A NEW LOOK AT SUSTAINABILITY

NATURAL RESOURCES.

Environmental legitimacy is one of our 10 Pillars of Sustainability. As an organisation we seek to be environmentally sustainable, reflected in the way we utilise our natural resources and the way we conduct our business.

Management systems and processes.

The major environmental impacts across the group include energy consumption and greenhouse gas emissions emitted from our motor, logistics and cement divisions. Other environmental issues include the responsible use and disposal of chemicals, use and disposal of batteries, oil and tyres. Due to the increasingly stringent compliance requirements, particularly in the EU, and customer demand for ISO 14001 certification, we are implementing management and monitoring systems to mitigate our deleterious environmental impacts.

Certified management systems.

The majority of Barloworld’s manufacturing sites are either ISO 14001 certified or operate to an internal standard system designed to produce similar results. However, due to the stringent compliance requirements and imperatives for ISO 14001, our company has an ongoing process of ISO 14001 certification which is aimed at ensuring all manufacturing operations are compliant. As we operate in a multitude of locations, standardised environmental management systems will enable us to better respond to issues and achieve consolidated good corporate citizenship. It is also increasingly a competitive advantage to standardise management systems across our operations.

Energy usage 2005/2006
						Natural gas
	Electricity (MWh)		Fuel (Mℓ)			(tonnes)
Division	2005	2006	2005	2006		2005	2006
Cement	592 556	650 000	12.6	12.3		nr	nr
Coatings	40 101	41 117	6.2	5		103	110
Corporate and other	nr	5 653	12.8	14		nr	nr
Equipment^#	23 140	15 692	4.7	7.4		nr	nr
Industrial Distribution	nr	16 110	nr	5.3		nr	3.9
Motor	74 619	53 788	21.4	11	*	nr	nr
Scientific	nr	21 482	nr	nr		nr	nr
Barloworld total	730 416	804 112	57.7	55		103	113.9

* The current usage is based on the division’s internal consumption, not that of the
customer base

# Equipment Iberia has been excluded from this table

nr not recorded

Emissions
	CO₂ (tonnes)^#
Division	2005		2006
Cement	nr		5 415 497	⁺
Coatings	3 364		3 949
Corporate and other	35 146		38 441
Equipment	16 996	^{^}	22 403
Industrial Distribution	nr		38 136
Motor	51 704		29 019	*
Scientific	nr		4 968
Barloworld total	107 210		5 552 413

#	Calculated based on reported petrol, diesel and natural gas consumption figures
+	Includes coal for cement production
*	The current emissions are based on the division’s internal fuel consumption, not that of the customer base.
^	Excludes natural gas consumption
	nr not recorded
	CO₂ emissions have been calculated using the GHG protocol factors for natural gas and fuel use (www.ghgprotocol.org)

Non-certified sites.

Environmental impacts at non-certified operations are managed through annual risk management audits and the Barloworld environmental minimum compliance guideline. The objective is to certify all of our operations.

Reducing our environmental impact.

Each operation is responsible for its own specific environmental management, taking full cognisance of the requirements of the broader organisation and ISO 14001 requirements. Our divisions have varying strategies in place to mitigate negative environmental impacts.

Product and service stewardship.

Product and service stewardship is of utmost importance in our company. Therefore, initiatives for stewardship in our own brand technologies include analytical services to guarantee quality of product. This includes adhering to the ISO standards.

Where we represent other companies’ brands, all our original equipment manufacturers are of international reputation and comply with international standards and norms. Other initiatives include efforts to improve product design so as to minimise negative impacts associated with the manufacturing, use and disposal of materials.

In a limited number of our divisions, we assess and manage our supply chain in respect of outsourcing and supplier sustainability performance, applying key performance indicators and implementing supplier accreditation policies, which entail environmentally friendly supplying.

Barloworld environmental policy.

Our adoption of the G3 is a commitment towards reporting transparently and comprehensively. We are now able to publish quantitative company-wide data with the internal collation of statistical information from all our operations into a central database. There are still, however, gaps in the information against which we are unable to report; we are giving priority to those issues that are most relevant and material to our businesses. We believe that if, as an organisation we collate all relevant environmental information, we are in a better position to articulate more care for our natural environment through comprehensive analysis and subsequently reduce our impact on it. This will also assist in our quest to be a leader in good corporate citizenship.

It will also be incumbent upon us to ensure that we work closely with our business partners along the value chain to obtain buy-in and which could result in collective action. We will be embarking on this process in 2007.

BARLOWORLD POLICY ON CLIMATE CHANGE

As we strive towards fulfilling the role of good corporate citizen, Barloworld:

Recognises with concern scientific evidence that points to adverse impacts that human activity is having on the planet, particularly in the area of climate change as manifested by rising sea levels and high frequency and intensity of extreme weather events;
Recognises that climate change poses a serious
threat to sustainability;
Recognises the importance of the United Nations’ Framework Convention on Climate Change and the Kyoto Protocol; and
Acknowledges, that as a global player, we have a role to play in implementing measures that will contribute to the mitigation of these negative impacts.

In light of the above, Barloworld’s future strategy on climate change will consider the challenge at hand and commit to:

Addressing our activities that contribute to climate change;
Monitoring air pollution and greenhouse gas emissions;
Monitoring the consumption of non-renewable energy and fossil fuels; and
Extending of our Value Based Management principles to support initiatives that are aimed at minimising our contribution to climate change.

One of the first steps in tackling the challenge of climate change is the understanding of our carbon footprint. The diversity of Barloworld’s operations necessitates that we make a firm commitment to determining the extent of our carbon footprint. Only once we fully understand our footprint can we set short to medium-term targets and monitoring mechanisms for implementation by our divisions across the globe.

Resource use.

Materials.

The broad range of products and services offered by Barloworld implies usage of a diverse range of materials. The major resources, other than water, that we report on indicating volumes and the business unit in which they are predominantly used.

Our resources are as diverse as our operations and include waste products, minerals and manufactured materials. As part of the supply chain process, we ensure that all of our resources are sourced from credible suppliers, who practice sound environmental and quality principles.

Waste materials used in our processes include spent pot liner (SPL) from furnace operations which are sourced from steel manufacturers and used in our cement production process (please see page 100 for further information). The use of this material reduces the quantity of waste produced by our suppliers and aids in our production process. The remainder of the waste products used in our process total less that 1% of the total materials used.

BARLOWORLD ENVIRONMENTAL POLICY*

Our environmental strategy is to strive to minimise the environmental impacts of our operations. Environmental considerations form an integral part of daily business, including management planning, capital expenditure and operating procedures.

Clear reporting structures at all operations culminate in compliance with relevant legislation and adherence to this policy being reported to the risk and sustainability subcommittee, and from there to the board of directors.

In all operations we undertake to:

establish clear accountability for environmentalperformance with top management;
comply with relevant environmental policies and laws, and other standards and codes of practice to which the company subscribes;
carry out life cycle assessments of products;
strive to minimise the impacts of our activities on theglobal, regional and local environment by:
- developing environmentally sound processes and products;
- optimising resource utilisation efficiency;
- minimising emissions and wastes;
promote environmental awareness in our operations to ensure that everyone has the skills and knowledge to comply with this policy;
maintain open dialogue with stakeholders to promote environmental protection and social upliftment;
participate with government and other bodies in developing effective legislation and standards to safeguard the health and safety of workers, and quality of the environment;
encourage suppliers and contractors to provideenvironmentally sound goods and services; and
develop contingency procedures to deal withunscheduled occurrences and community concerns.

Environmental management systems will be implemented in all operations to guide and track progress in meeting predetermined objectives and targets, and to demonstrate environmental responsibility and accountability at all levels of management and continual improvement of environmental performance through self-assessment and auditing.

Barloworld is committed to regular assessment of its environmental performance and policy, and to report thereon annually.

* This is a summary version of the full policy statement, the full text of which can be found on our website at www.barloworld.com.

Energy.

Barloworld recognises that energy is a scarce and valuable resource. Most of Barloworld’s operations are not significant consumers of energy; however, coal and electricity are used in significant quantities by our cement operations. Petroleum products are used by cement, motor, equipment, industrial distribution and logistics operations all of which own or operate fleets of vehicles running on petroleum products.

The PPC capital programme at the Dwaalboom kiln, which will result in at least 15% reduction in energy consumption in the cement business, has progressed during the year and should be complete by the first quarter of 2008 which is in line with the projected schedule.

Water.

Barloworld operations source most of their water requirements from municipal and local government water supply systems. Only our cement operation uses substantial quantities of water from underground sources, dams and the Berg River in the Western Cape, but has no significant impact on any water-related habitats or ecosystems.

Water usage (Mℓ)
Division	2004	2005		2006
Cement	3 095	2 507	*	2 848
Coatings	nr	238		206
Corporate and other	nr	nr		113
Equipment	nr	153		141
Industrial Distribution	nr	nr		39
Motor	nr	328		501
Scientific	nr	nr		nr
Barloworld total	3 095	3 226		3 848

Discharges.

No water sources, related ecosystems or habitats are significantly affected by discharges of water or runoff from our operations. In coatings all effluent water is treated and sampled prior to being discharged into the municipal rain water systems at all factories. In cement operations no water is discharged from the cement manufacturing process. Water is mixed with lime filter dust at the lime manufacturing operations and disposed of as sludge in evaporating ponds.

Total recycling and reuse of water.

The new water recycling plant which was installed at the International Chemical Corporate (ICC) division of coatings in the latter part of 2005. Recycling began in 2006 and targets will be set once recycling capacity has been evaluated.

A project in the cement division to recycle sewage water to process water has begun in a small number of operations. Water recycling will remain an integral part of the Dwaalboom expansion project (please see page 133 for more detail).

Emissions.

The process of cement and lime manufacture results in substantial emissions of CO2, approximately 780 kilogram for every ton of product manufactured. PPC is a signatory to the South African Energy Efficiency Accord via the Association of

Cementitious Materials Producers. This commits us to improving energy efficiency and reducing emissions of greenhouse gases.

The installation of equipment at the PPC operations to measure the NOx and SOx emissions will take place in 2007. These operations have set internal ambient air quality targets and the process will be refined and monitored throughout the year to ensure that these targets can be reported on in the next report for these operations.

Waste.

All wastes are disposed of responsibly through reuse, recycling, recovery, incineration or landfilling. Wastes generated include: acids, batteries, glass, lubricants, steel, packaging, pallets, paper, plastic, solvents, tyres and water. Volumes are not reliably quantified across all the divisions.

Hazardous waste is generated at a number of the manufacturing sites of Barloworld. The waste is collected from the sites by registered hazardous waste contractors and disposed of at registered hazardous waste sites.

The most hazardous substance used is spent pot liner (SPL), which is used by PPC. In South Africa, SPL is used as an alternative source of fuel and raw material at several operations in the Eastern Cape, North West, Gauteng and Limpopo provinces. The material is classified as hazardous in terms of South African legislation. Authorisation for its use has been obtained and storage facilities were approved by the Department of Environmental Affairs and Tourism and the Department of Water Affairs and Forestry in 2006. A total of 16 411 tonnes of SPL was used by PPC during 2006.

We do not have the systems in place to follow our products from cradle to grave as many products are not measured by our customers in terms of reclamation. In cement and lime the risk of contamination of the product during use, thereby impacting on product quality, prevents recycling or reuse of product materials. Waste generation is reduced by the provision of technical support to consumers in the form of mix designs and quantity estimates, both for optimal use of product and waste reduction.

Biodiversity
	Area		Vegetation
Division	affected (ha	)	type	Other flora
Cement	1 330		Fynbos
Cement	16 000		Bontveld biome
Cement	2		Renosterveld
				Specific
Scientific	2			horticultural species
Total	17 334

Biodiversity.

The majority of our operations are conducted in industrialised and urbanised areas and accordingly have minimal impact on terrestrial, fresh water and marine environments, or biodiversity-rich areas. The exception is our cement operation which operates on approximately 17 332 hectares of land classified as high biodiversity value, rare or endangered vegetation.

During 2005, PPC applied for a prospecting licence to determine the viability of gypsum reserves in the Knersvlakte bioregion in the Western Cape, South Africa. The environmental management plan for prospecting activities includes a comprehensive rehabilitation programme to establish the nature and rate at which the sensitive Knersvlakte vegetation will recover from disturbance through mining activity. The application process was halted due to responsibility for the process being moved to the Department of Minerals and Energy.

At the Riebeeck factory in the Western Cape considerable effort has been made to modify the waste dump profile and footprint in order to preserve the scarce Renosterveld. At Grassridge, a multi-stakeholder environmental monitoring committee interacts with the Grassridge personnel on a regular basis to ensure protection of the Eastern Cape Bontveld biome. A comprehensive programme of temporary relocation of protected vegetation ensures the restoration of the bontveld biodiversity after rehabilitation of mined areas has been completed. A similar programme is envisaged for the prospecting activities in the Western Cape Knersvlakte bioregion. The rehabilitation of the now closed Loerie operation has been approved by the Department of Minerals and Energy.

In an attempt to mitigate the impact of the motor division’s contribution to the depletion of fossil fuels and concomitant rise in gaseous emissions, South African operations have started tree-planting initiatives. In the equipment division, environmental impact assessments have been conducted at Middelburg site. In addition, an oil skimmer has been installed to prevent any contaminated rainwater from being discharged into the adjacent river.

Legal non-compliance.

The three incidents of environmental legal non-compliance that were reported in 2005 have been followed up in the following manner:

Monitoring of boreholes at the steel tube Ham Street site in Boksburg, South Africa has continued and the quality of groundwater has remained acceptable and within the legal limits.
No further overflows of the oil traps have occurred at the Equipment Isando site.
There have been no reoccurrences of spillages at Birtely, UK and the situation is resolved.

Performance of suppliers.

Barloworld requires suppliers to adhere to all relevant environmental legislation. However, for most of our businesses, there are no programmes in place to measure supplier performance in this regard. Specific matters that arise are taken up with suppliers.

The major manufacturing units of Barloworld –cement and coatings – assess the performance of their suppliers in their procurement practices.

Cement: Environmental gatekeeper questions have been extended to plant level throughout South Africa. These questions are included as part of the accreditation process for suppliers of goods and services to ensure environmentally responsible management throughout the supply chain. Assistance is offered to small, medium and micro enterprises (SMMEs) to include sound environmental practices in their business plans and practices.
Coatings: The training of all suppliers and contractors has continued this year with suppliers and contractors signing standard agreements of environmental performance to the environmental management system requirements.

Caterpillar Inc. (NYSE: CAT) has been selected as a member of the Dow Jones Sustainability World Index (DJSI World) for the sixth consecutive year. The index recognises leading sustainability-driven companies worldwide.

This page was updated on 22 December, 2006

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