Sustainable Development

As the Group is more and more established in emerging countries, especially with the acquisition of Orascom Cement, the "base of the pyramid" approach should be structured at Group level, and the sustainability report should explain which solutions Lafarge will implement in order to meet poor customers' needs.

New issues are arising with the company's growth in emerging countries, such as education, (how to recruit skilled people), but also health, subcontracting, transportation costs, construction, etc.

Local actions do exist, but the report gives no idea on the Group global vision and on the existence of guidelines. Furthermore, there is no information on how the Group considers conciliating the objective of low production costs in these countries with the commitment to respect social and environmental standards.

About relations with communities, Lafarge uses the Advance program to create a cartography of local stakeholders, but it is not enough. The Group should publish the results of assessments, explain how the management is involved in the assessments, develop an action plan in order to improve these results.

Moreover, the Group should change up from a strategy which minimizes risks and ensures license to operate to a strategy where local communities are involved in sustainable development.

*Philippe Lévêque, Executive Director of Care France

There is no doubt about Lafarge's commitment to curbing its G.H.G. emissions, yet its rapid growth in emerging markets is fast making an irrelevance of its annual improvements per tonne of cement.

This calls for a bolder approach, one that acknowledges the need for stabilisation and ultimately carbon neutrality, without compromising competitiveness.

This will require 3 things:

• a commitment to engage at industry and political level to secure regulatory, fiscal and trade measures that enable aggressive progress, yet level the playing field. Lafarge has moved on this, but its E.U. climate policy stance this year has fallen short;
• faster ramp-up in R&D to slash average group emissions per tonne - its progress in India proves big leaps are technically possible;
• a corporate commitment to stabilisation that could involve a financial top-up via offsets, insofar as physical emission cuts fail to keep pace. This is the toughest ask. If Lafarge set itself a long-term goal of achieving carbon neutrality, while committing in the interim to stabilising its emissions by de-coupling them from production growth, it would send a strong message that it is serious about solving Climate Change. By funding quality offsets, it would create a financial value for its unabated emissions that could drive further R&D.

How aggressively these targets and timelines are set would depend on what it can negotiate with policy makers, fellow cement manufacturers and customers, so as to ensure that its financial sustainability is safeguarded alongside the physical sustainability of the planet.

Lafarge invests more and more in countries that are considered to have human rights issues. But as far as human and trade union rights are concerned, the company needs to consider some points in order to live up to sustainability requirements.

First, the Group should report on which countries it is investing: are human and trade union rights recognised and applied in these countries?

Secondly, Lafarge should explain how it promotes human and trade union rights in these countries at plant and work site level including at subcontractors and their employees.

Finally, the Group should find a better mechanism to support individual managers in plants, in order to avoid situations like the South Korea conflict. For instance, the implementation of the Code of Conduct and of the Human Rights policy is done at business unit level and would rather be done by the Group.

Furthermore, the Human Rights policy of the Group should be completed with an independent verification mechanism.

To begin with, it is very valuable that a member of the European Works Council takes part in the Stakeholder Panel. The E.W.C. is quite focused on the issue of Operational Health and Safety and it has set up a dedicated working group.

Over the last years Lafarge has made a tremendous effort on this aspect; several ideas have been developed to reduce accidents and the new policy goes even further.

Lafarge has been able to significantly reduce all types of accident. The issue of health and safety is really part of Lafarge priorities and the company has been working on it very closely with partnering firms and suppliers.

Fatal accidents are reported from all the divisions in all areas, but some areas would require more financial resources to meet the standards that the group set. For example this is the case for renovation of old buildings, of silos and of old production units.

Lafarge should not neglect the corporate image as well and the impact of health and safety matters on its reputation.

Last year I emphasised the importance of Lafarge taking a strong industry lead in developing and lobbying for sustainable building products and solutions. This year I want to flag up 3 other issues.

First, some of us on the Panel would like to see Lafarge's reporting on persistent pollutants made more robust. When mercury emissions at one particular plant were drawn to my attention, I was promptly given the information that I asked for.

But in general, more detailed reporting would be welcome. I would also like to see an independent expert on our Panel with specialist expertise in the area.

Second, Lafarge's proposal to extract marine sands off Brittany may or may not prove to be acceptable. Whichever proves to be the case, it is vital that the environmental impact assessment is undertaken in a manner that can be accepted as thorough and impartial by democratically accountable local organisations.

And third, I was very impressed at a recent Lafarge executive meeting to see close integration of the values behind Lafarge's commitments to environment, human rights, anticorruption and health and safety.

At one point, I played devil's advocate and asked Bruno Lafont why the company bothers with such costly initiatives. He said, "We do it because it gives us competitive advantage ... and because it is part of our values." His answer combines practicality with moral authority. Such leadership is vital to the social and ethical cohesion of an enterprise like Lafarge.

Lafarge has progressed well in biodiversity conservation and site restoration in 2007. Its biodiversity panel (including W.W.F.) published a guide on quarry restoration and finalized a long-term index, to help Lafarge improve quarry biodiversity. W.W.F. recognizes this valuable innovation and encourages its promotion within the Lafarge Group and the conservation community.

Also in 2007, Lafarge's global CO2 emissions increased substantially, resulting in the weakening of reductions registered previously in industrialized countries to as low as 4.5% below 1990 levels (versus 8.3% in 2005). Lafarge's current growth strategy should not be a barrier to achieving the 10% reduction for industrialized countries by 2010; the improved performance in terms of CO2 reduction per tonne of cement produced (16.0% below 1990 levels) demonstrates that positive results are possible.

W.W.F. calls on Lafarge to do more in developing countries - in particular those in which CO2 emissions are growing fastest, such as China - to reverse the emissions growth trend triggered by growing cement demand. Following W.W.F.'s 2006 recommendations, the slight improvement in reporting on persistent pollutant emissions still leaves room for significant progress.

For instance, the data presented is combined over 2 years and no information given on previous years. Reporting could be further improved to facilitate benchmarking in the sector, along the lines of the W.B.C.S.D.-Cement Sustainability Initiative's requirements.

After 8 years of partnership, W.W.F. remains convinced that this collaboration can continue to catalyse major improvements within Lafarge's sector, and hopes that Lafarge will continue to demonstrate a growing commitment to sustainability.

Concrete is an extremely versatile construction material and, when used in the right way, becomes an essential component in sustainable construction. Concrete has qualities that can be very beneficial during the lifetime of buildings (longevity, structural stability and thermal inertia...), although these qualities will only have a positive effect, when the composition of all construction materials that constitute the building, is adapted to the specific local climate conditions.

With industrial activities rooted in so many different climate regions, Lafarge is in a very privileged position to define the right construction solutions for each specific climate region they operate in.

With the best available dynamic simulation software, used by the most experienced and competent specialists to define specific construction solutions that achieve the best, climate adapted, energy environmental performance results, Lafarge will be able to define which relevant building components providers to partner with in order to contribute to mainstream sustainable construction solutions.

To go further and reach the concept of providing solutions for buildings that consume zero net energy (that produce as much energy as they consume), it will be necessary for Lafarge to get many more construction sector actors to commit - utilities and electricity grid managers, communication (intelligence) technology providers, renewable energy systems producers, among others still.

Following this road is challenging for Lafarge and very positive for the local communities they operate in.

As the company expands its capacity in developing countries, I would welcome more examples of involvement by Lafarge in Clean Development Mechanism (C.D.M.) projects under the Climate Change Convention (U.N.F.C.C.C.).

The commitments to environmental audits, reducing CO2, NOx and SO2 emissions, and addressing POPs are important and progress reporting on these crucial. Along with these, I would like to see more on the "how". Use of alternative fuels is one example. Working with other industry partners in collaborative work on building energy efficiency is another.

Similarly, I would welcome more examples of how a leading industry player is going beyond business as usual and supporting sustainable development locally through C.D.M. projects. This engagement by large corporations in more developing countries is something I look out for.

*Cornis Van Der Lugt, U.N.E.P. (United Nations Environment Program)