendingon environmentalprotection (%)

100

90

80

70

60

50

40

30

20

10

0

66

4

14

16

61

2

17

20

39

11

31

19

ı

2006ı

2007ı

2008

Total in 2006: 42,033,079.04 euros.Total in 2007: 32,609,805.58 euros.Total in 2008: 56,578,419.24 euros.

Investment in updating of networks and connections.

Investments in combined-cycle power plants.

Environmental investments.

Environmental expenditures.


Media Supply

Fuel cellHot Module HM300

Electrical cabinetDC/AC inverters 400/25,000 V

Transformer

Heat recoveryPirobloc

Absorption unitYazaki CH-KE4040

a

a

--

a

a

a a a a a

Cold water

Electricity

Hot water

AirFumes

Syngas

Continiouscurrent

Alternatingcurrent

Fumesat 350 ºC

Dilutionair

s

s

s

Naturalgas

Mainswater

Fuel cell cogeneration facility

Identification and assessment ofenvironmental impactsThe Gas Natural Group has established a

methodology for identifying and

assessing the environmental impacts

associated with the processes, work

centres and vehicle fleet. Its aim is to

determine which have a more significant

impact on the environment in order to

establish their control.

The criteria on which the assessment is

based are as follows:

• Environmental requirements.

• Relative quantity/volume

generated/consumed.

• Quantitative and qualitative criteria.

• Score and classification.

The assessment of environmental

issues in potential emergency situations

involves two factors:

• Frequency with which the situations

occur.

• Seriousness of the consequences.

The product of both gives the risk, which

allows the assessment and structuring

of potential environmental issues.

The methodology, which enables the

integration of the principle of caution in

activity management processes, is

reviewed on a regular basis at least once

every three years. Likewise, it is

examined as long as, among others,

there are changes to the activities,

facilities or use thereof or to the

applicable legislation or regulations.


71

Interest inPeople

The Gas Natural Group comprises 6,842

people who share a common project and

carry out their activities in nine countries:

Argentina, Brazil, Colombia, Spain, France,

Italy, Morocco, Mexico and Puerto Rico.

The Company's human resources strategy

is based on its declaration of its Mission,

Vision and Values. It is based on the

following concepts:

• Fostering an environment of respect in

the workplace, focused on employees’

training and professional development.

• Encouraging a plurality of opinions,

outlooks, cultures, ages and genders.

Executive development and talent

management are the Group's reference

objectives and it seeks to create

opportunities for growth, generate

commitment and attract talent.

In the current context, it is necessary for

the human resources function to be

flexible, adaptable and have the capacity

for promoting change. It must also give a

rapid and efficient response to business

priorities and requirements.

In 2008, the human resources function

was reorganised with the figure of

business partners for each line of

business. The business partners work as

consultants and managers of the human

resources issues that are relevant for

employees and business managers.

72



With employeesInterest in people is one of the commitments laid down in the Gas Natural Group's Corporate Responsibility Policy, and is based on the followingprinciples:

• Providing employees with professional development opportunities commensurate with their skills.• Fostering a motivational working environment, where employees are treated with respect and their initiatives are considered in responsible fashion.• Encouraging clear targets, efficient leadership, competitive compensations and acknowledging the targets met.• Providing conditions which are conducive to a fair balance between professional and personal life within a framework of equality and dialogue.

Main indicators (*)

2008 2007 2006

Staff rate. No. of employees 6,842 6,699 6,686

Men/Women (%) 69/31 68/32 69/31

Women in management posts (%) 18.9 17.7 16.5

Personnel costs (in millions of euros) 338 308 277




Relevant actions


Start-up of new Integration Plan in Spain andinternational launch of base procedure.

Commitment andWorking EnvironmentSurvey.

Improvement in the international coordinationof the existing communication channels andre-launch with new functionalities.

Increase in use of NaturalNet through newfunctionalities.

Actions taken 2008

Homogenisation of the General Procedure ofthe Integration Plan for welcoming newemployees in every country.

Application and launch of the CommitmentandWorking Environment Survey throughoutthe Group.

International coordination activities for thesimultaneous international launch of theCommitment andWorking EnvironmentSurvey and common procedure for theIntegration Plan, as the most outstanding.

Maintenance of the Opinion channel forreceiving and solving queries, suggestionsand opinions put forward by employees.


Implementation of online tools for monitoringthe Group's integration plans and analysingthe results.

Analysis of results and definition of actionplans for the entire Group. Commitmentmonitoring.

Notification of the results of theCommitment andWorking EnvironmentSurvey.

Optimisation of internal communicationchannels on NaturalNet for strengtheningemployee participation in the ascendinginformation channels.



73

Equal opportunity,diversity and socialintegration as leversfor growth

Equal opportunities, guaranteeing

diversity and offering an attractive

professional career form part of the

Gas Natural Group's commitment to its

employees.

The Company rejects discrimination based

on age, gender, religion, race, sexual

orientation, nationality or disability. This

commitment covers the selection and

promotion processes, which are based on

the assessment of the individual's skills,

the analysis of the requirements that

apply to the position and individual

performance levels. Accordingly, the

Company maintains the objective of

defining Equality Plans through the

committees included in the main union

agreements that are currently in force.

The commitment to equal opportunities

and social integration goes beyond

compliance with legislation. The Group

promotes the hiring of disabled individuals

and enables their access to the job

market, offering a working environment

for development under equal conditions.

Accordingly, one of the Gas Natural

Group's objectives is for individuals with

some kind of disability to represent 2% of

staff. It resorts to responsible purchasing

policies with suppliers that employee

disabled individuals and directly contracts

individuals with disabilities. In Italy and

Brazil, the objective has now been fulfilled

and stands at 5% and 3% of the total

number of staff, respectively.

In other subsidiaries, efforts are also

being made to promote the integration of

disabled individuals. In Spain,

collaboration agreements were signed

with the Spanish Paralympics Committee

and the Adecco Foundation. A donation of

6000 euros was also made to FCSD

(Catalan Down Syndrome Foundation).

Staff rate. No. of employees

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

2006. 2007. 2008.

608 584636

ı

Argentina

ı

Brazil

ı

Colombia

ı

France

ı

Italy

ı

Morocco

ı

Mexico

ı

Puerto Rico

ı

Spain

522 501530

579 587574

10 135

359 378366

619 853568

107 107107 77 7578

3,818 3,7443,822


74


In 2008, an agreement was signed with

the Generalitat of Catalonia Regional

Government to favour the labour

integration of women who had suffered

from domestic violence, undertaking to

hire candidates presented by the

corresponding department, depending on

the agreed profiles and conditions.

The Gas Natural Group also understands

that local roots and awareness of the

particularities of each territory are critical

for the Company's success. This

perception leads to the direct hiring of

local managers and employees.

Breakdown of staff by age range (%)

100

90

80

70

60

50

40

30

20

10

0

18-35. 36-50. >50.

ı

Argentina

ı

Brazil

ı

Colombia

ı

France

ı

Italy

ı

Morocco

ı

Mexico

ı

Puerto Rico

ı

Spain

ı

Total

Average employee age (%)

41

40.9

40.8

40.7

40.6

40.5

40.4ı

2006

ı

2007

ı

2008

40.6

40.9

40.7

38.90

17.60

43.50

13.60

45.70

40.70

4.90

44.30

50.80

23.20

29.23

47.50

10.30

31.20

58.50

3.70

21.50

74.80

3.10

60.80

36.10

29.30

29.30

41.40

18.80

34.80

46.40

0.00

92.30

7.70

Breakdown of staff by gender (%)

100

90

80

70

60

50

40

30

20

10

0

Men. Women.

ı

Argentina

ı

Brazil

ı

Colombia

ı

France

ı

Italy

ı

Morocco

ı

Mexico

ı

Puerto Rico

ı

Spain

ı

Total

75

25

66

34

62

38

66

34

54

46

81

19

86

14

73

27

83

17

69

31





75 Number of executives

600

500

400

300

200

100

0ı

2006

ı

2007

ı

2008

442 479

555

Women in management posts (%)

40

35

30

25

20

15

10

5

0

2006. 2007. 2008. In Puerto Rico and Morocco,there are no women in management positions.

13.3 9.720.0

ı

Argentina

ı

Brazil

ı

Colombia

ı

Italy

ı

Mexico

ı

Spain

ı

Total

17.6 17.616.7

30.6 35.327.3

16.7 10.34.317.7 18.916.5

16.7 15.810.016.9 19.616.3

Senior managers from the local community (%)

100

90

80

70

60

50

40

30

20

10

0

2007. 2008. In Puerto Rico and Morocco, there are no senior managers from the local community.

7175

ı

Argentina

ı

Brazil

ı

Colombia

ı

Italy

ı

Mexico

ı

Spain

ı

Total

3333

8688

3343

8383

4346

100100




76


Average salary of men and women by professionalcategory(*) (euros)

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

Men. Women.

(*) In each professional category, there are sublevels and the salary differences are due to the greater percentage ofwomen at entrance level. Furthermore, the greater seniority of men at the Company means that the salaries may behigher due to the corresponding historical evolution. The difference in the operating group is due to the integrationof figures from every country. This collective includes 955 men and three women (two in Argentina and one in Co-lombia), which means that the average is not statistically comparable.

62,60676,477

25,68927,789

20,04719,774 10,59319,591

ı

Executives

ı

Technicians

ı

Administration

ı

Operators

Breakdown of staff by professional category (%)

100

90

80

70

60

50

40

30

20

10

0

Executives. Technicians. Administration. Operators.

ı

Argentina

ı

Brazil

ı

Colombia

ı

France

ı

Italy

ı

Morocco

ı

Mexico

ı

Puerto Rico

ı

Spain

ı

Total

20.0

5.3

48.1

26.5

2.4

10.2

6.8

80.6

11.4

12.6

5.8

70.2

11.5

17.2

10.5

60.8

0.0

7.7

7.7

84.6

19.0

24.3

5.0

51.6

30.8

3.7

56.1

9.3

25.6

4.6

63.0

6.9

37.3

12.0

1.3

49.3

14.3

16.0

8.1

61.6

Type of contract (%)

100

90

80

70

60

50

40

30

20

10

0

Open-ended contracts. Temporary contracts.

Temporary contracts: contracts for a specific term.

ı

2007

ı

2008

ı

2009

93

7

93.8

6.2

93.2

6.8

Reasonable assurance (Spain).




77 Recognition of tradeunion representation inthe workplace

The Gas Natural Group's fundamental

commitments to its employees include

scrupulous respect for the right to

freedom of association and union

representation. All the subsidiaries

have union representatives who are

freely elected.

With regard to union representation at the

Gas Natural Group, the following may be

mentioned:

• In 2008, the percentages of union

membership among the Group's

employees in Argentina, Brazil,

Colombia, Spain, Italy, Morocco,

Mexico and Puerto Rico reached

43.66%, 22.20%, 4.26%, 15.71%,

56.60%, 72.22%, 27.43% and 47%,

respectively.

• At present, 22 union organisations are

represented at the Company across

its areas of action; four in Spain and

18 elsewhere. The Group maintains

fluent, productive dialogues with

all of them.

• At the end of 2008, there were

224 union representatives in Spain.

The union agreements lay down the term

of notice for possible organisational

changes in the Company: In Spain,

without prejudice to the provisions laid

down in current legislation, the union

agreements of the companies with the

highest number of employees award the

Intercentres Committee the right to

preliminary hearing within the term of ten

business days for setting up new services

under regular work shifts, as well as for

changing the working day or timetable

and calendars for shifts

Remuneration policy

Remuneration is an essential tool for

employee satisfaction, together with the

attraction and retention of talent. The

Gas Natural Group's remuneration policy

is governed by equality on an internal

scale and competitiveness from the point

of view of the market. Its governing

criteria are as follows:

Trade union presence in Spain

No. of representatives %

Comisiones Obreras (CCOO) 106 47.32

Unión General deTrabajadores (UGT) 82 36.61

Confederación General deTrabajadores (CGT) 32 14.29

Gas Natural Colectivos 3 1.34

Independent professionals 1 0.45

Total 224 100

Employee and collective bargaining agreement indicators (%)

100

90

80

70

60

50

40

30

20

10

0

Not covered by collective bargaining agreements. Covered by collective bargaining agreements.

ı

Argentina

ı

Brazil

ı

Colombia

ı

France

ı

Italy

ı

Morocco

ı

Mexico

ı

Puerto Rico

ı

Spain

ı

Total

29

71

19

81

23

77

32

68

54

46

27

73

19

81

26

74

0

100

2

98


78


• For employees included in the union

agreement, the remuneration is

established in accordance with the

professional group and subgroup, as laid

down in the current agreements.

• For managers and employees not

included in the agreement, it is

established on an individual basis in line

with the remuneration policy approved

by the Board of Directors’ Appointments

and Remuneration Committee.

The Gas Natural Group'sremuneration policy isgoverned by equality onan internal scale andcompetitiveness fromthe point of view of themarket

In order to assess the competitiveness of

its remuneration policy on the market, the

Company carries out regular studies and

develops a policy based on the increases

in the actual and anticipated CPI and the

resulting and anticipated salary increases,

as provided by specialists in the subject.

Furthermore, in countries such as Spain,

there is a variable remuneration policy

that is applied to 49% of employees. It is

based on the fulfilment of the Company's

targets and on the assessment of each

employee's individual performance.

Promotion of flexibilitypolicies for employees

Flexibility in working conditions is an

important factor for employees to be

able to make their family life compatible

with their professional responsibilities.

The Company allows its employees a

number of professional benefits further

to those laid down in legislation.

Accordingly, it offers workers subject to

an incentive system who carry out their

functions outside the work centre the

possibility of a flexible working day in

accordance with a self-management

system. In addition, employees can

complete a continuous working day on

Fridays in winter and apply for a reduced

working day of 50% for a period of no

less than six months, beyond the cases

laid down in legislation.

The Gas Natural Group's flexible policy

includes maternity leave for

breastfeeding. In this case, the

reduction of the working day is extended

to one year and includes an additional

hour's reduction. Similarly, women

employees can avoid travel that involves

their moving away from their home

during pregnancy or breastfeeding. In

addition, employees who are looking

after families under various

circumstances can apply for the policies

that stand for bringing their place of

work closer to their home.

In 2008, a surveywas carried out tomeasure employee jobsatisfaction

Breakdown of staff by type of workday

6,000

5,000

4,000

3,000

2,000

1,000

0

2006. 2007. 2008.

5,243 5,2625,616

ı

Split workday

ı

Shift work

ı

Continuusworkday

ı

Flexibleworkday

ı

Reducedworkday

615 723516256 284282 93 11274

492 461198

Ratio between the standard minimum salary and the localminimum salary (*)

Argentina 2.12

Brasil 2.52

Colombia 2.08

France 1.66

Italy 1.44

Morocco 2.57

Mexico 2.36

Puerto Rico 2.06

Spain 1.96

(*) Equivalent to the number of times the local minimum salary of the country is contained in the Group's standard minimumsalary.




79

Services adapted toemployee requirements

The Gas Natural Group offers numerous

social benefits for its employees. The

following are currently in place in some of

the Group's companies and are worthy of

particular mention:

• Supplement to the legally required salary

paid in cases of temporary incapacity.

• Gas consumption bonus.

• Assistance for children with some kind

of disability.

• Meal vouchers for employees working a

split or flexible shift.

• Personal loans for purchasing a vehicle

for employees participating in the

commercial variable remuneration

system.

• Study assistance for employees and

their children.

• Interest-free advance salary payments.

• Loans under advantageous

conditions.

In 2008, the number of pension schemes

in place in the Group was increased, with

contributions made by the Company in

favour of its employees and their

beneficiaries.

Generation ofemployee commitmentand involvement

Management by Objectives (MbO)

is a strategic system for the

Gas Natural Group and is a basic lever

for involving employees in the

implementation of the strategy and

achieving business targets.

In 2008, updates were designed to the

MbO model to promote the involvement

of managers and the assessed parties.

The new features focus on the

introduction of success concepts, which

include the valuable contributions by the

employee beyond the fulfilment of

targets, and areas for improvement, which

inform the individual of the areas that

need to be developed.

In Argentina, the employees involved in the

MbO model took part in "Awareness

Dialogues", where they were able to

express their opinions, put forward their

queries and suggest improvements to

the model.

Work Environment Survey

In 2008, a survey was carried out to measure employee satisfaction with their jobsAs a preliminary step, focus groups were created in which employees gave their opinionsand discussed their concerns so that the query could be adapted to the actual concernsof the Group's personnel. The questionnaire comprised 58 questions that were commonto every country and a variable number of them adapted to each geographical area.Various valuation categories were used: compensation and benefits, commitment,communication, working conditions, professional development and corporateresponsibility, among others.

Employees were able to complete the questionnaire, which was translated into sixlanguages, anonymously and confidentially. Its launch was accompanied by a completecommunication plan aimed at promoting and motivating participation, which reached 80%of employees. The level of participation was in excess of 70% in every country.

The results of the survey and the action plans that were established will be reported in2009. These will emphasise the areas that were given the worst score, those that mostaffect employees and those that are most related to business targets and priorities

80


Breakdown of personnel costs (in millions of euros)

2008 2007 2006

Wages and salaries 258 244 232

Social Security costs 57 55 51

Definitive contribution plans 14 9 11

Definitive benefit plans 1 2 2

Work carried out for the Group’s fixed assets (52) (47) (46)

Others 60 45 27

Total 338 308 277

Management by Objectives (MbO) indicators (*)

100

90

80

70

60

50

40

30

20

10

0

2006. 2007. 2008. (*) % participants in the MbO and Performance Assessment systems.

14.0 15.514.8

ı

Argentina

ı

Brazil

ı

Colombia

ı

France

ı

Italy

ı

Morocco

ı

Mexico

ı

Puerto Rico

ı

Spain

17 17.516.6 18.1 17.816.920.6 2318.9

27.1 24.327.1

19.719.122.7

2.6 1.31.3

23.6 25.423.6

50 66.7100

Rotation rate (*) (%)

7

6

5

4

3

2

1

0

Men. Women. (*) Rotation: (external entering employees + external leaving employees)/average staff.

4.025.78

1.182.63

ı

18-35

ı

36-50

ı

>50

0.532.63




81

Training for thecontinuousimprovement anddevelopment ofprofessional actions

The Group has established continuous

training programmes and skills

development programmes that help its

employees satisfy their training

requirements so that they can do their

work correctly and continue their


The training plans are updated

continuously to the requirements of each

individual and business. The training

methodology used is in-class, distance,

online or mixed.

As support for its strategic target in the

area of talent development and

promotion, the Gas Natural Group has a

Management Development Programme,

which was in its eighth edition in 2008.

It involved the participation of

24 professionals with executive and

management functions. The Leadership

Development and People Management

Cycle also continued as a training plan for

executives, involving the participation of

32 people.

In addition, the Gas Natural Group has an

online training platform, “Acerca”,

implemented in every country in which it

operates. This tool enables easy, rapid and

flexible access to training contents. In

2008, 42.66% of the people at the

Company received online training, making

a total of 40,500 hours.

Rotation rate by country (*) (%)

120

100

80

60

40

20

0

2006. 2007. 2008.

(*) Rotation: (external entering employees + external leaving employees)/average staff.The rotation rate registered in France is the result of the high number of employees that entered the Company (eight) and employees that left the Company (five) with regard to asmall-sized staff (eleven employees).

12.9 15.77.4

ı

Argentina

ı

Brazil

ı

Colombia

ı

France

ı

Italy

ı

Morocco

ı

Mexico

ı

Puerto Rico

ı

Spain

22.8 23.417.1 14.8 16.711.2

15.8 14.331.4

1.9 13.211.2

30.238.347.6

14.5 2.62.5 9.7 11.411.4

122.5

Seniority rate. Average staff seniority by country (%)

20

18

16

14

12

10

8

6

4

2

0

2006. 2007. 2008.

ı

Argentina

ı

Brazil

ı

Colombia

ı

France

ı

Italy

ı

Morocco

ı

Mexico

ı

Puerto Rico

ı

Spain

ı

Total

18.2 18.317.2

9.9 9.59.7

7.7 7.86.4

9.5 9.98.7 9.6 108.2

5.4 5.24.9

5.9 6.94.2

12.9 12.512.4

15.1 14.914.9

0.6 0.80.2



Career opportunities forall employees

The existence of opportunities for

professional development is a basic part

of employee satisfaction. The Group has

designed tools that have been adapted

to the different profiles and aimed at


The Professional Development

Programme (PDP) is the tool aimed at

the employees included in the collective

bargaining agreement. The Management

by Objectives (MbO) has been designed

for those not included. Consequently,


fact that 100% of the Group's

employees have access to and are

assessed by tools designed to enable

professional development. Both

programmes have the same objectives

of favouring mobility and promoting the

cover of vacancies through internal

promotion.

In 2008, as a result of the application of

the PDP, there were 1,548 promotions in

the Group, which represents 32.15% of

the employees covered by the agreement.

As part of the "Description and

Assessment ofWork Posts" project, which

also figured in 2008, new work posts

were created and described in the Group.

Training indicators

2008 2007 2006


Total course hours 304,595 272,130 274,858


Investment in training per person (euros) 508.67 507.17 478

Participants 6,165 5,763 5,741

Attendees 25,874 19,193 19,649

No. of online courses taken 511 422 N/A

Users of online training schemes over total staff (%) 42.66 21.18 N/A

Training in corporate responsibility

In 2008, a training course was given under the title of "Corporate Responsibilityat Gas Natural". The aim was to publish the concepts and tools required for incorporation intothe Group's strategy in keeping with the approval of the corporate responsibility policy.

The blocks included in the programme, each of which was separated into different sections,were as follows:

• Environment.• Dimensions of corporate responsibility.• Corporate Responsibility Report.• Management issues (Code of Conduct).

An online course is currently being developed with the same name and is to be made availableto every employee.

Training hours per employee broken down bycategory (*)

80

70

60

50

40

30

20

10

0

(*) This graph does not include the figures for Puerto Rico, since there is no breakdown by category available. However,the average number of training hours per employee in this country is 85.

ı

Executives

ı

Technicians

ı

Administration

ı

Operators

73

48

36

20

82


83

Talent management

The Gas Natural Group defined a Talent

Management Programme to identify the

human and intellectual capital and to

introduce measures to attract it, develop

it and retain it. The programme, which

was implemented in 2007, focused

initially on 1,545 people and was

complemented in 2008 with the

development of the Professional Talent

Management Model, whose sequential

implementation is scheduled for all

employees in 2009.

The model arises from the need to bring

out the talent among the high number of

university graduates and professionals

working at the Company. It seeks to

identify people with the option for

promotion to posts of greater

responsibility.

The Gas Natural Groupdefined aTalentManagementProgramme to identifythe human andintellectual capital and tointroduce measures toattract it, develop it andretain it

In 2008, professional development

activities were carried out involving 73%

of employees in outstanding talent groups

at the Business Departments. They include

234 promotions, an increase of 127% in

comparison with 2007.

In the same year, the Succession

Plans tool was implemented and created

to manage the cover provided by the

executive team for selecting individuals

with the option for occupying vacant

posts. Gender is one of the key factors

managed by the tool, which designs

teams with greater female participation.

Staff promoted (*) (%)

50

45

40

35

30

25

20

15

10

5

0

2007. 2008.

(*) Staff promoted: individuals promoted/total staff.(**) The increase in the staff promoted in Spain in 2008 is due to the greater scope of the PDP in the said year.

3.64.27

ı

Argentina

ı

Brazil

ı

Colombia

ı

France

ı

Italy

ı

Morocco

ı

Mexico

ı

Puerto Rico

ı

Spain

ı

Total

11.617.60

6.65.18 8.413.70 6.686.105.005.00

26.6814.95

3.1723

010

43.4318.9

Reasonable assurance. (Spain).

84


Establishment of formalchannels for themanagement ofknowledge

As one of its most valuable assets, the

Gas Natural Group devotes notable efforts

to knowledge management. The Company

enables and favours teamwork, which

allows for a better use of the capacities,

resources and knowledge of its human

resources.

One of the tools designed to enable the

correct management of knowledge is

the Group's intranet: NaturalNet. In

2008, it was optimised to enable the

option of sharing the Company's

technological and information resources,

strengthening teamwork and minimising

the disadvantages of geographical

distance.

Communicationmechanisms forimmediate, transparentand participatorydialogue

The Internal Communications Plan

includes the communication actions and

channels in place in the Group. Its

objectives include: fostering employee

participation on a daily basis, motivating

their commitment to the Group's

common objectives and ensuring their

satisfaction and integration in the

Company.

The Gas Natural Group provides its

employees with the Opinion channel,

which allows them to put forward their

opinions, suggestions, comments and

concerns.

In addition, the Group has an Internal

Communications Consultative Group,

which comprises managers from various

areas. The aim of the group is to hold

regular meetings to collect the comments

and concerns put forward by employees.

It is worth underlining the publication

of communications and information for

the entire Group. In Spain,

49 communications and 29 informative

notes were published in 2008.

Another of the mechanisms for

communication with employees in Spain

is the NaturalNet noticeboard. In 2008, a

total of 313 personal announcements and

149 job offers were published for the

Group's employees under advantageous

conditions.

Furthermore, in Mexico, the "Breakfast

with Managers" initiative was developed,

where a department manager is invited so

that employees can talk with him/her and

propose improvements.

Mention must be made of the

implementation in Spain of the new

Integration Plan, which affords special

relevance to determining tutors for new

employees, the renewal of theWelcome

Manual and the delivery to new

employees of a kit with useful information

about the Company.

With regard to international

homogenisation, mention must be made

of the fact that Italy, Morocco, Brazil,

Colombia, Mexico and Argentina now

share the same general integration

procedure applied by the Group and

adapted to local particularities.

Opinion channel

2008 2007 2006

Number of suggestions received 234 166 191

Cost Reduction Project (*) 17 140 161

(*) On 30 June 2008, the Cost Reduction Plan was closed. This initiative was part of the 2004-2008 Strategic Plan and the aimwas to achieve, through more efficient management, a significant reduction of the external services expenses withoutaffecting the fulfilment of the strategic objectives. As from this date, all the comments or suggestions on these issues arechannelled through the Opinion channel.

NaturalNet

2008 2007 2006

No. of visits to Intranet 6,930,424 7,332,605 2,143,633 (*)

Mission, Vision and Values 600 822 16,463

Code of Conduct 1,350 2,871 2,618

Communications 11,450 10,479 18,606

Informative notes 8,034 5,288 7,035

Opinion Channel 8,971 7,256 8,025

Welcome Manual 3,248 1,965 5,177

Noticeboard 173,484 122,056 125,726

(*) Counting from July 2006 on.


85

Health andSafety

By health and safety, the Gas Natural Group

refers to the activities aimed at fostering a

culture of prevention and protection for the

health, safety and well-being of all its

employees, as well as those aimed at

promoting good practices by suppliers,

contractors and collaborator companies.

The Company has assumed the

commitment of reaching the highest

levels of health and safety, implementing

a zero accident rate as the target for

its actions.

The existence of a known culture of

prevention that is shared along the value

chain is a crucial element for fulfilling the

Group's targets. Similarly, in order to

promote the commitment of all its

employees to this culture, it devotes

important resources to training and

information in the subject.

The safety of products and services

constitutes a basic pillar for the

Gas Natural Group's Corporate

Responsibility Policy. This can be seen in

compliance with the provisions in force at

all its facilities and infrastructures and

through the training work that is carried

out for the collectives involved along the

entire value chain.

As recognition of its good practices, the

Gas Natural Group received the 2008

Prever National Safety Award for

Occupational Risk Prevention, a reference

in the European Union, in the category of

Enterprise and Institutions.

86



Health and safetyHealth and safety is one of the commitments laid down in the Gas Natural Group's Corporate Responsibility Policy and is based on the followingprinciples:

• Guaranteeing safety is everyone’s responsibility.• Proper training and information are key elements of prevention.• Integrating preventive actions into all activities and decisions to ensure continuous improvement.• Rejecting any conduct that may create an unsafe, intimidating or offensive working environment.

Main indicators (*)

Target for 2009 2008 2007 2006

Accidents requiring medical leave 73 85 77 94

Days lost 1,562 1,668 1,644 2,430

Mortalities 0 0 0 2

Frequency rate 5.55 6.26 5.85 7.28

Seriousness index 0.11 0.12 0.12 0.19

Incident rate 10.95 12.25 11.53 14.05

Absenteeism rate 1.94 1.94 2.23 2.4


Relevant actions


Development of a sensitising project forprevention in respect of risk activities andlaunch of an informative bulletin on healthand safety.

Start of process to draw up health and safetyrisk map. Incorporation of improvementmeasures detected in the surveys.

Strengthening of the accident investigationmodel for the generating of good practicesand publication of data on the likelihood ofaccidents on the Group website.

Actions taken 2008

Implementation of the occupational accidentrate website of the Gas Natural Group.

Publication of the prevention sheets onNaturalNet.

Start of a project for controlling accidentsinvolving works contractors.

Participation in the ClothingWork Group(fireproof and antistatic fabric).


Launch of the "International PreventionWeek", with coordinated activities in all thecountries in which the Group operates.

Development of an international campaignagainst accidents.

Implementation of the investigation of 100%of accidents involving employee absenteeismacross the Group.

Creation of an area on health and safety onthe corporate website.


(*) High level incorporation of suppliers and development of features. This has not been extended to the Group’s subsidiaries.


87

Provision of a safe andhealthy workingenvironment

The Gas Natural Group's commitment is

to reach the highest standards in health

and safety. The Company considers that

the objectives pursued by its general

policy on industrial safety and the

prevention of occupational risks have now

been consolidated.

The Group's actions in health and safety

are governed by the following principles:

• Strict compliance with the legislation in

force in each country.

• Consideration of occupational safety and

prevention as a collective responsibility.

• Consideration of information and training

as basic pillars for continuous

improvement.

• Furnishing all the Group's companies

with a specific structure for fostering

and strengthening a culture in

prevention.

• Extension of the Group's principles to

suppliers, contractors and collaborating

companies

• Commitment to building, operating and

maintaining industrial installations under

the premise of risk-prevention.

• Achieving the target of zero accident

rate in all the Company's activities.

• Collaboration, coordination and fluent

and transparent exchange of information

as a basic principle for action.

• Analysing the incidents and accidents

that occur in order to draw conclusions

and promote action plans.

• Giving out clear messages to customers

and users on safety and the correct use

of energy.

In 2008, the Group launched various

initiatives aimed at fostering employee

participation in issues related to health

and safety. Emphasis shold be made of

the consultation on psychosocial factors

of risk and job satisfaction. The results

revealed the issues that most concern

employees and helped implement

measures for their improvement.

In addition, a day was held on safety with

the participation of the Group's main

contractors. A technical guide for

monitoring indicators was also published

to unify the criteria for the implementation

and execution of the various health

monitoring campaigns.

Since 2005, the Company has had a Joint

Risk Prevention Service that offers

consultancy in prevention and monitors

employee health.

The Risk Prevention System was audited

in 2008 in accordance with the

commitment assumed by the Group to

identify actions for improvement for 2009.

In 2008, the Grouplaunched variousinitiatives aimed atfostering employeeparticipation in issuesrelated to healthand safety


Preventive action

Prevention activities are fundamental for

monitoring work health and safety. At

the Gas Natural Group, the basis of

prevention is the Occupational Risk

Prevention Plan and it is based on the

identification and regular assessment of

the risks inherent to each work post. In

Spain, risks are assessed on a biennial

basis beyond the requirements of

current legislation.

In 2008, a total number of 1,209

preventive actions were taken in Spain in

fulfilment of the 5% increase set as a

target the previous year. Throughout the

Group, the number of actions exceeded

3,000. This figure shows how the actions

required by the Company's internal

regulations occasionally exceed the legal

requirements in force in the countries in

which it operates.

In addition, the Group is implementing

more sophisticated prevention systems.

In Spain, hazard data sheets have been

drawn up for the specific activities carried

out by the technical services. They provide

detailed information on the operations,

equipment and tools that are required, the

specific prevention measures and the

applicable procedures and standards.

Special mention must also be made of

the important efforts of the subsidiaries

in Mexico and Colombia, which started

to bring their prevention systems into

line with those implemented in the

Group in 2008.

In addition, the high number of

assessments or controls of working

conditions in Spain, Brazil, Argentina and

Italy is also worthy of particular attention,

as well as the devotion to emergency

plans and simulations in Morocco.

In prevention, the two basic pillars are

information and training. The Company

devotes significant resources to these

activities and adapts them to the

corresponding work posts. In 2008,

emphasis should be made of the analysis

of accidents, the manual handling of

loads, the courses given to firefighting

brigades, the activities related to the

emergency plan in buildings and courses

on safety for working with gas or near

electrical hazards. Mention must also be

made of a specific training project on the

management of installation maintenance

and safety.

In 2008, a further 29% of employees

received training on health and safety.

There was also an increase in the ratio of

training hours per employee, which

reached 5.2 hours and exceeded the

target that was set. In 2009, the Company

plans to reach the figure of 5.46 hours per

employee and publish a periodical

magazine on health, safety and

sustainability for employees.

In order to consolidate these successes in

prevention, the Company plans to develop

the following in 2009:

• International PreventionWeek.

• Campaign for users of display screens.

• Campaign for promoting the use of

personal protective equipment.

• Organisation of regular meetings with

contractors on preventive safety issues.

Summary of preventive actions carried out in Spain

2008 2007 2006

General and specific risk assessments 160 142 61

Extraordinary activities risk assessment 52 35 12

Regular control of work conditions 549 365 504

Emergency-related actions 126 107 126

Other actions 322 270 150

Total 1,209 919 853

Safety training

2008 2007 2006

% attendees over total staff 61.91 47.7 41.4

No. of training actions completed 337 234 273


88


89 Continuous monitoringand data recording

These basic prevention tools enable the

study and assessment of results, as well

as the detection of areas for

improvement.

The Group has specific programmes for

the management and modernisation of

health-monitoring and risk-prevention

information. It also has an internal

procedure for unifying criteria for the

collection of data and investigating

accidents in accordance with the

recommendations of the International

Labour Organisation and the European

Statistics on Accidents atWork.

The results in this area are included in

control reports on a regular basis. In

addition, the Company prepares a

quarterly report on health and safety,

which is presented to the Directors. The

project was also started for the

construction of a specific area on the

Group's website. Its launch is

scheduled for 2009.

In 2008, a specific website on

Occupational Accidents at the

Gas Natural Group was implemented. It

records and shows the results of the

investigation of the accidents that occur in

every country where the Company has a

presence. Accordingly, the target for

having a standard support and developing

the model for investigating accidents

leading to absenteeism has been reached

on an international scale.

In 2008, a specificwebsite on OccupationalAccidents at theGas Natural Group wasimplemented

The accident rate at the Gas Natural

Group increased slightly in 2008, so the

target that was set was not reached. The

results were affected by the notable

increase in the Group's activity,

improvements to the data-collection

system and through the collaboration of

every subsidiary, which made it possible

to obtain more complete and rigorous

information.

Mention must be made of the reduction

in the number of accidents in Spain,

Argentina and Morocco, which reported

values similar to those of France and

Puerto Rico.

The Company has renewed its target for

reducing the accident rate by 5% in 2009.

Accordingly, the following actions will be

implemented, among others:

• Specific analysis of the situation in the

international subsidiaries that are

furthest away from the target.

• Launch of a campaign designed to

reduce the main causes of accidents

(cuts, knocks, crashing into objects and

strain), which represent 69% of the total

accidents.

In 2008, various adjustments were made

to the Preventive Management Indicator,

which quantifies and measures the

evolution of occupational risk prevention

management. The Company is currently

developing a specific computer application

for use in the area.

The Gas Natural Group did not receive any

fines for breach of health and safety

regulations in 2008.

90


The culture ofprevention in thevalue chain

The construction of a culture of prevention

among suppliers, contractors and

collaborating companies is another of the

Group's basic lines of action. Accordingly,

in 2008 the following actions were carried

out, among others:

• The effective implementation of the

website for exchanging documentation

regarding prevention with contractors

in Spain.

• Days for the exchange of knowledge on

new current legislation on health and

safety and applicable to works

contractors.

• Preparation of the safety manual for

combined-cycle power plants.

• Start of a specific project aimed at

controlling the accident rate at civil

engineering works.

Emphasis should be made of the fact that

216 of the 471 companies registered on

the website on prevention with

contractors in Spain provided information

on their accident rates in 2008. They

reported 145 accidents leading to

absenteeism and a total number of

2,859 working days lost. There were no

accidents involving deaths.

Furthermore, in the 20 projects carried out

by the Engineering Department during the

second half of 2008, special monitoring of

the accident rate of the 16 successful

bidders was carried out. There were 13

accidents, which led to a frequency rate

of 9.91. Much lower than the rate

obtained by the energy, gas and water

production and distribution sector (35.3),

the construction sector (72) and the

overall figure for Spain (34.8).

Participation ofworkers'representatives

Workers' representatives have special

importance in the consolidation of a

culture of prevention. They also carry out

key communication work between

employees and the Company's

management.

Their participation is specified in the

Health and Safety Committees, which

constitute the most important bodies for

consultation and participation in the

Company's risk prevention policy. They

are peer groups and meet every two

months or every quarter. In 2008, after

various union agreements had been

signed, the number of committees in the

Group was reduced to two. One of them

is unique for the companies of

Gas Natural SDG, S.A., the ten companies of

the Gas Natural Group that distribute gas

in Spain and Gas Natural Comercial S.L.

The other committee represents

Gas Natural Informática S.A. The

committees represent 88.76% of

Accident indicators

Target for 2009 2008 2007 2006

Accidents requiring medical leave 73 85 77 94

Days lost 1,562 1,668 1,644 2,430

Mortalities 0 0 0 2

Frequency rate 5.55 6.26 5.85 7.28

Seriousness index 0.11 0.12 0.12 0.19

Incident rate 10.95 12.25 11.53 14.05

Absenteeism rate 1.94 1.94 2.23 2.4

Accident indicators by country

Argentina Brazil Colombia France Italy Morocco Mexico Puerto Rico Spain

Accidents requiring medical leave 13 1 10 0 12 0 19 0 30

Days lost 226 14 55 0 332 0 138 0 903

Mortalities 0 0 0 0 0 0 0 0 0

Frequency rate 10.88 0.82 7.65 0 16.46 0 11.43 0 4.25

Seriousness index 0.19 0.01 0.04 0 0.46 0 0.08 0 0.13

Incident rate 21.75 1.97 17.01 0 32.21 0 21.95 0 7.87

The Group has set a target of reducing accident indicators by 5% in 2009.


91employees in Spain. Special mention

must also be made of the role played by

the 89 prevention representatives in the

Group's companies in Spain.

All the Group's collective agreements

expressly regulate health and safety

issues.

Occupational health

The Gas Natural Group understands the

concept of health and safety as a "state of

physical, mental and social well-being" and

follows the directives issued on the

matter by the competent international

organisations.

The Company looks after all its

employees' health through regular

medical checkups. Prevention campaigns

and campaigns for the early detection and

treatment of specific diseases are also

carried out. In 2008, the following actions

were taken, among others:

• The anti-smoking campaign, carried out

on an international scale and relaunched

in Spain.

• Activation of alerts on the Group's

Intranet with the recommendation of

contacting the medical services in the

case of international travel.

• Quarterly meetings with the persons

responsible for the medical services at

other international companies to

coordinate action criteria.

• Launch of a campaign for blood donors

in the offices in Barcelona and Madrid.

In addition, the survey on psychosocial

factors was performed in Spain and

involved the participation of 1,526 workers.

It enabled compliance with the legal

requirement for completing an initial

assessment of risks in this area.There are

plans for extracting the results and

opportunities for improvement so that the

Group can anticipate the appearance of

possible psychosocial risks.

Similarly, in 2008, the Guía para el análisis

y seguimiento de los indicadores de salud

laboral del Grupo Gas Natural (Guide for

the Analysis and Monitoring of

Occupational Health Indicators at the Gas

Natural Group) was distributed among the

Company's medical services. It is used to

unify the general working guidelines and

actions to be followed by the Group's

medical services.

In 2008, the survey onpsychosocial factors wasperformed in Spain andinvolved the participationof 1,526 workers

Participants in occupational health campaigns

2008 2007 2006

Prevention and/or early detection campaigns 12,621 10,205 10,426

Vaccination campaigns 2,392 2,006 2,666

Checkups 5,122 5,208 5,033

Medical assistance 14,652 17,290 15,646

Staff taking part in prevention campaigns at theGas Natural Group (%)

1009080706050403020100

ı

Obesityı

Preventionof cancerpathologies

ı

Diabetesı

Cardiovascularrisk

6.65

20.49

45.34

58.10

92


Measures forguaranteeing industrialsafety

The Gas Natural Group's commitment to

its customers and society also include

reaching the highest levels of safety in

its installations and products through the

development and application of cutting-

edge technologies; the adoption of the

corresponding safety measures; the

publication of safe practices for

stakeholders when working with natural

gas; and, finally, the training required for

the members of the value chain. In order

to monitor this commitment, the

Company invested 1.7 million euros in

activities such as the following:

• Launch of advertising campaigns.

• Preparation and sending of brochures on

safety and the responsible use of energy

to customers.

• Campaign for advertising advice on

safety.

• Collaboration activities with official

organisations and administrations.

• Activities for fostering safety in the

actions taken by the fire service, police

force and civil protection.

• Promotion of the safe and responsible

use of energy at schools.

• Courses on safety given to external

personnel.

• Participation in workgroups on

standardisation and technical procedures

regarding administrations, companies in

the sector and associations of

recognised prestige.

• Presence and participation in

international forums.

The internal customer

For the Gas Natural Group, the construction of a culture of prevention requiresthe active participation of the internal customer. In 2008, three projects were developed topromote the said participation:

• Survey on the perception of the prevention service by the staff in Spain. The finalparticipation rate reached approximately 50%. The consultation showed that more than90% of employees were satisfied with the prevention courses and that 86% are satisfiedwith the health monitoring service. The main issue for improvement includes the need forthe prevention planning to be familiar to the entire organisation.

• Risk awareness investigation project. Aimed at discovering the perception ofindividuals regarding the management of processes that may involve risks and theintervention methods and aspects that enable improvements. Special mention must bemade of the perception that safety is the main part of operations, the need for insisting ona change of attitude that holds safety as an ever-present aspect and the need forguaranteeing the transfer of knowledge and experience among the Group's variouscollectives and areas of action.

• Study on the factors of psychosocial risks. Performed through an online survey in Spainthat analysed psychosocial factors and job satisfaction. It is worth underlining the positivevaluation of issues that help generate a positive working environment, such as personalrelations, colleagues and the immediate superior. Relevance is also given to the positiveview of those that took part in the survey in issues such as job stability and variety in theirwork. Improvement opportunities include the supervision-participation factor and theoptions for promotion.

Campaignfor avoidingcarbon monoxidepoisoning

The main objective of the campaigntitled "Wake up, Carbon Monoxide Kills"was to contribute to reducing thenumber of cases of carbon monoxidepoisoning in the Colombian cities ofBogota, Soacha and Sibaté. Developedin collaboration with the Visionarios porColombia Corporation(CorpoVisionarios), its aim was to bringabout a cultural change and a change ofhabits and foster careful behaviour andthe preventive use of natural gasappliances and installations.

The actions that were taken includedtraining given to doctors, encounterswith journalists, two child creativitycontests and announcements made onTV and radio. As a result, there was aneed for reaching agreements with theprivate sector and close association withthe public sector.

The Colombian authorities collaborated ina very active way on the development ofthe initiative. The actions that were takenincluded the approval of Directive No.15/07 on the prevention of carbonmonoxide poisoning.

The campaign was awarded the 2008ANDESCO (National Association ofDomestic Public Services andComplementary Activities Inherent toCorporate Social Responsibility) Prize inthe category of "Best MarketEnvironment".

After the measurement taken in August2008, following the campaign, citizensimproved their knowledge of carbonmonoxide and its causes. In 2008, therewere no deaths caused by carbonmonoxide poisoning in Colombia.


93

The development and well-being of the

local communities in which it operates

constitute the basic pillars for the

Gas Natural Group's focus in corporate

responsibility.

The Company has developed

mechanisms for understanding the main

social requirements that need to be

satisfied and focuses on the said

satisfaction with its own initiatives and in

collaboration with the relevant

institutions in each country.

The Gas Natural Group's social actions

have an increasingly strategic focus. They

are centred on the contribution to

development through training, social

investment and the conservation of the

environment. These lines strengthen the

Group's own activity and look for

structural improvements that contribute to

its sustained progress.

Accordingly, the Company also exercises

its social responsibility when it

contributes to supplying the energy

required by the communities in which it

operates in an efficient, sustainable and

safe manner. Similarly, its capacity for

innovation, together with its participation

in new businesses, generates positive

effects not only for the Company, but also

for society as a whole.

SocialResponsibility

94



With societySocial responsibility is one of the commitments laid down in the Gas Natural Group's Corporate Responsibility Policy and is based on the followingprinciples.

• Positive integration in the society of the countries where it carries out its activities, respecting the culture, rules and setting.• Generation of value by conducting its business and by forging alliances with local communities, particularly in those countries where it maintains apresence.

• Promotion of the education, training, cultural wealth and inclusion of the most disadvantaged groups through social investment.

Main indicators (*)

2008 2007 2006

Evolution of the contribution from the Gas Natural Group (millions of euros) (*) 16.8 16.1 13

Breakdown by type of action (%)

Social 57.6 57.7 19.7

Environmental 25.6 24.9 39.9

Cultural 16.8 17.4 40.4

No. of sponsorship and social action activities 274 308 337

(*) Key indicator defined by the Group to monitor its performance in corporate responsibility.

Relevant actions


Presentation of the new educational folder onenvironmental awareness and energyefficiency.

Establishing of a system to measure theimpact of sponsorship projects through theLondon Benchmarking Group methodology(LBG).

Improvement of the information provided inCorporate Responsibility with the publicationof Corporate Responsibility reports in all theLatin American subsidiaries and the review ofthe web section.

Fostering of development co-operationprojects.

Actions taken 2008

Presentation of the educational folder in twelvecities. Economic contribution to the internationalexhibition titled "Water and SustainableDevelopment" (Expo Zaragoza 2008).

Adaptation of the social investmentmanagement tool to the LBD methodologyand the Millennium Development Goals.

Publication of corporate responsibilityreports in all the Group's Latin Americansubsidiaries.

Development of a new global sponsorshipstrategy to consolidate the generation ofvalue in local communities.


Support for the candidature of Madrid 2016 tohold the next 31st Summer Olympic andParalympic Games.

Relaunch of the new version of the tool forthe online management of social investmentin Spain and Latin America.

Increase in the scope of the independentexternal reviews of the Group's CR reports.

Improvement to the systems for measuringthe social impact of sponsorship actions.


(*) High level incorporation of suppliers and development of features. This has not been extended to the Group’s subsidiaries.


95

Positive integrationin society

The Gas Natural Group maintains its

commitment to contributing to the

development and progress of the

communities in which it operates. To put

this into practice, within the framework of

the Millennium Development Goals and

the principles of the United Nations Global

Compact, the Company develops

initiatives aimed at improving the living

conditions of underprivileged collectives.

In addition, the Company is aware of the

importance of education for social

cohesion and progress. Universal primary

education is one of the fundamental rights

included in the Universal Declaration of

Human Rights and is of critical importance

for progress in issues such as equal

opportunities and gender equality.

Accordingly, the Gas Natural Group

allocates part of its resources and efforts

to supporting and fostering educational

and cultural initiatives.

In recent years, issues related to the

climate change and sustainable

development have been included in the

Company's social agenda and took on

special relevance in 2008.

The Group considers its social

investment programmes within the

framework of its business development

strategy. The aim is to generate a higher

level of commitment by the Company to

the society of which it forms a part.

Given its priority, the Group has tools for

measuring the reputational impact of the

social programmes it develops. In 2008,

it continued to use the London

Benchmarking Group methodology

(LBG), which offers an overall view of

social investment and enables a

comparison of the results obtained with

those of other companies.

The Group considers itssocial investmentprogrammes within theframework of itsbusiness developmentstrategy

In addition, the Group progressed in

the redesign of its internal control tool

for sponsorship and social action, whose

completion is scheduled for 2009 and

which will allow an improved

management of the initiatives that

are taken.

Motivation for initiatives (*) (%)

Social investment

Specific contribution

Bussined-related initiatives 27.2

1.2

71.6

(*) LBG methodology.

Area of action (*) (%)

30.9

1.9

4.5

0.1

14.4 29.7

18.5

(*) LBG methodology.

Humanitarian assistance

Health

Education and youth

Economic development

Social welfare

Environment

Art and culture

96


Educational initiatives

The Gas Natural Group continued its

activities for promoting values such as

sustainable development and the rational

use of energy among young people. In

2007-2008, special mention must be

made of the "Natural Gas and the

Environment" programme, as well as the

online activity titled "Natural Gas, the 21st

Century Energy". The former provided

training for a total number of

69,402 students in Spain, who attended

conferences given by specialists in the

area. The online activity involved the

participation of 915 school groups. In

2008, the new educational folder with

teaching improvements for teachers was

presented in 12 cities.

The programmes for fostering a culture of

energy efficiency continued in Latin

America and teaching material was

distributed to teachers that focused on

the environmental benefits of natural gas

and its correct use. The actions that were

taken involved the participation of

145,777 schoolchildren.

The Group carries out other work in the

area of environmental awareness. In

2008, it sponsored the programme

broadcast by the Catalan public TV

channel TV3 "Joves fora de sèrie", which

gives examples of young people who

collaborate on projects for supporting

underprivileged collectives.

For further information, visit the

“Educational Activities and

Exhibitions” section of the Gas Natural

Group’s website (www.gasnatural.com).

Social action focusedon underprivilegedgroups

The Gas Natural Group fosters projects

that help reduce social inequality and

integrate collectives that are at risk of

exclusion.

Accordingly, the Company has set up a

number of collaboration agreements in

Spain with organisations such as the

Adecco Foundation and Femarec for the

employment of underprivileged

collectives. In addition, the Group fosters

the contracting of services to companies

that employ individuals with physical or

mental disabilities. Special mention must

be made of the fact that the Company is

one of the leading clients of Fundosa

Galenas, a company with the objective of

complying with the targets set by the

ONCE Foundation.

In Argentina, the collaboration of

Gas Natural BAN with the Musicium

College for the integration of disabled

children should be pointed out.

For more details on the social

action programmes in the

Gas Natural Group's Latin American

subsidiaries, please consult the

corporate responsibility reports available

at www.gasnatural.com.

Total participation of students in the “Natural Gas andthe Environment” educational programme. Spain

72,000

70,000

68,000

66,000

64,000

62,000

60,000

58,000ı

2006

ı

2007

ı

2008

63,035

70,192

69,402


97

The Group's commitment to research

also focuses on improving the life quality

of sick people and their relatives. In

2008, the Company continued to lend its

support to CNIC (National Cardiovascular

Research Centre) of which it is a co-

founder. Accordingly, and in collaboration

with the Spanish Ministry of Health and

another 13 Spanish companies, the

Gas Natural Group contributed to

creating the ProCNIC Foundation, which

carries out research on cardiovascular

diseases, the first cause of death in the

world. Furthermore, and as part of World

Heart Day, the Company distributed

several recommendations by Valentín

Fuster, Scientific Chairman of ProCNIC,

among its employees, aimed at reducing

the risk factors that lead to

cardiovascular disease.

In Latin America and for the eighth year

running, the Group took part in the

activities for collecting funds for the

Mexican Red Cross. In Argentina,

Gas Natural BAN continued to collaborate

with FUNDALAM (Foundation for

Nursing and Maternity) to promote

mother-baby health.

For more details on programmes

that focus on research and

the protection of health in the

Gas Natural Group's Latin American

subsidiaries, please consult the

corporate responsibility reports available

at www.gasnatural.com.

Corporate volunteers

Employees are a key part of the

Gas Natural Group's focus on corporate

responsibility. Their efforts help to put the

Company's commitment to sustainable

development into practice.

In Argentina, with the support of the

Gas Natural Foundation, the Company

continued with its corporate volunteer

plan started up in 2002. The programme

offers employees the possibility of

collaborating with community initiatives

and social projects.

For its part, the Group's subsidiary in

Mexico also fostered its corporate

volunteer activities 2008. Employees

received additional support from their

families, strengthening their bond with

the Company and the local community.

In both Argentina and Mexico, the

beneficiaries of the volunteer projects are

children, young people and adults in

danger of social exclusion with low-level

resources and whose basic needs are not

satisfied.

The Gas Natural Group's corporateresponsibility reports.The reflection of itspositive integration in society

Part of the success of large enterprises lies in their capacity for keeping in contact with thesocial concerns of their contemporaries.

In 2002, the Company published its first report on its initiatives in corporate responsibilityand sustainability. All the corporate responsibility reports published by the Group since thenhave been drawn up on the basis of the recommendations given in the Global ReportingInitiative (GRI). The reports seek to provide a fair and balanced view of the Company'senvironmental, social and economic performance.

The Gas Natural Group's 2007 Corporate Responsibility Report was given a rating of A+,which recognises reports that strictly and transparently follow the recommendations givenin the GRI.

In 2008, all the Gas Natural Group's subsidiaries in Latin America (Argentina, Brazil,Colombia and Mexico) published corporate responsibility reports. The aim is for the reportsdrawn up by all the subsidiaries to be given a rating of A+ in the mid-term, as obtained bythe Group's report. In addition, in keeping with its commitment to information transparencyand integrity, the Company works to ensure that all the corporate responsibility reports areconfirmed by an independent third party.

In recent years, the Group's Corporate Responsibility Report has received numerousrecognitions. Emphasis should be made of the fact that it was the only Spanish companywhose report was given a GRI Readers' Choice Award. The Company was recognised inthe category of Best Report for the media. It was also a finalist in the awards for the bestsustainability reports of the Ibex 35, organised by AECA (Spanish Accountancy andBusiness Administration Association) and ICJCE (Spanish Institute of CharteredAccountants).

Promotion of healthand research

In 2007, the CTA (AndalusianTechnology

Corporation) was opened with the

Gas Natural Group as one of its founders.

The corporation manages CTAER

(AdvancedTechnology Renewable

Energies Centre). In 2008, the Group also

collaborated with CSIC (Higher Council for

Scientific Research) on the programme

titled “Doñana Biological Station", which

focused on research in the area of

conservation genetics. These projects

constitute an example of the Group's

location to being at the fore in R&D.


The Group's corporate volunteer activities

were reinforced in 2008 with other social

awareness initiatives. The Company

sponsored the "Fifth Encounter of

Corporate Volunteers" in Argentina, which

focused on recognising and appreciating

the companies' volunteers, as well as

offering an area for exchange and

participation for employees from different

companies.

Promotion of music

Part of the Gas Natural Group’s cultural

sponsorship initiatives are geared towards

promoting music.

In 2008, the Company participated in a

variety of initiatives with the Barcelona

and National Catalonian Symphonic

Orchestra in Tarragona, Girona and Lleida.

The Group also sponsored musical

cycles and seasons in different towns

and cities. Among others, special

mention must be given to the

collaboration with the Gran Teatre del

Liceu and the Palau de la Música

Catalana concert halls, and the Teatro

Real (Madrid). The Company also

financed the Santander International

Festival, the Pontevedra Jazz Festival

and the Porta Ferrada International

Festival (Girona).

In Latin America, the various subsidiaries

also considered the promotion of music.

In 2008, numerous activities were carried

out, including the programme titled "CEG.

Our Voice", which took place in Brazil and

focused on the musical training of the

Group's employees.

For further information, see the

“Sponsorship and Social Action”

section of the Gas Natural Group’s

corporate website

(www.gasnatural.com).

Fostering culturalenrichment

Every year, the Gas Natural Group

publishes a book on the natural and

cultural legacy of one of the countries in

which it operates. In 2008, it published

the book titled Angola. Patrimonio cultural

y natural (Angola. Cultural and Natural

Heritage), with 26,000 copies.

The Group's support for Expo Zaragoza

2008 is also worth of mention, which

was formalised in 2007 and renewed in

2008 with a second contribution of

approximately 2 million euros for the

event. The Gas Natural Group sponsored

one of the events in the Expo, titled

“Water for Life”.

CorporateVolunteer Programmes inArgentina and Mexico

Employees at the subsidiaries have carried out various volunteer work to help vulnerablegroups in recent years: children living in poverty, the disabled, sick people and adults in dangerof social exclusion, among others.

In Mexico, the activities included collecting toys and tins of food to help those affected bynatural disasters in the states of Coahuila, Tabasco and Chiapas.

In Argentina, the Gas Natural Group's employees have been carrying out corporatevolunteer work for several years. Special mention must be made of the "Gas NaturalVolunteer Programme and Skills and Training Workshops", promoted by the Group'sFoundation. The main aim is to offer participants training for the skills that enable theiraccess to the job market. The programme included various workshops: paper craftwork,aimed at mainly at women between the ages of 25 and 60 years; painting and artappreciation, aimed mainly at children; and, finally, a workshop on practical initiation inelectricity, given by one of the Company's employees.

98


99

Its Latin American subsidiaries also

allocated part of their investments to the

promotion of cultural wealth. Among

others, they include the agreement with

the National Museum of Colombia,

whereby the Company sponsors the

museum's temporary exhibition hall.

Initiatives in keepingwith business

The Gas Natural Group continued

numerous projects in 2008 to fight against

energy poverty and favour access to basic

services by the collectives most in need.

Mention must be made of the initiative

titled "Cuartel V", which seeks to supply

natural gas to an underprivileged area of

the province of Buenos Aires. The

Company's managers undertook to create

a new social management model in which

residents, local collectives, non-profit

organisations and enterprises joined

forces to achieve a gasification system

that was accessible to communities in the

low-income bracket.

The Gas Natural Groupcontinued numerousprojects in 2008 to fightagainst energy povertyand favour access tobasic services by thecollectives most in need

Another of the programmes that were

launched on the back of this philosophy is

the Ráquira project, which was developed

in collaboration with local craft workers and

fosters the replacement of wood and coal

furnaces with natural gas furnaces to offer

benefits through reduced furnace time,

gas emissions and the production of

waste.The replacement also offers

improvements in terms of productivity,

contributing to strengthen the local

business fabric.

In Bogotá and in collaboration with a

subsidiary of the Veolia Group, the

Gas Natural Group incorporated the

company Biogás Doña Juana S.A. ESP in

2007 for the extraction, processing and

energetic use of the biogas generated by

one of the largest dumps in the city and in

Latin America. The aim of the project is to

make use of the energy possibilities of the

methane to reduce the uncontrolled

emissions generated by the

decomposition of urban waste.

Institutionalcommitment

The Gas Natural Group takes part in

national and international sector and

business organisations. This means that it

remains at the fore of sectoral knowledge

and is a reference in its various areas of

action. In 2008, the Gas Natural Group

spent 288,460 euros on cooperating with

organisations of this kind.

The Company continued its collaboration

with the International Chamber of

Commerce (ICC), an organisation that

speaks for companies from more than 140

countries and fosters the development of

voluntary standards and regulations.

It also played an active role in the work of

investor relations and corporate

communications forums of The

Conference Board, a reputed international

business association.

The Gas Natural Group is part of the

Corporate Reputation Forum (fRC), a

Spanish organisation that focuses on

analysing corporate reputation and

publishing the related trends, tools and

management models. In 2008, the Group

took an active part in the monthly

meetings for the exchange of experiences

and the promotion of various events and

publications.

Furthermore, the Company supports

ASEPAM (Spanish Global Compact

Association) and sits on its Executive

Committee. The goal of this organisation

is to support, promote and disseminate

the incorporation of the ten principles of

the Global Compact in companies’

management and governance models.

Accordingly, in 2008, the Group supported

various initiatives by the Global Compact

Foundation, such as its "Principle for

Responsible Management Education" and

"Caring for Climate".

In 2008, the Group also continued to

cooperate with the Ethos Chair of Ramon

Llull University, whose mission is to

disseminate and promote ethics in the

business and organisational field.

The Company also works with institutions

related to the energy sector on both an

international scale and in the countries in

which it operates. Outstanding among

these are of Sedigas (Spanish Gas

Association), the Spanish Energy Club,

Eurogas, the International Gas Union, the

EuropeanTechnical Association of the

Gas Industry, the Spanish Committee of

100


theWorld Energy Council and the

Mediterranean Energy Observatory. It also

takes part in various institutional forums

related to corporate responsibility and

cooperation for development, such as that

of the CEOE or that of the Catalan

employers’ association Fomento del

Trabajo.

In 2008, the Group sponsored the 19th

edition of theWorld Petroleum Congress,

which brought together players from the

sector in Spain to analyse the challenges

and trends of the petroleum and gas

industry. The congress was attended by

representatives from 60 countries,

including more than 30 ministers.

The Gas NaturalFoundation

In recent years, the Foundation has

continued to extend the scope of its

activities, launching new lines of action

and consolidating those already in

existence.

In this respect, it has intensified its

activities in the environment and

strengthened its lines of action in training

and in the protection and diffusion of

cultural heritage. Special mention must be

made of the growth of the international

activity with new programmes in

Colombia and Mexico and the launch of

the activity in Italy.

The Foundation's main action areas

include the following:

• Environmental management seminars.

• Collaboration agreements.

• Environmental information publications.

• EnergyTraining Centre.

• Gas Museum and History Centre.

In Colombia, in collaboration with the

District Education Department and the

University of Los Andes, the Foundation

fostered the "Young Scientists"

programme, aimed at providing support for

learning in science and citizenship. In

addition, three new projects were

launched: a training programme for

converting vehicles to natural gas; a

training and certification programme for

natural gas inspectors; and, finally, a

programme for strengthening the business

of contractors and installation firms.

In Mexico, the Foundation maintained its

support for the "UNETE" programme in

2008. This programme was launched in

2006 and focuses on improving child

education through the use of information

and communication technologies. The

"Supplier Training Programme" has also

been launched in collaboration with

FUNDES (Business Solutions Network).

An agreement was also signed with the

Mario Molina Centre for Strategic

Studies on Energy and the Environment

with a view to carrying out research on

the use and environmental impact of

natural gas as a fuel.

In Argentina, the Foundation continued its

support for the "First Export” programme.

Launched in 2001, it aims to help

Argentinian SMEs develop their capacity

for exports. Since it began, the

programme has provided consultancy

services to 7,164 companies and trained

18,510 professionals.

In Brazil, training courses continued in

collaboration with the NGO Viva Rio. They

are designed for young people and adults

in the communities of Cantagalo, Pavao

and Pavaozinho, in the southern area of

Rio de Janeiro.

In Algeria, there was a new seminar on

"Communication and Leadership", designed

for the country's business fabric.

In Morocco, the Foundation belongs to

the Board of the Institut Princesse Lalla

Meryem pour Enfants Autistes, located in

Tangiers, and it also started a training

programme in natural gas for future

engineers from the National School of

Applied Sciences.

All actions carried out in 2008 are

outlined in the Gas Natural

Foundation’s Activities Report. In addition,

updated information on its activities and

publications can also be found on the

Group’s website atwww.gasnatural.com.

Gas Natural Foundation. Activities in Spain

2008 2007 2006

No. of active agreements with autonomous regions 13 12 11

No. of seminars/courses held 18 19 19

Budget allocation (out of total) (%) 17 18 15

No. of publications 4 6 4

Environmental education fact sheets 1 1 1

Information sheets 11 11 11

Gas Natural Foundation. International activities

2008 2007 2006

No. of activities 17 15 11

% of the total budget 17 16 11

No. of countries in which it operates 7 6 5


101

The Gas Natural Group defines integrity as

the policies, procedures and tools that are

in place for ensuring that its activities and

those of its employees are carried out in

accordance with legislation and the internal

and external regulations, standards and

procedures applicable in all its areas of

operation. The Company also understands

that integrity includes the instruments

used to guide its employees towards

behaviour that is coherent with its Mission,

Vision and Values.

The Group's actions in the area of integrity

are ultimately aimed at establishing a

framework for action that encourages all

individuals to carry out their professional

responsibilities on the basis of ethics,

honesty and integrity.

The ultimate responsibility for ensuring the

Company's commitment and that of all its

employees to integrity falls mainly to the

governing bodies and is based on the

policies and practices that have been

created in the area of corporate

governance. At the Gas Natural Group,

corporate governance includes the

structure, policies and processes under

which the Company is managed and

controlled, and its purposes include

guaranteeing that the cultural and ethical

approach, objectives and expectations with

regard to behaviour are spread in cascade

and known by every employee.

The Code of Conduct and the procedures

laid down for its diffusion and protection

are basic elements of the Group's

framework of integrity.

Integrity

102



Governing the Group’s conductIntegrity is one of the commitments laid down in the Gas Natural Group's Corporate Responsibility Policy and is based on the following principles:

• Rejection of corruption and bribery in its business dealings and establisment of measures to prevent and combat them.• Provision of support for the principles of the UN Global Compact, as well as the principles of the OECD for corporate governance.• Respect of all aspects of the United Nations Universal Declaration of Human Rights and the Declaration of the ILO regarding basic rights in theworkplace.

Main indicators (*)

2008 2007 2006

Communications received by the Code of Conduct Committee 22 22 23

Number of messages received per 200 employees 0.64 0.66 0.92

Geographical origin of communications

Argentina (%) 5 5 13

Brazil (%) 0 5 4

Mexico (%) 50 23 4

Colombia (%) 0 23 4

Italy (%) 5 0 0

Spain (%) 40 44 75

Average time for resolving communications (days) 46 42 60

Audit projects analysed on the basis of the risk of fraud 35 28 N/A


Relevant actions

Actions taken 2008 (**)

Adaptation of the Code to the Hydrocarbons Act and reviewaccording to the LOPD. Constitution of the Committee in Italy.Finalisation of the process for notification to suppliers and itsinclusion in the training plan.

Approval of the Corporate Responsibility Policy in accordance with theRegulations for the Organisation and Operation of the Board ofDirectors and its Committees.

Construction of models for measuring credit quality.

Development of standards for controlling, measuring and managing theprice risk. Promotion of its long-term modelling.


Update in accordance with new issues in corporate responsibilityand its consolidation in the employee training plan. Introduction of anarea on the website for access to the code by suppliers andimprovement of the corresponding area on the Group's Intranet.

Homogenisation of the corporate governance regulations for thedifferent companies in the Group.

Progress in the quantification of the exposure to credit risk.Determination of unanticipated losses.

Development of standards for the operational risk susceptible toassurance and integration in the Risk Measurement System of thecorresponding exposure.

(**) The structure of the 2008 Corporate Responsibility Report is based on the commitments of the Group's new policy on the matter. Accordingly, since no formal commitments inthe area of integrity were drawn up last year, there are no proposed actions for 2008.


103

Corporate Governance

The Gas Natural Group's priorities include

guaranteeing transparency and the

effectiveness of the way in which its

bodies of government operate and,

therefore, it assumes advanced practices

in the area of corporate governance. After

the amendments of the Regulation for the

Organisation and Operation of the Board

of Directors and its Committees, the

Gas Natural Group can be said to fulfil

most of the Recommendations for the

Good Corporate Governance of Listed

Companies.

In its commitment to lead the field in the

area of good governance and information

transparency, the Company continued to

adapt its internal regulations to the most

advanced international practices.

The Gas Natural Group's practices in

corporate governance are described in

detail in various annual reports, which are

raised to the General Meeting of

Shareholders for its knowledge or approval.

The documentation drawn up by the

Company in the area of corporate

governance seeks to report on the most

relevant information related to its

standards and procedures, as well as the

criteria on which the decisions that are

taken are based.

All the corporate information is

available to the public on the Group's

website atwww.gasnatural.com.

The development of corporate governance

practices includes the participation of the

General Meeting of Shareholders, the

Company's highest decision-making body,

as well as the Board of Directors and its

Committees: the Executive Committee,

the Appointments and Remuneration

Committee and the Audit and Control

Committee. The Management Committee

also plays a relevant role from the

viewpoint of management.

In 2008, the different bodies of

government met as follows:

• Board of Directors: thirteen meetings.

• Executive Committee: twelve meetings.

• Appointments and Remuneration

Committee: eleven meetings.

• Audit and Control Committee:

seven meetings.

• Management Committee: monthly

meetings.

The Board of Directors, its Committees

and the Management Committee

operated as expected during 2008, fully

exercising their competencies without

interference and in full observance of

current legislation and the applicable

standards for the operation of the

Regulations for the Organisation and

Operation of the Board of Directors and

its Committees.

Diversity of the Board of Directors

Under 55 years of age

55-60 years of age

Over 60 years of age

35

24

41

104


Composition of the Board of Directors and Committees (at 31 de December 2008)

Audit and AppointmentsExecutive Control and Remuneration Type of

Board of Directors Committee Committee Committee Director

Chairman Salvador Gabarró Serra Chairman Executive

Deputy Chairman Antonio Brufau Niubó Board Member Board Member ProprietaryMember

Chief Executive Officer Rafael Villaseca Marco Board Member Executive

Board Member Enrique Alcántara-García Irazoqui ProprietaryMember

Board Member José Arcas Romeu Chairman Independent

Board Member Caixa d´Estalvis de Catalunya. ProprietaryRepresentada por Narcís Serra Serra (1) Member

Board Member Demetrio Carceller Arce Board Member ProprietaryMember

Board Member Santiago Cobo Cobo Board Member Independent

Board Member Carlos Kinder Espinosa Board Member ProprietaryMember

Board Member Enrique Locutura Rupérez ProprietaryMember

Board Member Emiliano López Achurra Independent

Board Member Carlos Losada Marrodán Board Member Independent

Board Member Juan María Nin Génova (2) ProprietaryMember

Board Member Fernando Ramírez Mazarredo Board Member ProprietaryMember

Board Member Francisco Reynés Massanet (3) Board Member Board Member ProprietaryMember

Board Member Miguel Valls Maseda Chairman Board Member Independent

Board Member Jaime Vega de Seoane Azpilicueta Independent

Non-Director Assistant Felipe Cañellas Vilalta Assistant Assistant AssistantSecretary Secretary Secretary Secretary

(1) On 28 April 2008, the Board of Directors replaced the representative of Caixa d’Estalvis de Catalunya, José María Loza Xuriach by Narcís Serra Serra.(2) Juan María Nín Génova joined the Board of Directors on 25 January 2008 in substitution of the Director José Luís Jové Vintró.(3) Francisco Reynés Massanet joined the Board of Directors on 25 January 2008 in substitution of the Director José Vilarasau Salat.

Remuneration of the Board of Directors (in thousands of euros)

Audit and Appointments andExecutive Control Remuneration

Position Board Committee Committee Committee Total

Salvador Gabarró Serra Chairman 550 550 - - 1,100

Antonio Brufau Niubó Deputy Chairman 127 126 - 12 265

Rafael Villaseca Marco Chief Executive Officer 127 126 - - 253

Juan María Nin Génova Board Member 127 - - - 127

Enrique Alcántara-García Irazoqui Board Member 127 - - - 127

Carlos Kinder Espinosa Board Member 127 126 - - 253

Francisco Reynés Massanet Board Member 127 126 12 - 265

Enrique Locutura Rupérez Board Member 127 - - - 127

Demetrio Carcelier Arce Board Member 127 126 - - 253

Fernando Ramírez Mazarredo Board Member 127 - 12 - 139

Caixa d´Estalvis de Catalunya. Board Member 127 - - - 127Representada por Narcís Serra Serra

Carlos Losada Marrodán Board Member 127 126 - - 253

Santiago Cobo Cobo Board Member 127 126 - - 253

Emiliano López Achurra Board Member 127 - - - 127

Miguel Valls Maseda Board Member 127 - 12 12 151

Jaime Vega de Seoane Azpilicueta Board Member 127 - - - 127

José Arcas Romeu Board Member 127 - - 12 139

Total 2,582 1,432 36 36 4,086



105

Code of Conduct

The Gas Natural Group’s commitment to

providing a safe working environment is

based on the Company's Code of

Conduct and can also be seen in its

subscription to the principles of the UN

Global Compact.

The Code of Conduct lays down the

action guidelines and expected behaviour

in areas such as respect for people,

professional development, equal

opportunities and occupational health and

safety, among others. It also sets out the

guidelines for relations between the

Group's employees and the collaborating

institutions or enterprises.

In December 2008, theManagement Committeeapproved a globalproposal for reviewingthe Code of Conduct

In 2008, the Code of Conduct Committee

continued to carry out specific activities

for publishing and complying with the

code across the Group. Created in 2005,

its aim is to promote the distribution,

knowledge and fulfilment of the Code of

Conduct. It is chaired by the Internal Audit

Department and involves representatives

from Labour Relations, Investor Relations,

Corporate Reputation and Customer

Service. The Secretary of the Committee

comes from the HR Development

Department.

The Company has local committees,

whose structure and missions are similar

to those of the Code of Conduct

Committee, in Argentina, Brazil, Colombia,

Italy and Mexico. Their mission is to help

with the correct implementation of the

code in each country.

Their main tasks include supervising the

operation of the procedure for consulting

and notifying the Code of Conduct. It is a

communication channel that allows all the

Group's employees to solve their queries

on the application of the code. They may

also use the procedure to notify the

Committee in good faith, confidentiality

and without fear of reprisal, of conduct

that is contrary to the principles laid down

in the Code.

All communications between the Code of

Conduct Committee and the Gas Natural

Group employees are confidential,

pursuant to the restrictions set forth in

Organic Law 15/1999, governing the

Personal Data Protection Act.

Notifications concerning fraud, auditing or

faults in accounting or internal control

processes are likewise sent directly to the

Audit and Control Committee of the

Company's Board of Directors. In 2008,

32% of the notifications received were

related to alleged fraud, none of which

had any significant impact.

The Code of Conduct is available in eight

different languages. The Company has a

specific area for the code on the corporate

Intranet, which provides practical

information on various matters related to

it, as well as on the consultation and

notification procedure.

The Code of Conduct Committee issues

regular reports to the Audit and Control

Committee and the Management

Committee, and it reviews the reports

drawn up by the local committees. In

2008, the Committee held eight work

meetings and 14 local commissions,

which, among other matters, analysed the

notifications received from employees.

Also in 2008, the Committee did not

receive any notification of incidents taking

place in the Group related with labour or

child exploitation or in relation to the

rights of the corresponding local

communities.

43% of the notifications received by the

Code of Conduct Committee were related

to the principle of respect for people, and

they were all solved appropriately. No

notification was related to any form of

discrimination.

The Committee has a several-year work

plan for developing actions whose main

aim is to extend the Code of Conduct. The

activities considered in 2008 included the

following:

• Update of the Gas Natural Group's Code

of Conduct.

• Training and information activities aimed

at the Company's employees.

• Activities for extending the code to

suppliers in Spain and abroad.

• Review of the security of the

processes related to the Gas Natural

Group's notification and consultation

procedure.

106


Mention must be made of the fact that

the Company's Board of Directors

approved the adaptation of the code to

the amendment of the Hydrocarbons Act.

Furthermore, in December 2008, the

Management Committee approved a

global proposal for reviewing the Code of

Conduct. The said proposal will be raised

for approval in 2009.

This recent adaptation seeks to include in

the code the commitments assumed by

the Company in the area of good

governance and corporate responsibility

since 2005, which is when it was

approved. In addition, the aim of the

update is to introduce the most advanced

International recommendations in the area

of corporate responsibility, ethics and

integrity.

The main new features of the Code of

Conduct include the introduction of

sections related to corruption, bribes and

money laundering, among others. The

new code also pays special attention to

matters such as its application in relation

to suppliers, contractors and collaborating

companies or the prevention of conflicts

of interest. Likewise, it underlines the

need for all the Company's employees to

collaborate in order to prevent the

appearance of bad practices.

The Code of Conduct Committee received

a total number of 22 communications in

2008: three consultations and

19 notifications. The result is a ratio of

0.64 communications for every

200 employees.

The Code of Conduct is included in the

welcome packs and is given to new

employees. It has also been included in

the Company's Training Plan in 2008, and

a total number of 304 training hours have

been given on the subject.

In 2008, the process for the distribution of

the Code of Conduct among the Group's

suppliers and collaborating companies

came to an end. The main aim was to

provide information on the commitments

assumed by the Company and notify the

existence of the notification and query

procedure for use by the said collectives.

The process provided information for a

total number of 810 suppliers, contractors

and collaborating companies in all the

countries in which the Group operates.

In 2009, there are plans for introducing an

area on the website for access to the

Code of Conduct by suppliers.

Code of Conduct chapter to which communications refer (%)

Queries Notifications Total

Respect for the law and ethical values - 17 15

Respect for other persons 25 43 40

Professional development and equal opportunities - 23 18

Health and safety at work 25 - 4

Loyalty to the Company and conflicts of interest - - -

Processing of information and knowledge 25 - 4

Relations with external collaborating companies and suppliers - 17 15

Use and protection of assets 25 - 4

Total 100 100 100

Average time for resolving communications (days)

2008 2007 2006

Queries 31 30 39

Notifications 48 49 74

General 46 42 60

Access to content on the Code of Conduct

Number of visits

NaturalNet 1,417

Corporate website 4,838

Total 6,255


107

Risk ManagementSystem

The context in which the Gas Natural

Group carries out its activity places it on a

scenario subject to a variety of inherent

risk factors.

In order to minimise the risks associated

with the business, the Group has

developed specific mechanisms that

enable their correct understanding,

characterisation and determination. In

addition, in recent years it has progressed

in the global management and control of

the most relevant risks. This has allowed

the Company to obtain more detailed

knowledge of the risks in the daily

management of its different businesses

and in the processes for reflection and

strategic planning.

One of the key concepts to the

Company's risk management is the

concept of risk profile, understood as the

level of exposure to the uncertainty

resulting from the joint effect of the

various categories of risk classified by the

Gas Natural Group.

The identification, characterisation and

measurement of the most relevant risks

provide knowledge about the Group's

overall risk profile at all times. This

knowledge makes it possible to

determine the maximum exposure to the

risk that is accepted, managing it through

the allocation of limits by risk category

and in global terms to establish the global

target risk profile.

In order to minimise therisks associated with thebusiness, the Group hasdeveloped specificmechanisms that enabletheir correctunderstanding,characterisation anddetermination

Monitoring and assessing risk exposure in

an integrated approach, and controlling

overall exposure to it, allows efficiency in

decision-making to be underpinned,

making it possible to optimise the risk-

return binomial.

The consultation and notificationprocedure in the Gas Natural Group'sCode of Conduct, a consolidated tool

The month of March 2008 marked the anniversary of two years since the launch of the Group'sconsultation and notification procedure. Managed by the Code of Conduct Committee, it allowsthe Group's employees to consult their queries on the interpretation of the code or to notifyany breaches of the Code of Conduct they may have observed.

The Gas Natural Group's corporate Intranet, NaturalNet, includes a specific area on theCode of Conduct. During its more than two years of life, the consultation and notificationprocedure has been used on numerous occasions by the Company's employees to consulttheir queries or report bad practices.

The procedure allows all the people at the Group to interpret the Code of Conduct in aconsistent manner and provides them with a point of reference in case of doubt.

Type of risk

Business• Gas price.• Electricity price.• Gas volume.• Electricity volume.• Regulatory.• Strategic.

Financial• Interest rate.• Exchange rates.• Liquidity.

Credit• Retail.• Wholesale.

Operational• Legal/contractual.• Human resources.• Fraud.• Processes.• Informationsystems.

108


The Risk Committee, the development

of standards led by the General Risk

Standard, the Corporate Risk Map and

the Risk Measurement System enable

the continuous improvement of the

process for identifying, characterising

and determining the Gas Natural Group's

risk profile.

The function of the Risk Committee is to

determine and review the Group's target

risk profile, guaranteeing its congruence

with the Company's strategic positioning

and assuring third-party interests. It is

also responsible for ensuring that the

entire organisation understands and

accepts its responsibility in identifying,

appraising and managing the most

significant risks.

Furthermore, the General Risk Standard

lays down the general principles and

guidelines for behaviour in order to

identify, inform, assess and manage the

Group's exposure to risk. The Risk

Committee is responsible for updating

and implementing the standard.

The Risk Measurement System is a

dynamic information instrument that

shows the Gas Natural Group's level of

exposure to different risk categories. The

preparation and updating of the said

map is the responsibility of the Financial-

Economic Department in collaboration

with the Internal Audit Department and

the business units. Its content is

discussed by the Management

Committee. The conclusions are

presented to the Risk Committee, the

Audit and Control Committee and,

where applicable, the Board of Directors

as a whole. The map is updated at least

once a year.

The identification and characterisation of

the risks take into account the

characteristics of the position at risk, the

impact variables, the potential quantitative

and qualitative severity, the probability of

occurrence and the degree of

management and control. The various

risks are characterised in absolute

and relative terms and illustrated in

graph format.

Corporate Risk Map

Process for identifying, characterising and determining the risk profile

Final RiskDetermining the proposal control New Postion Postion

the global by business and mana- position and risk and risk Alternativerisk profile unit gement identification information development proposal Approval

Governing bodies • •Persons in charge of •overall risk profile

Persons in charge ofrisk control and • • •measurement

Persons in charge ofrisk management and • • • • •spheres of action

Level of management

Severity(Meur)

Risk impactseverity

Very high

High

Average

Low

Very low


109

The Gas Natural Group has a Risk

Measurement System whose aim is to

quantify, on the basis of probability and

recurrence, the risk position assumed on

a global level and in each relevant

business with regard to risk factors

related to exchange rates and raw

materials for energy.

This system was devised as a support

tool for the business units and

guarantee that they have an optimum

level of independence in decision

making, while simultaneously ensuring

that the level of risk taken on by the

Gas Natural Group and per business unit

is in keeping with the risk profile

established by the governing bodies.

The measurement system used by the

Company also makes it possible to

identify the existence of natural cover

among the various business units,

thereby guaranteeing efficiency in

economic terms and regarding risk in

decision-making and safeguarding the

interests of the concurrent stakeholders.

In 2008, the Company continued to

develop and improve the system,

making significant progress in its

implementation regarding the following

types of risk:

short-term results. For each time

horizon and type of risk position

assumed, metrics are adopted to

control and manage the price risk more

efficiently. This includes particular

consideration of the relevant time

horizons for the potential management

of the positions. For the said

structures, the time horizon is longer

and cash-flow-at-risk or earning-at-risk

type metrics are used. For the arbitrary

and short-term positions,

measurements related to the value of

positions such as value-at-risk are

used. The relevant limits are given in

terms of the metrics that are used.

• Credit risk.With regard to the

wholesale and retail areas, various

statistical models were developed to

measure credit quality. This makes it

possible to increase the efficiency of

the commercial policy, providing

greater knowledge of the risk profile of

the customer base and any possible

alterations.

• Price risk. In 2008, the Risk

Committee approved the Market Risk

Limits Allocation and Management

Procedure. The limits that were

proposed include differentiated

treatment, in measurement terms, for

the positions assumed on a structural

scale in the mid and long terms with

regard to the arbitrary trading positions

that can be adopted to optimise the

Group/Business risk positions

Group/Business results volatility


In addition, the Company progressed in

the implementation of the long-term

price risk measurement models, which

complement those used at present.

Long-term price risk measurement is a

significant challenge, since the

measurements tend to lose their

accuracy when the time horizon for the

uncertainty is extended. Accordingly,


fact that in 2008 the price risk was

incorporated into the recurrent

measurement. This provides an

appropriate prediction of the long-term

behaviour of the prices of raw materials,

showing the differences in behaviour in

the corresponding short and long terms.

Internal Audit

For the Gas Natural Group, the internal

audit is an independent and objective

assessment tool. The Internal Audit

Department depends hierarchically on the

Audit and Control Committee of the Board

of Directors and reports to the Company's

Chairman and CEO.

The aim of the internal audit is to

supervise and systematically assess the

effectiveness of the Gas Natural Group's

Internal Control System. It provides a

methodical and rigorous focus for

monitoring and improving processes and

for assessing operational risks and the

associated controls.

The Internal Audit Department has

established a methodology for

assessment of the operational risks based

on the conceptual framework of the

COSO Report (Committee of Sponsoring

Organisations of theTreadway

Commission), and taking as a point of

departure the type of risks defined in the

Corporate Risk Map. Special mention

must be made of the fact that the

methodology used complies with the

most advanced International

recommendations in the area of corporate

governance.

Accordingly, the Internal Audit

Department assumes responsibility for

verifying compliance with the policies,

standards and controls put in place by

senior management in order to assess the

operational risks of the processes and

prevent and identify internal control

weaknesses, including those that are

related to ethical issues such as

corruption and bribes. In accordance with

the results obtained, action plans are then

designed focused on implementing

corrective measures.

The aim of the internalaudit is to supervise andsystematically assess theeffectiveness of theGas Natural Group'sInternal Control System

In 2008, 96 internal audit projects were

developed, 35 of which corresponded to

the review of processes associated with

the main operational risks of the general

corporate and business departments in

the Gas Natural Group.

In addition, given its organisational

position of independence and transverse

nature, the Internal Audit Department

takes part in or leads the relevant

projects from the point of view of

compliance with internal codes of

conduct as the chairman of the Code of

Conduct Committee.

Non-fulfilments andfines

In 2008, the Gas Natural Group did not

register any incident in relation to breach

of legislation or the voluntary code

related to the impact of products and

services on customer health and safety.

In 2008, certain fines were applied in

Spain in various areas related to

customers. Accordingly, the information

offered in this report is based on the

lists available in the Gas Natural Group's

Legal Services Department. The

references to cases are those which are

in possession of the said Department.

It is worth highlighting that all the

Gas Natural Group's activities are strictly

submitted to current local legislation.

The Company places particular emphasis

on the appropriate and transparent

provision of the information on the

products and services it provides.

110


111Likewise, the Gas Natural Group is a

member of Autocontrol,( )*

a non-profit association that manages

the Spanish advertising self-regulation

system. The Autocontrol controversy

resolution system has been recognised

by the European Commission owing to

the fact that it observes and fulfils the

principles of independence,

transparency, contradiction,

effectiveness, legality, freedom of choice

and right to representation by the

consumer, as laid down in

Recommendation 98/257/EC.

Total number of non-compliance with the regulation and the voluntary codes related tothe information and labelling of products and services, distributed in accordance with thetype of result of the said incidents

Type of non-compliance Company Total fines (in euros) No. of reports

Transfer of supply contracts Gas Natural Servicios SDG, S.A. 30,100 1

Not replying to requirements Gas Natural Andalucía, S.A. 1,100 1

Gas Natural Andalucía, S.A. 1,000 1

Gas Natural Andalucía, S.A. No economic fine 1

Gas Natural La Coruña, S.A. 600 1

Desarrollo del Cable, S.A. 300 2

Breach of conditions A.A. Gas Natural Distribución SDG, S.A. 24,000 1

Violation of consumer regulations Gas Natural Servicios SDG, S.A. 9,100.00 1

Incorrect readings Gas Natural Castilla y León, S.A. 800 1

Breach ICT 341/2004 Gas Natural Distribución SDG, S.A. No economic fine 1

Misleading advertising Gas Natural Servicios SDG, S.A. No economic fine 1

Monetary value of significant fines and total number of non-monetary sanctions fornon-compliance with laws and regulations


Tax deductions in pre-operative period Central Saltillo, S.A. de C.V. (México) 960,540.54 1

Total number of duly founded claims regarding the respect for privacy and the leakageof customers' personal details


Assignment of data to third parties Gas Natural Andalucía, S.A. 360,607.00 1

Gas Natural Servicios SDG, S.A. 9,000.00 1

Gas Natural Servicios SDG, S.A. No economic fine 1


Processing of data without consent Gas Natural Servicios SDG, S.A. 60,101.20 1







Customer's data not up-to-date Gas Natural Castilla y León, S.A. 60,101.21 1

Incorrect contract Gas Natural Servicios SDG, S.A. 60,101.21 1


Change of ownership in contracts Gas Natural Servicios SDG, S.A. 60,101.21 1

Collection of fraudulent data Gas Natural Servicios SDG, S.A. 60,101.21 1

Incorrect data Gas Natural Servicios SDG, S.A. 60,000.00 1


AdditionalInformation

The Millennium Development Goals 113and the Gas Natural Group

Awards and Recognition 115

Contents and GRI Indicators 117

Global Compact, MDGs and GRI 124

Independent Review Report 125

113

2008 Corporate Responsibil ity Report. Additional Information

TheMillenniumDevelopmentGoals and theGas NaturalGroup

In 2000, the Millennium Summit brought

together 189 heads of state and

government at the United Nations

Organisation with the purpose of

combining their efforts to wipe out

poverty worldwide and improving the

well-being of the most underprivileged

members of society. This spirit was

reflected in the Millennium Declaration

signed by all the attendees at the summit,

which constitutes a firm commitment to

the Millennium Development Goals.

The Gas Natural Group is aware that

fulfilling its targets, given their magnitude,

requires the collaboration of governments,

enterprises and social players. Their

fulfilment exceeds the capacities of any

one business or government.With this

premise in mind, the Company does

everything in its power to help achieve

these goals.

As part of its human rights efforts, the

Group has adapted its social contribution

strategy to the Millennium Development

Goals.

Goal 1. Eradicate extreme poverty and hunger

Action Country

Taking part in disseminating the “Éntrale al Reto Kilo” campaign by the Un Kilo de Ayuda Foundation. The goal of the project is to wipeout infant malnutrition.

Donation of coats to the São Paulo’s Social Solidarity Fund. The Group distributed information leaflets to employees and customers.

Collaboration with Lar Beneficiente Arco-Íris on a project that provides assistance for children and young people in the orphanage of theBelford Roxo community.

Supporting various entities and associations to cover basic needs in low-income quarters of Buenos Aires.

Support for Casa de la Caridad (a Valencia-based Charitable Association) in providing food for the city's homeless.

Mexico

Brazil

Brazil

Argentina

Spain

Goal 2. Achieve universal primary education

Action Country

Support to various institutes and associations for running nursery schools in autonomous regions.

Contribution to the Neighbourhood and Friends Association of the Conjunto Esperança district with the purpose of maintaining itsliteracy school for children and young adults.

Supporting the Social Development Commission, granting bursaries to promote academic training in the Santa Ana School inDerqui.

Support to Dividendo por Colombia Foundation for the "Basic Learning" programme through 650 grants for children with low-levelresources at 22 educational institutions.

Donation of office furniture for the Victor Salazar Ruíz and Juan B. Tijerina schools, among others.

Brazil

Brazil

Argentina

Colombia

Mexico

114


Goal 3. Promote gender equality and empower women

Action Country

Collaboration agreement with the Generalitat of Catalonia to provide training and contracts for women that have suffered fromdomestic violence.

Collaboration with the Gas Natural Foundation for research on law and enterprise.

Collaboration with the "Joves fora de sèrie" programme broadcast byTV3 in Catalonia for the promotion of education in values.

Spain

Spain

Spain

Goal 4. Reduce child mortality

Action Country

Support for the Adulão institutional community, which has the object of providing food, medical care and educational support tochildren.

“Gas Natural and Paediatric Network” programme, which involves cooperation with the cooperative civil association of thepaediatric network of educating prevention for health.

Support for the Abood Shaio Foundation for the development of the “Fashion with a Heart” programme, the purpose of which is toprovide medical care to children with heart problems.

Collaboration with the Casa de la Amistad Foundation with support for Mexican families with low-level economic resources andwith children suffering from cancer.

Support for UNICEF’s programmes to guarantee children's rights.

Support for ALCESI (Association for the Fight against Blood Diseases in Children) at the Las Lunadas 2008 event in benefit of theHaematology Unit of the Ricardo Gutiérrez Hospital.

Brazil

Argentina

Colombia

Mexico

Spain

Argentina

Goal 6. Combat HIV/AIDS, malaria and other diseases

Action Country

Economic contribution to the 2007 national collection of the Mexican Red Cross.

Suport for the ProCnic Foundation (National Cardiovascular Research Centre).

Support for civil society associations and foundations whose aim is to help sick children.

Collaboration with the Adecco Foundation’s “Family Plan” programme. Geared towards employees’ families, it carries outtraining initiatives to foster social and labour insertion of the disabled. Cooperation with the Femarec Foundation, with thesame objective.

Support for the Carriegos Foundation for the promotion of cultural activities and the rehabilitation of patients withneurodegenerative and traumatological diseases through equestrian activities.

Collaboration with the Guttmann Institute to help people affected by cerebral or spine injuries or other neurologicaldisabilities.

Collaboration with the Hospital del Quemado Corporation Association (ACIQ).

Internal campaign for training, prevention and early detection of HIV/AIDS among Group employees.

Mexico

Spain

Mexico

Spain

Spain

Spain

Argentina

Mexico

Goal 5. Improve maternal health

Action Country

Collaboration with FUNDALAM (Foundation for Nursing and Maternity) to promote health between mothers and children.

Support for the CIM*AB Foundation, whose aim is to wipe out breast cancer.

Argentina

Mexico

115


Goal 7. Ensure environmental sustainability

Action Country

Training of technical employees in automobile mechanics for converting vehicles to natural gas.

Environmental management seminar to present a simulation of the hypothetical improvement of the air quality inBarcelona and Madrid if a significant part of the vehicles that today run on petrol or diesel are replaced by others runningon natural gas.

Support for the Entorno Foundation for the development and promotion of training, research and information inenvironmental matters.

Participation in "A Reforestation Day" as part of the reforestation programme in the main protected areas of Mexico andConservation Land carried out by Naturalia, Comité para la Conservación de Especies Silvestres A.C

Help for the Fernanda Keller Institute in the training of young people as environmental officers in the district of Niteró.

Collaboration with Punto Radio (Onda Ramblas S.A.) on a Green roadshow programme, which focuses on training andeducation in environmental issues.

Collaboration with the Natura Foundation in actions for the protection, improvement, restoration and conservation of theenvironment.

Collaboration with the NGO Accionatura on the implementation of more than 70 studies and projects for recovering andconserving the environment.

Spain

Spain

Spain

Mexico

Brazil

Spain

Spain

Spain

Acknowledgement in responsible investment indices

The Gas Natural Group has maintained its position on the Down Jones World Sustainabilityindex (DJSI World) for the third year running. The Company has obtained the best scoresin its sector in the areas related to code of conduct, customer satisfaction andmanagement, biodiversity, environmental report, gas plant management and CorporateResponsibility Report.

The Group has remained part of the FTSE4Good sustainability indices for the seventh yearrunning. The Company has been listed since the index was created.

The Company formed part of the FTSE4Good Ibex, which includes the companies on the Ibex 35that meet the performance criteria in social responsibility and the environment.

The Gas Natural Group is present in the KLD Climate Change 100 Index, which recognises companieswith the greatest commitment to the fight against the effects of climate change. The Company alsoforms part of the ECPI Ethical Index Euro and theTriodos Bank ethical investment universe.

Goal 8. Develop a global partnership for development

Action Country

“First Export” programme, which includes free and specialised guidance on foreign trade for SMES in Argentina.

Sponsorship of the World Gas Congress.

“2015. A Better World for Joana” campaign, for disseminating, raising awareness and promoting the Millennium DevelopmentGoals.

Collaboration with the Corporate Responsibility Colombian Centre in order to promote, among others, better corporateresponsibility practices.

Collaboration with the Chamber of Commerce of Argentina on the "Chair of the CSR Global Compact" programme, whose aim is toenable the understanding and implementation of the principles of the UN Global Compact.

Argentina

Spain

Spain

Colombia

Argentina

Awards andRecognition

116


Awards and recognition given to the Gas Natural Group

The Chairman of the Gas Natural Group, Salvador Gabarró, obtained the "Career Achievement" award by the Association of Industrial Engineers ofCatalonia as part of its Annual Engineering Congress.

Through its subsidiary Ecoeléctrica, the Gas Natural Group was also given the Environmental Quality Award, the highest recognition given by the USEnvironmental Protection Agency.

The Gas Natural Group's Corporate Responsibility Report received the prize given by readers in the category of "Best Report for the Media", awardedby Global Reporting Initiative in 2008.

The Gas Natural Group's Corporate Responsibility Report was recognised in 2008 as a finalist in the Corporate Register Reporting awards.The Company's report was recognised in three categories: Best Report, Credibility in Information through Verification and Creativity inCommunication.

For the third year running, the Group was given the Mexican Philanthropic Centre award for a “Socially Responsible Company”.

For the second year running, the Group received the “Solidarity Company” certificate from the Monteiro Lobato boarding school, an institution whichis dedicated to providing teaching and care to over 300 children and adolescents without economic means in Sorocaba (Brazil).

Sustainable Asset Management (SAM) and PricewaterhouseCoopers gave the Gas Natural Group a Gold Class rating in the annual publicationanalysing the sustainability practices of the companies making up the Dow Jones Sustainability Index.

The Gas Natural Group was included in the ranking of the "Europe’s Top 50" according to the Business Week magazine, the only Spanish energycompany included in the classification.

Coinciding with the Company's 165th anniversary, Círculo de Economía rewarded the Gas Natural Group for its business record.

The Company was also awarded a prize by the Official Chamber of Commerce of Spain in France (COCEF) with the prize for the best Spanishenterprise in the said country.

Gas Natural México was recognised for the second year running as "Super Enterprise 2008", according to Expansión magazine, and joined the list ofthe top 90 companies for employment.

Gas Natural ESP received the Andesco Prize for corporate responsibility in the category of “Best Market Environment”, awarded by ANDESCO (NationalAssociation of Public Domestic Services Companies of Colombia).

Gas Natural Servicios was awarded a prize for its direct marketing campaign for the heated swimming pool service in Argentina. It was also awardedthe Lápiz Directo de Oro Prize 2008 by Editorial Dossier and the Círculo de Creativos Directos, and second prize in the Wave Festival in Rio, organisedby the Meio & Messagem Group, with the support of the Advertising Age magazine.

The Managing Director of Gas Natural SPS, Eduardo Cardenal, received the title of "Citizen of Soracaba", awarded by the Municipal Chamber ofSoracaba (Brazil).

Gas Natural México received the "Max Shein" medal from the Union of Entrepreneurs for Educational Technology, A.C. (ÚNETE).

The Gas Natural Foundation was recognised at the Konex Prizes 2008, awarded by the Konex Foundation for the most outstanding 100 personalitiesand institutions of the last decade in Argentina.

Gas Natural Distribuzione Italia was included in the 2008 Golden Book of Corporate Social Responsibility.

The Spanish Chamber of Commerce in the Republic of Argentina (CECRA) gave Gas Natural BAN the prize for the 2008 Best CorporateSocial Work.

The “First Export” programme of the Gas Natural Foundation received the Corporate Citizenship Prize awarded by the UN Chamber of Commerce inArgentina (AMCHAM).

Gas Natural ESP continues to hold first place in the "Bogotá, Our Progress" survey in the category of "Quality in the Provision of PublicNatural Gas Services”.

117


Contents andGRI Indicators

Contents

The following table indicates the

chapters and the pages of the 2008

Corporate Responsibility Report of the

Gas Natural Group containing the

different requirements established by

the Global Reporting Initiative

(G3 Guidelines, 2006).

1. Strategy and Analysis Pages Verification

1.1 Chairman’s statement. 3-4

1.2 Description of main impacts, risks and opportunities. 17, 106

2. Organisation Profile Pages Verification

Organisation Profile

2.1 Name of organisation. 11

2.2 Main brands, products and/or services. 5, 11-12, 16

2.3 Operational structure of organisation, including the main divisions, operating entities,subsidiaries and joint ventures. 11-13

2.4 Location of the organisation’s head office. Back cover

2.5 Location and name of the countries in which significant activities are performed or which arerelevant specifically with regard to sustainability matters addressed in the report. 5, 11

2.6 Nature of ownership and legal personality. 11

2.7 Markets served (including the geographical breakdown, the sector supplied and the types ofcustomers/beneficiaries). 5, 11-13, 38, 41-42

2.8 Dimensions of the organisation (including number of employees, net sales or revenues,total qualifications, amount of product or service rendered). 5, 11-13, 22, 48, 72

2.9 Significant changes in the size, structure and ownership of the organisation over the period covered by the report. 11, 15

2.10 Prizes and awards received during the period in question. 115-116

3. Parameters of Report Pages Verification

Profile of Report

3.1 Period covered by the information contained in the report. 5-6

3.2 Date of most recent previous report. 6

3.3 Cycle for presentation of reports (annual, twice-yearly, etc.). 9

3.4 Contact details for questions relating to report or its content. 9

118


Scope and Coverage of Report

3.5 Process of definition of report contents. 5-9

3.6 Coverage of report. 5-6

3.7 State any limitations in the scope or coverage of report. 5-9

3.8 Information on joint ventures, subsidiaries, leased installations, subcontracted activities, and other entitieswhich could significantly affect the comparison between periods and/or organisations. 5-9

3.9 Techniques for measuring data and bases for making calculations, including the assumptions and techniquesunderlying the estimates applied in the compiling of indicators and other information in the report. 5-6, 9

3.10 Description of the effect that the restatement of information belonging to previous reports could have,together with the reasons for said restatement. 6, 9

3.11 Significant changes relating to previous periods in the scope, coverage or in the valuation methodsapplied in the report. 5-6

Index of GRI Contents

3.12 Table indicating the location of the basic contents of the report. 117-123

Verification

3.13 Policy and current practice in respect of requesting external verification of report. 3, 6, 7, 125

4. Governance, Commitments and Participation of Stakeholders Pages Verification

Governance

4.1 Governance structure of organisation. 27-28, 103-104, 110

4.2 State whether the Chairman holds an executive post. 104

4.3 Number of members of the highest governing body who are independent or not executive. 104

4.4 Mechanisms of shareholders and employees to notify the highest governing body ofrecommendations and indicators. 27-28, 30-32

4.5 Link between the remuneration of the highest governing body, senior management and executivesand the performance of the organisation. CGR 14-15

4.6 Procedures implemented to prevent conflicts of interest in the highest governing body. CGR 33-34

4.7 Procedure for determining the qualification and experience required from members of the highestgoverning body to guide the organisation’s strategy in social, environmental and economic matters. CGR 16-17

4.8 Mission and values statements developed internally, codes of conduct and policies relating toeconomic, environmental and social performance, and the state of the implementation thereof. 14-15, 24-26, 102, 105-107

4.9 Procedures of the highest governing body to supervise the identification and management, by the organisation,of the economic, environmental and social performance, including the related risks and opportunities,and the adherence or compliance with internationally agreed standards, codes of conduct and principles. 27-28

4.10 Procedures to assess the performance of the highest governing body, particularly regarding the economic,environmental and social performance. CGR 16

Commitments with External Initiatives

4.11 Description of how the organisation has adopted a preventive approach or principle. 24, 107-110

4.12 Social, environmental and economic principles or programmes carried out externally, and those whichany other organisation may subscribe or approve. 93-100, 113-115

4.13 Main associations to which it belongs and/or national and international entities which the organisation supports. 99-100

Participation of Stakeholders

4.14 List of stakeholders which the organisation has included. 7-8, 28-32

4.15 Base for identifying and selecting the stakeholders to which the organisation is committed. 7-8, 28-32

4.16 Approaches taken for the inclusion of stakeholders, including the frequency of their participationby types and the category of the stakeholders. 7-8, 28-32

4.17 Main concerns and areas of interest which may have arisen through the participation of the stakeholdersand the way in which the organisation has responded thereto in the drawing up of the report. 7-8, 28-32

119


Performance Indicators

Economic Performance Indicators Pages Verification

Management Approach 19-20, 24-26, 47-48

GRI code GRI description

Aspect: Economic Performance

EC1 (P) Direct value generated and distributed. 12, 19-20

EC2 (P) Financial implications and other risks and opportunities for the organisation’s activitiesdue to climate change. 17, 57

EC3 (P) Coverage of the organisation’s defined benefit plan obligations. 79

EC4 (P) Significant financial assistance received from governments. AR 122

Aspect: Presence in Market

EC5 (A) Range of ratios of standard entry level wage compared to local minimum wage atsignificant locations of operation. 78

EC6 (P) Policy, practices and proportion of spending on locally-based suppliers at significantlocations of operation. 45

EC7 (P) Procedures for local hiring and proportion of senior management hired from the localcommunity at significant locations of operation. 73-74

Aspect: Indirect Economic Impacts

EC8 (P) Development and impact of infra-structure investments and services provided primarilyfor public benefit through commercial, in-kind, or pro bono engagement. 93-94

EC9 (A) Understanding and describing significant indirect economic impacts, including theextent of impacts. 17-20, 65-68, 100

Environment Performance Indicators Pages Verification

Management Approach 24-26, 53-54


Aspect: Materials

EN1 (P) Materials used, by weight or volume. 64

EN2 (P) Percentage of materials used that are recycled input materials. (Note 1)

Aspect: Energy

EN3 (P) Direct energy consumption by primary energy source. 22, 54, 59

EN4 (P) Indirect energy consumption by primary source. 59

EN5 (A) Energy saved due to conservation and efficiency improvements. 60

EN6 (A) Initiatives to provide energy-efficient or renewable energy based products and services,and reductions in energy requirements as a result of these initiatives. 63-64

EN7 (A) Initiatives to reduce indirect energy consumption and reductions achieved. 63-64

Aspect:Water

EN8 (P) Total water withdrawal by source. 54, 62

EN9 (A) Water sources significantly affected by withdrawal of water. 62, 67

EN10 (A) Percentage and total volume of water recycled and reused. 62

(*)

(*)

(*) Spain.

120


Aspect: Biodiversity

EN11 (P) Location and size of land owned, leased, managed in, or adjacent to, protected areas and areasof high bio-diversity value outside protected areas. Identify operational sites owned, leased, managed in,located in, adjacent to, or that contain protected areas and areas of high biodiversityvalue outside protected areas. 66

EN12 (P) Description of significant impacts of activities, products, and services on biodiversity in protectedareas and areas of high biodiversity value outside protected areas. 65-68

EN13 (A) Habitats protected or restored. 68

EN14 (A) Strategies, current actions, and future plans for managing impacts on biodiversity. 65-68, 70

EN15 (A) Number of IUCN Red List species and national conservation list species with habitats in areasaffected by operations, by level of extinction risk. 67-68

Aspect: Emission, Spills andWaste

EN16 (P) Total direct and indirect emissions of greenhouse gas emissions, by weight. 22, 54, 57

EN17 (P) Other relevant indirect green-house gas emissions by weight. 57

EN18 (A) Initiatives to reduce greenhouse gas emissions and reductions achieved. 58

EN19 (P) Emissions of ozone-depleting substances by weight. (Note 2)

EN20 (P) NOx, SOx, and other significant air emissions by type and weight. 61

EN21 (P) Total water discharge by quality and destination. 67

EN22 (P) Total weight of waste by type and disposal method. 62,64

EN23 (P) Total number and volume of significant spills. 68

EN24 (A) Weight of transported, imported, exported, or treated waste deemed hazardous under the termsof the Basel Convention Annexe I, II, III, and VIII, and percentage of transported wasteshipped internationally. 62

EN25 (A) Identity, size, protected status, and biodiversity value of water bodies and relatedhabitats significantly affected by the reporting organisation’s discharges of water and runoffs. 65-68

Aspect: Products and Services

EN26 (P) Initiatives to mitigate environmental impacts of products and services, andextent of impact mitigation. 63-64

EN27 (P) Percentage of products sold and their packaging materials that are reclaimed by category. (Note 3)

Aspect: Compliance with Laws

EN28 (P) Monetary value of significant fines and total number of non-monetary sanctionsfor non-compliance with environmental laws and regulations. 68

Aspect: Transport

EN29 (A) Significant environmental impacts of transporting products and other goods andmaterials used for the organisation’s operations, and transporting members of the workforce. 56-57

Aspect: General

EN30 (A) Total environmental protection expenditures and investments by type. 69-70

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Society Performance Indicators Labour: Practices and DecentWork Pages Verification

Management Approach 24-26, 71-72, 85, 86


Aspecto: empleo

LA1 (P) Total workforce by employment type, employment contract, and region. 76

LA2 (P) Total number and rate of employee turnover by age group, gender, and region. 74-75, 80

LA3 (A) Benefits provided to full-time employees that are not provided to temporary orpart-time employees, by major operations. 79 (Note 4)

Aspect: Relations Company/Employees

LA4 (P) Percentage of employees covered by collective bargaining agreements. 77

LA5 (P) Minimum notice period(s) regarding significant operational changes,including whether it is specified in collective agreements. 77

Aspect: Occupational Health and Safety

LA6 (A) Percentage of total workforce represented in formal joint management-worker health andsafety committees that help monitor and advise on occupational health and safety programmes. 90-91

LA7 (P) Rates of injury, occupational diseases, lost days, and absenteeism, and total numberof work-related fatalities by region. 88, 90

LA8 (P) Education, training, counseling, prevention, and risk-control programmes in placeto assist workforce members, their families, or community members regarding serious diseases. 88, 91

LA9 (A) Health and safety topics covered in formal agreements with trade unions. 90-91

Aspect: Education andTraining

LA10 (P) Average hours of training per year per employee by employee category. 81-82

LA11 (A) Programmes for skills management and lifelong learning that support the continued employabilityof employees and assist them in managing career endings. 81-82

LA12 (A) Percentage of employees receiving regular performance and career development reviews. 82-83

Aspect: Diversity and Equal Opportunities

LA13 (P) Composition of governance bodies and breakdown of employees per category accordingto gender, age group, minority group membership, and other indicators of diversity. 73-76, 103-104

LA14 (P) Ratio of basic salary of men to women by employee category. 76

Society Performance Indicators: Human Rights Pages Verification

Management Approach 24-26, 71-72, 85-86, 101-102, 105-107


Aspect: Investment and Supply Practices

HR1 (P) Percentage and total number of significant investment agreements that include humanrights clauses or that have undergone human rights screening. 105-106

HR2 (P) Percentage of significant suppliers and contractors that have undergone screening onhuman rights and actions taken. 106-107

HR3 (A) Total hours of employee training on policies and procedures concerning aspectsof human rights that are relevant to operations, including the percentageof employees trained. 82, 105-107

Aspect: Non-Discrimination

HR4 (P) Total number of incidents of discrimination and actions taken. 105-106

(*) Spain.

(*)

(*)

(*)

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Aspect: Freedom of Association and Collective Agreements

HR5 (P) Operations identified in which the right to exercise freedom of association or collectivebargaining may be at significant risk, and actions taken to support these rights. 77

Aspect: Child Exploitation

HR6 (P) Operations identified as having significant risk for incidents of child labour, andmeasures taken to contribute to the elimination of child labour. 101, 105

Aspect: Forced Labour

HR7 (P) Operations identified as having significant risk for incidents of forced or compulsorylabour, and measures taken to contribute to the elimination of forced or compulsory labour. 101, 106

Aspect: Safety Practices

HR8 (A) Percentage of security personnel trained in the organisation’s policies or proceduresconcerning aspects of human rights that are relevant to operations. 82, 105, 107

Aspect: Rights of Indigenous People

HR9 (A) Total number of incidents of violations involving rights of indigenous peopleand actions taken. 101, 105

Society Performance Indicators: Society Pages Verification

Management Approach 24-26, 93-94, 101-102


Aspect: Community

SO1 (P) Nature, scope, and effectiveness of any programmes and practices that assess andmanage the impacts of operations on communities, including entering,operating, and exiting. 70, 95

Aspect: Corruption

SO2 (P) Percentage and total number of business units analysed for risks related to corruption. 110

SO3 (P) Percentage of employees trained in organisation’s anti-corruption policies and procedures. 106

SO4 (P) Actions taken in response to incidents of corruption. 105-107

Aspect: Public Policy

SO5 (P) Public policy positions and participation in public policy development and lobbying. 99-100

SO6 (A) Total value of financial and in-kind contributions to political parties, politicians,and related institutions by country. (Note 5)

Aspect: Unfair competition

SO7 (A) Total number of legal actions for anti-competitive behaviour, anti-trust and monopolypractices, and their outcomes. 110-111


SO8 (P) Monetary value of significant fines and total number of non-monetary sanctions fornon-compliance with laws and regulations. 68, 110-111

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Society Performance Indicators: Product Responsibility Pages Verification

Management Approach 24-26, 36-37, 85-86, 92


Aspect: Customer Health and Safety

PR1 (P) Life cycle stages in which health and safety impacts of products and services are assessedfor improvement, and percentage of significant products and services categoriessubject to such procedures. 36, 85, 92

PR2 (A) Total number of incidents of non-compliance with regulations and voluntary codesconcerning the health and safety impacts of products and services during their life cycle,by type of outcomes. 90, 110-111

Aspect: Labelling of Products and Services

PR3 (P) Type of product and service information required by procedures, and percentageof significant products and services subject to such information requirements. (Note 6)

PR-4 (A) Total number of non-fulfilment of the regulation and the voluntary codes related to theinformation and labelling of products and services, distributed in accordance with thetype of result of the said incidents. 111

PR5 (A) Practices related to customer satisfaction, including results of surveys measuringcustomer satisfaction. 22, 37, 38-41

Aspect: Marketing Communications

PR6 (P) Programmes for adherence to laws, standards, and voluntary codes related tomarketing communications, including advertising, promotion, and sponsorship. 110-111

PR7 (A) Total number of incidents of non-compliance with regulations and voluntary codes concerningmarketing communications, including advertising, promotion, and sponsorship,by type of outcomes. 110-111

Aspect: Customer Privacy

PR8 (A) Total number of substantiated complaints regarding breaches of customer privacy andlosses of customer data. 111


PR9 (P) Monetary value of significant fines for non-compliance with laws and regulationsconcerning the provision and use of products and services. 110-111

(1) Natural gas is classified as a non-recyclable material (see Indicator Protocol Set EN1 of the GRI Sustainability Reporting Guidelines).(2) The cooling systems and fire extinguishing systems of the Gas Natural Group comply with current environmental legislation with regard to the non-use of chlorofluorocarbon (CFC)substances. Moreover, the use of natural gas absorption cooling systems facilitates the implementation of measures for eliminating the CFCs used in compression cooling cycles.Absorption uses coolants with a zero Ozone Depletion Potential (ODP) on the ozone layer. Natural gas absorption cooling cycles (using ammonia-water or lithium bromide-water mixtures)contribute to the international policy for the elimination of CFCs.

(3) The commercial activity of the Gas Natural Group does not involve manufacturing.(4) Only the profits included in the referenced section on pages 102 and 103 are listed.(5) Through its Code of Conduct, the Gas Natural Group states its stance against improper remuneration and influence peddling.(6) The Gas Natural Group is governed by Spanish law regulating the information that supply companies must provide on the safe use of gas.

AR: 2008 Annual Report.CGR: 2008 Corporate Governance Report.

Reasonable assurance. (2008). Limited assurance.


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GRI indicators GRI indicators(direct (indirect

Principles relevance) relevance) Millennium Development Goals

Human Rights

Work

The Environment

Anti-Corruption

Global Compact, MDGs and GRI

Principle 1. Businesses should support andrespect the protection of internationallyproclaimed human rights within their sphere ofinfluence.

Principle 2. Business should ensure that theirown operations are not complicit in humanright abuses.

HR1-9

HR1-2, HR8

LA4, LA13, LA14;SO1

Goal 1: Eradicate extreme poverty and hunger.Goal 2: Achieve universal primary education.Goal 3: Promote gender equality and empower women.Goal 4: Reduce child mortality.Goal 5: Improve maternal health.Goal 6: Combat HIV/AIDS, malaria and other diseases.Goal 7: Ensure environmental sustainability.Goal 8: Develop a global partnership for development.

Principle 3. Business should uphold thefreedom of association and the effectiverecognition of the right to collective bargaining.

Principle 4. Business should uphold theelimination of all forms of forced andcompulsory labour.

Principle 5. Business should uphold theeffective abolition of child labour.

Principle 6. Business should eliminatediscrimination in respect of employment andoccupation.

HR5; LA4,LA5

HR7

HR6

HR4;LA2,LA13,LA14

HR1-3

HR1-3

HR1-2; EC5, EC7;LA3

Goal 2: Achieve universal primary education.Goal 3: Promote gender equality and empower women.

Principle 7. Business should support aprecautionary approach to environmentalchallenges.

Principle 8. Business should undertakeinitiatives to promote greater environmentalresponsibility.

Principle 9. Business should encourage thedevelopment and diffusion ofenvironmentally-friendly technologies.

4.11

EN2, EN5-7, EN10,EN13-14, EN18, EN21-22, EN26-27,EN30

EN2, EN5-7, EN10,EN18, EN26-27

EC2

EC2; EN1, EN3-4,EN8-9, EN11-12,EN15-17, EN19-20,EN23-25, EN28-29;PR3-4

Goal 7: Ensure environmental sustainability.

Principle 10. Business should act againstcorruption in all its forms, including extortionand bribery.

SO2-4 SO5-6

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Published by:Communications Departmentand Chairman’s Office

www.gasnatural.com

Graphic Design:Estudio Gráfico Juan de la Mata

www.juandelamata.com

Photographs:Gas Natural GroupWalter Fernándes (p. 8)

Registered OfficePlaça del Gas, 108003 BarcelonaTel: 902 199 199

Fax: 93 402 58 70

Madrid Head OfficeAvenida de América, 3828028 MadridTel: 902 199 199Fax: 91 726 85 30

Gas Natural SDG, S.A.

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