)Sustainable Development Department

SUSTAINABLE DEVELOPMENT: AT THE CORE OF OUR COMPANY STRATEGY AND OUR PERFORMANCESustainable Development Department

Veolia Environnement

)Sustainable Development Department

• The fundamental principles of our approach to sustainable development

• Mapping Social priorities, ensuring access to basic services and human development

Contents

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Veolia Environnement: Global benchmark in environmental solutions

150 YEARS’EXPERIENCE

MORE THAN 317,034 EMPLOYEES IN

77 COUNTRIES

€34,787 MIN CONSOLIDATED

REVENUE

in 2010

Solutions for the management of the essential services of water, waste management, transportation and energy.

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Sustainable Growth(brand value,

goodwill increasing)

Our CSR approach to ensure a sustainable growth to Veolia & its stakeholders…

Build TRUSTBeing Exemplary

Get RECOGNITIONEvaluating our actions through

the ISO26000 framework

« As Veolia employee, what does Sustainability mean in my everyday professional life ? »

« How to get into a continuous progress approach, which ensures a performance guarantee to our stakeholders ? »

(1) : Triple Bottom Line = People (human capital), Planet (environmental capital), Profit (economical value created for all stakeholders)(2) : Immaterial capital = capacity to create value in the future (like goodwill)

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3Create sustainable VALUE: Adopting the Triple Bottom Line(1)

« How demonstrate our contribution to the Immaterial capital(2) of our customers and all stakeholders ? How make it readable / tangible ?»

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)Sustainable Development Department

The fundamental principles of our approach to sustainable development

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To rise to the major civil society and environmental challenges in a context of growing urbanization

• Innovate to find ways in which to reduce our environmental footprint in the countries where we operate

• Continue to develop lasting partnerships to place our range of diverse and complementary expertise at the service of our clients

The fundamental principles of our approach to sustainable development

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Biomass and cooling recovery on the Barcelona multi-

energy network

Construction of a biomass power plant in Tallinn supplying the 400 km

heating network. Use of local resources (Estonia)

Finance agreement by the French State for a feasibility study on geothermal energy in China in partnership with La Compagnie Française de Géothermie (China)

Trigeneration program (heating, cooling and electricity) in a leading Australian university (College of Science Precinct).Creation of teaching

programs for school groups, designed to increase awareness of environmental issues (France)

Eco-operation awareness programs for technicians (France)

Study of Milwaukee’s urban water cycle which is believed

to be the first-ever combined analysis of the water-energy nexus in a major community

Desalination plant using reverse osmosis in UAE aiming at a production capacity of 591,000liters of drinkin water

First year of full production at the biodiesel plant in Limay, France with 45,000 metric tons of used food oil recycled at a new 0-emissions focility

To contribute to economic development and to access to essential services in the countries where we operate

• Social integration through employment and diploma training for young people in our businesses

• Continuing professional training throughout the employee's career• Solidarity with employees in difficulty• Solidarity with populations for access to and maintenance of essential services

The fundamental principles of our approach to sustainable development

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Operations conductedin several developing countries (Morocco, Niger, India, Ecuador,

etc.) demonstrate that it is possible to reconcile service quality

and accessibility and to encourage respect for the human rights

of the populations served

)Sustainable Development Department

Mapping Social priorities, ensuring access to basic services and human development

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Mapping social priorities

Toward stakeholdersToward consumers

Social

Innovations

Developing the access to basic services for people in developing countries

Maintaining the access for unstable clients in all countries, including developed countries

Paying attention to people working in the informal economy with impacts on our activities

Capacity building of stakeholders (associations, companies, local services…)

Toward employees

Human resources actions toward insertion, qualification and security policy

Toward distressed people

The Foundation

Corporate social responsibility

Social

Innovations

Social

Innovations

Social Social InnovationInnovation

Providing economic security and encouraging employees to participate in corporate growth

Encouraging local, long-term employment

- Promoting long-term jobs: 93% of staff are on open-ended employment contacts

- Promoting internal advancement

- Promoting employee share ownership (1,91%)

- Ensuring equity : 132 entities awarded the "Diversity certification" in 2010

Developing professional skills

- Providing training to increase employee competence, autonomy and adaptability

Use of progressive environmental and social standards throughout VE

- Deployment of internal EMS (environmental management system) stands at 91%

- Implementation of ISO 14001, covering 49% of the revenue managed in 2010

- Support for local environmental field initiatives

- Promoting exemplarity

Involving employees in the company’s environmental approach

Guaranteeing health, safety and social equity for all employees

Reduction in frequency rate: 13% since 2008

- Regular monitoring of indicators

-“Safety at Work” charter

- 10% / year objective

Ensuring social equity

- Structuring employee-employer dialogue on a global scale (95% of employees covered)

Our responsibility to our employees

Type of collective bargaining agreements signed in 2010

Pay

Other

Labor-management dialogueHealth, safety and working conditions

56%

20%13

%

11%

“100,000 Rencontres Solidaires” project: helping unemployed

return to work

Contributing to economic development with optimization of local resources

Developing expertise and methodology on the groundto meet customers’ needs

Assuming our role as a provider of essential services while supporting communities

• Maintain and develop employment and training

• Take into consideration activities that have developedin the informal economy in the countries where we work

• Support innovation by creating partnerships with local start-ups - Veolia Innovation Accelerator

• Encouraging awareness of eco-friendly practices

- Creation of educational programs, on-site communication materials and guides for schools

• Promote access to water: - ACCES methodology in Africa, the Middle East and India

• Include social considerations in water pricing:

SEDIF’s (Greater Paris water authority) offer

• Optimize operation to improve service and supply more people:The case of Nagpur, India

• Contribute to integration through employment:

Veolia Environmental Services’ "REFLET" project in central-western France

• Adapt our services to specific populations: Veolia Transdev's Handibus service, France

• Adapt services to the local situation: Dalkia's service in Varna, Bulgaria

• Enabling access to essential services

• Maintain access to services for low-income customersin all countries

Commitment to price stability

Ensuring service continuity

- Supply commitment

Be attentive to the needs and emergencies

- The Veolia Foundation and Veolia Force

Acess to basic services and human development at the heart of our services

Over 1 000 projects supported since 2004

Over 100 emergency missions since 1998

Increase access to safe water for underprivileged populations:

• Do more with the same capacity by optimizing infrastructure operation: Karnataka and Nagpur

•• Implement appropriate, socially acceptable pricing policies In Morocco: subsidized tariff for the lowest rate (6 m³/month)

•• Increase number of subsidized individual connections: Morocco and Niger•• Invent new, collective and secure ways of accessing water

In Morocco: installation of “Saqayti” standpipes operated using a pre-paid smartcard

• Deploy tailored local customer services: “mobile agencies”• Explain how water should be used to optimize the benefits of access to

water service•• Find new economic and financial models

In Bangladesh, Grameen-Veolia Water Ltd

In Morocco (World Bank’s OBA Fund)

•• Assess impact of programs implemented by Veolia on people’s quality of life and human development:

impact of connection program in Tangier assessed by the MIT’s JPAL

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Include social considerations in water pricing: SEDIF's water service

SITUATION: 12% of people covered by SEDIF (the Greater Paris water authority) live below the poverty line

OBJECTIVE: To implement a subsidized price for water depending on income

• The definition of a specific subsidized tariff for users receiving income support is considered unlawful in industrial and commercial public services, unless specific legislation provides for such a tariff.

• Distribute targeted support for the most vulnerable, without modifying the water bill, but ensuring access for all. Beneficiaries are informed of the real cost of water and wastewater services on their water bills.

IMPLEMENTATION: SEDIF suggested allocating 1% of revenue from water sales (amounting to €2.5 million) to:

• Establish a contribution to a Solidarity Housing Fund (FSL, from the French, Fonds Solidarité Logement)

• Provide Water Solidarity vouchers

• Cover the costs associated with awareness-raising actions and support to underprivileged users

• Cover the operating costs of the unit responsible for managing "Eau Solidaire" subsidies

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CONTEXT: A performance guarantee contract aiming to demonstrate Veolia Water's expertise in a number of pilot areas

OBJECTIVE: To provide a continuous water supply 24/7 to 165,000 people who previously were only able to access water at home for several hours a week

IMPLEMENTATION:

Improve water network efficiency: leak reduction

Install meters and change from a fixed charge based on the surface area of the home (tax) to a charge based on water consumption (billing).Introduction of a common, progressive pricing grid based on consumption, including a subsidized block.

Awareness-raising among service users of the need to consume with moderation

INTEREST: Continuous water supply to all people in pilot areas without having

to produce additional volumes of water

Water savings that enabled slum areas to be connected to the publicwater service.

Optimize operation to improve service and supply more people: the case of Nagpur, India

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User enthusiasm; consumers are happy to pay for continuous water supply, provided the service is efficient and the price reasonable

CONTEXT: TenderOBJECTIVE: To run a social integration and back-to-work program in three districts outside Nantes, western France to create a general mobilization around waste management and urban cleaning services (12,000 people in districts covered by a local urban management program)

IMPLEMENTATION: Veolia Environmental Services joined forces with local social integration organizations: Océan, Ecorev, Homme Deboutand the Nantes Metropolitan area's job center. The non-profit organizations pick up objects, waste materials and bulky household items from waste drop-off centers. These objects are then repaired and restored in workshops and projects organized as a back-to-work initiative.

INTEREST: The partnership with local social integration organizations has allowed Veolia Environmental Services to stand out in tender processes

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Contribute to integration through employment: Veolia Environmental Services’ “Reflet” initiative in central-western France

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CONTEXT: Tender

OBJECTIVE: To develop a range of "Illico” transport-on-demand services, including the “Handibus” service for disabled peopleIMPLEMENTATION: The Illico Handibus is designed for disabled people wanting to travel to work, to reach their leisure destinations, to go shopping, to attend medical appointments, etc.

The service is available by reservation (from Monday to Saturday). The Illico Handibus runs from Monday to Sunday from 7am to 9pm.

Once an application has been received and assessed, the beneficiary receives a Handibus pass (membership €2). A journey is priced at €1.30 and accompanying travelers also pay €1.30.

INTEREST: Make mobility services accessible to all

Adapt our services tospecific populations: Veolia Transdev's Handibus service in Dunkirk, France

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CONTEXT: Tender

OBJECTIVE: Make the cost of heating accessible to allIMPLEMENTATION: Efforts to improve energy production (cogeneration) and infrastructure performance have generated energy savingsthat are reflected in the cost of heating.

Furthermore, Dalkia is offering customers a building retrofit serviceto improve insulation, thereby optimizing energy efficiency. The companyis aided by European subsidies that can finance up to 60% of the renovation work.

Lastly, Dalkia supports the creation of co-ownership associationsfor buildings in order to have a clearly identified contact.

INTEREST: The Dalkia business model in Eastern European countries is based on this optimization of energy efficiency, which makes it possible to adopt pricing policies that are adapted to the consumer.

Adapt services to the local situation: Dalkia’s service in Varna, Bulgaria

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)Sustainable Development Department

“Through its four areas of expertise, Veolia

Environnement can contribute to rising to the challenges

of sustainable development, and become the benchmark

in the sector: the company that reconciles, in an

exemplary manner, environmental protection with

human development, for the benefit of its clients but also

for the benefit of the company.”

Antoine FrérotChairman and Chief Executive Officer of Veolia Environnement

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