Risk and ethics

Carillion does not compromise when it comes to risk, business integrity or ethics. Operating with honesty and transparency is fundamental to us.

Risk

Our policies and processes help us to identify, mitigate and manage operational risks, including environmental, social and governance risks. See Ethics to see how we put our Values into practice.

We apply our risk management processes to every aspect of our operations, from choosing the markets we operate in and the contracts we bid for, to the selection of our suppliers and subcontractors. Carillion reviews new territories and sectors in which to operate in pursuit of sustainable, profitable growth. In all cases we carry out thorough due diligence to assess cultural fit, the relationship to corruption perception indices, and a range of other indicators.

Each business unit operates in markets that have been approved by the Board, and this is documented so each business understands their boundaries and can manage risks accordingly.

The Board is ultimately responsible for ensuring that the Group’s risk management systems are appropriate and operate effectively. This includes identification and evaluation of significant risks, together with the design, operation, and monitoring of suitable internal controls.

Our sustainability risks

Sustainability risks form part of the Group’s wider risk management policies and processes, which are firmly embedded in the Carillion culture, and supported by the following controls:

  • independent, external auditors review financial controls and other business systems to ensure they are operating effectively
  • peer reviews are conducted within each business unit by teams of impartial representatives from other parts of the business empowered to carry out thorough reviews based on comprehensive guidelines
  • all employees are encouraged to raise genuine concerns about malpractice at the earliest possible stage – this includes a confidential ‘whistleblowing’ hotline

Below are examples of current sustainability risks and opportunities we are addressing through our 2020 strategy. You can read more about our wider business risks in our Annual Report and Accounts 2012.

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Building a successful business 

Sustainability risks Opportunities
  • The direct impacts of the global economic downturn on our customers, partners and suppliers
  • Government austerity measures reducing public spending, affecting customers and employees
  • Reduction in public spending on construction contracts
  • Carillion employees involved in allegations of actual bribery or corruption, leading to potential prosecution and damage to reputation
  • New business opportunities in sustainable products and services
  • Potential growth in our services business as governments look to subcontract work to help deliver cost savings
  • Reputational and investor benefits of being regarded as a transparent, responsible business

Enabling low-carbon economies 

Sustainability risks Opportunities
  • Trailing behind the market for low-carbon products and services
  • Climate change impacts affecting our business, for example an increase in drought in MENA
  • Launching services that deliver financial and carbon savings to clients
  • Enhanced reputation as a leader on climate change mitigation
  • Winning more government contracts that address national carbon targets

Protecting the environment 

Sustainability risks Opportunities

Sending waste to landfill:

  • financial implications as costs rise
  • compliance with legislation

Diverting waste from landfill:

  • reduced costs of diverting waste
  • increased engagement with employees and stakeholders

Resource management:

  • prosecution for failure to comply with local legislation
  • contract delay
  • loss or decline of resources needed for our business, specifically timber and water, and consequent price rises

Resource management:

  • building mutually beneficial partnerships with organisations such as the Forest Stewardship Council (FSC-UK)
  • winning business through our responsible approach

Pollution prevention/legal compliance:

  • prosecution for failure to comply with local legislation
  • contract delay
  • management of refrigeration assets and oil and chemical storage facilities
  • reputational damage in the event of spills, etc

Pollution prevention/legal compliance:

  • building relationships with clients and suppliers as we share best practice
  • reputational benefits

Biodiversity:

  • prosecution for failure to comply with local legislation or contract delay
  • high cost for the management of protected sites

Biodiversity:

  • building mutually beneficial partnerships with organisations such as The Wildlife Trusts
  • reputational benefits
  • employee engagement opportunities around wildlife volunteering

Supporting sustainable communities 

Sustainability risks Opportunities
  • Negative public perception and reputation
  • High unemployment making it difficult to identify and recruit skilled workers
  • Difficult economic climate impacting on the stability of local businesses, which can affect our ability to deliver contracts
  • Reputational damage, for any number of reasons, in the communities where we work, leading to a reduction in repeat business
  • Youth unemployment in MENA and regional stability
  • Enhanced reputation in the community
  • Thriving communities bringing regional stability
  • Thriving communities provide loyal employees, long-term investors, resilient supply chains and financially viable customers
  • Attracting and retaining talented people
  • Ensuring a future pipeline of skilled individuals through our education and training
  • Direct benefits to grassroots organisations and those in need through charitable giving, contributing to our Values and reputation

Providing better prospects for our people 

Sustainability risks Opportunities
  • Accidents or incidents to our people or subcontractors
  • Employee dissatisfaction, leading to a reduction in staff retention and our ability to deliver on contracts
  • Poor health and wellbeing among our people reduces productivity
  • Lack of diversity among employees does not reflect customer base
  • A shortage of skilled workers in the future
  • More productive and loyal employees
  • Enhanced corporate reputation
  • Potential to win more work as a result of strong safety performance
  • Providing opportunities for a better work–life balance through flexible working
  • Working within our communities to ensure a future pipeline of skilled individuals

Leading the way with our customers and suppliers 

Sustainability risks Opportunities
  • Losing or failing to win contracts as a result of poor customer service
  • Reputational damage by association with a supplier with poor sustainability performance
  • Winning and retaining contracts through our proactive service and sustainable products
  • A local and small business-based supply chain will deliver significant cost savings and enhance flexibility
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