Ethics & governance

The Lafarge Way is an approach that brings together the ethics of action shared by all our employees around the world. It is founded on a set of fundamental values: integrity, commitment, courage and consideration for others. All of these values reflect Lafarge's commitment to sustainable development and the Group's Principles of Action.

The Lafarge Way is based on 3 guiding principles:

• making our people successful: Lafarge aims to help everyone succeed,
• focusing on performance improvement: Lafarge continually seeks to improve its products and services,
• "multilocal" organization: Lafarge's operations are local but are closely tied to its global strategy.

This code of conduct applies to all of Lafarge's relationships with:

• its employees,
• its customers,
• its suppliers,
• all local communities where the Group operates,
• its shareholders.

The code of business conduct sets certain standards of behavior for all employees and executives of the Group as well as for suppliers of goods and services. The code is designed to build trust at all levels.

A Group-wide dedicated telephone line is available for employees to report any violations of this code.

Since 2008, Lafarge has implemented trainings to enchance the Code's adoption. The contents of these sessions have been reviewed by transparency International, the International Chamber of Commerce and the Lafarge Stakholder Panel.

The Group also set up a Competition Complience Program. Deployed continuously, in includes awareness building and training for employees and verification at business unit level (96% of them have been tested at the end of 2010).

Sustainable development factors are taken into account when assessing the company's risks and planning for them.

Risk factors subject to special attention include:

• the supply of raw materials: in some countries, reserves of mineral resources are being exhausted, which is leading to shortages,
• "country" risks associated with some emerging economies. The Group is particularly attentive to risks related to human rights and corruption. Since 2009, Lafarge is a member of "Entreprises pour les Droits de l'Homme" (EDH), a group of 8 France-based companies working on understanding better human rights challenges.

These risks are assessed annually on the basis of suitable indicators.

Lafarge calls upon external expertise through:

• the strokeholder pannel;
• the biodiversity advisory pannel.

All of the indicators used in the Sustainability Report are audited and certified by ratings and auditing agencies (Ernst & Young, in the case of the 2010 Report).

Finally, Lafarge has, for several years, invited an annual external evaluation of its performance with regard to corporate governance, the environment and social goals. These evaluations are performed by independent extra-financial rating agencies, such as Vigeo.

This openness to dialogue and constructive criticism reflects Lafarge's commitment to continuous improvement and progress.

Lafarge's Board of Directors is composed of 18 members, 11 of whom are independent. The chairmen of the 4 committees are also independent.

The newly-created position of Vice Chairman of the Board is reserved for an independent director. This decision reflects Lafarge's determination to continue to implement the best practices with regard to transparency and governance.