Assurance Statement
Opinion
A significant step over the last year has been the formalisation and compilation of the Group CSR Policy which covers the primary CSR issues for the Group. Although many of these policies have been in place for some time, the compilation has brought CSR issues directly into a variety of business functions such as procurement and human resources. In addition, FirstGroup has adopted a formal Climate Change Strategy that outlines the role of public transit in climate change, the challenges of sustainable fuel solutions and the strategy of FirstGroup over the next decade
We have seen evidence that the investment in the Group CSR Management structure in 2005 has produced positive results in 2006. Communication around CSR issues between operating companies and Group appears to be more robust as evidenced by the progress under the new Community Strategy, which was based on a compilation of engagement mechanisms occurring at operating company and operation levels
The roll-out of the Injury Prevention Programme appears to have already resulted in benefits in terms of reduced employee injuries over the last part of the fiscal year.
Although FirstGroup has continued to develop internal audit processes for information in the CSR Report by integrating these items into the Group Financial audit process, personnel changes in the Internal Audit function at Group level limited the ability to validate these items in detail. Therefore, we saw relatively little progress in the quality of responses to internal CSR audit questions with a clear need for greater context to be provided to the operating companies around these items. Limit processes are largely in place, although there are still difficulties in compiling some of the data.
Unless otherwise stated, we have seen evidence to support the majority of the claims made in the Report. We found that underlying systems and processes are generally robust and most developed for environmental compliance and health and safety data.
During the course of our work, we identified a number of opportunities where strengthening of CSR performance management systems and reporting processes could increase robustness; these opportunities have been reported back to FirstGroup.
Our observations against the AA1000 Assurance Standard principles are as follows:
Materiality
Although the intended audience for this assurance statement is FirstGroup's stakeholders, the scope of the assurance work did not allow for direct interaction with representatives of external stakeholder groups. We have reviewed the outputs from engagement activities undertaken by FirstGroup and interviewed a cross section of directors and managers to understand their perceptions of stakeholder priorities. Our assessment of materiality with regard to non-financial issues in this report is limited by the evidence that we have gathered.
Nothing came to our attention to suggest that material issues have been omitted from the scope of the Report. Overall, FirstGroup continues to improve its reporting against issues material to its stakeholders - we are aware of a small number of issues where FirstGroup could report in a more balanced manner, for example, by discussing specific incidents that the business has managed over the past year.
We found evidence that appropriate systems are in place for monitoring and gathering information on relevant management arrangements and performance. Moving forward, an important mechanism that will enable the Group to identify material issues within the businesses will be the auditable, internal assessment questionnaire within which business divisions will list key risks and opportunities in health and safety, environment and social areas. Some development is still necessary to make this a valuable tool for FirstGroup including more robust communication around the questionnaire and development of the internal audit capacity to check responses from the businesses.
The recently updated Environmental Management Manual has identified the most significant environmental issues for each business. With the new Climate Change Strategy now in place, there may be value in using the Environmental Management Manual as a mechanism to drive performance in this area.
Completeness
On the basis of the method and scope of work undertaken and the information provided to us by FirstGroup:
- We are not aware of any material reporting units that have been excluded from the group data, beyond those specified in the scope of the Report.
- Nothing has come to our attention that causes us to believe that the data has not been properly collated from information reported at operations level.
- We are not aware of any errors that would materially affect the group data.
- As in previous years, the reporting of some issues is limited by the availability or comparability of data, and work continues to make additional improvements to the relevant reporting processes.
Responsiveness
We have found evidence of appropriate systems in place for responding to stakeholder concerns around the identified priority issues such as health and safety, employee and customer satisfaction and regulated issues. We have seen examples of good mechanisms to assess and respond to issues raised by customers and interest groups. We look forward to more formal measurement of the success of these mechanisms in order to support the implementation of the new Community Strategy.
The analysis of engagement mechanisms with the community and interest groups conducted by FirstGroup may also contribute to additional, proactive partnerships with key stakeholders such as government agencies (e.g. Network Rail) and Train Operating Companies to address some of the broader and more challenging issues facing the industry such as climate change.
Basis of the opinion:
Our work was designed to gather evidence on which to base our conclusions and to provide a limited level of assurance. We undertook the following activities:
- We conducted interviews in Aberdeen and Cincinnati with a selection of directors and senior managers responsible for areas of management and stakeholder relationships covered by the Report. The objective of these discussions was to understand FirstGroup's governance arrangements and management priorities;
- We discussed FirstGroup's approach to stakeholder engagement with relevant managers at both the Group and site levels, although we undertook no direct engagement with stakeholders to test the findings from these discussions;
- We conducted a general review of issues raised by external parties that could be relevant to FirstGroup's policies to provide a check on the appropriateness of statements made in the Report;
- The scope of our work included six operational site visits to: the First Student yards of Council Rock, Orange County, Lansdale and Pine Bush in the United States as well as the Reading depot for First Great Western and the Hornsey depot for First Capital Connect in the United Kingdom. We also interviewed senior managers for both First Great Western (Swindon) and First Capital Connect (London). Site-level sustainability data for January through December 2006 was reviewed during these site visits. We also discussed local management arrangements with managers at each location;
- We reviewed full 12-month sustainability data collated at the corporate level, and claims made in the Report. The external assurance team worked in parallel with, but independently of, FirstGroup's internal data validation processes. We interviewed managers responsible for internal data validation, reviewed their work processes and undertook sample checks on consolidated sustainability data during the assurance process;
- We undertook an assessment of the company's reporting and management processes against the principles of materiality, completeness and responsiveness as described in the AA1000 Assurance Standard. The scope of our work did not include a formal review of the Report against the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines.
Responsibilities of the Directors of FirstGroup plc and the Assurance Providers
The directors of FirstGroup plc have sole responsibility for the Report contents and underlying performance management, reporting and internal assurance systems. We were not involved in preparation of the Report and this statement represents our independent opinion. We adopt a balanced approach towards all FirstGroup stakeholders and a statement of impartiality relating to our contract with FirstGroup will be made available upon request. The opinion expressed in this assurance statement should not be relied upon as the basis of any financial or investment decisions. The independent assurance team comprised Todd Cort, Mark Line, Jeff Caton and Anne Euler. Further information, including a statement of competencies can be found at www.csrnetwork.com
csrnetwork Ltd
UK. May 2007
Mark Line
Director
Todd Cort
Project Manager
csrnetwork is a business-focused, corporate social responsibility advisory organisation bringing together specialists from the fields of environmental management, social accounting and sustainable development.