Sustainability report 2009

We need to ensure that all our employees across the world are confident in their ability to make decisions that will consistently prevent the organisation from conducting its business unethically or being exposed to serious risks.

The Balfour Beatty Group has grown fivefold since 2000 and operates in many diverse markets globally. We have recognised not only changing markets and customer needs, but that further growth will potentially stretch the boundaries of our operating companies, their management teams and individuals.

Ethics is about moral principles, about doing what is right, and we believe that having a common set of values that represent what we are as a Group and what we want to be recognised for, will offer clear business benefits to us and support us through the challenges of future growth.

Our devolved group structure works to serve our customers best, but order to serve them better and therefore sustain our business in the long term, we need to create unity across our business. This does not mean uniformity. It is about consistency.

By addressing the way we present ourselves and developing a strong and distinctive integrated ethical approach, we believe we will remain competitive and retain our market position. Our values programme aims to achieve this goal.

We have identified four values of integrity, teamwork, excellence and respect. It is these values which will inform employee behaviour across our business. All employees act as ambassadors for the business and need to demonstrate our Group values within their daily working lives.

The articulation of our four values followed a process, both internally and with key customers to gauge their opinions on the Group and what we need to do to sustain our business. These values are not new to Balfour Beatty, but behaviours our customers and other stakeholders recognised within our company culture. What is new is our plan to embed the values further through a structured programme.

Recognising the diverse nature of our internal audience, the programme has been designed to focus on cascade briefing methods and strongly encourages face-to-face workshops to create internal debate around the values. By allowing each operating company to customise their plans to suit their audience, the programme aims to create unity, but not uniformity.

Our new Code of Conduct is a direct product of our values. The Code underlines our ethics and the responsibility we all have to protect the company from risk, both legal and reputational. It also offers our employees principles on how our values can be translated into everyday actions. It has been translated into five languages.

Launched to all employees in 2009, the Code of Conduct recognises that people face difficult decisions every day of every week. It is not a rules-based document. It provides a framework within which individuals can make decisions, and highlights the need for everyone to do the right thing, rather than just following rules. To accompany the physical document, during 2010 employees will complete online training, to ensure they fully comprehend the importance of ethical behaviour.

In the past, we have had instances where the behaviour of individuals within the business have fallen short of the standards we expect and this has exposed the Group to legal and reputational risk. With the increased size and complexity of the Balfour Beatty Group, the Company recognises that the actions of one individual can increasingly impact our financial or reputational position as a whole.

Balfour Beatty was one of a number of companies subject to an industry-wide investigation by the Office of Fair Trading (OFT) into tender activities across the construction sector, and in 2009, we were fined £5.2m for breaches of competition law. In light of the original investigation, we had already carried out a thorough and detailed audit of all our businesses, and introduced a rigorous training programme, to ensure we are fully compliant with all aspects of competition law.

As set out in more detail below, as part of our settlement with the Serious Fraud Office in 2008, £2.25m was paid by way of Civil Recovery Order, and an external monitor was appointed to review our anti-corruption policies and processes.

Also in 2009, we supplemented the existing internal channels for employees to raise concerns about unethical conduct. Employees can now use a confidential third-party service accessible by phone or online. Employees can speak to an operator in any language, and the website is available in five languages.

In 2009, 42 whistleblowing cases were reported and thoroughly investigated and, where appropriate, remedial and/or disciplinary action taken (28 in 2008). The business practices committee reviewed all 42 cases. We believe that this increase reflects growing awareness of the role of whistleblowing channels and of the Company’s high ethical standards. The introduction of the new ethics helpline may lead to a further increase this year.

We are currently reviewing which performance measures will be most meaningful in tracking the impact of our new Code of Conduct and ethics reporting hotline. We expect to report our progress in next year’s report.

Balfour Beatty is a corporate supporter of the Institute of Business Ethics and Transparency International, and it works closely with the Anti-Corruption Forum.