Methodological clarifications

The Group's procedures are composed

• for environmental indicators: a company-wide measurement and reporting protocol, available on the (www.sustainable-development.veolia.com/en), supplemented by specific instructions for individual Divisions;
• for social indicators: a methodology for compiling, monitoring, analyzing and consolidating the data, using a reporting software package including a workflow process.

Consolidation scope

The scope of environmental reporting covers all worldwide activities over which the Company has operational control. Jointly controlled (50-50) water companies in France, and the design and operation of industrial water systems are excluded from the scope of reporting. Some subcontracted activities may also be included in the scope of reporting,
in particular in the field of waste management (e.g., biogas conversion) or transportation.

The scope of social reporting covers all consolidated companies whose human resources are managed by the Company, and those of the jointly controlled (50-50) water companies in which Veolia Environnement is responsible for human resources.
In the case of Proactiva (water and waste management activities in South America), companies owned 50-50 by Veolia Environnement and a Spanish company partner have been kept in the Company in 2006 to ensure the comparability of the data.

Consolidation method

Environmental and social data within this scope are 100% consolidated.

Scope variations

Scope variations are taken into account on the date on which they become effective. Acquisitions, the creation of companies or contracts won may, however, only be taken into account after a full year of operation.

For 2007, the main changes in scope or activity were :

• Veolia Water - operation for a full year of contracts in Armenia, China, Guam, Japan; Slovakia and new contracts in Spain and in Italy;
• Veolia Energy - operation for a full year of contracts in China and integration of new projects in Australia, Saudi Arabia, Bahrain, Bulgaria;
• Veolia Transport - acquisition of contracts in France and Chile,and transfer of contracts in Lebanon and Denmark;
• Veolia Environmental Services - operation for a full year of contracts in the United Kingdom, Belgium, Romania, Italy and acquisition of new contracts in China, United States, Poland, Baltic Countries, United Kingdom, Czech Republic, Switzerland, Sweden and Singapore.

Choice of indicators

The following indicators were chosen listed in order of priority :

• the Group's commitments and policy (EMS, environmental audits, etc.);
• performance related to Group's main challenges and impacts;
• the effects of the Group's labor practices;
• regulatory obligations (NRE law in France).

Consolidation and checks

Environmental data is consolidated and monitored by each Division and by the Environment Department based on data collected from the business units. For certain indicators, data is calculated or estimated directly at the divisional level.

Human resources data is consolidated and checked by the Divisions and by the Company's Human Resources Department. Automated checks are also performed at the business unit level.
The data is then checked by Salustro Reydel, the Company's independent auditor. The most relevant environmental indicators have been audited for the last six years by Ernst & Young, the Company's independent auditor.

Limits to the methodology

There can be limits to environmental and social indicators due to:

• the lack of standardized definitions and national and international legislation;
• the unrepresentative nature of certain measurements and estimates;
• definition changes that may affect their comparison;
• practical collection methods.

As a result of these limits,we consider the accuracy of most of our data to be within 5 to 10%.
The main limits and uncertainties for the current year are related to:

• methane emissions, which are estimated on the basis of national or international models that are subject to high levels of uncertainty.