Thr ee quarters of humanity will be living in ci ties in 2050. The aver mperatu age te re of the pl anet rose 0.6 ° Celsius in the c ourse of t h e 2 0 th c e n t u r y. Glo bal ene ou to d rgy c s set onsumption i ble between 1990 an d 2030. 1.5 b illion people worldw ide lack n o dri access t king wat e r. Th e w or ld p roduc ed 1.7 billion metric tons un of m icip te in 2006. al was Veolia Environnement’s four businesses interact to enable our company to take a global, responsible view of environmental solutions.” Message from Henri Proglio Chairman of the Board of Directors of Veolia Environnement If there is one thing I am sure of, it is the vital importance of Veolia’s activities in the world today and that of tomorrow. Our company stands at the heart of the major challenges facing our century, namely urban growth, dwindling resources and climate change. Our cities, now home to half the world’s population, are increasingly crowded and beset with a host of problems. Too often their infrastructures are obsolete or inadequate. Veolia Environnement’s mission, its business, is to improve people’s daily lives and prepare for their future. This has been an extraordinary human adventure over the past 10 years, as we have built up a company of more than 300,000 people, with revenues of €34.6 billion. But Veolia is recognized for more than just its expertise. It owes its successes over the past 10 years to its capacity to foresee and prepare for the future, so that it is now well equipped to confront the world that lies ahead. The company already and naturally embodies the emerging values of tomorrow’s world, namely conserving resources and recycling raw materials. Everywhere, too, we are encouraging the development of partnerships for the long term. Above all, and I must stress this especially, Veolia Environnement is committed to people. With our Campus, we are rolling back barriers to entry to the company in the name of equal opportunity and diversity. More broadly, wherever we act, we give pride of place to people, to their activities and their aspirations. Where others may lean toward resignation and pessimism, I take great comfort from the fact that our company is tangible evidence of humanity’s capacity to remain master of its fate. We have many strengths to achieve that, foremost among them being the people working for Veolia. Driven by a deep sense of service, and fully familiar with local conditions, they are continuously inventing new solutions and innovating daily. They work for an outstanding company that embodies 150 years of experience in 74 countries, capable of working with decision-makers and adapting to every type of local situation. Veolia truly sets the standard for responsiveness and innovation worldwide. Finally, its four businesses interact to enable our company to take a global, responsible view of environmental solutions. It is a source of great satisfaction to me that what began as a hope and an intuition—that water, waste management, energy and transportation were destined to come together to tackle the challenges of the environment effectively—has now become a reality, thanks to the talents comprising the company today. 8 Veolia Environnement 9 proliferation of decentralized, local facilities, including solar panels, geothermal installations, heat recovery systems, waste recycling centers, plants that reutilize wastewater, and so on. It is these “local energies”, these “local materials” and “local water” that will enable us to decarbonize, dematerialize and dehydrate our economy. Designing and operating these local solutions are precisely our core business at Veolia. How is innovation contributing to Veolia’s strategy? It’s an illusion to think that we can address the upheavals taking place in the environment— the “collateral damage” caused by progress—without innovation. The question is: how can we rid the economy of its addiction to carbon without new modes of production? How can we turn our backs on “business as usual” without discarding our customary technologies? If the future unfolds on a “constant technologies” basis, we will be fighting a losing battle against pollution. Only by innovating will the economy thrive again. That’s why Veolia is determined to broaden the already very wide array of technologies at its disposal, and to continue opening up its research to the best outside research. Even in this economic crisis, we have built up key positions in such essential areas as alternative water resources, or the use of biomass to produce energy through cogeneration. We have deployed innovative processes such as 12 Veolia Environnement high-performance, fully automated waste sorting centers on an operational scale. We have forged a partnership with Cleantech, an organization embracing several thousand start-ups specializing in clean technologies. Our R&D efforts today are laying the foundations of our successes tomorrow, enabling us to stay one step ahead of our rivals. Apart from its dynamic research, what are Veolia’s other strengths? To begin with, there’s the caliber and devotion of its 310,000 employees, the deep commitment of its operational managers, the round-the-clock availability and spirit of initiative of its people on the ground. Then, we are in structurally high-growth markets, serving both public authorities and industry. Again, we enjoy significant—in some cases unrivalled—competitive advantages in each of our specialties. All these have helped us record an increasing number of business wins in 2009. The last factor I’d like to stress is our excellence in four specialties—each a vital contributor to sustainable development—within a single company. Many of our clients work with more than one of our divisions, the initial contract creating the confidence that leads to subsequent ones. This combination of several different types of expertise is driving growth. For example, tomorrow’s wastewater treatment plants will stand at the point of convergence between water, waste management and energy. They will be biorefineries, producing clean water, generating energy instead of consuming it, and manufacturing biofertilizers and bioplastics from the organic matter contained in the wastewater. What are the other major items on the agenda for 2010? Firstly, the merger between Veolia Transport and Transdev, creating the largest private-public transportation operator. This will be held equally with the Caisse des Dépôts, and Veolia will be in charge of operations. What are we trying to achieve? The aim is to build a company with the critical mass to become the benchmark in sustainable mobility. In other words, we want to have the capacity to help city authorities to reconcile mobility with sustainability, thanks to a broad variety of intermodal transit systems effectively integrated into their urban fabric. Ticket-less access to transit systems will be safer, easy to use, offering guaranteed trip times and providing relevant real-time information to anyone wanting to ride them. In a word, systems capable of convincing people to leave their car at home. The second major operation this year will involve broader collaboration with EDF. Issues such as reducing carbon emissions and energy conservation have moved center stage in the past decade: they affect all of Veolia’s activities, not just one of them. Addressing them implies extending the Setting the standard in every area means more than simply being world number one. It means being ‘the’ standard in our industry, and beyond.” benefits of Dalkia’s industrial partnership in place with EDF since 2000. We need to invent new offers at the point of convergence between environmental and energy issues. Examples include local energy production with cogeneration and biomass, use of electric motors and mobility management, coupling electricity production with seawater desalination, and converting waste to energy. What is your assessment of 2009? Things were difficult and highly uncertain, due to the global crisis. But we can take a positive view on the whole, thanks to the efforts we made. Consequently, our performance in 2009 was in line with what we announced at the beginning of the year. We delivered on our promises, actually a little better, in the areas of divestments, debt reduction, and our cost-cutting plan. Veolia demonstrated its responsiveness, thanks to decentralized, coordinated organization. Strategic decisions are implemented rapidly thanks to short reporting lines. The company has emerged stronger and better poised for the future. And what are your goals for the coming years? We have set clear-cut, ambitious goals, namely to restore the balance between growth and profitability; restore profitability, to give us the means for profitable organic growth without taking on more debt. To bolster our key financial metrics, we plan to continue with our €250 million a year cost-cutting program and to turn around our recent acquisitions in waste management in Germany and Italy. But just because we plan to improve our return on capital employed, we have no intention of reining in our drive to win new markets! Our strategy will blend organic growth with a focus on the best available development opportunities. In practice, this means carefully selecting high value-added deals in sectors where our know-how gives us a crucial edge, where we can provide original solutions to complex challenges and leverage our competitive advantages most beneficially. To generate the means to go on growing without taking on more debt, we plan to rotate our asset portfolio, shedding the “less good” in order to reinvest in “the best” assets. We also plan to share certain capital expenditure programs with local or financial partners, those capable of underpinning our sales efforts and helping us to manage country risks, along the lines of the venture between Veolia Water and Mubadala. The aim is to achieve a balanced mix between long-term activities shaping our future and faster payback projects to guarantee regular earnings growth. Conquest and harmony would be the two words I would choose to sum up our policy. 13 , Human Resources: creating a workforce for a global business Services are at the heart of Veolia Environnement’s business. That is why the know-how of its employees is so important. Based on its strong values, Veolia has evolved a socially-responsible approach to human resources management focused on skills development, safety in the workplace, listening to employees, and guaranteeing decent living conditions. , , , , , does business. Managers on the spot are responsible for blending global with local considerations. A social audit function has been set up within the Audit Department to verify the effective implementation of the company’s human resources policy. A sustainable relationship with employees is essential to a sustainable relationship with clients. Veolia strives to build its employees’ loyalty by offering them attractive career prospects and guaranteeing working conditions to match their aspirations. Veolia Environnement has, in the current economic crisis, paid particular attention to continuing to nurture skills and preserve jobs. Local units adapted to the prevailing conditions in order to safeguard their operations. Strenuous efforts were made to avoid layoffs, and the necessary adjustments were the outcome of labor-management dialogue and management by example. Indeed, Veolia continued to hire employees and reduced its recourse to temporary labor. Developing skills and nurturing talent are the preconditions for motivating employees and enhancing their performance. The issues at stake in today’s global growth are human, commercial and Breakdown of workforce by geographic area at December 31, 2009 France (32%) Europe (excluding France, 35%) Asia-Pacific (10%) North America (9%) Africa / Middle East (7%) South America: (7%) As a global company employing more than 300,000 people, Veolia Environnement places a high premium on making sure its teams work together smoothly. Its goal is to provide effective, innovative environmental solutions wherever it operates. This calls for a strong sense of cohesion based on shared values and common managerial principles. An important feature of Veolia Environnement’s service-rich solutions is that they are executed locally and must adapt to a wide variety of contexts. The company uses local expertise extensively, rooted in local conditions and cultures. These services have to be operated in a precise location, and rarely lend themselves to standardized solutions. As a result, systematically allowing for specific conditions on the ground is crucial to the company’s management style, through extensive dialogue with local human resources managers wherever Veolia Environnement 24 Veolia Environnement financial, entailing a constant need to match the know-how of Veolia’s workforce to its changing businesses and the widely diverse local contexts in which it operates. Giving practical expression to that belief, Campus Veolia Environnement is responsible for implementing training policy, bringing the company’s different training departments under one roof to train employees and apprentices in the skills specific to its four businesses. With platforms and simulators that replicate actual working equipment, processes and conditions, the Campus system is an acknowledged benchmark in the provision of vocational and lifelong training. Veolia Environnement is committed to creating new job opportunities, particularly for young people, and has stepped up its focus on apprenticeships, which combine theoretical training with practical 25 www.blacksunplc.com © Black Sun Plc 2011 41
