Tél.: +33 (0) 1 71 75 00 00 75116 Paris, France36-38, avenue...

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Veolia EnvironnementSustainable development department36-38, avenue Kléber75116 Paris, FranceTél. : +33 (0) 1 71 75 00 00

www.sustainable-development.veolia.com

Sustainable development report 2007

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Interview with Henri Proglio 2

Opinion of the Independent Visiting Committee 4

Anticipating and adapting 8

Introducing new solutions 14

Building the sustainable city 22

Inventing innovative services 24

Embedding our governance 28

Moving forward with our stakeholders 32

Deploying responsible lobbying 36

Identifying and managing our risks 40

Data required under the French New Economic Regulations Act is provided in the 2007 Reference Document (Document de Référence):– Chapter 17, paragraph 17.2 for social information– Chapter 6, paragraph 6.3.3 for environmental information.

We would particularly like to acknowledge the work done by everyone who has contributed to producing this report• Philippe Abraham • Anne Adamo • Guillaume Arama • Catherine Arfi • Claude Arnaud • Michel Avenas • Benoît Bardon • Pascale Barillot• Juan-Andres Bendezu-Zevallos • Claire Billon-Galland • Dominique Boizeau • Denis Chesseron • Jean-Pierre Combe • Gary Crawford •Jocelyne Dauphin • Bruno de Buzonnière• Dominique Delis • Fanny Demulier • Anne Dequecker-Cormont • Gervais Descamps• Jean-Jacques Dœblin • Atika Doukkali • Peggy Dufour • Edouard Dupont-Madinier • Laure Duquesne • Michel Dutang • Caroline Edant •Sonia Elliot • Émilie Félix • Jérôme Fière • Gérard Fries • Marie Gaillochet • Stéphanie Geisenberger • Émilie Gerbaud • Denis Givois • Émilie Gourmoux • Dominique Héron • Louis Herremans • Ghislaine Hierso • David Houdusse • Ludivine Houssin • Kevin Hurst •Gérard Jeanpierre • Julien Juge • Franck Lacroix • Bérengère Lagraulet • Lucie Lambolez • Stéphanie Laruelle • Pauline Magnien • Michaël Mansuy • Dominique Masson • Céline Menain • Pierre-Alain Menant • Laurence Miller • André Mollon • Philippe Payen •Denise Perez-Ramirez • Clotilde Perraudin • Anne-Charlotte Porret • Bernard Portnoi • Emilie Pottier • Jean-Michel Quemerais •Jean-Phillippe Riehl • Mathilde Robert • Claire Rousselet • Amélie Rouvin • Bernard Saint-André • Stéphanie Sinelnikoff • BernardThomas • Mathieu Tolian • Thierry Vandevelde • Joëlle Vautier • Robin Young

We would also like to thankThe Sustainable Development Visiting Committee: John Gummer • Philippe Lévêque • Karina Litvack • Rajendra Pachauri • Usha Rao-Monari • Ignacy Sachs • Jean-Michel Severino • Björn Stigson Sancroft Group : Sally Bell • Eugénie Mathieu

Maps / InfographsLaura Margueritte • Cécile Marin • Agnès Stienne • Under the direction of Philippe Rekacewicz

InterviewsChristian Cochet • Bernard Harambillet

Photo creditsVeolia Environnement photo library: Christophe Majani d’Inguimbert, Antoine Muller, Georges Bosio • Veolia Énergie-Dalkia : Bucheon • Muriel Aubay-Voisin • Gettyimages • Photodisc

Conception and Designavantgarde 014574 6161, particularly Florence Villatte

Your opinion can help us do better, please send us your commentsBy e-mailSustainable Development Department – [email protected]

or by post

Veolia Environnement – Sustainable Development Department36-38, avenue Kléber – 75116 Paris – FrancePhone: + 33 1 71750000 – Fax : + 33 1 71751000

Useful internet linksVeolia Environnement’s sustainabledevelopment sitewww.sustainable-development.veolia.comVeolia Environnement www.veoliaenvironnement.comVeolia Environnement foundationwww.fondation.veolia.com

Veolia Environnement institutewww.institut.veolia.org

This report was coordinated and producedwithin the Veolia Environnement sustainabledevelopment department by Yves Cabana,Fanny Arnaud, Muriel Aubay-Voisin, Laurène Chenevat, Pauline Danel,Geneviève Férone, Carlos-Miguel Juri-Mejia,Patrick Kerfriden, Cécilia Tejedor.

Couv Veolia-UKsr2 2/07/08 15:12

This document is printed on oxygen, offset white uncoated paper, made from 100% recycled fibres and FSC, PEFC and ISO 14001 certified. June 2008.

Ginkgo bilobaThe ginkgo biloba is the last descendent of a family of trees that flourished across much of the planet over 200 million years ago.The only remaining wild-growing population is to be found in Eastern China. Highly resistant to pollution, insects and disease,this tree is often used in urban replanting programs. It is also thought to have curative powers in preventing memory loss. VeoliaEnvironnement has chosen the ginkgo as a symbol of the durability of its sustainable development approach since 2003.

Combating climate change 44

Preserving biodiversity 52

Saving resources 54

Contributing to the protection of health and lifestyle 57

Promoting respect of human rights 60

Reinforcing our social attractiveness 66

Protecting health and safety at work 68

Self-evaluation for progress 72

Extra-financial rating 73

Improving the quality of service 74

Economic performance 76

Environmental performance 77

Social performance 86

Environmental and social data 90

Assurance of environmental and social data 94

Glossary 95G This symbol gives a definition of the term to which it corresponds in the glossary

1-Veolia RDD-Strategy (1-25)-E5 2/07/08 15:13 Page 1

In your opinion, was the year 2007 a turning point in thepublic’s increasing awareness about the challenges of sus-tainable development and climate change?

The general awareness of decision-makers, the media and thepublic in general has been rapidly increasing over the last fewyears. 2007 was undoubtedly an important year with theimpact of the Bali conference and the award of the NobelPeace Prize to the IPCC (Intergovernmental Panel on ClimateChange) and Al Gore. In my opinion, the essential point is thatpeople are seeing for themselves that what has beenexplained to them scientifically is consistent with what theysee in their daily lives. The effects of climate change can beseen everywhere. However, we must not forget that there areother major environmental challenges. For example, access towater and sanitationG, and threats to biodiversityG.

How does this awareness affect your role with your clientsand other stakeholdersG?

There is a greater awareness but, at the same time, it isalready a time of action. And action, in terms of sustainabledevelopment, is noticeable firstly in the management ofurban communities and large cities around the entire world.Our current and future clients are town and city councils, andthey are now moving from being concerned to taking action.We are now helping them build sustainable cities in thesame way that we helped them build more efficient and lesspolluted cities in the past. The strategy that we adopted afew years ago, aimed at concentrating on the business ofenvironmental services alone, has put us in an excellentposition for finding global and innovative solutions to theirneeds. We are one of the few companies in the world capa-ble of doing this, because we have all the necessary know-how. For example, the decision that we have made to beinvolved in the public transportation sector is not only justi-fied, but is also essential to prove that our company has theexpertise to propose a global approach towards reducingcarbon emissions in urban areas.

Finding solutions to increasingly strict constraints

to save rare resources and reduceimpacts on the environment”

Interview with Henri Proglio, Veolia Environnement’s Chief Executive Officer and Chairman

“


3INTERVIEW

Veolia Environnement ••• Sustainable development report 2007

What are the strengths of Veolia Environnement in invent-ing and developing the future technologies of change?

Some people often attempt to set public management againstprivate management in our businesses. I believe that this isabsurd: there are bad private managers and good public man-agers, and vice versa. Our enterprise model is better in tworespects. Firstly, as an international group, Veolia Environnementhas the capacity to share management experience, acquiredunder fundamentally distinct economic, social, environmentaland climatic conditions. We can work equally well in Niger andin Norway. Secondly, we also have the means of supporting amagnitude and diversity of research and development effortsthat none of our competitors can match at the present time.In our businesses, innovation goes well beyond technology.Our principal aim is to use technology to invent new servicesolutions that better meet the needs of urban populations. Forexample, in the essential fields of transportation, informationand communication, technologies offer support to our mostinnovative approaches to achieve integrated management oftransit systems on the scale of a Greater Urban District.

What are your main commitments in terms of sustainabledevelopment and how are they broken down within yourdifferent activities?

In my opinion, we have now taken an important step and are nowentering a more mature phase.Last year we enthusiastically commit-ted ourselves to the difficult mission of setting minimum environ-mental and social standards for our Group that we will applythroughout the world.This is a very demanding exercise for a compa-ny that works in nearly 70 countries across all continents. But evenmore demanding is the need to update the frameworks withinwhich we are active, so as to better meet increasing constraints onrare resources and reducing impacts on the environment. It is a taskin which we can play a major role,but we cannot do it alone.We needthe help of our clients, and national and European authorities, tomake this change that goes beyond our contractual and commercialobligations.

These subjects are being brought up by an increasing numberof stakeholders internationally at the moment. How do youmeet their desire for transparency, education and assistance?

In this field too, we need to know how to pass from the communi-cation phase to the research and joint action phase.The SustainableDevelopment Visiting Committee that I created last year hasenabled us to benefit from the opinions of independent experts. Allopinions that they have on our strengths and weaknesses are wel-come. In 2007,we carried out an environmental and social responsi-bility audit on a large number of our operations in Africa and LatinAmerica.This was commissioned in order to obtain a clearer view ofour challenges and the manner in which we can face them.We have succeeded in encouraging development banks to share inthe capital of our subsidiaries in several countries; for example, theWorld Bank, the French Development Agency in Africa and MiddleEast, and the EBRD in Eastern Europe.With the help of NGOs and the main international foundations, weare searching more and more for joint action models that give prior-ity to transparency.It is essential that everyone should be increasing-ly open with each other and go beyond self-interest and personalcomfort, and work together to a greater extent. The urban growthof tomorrow will take place largely in areas with the least infrastruc-tures and services. An economic and social balance is more difficultto achieve in such areas.This is a global challenge; and I believe thatdue to its historical, geographic, and technical experience, VeoliaEnvironnement can contribute a great deal to meet the needs oflarge cities in the developing world. At the moment, this experienceis under-used, and this is a pity.

Veolia Environnement has muchto contribute towards the definition of new models to meetthe needs of large cities in thedeveloping world.”

“


Opinion of the IndependentVisiting CommitteeThe Sustainable Development Visiting Committee was created in 2006 to strengthen Veolia’sstrategic vision.The Committee’s view on the main issues at stake for Veolia in terms ofsustainable development and its recommendations for the company’s sustainability strategyand approach are synthesised below.

Water, waste, sanitationG, energy and transportation are the con-cerns that lie at the heart of any environmental consideration andthey are Veolia’s core activities. So, sustainable development can-not be an add-on extra. It is Veolia’s business.

The Reality of Climate ChangeClimate change is an overriding concern. It is likely to result in morefrequent and extreme droughts,storms,and floods. It will generateconsiderable health challenges;it may well lead to serious conflicts;and will certainly have increasing consequences for business activity.The urgency of combating its dangers will become an ever moreinsistent demand upon governments, the European Union, andinternational organizations. We can expect the pricing of carbonemissions and rising price of energy to drive up costs and increasedemand for efficiency savings.This will also have significant impli-cations for the transportation sector in terms of vehicle efficiency,fuel prices and public transportation provision. All will lead to addi-tional pressures and opportunities for Veolia’s operations and serv-ices. Effective management of its own and its clients’ GHG emis-sions is therefore essential.To this end,Veolia will need to adopt both mitigation strategies andadaptation measures to take full advantage of its role in the fightagainst climate change. Some of those mitigation measuresalready exist but new technologies will be needed as will the development of the means to transfer and broadcast them.Veoliawill want - and need - to play a central role here.This should involvestrategies, systems, and services that support adaptation to climatechange for Veolia’s own operations, clients, and stakeholdersG.Critical areas include infrastructure, information, and capacity ofstakeholders to respond to the environmental as well as thehuman dimensions of a changing climate.

The Management of ResourcesThe human ecological footprint has tripled since 1961 and nowexceeds the world’s ability to regenerate by 25%. The global popu-lation is expected to reach 8.1 billion by 2030 and growth in worldGDP point towards higher standards of living particularly in developing countries. Inevitably, therefore,Veolia will be faced withglobal competition for scarce and increasingly expensive resources,particularly energy and water, and will therefore need to substan-tially reduce its own ecological footprint.However, its expertise andexperience puts it in a strong position to handle these problemsand turn them into opportunities.At the same time, consumer preferences and government regula-tion are changing in response to environmental concerns. Localauthorities are becoming aware of these issues and of theirresponsibilities,though Veolia must also overcome weak governing

processes that require it to engage effectively with citizens andopinion formers outside formal political structures.Climate changewill be an accelerator of change. Veolia will need to keep ahead ofthe pack and be an exemplar of a company, that, by reducing itsown emissions and developing lower-emission products, will gaincompetitive advantage. The stakes are high and their measure isperhaps best exemplified by the opportunity in the energy servicemarkets, which alone is now estimated to be worth €5-10 billion.

EnergyPrimary energyG demand is expected to increase by more thanone half by 2030 and fossil fuels will account for 83% of that over-all increase. It is therefore a business necessity that Veolia reducesits own and its clients’ dependence on fossil fuels.Reducing energy consumption is a key factor in minimising car-bon emissions and Veolia needs to set appropriate targets aroundthese, e.g. metric tons of CO2 per thermal MWh produced.One solution is to explore more technical options for Veolia’sbuildings including efficient appliances and heating and coolingdevices, improving insulation and installing active and passivesolar energy. There are opportunities provided by CHP and decen-tralised energy. Veolia is also well positioned to move into secondand third generation biofuelsG, and has the necessary expertise topromote the scaling down of technologies to produce biogasG forrural communities in developing countries. Veolia could also lookto provide carbon offsetting opportunities for its clients.

Water and sanitationWater management, particularly reducing consumption and pollu-tion, is an important challenge.The effects of climate change makethat inevitable. Conflicts based on access to water will multiply,fuelled by food insecurity and health concerns.The world’s poor willbe particularly vulnerable to the disruption caused by changes inthe climate.The Group must become the natural choice for modernwater services with the lowest possible water footprint. It must alsoshow that it has grasped the urgency of the problem and is ready tomeet the pace of change.In this regard, Veolia should seek to influence the creation of envi-ronmentally and socially effective pricing systems and regulations.Itshould also emphasise the development of water saving,replenish-ment and sustainable supply initiatives.Veolia could look to developmore cost effective processes for separation of black and grey water,pre-treatment or limitation of industrial wastes,and efficient small-scale wastewater treatment, involving lower capital costs and infra-structure for wastewater management in developing countries.Sanitation and waste management in particular are key issues fordeveloping countries. 2008 is the International Year of Sanitation


5COMMITTEE


and all the indicators show that this component of the MillenniumDevelopment Goals will not be met. This calls for urgent globalleadership from businesses such as Veolia operating in this sector.

WasteVeolia’s role in the waste industry should lead it to pioneerinnovative ways of reducing GHG emissions through landfillG

and incineration gas recovery and improved landfill practices,together with state of the art waste to energy systems andanaerobic digestion. The company should also seek to lead inwaste minimisation, recycling and re-use and in the diffusionof these mature technologies into developing countries.

The Challenge of DevelopmentDeprived communities in developing countries will be faced withsome dramatic changes over the next decades. Veolia’s position inthese countries, and particularly its exposure to regions experien-cing very rapid urbanisation,will provide opportunities for Veolia toplay an active role in contributing to social and economicdevelopmentIt will need to adapt its business model for developingcountries and contribute to global awareness raising, behavioralchanges and development of innovative solutions. A key area offocus will be the long term adaptation of client communities to cli-mate change and to the formulation of disaster risk reductionstrategies. “Doing business with the poor” will be an importantgrowth area for Veolia.

RegulationVeolia’s strong presence in the European Union means that it isclose to the heart of an organization that, in many ways, is settingenvironmental standards for the world. These are the standardsincreasingly accepted in developing countries and hugely influentialin the standards being prepared in the US. The company thereforeneeds to play a proper part in influencing the EU regulatory frame-work to ensure that its targets are as challenging as possible whileits requirements are cost effective and unprescriptive. In engagingactively in this process of public standard-setting, Veolia mustensure that it subscribes to the highest standards of transparency.

Technology OpportunitiesThe market for efficiency innovations is substantial and Veoliashould have a clear strategy for ensuring that it makes the most ofthis potential. In particular it should be at the forefront of findingand investing in simple, ways to help the consumer reduce theirwater and energy use and their production of waste.By adopting a long-term, cross-sectoral vision, integrating environ-mental and social concerns and involving all stakeholders in busi-ness activities Veolia will be in a position to further lead by example,create a strong corporate identity and anticipate regulation andsocietal expectations.We believe Veolia has the expertise and the vision to play a majorrole in tackling some of the world's great challenges.

John Gummer, Chairman of the SANCROFT Group, Chairman of Veolia UK Ltd, former UK Environment Minister

Philippe Lévêque, Executive Director, CARE France

Karina Litvack, Head of Governance and SustainableInvestment, F&C Management Ltd

Dr Rajendra K. Pachauri, Head of the IPCC (International Panelon Climate Change), Director-General of TERI (The Energy andResources Institute), India

Usha Rao-Monari, Senior Manager, International FinanceCorporation

Ignacy Sachs, Professor at EHESS (École des Hautes Études en Sciences Sociales)

Jean-Michel Severino, Director General, Agence Française de Développement

Björn Stigson, Chairman of World Business Council forSustainable Development

� From left to right : Ignacy Sachs, Rajendra K. Pachauri, Yves Cabana,Henri Proglio, Björn Stigson, Usha Rao-Monari, Jean-Michel Severino, John Gummer, Karina Litvack, Philippe Lévêque.

The first plenary meeting of the committee took place January 16th, 2008.

The committee members:


SS


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7STRATEGY


In a market led by urban growth and increasingly strict environmentalrequirements, consolidation of our world leadership depends on ourcapability to propose innovative and responsible solutions for thesustainable management of cities.


Anticipating and adaptingThe growth of large urban areas is a major phenomenon typical of the modern world. Morethan half of the world’s population is already living in cities and this trend will continue.It makes the response in terms of economic efficiency of the city, social balance, sanitation,environmental challenges and ecological footprint more complex.

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Urban growth is placing increasing pressure on limited naturalresources. The requires a sustainable development strategy for cities – now one of the most robust realities of the actual implementation of sustainable development. Itrequires a global vision that takes into account the interac-tions between urban management aspects previously consid-

ered as distinct realities. The increasing awareness of climatechange is accelerating this process, because energy needsrelated to housing, transportation and waste disposal aremajor causes of the production of greenhouse gasesG. A signif-icant percentage of these sectors is related to urban planningand management choices.

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With the significant exceptions of Russia and part of Eastern Europe, urban growth is a worldwide phenomenon and is advancing at a rate inverselyproportional to the level of development.


9STRATEGY


Tokyo

Bombay(Mumbai)

NewDelhi

Mexico city

New York

São Paulo

Calcutta

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Buenos Aires

Cairo

Rio of Janeiro

Osaka-Kobe

Peking

Manila

Moscow

Istanbul

Lagos

Kinshasa Djakarta

ShanghaiLahore

Shenzhen

Madras(Chennai)

LondonParis

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Veolia Environnement is a preferred partner of leadersof large urban districts for inventing and applying sustainable solutions for the management of moderncities, for the followings reasons:

• more than 150 years experience of managing urban publicservices. As a result, we have optimized technical, social andenvironmental management, but more importantly we haveaccompanied the infrastructure construction process andhelped define frameworks for the regulation of major publicservices (water, sanitationG, waste management, public trans-portation, energy management);

• a strategic vision integrating these various activities into asingle business of providing services to the environment formore than 10 years now, which identify technical, contractualand commercial convergences. In particular, this approach hasenabled us to anticipate the multi-dimensional aspects of cli-mate change and evaluate carbon savings, enabling us to giveappropriate solutions;

• a worldwide experience in 68 countries across all continents,with an extremely broad range of economic, social, environ-mental and climatic conditions. This obliges us to continuous-ly change our models and this adaptation, then, enriches ourlevel of knowledge and our ability to innovate;

• a contractual model based on long-term partnership, rootedin locality and based on a clearly defined balance of responsi-bilities between the private manager and the public and polit-ical authority. Consequently, it shares major characteristicswith the concept of sustainable development.

The development of the Group is based on our ability to convince our future clients of our competence in managing environmental servicesbetter than they can.

This model is based on our economic performance and our envi-ronmental expertise. But it also requires an ability to control thesocial transformation that accompanies outsourcing in a peacefulmanner. Finally, it requires an ability to ensure that local popula-tions accept our actions in the short and long term.

With this specific model and its four basic pillars (economic,environmental, social and societal), we have been able to natu-rally integrate sustainable development into the heart of ourstrategy. We believe that our performance in this field is anessential element of our commercial credibility, our ability to setout ourselves aside from our competitors with less expertise,and more generally in creating value.

A more urbanized world with a greater awareness of the need to control environmental damage related to urban and industrialactivities is favourable to the development of our services.Quantitative needs for environmental services are increasing, andtechnical and organizational difficulties are strengthening theneed for expertise and experience.

Growth (United Nations projections)Millions of city dwellers

Achieving economic efficiency as well as environmental and social balance in large urban areas is one of the main global challenges ofsustainable development.


CHINA

SOUTHKOREA

JAPAN

AUSTRALIA

NEW-ZEALAND

SINGAPORE

THAILANDSAOUDIARABIA

ISRAEL

EGYPTNIGER

MOROCCOCANADA

THE UNITED STATES

MEXICO

BRAZIL

ARGENTINA

CHILE

GABON

SOUTHAFRICA

COLOMBIAVENEZUELA

URUGUAY

BOTSWANA

BURKINAFASO

ALGÉRIATUNISIA

SENEGAL

DIMENSIONIVORY

BENINBAHREÏN

PLAINARAB EMIRATES

OMAN INDIA

LEBANON

MALAYSIA

THE PHILIPPINESDOMINICAN REPUBLIC

MAURITIUS

THE UNITED KINGDOM

IRELAND

SPAINITALY

ROMANIA

ESTONIA

FINLAND

POLAND

SWEDENNORWAY

CZECH REPUBLIC

GERMANY

PORTUGAL

LUX.

ARMENIEBULGARIA

TURKEY

RUSSIA

SERBIA

LATVIALITHUANIA

SWITZERLAND

BELGIUM

AUSTRIA

NETHERLANDS

DENMARK

SLOVENIA CROATIA

SLOVAKIAHUNGARY

TAIWAN

Revenue in million euros (2007)

2,0001,000100 400 2,750

Aftering the revenue figures to take account of purchasingpower parityG (PPP) gives a better idea of the Group's industri-al realities. When this approach is used, the relative weight ofemerging zones, namely Eastern and Central Europe, Asia,Latin America and Africa from which 13% of revenue areearned, is doubled.

Revenue Revenue correc. RatioFigures in M€ for. PPPNew entrants to the EU 2,133 3,622 1.7Asia 961 2,386 2.5Latin America 569 752 1.3Africa 745 1 ,676 2.3

Total 4,408 8,436 1.9% total Revenue 13% 25%

This diversified presence makes our Group into a vector for distributing know how and technologies to the emerging world.It enables us to identify good practice on sites anywhere in theworld, including in developing areas (e.g. Latin America with theRapid Transit Bus) or remote areas (e.g. Australia with "re-use")and to extend its application.

Environmentally, the developed world appeared to be governed by a logic of quality and increasingcontrol over the level of risks; due to its magnitude,the challenge of climate change is emphasizing theneed for efficient environmental investments.

For Veolia Environnement, this provides an opportunity to benefit further from the diversity of its presence throughoutthe world, and particularly its strong involvement in theemerging and developing world.The Group has experienced fast international growth over thepast fifteen years. In 2007, its activity in France accounted for44% of its total turnover. Three large developed countriesalone (the United Kingdom, Germany and the United States)in which the Group earns more than €2 billion in revenue, rep-resent 44% of the international turnover.Even so, Veolia Environnement's involvement in the emergingand developing world increased in 2007. Almost 27% of itsworkforce now works in Asia and the Pacific, Eastern andCentral Europe, Latin America, Africa and the Middle East.The Group employs nearly 90 000 employees in these areas.

In 2007, 44% of the Group's total revenue were earned in France. The remainder was derived from 67 other countries. However, 80% of internationalrevenue were developed in 14 countries, in which Veolia's activity is worth more than €300 million. 44% of international revenue are earned in theUnited Kingdom, Germany and the United States.

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/ BREAKDOWN OF VEOLIA ENVIRONNEMENT’S REVENUE OUTSIDE FRANCE


11STRATEGY


Sustainable performance requires important effortsto adapt and innovate.

We need to anticipate and prepare to change our standard contracts. This will, in the future, provide a basis for our workand remuneration to make them more dependent on achiev-ing targets on quality and resource efficiency. Additionally, itwill provide the fine tuning of means to suit needs, rather thansimple supply of large volumes of products or basic services.

These changes have already been partially implemented, butcannot be under our responsibility alone. The forms of ourremuneration, and more generally the conditions under whichwe will supply services, are governed by regulations thatdepend on public authorities. The required changes necessi-tate not only a consensual approach with our clients, but alsoan understanding and acceptance by the served populations.

CHINA

SOUTH KOREA

JAPAN

TAIWAN

AUSTRALIA

NEW-ZEALAND

SINGAPORE

THAILANDSAOUDIARABIA

ISRAEL

EGYPTNIGER

MOROCCOCANADATHE UNITED STATES

MEXICO

BRAZIL

ARGENTINA

CHILE

GABON

SOUTH AFRICA

COLOMBIAVENEZUELA

URUGUAY

BOTSWANA

BURKINAFASO

ALGERIATUNISIA

SENEGAL

DIMENSIONIVORY

BENINBAHREÏN

PLAIN ARAB EMIRATES

OMAN INDIA

LEBANON

MALAYSIA

THE PHILIPPINESDOMINICAN REPUBLIC

MAURITIUS

THE UNITED KINGDOM

IRELAND

SPAINITALY

ROMANIA

ESTONIA

FINLAND

POLAND

SWEDENNORWAY

CZECH REPUBLIC

GERMANY

PORTUGAL

LUX.

ARMENIEBULGARIA

TURKEY

RUSSIA

SERBIA

LATVIALITHUANIA

SWITZERLAND

BELGIUM

AUSTRIA

NETHERLANDS

DENEMARK

SLOVENIA CROATIA

SLOVAKIAHUNGARY

2,000 2,6001,000100 400

Revenue adjusted for PPP in million euros (2007)

Adjusted for PPP, 38% of the Group's revenue is earned in France. This approach compensates for differences due to price levels, and gives arealistic idea of the Group's industrial reality in Eastern and Central Europe, China and Africa.

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/ BREAKDOWN OF VEOLIA ENVIRONNEMENT REVENUE ADJUSTED FOR PURCHASING POWER PARITY (PPP), OUTSIDE FRANCE

INTERNATIONAL REVENUE ADJUSTED FOR PURCHASING POWER PARITY

MethodologyThe use of revenue adjusted using the purchasing power parity methodcompensates for differences in prices found for similar services in differentmarkets. Thus it represents, moreaccurately, the breakdown of the Group'sindustrial realities in the differentcountries in which it is located. Revenuecorrected for purchasing power parity are calculated using the World Bank's2006 ratios, except in specific cases.


Responsibilities granted to private operators in developed coun-tries have been increasingly broken down into segments andcontract durations have been shortened over the last twodecades, due to competition law. Nevertheless, in the developingworld, it is generally accepted that the need to develop basic andessential services justifies longer contract duration and broadermanagerial responsibilities.

Achieving sustainable urban developmentobjectives requires more consistent models and better-targeted responsibilities employed over the long term.

At the present time, the obligation to manage climate changeis creating a new challenge for efficiency and performance inthe developed world. The objective is to propose in-depthchanges to urban services, with the aim of achieving thereductions in GHGG emissions identified by the KyotoprotocolG. In all our activities, we believe that the basis for asolution lies in a public-private partnershipG. This is based onclose public control over a responsible private manager paidpartly on quality and service improvement objectives.

The need for a global and sustainable approach goes beyondthe framework of each of our operational activities. Mobilizationof urban districts, in terms of sustainable development, is significantly dominated by the will to reduce GHG emissions.It has become necessary to offer tools to local governments for them to objectively choose between the various possibleactions.

The common carbon saving mechanism makes it possible todesign technical-financial tools adapted to the characteristicsof each region, so as to prioritize decisions with an impact onGHG emissions in different sectors of municipal management(transportation, heating and cooling networks, energy man-agement of public buildings, public lighting, waste treatment,etc.), on the basis of an objective approach towards their finan-cial cost/ ecological benefit ratio.

Our own responsibility consists in:

• emphasizing what we believe could contradict sustainabledevelopment objectives in the management of environmentalservices. Thus, traditional remuneration for the provision ofwater based on volumes supplied must change to incorporatethe objective to reduce water consumption, without disturb-ing the economic balance of an activity for which costs arevery largely fixed;• highlighting the best organizational frameworks that wesee in our international experience. For example, in the UnitedKingdom, an operator is made responsible for managingwaste flows produced by a region, and for making changes tothe system by significantly developing recycling and energyrecovery. In the long term, such integrated contracts willenable increased responsibility and efficiency, unequalledelsewhere in the European Union.

Contract Recycling ratio Recycling objective 2008-2009 fixed by the local authority

2011-2012

Nottinghamshire 37.8% 45%Shropshire 37.9% 53.4% Southwark 18.5% 34.8%

• recommending research on the breakdown of responsibili-ties between delegating authorities and operators. In the fieldof urban transportation, integrated management of the differ-ent segments and the implementation of genuine inter-modalmeans have become an entirely separate business distin-guished from the simple management of transportationmeans. Its increasing complexity justifies the organising pub-lic authority in delegating this work to a specialised privatemanager. We are experimenting with new responsibilitiesbased on this logic in contracts in the Netherlands and theUnited States.

Landfill in Hong Kong, China


13STRATEGY


In the short term, internal transfers can help to maintain localjobs. In the medium term, social efficiency is largely based ontraining and promotion efforts for local supervisors. Veolia hascarried out its internationalization process in line with its policyfor the development of its activities, making only very moder-ate use of expatriation. At the end of 2007, the Group onlyemployed 710 expatriates.This experience of social transformation is essential to thesuccess of delegation of public services. Confidence shown bythe public decision-makers in the appointed organization’sability to implement informed and peaceful social manage-ment increases confidence in the choice of better economic effi-ciency and environmental expertise.

Veolia Environnement enjoys an important competitiveadvantage over its competitors, because it has been puttingthese social transformation processes into practice for morethan 150 years. This knowledge how is broadly based on man-agement experience, and is very difficult for newcomers toacquire.

The development of Veolia Environnement meets particularneeds with regards to social transformation, particularly interms of its organizational development.

The challenge is to perform a major social transformation ofthe organizations that we are asked to manage. These are generally public and administrative organizations, and weneed to lead them and their personnel into the world of private enterprise.

Integration of existing personnel (positions, remuneration,social advantages, training, capitalization of know how andtransfer of skills) involves progress at all levels of the activity.A new enterprise project based on Veolia Environnement's values must be produced taking into account the existing situation.

Under some circumstances, the complexity of this change canbe strengthened by poor historic productivity. This must be cor-rected to achieve economic objectives, while controlling therisk of traumatic social changes.

CHINA

SOUTH KOREA

JAPON

TAIWAN

AUSTRALIA

NEW-ZEALAND

SINGAPORE

THAILANDSAOUDI ARABIA

ISRAEL

EGYPTNIGER

MOROCCOCANADA

THE UNITED STATES

MEXICO

BRAZIL

ARGENTINACHILE

GABON

SOUTH AFRICA

COLOMBIA

VENEZUELABURKINA

FASO

TUNISIA

SENEGAL

DIMENSION IVORY

BENINBAHREÏN

PLAIN ARAB EMIRATES

OMAN INDIA

LEBANON

MALAYSIA

THE PHILIPPINES

UNITED KINGDOM

IRELAND

SPAIN ITALY

ROMANIA

ESTONIA

FINLAND

POLAND

SWEDENNORWAY

CZECH REPUBLIC

GERMANY

34

2

SLOVENIACROATIASLOVAKIAHUNGARY

1 -2 -3 -4 -

PORTUGAL

LUX.

BULGARIA

TURKEY

RUSSIA

SERBIA

LATVIA

SWITZERLAND

BELGIUM

AUSTRIA

NETHERLANDS

DANEMARK

1

VIETNAM

LIBYA

Total workforce atdecember 31 2007

2 500

5 000

10 000

15 000

20 000

27 500

500

/ BREAKDOWN OF THE VEOLIA ENVIRONNEMENT' WORKFORCE, OUTSIDE FRANCE

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Locations of Veolia Environnement employees.37% 63%� France � International

Proven expertise in social transformation

The Group's international development depends on integration and training of local labor. By 2015, 75% of Veolia Environnement's total workforceshould be international.


Integrating sustainable developmentinto the business modelThe economic model for water services has been built upbased on a virtuous circle by which increases in volumes soldfacilitated the development of access to water, improvementsto sanitationG parameters, financing of the pipe systemsmaintenance, the protection of resources and depreciation ofinfrastructure costs.

This virtuous circle did lead to a high service quality, but nowneeds to be adapted to include new constraints. The need toreduce consumption, to limit pressure on local resourcesactually leads to a reduction in unit consumption, causeschanges to the economic balance of the activity. Therefore,Veolia Water is orienting its action such that remunerationfor the water service is based more on an evaluation of theservice quality, rather than volumes consumed.

The water service also needs to address more social concernsthan it did in the past, since they were usually managed byexternal philantropic organizations; for example, applicationof the "right to water", assistance to vulnerable customers.New solutions are being developed to balance the water serv-ice, whilst providing solutions to the needs of all users,including those with the greatest needs.

From management of the water service to resource conservationPreservation of the resource, health and safety, service conti-nuity and adaptation of prices to meet social objectives are allqualitative criteria that represent an increasing percentage ofremuneration for the water service. This is why Veolia Water isdeveloping a range of services beyond its traditional activity ofproducing and distributing drinking water and providing san-itation.

These new uses and services could form the basis for newremuneration structures to balance costs and to make theinterest of public authorities, consumers and operators morealigned.

New resourcesVeolia Water satisfies the problems of qualitative and quanti-tative pressures on the water resource by extending its sphereof influence from the "small water cycleG" to the "large water cycleG" through several types of approaches:• actions towards resource conservation and the fight against

pollution;• increased awareness of new usages;• promotion of alternative resources.

Efforts can also be made to reduce waste and improve recyclingof treated wastewater for certain uses (e.g. industrial, agricul-tural or recreational). Recycling provides a means of maximiz-ing the use of water before releasing it into nature.

Desalination of seawater is possible in regions close to thecoast, where fresh water resources are insufficient. VeoliaWater is developing high performance technological solutionsin this field to reduce energy consumption, costs, and theenvironmental impact.

Introducing new solutionsVeolia Environnement calls upon a very wide range of environmental expertise and diverseinternational experience to make use of a long history of practicing its business.This helpssave resources and reduce impacts on the environment.

Veolia Water

Improving the water management model in a context of reducing volumes and with a viewtowards protection and diversification of resources.

million people supplied with waterservice by Veolia Water 78

million people supplied with wastewater service by Veolia Water 54


Data not available

Excessive use

10 25 750 5 0 100

2025

2000

15STRATEGY


Rethinking the place of water in citiesThe development of infrastructure designed to evacuate rain-water, to restore water courses and planted canals in cities, isone way of reconciling the storage of rainwater and limitingrisks of flooding, at the same time as developing leisurespaces. The arrangement of recreation areas around watercontributes to making cities welcoming and more attractive.Water thus becomes a means or reintegrating the naturalenvironment and biodiversityG into the urban area. This aspectis taken into account in changes to water services managed byVeolia Water.

Veolia Water's development model is now changing. This willonly be possible if a number of changes are made outside thecompany, particularly in the regulations that control the roleand scope for maneuver of the operator.

Developp new partnershipsIn order for water management to enable access to water orfor protection of water resources, a large number of bodiesknowledge and roles need to be organized in a complementarymanner. Veolia Water is working towards improving the effi-ciency of its service by strengthening its communication withcivil society. In emerging countries, public-private partnershipsmay be complemented by partnerships with local associationsand organizations, so as to implement development and envi-ronmental protection actions.

/ DRAWN OFF WATER QUANTITIES (SURFACE AND GROUND WATER) AS A PERCENTAGE OF RENEWABLE WATER RESERVES

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The total quantity of fresh water available on the planet is constant. The concept of water scarcity is meaningless except in a local or regionalcontext and depends on the relation between the variable availability of resources (due to natural or climatic causes) and changes to quantitiesdrawn off. There are three possible types of actions to meet increasing needs resulting from urban demography; firstly reduce individual andcollective waste, secondly accelerate the natural resource renewal cycle and thirdly "create" new resources by desalination and recycling ofpreviously treated wastewater.


100

120

140

160

180

200

220

240 projections

OECD countries

1980 1990 2000 2010 2020

Veolia Environmental Services

Waste is a marvelous deposit of resources, renewable energy, alternative energy and secondary rawmaterials. Its management represents both an economic opportunity and a social and environmentalobligation.

Despite efforts made to reduce waste generated, waste pro-duced throughout the world is increasing since it is dependenton economic growth and changes to consumption habits.The increasing scarcity of raw materials and increases in theircosts are causing an increasing demand for secondary rawmaterialsG that encourages their valorisation.

Finally, climate change and the need to limit impacts on natural environments result in an increasing need for controlover polluting emissions and recovery of available energy innon-recycled waste.

Prioritizing waste treatment methodsVeolia Environmental services organizes management of wasteassigned to it by defining an order of priority for treatmentmethods. These methods include: limitation of waste produc-tion at the source, reuseG, recycling and recovery of materials,and finally recovery of energy and elimination. The objective isto reduce the percentage of waste landfilled or incineratedwithout any energy recovery.

Quantitative and qualitative preventionVeolia Environmental services advises its industrial clients onhow to reduce quantities of waste produced and the danger-ousness posed by each type of waste. In 2007, recovered wastequantities decreased and tonnes of recycled waste increasedsignificantly, in the context of Veolia Environmental Services'industrial activity. The company organizes awareness raisingaimed at the general public, to reduce waste and encouragesorting and recycling.

Recycling and recoveryVeolia Environmental Services considers all forms of wasterecoveryG to be a priority (material, agricultural and energy).Increasing quantities of treated and recycled waste is a perma-nent objective, both in traditional forms (paper, cardboard,plastic, and metal) and new activities (such as waste electricaland electronic equipment (WEEE)). Recycling is expanding(+35% recycled materials in 2007), particularly in the paper /cardboard (+39%), and metal (+20%) activities. VeoliaEnvironmental Services is now recycling 14% of all waste thatit receives (at the exit from the installation).

The increase in recycling ratios is based on continuous improvement of treatment processes, and the creation of newlong-term industries. Thus, recovery of biomassG derived frommunicipal and industrial waste is now used for manufacturingbiomaterials and bioproducts used in the chemicals, automobile,packaging and construction sectors. Veolia EnvironmentalServices is thus becoming a player at the heart of industrialecology models.

Recovering the energy from wasteRecovery of energy from waste is the next step after prevention,recovery of materials and recycling. It provides a means of savingfossil fuel and limiting emissions of GHGsG.Veolia EnvironmentalServices generates heat and electricity from the combustion ofwaste that cannot be recovered otherwise, or from the recoveryof landfill gasG.

Biomass that contains materials originating from forestry activities or agriculture, and the organic fraction of industrialand municipal waste, may also be transformed into combustiblematerials to produce heat, electricity or fuels. Used food fats canalso be recovered or transformed into biodiesel. Common waste(wood, paper, plastics) can be transformed into solid recoveredfuel (SRF).

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/ GROWTH IN THE PRODUCTION OF MUNICIPAL WASTE INCOMPARISON WITH GROWTH OF THE GROSS NATIONALPRODUCT AND THE POPULATION

Despite efforts to reduce waste at the source, waste productiongrows in tandem with economic development.

GNP

Municipalwaste production

Population

Base 100 in 1980


Promoting integrated waste managementWaste flow treatment can be optimized when it is managedglobally and is integrated over a region or a residential basin.Veolia Environmental Services use this type of approach whenpossible depending on the institutional organization and theregulations, as is the case in the United Kingdom.

17STRATEGY


Protecting natural spaces

Rehabilitating soils and sitesVeolia Environmental Services also applies its expertise to depol-lution and rehabilitation of sites. Decontamination of soilsbecomes necessary when industrial activities or accidental pol-lution have degraded their quality. It can be implementedthrough technical processes adapted to each situation (biolog-ical treatment, extraction, ventilation, sprinkling, pumping, ther-mal desorption, etc.).Soils depleted by over-production can also be enriched by organicmaterials using improvements produced from agronomic recovery of biomass derived from waste.

Treating hazardous wasteThe company is developing innovative systems for the treatmentof hazardous waste that require the use of state-of-the-arttechnologies. These systems provide a means for limiting theimpact of significantly polluting waste on natural environ-ments. The quantity of hazardous waste treated by VeoliaEnvironmental Services increased by 12.1% in 2007. The treat-ment of hazardous waste from households is also developingencouragingly.

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0 100 200 300 400 500 600 700 800 900

Canada

Norway

United StatesDenmark

Ireland

Australia

Netherlands

Germany

United Kingdom

Sweden

Finland

BelgiumHungary

JapanMexico

Urban Brazil

Poland

Rural China

percentage of wastefrom households

Municipal waste

million tonnes of waste recycled by Veolia Environmental Services10

million tonnes of waste treated by Veolia Environmental Services72

/ PRODUCTION OF WASTE IN KILOGRAMS PER INHABITANT AND PER YEAR

The desire to reduce waste production is unfortunately not being realised in today’s world. However, waste can become a resource now that rawmaterials and energy are becoming rare. Proven techniques are available to change from an ecological elimination logic towards a material orenergy recovery logic. Regulations and taxation can be used to direct flows between different methods with genuine efficiency. The most difficultpart is to reach a consensus about a reasoned, balanced and integrated vision of treatment methods between the stakeholdersG. On this basis,integrated management of waste flows produced by a given region, then enables fast and effective implementation of sustainable treatmentsolutions.

Spain

Urban China

France

Italy

Municipal waste: waste from households,commercial activities, small enterprises,offices and institutions, and municipalservices (roads, green spaces, etc.)

Household waste: waste derived from the daily activity of houses (organicmaterials used, packaging, etc.)


emission standards and emissions of CO2 and other pollu-tants are lower than in a large number of individual facilities.

Integrated building managementVeolia Energy-Dalkia optimises energy use in all types of build-ings, (homes, offices, hospitals, public facilities, shopping centers),with the prospect of a factor of 4 by the year 2020. Solutions proposed to reduce consumptions and the emissions of GHGsinclude boilers, heat pumps, ventilation, intelligent control systems, renewable energy and cogenerationG. As a global com-petitor, Veolia Energy-Dalkia guarantees results to its clients,through long-term contracts.

Optimization of energy consumptionson industrial sites Veolia Energy-Dalkia partners its industrial clients in efforts tomanage their energy bill and to reduce GHG emissions byworking on all industrial utilities (steam, hot water, chilledwater, compressed air, electricity, industrial gases). As in build-ings, its action are based on two services: namely the design oftechnical improvements leading to improved energy efficiency,and optimized operation of sites within the framework of per-formance contracts. For example, Veolia Energy-Dalkia imple-ments solutions integrating renewable energy or recovery oflost heat.

Public lightingPublic lighting, on average, accounts for almost half of the elec-trical consumption of city councils, and is also a source of GHGemissions. Veolia Energy-Dalkia optimizes urban lighting bymeans of simple technological solutions (remote managementof light points) through its subsidiary Citelum, and contributesto transforming a traditional town into a sustainable town(reduction of light pollution, reduction of electricity consump-tion, etc.).Veolia Energy-Dalkia is developing complementary activitiessuch as electrical facilities with Clemessy, and climatic engineer-ing with Crystal.

Veolia Energy-Dalkia is an integrator of energy solutions. Itsbusiness is to provide the energy necessary to its clients in anoptimized manner, while reducing their final consumptionand limiting the accompanying GHGsG emissions.

This business consists of reducing global energy consumptionwhile minimizing the proportion supplied by fossil energyG.Therefore, Veolia Energy-Dalkia adjusts several factors: name-ly, modifying the behavior of users, optimizing managementof their needs, achieving modernization by making efficientuse of technical equipment, and finally, using renewable ener-gy whenever possible. The combination of these factors willachieve improvements in energy efficiency so that, dependingon the country, Veolia Energy-Dalkia can earn Energy SavingCertificates (ESC) or green certificatesG, and optimise manage-ment of CO2 quotas on the corresponding markets.

In this context, the company is taking steps to modify thestructure of its contracts to base its remuneration on the energy saved, rather than on the energy consumed. It alsoattempts to define offers that incentivise the search for carbonefficiency. This objective to "optimize" energy in cities is organ-ised into four major activities.

Development of heating and coolingnetworks Heating and cooling networks reduce the impact of heatingand air conditioning on the environment. They are powerfulmeans of integrating renewable or alternative energyG incities, especially through the use of boilers using biomassG or heat recovery from municipal waste and industrial wasteincineration plants. These facilities are governed by very severe

Veolia Energie-Dalkia

The range of Veolia Energy-Dalkia's services is changing within a context marked by the increas-ing importance of renewable energy and energy and carbon saving targets.The activity of VeoliaEnergy-Dalkia lies at the core of three main challenges, firstly the growing urbanization and theindustrialization that accompanies it, secondly the price increase and the growing scarcity offossil fuels and thirdly the climate change.

million residents heated by Veolia Energy-Dalkia14.5

thermal power managed by Veolia Energy-Dalkia

87,375 MW


19STRATEGY


/ FINAL ENERGY CONSUMPTION

/ WORLD ENERGY CONSUMPTION, REFERENCE SCENARIO FROM THE INTERNATIONAL ENERGY AGENCY (IEA)

� from 70 to 260

� from 260 to 530

� from 530 to 1100

� from 1100 to 2500

� from 2 500 to 10 000

� data not available

Kilograms of oil equivalent per year and per inhabitant (2007)

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(IEA

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0

2

4

6

8

1970 2002 2010

10

12

14

16

18

2020 2030

Billion tonnes of oil equivalent

Coal

GasNuclear

Oil

Renewable energies

The rapid increase of energy demand in thedeveloping world, the growing scarcity of hydrocarbons and the requirements for responding to climate change are all major challenges for the energy sector. Energy consumption projections in the IEA reference scenario areinconsistent with a reduction of GHGG

emissions.

While there are still serious economic and technological obstacles to carbonstorage and the massive development of renewable energyG, the search for restraint and energy efficiency is one immediately available method that combines economic benefit and ecological virtue.

The value of the energy flow, furtherincreased by mechanisms for carbonrecovery created or inspired by the KyotoprotocolG, provides a means for developing a new industry to optimize energy and carbon efficiency.


edge of passenger needs and an investment capability suchthat it can propose innovative contractual solutions on themodel of public-private partnerships. These enable optimiza-tion of public investments to meet long-term needs, fixing ofquality objectives in terms of usage or environmental per-formance to be achieved by the operator, and VeoliaTransportation accepting a percentage of investments to bemade for the development of new infrastructures.

Embedding environmental efficiencyVeolia Transportation's proposals include eco-efficient calcula-tions that are useful to town councils to improve their under-standing of their environmental footprint and to define the besturban development options for transportation, to encourage thedevelopment of integrated transit systems with low CO2 emis-sions.

Developing inter-modal solutionsImproving networks and transportation hubs and organisingthe best fit between transportation modes are essential ele-ments to provide fluid and efficient journeys for passengers.Veolia Transportation participates in the development of inter-modal transportation by offering complementary travel modesthat provide the missing link between private cars and tradi-tional public transportation (car sharingG, collective taxis, shut-tle buses, self-service bicycles).

Accessible transportation for everyone provides an importantlever for social cohesion and is a factor conducive to development.A substantial movement from private cars to public trans-portation contributes to reducing GHGsG and improving airquality. Finally, public transportation contributes to the devel-opment of more ideal densities in an urban environment.

From transportation operator to global mobility managerVeolia Transportation's services are adapting to take these prob-lems into account; Veolia Transportation is changing from a pas-senger transportation operator to a global mobility manager. Bybroadening its core business to meet new objectives, VeoliaTransportation proposes new services contributing to finding asolution to the increasing economic, social and environmentalchallenges related to urban mobility and the need for alterna-tives to road for the transportation of passengers and goods.

Reorganizing responsibilities and contract modelsThis new role as global mobility manager implies a redefinitionof activity, scope and objectives, in cooperation with organisingauthorities and other transportation operators. VeoliaTransportation has the technical expertise and detailed knowl-

Veolia Transport

Urban growth and climate change are exacerbating the enormous challenges to which publictransportation must provide solutions. Urban congestion and the increase in travel require-ments make it necessary to improve efficiency and ease of mobility.

North America

LatinAmerica

Western Europe Russia and

Eastern Europe

Africa and the Near East

Asia - Oceania North America

LatinAmerica

Western Europe Russia and

Eastern Europe

Africa and the Near East

Asia - Oceania

1990 2020

The public transportation sector tackles sustainable development challenges, through its contribution to economic efficiency, social balance in regionsand its impact on atmospheric pollution and world emissions of GHGs. Needs will grow exponentially in future decades, particularly in emerging areaswithout modern urban transit systems.

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9 0005 0003 0001 000

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Billions of kilometers

/ LAND TRANSPORTATION FORECASTS FOR PASSENGERS IN BILLIONS OF KILOMETERS


21STRATEGY


Developing new transportation offersThe objective of global transportation management is to transferthe maximum number of passengers to public transportation;the use of public transportation should become as easy, flexibleand efficient as the use of a private car.

Customizing public transportationThe business of Veolia Transportation includes a new technologi-cal dimension to control mobility within a region and to allowindividuals,continuous personal access to information.The supplyof real time displays, individual information through SMS androuting computers,makes it easy for each passenger to create andoptimize their route. Innovations may also be organizational; tomeet the needs of everyone and to increase the use of publictransportation networks,detailed analysis has been carried out ondemand, leading to the creation of new timetables and improvedfrequencies.

Developing individual shared ride offers Shared rideG meets particular needs; it is not always possible to setup a regular transportation line in less dense areas. VeoliaTransportation has developed transportation on demandG (TOD) inremote urban and rural regions, or to facilitate travel for disabledpersons. Shuttle service for airports, buses, shared taxis, are all pos-sible solutions for making better connections and showing regionsat their best.

Proposing alternatives to road freighttransportationRailway and river freight transportation modes are now under-used,although with their environmental efficiency, they should beable to offer a viable alternative to road freight. VeoliaTransportation is developing rail and sea freight transportationthrough the activity of Veolia Cargo.

Inde

Asia220 billion EurosEurope

140 billion Euros

North America

65 billion Euros

Latin America

35 billion EurosAustralia

4,3 billion Euros

/ PASSENGER TRANSPORTATION MARKET

billion kilometres travelled withVeolia Transportation1.75

billion trips done with VeoliaTransportation2.5

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The opening up of the public transportation sector to private companies is a recent phenomenon in many regions of the world, and should increaseconsiderably during the next twenty years.

Road passenger public transportation market

including the part now accessible to the private operators

Rail passenger public transportation market

including the part now accessible to the private operators

World market:more that 460 billion Euros

of which the existing marketaccessible to private operators is 75 billion Euros


Building the sustainable city

MACHINE

THERMIQ

UE

COGÉNÉRA

TION

Recovery of raw materials

Energy recovery (capture and recovery of biogas,

incineration, biomass, alternative fuel, etc.)

Combating climate change

Reduce use of

resources

REINTRODUCE THE CITY INTO THE ENVIRONMENT

REINTRODUCE THE ENVIRONMENT INTO THE CITYImprove access

to essential services

Multi-function

pond

Production

Water plant

Distribution

Fossil

energy

Renewable energy

and local

alternatives

Optimisation of the energy mix

Energy

transformation

Energy distribution

House holds Tertiary

HOSPITAL

Industry

Planted

roof

Connecting regions

Buses

Car-sharingLight rail

Bus

Metro

Wast

treatm

Incinera

Sorting center

Groundwater and wetlands recharge

Wastewater reuse

Ag

Reservoir

Wastewater

Waste

collectionLandfill

Energy ServicesMaintenance - OperationsOptimisation of needs and costs

Transportation and distribution of goods

Urban lighting

Optimisation of urban space through

public transportation

Urban

environmental

services

Intermodes

Achieving maximum efficiency in all our activities involves the definition of global managementframeworks that make an operator responsible for management of a flow and enable:• the manager to take responsibility for quality and performance objectives;• elimination of conflicts of interest between producers and distributors (essential when considering

economy of resources);• control of long-term changes to infrastructures;• simplification of control applied by the public authority.

The exercise of competition involves:• setting up periodic competition, intrinsic to the delegated management model;• appropriate segmenting of territories;• subcontracting of some activity segments while maintaining global consistency of the contract.

Under different conditions, each of our activities requires a progressive change to its economiclogic:• for water, the percentage of the remuneration related to the quality of service and saving of

resources must increase, to compensate for a reduction in the remuneration for volumes distributed;• for environmental services, the percentage of income related to landfilling must decrease, and be

compensated for by an increase for treatment methods to recover the material or energy;• for energy management, combating climate change requires an increase in remuneration related to

energy and carbon efficiency;• for public transportation, the virtuous aspect of high volumes which avoids more disruptive and

polluting means of transportation, does not eliminate the need for fine tuning of means (financing,urban land occupancy, energy) to transportation needs.

Adaptation of management frameworks

Updating remuneration methods


23STRATEGY


Recovery of raw materials

bating e change

Reduce negative impacts on

the environment and ecosystems

e access al services

Multi-function

pond

Tertiary

HOSPITALPlanted

roof

Bus

Wastewater

treatment plant

Incineration

Sorting center

Compost

AgrIcultural recovery

Sludge - treated wastewater

Composting

Wastewater

Waste

collectionLandfill

y Servicesenance - Operationssation of needs and costs

ansportation and tribution of goods

The objective is to compare investment costs, management costs and the environmental and climatic impact of measures to be taken, based on:• characteristics of each region in terms of economic and natural resources, infrastructures

and town planning;• improvement objectives defined by the public authority.

At the moment, innovative technical-financial instruments may be defined based on measurements of carbon savings achieved. This enables a comparison between actions planned in a wide variety of sectors such as transportation, housing, waste treatment, lighting, city planning, social housing, etc.

In the future, a more ambitious approach will be necessary in order to change from carbon saving to measurements of the global ecological footprint (taking account of biodiversityG and local social, economic and cultural aspects).

Creation or modernisation of essential services in these built-up areas requires research andparticular adaptation to take account of:• the frequently enormous size of these built-up areas and their rate of change, that corresponds

largely to future urban growth;• special difficulties in creating an economic balance that requires optimized matching of means

to needs, both for investments and operation;• whenever possible, reconciling traditional economic and social realities with modern and secure

management methods;• definition of regulation mechanisms setting down principles of sustainable governance and increased

responsibility of persons or companies causing pollution or using resources.

Adaptation of the contract model in emerging countries

Sustainable urban planning


The scale to be used for sustainable development is the urbandistrict. Although the metabolism of cities has been completelytransformed, technologies used in environmental services atthe present time are based on the scientific heritage from theend of the 19th – beginning of the 20th century. The existingapproach needs rethinking to create and deploy differenttechnological solutions, by sharing knowledge on commonareas and participating in European and international researchprograms. Our research has initiated complete programs for therecovery of energy resources, raw materials, water resources,management of urban areas and optimisation of informationsystems, combining technical expertise and understanding ofhuman organizations that are currently undergoing a thor-ough transformation.

Due to strong synergies between our activities and a continu-ously increasing budget (+45% since 2003), R&D satisfies theambitions of the Group and is closely involved in the majorchanges of the 21st century. Veolia Environnement's researchobjectives for the 2008 - 2010 period have been fixed with thefour divisions. Projects have been divided into four main cate-gories with different timescales and programs depending ontheir duration and their relevance.

All these programs are defined in close cooperation with ourclients and help to optimise existing processes and invent newsolutions both in terms of industrial research and inimprovementG of proposed essential services.

Creating tomorrow's solutions Although drinking water is still a basic theme for research, otherpriority areas are the treatment and recovery of waste, energyand the reduction in GHGsG. Intensive work is being done onthe development of renewable and alternative energyG sources,in parallel to the search for solutions to optimise energy effi-ciency and save fossil fuels, and to provide efficient and easy tounderstand transportation services.

Inventing innovative servicesVeolia Environnement relies upon its research and development (R&D) to improve its rangeof services and to perfect technologies used within its facilities every day.

for the 2007 budget118 M€

since 2003+ 45%

22%

20%

16%

9%

6%

6%

7%

9%

/ R&D BUDGET BREAKDOWN BY PROGRAM

2%3%

� Drinking water

� Wastewater

� Collection, sorting, recovery of waste

� Bioenergy (production of primaryenergy)

� Production and optimisation ofenergy (use of primary energy)

� Ecobuilding – ecodistrict

� Transportation

� Environmental and health impact of our businesses

� Development of expertise outside specific programs

� Potential projects outside specific programs


25STRATEGY


From research to innovation The group’s R&D approach is aimed at operational implemen-tation of innovative and concrete solutions, crucial for theGroup's competitiveness.The teams at the three research centers and the internationalunits are working towards this end, in close cooperation with thetechnical managements of the four divisions. About a hundredsupervisors validate and improve the reliability of tomorrow'stechnologies.

� See Veolia’s R&D organization on www.sustainable-development.veolia.com

Managing the impacts of industrialprocesses The ongoing improvement to technologies used in the water,energy, environmental services and transportation fields isessential for us to adapt our services to be able to meet newrequirements for quality, access and respect for the environment.In addition to this progress approach, Veolia Environnement’sR&D is developing methodologies for measuring the environ-mental impact of the different processes and innovationsdeveloped, using life cycle analyses (LCA) to identify areas forimprovement.

Recovery of metals contained in industrial wasteThe use of zinc and nickel by industry has harmful consequences on the environment and the economy: releases into the naturalenvironment, reduction of resources leading particularly to economictension and fast increases in metal prices. This situation forces manufacturers to pay high prices to buy the metals that they need. This is paradoxical when we know that a large quantity of metals contained in their own waste are not recovered, due to the lack of techniques for extracting them. To overcome this, Veolia Environnement's research teams are working in partnership with the University of Metz to develop a technology

for recovering metals contained in industrial waste so that they can be reused. A pre-industrial plant was built on the Cedilor site, a subsidiary of Sarp Industries to validate the technology and improve its reliability, and forwhich three patents were lodged in 2004. This innovation opens up the way to recovery of many other metals. Already, the Group's research teams are working on specific treatment and recovery technologies for each type of waste. At the moment, Veolia Environnement recovers 600 tonnes of metal waste per year.

experts, including 400 research workers and 400 developers800

research supervisors>100 research centers in France and extensions in other countries3

FOCUS

Recycling of metals


AA

2-Veolia RDD-Approach (26-41)-E5 2/07/08 15:14 Page 26

A

Sustainable development is a source of opportunity and inspiration for ourbusiness. Across the entire company, it provides a challenge of responsibilityand consistency,and must be applied by a coherent global governance systembased on firm measures.

27APPROACH



Embedding our governance Effective long-term governance requires a committed approach and aims to anticipaterisks and opportunities and integrate the major risks faced by the company in its internal control.

Inde

pend

ence

Role

in d

ecis

ion

mak

ing

Fina

ncia

l inf

orm

atio

n

Directors amongthemselves and in relation tomanagement

Statutory auditors in relation tomanagement

Directors

Shareholders

Other Stakeholders

Presence of at least 50% of independent directors within the board and on committees (Accounts, And AuditCommittee; Nominations and Compensation Committee; Strategic Research, Innovation and SustainableDevelopment Committee)

• Definition of independence adopted by the internal regulations of the board of directors . . . . . . . . . . . . . . . . . . . . . . . . . . .

Average duration of a director's mandate of four years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Auditors cannot offer advisory services, except for services related to the audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Auditor - director meetings without the presence of management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Maximum five accumulated mandates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of meetings and average attendance at board meetings and committee meetings

• Number of meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• Attendance ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annual evaluation of the operation of board meetings and committee meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Formal evaluation of operation of the board once every three years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Percentage of votes cast in the General Assembly by shareholders present, represented or voting by correspondence in 2007 (therefore apart from mandates to the President). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Participation ratio (quorum) at the last general assembly (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of resolutions related to the company’s social responsibility (CSR) proposed and voted in theGeneral Assembly in 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of persons who raised questions related to CSR in 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2007 remuneration of the company representative (CEO) *** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Criteria for determining and fixing remuneration of the CEO and his main directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of share purchase options awarded to the CEO and the ten largest assignments in 2007• options awarded to the Chairman. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• ten largest awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Board of Directors

Accounts and Audit

Committee

Nominations andCompensation

Committee

Strategicresearch,

innovation andsustainable

DevelopmentCommittee

Board of Directors

Accounts and Audit

Committee

Nominations andCompensation

Committee

Strategic research,innovation and

sustainableDevelopment

Committee

11/14

six years (half renewed every three years, last done in 2006)

yes

yes

yes*

yes**

yes**

95.66%

61.21%

none

Three out of sixteen questions

2,374,033 Euros

See chapter 15 in the 2007 reference document

110,000350,000

3/3 2/3 2/3

11 6 3 1077.9% 77.8% 100% 100%

Good governance standards Situation on March 15 2008

* To the company's knowledge, based on declarations of directors and excluding legal waivers.** In addition to a formal evaluation every three years, the board of directors must include an item on the agenda to evaluate and debate its operation once a year. The most recent formal evaluation was held in 2007.*** Total gross remuneration including fixed and variable remuneration, attendance fees paid during the year 2007 by the company and its subsidiaries, and benefits in kind.

Evaluation of good governance standards


APPROACH Veolia Environnement ••• Sustainable development report 2007

29

As a company with a board of director quoted on the Paris andNew York stock exchanges, Veolia Environnement is governedby obligations set down by the 2003 Financial Security lawand the Sarbanes-Oxley law for governance of the companyand for internal control.

The Group initiated a process to certify the effectiveness of internalcontrol on December 31 2006, to meet the requirements of theseregulations. This certification was renewed in 2007.

Risk mappingIn continuation of work done to evaluate internal control, amap of the major risks affecting the Group was drawn up in2006 based on about 150 internal interviews with supervisors.The risk evaluation was carried out at the Group level andreproduced in each division. This enabled an analysis of thegross risk, the residual risk and existing control levels.

Based on this map, a steering group was set up to ensure con-tinuous improvement in risk management. Risk committeesare organised regularly (four meetings in 2007) under thechairmanship of the Veolia Environnement Chief ExecutiveOfficer, to initiate implementation of globally coordinated riskmanagement strategies. "Risk controllers" have been maderesponsible for drawing up and deploying action plans foreach identified principal risk, in coordination with risk man-agers of Veolia Environnement divisions. The Group's assur-

ance and internal audit programs have also been restructuredto include major risks.

Awareness of ethics and sustainabledevelopment14 awareness seminars were organised for more than 400Group executives between October 2004 and December 2005,around the "Ethics, Commitment and Responsibility Program”.Veolia Environnement is continuing action in this area by creating and deploying a training program for several thousandGroup executives from 2007 onwards, on respecting competi-tion law.

� Environmental and awareness training on sustainabledevelopment (see page 85).

Veolia Environnement has defined its sustainable develop-ment commitments in its Charter, updated in 2006(http://www.sustainable-development.veolia.com/en/)

We use a global system (see pages 30-31) to ensure thatwe respect our obligations and take account of challenges at all stages in their development, from latency to institutio-nalization.

Minimum standards

FOCUS

Veolia Environnement made the decision to set minimum worldwide environmental and social standards for itself in 2006. Work groups met during the year 2007 to begin the implementation of this approach that should be fully operational by 2011.

These standards must provide a basis for the company's environmental and social responsibilitiesapplicable throughout the world, independently of the state of local regulations. Environmentally, the first objective is to identify the industrial products and processes for which a quality standard should be produced. This can then bedeveloped into a precise specification dealing with the main quality aspects of the final product and control of environmental and health impacts.

These standards will define environmental standards below which Veolia Environnement will refuse to act, taking account of its leadership in its markets. Socially, standards will be defined based on identification of the main aspects of the company's responsibilitytowards its employees. One or several symbolic,significant, measurable and realistic measures will be set for each employee, taking account of the diversity of Veolia Environnement’s economic and social base in the world. Each will be based on a specification describing conditions ofimplementation in the different geographic areas and countries in which the Group is present.


Risk management groupThis department was created in 2004 and its mission is globaland coordinated management of all types of risks that couldaffect the Group:• anticipate, analyze and weigh risks, by permanent monitoring

(mapping)• ensure that identified risks are actually taken into account

and at the appropriate level• check existing risk control systems• inform all stakeholdersG about global risk management proce-

dure

Research management� See page 24.

Health managementCreated in 2001.Mission• to monitor and anticipate new health safety challenges for

the protection of employees and public using our services.• training of employees on health issues and making the public

aware of environmental health

Ethics CommitteeThe Ethics Committee was created in 2004 and is independentof Veolia Environnement’s hierarchy.CompositionThe three members were chosen for their knowledge of theGroup and their career situation, to guarantee independenceand the experience necessary for their role.Mission• to present recommendations about fundamental valuesG of

the company to the Group’s Executive Committee• to ensure that the “Ethics, Commitment and Responsibility

Program” is respected, particularly through a whistleblowingsystemG.

• to perform ethics audits at all the Group’s sites.

Europe services Veolia Environnement has a permanent office in Brussels,close by the European institutions.

Campus Veolia EnvironnementTraining center created in 1994 - About twenty training centers(in France and internationally).Mission • to develop the skills of the company’s employees• to promote environmental services and to accompany the

Group’s growth in partnership with major training andrecruitment players.

Functional management rely on the Group’s four divisions carry out

Sustainable development is at the heart of Veolia Environnement’s culture, business and strategy. The managementof sustainable development is directly attached to the Chief Executive Officer. The sustainable developmentdepartment was created in 2003 and it coordinates environmental and social performance and works with divisions

EMERGENCELATENCY

Public awareness is gradually increasing as a result of repeated alerts from NGOsand the scientific community (e.g. biodiversityG, human rights).

Mobilization limited to research worker communities, initiation of debates by NGOs (e.g. nanotechnologies, biotechnologies).

Spreading a forward looking culture

Institut Veolia Environnement (IVE)Created in 2001Mission• to anticipate economic, environmental and social trends

and challenges during the next decades, to foster theGroup’s long-term vision.

• to be a platform for exchanges and communication betweendifferent players.

Key partners• Foresight Committee, composed of six internationally

recognised members, that meets twice a year to guide andvalidate projects,

• network of academic experts with which the IVE carries outforesight studies in the disciplines represented.

Areas of Research Economic aspects of the environment, relations between health/ environment, climate change and lifestyles, the challenges ofurban growth, society and the environment.Tools• foresight studies program to consider areas of interest in

greater detail and to broaden the experts network.• international conferences and seminars so that work can

be done in the context of a permanent communication withthe academic environment and civil society.

• initiation of innovative projects (FactsG and SapiensG) torecord experience and scientific know-how for use in laterprojects.

2007 activities included new studies on the ecological foot-print and on health, pollution of indoor air, and other subjects,widening of the network to make it international, and the2050 climate conference in Montreal.

� Find about Institut Veolia Environnement news onhttp://www.institut.veolia.org/en/

Sustainable Development Visiting CommitteeThis Committee was created in 2006 and its objective is tohelp Veolia Environnement in making progress with its viewsand its research on sustainable development.

� See committee’s opinion, page 4.

Foresight

� �

� �



31

Environmental management systemG

• tool for implementing the Group’s policy in the field of theenvironment and environmental health. Deployed since 2002,and adapted to the requirements of international standards(ISO 14001, Global Reporting Initiative)

• objectives are to manage and reduce the impact of theGroup’s activities on the environment and health, throughenvironmental performance management.

Annual environmental reporting• monitoring of about a hundred indicators since 2001 using

the environmental information system (EIS), production ofaction plans

• methodology principles formally defined in the “measure-ment and reporting protocol for environmental indicators”

• Implemented in operations representing 75% of the Group’sturnover

• environmental audits: 1,200 priority facilitiesG audited since2001.

Annual social reporting• measurement of the Group’s social performance through

160 social indicators deployed in 68 countries.• takes account of the specific social nature of each moni-

tored business.• network of 600 correspondents in divisions to collect and

consolidate data.

Annual client reporting• measurement of satisfaction of our individual customers

based on changes to 10 synthesized indicators.• scope: 42 entities in 19 countries (8 businesses added in 2007),

namely 75% of 2007 revenue made with local authorities.

Requested extra-financial ratingAn extra-financial rating exercise has been organised on partof our geographic coverage and all of our activities since 2004.

� See “Performance” section

Committees, inspection and monitoring bodiesfor internal proceduresNominations and Compensation Committee provides propos-als to the Board of Directors about nominations and renewalof directors’ contracts, payment for social representatives andindependence of directors.Accounts and Audit Committee examines the relevance ofaccounting methods and gives its opinion on accounts, exam-ines the internal audit program and is informed about inter-nal control.Strategic Research, Innovation and Sustainable DevelopmentCommittee, evaluates R&D policies within the Group’s strategy.

Legal management• analysis of texts and jurisprudence in terms of delegation of

public services, government and private contracts, public -private partnerships, for each division.

• legal monitoring in several domains, to have a complemen-tary analysis and / or a Group position on a particular sub-ject identified by the Reading Committee, recently createdin 2007

• conformity of the Group’s activities with regulations andthe company’s good practice.

Systems: internal control and auditsInternal Control Department• formal definition and implementation of internal control

processes. This function was created in 2004 within thefinancial services management, and has been broken downinto divisions and operational units.

Internal Audit Department• procedures to evaluate risk management, control and corpo-

rate governance processes, and to contribute to improvingthem

• evaluation of internal control, in application of the require-ments of the 2002 Sarbanes-Oxley Act.

• six-monthly antifraud reporting initiated since 2005, for theattention of internal audit managers and internal controlmanagers.

The management was certified by the French Institute forAudit and Internal Control in 2006 and confirmed in 2007.

nt rely on the Group’s four divisions carry out their roles

egy. The managemente developmentnd works with divisions

in defining their objectives. It encourages adaptation of our contractual models and our commercial offers to make sus-tainable development a competitive advantage and a value creation lever.

Existence of national or international standards and regulations (e.g. safety at work, anti-trust law).

INSTITUTIONALIZATIONMATURITY

Mobilization of public bodies and companiescontributing to the economy, strong representation in the media, priority on agendas (e.g. health, environment, hygieneand climate change).

ComplianceGuidance

� �

� �


Suppliers: developing responsible procurementIntegrating sustainable development tools into purchasingprocedures contributes to limiting risks with regard to suppli-ers, safety and working conditions of subcontractors, protec-tion of the environment and ethics, all of which vary from onecountry to another.

Integrating sustainable development inthe purchasing processTools have been developed to include sustainable develop-ment in all steps of the purchasing process. They are formallydefined in the Group’s Purchasing Charter. Since 2004, 233buyers with 22 different nationalities have been trained onpurchasing (about 80% of purchasers have been trained).

Shareholders: informing the financialcommunityVeolia Environnement meets the expectations of its share-holders and investors through its irreproachable corporategovernance, demonstration of the relevance of developmentpriorities and appropriate risk management – all levers ofvalue creation.

Apart from meetings with institutional investors and financialanalysts, our various company publications provide a means ofmeeting the financial community’s transparency and explana-tory requirements: letters to shareholders, the Annual Report,Reference Document, annual Sustainable Development Reportand Social Report.

All financial information is also available on the financial pageof the Veolia Internet site (www.veolia-finance.com).

Moving forward with our stakeholdersVeolia Environnement’s growth is based on a decentralised operating model with astrong local involvement. We have the responsibility to set up relations of trust and dia-logue with each of our stakeholders at all levels, and to include their expectations andcontributions in the implementation of our sustainable development strategy.

• Suppliers’ Charter• Sustainable development

questionnaire

• Sustainable development commitment

� art. 6 in outline contracts

• Evaluation of suppliers• Sustainable development audit

Call for tenders

� Give the buyer a first view of the sustainable development of the supplier

�Make the strategy of our suppliers consistent with VeoliaEnvironnement’s sustainable development commitments

� Oblige our suppliers to make a commitment to contribute toVeolia Environnement’s sustainable development objectives, both in their activityand in their supply chain.

� Guide contract relationship

� Check that sustainable development commitments madeby suppliers are put into practice

� Identify risks and fix areas of progress for sustainable development.

/ INTEGRATION OF SUSTAINABLE DEVELOPMENT INTO THE PROCUREMENT PROCESS



33

Two complementary support items were developed in 2007 toguarantee good project governance: a behavior code for work-ing groups on procurement to evaluate suppliers and assessthe quality of products and services purchased; and a SupplierCharter that defines the conditions of a responsible client-supplier relationship and summarises the Group’s commit-ments towards sustainable development.

Furthermore, Veolia Environnement is carrying out an activesupplier evaluation policy, particularly on safety and environ-mental aspects. 575 outline agreements with regional suppliers,namely half of all on-line supplier agreements, were evaluatedin 2007.

Apart from tools developed at Group level, each division deploysits own approaches to manage the selection of products andthe relationship with supplier or subcontractor. For example,Veolia Environmental Services insists that its suppliers sign anagreement against illegal labor.

Sustainable development audits Since 2004, Veolia Environnement has carried out sustainabledevelopment audits of its suppliers, giving them means ofmeasuring their performance and comparing it with theGroup’s expectations in this field.

In 2007, the Group’s purchasing management carried out anaudit of a highlighted supplier of batteries shared by all divi-sions. This resulted in a progress plan being set up related toimprovements to safety, the formal definition of a humanresources policy and integration of sustainable developmentin steering its own suppliers.

Sustainable development has also been integrated into thecontracts of Veolia Water France suppliers, in the same way asthe quality and technical aspects of products, safety of peopleand equipment, and commercial positioning of proposals.This approach was initiated in 2006 and continued in 2007.

About forty sustainable development audits of strategic sup-pliers have been made by Veolia Water in France (around eightEuropean countries), and consulted suppliers answered 381questions on economic, social and environmental subjects.

Improvement areas and action plans were suggested for theyear 2010. This approach has been deployed in France, and iscurrently being deployed internationally.

A sustainable development section is also included in auditson the Veolia Environmental Services site, already deployed at40 suppliers.

Good purchasing practices are disseminated through a specificInternet site on procurement accessible throughout theworld: 1,337 agreements were referenced at the end of 2007and they are being referred to more and more frequently(3,545 users). Consolidation of procurement teams in differentcountries (the United States, United Kingdom, and Germany)and broad outline agreements also contribute to consolidat-ing the procurement network internationally.

Social progress:approach towards suppliers and subcontractors in AfricaSince 2006, Veolia Water AMI (Africa - Middle East - India) has carried out a policy aimed at integrating social responsibilitycriteria in the selection of, and relationships with its suppliers and subcontractors. The objective is to ensure that theyrespect international rules and laws concerning labor, particularly for labor intensive activities, such as maintenance ofwater networks, urban electrification and sanitationG.

In 2006, companies included in the investigation represented more than 80% of purchases in Morocco and in Gabon. After studying and analysing the data, Veolia Water AMI issued accreditation certificates to companies that wereconsidered to comply with the requirements. In 2007, the approach was extended to Niger and audits were carried out in Morocco and Gabon. The results obtained were formally defined through a purchasing charter defining requirements applicable to suppliers in terms of sustainable development. This charter is required by the contract and it must be agreed upon by suppliers who are invited to participate in any new call for bids, and by suppliers with revenue of more than 100 k€ or belonging to risky procurement categories.

BEST PRACTICE


Clients: raising awareness of responsible consumptionThe protection of the environment requires the involvementof the general public. The Group puts great emphasis on rais-ing customer awareness on the impact of their consumption.Increasing public awareness can have a direct bearing on theenvironment through encouraging customers to adapt theirbehavior in favor of sustainable development and responsibleconsumption.Veolia Environnement has thus committed itself towards aprocedure to meet the eighth principle of the Global

Compact that encourages “taking initiatives towards moresustainable environmental practices”.

The Group supports an increasing number of educational pro-grammes to encourage eco-citizenship, particularly on the fol-lowing four areas:• steps to increase the awareness of children about protection

of the environment;• campaigns towards reasonable use of water and energy savings;• promotion of the use of public transportation;• incentives to reduce and recycle waste.

Trafford changes the waste sorting habits of its residents with the help of Veolia Environmental ServicesSince 2005, in the United Kingdom, VeoliaEnvironmental Services has been working alongsidethe metropolitan district of Trafford (GreaterManchester) on a campaign to raise citizens’awareness of the need to recycle waste. Advertisingand outreach door-to-door campaigns have beenorganized: over 40,000 households have beencontacted so far.

Following this campaign, Trafford recorded aconsiderable increase in waste recycling: from 10% in 2005 to 25% in 2007. This is one of the largestincreases ever recorded in an urban area accordingto the Department for Environment, Food and RuralAffairs (DEFRA).

Such initiatives are frequent in the UK thanks to thefavourable context of integrated waste managementcontracts.

BEST PRACTICE

5 %

10 %

15 %

20 %

25 %

30 %

35 %

2004 2004/05 2005/06 2006/07 2009/10

5 %

10 %

15 %

20 %

25 %

30 %

35 %

40 %

45 %� Recycling rate achieved by VES

---- Recycling rate objective set by the local authority

/ TRENDS IN THE RECYCLING RATE IN TRAFFORD SINCETHE SETTING-UP OF PUBLIC-PRIVATE PARTNERSHIPS IN PUBLIC SERVICES IN 2004

Recycling campaign in Trafford, United Kingdom



35

Civil society: listening to residents and associationsAll Veolia Environnement divisions have initiated a communi-cation with civil society at the local level, so that the Group’sactivities and services can be adapted to match the expecta-tions of local residents and to reduce perceived nuisance dueto its activities. This is particularly true for the construction or renovation of networks that create nuisance, but that aredesigned to eventually improve the efficiency of the service.

For example, Veolia Transport uses its “proxi quality”approach, with the objective of initiating a communicationon a local transportation project by organizing a public meet-ing between public transportation users and local residents.Discussion groups can continuously improve the operation ofa public transportation line or network, as is the case inNancy, France.

Since 2006, Veolia Water has been setting up panels of watertasters. Agents working at the Greater Toulouse Agency inToulouse, France, participate in these panels and fill in a ques-tionnaire about their perception of the taste and the odor ofthe water. In 2007, the company broadened this approach andinvolved consumers directly. A sample group of fifty residentswas set up, distributed uniformly throughout the breakdownnetwork.

Veolia Water AMI organized a debate in Niamey (Niger) inOctober 2007, attended by about forty NGOs and cooperativeorganizations with the aim of presenting its activities inAfrica to them, particularly its programs dealing with theMillennium Development Goals. The communication clarifiedthe roles and responsibilities of the different people involved

in water, explained the plans and missions of the companyand SEEN (its Nigerian subsidiary), and identified commonwork areas. The discussion was strengthened by site visits.Participants congratulated the Group on this initiative andconfirmed their intention to continue the communicationand cooperation.

Supporting local sustainable develop-ment projectsSince it was created in May 2004, the Veolia EnvironnementFoundation has supported more than 600 sustainable develop-ment projects with an annual budget of €5 million. Each projectis sponsored by a person working in the Group.

In 2007, 183 selected projects were set up in new countries dueto the support of sponsors originating from Veolia Environnementlocal subsidiaries.These included the professional integration ofemployees from the Romany people and the combat againstsexual exploitation and trade in young girls in India.

� http://www.fondation.veolia.com/en/

288

Solidarity178

Professional integration

/ BREAKDOWN OF THE 611 PROJECTS SUPPORTED BY THE FOUNDATION SINCE ITS CREATION

Rating requested by Veolia FoundationBMJ Ratings has evaluated the efficiency of the Foundation’s management method and its performances with regard to internationallyrecognized standards of good practice forfoundations.

An A++ rating was assigned. Good performance of the Foundation has been emphasized including rigorous selection of projects, ensuringthat all fields of action are consistent with theGroup’s strategy, sound management of resourcesand quality of information distributed by itsinstitutional documents.

FOCUS

A++

145

Environment


The Group uses consultation and communication, mainly inthe European Union and with international institutions, toprovide material for reflection on environmental policy.

Participation in consultations for EUgreen papersDue to the importance of the EU market for VeoliaEnvironnement, a permanent representation with Europeaninstitutions has been set up in Brussels. The Group monitorschanges to the legislation and European regulation related toits activities and participates in preliminary research on theenvironment.

Thus, Veolia Environmental Services has made its detailed con-tribution to European institutions working on production of aframework directive on waste, inspired by field experience.Veolia Transport participated in the ongoing call for informationabout “sustainable urban mobility”, for which an action planmust be produced before the end of 2008. Veolia Energy-Dalkiaand Veolia Environmental Services are working on proposalsrelated to policies on climate change and energy of the EU.

The Group is also participating in research on problems relatedto sustainable development in the urban context: for exampleadaptation to climate change, market instruments.

It is directly involved with strategic questions on which itslegitimacy is related to its expertise. It is also involved withprofessional federations, think-tanks and some NGOs.

Combating climate changeThe Group actively monitors changes to regulations and inter-national negotiations (the Kyoto protocolG, CDMG, JIG) to antic-ipate how its activity sectors might be involved in mattersrelated to climate change and reduction of GHGG emissions.

Concerning the European Union’s Emission Trading SchemeG,the sites concerned are mostly Veolia Energy-Dalkia’s combus-

tion facilities with a capacity of more than 20 megawatts.Quotas assigned to it represent 1% of European quotas. Theseare managed in the framework of a special purpose structure,VEETRA (Veolia Environnement Emission Trading) that uses aprecise measurement of real emissions resulting from theoperation of sites, to optimise cost effectiveness and identifynew financing capacities for GHG emission reduction projects.VEETRA also works for other Group divisions.

Veolia Transport favors extending the CO2 permit trading sys-tem to emissions related to companies’ activities (mainlyfreight and potentially employees home-office commuting).This requirement should first be applied to companies alreadysubject to the EU Emission Trading Scheme.

Furthermore, Veolia Environnement teams are monitoringCommission proposals on mechanisms for reducing GHG emis-sions in sectors not subject to the ETSG to integrate them intotheir projects, including targeted incentives (climate plans) anddomestic projectsG (in France) that can give the rights to emis-sion credits.

Energy performance and renewableenergy

Energy saving certificatesIn France,Veolia Energy-Dalkia participated in the developmentof the energy saving certificates (CEE) system, with the objectiveof including the energy performance contract into the CEEsystem and earn certificates.

Responsible lobbyingVeolia Environnement is at the heart of major public challenges:access to essential services,the environment,public health,climate change.The Group makes submissions to the differentinstitutions concerned so as to perform its activity under optimum conditions, contribute toimproving the quality of life and anticipate changes in the management of services for theenvironment.



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Energy recovery from wasteVeolia Environmental Services is defending different forms ofenergy recovery from waste (capture and recovery of biogasG

from landfillG, incineration with energy recovery, methanisationG,production of biofuelsG and alternative fuels) with Europeanauthorities.

Electricity produced by cogenerationCogenerationG is expanding in all European countries. The gener-al economic balance of cogeneration contracts in France has beenmodified due to new less favourable tax arrangements. VeoliaEnergy-Dalkia is working with the industry to correct this situa-tion, after the economic and environmental advantage of cogen-eration was recognized by the European Parliament Directive2004/8/CE.

In 2007, the Group continued its cooperation with international organizations to provide its expertise to help achieve Millennium Development Goals (MDGs). Four priority steps were taken:

• the commitment towards the “access to essential services for everyone” initiative controlled by UN-Habitat. The expert committee of which Veolia Environnement is a member was appointed to produce functional means for better controlling the practice of public - private partnerships

in the field of housing;

• support of the UN-Global Compact Foundation responsible for implementing the principles of the Compact, withparticular recognition of Veolia’s actions in the fight against climate change at the Geneva conference in July 2007;

• support for centralised cooperation, particularly in Asia where Veolia Environnement is participating in a panel of experts on urban pipe system management methods organised by the Asian Development Bank since December 2007. The Group is also contributing to the creation of a databank on decontamination techniques and practices, with the association of Asian cities (CityNet);

• strengthening local skills through a long-term partnership with UNITAR (United Nations Institute for Training and Research) in which Veolia Environnement supported geographic implementation of the ITCLA (International Training Centers for Local Authorities). This helps local decision makers to improve the quality of their urban services. In 2007, our experts worked on twelve sessions that brought together almost 400 elected membersand local managers, on the theme of sustainable city planning.

International partnerships

FOCUS

European Parliament in Brussels, Belgium


Veolia Environnement’s contribution to the“Environnement Grenelle” round table process, in FranceThe French government launched the “Environnement Grenelle” in July 2007, and provided an opportunity for discussionsand debates between the Government and representatives of civil society, to define a road map towards sustainabledevelopment.

Veolia Environnement actively contributed to the debates in this framework of working groups organised by the FranceEnterprises Movement (MEDEF) and professional federations. The Group’s strong experience in France and in othercountries provided a set of specific proposals that were made available to stakeholdersG on the internet and that can beviewed at: http://www.sustainable-development.veolia.com/en/ .

The proposals formulated by the Group’s divisions are in the following areas: • encourage saving of water resources and preservation of natural environments,• use waste as a resource,• manage energy demand and encourage renewable energy and decentralised generation,• set up a sustainable mobility policy.

FOCUS

Patagonia, Argentina

Access to essential services

Price of servicesVeolia Water is actively involved in monitoring the implementa-tion of measures recommended by the Water FrameworkDirective, and particularly their consequences, if any, on thecost for the consumer of public drinking water and wastewaterservices.

Access to sanitationLack of sanitationG is considered to be a genuine “sanitary time-bomb”, and this is why the international community hasdeclared the year 2008 to be the international sanitation year.Access to sanitation has been recognised as a human right since2002, and has become a subject of concern for nations in thesame way as access to drinking water. Veolia Water has made apriority of it in its lobbying actions.



39

Climate 2050:technological and political solutionsClimate 2050, the 4th conference of the Veolia Environnement Institute organised with the Pew Center on Global Climate Change andthe National Round Table on the Economy and the Environment, met in Montreal in October 2007 with almost 400 participants fromtwelve countries. The objective was to encourage multidisciplinary and inter-sectoral discussions to improve understanding ofstrategies to reduce GHGG emissions by the year 2050 and to create links between the scientific community, the private sector andpublic authorities. The debates identified the technological challenges; innovative measures and needs for public policies, throughsessions concentrating on eight key sectors such as transportation, biofuelsG and the capture and storage of CO2, and cross-discipline sessions. This event reiterated the call for the involvement of everyone concerned and all countries in combating climatechange change, in preparation for the Bali conference (www.institut.veolia.org).

Responsiblemanagement of servicesfor the environmentVeolia Environnement, extending Group researchinitiated at the Environment Grenelle, has published a document entitled Proposals for responsiblemanagement of environmental services.

This document starts by presenting technicalsolutions put forward by Veolia, but it also describeschanges that it considers necessary, particularlyin terms of governance, to favour good managementof services for the environment.

The document can be downloaded from the Internet site www.sustainable-development.veolia.com.

Veolia Environmental Services also contributes todebates on waste management policy. Among othertasks, it participated in the book Du rare à l’infini,panorama mondial des déchets 2006 (From Waste to Resource, 2006 World Waste Survey) withCyclope, the leading European institute for researchon international markets for raw materials andcommodities.

FOCUSIt works within the AquaFedG federation and participates onhomogenisation of definitions, to create an international basisfor discussion, so that challenges related to sanitation can bebetter understood and taken into account.

Service continuityVeolia Water is also lobbying European institutions to get themto recognise that the breakdown of drinking water and sanita-tion are priority challenges, regardless of climatic conditions.

Resource conservation

Water shortage and droughtVeolia Water is participating in European research on adapta-tion to climate change, and is emphasizing that strain onwater resources is a local phenomenon.

The company is favorable to the development of alternativeresources (recycling of treated wastewater, groundwaterrecharge, control and recycling of stormwater, seawaterdesalination), while promoting judicious demand manage-ment measures.

Preservation of soilThe Group supports the European Framework Directive for theprotection of soil, in the same way as the Directives on waterand air and for which Framework Directives have already beenproduced.

Veolia Environmental Services is also organizing communica-tion with public authorities on the protection and remediationof soils. A conference on this subject was organized in theFrench Senate in November 2007.


COMPLY AND ADAPT TO REGULATIONS

CHANGES IN CONTRACTUAL MODELS

CLIMATE CHANGE AND ENERGY

EFFICIENCY AND RECOVERY OF RESOURCES

HEALTH CHALLENGES

BIODIVERSITY AND ECOSYSTEMS BALANCE

SAFETY AND HEALTH OF EMPLOYEES AT WORK

MANAGEMENT OF SKILLS

CULTURAL DIVERSITY

RELATIONS WITH STAKEHOLDERS

URBAN POPULATION GROWTH

INNOVATIVE CHANGES

Identifying and managingour risksRisk management is based on principles of anticipation, information, coordinationand management. The map of risks in terms of sustainable development providesour stakeholders with transparent information about the degree of commitmentand suitability of Veolia Environnement on all subjects.

Competition law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Make sites comply. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Detection and prevention of frauds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Anticipate environmental regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adaptation to the capability of local consumers to make contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adaptation of proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adaptation of the contracts in emerging countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Decarbonated energy mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Renewable energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Control of methane emissions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other GHGsG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

BiomassG - soils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Secondary raw materialsG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Drinking water and sanitationG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Legionella. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Atmospheric pollution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Indoor air quality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Preservation of biodiversityG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Impact of activities on ecosystems / LCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Urban biodiversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Growth and replacement of workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Development of different businesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Career development and continuous training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Internationalisation of recruiting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contribution to local jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Increased awareness of responsible consumption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contribution to participative debates and responsible lobbying. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relationships with international non-government organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relationships with the local communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contribution to Millennium Development Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Human rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Converging Technologies*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CO2 capture / storage (evaluation) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“Decentralized energy”** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Challenge Sub-challenge Researc

* Nanotechnologies, biotechnologies, information technologies and cognitive sciences** Production of energy, where it is used, and not from a remote power station

Furthermore, mapping enables permanent monitoring ofchanges to risks in a context of pressure from regulations andthe demand for more information by our stakeholdersG.Sustainable development challenges facing Veolia Environnementcan be considered as risks or opportunities, but in both cases

they change dynamically.These challenges apply to deep-seatedtrends, among which there are external sources that areimposed on our business such as scarcity of resources, andpopulation and urban growth, and internal structural chal-lenges that are specific to growth and internationalisation of



41

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

to make contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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ion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

nsible lobbying. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Research Awareness Structuring Action plans

� Setup action plan

� Guidance during organization

� Awareness raising

� Research in progress

the Group. In order to organize our approach and define ourchallenges more precisely, we have decided to combine theinternal risk mapping approach and the external approach ofour sustainable development rating by BMJ Ratings. This firstpresentation will be studied in more detail and a detailed map

of challenges affecting the Group and each of its divisions willbe produced in 2008, in coordination with the risk manage-ment department.


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43CHALLENGES


We communicate our vision on our most important challenges and we makea commitment to research and taking action that combines realism and responsibility,to better meet the expectations of our stakeholders.


The objective is to use verified methodologies to demonstrate acontinuous improvementG in the ratio between reductions inemissions achieved by our management and the emissions forwhich we accept responsibility.

In this context, our carbon strategy can be broken down intothree areas.

Accompanying innovation: Veolia Environnement invests in lowCO2 emission technologies - biomassG, solar energy, recovery ofbyproduct energy. Research is also being undertaken on carbonstorage in order to determine appropriate sites, increase thereliability of techniques and verify economic relevance.Although this solution is promising, it will only be viable in themedium or long term.

Promoting renewable and alternative energyG for decentralizedsystems; these energy “decarbonize” the energy mix. However,for technical and economic reasons they are not a completesubstitute for fossil fuels.

Rationalizing the use of energy to reduce waste by improvingenergy efficiency.All urban and industrial activities have significant potential forgreater savings and efficiency. Techniques are available forcontrolling consumption. The high cost of energy and fuel reco-very makes most energy efficiency investments economicallyattractive. This is the mainstay of our business.

Veolia Environnement is highly concerned by two aspects of cli-mate change and the need to reduce GHGG emissions.• Three of our activities (energy services, public transportation,waste treatment), are critical emitters of carbon dioxide andmethane. The water sector is less directly involved in GHG emis-sions, but is very much affected by the effects of global warmingon the availability of water resources.• Our clients, managers of our cities and companies, are the par-ties most closely involved in the drive to reduce GHG emissions,either through the responsibilities that they hold or as a resultof constraints set by regulations.

Thus, the management of GHG emissions is, for VeoliaEnvironnement, a responsibility, in some cases a constraint (faci-lities are subject to quotas in the European Union) and, moreoften an opportunity to develop expert services for the benefitof our clients.However, our business model has two unusual features:• Veolia Environnement cannot reduce its absolute GHG emis-sions without sacrificing business growth. Each new contractwe win to manage municipal or industrial facilities brings asignificant increase in emissions under our responsibility. .• Thus, unlike many other stakeholdersG, growth of our emis-sions must be perceived as being a positive, to the extent that itenables us to broaden the scope of our energy efficiency andcarbon services, which if all other things being equal, contributeto a global reduction of GHG emissions.

Thus, our carbon performance is based on the demonstration ofthis energy and carbon efficiency model, to which all of our acti-vities can contribute.

Combating climate changeVeolia Environnement emits greenhouse gas (GHG) through management of its activitieson behalf of its clients, but it also contributes to the fight against climate change throughour efforts to make a global reduction of GHG.

The carbon efficiency ratio was 58% in 2007,compared with 53% in 2006.

20.2 Mt

39.5 Mt

28.6 M€

24.6 Mt

42.8 Mt

32.6 M€

Global reduction of GHGemissions

Total direct and indirectGHG emissions

Revenue

Carbon efficiency = Global reduction of GHG emissions = 58%Total direct and indirect GHG emissions

2006 2007

+ 22%

+ 8%

+ 14%


CHALLENGES Veolia Environnement ••• Sustainable development report 2007

45

In 2007, the Group emitted 42.8 million metric tons of CO2 eq., an increase of 8% compared with 2006,while the revenue increased by 14%. N2O emissions (waste incineration) are included for the first time,together with CO2 emissions from SNCM ships (France).

/ DIRECT AND INDIRECT EMISSIONS OF TOTAL GHG 2006 AND 2007(million metric tons of CO2 eq.)

3.339.5

336.5

0.42.3

0.41.8

2.40.2

2.10.2

0.321

0.320.7

0.3160.3

13.7

Water WasteManagement

Transportation VeoliaEnvironnement

Energy

MethodologyFor each of its activities, the Group measures on the onehand direct emissions from managed processes, vehicles,facilities or equipment and on the other hand indirectemissions due to electricity consumption.

The greenhouse gasesG concerned are:• CO2 emitted by combustion installations, incineration ofthe fossil part of waste and fuel combustion by mobilesources;• CH4 contained in landfill gasG that are not captured byinstalled collection systems and combustion of NG (naturalgas for vehicles) of mobile sources;• N2O originating from the waste combustion process.

MéthodologieThe Group contributes to an global reduction in GHGG byreducing its own emissions and by avoiding third party emis-sions.The scope of the contribution of Veolia Environnement’sdivision has changed since last year.Veolia Water: distinction made in the energy production (originating from renewable energy or recovery of biogasG)between on-site consumed energy and sold energy.Veolia Transport: extension of the perimeter of the “eco-effi-cient travel”to 92% of Veolia Transport passengers and 79% ofkilometers travelled (apart from road and railway freight) andincluding sea transportation.Veolia Environmental Services: accounting for reductions inemissions generated by the capture of landfills biogas and byon-site consumption of part of the electricity produced due toenergy recovery from waste. CO2 avoided by material recoverywas quantified on the following fractions starting from theirlife cycle analysis: paper / cardboard, plastics, ferrous metals,non-ferrous metals, glass, wood and bottom ashes originat-ing from incineration.Veolia Environnement’s global reduction of GHG for 2006was recalculated with a homogeneous basis, the 2006 valuebeing 20.2 million metric tons of CO2 eq.

� Direct emissions � Indirect emissions (electricity)

/ GLOBAL REDUCTION OF GHG EMISSIONS (in million of metric tons of CO2 eq.)

Water WasteManagement

Energy Transportation VeoliaEnvironnement

0.090.04

16.213.9

4.64.2

3.72.1

24.620.2

� 2006 � 2007

In 2007,Veolia Environnement contributed 24.6 million metric tons of CO2eq.to the global reduction of GHG emissions.

2006 2007 2006 2007 2006 2007 2006 2007 2006 2007

Externally verified figure (see page 94).


1Capture of CO2

2

2

Transportation

by ship

3

Transportation

by pipeline

4Storage in tank 5Recovery: use of CO2 6

Injection

well head

7ain deep saline aquifers

7bin unused coal seams 7c

in gas or oil deposits at end

of exploitation

Fuels

Thermal power stations supplying heating and cooling networksmanaged by the Group,municipal waste incinerators and landfillsburning landfill gasG are all significant emitters of carbon dioxide.Since 2005, Veolia Environnement has initiated a research pro-gram on the capture, transportation, storage and recovery of CO2produced by these types of medium size industrial facilities.

Acquiring expertiseCarbon storage is expected to reduce GHG emissions aroundthe world by between 20 and 30% by 2050. This aims at pro-viding new solutions to reduce the Group’s GHGG emissions,acquiring recognized expertise in this field, and exploring newmarkets.

In the framework of preliminaty studies, potential Europeansites were identified in 2007 for the construction of a pilotplant that can be used to:• find capture solutions appropriate for the different types andsizes of facilities belonging to the Group;• study the different transportation and recovery systems adap-ted to the geographic spread of our facilities;• define a framework acceptable to everyone considering therisks and challenges of this solution.

This study was completed in 2008 with the selection of a sitein Claye-Souilly in Seine et Marne, France. The pilot captureand storage plant will handle 200,000 metric tons of CO2 peryear. The gas will be injected into a saline aquifer at a depth ofmore than 1,500 meters for several years.

/ CAPTURE, TRANSPORTATION, RECOVERY AND STORAGE OF CO2

CO2 storage:a important research and development challenge

Floating icebergs, Island

1 - Capture of CO2 by post-combustion, oxy-combustion or pre-combustion

2 - Transportation by ship 3 - Transportation by pipeline 4 - Storage in tank

7 - Storage7a - in deep saline aquifers7b - in unused coal seams7c - in gas or oil deposits

at end of exploitation

5 - Recovery: use of CO2 in production process of some industries (petrochemicals, etc.)

6 - Injection well head


SHOPPING

CENTER

HOSPITALSCHOOL

CULTURALCENTERLARGE STORES

HOTEL

Thermal

installation

Cogeneration

1b

Renewable and

alternative

energy 2Energy

transformation

4Energy services• REDUCTION IN COSTS BY MAINTENANCE AND OPERATION

• ADAPTATION TO THE NEED FOR HEAT AND TO REDUCE THE ENERGY BILL

a1

a2

a4a3

b1

b2

b3b4

2a

2bb5

3Energy

distribution

1a

Fossil

energy

Energy

efficiency

b6

Landfill gasMunicipal

waste incineration

plant

Landfill

1- INPUT ENERGY1a - Fossil energy

a1 - Fuel oil a2 - Gasa3 - Coal a4 - Others

b - Renewable and alternative energyb1 - Wind b2 - Solarb3 - Biomass b4 - Geothermal

b5 - Incineration b6 - Landfill gas CO2 reduction by the use of renewable

and alternative energy

3 - ENERGY DISTRIBUTION Distributed heat Generated and distributed

electricity Distributed cold

2 - ENERGY TRANSFORMATION

2a - Cogeneration Reduction of CO2

by the use of cogeneration Reduction of CO2 related to

energy efficiency (EE)2b - Thermal installation

(boiler, cooling unit) CO2 emissions from combustion

of input energy

4 - ENERGY SERVICES CO2 reduction related to

optimization of energy services


47

ted by Veolia Energy-Dalkia several years ago, and it largelycompensated for this mechanical trend. The carbon efficiencyratio for this year is 21.7%, which is 8% higher than 2006.

Reducing GHG emissionsThe following actions are taken to reduce GHG emissions (seeinfograph):• use of renewable and alternative energy whenever possible(1);• efficient use of the best production equipment (energy effi-ciency) (2) (3)• combined production of heat and electricity (cogenerationG)(2a);• reducing energy consumption (public lighting of cities,global management in buildings) (4).

In 2007, primary energyG savings generated by Veolia Energy-Dalkia achieved a overall reduction of GHG emissions equal to4.6 million metric tons of CO2 equivalent.

This was achieved by:• an increase in renewable and alternative energy in theenergy mix (7.2% in 2007 compared with 4.9% in 2006, namelya reduction of 1.4 million metric tons of CO2);• savings made proportional to the quantity of electricity andheat sold (overall reduction of 2.7 million metric tons of CO2);• an increase in the percentage of energy services (servicesafter meter) in delivered energy quantities (overall reductionof 0.5 million metric tons of CO2).

The energy management system comprises four steps repre-sented by the following energy flows:• choice, purchase and supply of fuel;• transformation of energy;• distribution of energy;• use of energy.

The percentage of the overall reduction of GHGG emissions, asa percentage of all Veolia Energy-Dalkia emissions, is calculatedby means of a carbon efficiency ratio applied to energy activities.A significant percentage of Veolia Energy-Dalkia’s developmenttakes place in areas such as Eastern and Central Europe inwhich coal is the most frequently used fuel. This has a negativeimpact on the carbon content of our energy mix. However, in2007, the increase in the percentage of renewable and alterna-tive energyG used was a remarkable development (for examplean increase of 42% for biomassG) as a result of the policy adop-

/ DIAGRAM OF VEOLIA ENERGY-DALKIA’S ENERGY MANAGEMENT SYSTEM

Contribution by Veolia Energy-Dalkia

CARBON EFFICIENCY RATIO FOR OUR ENERGY ACTIVITYVeolia Energy-Dalkia has fixed itself a target of 23% by the year 2011.

19.7% 20.1%21.7%

23%

2005 2006 2007 Target2011


SHOPPING

CENTER

CULTURALCENTERLARGESTORES

HOTEL

1

2

6Biological treatment

3

5Energy recovery

4Incineration

7Agricultural recovery

33

8Sorting center

9Recovery of material 10

Landfilling

11

Energy recovery

from landfill gas

3

1 - Municipal clients 2 - Industrial and commercial clients 3 - Waste collection CO2 originating from consumption of fuel 4 - Incineration CO2 originating from combustion

of waste and supplementary fuel

7 - Agricultural recovery of compost 8 - Sorting center CO2 originating from consumption of fuel 9 - Material recovery (recycling of plastics, metals, bottom ashes, wood, paper-cardboard and glass) CO2 avoided by material recovery 10 - Landfilling

Landfill gas capture

network

Biological treatment (6):• production and use of compost (7) (1 million metric tons ofcompost produced in 2007);• energy recovery from methane derived from methanizationsystems.

Sorting and recycling (8):• material recovery (9);• recovery of substitute fuels (waste oil, refuse-derived fuels).

Landfilling (10):• capture and treatment of landfill gasG (10) (449,735 metrictons of methane were captured and treated in 2007), giving areduction of 9.44 million metric tons of CO2 eq.;• recovery of landfill gas to produce electricity or thermalenergy (11) (162 GWh of thermal energy and 994 GWh of elec-tricity were sold in 2007, originating from 79 sites).

In 2007, Veolia Environmental Services reduced its CO2 emis-sions by 9.92 million metric tons by capturing landfill gas andby on-site consumption of part of the electricity produced byenergy recovery from waste.

Furthermore, recycling of raw materials and the sale of energyrecovered from waste (landfills and incinerators) have avoidedthe use of fossil fuels by third parties; avoided emissions of GHGassociated with this consumption were equal to 6.31 millionmetric tons of CO2 in 2007.

Integrating the carbon challengeOur clients are increasingly interested in the carbon footprint ofthe services we provide. In this context, Veolia EnvironmentalServices is undertaking work to estimate the GHGG emissionsof its services and to integrate carbon aspects into our offers.

Reducing GHG in the life cycle of wasteThe following activities are currently being undertaken (seeinfograph).

Collection and transportation (3):• rationalization of collection operations;• use of alternative fuels (1,512,000 liters of biodiesel to reduceCO2 by more than 4,000 metric tons);• development of alternative means of transportation (rail-way or waterway);• training in fuel-efficient driving techniques.

Incineration (4):• energy recovery derived from the combustion of waste (5)(2,566 GWh of thermal energy and 4,099 GWh of electricity weresold in 2007, for 12.4 million metric tons of waste incinerated);• recovery of metals and slag.

1 - Municipal clients 2 - Industrial and commercial clients 3 - Waste collection CO2 originating from consumption of fuel 4 - Incineration CO2 originating from combustion of waste and supplementary fuel N2O originating from combustion of waste 5 - Energy recovery from incinerated waste CO2 avoided by energy recovery 6 - Biological treatment CO2 originating from consumption of fuel

/ DIAGRAM OF REDUCTION AND AVOIDANCE OF GHG EMISSIONS BY VEOLIA ENVIRONMENTAL SERVICES

Contribution of Veolia Environmental Services

7 - Agricultural recovery of compost 8 - Sorting center CO2 originating from consumption of fuel 9 - Material recovery (recycling of plastics, metals, bottom ashes, wood, paper-cardboard and glass CO2 avoided by material recovery 10 - Landfilling CO2 originating from consumption of fuel CH4 (methane gas) not captured 11 - Energy recovery from landfill gas CO2 avoided by energy recovery from landfill ga Reduction of CH4 by capture of landfill gas



49

have already been registered with the United Nations andnine other projects are currently in the process of being devel-oped. They consist mainly in the installation of landfill gas col-lection and treatment systems and possibly of leachatesG

evaporators.

Veolia Environmental Services has been working on “CleanDevelopment Mechanism” (CDMG) projects since 2001, beforethe Kyoto protocolG came into force enabling developing coun-tries to reduce their GHGG emissions through investmentsmade by developed countries under constraint. Four projects

Tremembé

BRAZIL

Fachinal Tijuquinhas

COLOMBIA

MEXICO

CHILE

CAMEROON

CHINA

Alexandria

EGYPT

ARGENTINA

Merida

� Under preparation

� Project design document (PDD)

� Registration request

� Registered

PREPARATION PDD VALIDATION DNAG

AGREEMENTREQUEST FORREGISTRATION

REGISTRATIONOF EMISSION

REDUCTIONVERIFICATION

DELIVERY OFCERSG

> 1 project in China

> 1 project inCameroon

> 2 projectsin Mexico

> 2 projects in Colombia

> 1 project in Chile> 1 project in China

> Merida project,Mexico

745,000 t CO2 eq. over 7 years renewabletwice

> Fachinal project,Argentina

370,000 t CO2 eq. over 10 years

> Tremembeproject, Brazil

700,000 t CO2 eq. over 10 years

> Alexandriaproject, Egypt

3.7 Mt CO2 eq. over 10 years

> Tijuquinhas, project,Brazil

Experience of Veolia Environmental Services in Kyoto project-based mechanisms

Beyond the positive impact CDM projects have on GHG emissions,they also create a new income from the sale of carbon credits, and can improvethe environmental quality of waste treatment infrastructures in developingcountries.

CDM projects

Sour

ce :V

eolia

Env

ironm

enta

l Ser

vice

s 200

7.


STATION TERMINUS

GARE

MÉTRO

1 - Village 2 - City Center 3 - Suburb 4 - Bus station 5 - Park and ride car park and country train station 6 - Terminus station in city center 7 - Public transportation management satellite 8 - Car sharing car park 9 - Smooth transit modes

2

6

Metro

Tramway

1

3

Car sharing

5

7

BusStation terminus

4

8

9

Transportation

on demand

Train

Private car

CO2 avoided due to the use of public transportation

CO2 emitted by public transportation

Bicycle

... by measuring travel eco-efficiencyVeolia Transport has developed an “eco-efficient travel” indica-tor to manage its GHG emissions, estimating the amount ofCO2 avoided by passengers travelling daily within the servedregions. This indicator is defined by measuring what the samepassengers would have emitted if they were in a private car. In2006, "eco-efficient travel" was calculated over a restrictedscope of urban and inter-urban networks for which the dataand average distance travelled per passenger was reliable.This scope was extended in 2007 to cover 92% of VeoliaTransport passengers and 79% of kilometers travelled.

Since 2001 several urban freight transportation initiativeshave been set up, for example an urban distribution platform(Elcidis) in La Rochelle, with electric vehicles making deliveriesto the city center.

Thus, over the scope considered in 2007, Veolia Transportavoided 3.7 million metric tons of CO2 which is the equivalentof 1.4 times the GHG emissions originating from its activitieswithin the same scope.

The three main strategic approaches developed by VeoliaTransport to maximize its contribution to GHGG emissionsreduction are firstly to increase the use of public transportation(frequency, attractiveness, complementarity of transportationmodes, etc.), secondly to improve carbon generation by trans-portation by precisely adjusting means to meet needs (forexample transportation on demandG), and thirdly to facilitatethe change towards "clean" vehicles.

Prioritizing public transportationA bus emits an average of between 80 and 90 grams of CO2equivalent per person per kilometer travelled, whilst a privatecar emits twice this amount. In this view, Veolia Transportoffers solutions to the responsible authorities to encourage amode switch from private car to public transportation (forexample the use of park and ride car parks).

Reducing GHG emissions…The following are developed within managed networks:• reduction of fuel consumption (training in energy efficientdriving techniques, driving assistance tools);• promotion, use or production of biofuelsG (advice to localcommunities, use of alternative waste food oil fuels, recoveryof biogasG derived from landfills and sludge from wastewatertreatment plants).

/ OPTIMIZATION OF THE DIFFERENT TRANSPORTATION MODES OF VEOLIA TRANSPORT

Contribution of Veolia Transport


SHOPPING

CENTER

1

2

3a

4

5

6

7

8a

9

10

Sea

Aquifer

Drinking water network

Wastewater network

Treated wastewater network

1 - Repair of the drinking water network2 - Drinking water reservoir3 - Rain water storage ponds3a - Multi-function pond

3b - Landscape storm pond

4 - Actiflo™ (patented treatment system)5 - Infiltration node (drainage)6 - Planted roofs

Farmland

Solar panels

Water infrastructures

Users: industry, activity centers, residential zones

Aquifer

3b

8b

Drinking water

plant

Treatment

plant

Seawater desalination plant

River

River

River

7 - Active groundwater recharge (under pressure)8a - Groundwater recharge by infiltration8b - Recharge of wet zones9 - Agricultural reuse of treated wastewater 10 - Information center (increased awareness action)11 - Solar panels

8b

11


51

Adapting services to climate changeFurthermore, Veolia Water has embarked on the path towardsadaptation to climate change and is developing drinkingwater and wastewater management solutions for use by com-munities and companies (see infograph).

Encouraging the fight against resource wastage (water, energy,chemical products) and their use:• increased awareness of efficient use of water (10);• repair and maintenance of the water network (1).

Adaptation of wastewater management:• optimizing the use of wastewater collection networks duringextreme rain events (3a and 3b) (5);• anticipation and management of sanitationG networks dur-ing severe heat waves, particularly in urban environment(smells, corrosion, etc.);

Promotion and development of alternative resources:• recharge of water tables (7) (8a and 8b);• recycling of treated wastewater for non-domestic uses andreuseG of rain water (6) (9);• desalination of seawater and brackish water combined witha source of renewable energy (11).

Managing the energy intensity of treatmentsThe activities of Veolia Water do not emit large quantities ofGHGG directly. However the greater sophistication of neces-sary treatment due to increased pollution and higher qualitystandards is tending to increase the amount of energy neededfor water treatment. Furthermore, the reduction of energy inten-sity for alternative techniques such as desalination is crucial indetermining the extent to which they are economically andenvironmentally viable. In this context, Veolia Water is workingon two issues:• energy efficiency optimization of installations (actions onpumping, optimization of pond aeration and energy recovery);• production of renewable energy (recovery of biogas derivedfrom digestion of sludge, recovery of potential energy fromwater by microturbining or by a pressure exchange).

/ CHANGES TO WATER FLOWS AND TREATMENT CAUSED BY CLIMATE CHANGE

Contribution of Veolia Water


ucts (organic fertilizers and secondary raw materialsG).EcotoxicityG tests used for forecasts are complemented bybiological tools indicating the condition of the aquatic or landenvironment.

The Group is also working with many university and institu-tional partners to benefit from the most advanced expertise,particularly in the field of ecosystems modelling, a disciplinethat enables us to better understand their complexity and topredict changes to them.

Urban biodiversityThe development of cities often leads to intensive occupancy ofspace that leaves little room for nature. However, these urbanenvironments are not necessarily poor in biodiversity and para-doxically, have even become a refuge for many threatenedspecies appearing in the red list of the International Union forConservation of Nature (IUCN).

Therefore, an evaluation of the urban biodiversity situation isessential to determine appropriate management.The use of toolssuch as the "green registerG", enables stakeholdersG concernedwith urban development to adapt their strategies (ecologicalanalysis and list of green space occupancy within a region).

This challenge applies to all of the Group's activities.• Veolia Environnement has adopted a policy of integratingprotection of biodiversityG on land occupied by its facilities atthe project design stage, particularly through its approachtowards sustainable urban planning. When the Group takesover existing facilities, it works in cooperation with its munici-pal or industrial clients to improve their integration within thenatural environment.• Through its activities,Veolia Environnement is making a pos-itive contribution to the protection of biodiversity by reducingthe amount of pollution affecting ecosystems and taking intoaccount its secondary impacts (residual pollution contained inour waste, consumption of natural resources) that we need tocontrol and reduce.

Protection of biodiversity is included in the commitmentsmade in the company's Sustainable Development Charter, thatcan be viewed at www.sustainable-development.veolia.com.

Characterization of our impactsVeolia Environnement R&D is continuing to make progress inevaluating its impacts. In addition to classical physicochemi-cal and bacteriological approaches, the Group has nowacquired good expertise of tools for evaluating its releasesinto aquatic environments, its GHG emissions and its prod-

Preserving biodiversityWorldwide biological diversity is shrinking at an unprecedented rate. According to theMillennium Ecosystem Assessment, the rate of extinction of species is one thousand timeshigher that it would be naturally. Faced with this major challenge,Veolia Environnement isdeveloping an approach based on characterizing the impacts of its activities and integratingbiodiversity management within its environmental management system.

Preservation of ecosystems on Veolia sitesVeolia Water UK in the United Kingdom pays special attention to protected species and natural habitats present on its sites. Since 2002, Veolia Water UK has been working on a classification of its sites with regard to the British national system, which enables delimitation of protected zones and appropriate management of natural areas. Several partnerships have also been initiated between subsidiaries of Veolia Water UK and environmental associationsworking towards the preservation of biodiversity. For example, the partnership between Three Valleys Water, Friends of Stockers Lake and Middlesex Wildlife Trust has lead to the creation of a protected zone at Stockers Lake, to preserve the population of birds living close to this wet environment.

BEST PRACTICE



53

Veolia Environnement is thus interested in the characteristicsand functions of urban biodiversity so as to encourage thedevelopment of green areas within its sites. Experiments willbe carried out on some Veolia Water sites in 2008.

Management of biodiversity in our facilitiesOur geographic information system (GIS) references our mainfacilities’ position relative to areas of ecological interestG andalready includes more than 1,200 priority facilities. The pro-gressive integration of this tool into our environmental infor-mation system (used for environmental reporting and audits)will enable its broader use by operational staff.

Since 2005, Veolia Environnement has been implementingactions aimed at increasing awareness of its managerial gradeemployees and promoting good practices. The Group deploys aquestionnaire to collect quantitative and qualitative informa-tion about actions related to biodiversity. The results collectedby Veolia Environmental Services from more than 300 sites areuseful for evaluating the awareness level of operational stafftowards this challenge and for identifying actions that can beshared (for example developing best practices guides).

The Group is developing a methodology for systematicallyevaluating the impact of its priority facilitiesG on biodiversi-ty. This methodology will integrate local characteristics ofthe natural environment and methods of development andmanagement of the site so as to enable the definition of anadapted action plan and measurement of results obtainedthrough the definition of performance monitoring indica-tors. The methodology will gradually be enriched by theresults of R&D work currently in progress. The Group willdefine a deployment scope in 2008, and implementationobjectives for 2011.

Importance of biodiversity in our activitiesEvery species performs a number of functions that are funda-mental for a balanced ecosystem. In doing so, nature per-forms services that are useful for our activities, for examplethrough the ability of ecosystems to clean water or regulateair quality.

Biodiversity thus contributes to facilitating our work (biolog-ical treatments of untreated water and wastewater, the useof ponds or grassy strips for their self cleaning capability,etc.), and can enable the use of simpler and less expensivetreatment processes (water and energy consumption).

Economic valorization of ecosystem servicesThe Orée associationG, the French Institute of Biodiversity (IFB)and Veolia Environnement initiated a workgroup in 2006 enti-tled "How to integrate biodiversity into business strategies";this association is composed of about twenty companies, pub-lic communities and associations. The objective is to evaluaterelationships between business and biodiversity. A guide oneconomic tools to be implemented in order to benefit fromthis type of interdependence will be published in 2008.

Veolia Environnement has also initiated cooperation with theeconomic research laboratory of the University of Columbia,New York (CEMTPP) on the subject of economic applications ofecosystem servicesG.

Treatment ofeffluents by plant means(Organica)

The Hungarian Organica company has been a subsidiary of Veolia WaterSolutions & Technologies since 2007, and is specialized in a biological

technique to treat domestic wastewater through the use of complex ecosystems.

Organica designs wastewater treatment plants making use of the immersed roots of aquatic plantsand a very special type of fauna (earthworms,shellfishes, snails).

More and more small or medium size communities are interested in this technology because these plantsare 100% natural and also because of their smallground occupancy (0.3m2 per equivalent inhabitant).

Noortalje in Sweden


natural phenomena of evaporation and condensation in theform of rain. Desalination by reverse osmosisG is more recent andconsists of retaining salts, bacteria and particles in membranesand obtaining very pure water. In all cases,Veolia Environnementis working on making continuous improvement to the energyefficiency of the process and management of the saline concen-trate to give better control over the environmental impact andproduction costs. The extension of these techniques to lessextreme situations than those from which they originate (richcountries with abundant and inexpensive energy but withsevere pressure on water) requires continuous work to lowerprocess costs and particularly their energy intensity.

Groundwater rechargeGroundwater recharge techniques artificially input water to thewater table, in order to protect groundwater.They use the ground'snatural functions, namely its filtration and storage capacity. Forcoastal aquifers, replenishment also prevents penetration of sea-water into groundwater and consequently salination of thisgroundwater. Artificially replenishing water tables makes themmore productive and provides a solution to chronic or seasonaldeficits and limits imports of water from other procurementbasins. As an illustration, the Berlin water service managed byVeolia Water is based largely on the principle of filtration on banks.

Preserving water resources

Rationalizing withdrawalEfforts to reduce waste can benefit from technical solutions toimprove the efficiency of drinking water networks and con-sumption of water in facilities. Veolia Water applies a continu-ous improvementG approach on these two elements.Awareness-raising and education aimed at consumers encour-age the rationalization of use and savings of water in regions inwhich there is pressure on water resources.

Developing alternative resourcesVeolia Water concentrates its efforts on the development ofalternative resources so as to limit pressure on water supplies.

RecyclingRecycling (reuseG) of wastewater maximizes the use of with-drawn water before it is returned to the natural environment,creating a lever effect between the volume of water withdrawnand the volume of water used. It can be used for industrial pur-poses (process water, cooling water, etc.) or for rural applications(crop irrigation, irrigation of golf courses, green spaces), or evensome domestic uses for which drinking water is not necessary.For example this is the case in Adelaide, Australia, where theBolivar wastewater treatment plant managed by Veolia Waterreprocesses 43,000 cubic meters wastewater per day and irri-gates horticultural plantations, to recharge groundwater in win-ter and supply non-drinking water for domestic purposes in aresidential area. Veolia Water thus recycles 3 million cubicmeters per day (namely 20% of the current world market).These reuse solutions require rigorous technical control to avoidany sanitary risk.Psychological and cultural barriers that still limit their use alsoneed to be addressed.

Desalination97.5% of water reserves on the planet are seawater.Desalination can considerably increase the available waterresource and provide a solution in case of drought or shortages.It also reduces dependence on water from other regions byavoiding water imports and transfers over long distances.Veolia Water is developing two major types of processes todesalinate sea water. Thermal desalination is the traditionalmethod, and consists of separating salt from water by evapora-tion in a distillation system. Distillation artificially reproduces

Saving resourcesNatural resources and raw materials are being consumed more and more intensivelyaround the world.The activities of Veolia Environnement are increasingly being integratedinto an economy of scarcity; the solutions that we are developing can help to rationalizeexploitation of resources or substitute renewable resources, for more sustainable andeconomically viable management.

5.2

7.4+ 42%

2005 2007

/ EVOLUTION OF THE QUANTITY OF DESALINATEDWATER PRODUCED BY VEOLIA WATER (IN MILLIONS OF CUBIC METERS)



55

Veolia Environmental Services is developing recycling particu-larly in paper/cardboard and metal industries (+39% and +20%respectively in 2007). The increase in the recycling rates isbased on continuous improvement of treatment processes,and the creation and development of new activities. Treatedwaste quantities are reducing and metric tons of recycledwaste are increasing (+35% in 2007, namely 10 million metrictons).

At the same time, Veolia Environmental Services is workingwith its industrial clients to reduce the quantity of waste pro-duced and therefore the quantity of raw materials used in pro-duction processes and their hazardous nature.

Saving raw materialsA significant part of industrial and waste contains usefulmaterials (paper, cardboard, plastic, metals, wood, glass) thatcan be reused directly in the production process, and conse-quently have a significant economic value. Veolia EnvironmentalServices is encouraged to develop recycling and recovery activ-ities by an increase in the global demand for recycled materi-als, related particularly to growth of emerging countries. Itthus contributes to reducing exploitation of natural resources.

Reconciling saving of resources and creation of value

FOCUS

7.45

10.03

2006 2007

/ MATERIALS RECOVERED BY VEOLIA ENVIRONMENTAL SERVICES (IN MILLIONS OF METRIC TONS)

� Other recycled materials

� Compost produced

� Alternative fuel

� Wood, glass, plastic

� Construction

� Metals

� Paper, cardboard

This graph, illustrating the typical situation of an urban heating contract in Central Europe, shows the positive impactobtained on consumptions by a policy of continuous improvement of energy efficiency and thermal insulation at privateclients and at manufacturers.

This economical resourcemanagement coexists with strongadded value due to expansion of the network into new districts and urban renovation, new servicesand connection of new industrialclients.

130

120

110

100

90

80

70N N + 1 N + 2 N + 3 N + 4 N + 5 N + 6 N + 7 N + 8

� Planned and real heat sale

� Natural change to heat revenue basis 2002.

+ 67%

+ 34%

+ 34.7%


Recovering green wasteGreen waste provides an opportunity for new products that betterrespect the environment,by developing substitute products with alower environmental impact. The collection of biomass flowsderived from waste, and particularly recovered wood, is continu-ously increasing; Veolia Environmental Services is developingmethods of recovery for the wood industry, grinding and paperworks. Furthermore, the recovery of biomass derived from wasteprovides a means of providing complex biomolecules to chemicalindustries, thus replacing molecules with mineral or synthetic ori-gin by renewable molecules. Biomaterials (composites, fibers,hemp concrete, linen, etc.) can be used by the automobile, con-struction and packaging sectors.

Protecting soils: recovery for farmingUse of organic materials derived from waste provides a means ofmaintaining or improving soil quality. It protects water resources byretention of nitrates and pesticides,and reduces erosion and deple-tion of soils. Therefore, the addition of enrichmentG from VeoliaEnvironmental Services compostingG systems (+24% compostedsludge in 2007) which satisfies high quality standards, contributesto enriching the earth with organic materials. VeoliaEnvironnement is developing several systems for the treatmentand recovery of sludge produced by treatment plants, the mostimportant being agronomic recovery through spreading and com-post.

Recovering biomassBiomassG includes a large number of materials originating fromforestry or farming, and the organic part of industrial and munici-pal waste flows.

Developing renewable energy sourcesIncreasing interest is being shown in biomass. After treatment, itcan be transformed into fuel to produce heat, cold, and electricity(via biomethanizationG and cogenerationG). Moreover, capturedbiogasG originating from the decomposition of rotting waste canbe recovered in the form of energy,so that GHGG emissions can belimited.Direct recovery of forestry or farm biomass is a strategic priority forthe energy sector. It can be used as a fuel by heat production sys-tems, particularly in boilers supplying urban heating networksG, inaddition to or as a replacement for fossil fuel.The structure of theforestry industry and in particular the development of very shortrotation scrubs, are key development themes for Veolia Energy-Dalkia. Furthermore Veolia Environmental Services is designingnew biodiesel and biofuelG production methods originating fromused animal fats and grease from treatment plants.

BEST PRACTICE

� Incineration or coincineration

� Storage

� Others

� Agronomic recovery

� Recovery of solid fuel

Recovery of sludgefrom wastewater treatmentplantsVeolia Environnement has demonstrated its capacity to proposereliable and financially viable solutions for the treatment andrecovery of sludge produced by wastewater treatment plants. The agronomic recovery system is the most important, representing46% of the tonnage. Its benefits are recognized (fertilization,limitation of additional chemicals, reduction of soil erosion, etc.).Solid substitute fuels and incineration with energy recovery cansometimes avoid consumption of fossil fuels. Furthermore, digestionof sludge, that reduces the final volume of sludge, can producebiogas that can be used for energy and thus reduce GHG emissions.

46%

5%

22%

18%

9%



57

Controlling health risksSanitary risks with drinking water are related partly to micro-biological risks (bacteria, virus, parasites), and also to chemicalrisks (arsenic, fluorine, nitrates, etc.). The entire challenge ofwater control consists of monitoring a large number of differ-ent substances continuously (and not just after treatment).Therefore, Veolia Water is implementing approaches conform-ing with Water Safety Plans, so as to have preventive manage-ment of sanitary risks related to upstream water qualityaffecting the supply. For example, the HACCP (Hazard AnalysisCritical Control Point) method provides a means of evaluatingsanitary risks on the input side of the water intake, takingaccount of potential risk factors (plants, farm activities, etc.) as far as the consumer's tap. This approach is now beingdeployed on facilities operated by Veolia Water.

Health in urban areas is a fragile but vital task to maintain thewellbeing of all inhabitants. Factors damaging to health tendto concentrate in modern cities such as an increase to chemi-cal exposure in daily life, infectious agents such as legionella,and degradation of outdoor and indoor air quality. Therefore a sustainable city must be clean and healthy. VeoliaEnvironnement contributes to this through better manage-ment of waste, preservation of the quality of drinking waterand treated water released into the natural environment, andreduction of nuisances related to transportation and energydistribution infrastructures.

Water quality, from the source to the tap2.3 billion people suffer from poor water quality; 1.96 milliondie every year from diarrhoea type diseases mainly related towater. Water quality plays a fundamental role in health , interms of food but also for hygiene (body, clothes). Thereforesupply of drinking water must be maintained at all times andsanitary checks should be carried out (see page 82).

Contributing to the protection of health and lifestyleThe World Health Organization claims that 25% of preventable diseases are linked to theenvironment. Urban hygiene and a reduction of diffuse pollutions, contribute to keeping ahealthy and balanced environment that protects everyone’s wellbeing.Environmental healthis an important aspect of Veolia Environnement's businesses.

Hygiene in hospitals

The hospital concentrates risk factors related to hygiene in a limited and closed space. Water and air quality, cleaning,disinfection and sterilization are all of overriding importance in the effort to maintain a high level of hygiene and to resistacquired infections that affect between 5 and 12% of all people in hospital. Veolia Environnement is now a key player inenvironmental safety at hospitals and clinics. For example, in Saint Joseph hospital in France, one part of the partnershipbetween Veolia Energy-Dalkia and its client deals with improved health and safety with a plan to fight nosocomial infections(air treatment, cleaning) and a "legionella" prevention program in partnership with the ‘Comité de lutte contre les infectionsnosocomiales’ (CLIN) (Committee to fight against nosocomial infections) and the operational hygiene unit.


Reducing pollution upstream In addition to the conventional sanitary monitoring of water,Veolia Water is working to reduce water contamination byorganic materials, since organic contamination is a source ofbacterial proliferation, and interaction between such bacteriaand chlorine can have harmful long-term effects on health.Veolia Water also offers complete analyses of their process toits industrial clients to encourage recycling of water, rawmaterials and to limit polluting releases.

Veolia's R&D management is concentrating its efforts particu-larly on saline industrial effluents that are very widespreadand complex to be treated (for example polluted water fromlandfills).

Veolia is involved in implementation of the REACH regulation

REACH, the European regulation on the Registration, Evaluation, Authorization and restrictions of Chemical substances,came into force on June 1st, 2007. This regulation will enable better knowledge of chemicals circulating in the Europeanmarket and aims to guarantee better protection of health and the environment. Veolia Environnement has initiated an activeapproach to meet the requirements of this new regulation that involves several of the Group's divisions. REACH is perceived as being a genuine opportunity to improve the management of chemical products used in our activities,particularly due to new information that will become available. The Group is particularly concerned because it is a producer of materials originating from waste, and is also a user of chemicals (for water treatment, waste treatment,cleaning and disinfection of heating or cooling production systems). REACH will provide a means of replacing the mostconcerning substances by less harmful alternatives.

Sanitation essential for healthWithout sanitationG, wastewater that is returned directly intothe environment pollutes natural aquatic environments andthreatens the quality of drinking water produced down-stream. Sanitation also provides a means of significantlyreducing exposure to some diseases such as diarrheic dis-eases. The health impact of sanitation also has an effect onthe quality of bathing water, for which the economic risks forexample for tourism are large.

Reducing atmospheric pollutionMany diseases (cancers, allergies and lung diseases) are directlyrelated to atmospheric pollution.

Contribution of public transportation to urban air qualityVeolia Transport contributes to reducing local pollution in citycenters by encouraging the development of public transporta-tion, management of transportation systems running on elec-trical energy and providing vehicles with particle filters orbiofuelsG. In Australia, Veolia Transport is the first companyworking in this sector to be officially recognized by localAustralian authorities as having a high performance ecologicalpolicy. Its vehicle maintenance program, designed to improve airquality by reducing emissions from diesel vehicles, received the"Clean Fleet" accreditation in September 2007.

AtmosphericpollutionTowards real time modelling of atmosphericdispersion of pollutants

Incinerators, landfills, treatment plants, compostingG

centers and cooling towers emit gas effluents intothe atmosphere. Veolia Environnement's research is developing software to model atmosphericdispersion of pollutants and smells. This tool iscurrently being developed and will provide a means of modelling dispersion of emissions into theatmosphere in real time, and determining theirimpacts on the environment, if any. The results will be used to adapt the activities of sites accordingly.

R&D



59

Christian Cochet, at the Centre scientifique et technique du bâtiment(Building Scientific and Technical Center)Why is the impact of the indoor air quality on health soimportant at the moment?Several factors explain this increased awareness. Work onenvironmental health has demonstrated the importance ofthe indoor environment on health. Questions such asasbestos have introduced the idea that building can be afactor in the health hazard. Finally, the need to improve theenergy efficiency of buildings will cause stricterrequirements for the management of indoor air.

What are the sources of indoor air contamination, andwhat are the consequences on health?The range of effects on health is enormous, varying fromallergies to cancer. There can be several types of sources of contamination (chemical, microbiological,radiological, etc.) They depend on the outdoor air quality,the building itself (construction materials, paints, etc.), thecontent of the building (furniture, electronic equipment)and finally building management (maintenance,ventilation in particular).

What solutions can be implemented and what role canVeolia Environnement play in the subject?Contamination sources must be reduced in the buildingdesign phase, with the choice of air management systemsappropriate for use. The operation of buildings affectsenergy efficiency, and is also of overriding importance to assure good renewal of indoor air; this is a challenge at the core of the business of Veolia Energy-Dalkia.

Controlling emissions of pollutants fromincineration plantsVeolia Environmental Services is working to continuouslyimprove the treatment of exhaust gases from waste inciner-ators. Since 2005, investments made to apply European stan-dards, particularly demanding in terms of emissions, haveconsiderably reduced the residual health hazard related toemissions from waste incinerators. In 2007, the quantity ofpollutants emitted per metric ton of incinerated wastedropped by 15% for SOx, 3% for NOx, 1 % for HCI, and remainedstable for dust particles.

Preventing the developmentof legionellaVeolia Energy-Dalkia has implemented a specific methodologywith its clients, particularly in hospitals and tertiary sectors, tomeasure and manage the risk of legionella developing in theirfacilities.

� See also "Performance" part in page 82.

Indoor air quality: an emerging challengeVeolia Energy-Dalkia is assisting its clients in controlling andimproving indoor air quality, by operating and maintainingzones with a controlled atmosphere, disinfecting forced airducts, and performing biological and physicochemical tests forcontinuous monitoring of air quality.Veolia Energy-Dalkia also has a unit specialized in controlledatmosphere environments used in many industrial sectors andthat require a particularly high air quality, such as microelec-tronics, food processing and pharmaceuticals.The development of high energy efficiency buildings will rein-force the need to test indoor air quality. Veolia Energy-Dalkia iscontinuing important R&D programs in this field.These concen-trate particularly on cleaning and disinfection techniques for airdistribution systems, and the definition of health thresholdsand air quality indicators based on specific measures.

INTERVIEW

Christian Cochet,Assistant Director, Energy Health

Environment, CSTB


Solutions for social supportIn Africa, Veolia Water AMI (Africa, Middle East, India) is develop-ing appropriate solutions for the poorest populations. "Mobileoffices", that are actually buses outfitted as offices, are used tovisit associations and inhabitants of under-equipped andremote districts; automatic water fountains, with prepaid fixedfees, are used to reduce waste while allowing access of poorfamilies to water.

Since initial contact in 2002, Moroccan subsidiaries of VeoliaWater have connected 198 995 inhabitants to the drinkingwater network and 66 180 inhabitants to the sanitationG net-work through subsidized connectionsG. A similar policy is imple-mented in Niger. Finally in March 2008, Veolia Water agreedwith the Grameen Bank to create a new company, Grameen -Veolia Water Ltd.

An important presence in emergingcountriesAlthough Veolia Environnement earns most of its revenue indeveloped countries, its presence in emerging or developingcountries measured in terms of industrial and human realities,is very significant. Veolia Environnement has a large economicinfluence in some of these countries, which reinforces theextent of our company responsibility.

Facilitating financial access to the service Social support mechanisms must be created in developingcountries to meet the needs of the worst off populations.

Promoting respectof Human RightsAccess to essential services

These are defined as vital services essential for a dignified and decent life.The UN’sInternational Covenant on Economic, Social and Cultural Rights (ICESCR) includes collectivedrinking water and sanitation, waste management and waste disposal, energy distributionand public transportation services in the definition of essential services. Although frequentlymentioned in the context of the developing world, the problem of access to these servicesis also an issue for urban services management in the developed world.

CZECH REPUBLIC

NORWAY

UNITED KINGDOM

UNITED STATES

MEXICO

FRANCEGERMANY

MOROCCO

NIGER

GABON

SLOVAKIA

LITHUANIAPOLAND

ROMANIAARMENIA

CHINA JAPAN

AUSTRALIA

2.5% 0.8%

Revenue in PPP (purchasing power parity) as a percentage of the gross national product in PPP

0.4% 0.1% 0.05%

ISRAEL

/ ECONOMIC PRESENCE OF VEOLIA ENVIRONNEMENT IN SOME COUNTRIESSo

urce

s:U

ND

P 20

05,W

orld

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7.

Our activity as a percentage of the wealth of a country is an indicator of our social and environmental responsibility. In several countries in Africa and EasternEurope, it is greater than what has been achieved in France after 150 years of development. Veolia Environnement contributes to the local economic activity byredistributing its revenue to the stakeholdersG . In Gabon, the 2006 revenue of 101 billion CFA Francs (154 million Euros) is distributed with 43.2% to suppliers andservice providers, 19.5% to employees, 2% to tax administrations (excluding VAT), 1.7% to banks and 33.5% for investments.



61

This innovative partnership will enable to provide drinkingwater to poor rural populations in Bangladesh. At the end of 2008, the first unit should supply 25,000 inhabitants ofGaolmari with drinking water from water fountains, at a pricecalculated as a function of the financial capability of the com-munity. All profits shall be reinjected into the project tofinance its expansion.

Adapting ratesVeolia Environnement does not determine rates for access toservices for users of water, energy or transportation; they arefixed by the public authorities within the framework of eachcontract. But we propose special rate arrangements in cooper-ation with local authorities and possibly associations, toenable better access of the population to these services.

Thus in Africa, Veolia Water contributed to applying:• rates adapted to the capability of inhabitants and the typeof consumption considered (essential or leisure) to reduce thecost for the poorest;• free connection to the drinking water networks, or costspread out over up to 7 or 10 years, to determine monthly con-tributions that inhabitants can afford;• combination of multiple levels of financial solidarity –between subscribers to the water service (in Morocco);between large cities and isolated centers (in Niger), betweendeveloped and emerging countries through international soli-darity, for example as in Burkina Faso, in which the differencebetween the contribution requested from inhabitants and thereal cost is paid by the ONEAG and then the World Bank.

Emergency humanitarian assistanceand technical supportVeolia Environnement makes its expertise available for emergency humanitarian assistance (Veolia Force)and development (Veolia Waterdev) through its networkof 450 volunteer employees. Emergency action has beentaken to enable access to water in partnership withUnicef (North Korea, Congo Democratic Republic),Solidarity and Initial Urgency (Bangladesh, Pakistan, and Sudan), the French Red Cross (Indonesia, CentralAfrica) and the Ministry of Foreign Affairs (Pakistan, Peru, Mexico). Veolia has also participated in the Alliance for development’s activities (Madagascar,Niger, Vietnam) and has provided technical support formore than 10 French local authorities engaged in decentralized cooperation programs. Combining the activities of the Veolia Environnement Foundation and organizational skills of Waterdev Waterforce under the same management in 2008 will strengthen the actions of Veolia Environnement in the field and make them more consistent and efficient.

FOCUS

In some countries in which climate conditions make heatingan essential service, Veolia Energy-Dalkia breaks charges downindividually, to enable better control over heating costs thatare very important for low-incomes. In Lithuania, the installa-tion of individual meters is financed by a fund for "efficientenergy consumption", subsidized by the World Bank and withup to 100% of the cost (for more than 500 buildingsequipped).

Identifying models that take intoaccount traditional local contextIn developing countries, our businesses are encouraging infor-mal craft activities that can play an important role in maintain-ing social and economic balance.The waste management sectorwith Egyptian zabaleen or pepenadores (ragmen) in Venezuelaare very typical of this phenomenon. New modern systemsmust adapt to these realities, and either eradicate their mostunacceptable aspects such as child labor by accompanying itwith social and education monitoring, or search for means ofconciliation and balance. The simplest tasks can be carried outby traditional means as soon as a framework is set up to guar-antee legitimacy and health and safety.

Practices from the South deserve attentive consideration; theTransmilenio in Bogota has demonstrated that financial con-straints can lead to the invention of effective and economicsolutions that can be perfectly transposed to developed coun-tries. Waste recycling requires large financial support from pub-lic authorities in the richer world, whilst it is done spontaneous-ly in the developing countries.

Madras in India


ROMANIA

MOROCCO

NIGER

GABON

COLOMBIA

MEXICO

ARGENTINA

CHINA

INDIA

ARMENIA

/ ACCESS TO DRINKING WATER AND SANITATION FACILITIES IN URBAN ENVIRONMENT AS A % OF URBAN POPULATION

/ WORK DONE BY VEOLIA WATER IN SOME EMERGING OR DEVELOPING COUNTRIES

Sour

ces:

Wor

ld H

ealth

Org

aniz

atio

n (W

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) and

UN

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� More than 50% of the population does not have access to drinking water norto decent sanitation facilities

� Limited access to drinking water very poor access to sanitation facilities formore than 40% of the population

� Better access to drinking water and sanitation facilities but still less than theworld average

� Significant improvement in access to drinking water and sanitationequipmentG (better than the world average in both cases)

� Acceptable access to drinking water, but at least 30% of the population doesnot have access to sanitation facilities

� Good access to drinking water, but between 20 and 30% of the populationdoes not have access to sanitation facilities

� Very good coverage of drinking water and sanitation equipment� Data not available

Facilitating access to water supply and sanitationAccess to drinking water is only really efficient in terms of development if it is also accompanied by access to sanitation; about a billion people in theworld do not have access to drinking water and 2.6 billion do not have access to basic sanitation. In the strict framework of responsibilities grantedto it in exercise of public service management throughout the world (1.8% of the world population served with drinking water and sanitationfacilities), Veolia Water makes a commitment to actively contribute to achieving the Millenium Development Goals. In emerging countries, VeoliaWater pays special attention to improving the quality of drinking water; setting up or restoring service continuity; increasing the number ofconnections (drinking water supply and sanitation).

NIGER> 1 service concession

(affermage) contractG

> Drinking water: 1.48 million inhabitants served by connections and water fountains

> Increase in the number of inhabitants served since 2001 � + 352,000

ARGENTINA> 1 concessionG contract> Drinking water: 0.21 million

inhabitants served> SanitationG: 0.13 million

inhabitants served

ROMANIA> 2 concession contracts> Drinking water and sanitation:

1.95 million inhabitants served > Increase in the number of

connections since 2000 � + 29,751

GABON> 1 concession contractG

> Drinking water: 0.97 million inhabitants served

> Increase in the number of inhabitants served since 1997 � + 555,000

INDIA> Karnataca performance contract> Drinking water: about

240,000 inhabitants served> Increase in the number

of meters installed since 2006 � + 25,000

MOROCCO> 3 concession contracts> Drinking water: 2.84 million

inhabitants served > Sanitation: 2.87 million inhabitants

served > Increase in the number of inhabitants

served since 2002� + 705,000

MEXICO> 1 concession contract> Drinking water: 0.75 million

inhabitants served> Sanitation: 0.73 million inhabitants served

COLUMBIA> 3 concession contracts> Drinking water: 0.48 million


CHINA> 15 contracts> 4 service concession

(affermage) contracts> 5 concession contracts> 6 BOTsG

> Drinking water: 23.87 million inhabitants served

> Sanitation: 11.5 million inhabitants served

ARMENIA> 1 service concession

(affermage) contract> Drinking water: 1.5 million




63

We believe that one of the keys to success, in improving urbanfacilities in large cities throughout the developing world is tosuccessfully balance both the modern and the traditional inan organizational framework that uses rigorous standards interms of financial and environmental efficiency and socialbalance.

Adapting and developing availability of our servicesThe problem of service availability can arise in some developingregions and parts of the population of developed countries.Divisions of Veolia Environnement adapt their services to pro-pose technical solutions and services to the local context or tospecific populations.

Thus in terms of mobility, Veolia Transport is developing itsrange of services so as to make it more accessible. When it isimpossible to set up a regular line for remote geographicareas, or in areas with special access, the company develops

Gothenburg: regional transportation and territorialdevelopmentPublic transportation connections contribute to de-isolation of regions and revitalization of their economic activity. In the absence of any river transportation system, a sea or a river can become an obstacle to development. This is not the case of the islands in thearchipelago to the south of Gothenburg (Sweden); development of maritime public transportation enables the inhabitants of theseislands to participate in the daily economic activity of Göteborg, one of the largest ports in Scandinavia. Veolia Transport operatesfive ferry lines connecting islands in the archipelago to the city center. Each ferry can carry 450 people and operates every day, evenin bad weather; this service is an essential link between the islands and the rest of the region. Some districts on the Göta river bankthat have been unused for long periods are now the sites of new activity facilitated by ferry connections: several big companies havedecided to set up in these districts. Finally, ferries can help to give better service to the university located on the North bank, andachieve continuity with the traditional Gothenburg city center on the south bank.

transportation on demandG services, for example an inter-municipalities transportation on demand service operating inrural or suburban areas in eastern France. These services areparticularly appropriate for transportation of the elderly.

Services are also developed for the disabled ; this is the case inOakland (United States) where 2,200 people are transportedper day. Welcoming disabled customers requires specific trai-ning. Campus Veolia, in partnership with Veolia Transport andassociations of disabled people, set up a first session in 2007for training in welcoming and dealing with these customers.

In developed countries, Veolia Water sets up initiatives tomaintain access to water services for people in a vulnerablesituation; education on usage with underprivileged people,involvement with social services, spreading of payment ofbills, contact with consumers in difficulty, and cancelling debtwhen necessary.

Jerusalem tramway: exercising our responsibility in a difficult context

Veolia Environnement operates in 68 countries, and sometimes conducts its activities in very sensitive contexts in which it hassocial and environmental responsibilities, and special vigilance is necessary. This is the case for future operation of the Jerusalemtramway. The 13 km long line will pass through the center of Jerusalem and the old city, and will serve built up areas to the northeast of the "green line" that has marked the boundary between Jerusalem and the "occupied territories" since 1967. After severalyears of consensus, in January 2006 the National Palestinian Authority (ANP) opposed the construction project. Veolia’s mainresponsibility is the operation of the future line now planned for 2010. An enquiry carried out by TNS-Sofres in May 2007 at therequest of Veolia Transport shows that 81% of inhabitants in the Shoafat and Beit Hanina areas, where the population is essentiallyArab, support the construction of the tramway. People surveyed emphasize its importance in reducing their travel time, allowingthem easier access to the center of Jerusalem and encouraging economic development of the area. In our opinion, such elementsare important in an area in which the ease of transportation is important. At the same time, Veolia Environnement is continuingthe process of engaging with local authorities, non-governmental organizations and local associations in a context of transparent and open communication with all stakeholdersG .

FOCUS


Pacific Ocean

Atlantic Ocean

Indian Ocean

Pacific Ocean

North America28,868

Western Europe195,777

Eastern Europe34,112 Asia

15,661

Latin America19,216

Africa13,436

Middle East3,409

Oceania9,023

Circle sizes are proportional to the number of employees per major region

Human development index (HDI)

Data not available

0.25 0.50 0.65 0.78 0.85 1.00

Thus, further work will be done in five major fields involving allstakeeholders within the company:• safety and work conditions• guarantee of a decent income and minimum social protec-tion;• employee representation and right of expression;• non-discrimination and equality of opportunities;• long-term employment and professional progress.

Veolia Environnement respects the basic human rightsdefined by international authorities such as the ILOG andOECDG. In particular, the Group only accepts contracts if it issure that it can comply with these rights.The Group determines whether:

• the remuneration is sufficient for a decent standard of living(see graph);• there is any social protection (retirement, health);• basic skills are possessed and enable acquisition of mini-mum autonomy in one’s work;• there is no discrimination when hiring or when making promotions within the company;• work conditions are appropriate (minimum risks of accident,stress, etc.);• there is an opportunity for stating individual or collectiveopinions.

In 2007, the Group decided to give itself minimum socialstandards applicable to all countries in which it operates. Thecreation of these standards takes account of the nature of ouractivities and they will be implemented progressively in coop-eration with union organizations.

/ RATIO BETWEEN THE AVERAGE REMUNERATION OF VEOLIAENVIRONNEMENT AND THE MINIMUM LEGAL WAGE (STUDYPERFORMED IN 19 COUNTRIES)

2.272.21 2.24

2005 2006 2007

/ VEOLIA ENVIRONNEMENT’S EMPLOYEES PER MAJOR REGION

Sour

ces:

Uni

ted

Nat

ions

Dev

elop

men

tPro

gram

me

(UN

DP)

,Veo

lia E

nviro

nnem

ent2

007.

Fundamental social rightsEvery employee has fundamental social rights, regardless of their qualification level and thecountry in which they perform their activity.

France117434

Other WesternEuropeancountries

78,343


LATIN AMERICA

BMJ Ratings has carried outan evaluation of companiesin the Proactiva subsidiarypresent in Latin America. The

waste and water businesses were analyzed in Argentina,Brazil, Chile, Colombia, Mexico and Venezuela based on envi-ronmental, social and society criteria to identify challengesfaced by the Group. The evaluated companies represent46% of the workforce and revenue for the Latin Americaarea.

Risk mitigation and opportunity maps have been drawn upto rate the performance of actions carried out and the rele-vance of sustainable development policies adopted.

Analysis

BMJ has recognized technical leadership and high qualityintegrated management of environmental challenges. Withcomparable degrees of engagement, the different sub-sidiaries have identified their responsibilities for managingthese local impacts in terms of nuisance and pollution. On acontinent in which national GDPs are growing at between 4and 10%, the need for treatment of municipal and industrialwaste and problems related to the management of water israpidly increasing, with consequences that Proactiva's sub-sidiaries have anticipated.

Despite the lack of strict regulations and legislation, manage-ment methods meeting the highest international standardshave been adopted to deal with social and communityaspects. Employee safety is defined as a priority objective, andthe results achieved are better than the average observed inthe sector.

Recommandations

Two projects are still to be completed under this favourablecontext. Firstly the organization of the managementprocesses that are still too informal to guarantee efficiencyand advantaged perceived by stakeholdersG concerned, andsecondly the organization of a complete steering and report-ing system enabling the transfer of knowledge and goodpractices.


65

AFRICA

Veolia Environnement has mandatedVigeo to measure its degree of manage-rial commitment on the African conti-nent regarding its main social responsi-bility objectives that it is obliged to

maintain. Three separate audits were carried out in Morocco(Water), Niger (Water) and Egypt (waste management), andthey were extended by a documentary analysis and inter-views with managers of the Water subsidiary in Gabon.The evaluated entities represent 76% of the workforce and81% of the revenue of the Group in the Africa-Middle Eastarea.Specific social and environmental features expose theGroup to high risks in these fields. In this context, the "pro-bative" level 3 rating on our 4-level scale corresponds to areasonable assurance of risk control.

"Advanced" rating for objectives:

• contribution to the development of access to water forthe poorest• quality of the remuneration and social protection systemsfor employees;• safety and continuity of services provided to users.

"Probative" rating for objectives:

• protection of water resources and fight against climatechange;• contribution to economic and social local development;• prevention of corruption;• quality of employment management;• quality of the relation to delegating authorities.

"Initiated" rating for objectives:

• protection of health & safety of employees (deploymentof embryonic safety management in a country);• improvement to social employment conditions for subcontractors (Group programs deployed partially);• social communication quality (in a country, no commit-ment observed for emergence of elected representatives of personnel);• quality of the relation with the client user (heterogeneousmaturity of client care systems).

Assessing our corporate responsibility in Africa and Latin AmericaEnvironmental and social rating campaigns carried out at Veolia Environnement’s request in 2007enable the Group to have an inventory of conditions under which it exercises responsibility in Africa andin South America.The results of these audits will be used in 2008 as a basis for considering furtherdetails of our sustainable development policy in these sensitive areas.


Recruiting or integrating almost 500,000 talented newemployees by 2015 assumes a human resource policy concen-trating on several major challenges.

In a context in which available talent on the market is rarify-ing, and our business is facing tougher competition, our firstchallenge will be to attract, train and keep the best talent in allthe socioprofessional categories that form our company'sstructure and in all job areas in which we work.

To achieve this, we will need to deploy and reinforce ouremployer identity by a forceful communication on our jobs,our social policy and our opportunities.

We are also carrying out an ambitious professionalizingrecruitment policy for all candidates, regardless of their ageand their initial training. Thus in 2007, the Veolia Competenceoperation recruited 6,600 people in France.

The vitality of these approaches in different parts of the worldcan easily be seen by looking at Veolia Energy - Dalkia’s nurs-ery of international managers working in more than thirtycountries, and Veolia Transport’s European recruitment cam-paign.

For the development of skills and professional progressWe have developed the Campus Veolia Environnement dedi-cated to training, so as to develop our human resources andgive our employees the opportunity to achieve professionaland social progress matching their efforts.

Campus Veolia is a genuine skills platform, and offers initialwork-study contracts and continuous training courses. Threeapprentice training centers were opened in France in 2007.They are the first operational bases for regional campuses.Throughout the world, Campus Veolia Environnement alreadyunites a network of twenty campuses in eleven countries(United States, Czech Republic, Morocco, etc.). A large numberof academic partnerships between Group subsidiaries andlocal universities are supporting this ambitious policy at theservice of the development of skills.

For new talents and diversified profilesFrance will continue its growth and will employ a quarter ofour total number of employees in 2015. However, at the sametime it is expected that three quarters of our employees willwork outside France in about a hundred countries, due to thestrong international development of our Group.

Reinforcing our social attractivenessThe Group’s main attraction for employees is its business: the service of the envi-ronment, society and sustainable development. Currently, in a context of growthand increased globalization, the women and men who have chosen this sector andmake up the company community are at the heart of our performance. By 2015, wewill employ about 600,000 people, which is twice our current workforce.

Our priorityprojectsThese major challenges have been the reason for a number of priority projects:• anticipate hiring and management of talents to meet our needs by the year 2015 and deploy our career management principles, by making our employer message more visible;• manage our performance better and produce a more obvious link between performance and reward of our employees;• assist our managerial grade employees by moreappropriate assessment and payment principles,clarify their prospects for progress;• manage our skills and expertize to make the bestuse of the asset of Campus Veolia, by putting it atthe heart of the evolution of needs and of thesteering system, with the objective of improvingrecruitment and professional progress.

FOCUS



67

This commitment contributes to increasing the ratio of inter-nal promotions. This ratio has been increasing regularly since2005, and was 4.6% in 2007.This commitment contributes to increasing the ratio of internalpromotions. This ratio has been increasing regularly since2005, and was 4.6% in 2007.

Diversity, a development assetOur cultural, economic and social diversity is our strength. Weare firmly established in all regions in which we have branchoffices throughout the world, and we would like to furtherstrengthen this asset for our development.

Thus, in 2007, an ambitious work program was launched:"To respect differences and equality of opportunities", whichafter a preliminary review, has demonstrated three lines ofprogress;• keep disabled workers in jobs and integrate new disabledworkers;• access of women to responsibilities and to certain profes-sions;• make managing teams more international.

We are making recruiters more aware of the integration ofthose with disabilities and we are working on the productionof transverse tools; this is why we have strengthened our‘Handicap’ operation.

Fair and equitable remunerationOur salary policy is attractive, to attract and keep our employees.Its guiding principles include equitable remuneration, reducingdisparities, and facilitating access to savings from earnings.

In 2007, this policy resulted in the signature of 1,020 agreementsin our different countries of operation.

195,500 employees in twenty-seven countries were also offeredthe opportunity to benefit from the increase in the Group's2007 capital. The percentage of Veolia Environnement's capitalheld by employees is now 1.63%, held by 33,000 people, and ineight countries more than in 2006.

Encouraging employee-employer communication This entire policy, its results and its prospects for the futuredemonstrate our commitment to social communication.Employee-employer communication is essential to our modeland our efforts are helping us to make continuous progress.Thus, there has been a significant increase in the number ofcollective agreements signed since 2005.There were 16,072 personnel representatives in 2007, which is12% more than there were in 2005, illustrating the strength ofour commitment to employee-employer communication.Another sign of the magnitude of our mobilization is thebreakdown of collective agreements by theme, particularlyconcentrating on remuneration.

Promotingsocial mobilityWe want to reinforce and identify our role in socialmobility, with all employees in our company includingmanagerial and non-managerial grades . The objective is to set up special tools to encouragethis strategy. Our employees must be able to benefitfrom professional progress at all hierarchical levelsregardless of their initial level of training, to matchtheir ambitions and their capabilities.

FOCUS

Apprentices at the Veolia Environnement Campus, France


• integrate health and safety themes as essential componentsof our training courses;• monitor the smooth deployment of this policy to all ourentities throughout the world.Health and safety of our employees is everyone’s responsibili-ty. Veolia's ambition is now to develop new behaviours and toapply daily the best practice everywhere.

Measuring the exposure of Veolia'semployeesRecommended collective or individual protection measuresnecessary for safeguarding the health of Group’s employeesrequires better knowledge about methods of exposure to haz-ardous elements, that may be chemical, biological (e.g.bioaerosolsG) or physical (e.g. noise). Veolia Environnement’sResearch (Health R&D) is working on characterization of workenvironments and development of tools for understandinghealth hazards, in partnership with Veolia Environnement'senvironmental analysis center and the Group's safety depart-ments.

Exposure to bioaerosolsStudies have been initiated for employees working at materialsrecovery facilities and at wastewater treatment plants.Recommendations on threshold levels that must not be exceed-ed are still to be more precisely defined.Targeted prevention andprotection solutions have been defined.

Exposure of employees in research centers to chemical substancesA computer tool specially adapted to working conditions ofemployees in Veolia research centers was developed, followingan analysis of the different work stations and chemical sub-stances present. This tool provides a valuable working basis forother activities performed in the Group.

A permanent requirement: safety andhealth of our employeesThe health and safety of our employees has been the subjectof increased attention since 2007 to limit the number of acci-dents that occur annually in our teams, at client sites and onthe road.

The Group's Executive Committee declared the year 2008 asthe "World Safety Year for Veolia Environnement". This com-mitment will include three main actions:• strengthen the involvement of managers through a systemincluding targets, performance review and financial incen-tives;• define and deploy safety and health standards throughoutthe Group;• demonstrate the Executive Committee's commitmenttowards these problems through communication to at allemployees;

Protecting health and safety at workOur commitment: to provide better protection for our employees against work safetyand health risks throughout the world.

Hygiene for HealthcampaignIn May 2006, Veolia Environnement launched aninternational Hygiene for Health campaign to increaseawareness of its employees about washing hands. This campaign forms part of the Group's ambition to improve health at work by applying preventivemeasures, and particularly by the dissemination of good behavior in terms of hygiene. Managers and supervisors responsible for safety and health and for communication were mobilized in operationscenters and in head offices. Finally, more than 100,000 employees have been sensitized in our differentcountries of operation. Deployment of this campaignwas followed by many local initiatives, withpresentations on the theme of hygiene and strongerinitiatives to improve sanitary equipments.

BEST PRACTICE

bodies dedicated to the study of health and safety problems2,971

participants in safety training actions157,611



69

Jiamusi : actions to improve safety at work Veolia Energy-Dalkia was awarded a contract for operation anddevelopment of the Jiamusi heating network in north-eastern China, inMay 2007. Apart from the reconditioning of technical infrastructure,one of Veolia Energy – Dalkia’s immediate actions was to set up safetystandards for its employees equivalent to those applied in Europe,including widespread use of personal protective equipment (protectivegoggles, protective masks, safety shoes, etc.), setting up safety devices

(barriers, signs, etc.). The increased awareness of employees was reinforced by display panels summarizing instructionsand good practices. Safety procedures were formally defined with the organization of safety exercises. Eleven safetytraining courses (management of industrial accident situations, the use of personal protective equipment) were organizedin 2007 and were attended by more than 500 people.

/ VARIATION OF THE FREQUENCY RATIO OF WORK ACCIDENTS BY DIVISION (NUMBER OF ACCIDENTSPER MILLION HOURS WORKED)

23.94

15.5620.62

33.78

24.05

Veolia Total Veolia Water Veolia Energy Veolia EnvironmentalServices

Veolia Transport

26.0

5

24.6

7

18.0

8

17.6

2

18.6

1

18.5

5

42.6

37.4

3

21.0

9

22.5

5

� 2005 � 2006 � 2007

/ VARIATION OF THE SEVERITY RATIO OF WORK ACCIDENTS BY DIVISION (NUMBER OF DAYS LOST FOR WORK ACCIDENTS PER THOUSAND HOURS WORKED)

0.71

0.46 0.47

0.970.85

0.74

0.72

0.52

0.46 0.51

0.52

1.12

1

0.7

0.81

� 2005 � 2006 � 2007

Veolia Environnement does the maximum to reduce the frequency and severity of work accidents

Jiamusi in China

Veolia Total Veolia Water Veolia Energy Veolia EnvironmentalServices

Veolia Transport


PP

4-Veolia RDD-Perf. (70-97)-E5 2/07/08 15:16 Page 70

P

71PERFORMANCE


Progress is impossible unless we measure what has been done, evaluatewhat remains to be done, manage performance by making ambitiouscommitments,produce accurate and complete reports and take into accountexternal views and judgments.


Self-evaluation for progressBMJ Ratings has upgraded the Veolia Environnement Group’s rating to AA+.

BMJ RatingsThe BMJ Ratings agency has led a rating analysis of our sub-sidiaries in the four activities in China, Germany, France andMexico.The rating tools used are the DEEPP Model® used for the CSR(Corporate Social Responsibility) rating and the GlobalView®rating used to evaluate the contribution of the Group’s globalperformance (economic and extra-financial) to sustainabledevelopment.

The update of the 2007 extra-financial evaluation of the VeoliaEnvironnement Group carried out in 2008 confirms the goodresults and the previously observed trend of performanceimprovements in all sustainable development fields.

CSR Rating using the DEEPP Model®The BMJ Ratings agency has upgraded the Group’s rating toAA+. The “AA” rating indicates strong management of environ-mental and social issues. The “+” trend expresses the Group’spositive dynamique.

The recognized leadership of Veolia Environnement is rein-forced by its position on climate challenge, and through theambitious approach adopted towards social cohesion.

The internal organization accompanying this strategic ambi-tion clearly identifies the responsibilities engaged and providesan efficient solution to expectations expressed by the Group’sstakeholdersG.

Although the principles adopted for innovation and informa-tion transparency can still be improved, the Group’s vision of itsfuture and its commitments must enable it to improve the effi-ciency of its sustainable development policy in the short term.

Its performance is improving in all fields and particularly in theenvironmental one and in the area of the relationship betweenthe Group and civil society. These changes are the result of suc-cesses particularly in America and Asia and the Pacific, wherethe Group’s expertise and business ethics are resulting inresounding successes.

BMJ Ratings highlights the evidence of changes to our businessmodel, moving from a purely economic model to one combinedwith high environmental efficiency.

DEEPP Model® Rating

Integrated rating according to GlobalValue®The BMJ Ratings agency ameliorates the Global Value Index,which evaluates the Group’s capacity to make a commitmentto sustainable development, to create value and improve per-formance. The Index improved from 1.15 to 1.19: the 11 indexesare moving in a positive direction and show considerable con-sistency. The performance is significant in terms of manage-ment of activity cycles in all the Group’s divisions.

Veolia Environnement’s rating is determined over a year startingfrom the 31st of March 2008.

The evaluation does not take account of information about com-mitments made after this date.

Nanterre, 31/03/2008Pascal Bello, General Manager

Ratin

g by

fiel

dRa

ting

by m

anag

emen

tprin

cipl

e

Environment

Human resources

Commercial function

Purchasing and subcontracting

Civil society

Company governance

Leadership value

Organization of responsibility

Information transparency

Commitment towards stakeholders

Independent control

Innovation

Long-term vision

82/100

78/100

79/100

81/100

78/100

82/100

86/100

84/100

75/100

84/100

78/100

72/100

81/100

A A

+ ra

ting

GV. Index 1.19

0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40

2004 2005 2006 2007A+ A++ A++ AA+

Evaluation of Veolia Environnement’s rating by BMJ Ratings.


PERFORMANCE Veolia Environnement ••• Sustainable development report 2007

73

Extra-financial ratingVeolia Environnement’s selection in sustainable development indexes

Extra-financial rating provides the means of measuring thesustainable development performance of companiesthrough their selection in specific stock exchange indexes.The main evaluation areas are governance, management ofhuman resources, environmental performance, ethics, humanrights, customer care, supplier relations and the communica-tion with civil society. Veolia Environnement is listed in themain extra-financial indexes.

FTSE4GoodVeolia Environnement has been listed in theBritish FTSE4Good index since 2004.This index is

composed of companies quoted in the FTSE Global Equity index-es and considered to have the highest performance in terms ofsustainable development. Margins for improvement have beenidentified in terms of management of human rights and anti-corruption procedures.

DJSIIn 2007, Veolia Environnementonce again appears on the

American DJSI World and Stoxx indexes, and was identified asthe leader in the Water Utilities sector. The Group improved itsglobal score in 2007. Its performance was underlined for its com-mitment to human resources, its social and environmentalreporting, its commitment to stakeholders and access to water.

ASPI Eurozone (Vigeo)The European ASPI Eurozone index iscomposed of the 120 companies in the

Euro zone with the highest ratings for sustainable develop-ment. Veolia Environnement was listed again in 2007, basedon the rating made in 2006.

Centre Français d’Information sur lesEntreprises (CFIE)) (The French center forinformation on companies)The Group was awarded first place in the 2007 French busi-ness classification for the quality of its social end environmen-tal information.

Ethibel SustainabilityIndex (Vigeo)Veolia Environnement is included in theEthibel Sustainability Indexes, and hasbeen since 2002. The Ethibel PioneerIndex is composed of the shares of approximately 200 compa-nies and the Ethibel Excellence Index is composed of the sharesof around 280 companies quoted in Europe, North America andPacific Asia. These are companies with the best performance orwith performances above the average for social and environ-mental matters, and which meet ethics criteria produced bythe independent Forum Ethibel organization.

The SustainabiliityYearbook 2008The Sustainability Yearbook 2008 is a classification of compa-nies produced by the SAM rating agency in partnership withPricewaterhouseCooper, and rewards Veolia for its exceptionalachievements in the field of sustainable development bygranting it three awards: SAM 2008 Leader in the WaterUtilities Sector, SAM 2008 Sector Mover, and SAM 2008 SilverClass for good overall performance.

Our position with respect to the marketVeolia Average of eight companies Environnement with which Veolia Environnement

is regularly compared*

Revenue 32.628 billion euros Approx 20 times less

Percentage of the Water activity in total revenue 33.39% Approx 77%

Number of countries concerned 68 Approx 3 times less

Workforce 319,502 Approx 38 times less

This table shows the size, complexity and diversity in whichVeolia Environnement performs its activities.

* This concerns eight other companies evaluated in the DJSIWater Utilities sector.

Note: data presented for Veolia Environnement is 2007 data:data presented for its peers is the most recent available infor-mation.

Source : Utopies.


Monitoring satisfaction in all our sitesClient satisfaction is now monitored regularly by every divi-sion based on indicators identified, in 2005 and 2006, whensurvey methodologies were harmonized (see graph 1). TheGroup has developed special training courses to increase theawareness of its employees in customer relations (see graph 2).In particular, Veolia Transport has made a strategic priority of it.

Furthermore, Veolia Water has organized consumer trophiesto identify, award and share specific practices carried outworldwide.

Being available to listen to our customersVeolia Environnement has developed expertise in the manage-ment of customer service centers (see graph. 3). Apa Nova(Veolia Water) in Ploeisti, Romania, received the prize for the bestcustomer service in 2007 for the Europe, Middle-East and Africaarea awarded by Contact Center World. This prize was awardedparticularly for the synergies with the activities of Veolia Energy-Dalkia and Veolia Environmental Services.

Veolia Environnement is committed to continuous improve-ment of its customer satisfaction levels through welcoming ofcustomers, access to services (call centers, dedicated teams)and meeting increasingly strict quality requirements (servicecommitments, customer service charters, passenger charters,etc.). The Group is defining service standards to meet con-sumers’ expectations, and is harmonizing its reporting tools, toget a better understanding of population expectations. One ofthe major aspects of this policy is diffusion of good practicesand experiences. They can be more easily identified throughthe use, since 2003, of annually consolidated “customer” indica-tors. This reporting enables an annual inventory of actionsimplemented to improve the quality of service, and encouragesthe Group’s different sites to make progress in this area.

The reporting process and indicators identified five years agoneed to be changed. An independent audit of tools during2008 will provide a basis for adapting them to meet the expec-tations of our customers and local authorities.

Improving the quality of service: a daily attentionCustomers’ satisfaction is one of the Group’s major priorities. Various indicatorscontribute to the improvement of our performance: e.g. service quality monitoring,complaints management or real time information.

/ SATISFACTION SURVEYSConsolidated scope of VeoliaEnvironnement

91%

2005 2006 2007*

96% 95%

* Performance for new scope

/ CUSTOMER RELATIONSHIP TRAININGConsolidated scope of VeoliaEnvironnement

79%

2005 2006 2007*

87% 89%

/ CUSTOMER SERVICE POINTS Consolidated scope of VeoliaEnvironnement

87%

2005 2006 2007*

95% 95%

/1 /2 /3



75

Managing complaints more efficientlyResponses given to our customers following failures or com-plaints must be systematic, fast and effective (see graph. 4).Veolia Transport and Veolia Water have made a commitmentto a new process for management of complaints with dedi-cated teams. In particular Veolia Transport has produced amultidisciplinary program to increase professional behaviour.After the success of experiments carried out in 2006 and2007, Veolia Environmental Services has integrated the “i-oscar” complaint management program into its customerrelationship web solution set up in France.

Informing our customers in real timeVeolia Environnement has made a commitment in recentyears to set up customized information systems. For example,Veolia Water communicates with its customers through textmessaging in Morocco, the Czech Republic and China toanswer their questions about billing, payment, consumptionand leakage monitoring. Similarly, Veolia Transport informs inreal time (text messaging, email) its customers about any delaysand incidents in most countries in which it has activities.

/ COMPLAINTS HANDLINGConsolidated scope of Veolia Environnement / VARIATION OF OTHER CUSTOMER PERFORMANCE INDICATORS

80%

2005 2006 2007*

Increased awareness of responsible

consumption

Communication,publishing, etc.

Internet Customizedservices

Databases Customer serviceprinciples and

charters

83%85%

60%

51%

98%

95% 96%

77 %

82%81%

83%

87 %89%

67%68 %

70% 73%

91%

89%

� 2005 Performance � 2006 Performance � 2007 Performance*

BEST PRACTICE

“Going for Green”Developing a customer care culture

This Veolia Transport program ensures that employees in contact withpassengers and their managers are focussed on the same objective:satisfaction of passengers. Its success is based on adapting customer relation situations to the local context.

The “Going for Green” program consists of:• a training course;• a measurement of passengers satisfaction and personnelmotivation (before and after training);• an internal communication system.

“Going for Green” was successfully tested in transportation networksin Dublin and Las Vegas in 2005 and 2006, and was implemented inGermany, France and the United States in 2007. It is also planned tobe applied to the Stockholm metro and the Barcelona tramway in 2008.

/ CUSTOMER SATISFACTION BEFORE / AFTER THE “GOING FOR GREEN” PROGRAM IN KIEL (GERMANY)

General satisfaction Customer handling in case

of incident

Customer handling in case

of service interruption

58%

67%

43%

57%

42%

48%

� Before implementation

� After implementation

/4

� see best practices p. 34


A value creation for our activities…Sustainable development intrinsically forms part of VeoliaEnvironnement’s commercial development. The financial per-formance of our businesses is based on the ability to promotea genuine circular savingG, particularly by systematically ana-lyzing material and resource flows in regions, in the context ofactions involving local communities, public services and com-panies.These exchanges require that the quality of our contracts andacceptance of our services and solutions are optimized.Contractual relations are subject to a permanent and transpar-ent evaluation of the quality and suitability of the deliveredservices. Therefore, the financial performance depends on closecooperation between responsible partners within a value cre-ation chain, based on cooperative models.

…that can be seen in the Group’sresultsThe Group’s consolidated revenue was equal to 32.6 billion Euroson the 31st of December 2007. This was 14% more than in 2006.

External growth is due particularly to acquisitions made byVeolia Environmental Services in the United Kingdom and inGermany (contribution of the order of 1,200 million Euros),Veolia Energy in Europe and in Australia (254 million Euros)

Economic performanceand Veolia Transport in France and in the United States (161 mil-lion Euros). The build up in strength of the biomassG industryfor Veolia Energy-Dalkia justifies strategic decisions madeabout renewable energyG, with the renovation of the Vandoeuvreheat network and acquisition of PanPower in Hungary. Otheracquisitions marked the year 2007, particularly the acquisitionof Sulo (recycling) in Germany and several companies in thetransportation business in the United States.

The Group’s international growth accelerated in 2007 with anincrease in the share of the total turnover now equal to 56% ofthe total (compared with 53% in 2006).

This overseas growth is also boosted by the start up of newcontracts signed in 2006, particularly in Central Europe, AsiaPacific (water contracts for Shenzhen, Lanzhou and Kumming),South Korea (a metro line in Seoul) and the United Kingdomwith integrated waste management contracts (Shropshire,East Sussex, Nottinghamshire).

Activity was also strong due to Veolia Water AMI’s (Africa,Middle East, India) development of activity in Morocco, theconstruction of seawater desalination plants by reverseosmosisG in the Sultanate of Oman, and by thermal desalina-tion in Saudi Arabia (800,000 m3/d).

� See annual report www.veoliaenvironnement.com

Employees (personnel costs)

2007 10,061 M€

2006 8,993 M€

Suppliers,external serviceproviders and indirect taxes (3)

2007 18,271 M€

2006 15,766 M€

Tax administrations (4)

2007 416 M€

2006 331 M€

Banks and bondinvestors (5)

2007 817 M€

2006 701 M€

Shareholdersincluding minorityshareholders

2007 564 M€

2006 479 M€

Net investments (6)

2007 4,003 M€

2006 2,884 M€

Income from operations redistributed to stakeholders

2007 30,129 M€

2006 26,270 M€

Revenues (1)

2007 32,628 M€ 2006 28,620 M€

/ DISTRIBUTION OF OUR INCOME AMONG OUR STAKEHOLDERS IN 2007

This table presents how the income from our activities is redistributed to our different stakeholders.

(1) Income from ordinary activities.

(2) This income is equal to the sum of 2007 provisions anddepreciation expenses plus the 2007 net profit minus profits of associated companies and dividends paid to shareholders in 2007 (group and minority shareholders).

(3) These data are calculated by taking the difference with all components of “income from operations distributed to the stakeholdersG”.

(4) This amount is equal to expenses observed in consolidatedaccounts for company tax.

(5) This amount is equal to net cost of the financial debtreported in consolidated accounts in 2007.

(6) This is the sum of industrial investments and net operationalfinancial assets for transfers and reimbursements made for 2007.

Income from operations availablefor the company (2)

2007 2,499 M€

2006 2,350 M€



77

In 2008, the Group will achieve the last of the twelve commit-ments that were defined in 2002. Considering the major chal-lenges consisting of climate change, renewable energy, health, andwaste recoveryG, the Group began to define a new generation of indicators with quantified objectives in 2007 following a logic ofmeasuring performance rather than developing additional means.The Group’s commitment applies to trends: reduction, constantor growth. It is complemented by the definition of a guidingtarget value that can be revised depending on the rate ofimplementation of the EMS and any significant changes to thescope. In 2008, the Group will complete production of its nextenvironmental management plan by including ongoingresearch on the production of minimum standards applicableto all our activities. Within this framework, a liaison committeecontrolled by Executive Management and composed of theVice President of the sustainable development department,a member of the Executive Committee of each division and representatives of the different managements concerned(Legal and R&D), will validate strategic plans in terms of environmental management, and will report to the VeoliaEnvironnement Executive Committee annually.

The Environmental Management System (EMS)G is a tool usedto implement the Group’s policy in the fields of the environmentand health. It is common to all activities and is structuredaround three levels of responsibility (Group, division, businessunits). It enables the Group to determine, manage and reducethe impact of its activities on environment and health. An environmental management committee, composed of the envi-ronment departments of the Group and its divisions, managesthe implementation and organization of the EMS, encouragessharing of information and good practices between divisions,and ensures that objectives and actions taken in 239 differentbusiness units remain consistent.

In 2007, the group:• set up a team of internal auditors with direct control overreturned information (implementation of the EMS, conformitywith regulations, relevance of the action plan);• finalized implementation of its environmental information system (EIS) to improve the indicator reporting process and theinterpretation of environmental data. This tool will also bestrengthened by a specific module for monitoring how environ-mental audits are performed.

Environmental performance

Division State Definition Achieved Trend 2011 target valueon 31.12.07

Veolia Environnement

Existing Implementation of the EMS 75% 60%Scope increased in 2008

Existing Percentage of priority facilities audited 89%90%Scope increased in 2008

New Energy supplied by the production of renewable and alternative 13%17%

energy as a percentage of total energy consumption Revisable in 2008New Carbon efficiency ratio*

(global reduction of GHG emissions / 58% Defined in 2008/ total GHG emissions)

Veolia WaterExisting Water distribution network efficiency in the EU (15 countries) 82% > 80%

Existing Wastewater treatment efficiency (BOD5) 90% > 80%

New Overall Wastewater treatment efficiency 80% Defined in 2008

New Percentage of the population evaluated with quality classes 79% 100% coverage

Veolia Environmental ServicesNew Percentage of waste treated in incinerators scope with dioxin emissions lower than 0.1 mg/Nm3 98% > 95%

(all sites)

New Methane capture rate from landfills 50% Defined in 2008

New Percentage of waste treated (landfill or incineration) without recovery 56% Defined in 2008

Veolia TransportExisting Reduction of polluting emissions from CO: 2.51 g/km

vehicles: CO, HC, particles HC: 0.65 g/km Redefined in 2008Particles: 0.31 g/km

New Scope of eco-efficient travel (% passengers) 92% 100% coverage

Veolia EnergyNew Carbon efficiency ratio*

(Overall reduction of GHG emissions / 22% 23%total GHG emissions)

��

�

�

��

��

��

�

* See pages 44 to 51 “Combating climate change”


/ EMS IMPLEMENTATION RATIO (INCLUDING ISO 14001 CERTIFIED FACILITIES) OF RELEVANT ACTIVITIESG (% relevant revenue covered by an EMS)

66%

2005 2006 2007 Target2008

72% 75%80%

/ PERCENTAGE OF PRIORITY FACILITIES AUDITED (cumulative since 1/1/2002)

80%

2005 2006 2007 Target2008

87% 89%100%

The implementation ratio of the Environmental Management System (EMS)G

was 3% higher in 2007 and is on line with our 80% target for the end of 2008.The change in the indicator takes into account the fact that in general, thereis no environmental management in place at most of the sites that we areasked to manage under new contracts. Therefore, a minimum time is neces-sary to put in place the Group’s internal approach.

The percentage of ISO 14001 certifications has remained constant, thanks tothe achievement of external certification for a number of sites that wereimplementing the Group’s internal EMS.

The percentage of the 1,285 priority facilitiesG that have been audited since2002 is now 89%, which is on track for the 2008 target of 100%.

578 sites were audited in 2007. An action plan is produced during the firstaudit. Audits are then carried out to monitor the implementation of actionplans, so that they can be corrected if necessary.

The Group’s significant growth, resulting in 110 new facilities being broughtinto the scope, makes it difficult to perform the audit during the first yeardespite rigorous planning.

Thus, the percentage of audits completed on the 2007 scope with the pro-forma 2006 was 91.4%.

Managing environmental performance Indicator with quantified target

N New indicator

Drinking water production plant, Linjang, Shangai-Pudong, China.



79

Veolia Environmental Services facilitates the development ofmaterial, agricultural and energy recovery, respecting the hierarchyof treatment methods.

Selective collection and sorting of waste (wood, paper, cardboard,glass, metals and plastics) produced by industrial companies andhouseholds, recover materials by recycling waste to transform it intoreusable materials.

Waste that cannot be integrated into material recovery systems willbe recovered for energy, thanks to the capture of heat produced byincinerators equipped with recovery systems and the capture oflandfill gasG derived from decomposition of landfillG waste.

Finally, the organic fraction of industrial or municipal waste flowsmay also be recovered for agricultural use, so as to restore thecontent of organic material in soils and to limit the need for addedenrichmentG derived from fossil fertilizers (nitrogen, phosphorus,potash).

Veolia Environmental Services has made a commitment to reducethe percentage of waste treated (landfill or incineration) withoutrecovery.

This strategy is boosted by changes to treatment systems between2006 and 2007. The percentage of material recovery systems(particularly due to the integration of the new Sulo subsidiary) andenergy recovery systems will increase.The percentage of unrecoveredlandfill or incinerated waste is +5% less than it was in 2006.

With an incinerator equipment ratio exceeding 92%, energy isrecovered from almost the entire tonnage treated in this type offacilities.Most facilities that are not fitted with energy recovery systemsare hazardous waste incinerators in which priority is given to thereduction of polluting emissions.

� Material recovery (recycling)

� Energy recovery (incineration and landfillgas from landfill sites)

� Landfill or incinerationwithout recovery

� Agricultural recovery(spreaded sludge)

/ INCREASE IN THE TONNAGE OF WASTE BY TREATMENT SYSTEM 2006-2007

24.5%

20.2%

6.9%5%

/ ENERGY RECOVERY FROM INCINERATED WASTE

3.3%

96.7%

3.2%

96.8%

3.5%

96.5%

2005 2006 2007

� Without energy recovery

� With energy recovery

Conserving natural resourcesConserving raw materials

/ PERCENTAGE OF THE TONNAGE OF WASTE BY TREATMENT SYSTEM

N

N

N

58.9%

28.6% 28.8%

12.6%12.1% 11.4%

30.7%

0.4% 0.4% 0.3%

59.4% 56.3%

2005 2006 2007

� Agricultural recovery (spread sludge)

� Material recovery (recycling)

� Energy recovery (incineration and landfill gas from landfill sites)

� Landfill or incinerationwithout recovery


/ RENEWABLE AND ALTERNATIVE ENERGY PRODUCTION(thousands of MWh heat and electricity)

322

11,969

15,377

494

8,849

6,034

7,631� Energy

� Waste management

� Water

/ ENERGY SUPPLIED BY THE PRODUCTION OF RENEWABLE AND ALTERNATIVE ENERGY AS A PERCENTAGE OF THE TOTAL ENERGY CONSUMPTION(Electrical and thermal)

11%

+ 2 points

13%

2006 2007

/ WATER DISTRIBUTION NETWORK EFFICIENCY

80.7%

77%

81.1%

77.7%

81.7%

75.3% 80%

2005 2006 2007 Target (EU 15)

Saving water resources

The efficiency ratio of Veolia Water’s drinking water networks in the EuropeanUnion remains greater than 80%, in line with the commitment made in 2002and carried forward until 2011. This illustrates the high performance level inmature markets.

Development in countries in which water services require major upgrades overseveral years is incompatible with commitments taken on a global scale. Thus in2007, the addition of a new contract for a city of 1.5 million residents with anefficiency ratio of 15.4% has reduced our worldwide efficiency by 2% that wouldhave been equal to 78.5% and therefore higher than 2006, if this contract hadnot been included.

In 2007, Veolia Environnement produced 15.4million MWh of renewable and alternativeenergy out of a total energy consumption of 117.6million MWh. Energy produced from renewableand alternative energy sources provides 13% ofVe o l i a E n v i r o n n e m e n t ’s t o t a l e n e r g yconsumption, which is 2% more than in 2006.

Production of renewable and alternative energy by the Group is almost 29%higher and has reached 15,377 thousand MWh (thermal and electrical). Energyrecovery of incinerated and landfillG waste is 16% higher than it was in 2006 andstill forms the main source of the Group’s production (57.5% of the total).However, its part in the total production of renewable and alternative energy is5% lower due to the strong increase in energy produced by Veolia Energy derivedfrom biomass (+50%).Within a restricted volume,Veolia Water’s policy to produce renewable energyG

(energy recovery from biogasG and microturbines) has increased production bymore than 53%.

4,016

/ RENEWABLE AND ALTERNATIVE ENERGY CONSUMPTION(Veolia Energy-Dalkia - thousands of MWh)

2,468

4,433

6,807

5,026

1,781

20072006

20072006

1,965

Preserving energy resources

Veolia Energy – Dalkia’s consumption of renewable and alternative energyG hasincreased by two thirds in two years, and by 54% since 2006, due to three factors:• an acquisition and development policy giving preference to operations makingsignificant use of biomassG, particularly in Hungary and Germany;• continuation of a policy to substitute biomass for fossil fuels in our operations,either through the development of biomass boilers or by including a certainpercentage of biomass into burned coal;• development of heat recovery in municipal waste incineration plants (MWIP)G

Note: Heat recovered in MWIPs is now taken into account by assigning 50% into the renewable energycategory, instead of assigning 100% into the alternative energy category previously.This breakdown complies with international recommendations, and this is why we have updated the 2006 figures.

+ 54%

+ 29%

� Renewableenergy

� Alternativeenergy

� EU (15 countries)

� World

N

Indicator with quantified target

N New indicator



81

/ METHANE CAPTURE RATE FROM LANDFILLS(in operation, and for which Veolia Environmental Services controls investments)

2005 2006 2007

52%47.4% 50.2%

Limiting our impactsCombating climate change

In 2002, Veolia Environmental Services made a commitment toequip its landfill sites (in operation, accepting biodegradablewaste, and for which Veolia Environmental Services controlsinvestments) with landfill gasG capture and treatment systems,with a target of 100% by the end of 2006.82% of landfill sites were equipped in 2007, which is equivalentto 92% of all buried waste. 20 sites still remain to be equipped,and an investment plan has been produced for them. Inparticular, this plan includes five Clean Development MechanismG

projects in progress.

The challenge has now moved to two complementary fields:• Methodologies for calculating the production of methane andfor measuring captured and emitted methane:Veolia Environmental Services uses different methodologies forcalculating the production of methane from landfill sitesdepending on its regulatory obligations, but none of them offersa precise measurement. There are also uncertainties with themeasurement of captured methane. Due to the importance ofthis issue, innovative work was initiated on modeling methaneproduction, better reliability in the measurement of capturedmethane, and the development of a precise methodology formeasuring diffuse emissions of methane.

• The efficiency of capture devices:The Group made the decision to provide information about theeffective capture ratio of theoretical methane emissions startingfrom 2007 (despite necessary reserves for the calculation andmeasurement methods used), so as to evaluate our progress inthis field.The Group has committed itself to improving its capture ratio,which was 50.2% in 2007, between now and 2011. WithoutProactiva(1), the capture ratio is 58.4% on the scope of VeoliaEnvironmental Services alone. Veolia Environmental Services andProactiva have initiated action plans designed to:- install capture and treatment systems on sites that are notequipped (particularly through CDM projects);- deploy methods of efficiently operating landfill gas capturesystems.

In 2008, the Group will deliver a target value of its capture ratefor the 2011 deadline, although this target may be revised ifsignificant changes to the scope are made or if any measurementmethodologies are changed.

Veolia Energy-Dalkia is continuing its efforts to reduce the carbonintensity of heat produced by facilities larger than 20 MW. For aconstant scope (base 2005), the carbon content per MWh produceddropped by 1.8% in 2006 despite adverse climatic conditions,and by3.4% in 2007 due to improvement in efficiency,management of theenergy mix, better use of co-generation and development ofrenewable and alternative energy.Note: based on a 2006 proforma, the carbon content per MWh produced wouldhave dropped by 5.3%.Without the proforma and if the new contract in Hungaryis included (wood heating), the 2007 performance is even better with an increaseof 6.4%, namely 0.32 metric tons of CO2 per MWh thermal.

In 2006,Veolia Energy-Dalkia created an indicator quantifying theoverall reduction of GHG emissions and converting primary energyG

savings achieved into metric tons of CO2.

Efforts made to reduce GHG emissions, particularly due to energymanagement systems and renewable energy , have beenrepresented as a “carbon efficiency” ratio that measures thepercentage of the overall reduction of emissions, as a percentage ofVeolia Energy-Dalkia’s total GHG emissions. In 2006, the smallincrease in comparison with 2005 is explained by the acquisition ofnew coal facilities. A value of 21.7% was achieved in 2007 due to thereduction in the percentage of coal, the 42% increase in thepercentage of wood and the 12% reduction in the percentage of fueloil in the energy mix. Veolia Energy-Dalkia has set itself a “carbonefficiency”ratio target of 23% by the year 2011.

/ CARBON PERFORMANCE OF FACILITIES OF MORE THAN 20MW(metric tons of CO2 / MWh thermal produced)

2005 2006proforma 2005

2007proforma 2005

0.331

0.309

- 1.8%

- 3.4%

0.337

/ CARBON EFFICIENCY RATIO (Veolia Energy-Dalkia - overall reduction in GHG emissions / total GHG emissions)

19.7%

2005 2006 2007 2011target

20.1%21.7% 23%

N

N

(1) Proactiva is a 50% subsidiary with the Spanish FCC Group that operates in Latin America.


Sanitary quality of drinking waterThe ratio of compliance with the regulations is useduniversally to take account of the sanitary quality of water. However, this indicator has some limits that Veolia Water would like to improve. Veolia Water has created a new indicator based on chemical andbacteriological parameters that the World Health Organization has considered to be priorities (E-coli, arsenic, fluorides, nitrates and selenium), in order to evaluate the quality of the water that it distributes. The method of calculating this indicator includes the intensity by which thresholds recommended by the WHO are exceeded, and the duration. Therefore, it reflects the capability of the operator to initiateappropriate corrective actions as quickly as possible, toenable permanent control of the sanitary quality of distributed water.In 2007, the indicator was calculated for 78.8% of the total population served by Veolia Water throughout the world. The objective is to adapt tools and organizations so as to quickly reach a 100% coverage ratio. 99.3% of the entire population served by Veolia Water forwhich this indicator was calculated benefited from excellentquality or high quality water. For the remaining 0.7%, solutions will have to be found with our clients so as to achieve internal standards of Veolia Waterconcerning the quality of distributed water.

/ PERCENTAGE OF WASTE TREATED IN INCINERATORS WITHDIOXIN EMISSIONS LOWER THAN 0.1 NG/NM3 (all site)

87.3%

21.22%

78.78%

88.9%97.9% 95%

2005 2006 2007 Target

Environmental health

Management of dioxin emissions related to waste treated inincinerators is a public health challenge. Because there is noscientifically accepted value, Veolia Environmental Services hasadopted the strictest regulatory reference, which is the valueadopted by the European Union, to measure its performance.

In 2007, Veolia Environmental Services decided to extend theindicator to include all managed facilities, even when it does notcontrol investments for these sites (this represents a total of 78 incinerators compared with 23 in the past) and to fix apermanent target of more than 95% for this new scope.

0.62%

0.09%

0.00%87.04%

12.25%

� Excellent quality water

� High quality water

� Water with insufficient quality over the long term

� Water with insufficient quality in the short term

� Poor quality water

Percentage of the �population evaluated with

a compliance ratio only

Percentage of the �population evaluated with quality classes

Managing the legionella risk in our facilitiesThe risk prevention system developed by Veolia Energy-Dalkia is based on:• the existence of a prevention plan adapted to each country and conforming with the Group’s system;• increased awareness of personnel to the risk of Legionella;• an audit of each of its sites at-risk and implementation of our consultancy obligation towards our clients;• implementation of technical devices complying with the prevention plan.The progress rate in 2007 was 89.7%, which was almost 5% better than 2006.The constant improvement to the indicator reflects Veolia Energy – Dalkia’s efforts to maintain high quality monitoring and goodprevention at its facilities.

N

Indicator with quantified target

N New indicator



83

Veolia Water has developed a composite indicator that better reflectsthe performance of treatment systems used, taking account of andweighting different forms of pollution, following the approach usedby water agencies in France.The chemical oxygen demand (COD), nitrogen (N), phosphorus (P)and suspended solids (SS) are thus included alongside the biologicaloxygen demand (BOD), to represent a global efficiency ratio.The global treatment efficiency ratio this year is 79.7%.The treatmentefficiency (BOD) remains stable at 90%.

2780

1,172

147

2055

965

106

2154

933

90

2005 2006 2007

� Dust

� HCI

� NOx

� SOx

/ WASTEWATER TREATMENT PLANT EFFICIENCY (capacity larger than 50,000 population equivalent)

90.1%

78%80%79.7%

90%

2006 2007 BOD objective

� BOD wastewater treatment � Overall wastewater treatment efficiency efficiency

Limiting air pollution

Limiting the discharge of pollutants into water

Emissions from incineration plants per metric ton of treated wasteare continuously being reduced due to improvements in theperformance of treatment systems. This is the case particularly for nitrogen oxides, for which treatment has significantly improvedin Asia.

Veolia Transport is continuing its efforts to reduce pollutingemissions from its fleet of passenger transportation vehicles.Compared with the target fixed in 2005 (80% of the vehicle fleet),reduction objectives for 2008 are 8% for carbon monoxide (CO), 14%for hydrocarbons (HC) and 15% for particles.2007 results have improved by 1%, 6% and 5% for CO, HC andparticles respectively, which is on track to achieve the objectives forthe end of 2008.

Note: 2005 and 2006 values have been updated to include a correction to the2005 target.

/ PASSENGER TRANSPORTATION VEHICLE EMISSIONS PER UNIT (grams per kilometer)

/ EMISSIONS FROM WASTE INCINERATION PLANTS (hazardous and non-hazardous waste in g/ metric ton of waste incinerated)

Unit emissionsof CO

Unit emissionsof HC

Unit emissions of particles

� 2005 � 2006 � 2007 � 2008 target

2.692.53 2.51 2.48

0.73 0.69 0.65 0.62 0.36 0.33 0.31 0.30


The Group’s commitmentsA sustainable buildings policyThe construction of tertiary buildings (offices, research centers,training premises, etc.) for which the Group is the owner, will bebased on sustainable construction criteria. A typical specifica-tion has been produced defining minimum requirements to berespected (obtaining the NQ HQE® Tertiary certification). VeoliaEnvironnement would then like to go further and construct“zero energy” buildings. Veolia Environnement’s five new campuses now integrate this commitment.

Rationalizing procurementVeolia Environnement’s head office has undertaken anapproach to improve its purchases of paper (reports, internalpublications, brochures, etc.) by setting up a reference list ofprinters which includes sustainable development criteria. TheGroup will only purchase paper from IMPRIM’VERT labeledsuppliers, guaranteeing absolute elimination of toxic prod-ucts, and security of product and hazardous waste storagesites. The Group also makes a commitment to print docu-ments for internal and external communication purposes (andin minimum numbers) using only paper derived from sustain-ably managed forests (FSC).

Renewing the fleet of light vehiclesThe CO2 emissions reduction policy has already improved theenvironmental and economic performance of 28,000 vehiclesin France. Since 2006, renewal of the fleet has had a positiveeffect on the reduction of CO2 emissions through the use of anew vehicle selection table. The average emissions of the6,000 new vehicles that came into service in 2007, all cate-gories combined, was 145.6 g of CO2/km, in other words 8.9%less than vehicles bought in 2005 before this policy was set up.The Group has made a commitment to reduce total emissionsfrom its entire fleet by 10% from 2006 levels by 2010.

Best practice sitesSaving waterVeolia Environmental Services has set up a system for washingcollection points for glass and paper in Nancy, France, whichrecovers wastewater and filters it before carrying it to thetreatment plant.

Veolia Transport uses recycled water for washing 25% of itsfleet of vehicles, which represents more than 8,200 publictransportation vehicles.

In Bordeaux, France, Veolia Transport has developed biologicalfountains for cleaning mechanical parts, thus limiting emis-

In all of its activities, the Group generates impacts on the envi-ronment, over which the degree of control determines its levelof responsibility. Veolia Environnement manages three types offacilities:• industrial facilities for which the Group controls investment;• industrial facilities for which the Group does not control invest-ment and which require cooperation with the delegating authori-ty;• tertiary sites,functional and administrative centers for which theGroup is fully responsible.

Industrial facilities are integrated into the EMS,which makes it pos-sible to control and reduce the impact of the Group’s activities onthe environment through action plans.Tertiary sites are not included in the EMS at the moment, but anestimate of their impacts gives the following values:• consumption of water, 1 million cubic meters;• consumption of energy, 325,000 MWh;• production of waste, 21,000 metric tons;• CO2 emissions, 0.1 million metric tons.

A more detailed analysis of the nature of the impacts of all theGroup’s sites (particularly through mapping) will be made withinthe framework of a global action plan with associated research onthe Group’s responsibilities.

Management of our ownimpacts and consistency with regard to our activities

Decision makingtool to build an environmentally friendlybus depositThe sustainable development department and Veolia Transport have been working with aspecialized design office to develop a decisionmaking tool to build an environmentally friendly busdepot. This tool makes use of the technical andgeographic characteristics of the depot, and helps to make structured choices as a function of environmental factors, and to evaluate the resulting return on investment.

FOCUS



85

Environmental training and increasedawareness of sustainable developmentTraining courses provided by Campus Veolia Environnementincrease awareness of sustainable development. In 2007, 60 stu-dents (future Veolia Operations Managers representing 96% ofpersons attending the course) were awarded a “EnvironmentalServices Management and Engineering” master degree diplo-mas. 20% of the teaching time in this master’s degree is set asidefor the environment and sustainable development areas.

Veolia Environnement integration days (JIVE) offered to all newemployees working with the Group include workshops in whichparticipants are evaluated based on their ability to integratesustainable development areas into their work.

Veolia Environmental Services has included an environmentalawareness module in its training program for its employees.

Divisions also pass on these messages. Thus, Veolia Water hasdeveloped a network of correspondents that pass on theGroup’s sustainable development strategy, modified to suit thelocal context. These procedures are particularly well developedin the United Kingdom (Three Valleys Water), France (in theSouth-West region), Germany and Niger.

sions of liquid and gas releases into the environment andeliminating the use of detergents.

Optimizing energy consumptionVeolia Environnement’s head office has produced a programto increase the awareness of employees of eco-actions.Energy saving measures have been set up based upon theimproved lighting (installation of low energy bulbs, move-ment detectors in washrooms, time programming in somerooms). Electricity consumption was thus 33% lower in 2007than in 2005.

In France, Veolia Transport has provided manually recharge-able standalone torches using “low voltage” bulbs for use bybus drivers.

Limiting emissions from private transportationVeolia Water has put five hybrid vehicles into circulation inAgen, France, to reduce polluting emissions and achieve fuelsavings.Veolia Water is developing a travel plan in the United Kingdom,to encourage car sharingG between its employees.

Recycling wasteIn China, Veolia Water has joined the Planet Partners programdeveloped by its computer supplier in partnership with a localNGO that encourages responsible recycling and is increasing theawareness of its local teams about the benefits of this practice.

In France, Veolia Energy-Dalkia has installed cardboard kits sup-plied by Veolia Environmental Services to collect small toxicwaste following maintenance work.

The Veolia Environmental Services Resources project

Can you describe the Resources project and how it isdeployed within your region?A Carbon balance® and an energy diagnostic wereproduced and used to create an inventory and anassociated action plan for three pilot sites. This included the setting up of performance indicators and the mobilizationof all teams (training of 500 people). All commercial agentsin the region (100 people) attend training courses producedin cooperation with the sustainable development team. It is planned to deploy this project throughout Veolia Environmental Services Center-West as a function of the results obtained on pilot sites, and in the Group’s other businesses in the France West Region.

What is the motivation behind Veolia EnvironmentalServices Center-West Region setting up the Resourcesproject?Above all, the objective is to use sustainable developmentas a management and innovation lever to achieve two main objectives, namely to limit our own impacts(particularly our CO2 emissions), and to improve our commercial proposals in response to the newexpectations of our clients.

Bernard Harambillet,Assistant Regional Manager for the Veolia Environnement

Services Center-West Region (VPCO)

INTERVIEW


These studies emphasized the need to adapt our indicators tomatch local reality in the countries in which we operate, and totake better account of company acquisitions and operationstaken over, that make significant and continuous changes toVeolia Environnement’s operations scope.

In this context, it became necessary to apply minimal stan-dards, which maintain the possibility of controlling the Group’scommitment to match local realities. These standards providemore relevant criteria for a Group anchored in a diversity ofcontexts and a variety of activities.

Minimum social standards for diversityOperating in extremely varied local context and involved in thepromotion of diversity, we are in the process of developingminimum social standards. For example, since 2002 VeoliaEnvironnement has committed itself to a comparatively trans-parent remuneration policy. We compare the average remune-ration of our employees to minimum local wages. This 2006comparison between guaranteed minimum or actual wagesin 19 countries in which we operate shows that the Group’ssalaries are 2.2 times higher than the average minimum legalsalaries in these countries (namely an average weighted salaryof 26,566 Euros for Veolia Environnement compared with the minimum legal average salary of 12,008 Euros). Two-thirdsof Veolia Environnement’s employees are employed in these 19 countries.

Working towards our objectivesIt is essential to understand the Group’s social performance andoperational practices to be able to deploy homogenous mana-gement of our human resources on a global scale, or within pro-jects to share best practice. Our worldwide network of 600 cor-respondents collects, processes and consolidates 160 social indi-cators. Dedicated software improves the reliability of the collec-tion and validation of data. This information gives rise to analy-ses by geographic area, by country and by activity type. VeoliaEnvironnement is one of the leaders of companies included inthe CAC 40 stock exchange index in terms of the quality andcoverage of published social information. Strong areas identifiedby Executive Management guide our social policy. Thus, specialinvestigations were carried out on different issues, concentra-ting on efforts made by our businesses:• increased loyalty of employees;• reduction of absenteeism;• safe working conditions;• reduction of temporary labor (fixed term contracts, temporaryemployees);• development of professional training and skills, particularly bymeans of work-study contracts.

Diversity: driving force of our social policyDiversity forms part of our social model. The special features ofour four activities, the diversity of our local sites, and the hete-rogeneity of data that they produce, all confirm difficulties inmonitoring general indicators applicable to the entire Group, asmentioned in studies carried out in 2007.

Social performance

Social data verificationby the official auditor,KPMGThe quality of social reporting has been confirmed by an external evaluation. KPMG, one of VeoliaEnvironnement’s auditors verified 11 key social datachosen by the Group. KPMG’s report (moderateassurance level) concludes that there are no significant anomalies in the verified data. It emphasizes good control over existing reportingprocedures, the quality of the software used, the reliability of data collection, and the strongmonitoring and verification environment. The evaluation external to KPMG is included in Veolia Environnement’s 2007 social report.

FOCUS

The number of participants in our training increased signifi-cantly between 2005 and 2007, and an increasing number ofwomen benefited from it.Training encouraged internal mobility within the Group:82% of inter-company transfers and 18% of intra-companytransfers demonstrate our employees’ loyalty to the Group.In this context, the professional promotion ratio is increasingslowly, but regularly.Our social policy is aimed at reducing differences and pro-moting equality of opportunities. Salary differences withinthe Group are generally less than or very much less than, dif-ferences determined by Eurostat across Europe. The averagedifference in France is 18.9%, while the difference amongVeolia Environnement’s employees is only of 12.6%.Furthermore, the average participation in the new shareissue offering to our employees in 2007 was 20.5% (com-pared with 17.1% in 2006), which is a sign of the confidenceof employees in their Group.



87

Structure of workforce

The number of employees on December 31st 2007 was 319,502,which was 7% more than in 2006. Almost two thirds of the work-force is outside France. The largest percentage increase was in theSouth American zone (+13.2%). However, the largest increase in thenumber of the Group’s employees was in Europe (outside France)(+7.7%). The breakdown of employees by socioprofessional catego-ry reflects the activities of a group anchored in practical realities,requiring a high ratio of salaried employees. The companyincreased the number of employees with unlimited-term contractsbetween 2006 and 2007.Only a small minority of its employees are

recruited under a fixed-term contract, which is in accordance withthe Group’s social policies. The ratio of men to women employedvaries by business and reflects the sometimes difficult conditionsof the work available (21% of women throughout the world).However,more than half of the Group’s employees working in gen-eral functions and administrative services are women. In 2007, thisdisparity was tending to reduce and the general trend is towardshigher growth in the female workforce than in the male workforce(12.8% compared with 6.1%).

Compensation and professional development

/ AVERAGE GROSS ANNUALCOMPENSATION BY GENDER SINCE 2005 (IN EUROS)

25,31822,117

25,96622,127

26,78622,823

2005 2006 2007

� Women � Men

/ TRANSFERS WITHIN THE GROUP

82%

18%

/ NUMBER OF EMPLOYEES WHO BENEFITED FROM TRAINING

48,970221,813

75,032283,785

132,152311,347

� Women � Men

2005 2006 2007

37%

117,434

6%

19,216

35%

112,455

8%

24,684

9%

28,868

/ BREAKDOWN OF WORKFORCE BY GEOGRAPHIC AREA IN 2007

5%

16,845 � France

� Europe outsideFrance

� North America

� Asia Oceania

� South America

� Africa and theMiddle East

� Administrativeemployees

� Workers / operations agents

� Executives

� Supervisors / technicians

15%

12%

65%

/ BREAKDOWN OF WORKFORCE BY PROFESSIONNAL GRADE, DEC. 31, 2007

8%

79%

253,983

21%

65,519

/ BREAKDOWN OF WORKFORCE BY GENDER, DEC. 31, 2007

� Men

� Women

93%

7%

/ BREAKDOWN OF FULL TIME EQUIVALENT EMPLOYEES BY TYPE OF CONTRACT

� Number of fulltime equivalentemployees withpermanentcontracts.

� Number of fulltime equivalentemployees withfixed termcontracts

93% of the company’semployees had a permanentcontract in 2006

� Intra-company mobility

� Inter-company mobility


Job dynamics

/ NET JOB CREATION

6%7%

12%

2004/2005 2005/2006 2006/2007

/ SUMMARY OF HIRES AND DEPARTURES* Not including hiring converted into unlimited-term contracts (8,030 throughout the world)** not including termination of fixed-term contracts due to employmentwith an unlimited-term contract

Intakes

Departures

New hires

Fixed-term contract*, 29,019

New hires

Unlimited-term contract, 60,072

Dismissals

- 10,532

Retirement

- 3,570

Voluntary departures

- 30,071

End of contracts(Fixed term ** and loss of contracts

- 20,283

Departure for otherreasons

- 3,150

/ TURNOVER OF PERSONNEL ON UNLIMITED-TERMCONTRACTS

14.3%

2005 2006 2007

15.7%17.4%

After a net creation of jobs equal to 12% (compared with 7% in2006), Veolia Environnement is making a strong contribution toemployment in the countries in which it is operating, whileconsolidating its internal growth trend. The total number ofpeople hired in the world is 89,091 (of which 67% are unlimited-term contracts). The acceleration in the turnover is largelyexplained by a growing labor market and an increased number ofpeople leaving for retirement.

Encouraging employer-employee dialogue

/ NUMBER OF COLLECTIVE AGREEMENTS SIGNED SINCE 2005

1,341

2005 2006 2007

1,505

2,070

/ NUMBER OF EMPLOYEE REPRESENTATIVES SINCE 2005

14,296 15,687

16,072

13%

10%

49%

/ DISTRIBUTION OF COLLECTIVE AGREEMENTS BY SUBJECT IN 2007

28%

� Compensation

� Health, safety or working conditions

� Employee-employer communication

� Other

The Group places the communication with its employees at thecore of its social model. The very significant increase in thenumber of collective agreements signed between 2005 and2007, the regular increase in employee representatives since2005, the breakdown of collective agreements largely centeredaround the question of compensation certify the dynamics ofthis employee-employer communication policy.

2005 2006 2007



89

25%

14%

/ BREAKDOWN OF VEOLIA ENVIRONNEMENT’S WORKFORCE BY LEGAL LIMITS ON WORKING HOURS

60%

24%

5%

11%

/ BREAKDOWN OF VEOLIA ENVIRONNEMENT’S WORKFORCE BY LEVELOF PROTECTION AGAINST DISMISSALS AND REDUNDANCIES

/ BREAKDOWN OF VEOLIA ENVIRONNEMENT’S WORKFORCE BY LEVEL OF WOMEN’S REPRESENTATION COMPARED WITH THE TOTAL WORKING POPULATION

6%

2%

11%

37%

6%

57%

� Countries with very highlevel of education

� Counties with high levelof education

� Countries with moderatelevel of education

� Country with low levelof education

� Countries with strong women’srepresentation

� Countries with averagewomen’s representation

� Countries with low women’srepresentation

� Countries with low limits on working hours (with veryflexible working hours)

� Countries with average limitson working hours (withmedium working hours flexibility)

� Countries with strong limits onworking hours (with very rigidworking hours)

� Countries with average protection against dismissalsand redundancies

� Countries with low protectionagainst dismissals and redundancies

� Countries with very low protection against dismissalsand redundancies

� Countries with strong protection against dismissalsand redundancies

Diversity of local contexts

Training on subjects other than safety vary as a function of the level of education of the countries.When this level is low, the emphasis isplaced on basic knowledge (reading, writing, arithmetic).Therefore, every employee has the opportunity to improve his/her skills, regardless ofhis/her origin, seniority or initial training.The Group creates work contracts complying with national legal durations, to match local reality asreasonably as possible.The use of overtime depends on local practice in each country and the specific nature of different activities. Individuallayoffs remained limited (3.2% of the total workforce) in 2007 and the number of collective layoffs (326 in all) was 17% less than it had beenin 2006.

yere

/ BREAKDOWN OF VEOLIA ENVIRONNEMENT’S WORKFORCE BY LEVEL OF EDUCATION

Labor organization

/ PERCENTAGE OF FIXED-TERM CONTRACTS BY REGION IN 2007

6.3%

0.3%

12.1%

7.0% 7.4% 7.0%

/ AVERAGE ANNUAL NUMBER OF OVERTIME HOURS WORKEDPER EMPLOYEE IN 2007 AND BY REGION

136

197

101 103

5074

Africa /

Middle East

North Americ

a

South America

Asia / O

ceania

Europe

Total VE

Africa /

Middle East

North Americ

a

South America

Asia / O

ceania

Europe

Total VE

/ PERCENTAGE OF PART-TIME EMPLOYEES BY REGION IN 2007

0.2%

6.3%

0.2%

3.8%

11.3%

9.1%

Africa /

Middle East

North Americ

a

South America

Asia / O

ceania

Europe

Total VE

Analyzing the organization of labor by geographic area, one couldsee that criteria vary depending on specific features and culturalpractice in different local contexts.The variety of social situationsobliges Veolia Environnement to set up a work organizationspecific to each country, depending on local features.

81%

61%


UNIT 2006 2007 2007VEOLIA VEOLIA

ENVIRONNEMENT ENVIRONNEMENT WATER ENERGY ENVIRONMENTAL TRANSPORT FRANCESERVICES

Total headcount at December 31, 2007 298,498 319,502 82,867 54,375 100,032 81,532 117,716Number of employees with unlimited-term contracts 278,597 298,008 78,950 50,575 92,302 75,524 110,413Number of employees with fixed-term contracts 19,901 21,494 3,917 3,800 7,730 6,008 7,303Number of fixed-term contract converted into unlimited-term contracts 7,689 8,030 1,420 1,318 3,423 1,853 3,065Number of male employees 239,352 253,983 63,861 45,021 79,540 65,261 91,946Number of female employees 59,146 65,519 19,005 9,354 20,493 16,271 25,770Number of managerial grade employees 24,007 27,048 10,627 6,359 6,704 2,897 13,393Number of non-managerial grade employees 274,491 292,454 72,239 48,016 93,329 78,635 104,323Number of employees with work-study contracts at December 31, 2007 4,787 5,922 1,725 2,120 923 1,146 2,909• of which employees with apprenticeship contracts 2,766 3,104 1,255 855 644 345 1,902Number of employees with disabilities at December 31, 2007 4,513 4,980 1,425 774 1,625 1,155 3,103Total weighted annual average number of employees (full-time equivalent) 268,746 291,140 80,147 50,882 85,823 73,660 110,520Weighted annual average number of employees with unlimited-term contracts 252,728 270,880 74,896 46,626 79,830 68,936 103,964Weighted annual average number of employees with fixed-term contracts 16,018 20,260 5,251 4,256 5,993 4,724 6,556

NEW HIRES

Total number of new hires 71,036 89,091 12,056 14,026 39,715 23,045 33,457• of which with fixed-term contracts 29,927 37,049 3,993 4,219 20,347 8,384 22,046• of which with unlimited-term contracts 41,109 52,042 8,063 9,807 19,368 14,661 11,411

DEPARTURES

Total number of departures 66,561 77,991 9,846 10,175 36,912 20,919 29,103• of which number of dismissals 8,564 10,206 1,051 1,967 4,272 2,912 2,814• of which redundancies 394 326 86 70 98 72 8

JOB MOBILITY

Total number of transfers 13,057 16,154 3,638 3,635 6,558 2,257 6,853• of which managerial grade employees 2,353 2,920 904 750 795 423 1,321

OVERTIME

Total number of overtime hours Hours 21,900,015 23,760,578 3,775,847 2,217,179 10,455,878 7,308,219 3,636,641Average number of overtime hours per employee per year Hours 73 74 46 41 105 90 31

TEMPORARY EMPLOYEES

Number of temporary employees (full-time equivalent) 12,506 14,026 3,968 2,617 6,560 865 7,648Payment to temporary staffing agencies Euros 392,477,199 492,810,333 124,029,192 105,552,275 226,824,735 35,511,718 336,572,880

ORGANIZATION, WORK TIME, ABSENTEEISM

Weekly work time Hours 38.4 40.0 38.1 47.1 39.2 38.2 35.5Number of part-time employees (full-time equivalent) 14,970 15,839 2,562 676 6,086 6,478 7,704Total number of work days lost through absence (unlimited-term contracts) Days 3,251,287 3,492,789 831,932 529,694 1,080,895 1,045,335 1,671,955• of which total number of work days lost through sick leave (unlimited-term contracts) Days 2,210,145 2,394,092 573,790 402,077 696,156 719,854 1,129,280

COMPENSATION, SOCIAL SECURITY CONTRIBUTIONS, PROFITSHARING AND EMPLOYEE STOCK PURCHASE PLANS

Average gross annual compensation Euros 25,247 26,039 26,767 24,555 24,979 27,037 28,977Average gross annual compensation (men) Euros 25,966 26,786 27,773 25,564 25,455 27,785 29,698Average gross annual compensation (women) Euros 22,127 22,823 23,221 19,159 22,640 23,926 25,965Gap between average compensation (men and women) % 14.8 14.8 16.4 25.1 11.1 13.9 12.6Ratio of average compensation to average minimum compensation in 19 countries that have a legal minimum wage 2.2 2.2Social security contributions as % of total payroll costs % 22.3 30.4 32.7 33.8 26.7 29.3 44.0Total amounts paid in respect of bonus payments (France) Euros 57,367,743 59 386 297 36 212 935 7 428 850 8 610 271 5 316 771 59,386,297Total amounts paid in respect of employee stock purchase plans (France) Euros 57,611,395 61 263 468 26 592 971 9 067 823 15 926 501 9 664 269 61,263,468

LABOR RELATIONS AND COLLECTIVE AGREEMENTS SUMMARY

Number of collective agreements signed 1,505 2,070 434 618 367 648 641• of which related to compensation 876 1,020 218 179 250 370 389• of which related to health, safety or working conditions 194 197 58 56 37 46 68• of which related to employee-employer dialogue 158 266 72 34 24 136 73• of which related to other subjects or several of the above 277 587 86 349 56 96 111Total number of employee representatives 15,687 16,072 4,366 2,963 4,803 3,904 10,394

OCCUPATIONAL HEALTH AND SAFETY

Number of work accidents with sick leave 11,273 11,848 2,120 1,785 4,927 3,012 5,805Total number of days lost through work accidents Days 327,096 351,880 62,889 41,027 141,430 106,516 231,616Accident frequency rate 24.7 23.9 15.6 20.6 33.8 24.1 30.9Accident severity rate 0.72 0.71 0.46 0.47 0.97 0.85 1.23Number of employees trained in safety procedures 143,468 157,611 48,004 26,330 47,717 35,456 56,279Number of organizations dedicated to the study of health and safety problems 2 634 2,971 513 556 1,190 709 659

TRAINING

Total training expenditure as a percentage of total payroll costs % 2.28 2.25 2.45 2.52 1.98 2.15 3.03Number of employees who benefited from training 358,817 443,499 128,565 80,418 126,439 107,335 125,571• Managerial grade 47,877 47,347 20,115 13,063 8,863 4,891 15,308• Non-managerial grade 310,940 396,152 108,450 67,355 117,576 102,444 110,263• Men 283,785 311,347 92,410 62,623 99,566 56,540 105,853• Women 75,032 132,152 36,155 17,795 26,873 50,795 19,718Expenditure per employee trained Euros 431.6 385.1 409.6 391.0 334.9 398.7 772.1Total number of training hours Hours 5,560,907 6,210,061 1,467,345 1,142,892 1,448,486 2,136,617 2,052,473Average duration of training activities Hours 15.5 14.0 11.4 14.2 11.5 19.9 16.3

COMMUNITY INVOLVEMENT ACTIVITIES

Subsidies for community involvement activities Euros 57,295,982 62,267,656 28,020,706 13,756,533 8,800,027 11,338,158 45,490,079

* Veolia Environnement 2006 and 2007 data include data for the VE SA Head Office, for the CAE and for Campus Veolia Environnement (not described in detail here).

SOCIAL PERFORMANCE DATA



91UNIT 2005 2006 2007 2007

VEOLIA ENVIRONNEMENT WATER ENVIRONMENTAL ENERGY TRANSPORTSERVICES

EMS implementation ratio (including ISO 14001 certified facilities) on relevant sites (1) % relevant revenue 66% 72% 75% 80,9% 63,1% 92,7% 55,6%

Relevant revenue covered by a certified management system (ISO 9000 or 14001)(4) % 65% 68% 67% 85% 74% 75,3% 31%Number of sites covered by an ISO 14001certificate (2) Nb 705 853 939 254 559 85 41Drivers (Veolia Transport) who have received training in environmental performance % 70% 64% 56% - - - 55,9%Percentage of priority facilities audited (cumulative since 01/01/2002) (1) % 80% 87% 89% 84,9% 87,2% 97% 85,2%Revenue from relevant activities billions of Euros 17,4 19,2 21,3 6,1 3,9 6,3 5,0AIR

Direct CO2 emissions (1) Million metric tons CO2 26,1 27,9 29,2 0,2 5,8 21 2,3Direct CH4 emissions kt CH4 362,4 405,3 482,1 - 480,9 - 1,3Direct N20 emissions (Veolia Environmental Services) kt N2O - - 0,57 - 0,57 - -Total direct greenhouse gas Millionemissions (1) (2) metric tons eq. CO2 33,7 36,5 39,5 0,2 16 21 2,3Indirect emissions of greenhouse gases Millionrelated to consumption of electricity (1) metric tons CO2 2,7 3 3,3 2,36 0,30 0,31 0,35 Total direct and indirect (electricity) Millionemissions of greenhouse gases (1) (2) metric tons eq. CO2 36,4 39,5 42,8 2,5 16,3 21,3 2,6Global reduction of greenhouse gas emissions (1) (5) (9) Million metric tons CO2 - 20,24 24,64 0,09 16,22 4,64 3,70• of which overall reduction of greenhouse

effect gas emissions (5) (9) Million metric tons CO2 - 13,02 14,62 0,07 9,92 4,64 -• of which avoided emissions of greenhouse gases (5) (9) Million metric tons CO2 - 7,21 10,02 0,02 6,31 - 3,70Carbon performance of facilities of more metric tons CO2/MWh than 20 MW (world) (1) (3) thermal produced 0,337 0,342 0,320 - - 0,320 -CH4 capture rate from landfills (in operation and for which Veolia Environmental Services controls investments) % 52% 47,4% 50,2% - 50,2% - -Landfills (non-hazardous waste) equipped with biogas recovery and treatment systems (in operation and for which Veolia ES has control over capital investments) (1) (2) % 70% 80% 82% - 82% - -Emissions from waste incineration plants (hazardous and non- hazardous waste) per metric ton of incinerated waste • SOx (2) g/incinerated metric tons 147 106 90 - 90 - -• NOx g/incinerated metric tons 1172 965 933 - 933 - -• Dust g/incinerated metric tons 27 20 21 - 21 - -• HCl g/incinerated metric tons 80 55 54 - 54 - -Passenger transportation vehicles emissions per unit• CO (1) (10) g/km 2,69 2,53 2,51 - - - 2,51• HC (1) (10) g/km 0,73 0,69 0,65 - - - 0,65• particles (1) g/km 0,36 0,33 0,31 - - - 0,31Completion of Legionella risk prevention plan (1) % 80% 85% 90% - - 90% -Percentage of waste treated in incinerators with dioxin emissions lower than 0.1 ng/Nm3 (all sites) (2) % 87,3% 88,9% 97,9% - 97,9% - -WATER

Water distribution network efficiency (world) (1) % 77% 77,7% 75,3% 75,3% - - -Water distribution network efficiency (EU 15) % 80,7% 81,1% 81,7% 81,7% - - -Industrial water consumption (2) Million m3 210,3 391,4 452,6 394,4 22,6 34,1 1,6Wastewater treatment efficiency (biological treatment plants with a treatment capacity of over 50 000 PE) (1) % - 78% 79,7% 79,7% - - -BOD5 overall wastewater treatment efficiency (biological treatment plants with a treatment capacity of over 3 metric tons of BOD5 per day – 50 000 PE) (1) (2) % 91% 90,1% 90% 90% - - -Percentage of clients equipped with water metering device % 93% 93% 95% 95% - - -Landfills collecting and treating leachates (internally or externally) (in operation and for which Veolia ES has control over capital investments) % 96% 98% 99% - 99% - -Percentage of the population served by excellent quality or high quality water (1) % - - 99,3% 99,3% - - -Bacteriological compliance rate % 99,3% 99,3% 99% 99% - - -Overall compliance rate % 98,7% 99,1% 98,6% 98,6% - - -ENERGY

Total energy production (electricity and heat) (1) Million MWh 71,5 73,9 77,9 0,5 8,8 68,6 -Production of renewable or alternative energy (electricity and heat) Million MWh 11,2 12 15,4 0,5 8,8 6 -• of which renewable energy (1) Million MWh - - 9,5 0,5 4,7 4,3 -Total energy consumption (electricity and heat) (1) (2) (6) (8) Million MWh 105,6 111,3 117,6 6,7 6,3 95,1 9,5Renewable and alternative energy consumption (7) (8) Million MWh - - 8,5 0,5 1 6,8 0,2• of which renewable energy (1) (7) (8) Million MWh - - 6,1 0,5 0,5 5 0,1Percentage of renewable and alternative energy (7) (8) % - - 7,2% 6,8% 16,5% 7,2% 2,4%• of which renewable energy (1) (7) (8) % - - 5,2% 6,8% 8,7% 5,3% 1,1%Percentage of incineration plants equipped with energy recovery systems % 91,2% 90,3% 92,3% - 92,3% - -WASTE

Quantity of sludge dealt with Thousand metric tons MS 806 866 942 942 - - -Waste recycled % 12% 11% 14% - 14% - -Quantity of waste recycled Million metric tons 6,8 7,1 10 - 10 - -Quantity of compost produced (2) Thousand metric tons 764,3 851,6 1006,1 26,3 979,8 - -SOILS

Sludge produced recycled for agriculture (1) (2) % 40% 47% 46% 46% - - -Landfill surface restored ha 190 195 220 - 220 - -

(1) Indicator for which an external check has been made(7) The scope used for indicators was broadened in 2007 to include Veolia Water and Environmental Services(2) Indicators satisfying NRE requirements(8) Values do not include the energy of incinerated waste(3) 2007 value 2006 proforma: 0.324 metric tons of CO2/MWh(9) The 2006 value has been updated to be consistent withthe 2007 calculation scope(4) Includes Veolia Transport NFS service certificates in France(10) 2005 and 2006 values have been updated to inte-grate a correction on the 2005 reference scope

(5) See climate change pages (p. 44 - 51)(-) Indicators not available, not significant or not applicable(6) The Group’s thermal self-consumption is not included because it is marginal(7) The scope used for indicators was broadened in 2007 to include Veolia Water and Environmental Services(8) Values do not include the energy of incinerated waste(9) The 2006 value has been updated to be consistent with the 2007 calculation scope(10) 2005 and 2006 values have been updated to integrate a correction on the 2005 reference scope(-) Indicators not available, not significant or not applicable

ENVIRONMENT PERFORMANCE DATA


Choice of indicatorsThe following indicators were chosen listed in order of priority:• the Group’s commitments and policy (EMS, environmentalaudits, etc.)• performance related to Group’s main challenges andimpacts;• the effects of the Group’s labor practices• regulatory obligations (NRE law in France)

Consolidation and checksEnvironmental data is consolidated and monitored by eachDivision and by the Environment Department based on datacollected from the business units. For certain indicators, datais calculated or estimated directly at the divisional level.Human resources data is consolidated and checked by theDivisions and by the Company’s Human Resources Department.Automated checks are also performed at the business unitlevel. The data is then checked by Salustro Reydel, theCompany’s independent auditor. The most relevant environ-mental indicators have been audited for the last six years byErnst & Young, the Company’s independent auditor (see thereport on page 94).

Limits to the methodologyThere can be limits to environmental and social indicators due to:• the lack of standardized definitions and national and interna-tional legislation• the unrepresentative nature of certain measurements and esti-mates• definition changes that may affect their comparison• practical collection methods

As a result of these limits, we consider the accuracy of most of ourdata to be within 5 to 10%.The main limits and uncertainties for the current year are relatedto:• methane emissions, which are estimated on the basis of national or international models that are subject to highlevels of uncertainty.

In the absence of any recognized and relevant reporting baseline forits activities, the Group has defined its own reporting proceduresdeveloped from good practice and draft international standards.

Methodological proceduresThe Group’s procedures are composed of:• for environmental indicators: a company-wide measure-ment and reporting protocol, available on the (http://www.sustainable-development.veolia.com/en), supplemented byspecific instructions for individual Divisions;• for social indicators: a methodology for compiling, monitor-ing, analyzing and consolidating the data, using a reportingsoftware package including a workflow process.

Consolidation scope The scope of environmental reporting covers all worldwide activ-ities over which the Company has operational control. Jointly con-trolled (50-50) water companies in France, and the design andoperation of industrial water systems are excluded from thescope of reporting. Some subcontracted activities may also beincluded in the scope of reporting, in particular in the field ofwaste management (e.g., biogasG conversion) or transportation.The scope of social reporting covers all consolidated companieswhose human resources are managed by the Company, andthose of the jointly controlled (50-50) water companies in whichVeolia Environnement is responsible for human resources. In thecase of Proactiva (water and waste management activities inSouth America), companies owned 50-50 by VeoliaEnvironnement and a Spanish company partner have been keptin the Company in 2006 to ensure the comparability of the data.

Consolidation methodEnvironmental and social data within this scope are 100% con-solidated.

Scope variationsScope variations are taken into account on the date on whichthey become effective. Acquisitions, the creation of companies orcontracts won may, however, only be taken into account after afull year of operation. For 2007, the main changes in scope oractivity were:• Veolia Water - operation for a full year of contracts in Armenia,China, Guam, Japan; Slovakia and new contracts in Spain and inItaly;• Veolia Energy - operation for a full year of contracts in China andintegration of new projects in Australia, Saudi Arabia, Bahrain,Bulgaria;• Veolia Transport - acquisition of contracts in France and Chile,andtransfer of contracts in Lebanon and Denmark;• Veolia Environmental Services - operation for a full year of con-tracts in the United Kingdom, Belgium, Romania, Italy and acquisi-tion of new contracts in China, United States, Poland, BalticCountries, United Kingdom, Czech Republic, Switzerland, Swedenand Singapore.

Methodological clarifications



93

onsCORRESPONDING GRI PAGES REASON FOR INDICATORS OMISSION

BUSINESS STRATEGY AND PROFILE

PROFILE

1,1 2, 31,2 4-5, 8-21, 31-35, 40-41, 76

ORGANIZATION PROFILE

2,1 COVER2,2 11, 14-212,3 11, 14-25, 28-31 +2,4 982,5 10-13, 61, 62, 642,6 +2,7 10-13 +2,8 10-13, 30-31, 76-77,922,9 922,10 72-73

REPORT PARAMETERS

3,1 30-313,2 30-32, 923,3 30-32, 923,4 973,5 40-413,6 923,7 923,8 923,9 923,10 923,11 923,12 93,973,13 94

GOVERNANCE AND COMMITMENTS

4,1 28-314,2 24,3 284,4 28-294,5 28-29 +4,6 28-31 +4,7 28, 30-314,8 28-314,9 28-31, 40-414,10 28 +4,11 22-23, 28-29, 40-414,12 37,644,13 36-374,14 32-35, 60-61, 884,15 32-35, 374,16 4-5, 32-35, 374,17 4-5

ECONOMIC PERFORMANCE

EC1 61,76EC2 4-5, 12, 18-19, 45-51 EC3 +EC4 –EC5 64EC6 61 –EC7 –EC8 60-63,76EC9 60-63,76

ENVIRONMENTAL PERFORMANCE

EN1 –EN2 91EN3 91EN4 91EN5 44-56EN6 44-56, 18-21EN7 44-56, 80-81EN8 91EN9 15 (world level)EN10 54 DE L’OMISSIONEN11 52-53 EN12 52-53EN13 52-53

CORRESPONDING GRI PAGES REASON FOR INDICATORS OMISSION

EN14 52-53EN15 –EN16 45, 91EN17 45, 91EN18 44-51, 81, 91EN19 –EN20 83, 91EN21 82, 91EN22 79, 91EN23 –EN24 –EN25 –EN26 16-23, 44-56EN27 –EN28 +EN29 85 (partiel) –EN30 –

SOCIAL PERFORMANCE: WORKING CONDITIONS

LA1 13, 86-87, 90LA2 13, 86-87, 90LA3 –LA4 88 (part time)LA5 +LA6 68-69LA7 68-69, 90 LA8 68-69LA9 89-90LA10 90LA11 66-67LA12 +LA13 28, 86-87, 89LA14 88

SOCIAL PERFORMANCE - HUMAN RIGHTS

HR1 –HR2 32-33 HR3 32-33HR4 �HR5 –HR6 –HR7 –HR8 32-33 HR9 –

SOCIAL PERFORMANCE - IMPACT ON SOCIETY

SO1 65, 34-35, 60-64SO2 65, 72 SO3 29SO4 �SO5 36-39SO6 –SO7 +SO8 +

SOCIAL PERFORMANCE - IMPACT OF PRODUCTS

PR1 57-59 PR2 –PR3 –PR4 –PR5 74-75 PR6 –PR7 –PR8 –PR9 –

� Indicator insufficiently relevant to the specific nature of our business

– Indicator not collected or not consolidated

� Veolia Environnement does not wish to report on this indicator

+ Data available in our 2007 annual report, our 2007 reference document or ourInternet site: www.veolia.com

The challenges dealt with in this report have been selected according to their level of relevance to the expectations of stakeholders. The process of preparing the sustainable development report takes account of the Global ReportingInitiative G3 guidelines (www.globalreporting.org).


External assurance Financial year ended on December 31, 2007

Further to Veolia Environnement’s request and in our capacity as statu-tory auditor of Veolia Environnement, we have performed a review inorder to express the limited assurance that the environmental indica-tors for the financial year 2007 identified by the(1) symbol in the 2007environmental performance report situated page 91 of the sustainabledevelopment report (the “Indicators”) have been prepared in accor-dance with the reporting protocol applicable for 2007 (the “Criteria”), asummary of which being included in the “information about metho-dology”chapter on page 92.Our review was conducted in accordance with the professionnal prac-tice defined by IFAC’s (International Federation of Accountants) ISAE3000(2). It is Veolia Environnement‘s responsibility to establish theCriteria, ensure its accessibility on its website(3) and establish theIndicators according to the Criteria. It is our responsibility to express,onthe basis of our review, a conclusion on the Indicators, in accordancewith the Criteria. A higher level of assurance would have required moreextensive work.

Nature and scope of our reviewTo express our conclusion,we conducted the following review:• We have assessed the Criteria with respect to its accuracy, understan-dability, neutrality, completeness and its relevance towards the group’sactivities and the environmental reporting practices of a selected sampleof nine comparable environmental services companies (water, energy,waste managment services and transport).• At the level of the Group and its four divisions (Water, EnvironmentalServices, Energy and Transport), we have interviewed those in charge ofenvironmental reporting. At these levels, based on a materiality and riskanalysis,we have verified the application of the Criteria,implemented ana-lytical procedures and verified,on a sample basis,the calculations and con-solidation of data.• We have selected a sample of twenty business units(4) or equivalent innine countries (Germany, Australia, Spain, United States, France, Mexico,Poland,Sweden and Venezuela) ,based on their activity,their geographicallocation,their contribution to the Indicators and the results of the verifica-tion works carried out over the past six years.• The selected business units account for an average 22% (between 13%and 49%,according to the Indicators)(5) of the total value of the Indicators.At their level, we have verified the appreciation and application of theCriteria,and tested the data by means of random checks which consistedin verifying calculations and comparing source data with supporting do-cuments.

Information about the CriteriaThe Criteria begets from our part the following remarks.

Relevance• The Group publishes indicators related to the management of sani-tary risks related to Legionella, dioxins and drinkable water quality.• The Group has innovated in the field of measurement of sanitaryquality of drinkable water (percentage of the population served by excel-lent quality or high quality water) and wastewater treatment efficiency(overall efficiency)• The Group has clarified the presentation of its energy consumptionsand productions, especially regarding renewable energies.Notwithstanding, energy consumptions do not account for the energycoming from waste whereas waste treatment plants energy productionis accounted.• The Group has published this year an indicator on the performance oflandfill gas collection systems (CH4 capture rate from landfills). TheGroup could also enhance the reporting of equipment ratio for othersites by measuring their performance.• Indicators related to NOx and SOx emissions measure the impact ofwaste incineration activity but do not cover the impacts of energy pro-duction and transport. Transport performance indicators (passengertransportation vehicle emissions per unit) could be stated in more ope-rational terms (for example, typology or renewal rate of vehicle fleet).

• Indicators related to waste recycling (treated or produced) could be cla-rified, in accordance with Group objectives.• Some activities (engineering and works, wastewater network manage-ment, industrial water management, waste collection, other energy ser-vices) are yet to be fully covered by the Group’s environmental reporting.The Group could also strengthen its accounting of the environmentbeyond the scope of its operational activities:demand management,man-agement of subcontractors,eco conception,etc.

Completeness• The reporting perimeter is described in the « information aboutmethodology » section on page 91, most importantly regarding theperimeter of activities controlled by the Group worldwide.• The Group could be more specific as regards the notion of operationalcontrol, in particular in the case of joint control (for example, Proactiva inSouth America),subcontracted activities or financial year acquisitions andcessions.

Understandability and neutrality• The Group provided detailed information in the « information aboutmethodology » section on page 91, in the footnotes of the environmentalperformance data table on page 92 or in associated comments in the pre-sentation of the environmental indicators in the “EnvironmentalPerformance”(pages 77 to 83) and “Combating climate change”(pages 44to 51) sections, most importantly regarding limits of the methodologyassociated with Indicators, in particular for methane fugitive emissions,estimated using national or international models.• The indicator “Global reduction of greenhouse gases emissions” mea-sures the gap between emissions that would be emitted in the frameworkof reference scenarios defined by the Group and the reported emissions.This indicator is innovative but remains complex to manage.• The Group could clarify standards for the accounting of environmentalmanagement systems and environmental audits, taking into accountavailable operational feedback.• The Group could systematize constant perimeter analysis for the indica-tors (business units,contracts or sites).

Reliability• The Indicators reporting reliability has been strengthened by thedeployment of the Group environmental information system in all divi-sions and in most business units.Its deployment is yet to be systematizedin the rest of the business units.• Environmental data management could be reinforced, in particularwith a follow-up of synthetic dashboards several times a year.• The Group must better anticipate methodological modifications andvalidate the Criteria update before the reporting campaign begins.

ConclusionWe can not express a conclusion on the indicator “Global reductionof greenhouse gases emissions”, given the late inclusion of avoidedemissions thanks to waste material recycling in the calculation, thataccounts for more than 13% of the indicator, on which we could notperform all the required verification works.Based on our review,and except for the above qualification,nothing hascome to our attention that causes us to believe that the Indicators werenot established, in all material respects, in accordance with the Criteria.

Neuilly-sur-Seine (France),April 14, 2008

The Statutory Auditor Assisted by ERNST & YOUNGERNST & YOUNG et Autres Environment and Sustainable

Development

Jean BouquotPatrick Gounelle Éric Duvaud

Statutory auditor’s assurance report on a selection of environmental indicators

(1) Protocol for the measurement and reporting of environment indicators 2007, Veolia Environnement, updated in April 2008 (French version).(2) ISAE 3000 “Assurance Engagement other than audits or reviews of historical data”, InternationalFederation of Accountants, International Assurance Board, December 2003.(3) www.sustainable-development.veolia.com ; « Publications » chapter.(4) In France, the Banlieue de Paris and Sud-Ouest regions (Water), the main facilities of the Ile-de-France, Nord, Est, Centre-Méditerranée and Atlantique regions (Energy), the Sud-Est and Ile-de-Franceregions (Environmental Services), and the Ile-de-France region (Transport); in Europe, Berliner WasserBetriebe (BWB and Veolia Wasser Deutschland business units(Germany), Dalkia Poland and DalkiaSpain, Veolia Transport Sverige AB (Sweden) ;in the rest of the world, United Water et Veolia WaterAustralia (Australia), Proactiva Medioamabiente Mexico and Venezuela (Environmental Services) andVeolia Transportation (United States).

(5) 33% of relevant activities turnover, 25% of priority facilities; 21% on average (direct and indirectCO2 and greenhouse gases emissions, global reduction of greenhouse gases, carbon performance ofmore than 20 MW facilities of energy consumption and production, including renewable energy); 13%of landills for which the group has control over capital investments; 49% of sites involved inLegionella risk prevention plan (hot sanitary water production plants and cooling towers of VeoliaEnergy); 15% on average (volumes of drinkable water introduced into networks, water network lengthand population served); 16% of indicators related to water treatment and sewage sludge (pollutingcharge -DBO5-received by more than 3 metric tons per day capacity wastewater treatment plants,quantity of sewage sludge produced); 24 % of road transport vehicles taken into account forpassenger transportation vehicle emissions (accounting for 72% of the total road vehicles fleet)



95

cember 31, 2007 GlossaryAAdeme Agence De l’Environnement et de laMaîtrise de l’Énergie, France (Agency for theEnvironment and Energy Control, France).

Alternative energy Energy sources from natural or industrial origin (biogas, flare gas, etc.).

AquaFed International association of privatewater operators.

Areas of ecological interest Sectors charac-terized by the presence of species or remarkableenvironments forming part of the national, regionalor worldwide natural heritage.

BBioaerosols Micro-organisms are present every-where in the environment, and are called bioaerosolswhen they are in suspension in air.

Biodiversity Refers to the variety and variability of living organisms and ecosystems. Biologicaldiversity is studied at three levels (genetic, specific or ecosystemic).

Bioenergy Energy produced mainly from biomassand used in the form of fuel, heat or fuel.

Biofuel Liquid or gaseous product designed for usein the engine of a vehicle, containing products derivedfrom vegetable or animal crops.

Biogas Gas resulting from the biological degradationprocess of organic materials with an oxygen deficit,containing a large percentage of methane and with ahigh calorific and energy potential.

Biomass Vegetable and organic animal waste.

Biomethanisation See methanisation.

BOT (Build Operate Transfert) Type of contractin PPP in which the private operator is responsiblefor construction and operation of a project that itwill be required to retrocede to the public authorityat the end of the contract.

C-DCar sharing Service based on pooling of a fleetof vehicles (in practice, short period car rental).

CER (Certified Emission Reduction) Namegiven to carbon credits corresponding to emissionreductions achieved through a CDM project. 1 CERcorresponds to one metric ton of avoided CO2 equivalent.

Circular saving Saving that maintains a ba-lance between the economic development andpreservation of resources (according to the UnitedNations program for the environment).

Clean development mechanisms (CDM)Mechanism used for projects in the framework of theKyoto protocol. It enables countries under constraintand companies in these countries to obtain emissioncredits by investing in projects to reduce emissions inhost countries (developing countries, large emergingcountries) that have ratified the Kyoto protocol buthave no objectives to reduce their GHG emissions.

Cogeneration Process that consists of simulta-neously producing thermal energy and electricalenergy from a single fuel.

Composting Biological process used to treatorganic waste (green waste, fermentable fractionof municipal waste, sludge from urban treatmentplants, etc.), by degrading them in an acceleratedmanner.

Concession Operating contract for a public servicecontract between a public authority and an operator(concession company). The concession company isresponsible for operation, renewal and mainte-nance of the facilities, and for invoicing. It alsofinances necessary investments (unlike service con-cession (affermage) contracts. The operator’s remu-neration is derived from users of the service.

DNA (Designated National Authority)Entity (often forming part of the Ministry of theEnvironment) of the government of a CDM projecthost country made responsible for approval of suchprojects within its national area.

Domestic project Project to reduce emissionsset up in France, so as to encourage reductions ofCO2 emissions in diffuse emission sectors (trans-port, buildings, agriculture).

E-FEcosystemic services Knowledge of ecosys-tem functions and services that human beingsobtain from them.

Ecotoxicity Property of a substance to causeharmful effects on living organisms or their physio-logy (biochemical effect) and their functional orga-nization (ecosystem).

Emission quotas of greenhouse effectgases These quotas correspond to the authorizationto emit a metric ton of carbon dioxide equivalentduring a given period. In particular, they areassigned to operators of energy facilities in applica-tion of the Kyoto Protocol.

Emission Trading Scheme (ETS) Europeansystem for the exchange of GHG emission quotas.

Enrichment Product added to soil to improve itsphysical qualities and correct its acidity.

Environmental management system (EMS)System that an organization can use to implementits environmental policy and achieve associatedobjectives to control environmental impacts signifi-cant of its activities and to respect regulatoryrequirements.

Epe Entreprises for the environment (association).

Factor 4 In France, the objective of dividing nationalgreenhouse gas emissions in 1990 by a factor of 4by 2050.

Facts (Field Action Science) Initiativestarted by the Veolia Environnement Institute inMay 2007 aimed at distributing good practices in an international publication, FACTS Reports. The subjects discussed deal with development, humani-tarian aid, health, education, and the environment.

Fossil energy Energy produced from rock originating from the fossilisation of living beings:oil, natural gas, coal. Their combustion createsgreenhouse effect gases.

Fundamental values of Veolia EnvironnementDerived from the « ethics, conviction and responsi-bility » program; commitment towards sustainabledevelopment, respect of regulations in force in thecountries in which we work, loyalty to clients andconsumers, social responsibility, risk control.

G-HGreen certificate The producer is issued with agreen certificate for each MWh of electricity gene-rated from renewable energy (hydroelectric, photo-voltaic, wind, geothermal, biogas, wood energy). It isthen sent to the consumer to certify the source of itselectricity. In France, OBSERV’ER is the institute thatissues green certificates.

Greenhouse gases (GHG) Gas absorbingsome solar rays and responsible for climate change(CO2, CH4, N2O, water vapour).

Green register City planning document used toproduce maps of the citie’s green spaces.

Household wastewater Refers to soapy resi-dual water. It includes wastewater from showers,dishwashers and washing machines.

I-J-KIFRS Standards (International FinancialReporting Standards) International accountingstandards adopted by companies quoted in theEuropean Union.

ILO International labor organization.

Joint implementation (JI) Flexibility mecha-nism defined by the Kyoto protocol, similar to theCDM. It enables developed countries to invest inother developed countries, particularly in countrieswith a transition economy in Central and EasternEurope, and to obtain carbon emission credits thatthey can use to respect their commitments in termsof emission reductions.

Kyoto protocol Protocol that came into force in2005 in extension of the United Nations outlineagreement on climate change. In particular, it fixeslimiting values for greenhouse gas emissions inindustrial countries.

LLandfill Sites that replace tips, enabling storageand treatment of waste and energy recovery frombiogas.

Landfill gas See biogas.

Large water cycle Resource cycle governed bynatural phenomena (rivers, lakes, groundwatertables, clouds, oceans, ice).

Leachates When stored and under the combinedaction of rain water and natural fermentation,


waste produces a liquid fraction called “leachates”.These materials are rich in organic materials andtrace elements, cannot be released into the naturalenvironment directly and must be treated.

M-N-OMethanisation Biological process for degrada-tion of organic material by microbial flora, in theabsence of oxygen.

MWIP Municipal Waste Incineration Plant.

Network efficiency ratio Ratio between thesum of invoiced and non-invoiced water volumes tothe total volume input into the distribution network.

OECD Organization for Economic Cooperation andDevelopment.

ONEA National Office for water and sanitation inFrance.

Operational Entity Organizational and geo-graphic entity forming a level of management andconsolidation with the division.

Orée French association composed of enterprisesand communities to develop a common research onhow the environment is taken into account by thesebodies.

PPrimary energy Incoming energy before trans-formation.

Priority facilities Facilities with the most sen-sitive environmental impacts for the Group.

Public private partnership The abbreviationPPP also refers to a very wide variety of methods ofproduction and management of infrastructures, faci-lities or public services. In terms of public service, theobjective is a financing method by which a publicauthority calls upon private service providers tofinance and manage facilities providing or contribu-ting to public service. In return, the private partnerreceives payment from the public partner and / orusers of the service that he manages. This financingmethod is present in many countries in various forms.

Public service concession Method of operating public services or general interest services originating from public authorities and forthe benefit of residents, who pay the price directlyto the concession. The concession is responsiblefor operation of the service and, if applicable, formaking some investments.

Purchasing power parity (PPP) Methodused to produce a comparison of the purchasingpower of national currencies in different coun-tries. It consists of measuring the amount of goodsand services that can be purchased using a cur-rency (standard shopping basket of goods in thedifferent compared countries).

Q-RRelevant activities• Production and distribution of drinking water, collection and depollution of urban wastewater.

• Waste treatment activities (sort, composting,incineration, storage, treatment of hazardous waste).• Energy services (heating and cooling networks,thermal and multi-technique services, industrialutilities and facilities management). • Transport of passengers and goods.

Renewable energy Energy produced from na-tural elements (sun, wind, water, earth): solar andwind energy, hydroelectricity, geothermal, biomass,tidal, biogas from landfills, etc.

Reuse Reuse of treated wastewater (that hasbeen treated in a treatment plant and that can bereleased into the natural environment).

Reverse osmosis Process for separation ofwater and dissolved salts by means of semi-perme-able membranes under the action of pressure (54 to 80 bars for the treatment of sea water).

SSanitation Collection and depollution of wasteand drain water.

Sanitation equipment Systems for treatment ofwastewater or waste, or well ventilated toilets, or toi-lets connected to a septic tank, according to the defini-tion of the World Health Organization and the UNICEF.

Sapiens (Surveys and PerspectivesIntegrating Environment and Society)Multidisciplinary scientific journal issued by theVeolia Environnement Institute publishing articleswritten by the best specialists describing significantprogress in the field of environmental prospecting.

Secondary raw materials Raw materialsderived from recycling of waste and that can beused in manufacturing of a new product.

Service concession (affermage) contractsContract for operation of a public service (for exam-ple drinking water services) drawn up between a de-legating public authority and an operator. The localauthorities makes investments, the private companyis responsible for operation, renovation of facilitiesand invoicing. The operator’s remuneration isderived from users of the service.

Shared ride Refers to three types of transport inclu-ding car pool, car sharing, and transport on demand.

Small water cycle Cycle of agricultural, indus-trial and domestic uses.

Stakeholders Internal and external parties concerned by operation of the enterprise: employees,clients, suppliers, shareholders, associations, civilpartnership, public authorities, etc.

Subsidized connection In the most generalcase, this refers to connection of low incomehouseholds offered at a low price and / or withpayment facilities.

T-UTransportation on demand (TOD) Particulartransport mode including traditional or collectivetaxis, school buses, car sharing and self-servicebicycles. TOD services are different from other pub-lic transport services in that vehicles do not follow

a fixed route and do not have a precise timetable,except sometimes to meet particular needs.

Urban heating networks Central boilers thatsupply buildings connected to them through a net-work of pipes.

V-WWaste recovery There are three types of recovery:• material recovery or recycling that consists ofusing the materials contained in waste for a secondlife;• energy recovery, that consists of generating elec-tricity or supplying a heat network;• agronomic recovery that consists of transformingthe fermentable part of organic waste into com-post.

Whistleblowing system System by whichemployees who observe a failure to observe func-tional rules of the ethics, conviction and responsi-bility program, can send alerts to the ethicscommittee, if recourse to management is insuffi-cient.

White certificates French system used todemonstrate and evaluate energy savings made.These certificates must enable savings of 54 TWhby 2008.


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