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			GENERATING RESPONSIBLY International Power is committed to conducting business in a responsible manner wherever we operate. Since our formation in 2000, we have put the highest emphasis on environmental, health and safety performance, and on valuing our shareholders, customers, employees, neighbours and suppliers. As an electricity generator, we see corporate social responsibility (CSR) as being an integrated approach to managing environmental, health and safety (EH&S), employee, community and ethical issues. We have previously reported on our EH&S performance for 2000 and 2001. For 2002, the scope of reporting has been broadened to include all of our CSR issues. In last year’s Annual Report, we made a commitment to seek to comply with guidelines produced by the Association of British Insurers (ABI)1 for reporting on CSR issues. The decision reflected an increasing interest amongst our key stakeholders to be informed of our overall CSR performance including how we manage the associated risks and opportunities. Stakeholders increasingly judge companies on their social and environmental performance. In recent years a number of indices have been developed to inform stakeholders, including pension fund managers and analysts, on how a company is performing over time and relative to other companies in their particular sector. In the UK, Business in the Community (BITC) is acknowledged as a leading index provider. In 2002 International Power took part in the first BITC Corporate Responsibility Index. The detailed performance feedback provided by BITC will form a key input to our work in improving our CSR performance in the coming year. We take a risk-based approach to managing our CSR issues and this is consistent with the way in which we manage other business issues. This year our CSR management team has conducted a full analysis of the CSR issues facing International Power. This analysis is helping to drive our programmes for the future. In order to provide assurance that our policies are being properly implemented we will be further integrating these issues into our existing compliance audit programmes, which already cover the areas of EH&S. The content of this report closely reflects the key issues identified within the ABI Guidelines. These issues are described in greater detail overleaf. For our full CSR report please visit our website at www.ipplc.com or write to the Company Secretary. 1 Association of British Insurers (ABI) “Investing in Social Responsibility” (October 2001) Environmental protection and efficiency Power generation can have a significant environmental impact. In providing electrical energy to sustain modern society we recognise we must strive to implement environmental management systems at all our assets. During 2002, we had four minor reportable incidents across all our assets, none of which incurred regulatory action. We continue to seek ways of reducing our environmental impact through improvement in operational practices and the introduction of new technologies. We recognise climate change as being a key business issue for the future. As society’s attitude to fossil-sourced emissions changes, together with the introduction of the EU Emissions Trading Scheme, we anticipate there will be an increasing impact on our business. As part of our management process, data on our most significant environmental impacts, including carbon dioxide (CO2) emissions, will continue to be monitored and reported annually as Key Performance Indicators (KPIs). Details of our other emissions can be found on our website. Figure 1 illustrates the emissions of CO2 per kilowatt-hour resulting from our power generation activities over the last three years. Figure 1 Total CO2 emissions from International Power’s power stations We strive to make our power stations as efficient as possible and to ensure, through proper maintenance practices, that they are available to operate whenever required. Cleaner power stations Blackstone and Bellingham, US A number of our power stations, including Blackstone and Bellingham, are now some of the cleanest in the US. Our use of Best Available Control Techniques (BACT) has meant that we now emit some of the lowest levels of oxides of nitrogen (NOx) in the US. The power stations use low NOx burners and selective catalytic reduction (SCR) which allows them to operate within their permit NOx levels of two parts per million. Employee rights and human rights It is the policy of International Power to ensure that all employees or applicants are given equal opportunities regardless of race, colour, religion, sex, marital status, sexual orientation, age and physical or mental condition when unrelated to job performance. We support the Universal Declaration of Human Rights (UNDHR) and will apply its principles throughout our workforce. This commitment extends to ensuring that the health and safety of our employees and the environment, in which they live and work, is actively managed. Health and safety In the last two years several of our plants have received Royal Society for the Prevention of Accidents (RoSPA) Gold Awards for their health and safety performance, including Hub in Pakistan, Deeside and Rugeley in the UK and Pego in Portugal. We value such awards very highly and encourage all our facilities to seek the same high level of recognition. As in previous years our standards of health and safety continue to be high and are considered a critical aspect of our operations. We will continue to review our policies and reporting requirements. We issued a revised health and safety policy in February 2003 and have introduced additional specific KPIs for 2003. Community involvement We consider the communities in which we operate to be one of our most important stakeholder groups and we strive to interact both locally and proactively with them. Our community involvement is targeted to improve economic, environmental and social well being in qualitative and quantitative terms. Our contributions are through leadership, by initiating and steering community projects or in the form of donations of time, cash, equipment or facilities. These initiatives include: funding free ‘eye camps’ to combat blindness (caused by cataracts) in the local community around Hub in Pakistan; education through industry schemes at Deeside and Rugeley in the UK; support for para-Olympians annual award ceremony in Midlothian, Texas, US. During 2002 International Power and its majority-owned subsidiaries donated £455,000 to charitable causes. Companies in which International Power has a minority shareholding (associates) donated a further £215,000. The Company also supported LEPRA, the Salvation Army, SCOPE, The Queen Elizabeth Trust and Sightsavers. The Company match-funded money raised by staff for charitable causes. Figure 2 International Power charitable donations Figure 2 illustrates our KPI on spending in community initiatives as a percentage of our annual turnover for 2001 and 2002. Bringing the land back to life Pelican Point, Australia Pelican Point’s Ecological Restoration Project has made a significant contribution to the greening of 33 hectares surrounding the power station. Up until two years ago, it was a very windswept and lifeless environment as a result of previous industrial use. Since then, 25 native plant species have been reintroduced to the site. Over 1,000 members of the local community have participated in the revegetation activities. The environment surrounding the site is now rapidly being transformed to establish primary habitat for the diverse range of wildlife found locally.   Learning for life Balochistan, Pakistan As part of our educational support programme and in conjunction with The Citizens Foundation (TCF) we are building a new primary and secondary school in Balochistan near to our HUBCO plant. This province is one of the poorest in Pakistan and has the lowest literacy rate. The school will be run by TCF and will welcome its first primary children in April 2004. The secondary school will open in April 2005 and by 2008 we expect the school to have over 500 pupils. Young Environmentalist of the Year Awards 2002 The Young People’s Trust for the Environment is a charity which aims to encourage young people’s understanding of the environment and the need for sustainability. Every year the charity holds a competition to raise awareness of the threat to the environment and how we may best preserve our fragile planet. Entrants are asked to submit a project relating to environmental and nature conservation issues. This annual competition is open to children aged between 8-16, of employees from six participant companies including International Power. In 2002, a total of 80 young people entered from International Power, with the winners being flown to London with their families to collect their prizes at the awards ceremony in November. This year’s award winning projects covered: – endangered species – the giant panda and the cheetah (junior category) and European wasps as pests in Australia (senior category) Bob Holness, Marnie Peterson (senior winner), David Crane, Katy Secombe, Rachel Maggiani (junior winner), Danny John Jules. Ethical behaviour In a climate of fierce competition, International Power has a business practice policy, which has been approved by the Board, and which is designed to ensure that we operate to the highest ethical standards. This policy covers: relations with officials and prospective business partners; business gifts and hospitality; conflicts of interest; proper financial control and accounting. This policy and the associated procedures help us to ensure that we conduct our business in an ethical manner. Our combined compliance audit process gives us assurance that these arrangements are effective. 2003 targets We will continue to encourage and support all our assets to operate to the principles of, and be certified to, ISO 14001 (the international environmental management system standard) by December 2004. Certification to recognised standards for health and safety, and quality management systems will also be encouraged. We will seek to understand better the ethnic, gender and age dynamics of our workforce. We will further integrate CSR issues into our existing audit programmes. During 2003, at each asset we will: - set targets for group discussions about safety issues in the work place – ‘toolbox talks’; - set targets for periodic inspections of specific plant areas – ‘safety walks’; - review lost time incident frequency and set an appropriate reduction target; - review first aid treatments and set an appropriate reduction target.