REpoRt - Lafarge

SustainabilityReporTLAFARGE 2012

2012 Sustainability Report • 03company proFilelafarge world presenceworld leader in building materials and a major player in the cement,aggregates and concrete industries, we contribute to the constructionof cities throughout the world. our innovative solutions provide cities withmore housing and make them more compact, more durable, more beautifuland better connected. the group operates in 64 countries and employs65,000 people. it generates annual sales of €15.8 billion.reinForcing ourcommitment to sustainabledevelopmentbruno laFontChairman and Chief Executive Officernorth americasales: €3,375memployees: 8,821latin americasales: €961memployees: 2,609western europesales: €3,181memployees: 11,448shared value at laFarge €m %Sales 15,816 -Cost of goods sold 10,632 -Cash value added 5,184 100Paid to employees for their services 2,425 46.8Paid to lenders as a return on their loans 1,031 19.9Retained for growth 906 17.5Community Investment 20 0.4Net Cash 802 15.5Income taxes paid to governments 487 60.7Paid to investors for providing capital 315 39.3central andeastern europesales: €1,270memployees: 7,041middle eastand africasales: €4,283memployees: 19,644cementAggregates& concreteasiasales: €2,746memployees: 14,774World leaderEmployees: 41,200Revenues: €10,373mCountries: 58Sites: 161No. 2 & No. 4 worldwideEmployees: 21,800Revenues: €5,353mCountries: 36Sites: 1,395Revenues€15,816 mnet incomeGroup share€432mnumber of countries64number of employees65,000number of sites1,570number of quarries708“Sustainability isa commitment to be renewedevery day, even more soin times of crisis.”In 2012 Lafarge reorganized aroundcountry units instead of product divisions,to be closer to its markets andcustomers. At the same time, the Grouplaunched its Sustainability Ambitions2020. To be sustainable, a companyneeds to both refl ect market developmentsin its world vision and build on itsexpertise and past successes.Sustainability Ambitions 2020incorporate objectives that scaleup previous ambitions as well asnew targets in the fi elds of affordablehousing, volunteering, and recycling.Lafarge has expanded its activitiestowards the Circular economy which isbecoming more important to address thechallenges of demography and urbanizationin a world where two thirds of thepopulation are expected to live in citiesand where natural resources are limited.In this context, Lafarge needs to continueits efforts towards housing, educationand health to address increasinginequalities. Such efforts are coherentwith Lafarge’s ambition to BuildingBetter Cities.In 2012 Lafarge’s Sustainability Reportwas A+ level checked by GlobalReporting Initiative, as in previous years.Moreover, Lafarge continued its effortsin R&D, especially in the field of sustainableconstruction and cities, whiledecreasing the burden of its debt andimplementing its cost reduction program.For example, Lafarge successfullylaunched Hydromedia , an innovativeconcrete contributing to our climatechange adaptation efforts. The Groupalso created a microfinance program foraffordable housing and inaugurated anew Construction Development Lab inMumbai, India.However, we do not take our successesfor granted. SustainabilityAmbitions 2020 give a new impulse toour sustainable development actions andenable our employees to contribute aspart of their daily practice. Sustainabilityis a commitment to be renewed everyday. Lafarge continues to be the safetyleader in its sector but we will not besatisfied with our results until we reachour target of zero incidents. All employeesat Lafarge, starting with the Executiveteam and our Country CCEOs remain fullymobilized to achieve this target. Any incidentis unacceptable. I personally reviewwith the Country CEO and appropriatemanagers the root cause of every fatalityand ensure remedial action plans areimplemented. Safety remains our numberone priority.2012 saw achievements in many fi elds:CO 2 emissions have decreased by24.7% since 1990 and a biodiversitystrategy was published in partnershipwith WWF International, among manyother actions highlighted in this report.In addition, we still need to improve interms of diversity and have therefore setvery ambitious objectives in this fi eld aspart of our Sustainability Ambitions2020. Raising the bar to maximize valuefor all our stakeholders and ensure thatwe make a net positive contribution tosociety and nature is our ambition for2013 and beyond.

04 • 2012 Sustainability Report 2012 Sustainability Report • 05year at a glanceclimate changeFURTHER CARBONFOOTPRINT REDUCTION24.7%reduction of CO 2 emissions per tonof cement compared to 1990Lafarge continued to reduce its CO2 emissionsin 2012. This result was obtained thanksto intensified performance efforts to improvekiln energy efficiency, increase the use ofalternative fuels and develop new blendedproducts for a range of applications usingcarbon-neutral additives. Lafarge alsosuccessfully completed its second industrialtrial for Aether ® , its new generation clinkerformulated for lower carbon cements. The trialconfirmed the feasibility of industrial-scaleproduction of Aether ® cements, which offersimilar characteristics to Ordinary PortlandCement, while allowing a 25-30% reductionin CO2 emissions. See page 37employeesNEW COUNTRY-BASEDORGANIZATIONA new country-based organization was putinto place to allow stronger focus on localmarket needs, accelerate developmentthrough organic growth and innovation andreinforce efficiency. The reorganization, alongwith a number of divestments, led to a 5.3%net reduction in the number of employeesGroup-wide. Measures were taken toaccommodate those employees impactedby the reorganization, to assist them in findingnew employment either withinor outside the Group. See page 14Sustainable construction develOPING newsolUTIONS to meet the URBAN challengeLafarge created a new Innovation functionin 2012 to boost the development androll-out of more sustainable, cost-effectiveconstruction solutions for better towns andcities worldwide. Bringing together R&D,marketing by specific construction segmentand distribution, this new function willfacilitate the development of tailor-madelocal solutions.With several billion people today lackingaccess to decent housing, Lafarge alsolaunched its microfinance program foraffordable housing to help low incomepopulations in emerging markets financethe construction, extension or renovationof their homes. See page 22Health & Safet2012 saw the continuation of our Health & Safety journey and thesuccessful early implementation of new strategic orientations in Healthand Safety management, with a 24% reduction in fatalities comparedto 2011. However, the Health and Safety of employees and contractorsremains a preoccupation and the Group’s number one priority. See page 12Circular economyENERGYCONSUMPTION& RESOURCEMANAGEMENT,NEW INCREASEIN FOSSIL FUELSUBSTITUTION.Lafarge continued toincrease its use ofalternative fuels, reachingan average of 14%. Itfocused increasingly on theuse of biomass andmunicipal waste in its kilns,for example launching aproject in Hungary inpartnership with WWF todevelop the use of variousbiomass sources asalternative fuels for its localplant. See page 30biodiversity,ADDITIONAL TOOLSTO RAISE AWARENESSAND PROFESSIONALIZEPRACTICES.Lafarge implementedBiodiversity ManagementPlans in 99.2% of thosequarries identified in a 2011screening program as beingin or within 0.5 km of abiodiversity sensitive area.The Group also publiclyreleased a BiodiversityGuidance manual developedwith WWF International andits International BiodiversityPanel.See page 32WATER, TOWARDSWATER STEWARDSHIPIn 2012.Lafarge used the WWF WaterRisk Filter to identify itsoperations located in highriskwater basins. Fifteencement plants wereidentified and, as part ofits Sustainability Ambitions2020, Lafarge will work withlocal stakeholders in thesehigh priority basins toimprove water management.See page 34sustainability Ambitions 2020:Making a Net PositiveContribution to SocietyToday the world consumes one anda half times the resources theEarth can support. SustainabilityAmbitions 2020 is Lafarge’s plan to contributeto correcting this imbalance: it isour roadmap for making a net positivecontribution to society and nature.A holistic approachThe program’s objectives incorporate theimpact of our activities through our valuechain and take into account all our stakeholders:clients, shareholders, employees,governments, suppliers, local communitiesand future generations. Someof our objectives, such as ambitious CO 2emissions reduction targets, build on successfulefforts outlined in our previousaction plan, Sustainability Ambitions2012. Others are entirely new, such asour commitment to one million hours peryear of employee volunteering by 2020.The issues tackled in SustainabilityAmbitions 2020 are interlinked. Forinstance, our commitment to have 20%of concrete made using recycled materialswill also contribute to other objectivessuch as expanding the market forrecycled aggregates and contributing tolocal job creation as entrepreneurs createbusinesses to collect, transport, andprocess materials.We applied analytical tools to measureour contribution to society’s development,mapping our Ambitions relativeto their environmental and social impactas well as their business impact. We areconfident that this program will help usgain a competitive advantage throughtalent attraction and retention, industrialperformance, new product and solutiondevelopment, market opportunities,improved risk management and asecured license to operate.Measuring our net positivecontributionValue in our business is created locally.To maximize our net positive contributionworldwide, our country units need theleeway and support to localize the implementationof the Sustainability Ambitions2020 objectives. Our efforts in 2013 willbe geared towards the effective measureof our net positive contribution, implementationsupport to country unit teamsand the piloting of new projects, suchas the employee-volunteering program.We will start reporting on SustainabilityAmbitions 2020 in 2014.Working with stakeholdersSustainability Ambitions 2020 is theresult of close consultation with all ourstakeholders, who have helped us evolveand define strategies that are good bothfor Lafarge and the greater community.Our Stakeholder Panel continues to helpus understand what our stakeholdersexpect from us, but also the value theyattach to our growth: more jobs, longtermsocio-economic development,more affordable and reliable productsand greater transparency. In summary,that Lafarge contributes actively to thedevelopment of the communities inwhich it operates.· Building communities - P.11· Building sustainably - P.21· Building the Circular Economy - P.29· Governance - P.41

06 • 2012 Sustainability Report 2012 Sustainability Report • 07Understanding our businessThe global cement market is increasing by approximately 5% per year on average, withdemographic growth and urbanization driving consumption, especially in emerging economies.By taking an integrated approach to sustainability issues throughout its value chain, Lafargeintends to minimize its footprint upstream and provide markets with innovative solutionsdownstream, to contribute to more sustainable, livable towns and cities. Our products are sourced,manufactured and used locally. Lafarge therefore considers itself part of the communities whereit operates. Investing in its operations for the long term, its ambition is to make a net positivecontribution to society and nature.5. SUSTainable CONSTRUCTIONBy 2020 two thirds of the world’s inhabitantswill be living in towns and cities. Lafargeis innovating to develop more eco-efficientand cost-effective construction solutions formore sustainable, livable urban environments.As part of its Sustainability Ambitions 2020,it aims to contribute to 500 energy efficientconstruction projects.6. AFFORDABLE HOUSING7. RECYCLINGIt is Lafarge’s responsibility to beefficient in the use of rawmaterials. One way of doing thisis through recycling. As part of itsSustainability Ambitions 2020,the Group’s objective by 2020 isfor 20% of its concrete to containreused or recycled materials andto produce 15 million tons peryear of aggregates manufacturedfrom recycled / reused materials.1. BIODIVERSITYOur operations can impact (positivelyor negatively) on local ecosystems. Lafargehas been working in partnership with WWFInternational since 2000 to protect and promotebiodiversity at its sites. The Group aims toimplement Biodiversity Management Plansin all its quarries and cement plants by 2020.2. CO 2The cement manufacturing process generatesCO 2through the ‘decarbonation’ of limestoneat temperatures of approximately 1,450°C andthe use of fossil fuels to heat the raw materials.Lafarge has made significant progress in reducingits CO 2emissions, thanks to improvements in kilnenergy efficiency, the increasing use of non-fossilfuels and the development of new lower-carboncement solutions.Four billion people lack access to decent housing.Lafarge has launched a micro-finance program foraffordable housing, to help low income populationsin emerging markets finance the construction,extension of renovation of their homes.+69%in cement productionsince 1990, yet only+27% in net CO 2emissions14%average alternativefuel rate3. WATERWater is an essential resource for all life speciesand human activities. In 2012 Lafarge used theWWF Water Risk Filter to identify its operationslocated in high-risk basins, where it will work withother stakeholders to promote sustainable watermanagement.20%of Group salesin water-stressed regions70%of sites equiped with awater recycling system4. SOCIO-ECONOMIC DEVELOPMENTLafarge plays an active role in the socio-economicdevelopment of the communities aroundits sites. In 2012 the Group piloted the useof a socio-economic footprint evaluation toolfor its operations, developed in partnershipwith the NGO CARE.2 mLafarge aims to enable2 million people tohave access to affordableand sustainable housingby 202020 %of its concrete tocontain reused orrecycled materials:this is Lafargeobjective for 2020421 million tonsof raw materials consumed in 2012708Numberof quarries

08 • 2012 Sustainability Report 2012 Sustainability Report • 09sustainability ambitions 2012:have we delivered?Our Sustainability Ambitions 2012 program came to term at the end of the year. Almost allthe objectives were achieved and contributed to the integration of sustainability into our business processesand strategic orientations. We have built on this program to develop our Sustainability Ambitions 2020,an even more ambitious plan to make a net positive contribution to society.ManagementTarget Deadline Performance Performance Why is Lafarge pursuing this ambition? What will change?2012 2011 How are we progressing against this ambition?On safety, reduce the employee LostTime Injury Frequency Rate (LTIFR)for Lafarge employees to 0.94 orbelow in 2010.Continue to check theimplementation of our Competitioncompliance program in our businessunits. 100% of all significantbusiness units tested for complianceby end of 2010.Manage and improve ourlocal stakeholder relationshipmanagement by:Training 100% of units in thelocal stakeholder relationshipmethodology.Full reporting of the threenew indicators.Three additional targets (undertakingself-assessment on stakeholderrelationships, launching a dedicatedintranet site and providing aninternal audit screening tool) werecompleted in 2009.On customers, by 2012, the Groupwill achieve €3 billion annual salesin new products.Reach 20% of women in seniorand executive management(Lafarge grades 18+) by 2012.2010 0.75 0.63 Lafarge continued to make progress in 2012 in reducingthe lost-time injury frequency rate (LTIFR) for its on-sitecontractors, with a 19% reduction compared to 2011.However, the LTIFR for employees was disappointing with a19% increase compared to 2011.2010 100% 96% Our Competition Compliance Program has beenimplemented in 100% of our business units. To ensureits effectiveness, the Group Legal Department conductsregular unannounced compliance checks and verifications.2012 Cement: 64%A&C: 41%Cement: 76%A&C: 80%2009 done done(1)Sensitive areas are defined as IUCN Category I to VI sites, Ramsar, IBA, Natura 2000.(2)Net CO 2 emissions are the gross emissions less the emissions that come from burning waste.Fully achieved Partially achieved in progressTraining workshops focus on the key personnel forstakeholder engagement: Cement Plant Managers andAggregates & Concrete (A&C) Area/Regional Managers.With the reorganization that took place at both Groupand country level in 2012, some training sessions werepostponed to allow country-level organizations to be putin place; going forward, we will continue to reinforcethis program. The other objectives had been completedpreviously.2012 €2.2 billion €2.3 billion New concrete product sales increased, but overallsales of new products decreased slightly in 2012.2012 16.4% 15.8% In 2012 we continued the improvementseen over the last few years, and by year-end 16.4% ofpositions in senior management were held by women.Although we did not reach our target of 20% by end 2012,we are making progress and our Sustainability Ambitions2020 target is to have 35% of senior managementpositions held by women in 2020.socialTarget Deadline Performance Performance Why is Lafarge pursuing this ambition? What will change?2012 2011 How are we progressing against this ambition?By end 2010, establish acomprehensive Group-wideoccupational health programincluding, at a minimum,regular medical examinations.For HIV/AIDS and malaria, by end2010, Lafarge will have extendedto major emerging countrieswhere it operates, its best practiceimplemented in Africa.environment2010 Completed Planrolled-outA protocol for Health Assessment (HASOP) has beendeveloped and broadened in all countries to providea standardized approach to risk-based medicals. Thisprotocol will ensure that the relevant occupationaland personal health risks are identified and managed.Assessments are now being implemented at country level,and should be finished by 2014.2010 Completed Completed Based on its experience in Africa, the Group has developeda manual and user guide to assess and manage relevant publichealth issues. The Group is working towards the developmentof an integrated health approach to improve the well-beingof its communities. In 2012 guidelines were developedto facilitate the implementation of the health strategy.Target Deadline Performance Performance Why is Lafarge pursuing this ambition? What will change?2012 2011 How are we progressing against this ambition?Have 100% of our sites auditedenvironmentally within the last fouryears.By end 2010 reach a rate of 85%of quarries with a rehabilitation plancomplying with Lafarge standards.By end of 2010, all our quarrieswill have been screened accordingto criteria validated by WWFInternational.Sites in sensitive areas (1) will havedeveloped a site biodiversityprogram by 2012.By end 2010, cut our worldwide net (2)CO 2 emissions per ton of cementitiousby 20% compared to 1990. During2011, a new objective of reduction of33% vs 1990 by 2020 was set.Cut our dust emissions in cement plantsby 30% over the period 2005-2012.Cut our NOx emissions in ourcement plant by 20% over theperiod 2005-2012.Cut our SO 2 emissions in our cementplant by 20% over the period 2005-2012.By end 2010 have a baseline forpersistent pollutants in our cementplants for 100% of kilns andreinforce our Best ManufacturingPractices to limit emissions.Permanent 89.3% 88.4% Although we did not complete our objective, we havemade progress over the years and will continue to worktowards the target of having 100% of our sites auditedenvironmentally within the last four years.2010 84.6% 86.4% Although we reached this objective in 2011 changesin assets slightly undermined our performance in 2012.2010 100% 97% Lafarge continued to build on the 2011 mapping of all itsquarries and screened them to confirm locations that areinside internationally protected areas or within 500m ofthem using IBAT (Integrated Biodiversity Assessment Tool).2012 99.2% 49.2% In order to achieve this ambition, Lafarge and WWFemployed ecology graduates to help develop sitebiodiversity programs, in close collaboration with theenvironment and operational teams in several countries.2010 (24.7%) (23%) Our new CO2 emissions reduction objective was madepublic in June 2011 and is part of the SustainabilityAmbitions 2020 plan. By end of 2012 we madesignificant progress, in line with our new objective.2012 (45%) (39%) Although cement plants generate dust, we have continuedto make significant progress in lowering emissions throughrevamping or replacing less efficient air pollution controldevices.2012 (34.5%) (33.5%) NOx is emitted from virtually every combustion, includingcement manufacture. Since achieving our targeted reductionin 2009 we have continued to implement NOx abatementtechnologies such as SNCR (Selective non catalyticreduction) and many of our newer kilns are designed withlow-NOx precalciners.2012 (61%) (51%) SO2 can be another unwanted product of some cement kilns.We have reduced emissions by approximately 60% since 2005.2010 98% 100% Persistent pollutants are emitted by cement kilns. Lafarge isworking with WWF to achieve significant emission reduction.Measurements have been completed for all kilns but theanalytical results for recently acquired operations in onecountry are pending. Plant-specific action plans have beendeveloped to reduce emissions from a group of top-emittingplants. Progress with reducing emissions will be monitoredand reported.

2012 Sustainability Report • 1101buildingcommunitiesWhether a cement plant or a quarry, Lafarge investsin its operations for the long term. It therefore hasa special responsibility towards the communitiessurrounding these operations. This starts of coursewith its employees: their health and safety, whichis the number one priority for the Group, and theirskill development. But beyond this, Lafarge believesits success will be greater if its corporate policies andpractices enhance not only its own competitiveness butalso the social and economic conditions in the communitiessurrounding its sites. This involves developing solutionsto meet specific local challenges, whether related to health,housing, education or job creation. Each local Lafargeorganization is responsible for developing andimplementing projects that benefit both Lafarge and itscommunities, driving local socio-economic development.This is a key aspect of the net positive contribution thatthe Group intends to make to its local communities.1 health & SAFETy p.122 Employee DIVERSITy & skills p.143 COMMUNITy DEVELOPMENT& OUTREACH p.16Women in a village near Lafarge’s Arasmeta plant, India.The plant has installed a pipeline in this arid region toprovide the neighboring communities with drinking water.

12 • 2012 Sustainability Report 2012 Sustainability Report • 13Health and Safetyfranck rose,IndependentWhilst recognizingLafarge’s leadershipwithin its sector themore important factoris whether Lafargecan sustain year onyear continuousimprovement inreduction of fatalitiesand work relatedinjuries and illnesses.The reduction infatalities in 2012 iswelcome but there isstill a long way to go.The priority of thisjourney is exemplifiedby the Chairmanand CEO personallyreviewing everyfatality investigation.The deteriorationin the employee LTIFRis of concern.For the last decadeLafarge has achievedcontinuousimprovement byrigorous deploymentof standards andrisk managementprocesses withdemonstrablemanagementleadership. To losemomentum in 2012is disappointing butI commend Lafargefor rapidly identifyingand addressing theroot cause. Ensuringconsistency ofleadership is crucialand the emphasison the Visible FeltLeadership program isentirely appropriate.I am pleased with andsupport thedevelopment of theOccupational Healthprogram and theprogress achieved.Lafarge’s ambition isto reach zero fatalitiesand virtually eliminatelost-time incidents (LTI) foremployees and contractorsacross its operationsaround the world.25fatal incidents in 2012.Ten fatalities occurred on ouroperating sites while15 occurred during off-sitetransport activities.This compares to 34 fatalincidents in 2011, 16 on-siteand 18 off-siteHealth and Safety ambitions remainsan overarching priority for the Group.As Lafarge wants to be a leader inHealth and Safety for not only our sector butfor industry in general, we will continue ourefforts to implement our risk mitigationstrategy, behavior-based safety, andstrengthen our approach to occupationalhealth issues. The year 2012 saw majorreductions in fatalities both on-site and intransport operations and successful earlyimplementation of new strategic orientations.Results & Incident ReductionLafarge continued to make progress in 2012in its lost-time injury frequency rate (LTIFR)for on-site contractors, with a 19% reductioncompared to 2011. However, the LTIFR foremployees was disappointing with a 19%increase compared to 2011, affected by thesituation in 7 countries. When safety performancebegan to slip in these countriesimmediate corrective action was taken. Inmost cases we found the root-cause to besafety leadership and employee empowerment.The situation improved by year-endand good performance continues in the firstpart of 2013.Twenty-five fatalities occurred in 2012compared to 34 in 2011. Although this representsa 26% reduction between 2011 and2012, regretfully Lafarge still has too manyfatalities and cannot be satisfied until all ofthem have been eliminated. Following a 50%reduction in transport related fatalities in2011, no significant reduction was noted in2012. 80% of transport fatalities occurred inAfrica and the Middle East. Countries in thiszone are diligently and relentlessly working atimplementing the Group Transport Standardsin a challenging geographical context. Thefocus is on the five transport managementpillars: Transport Contractors, Drivers, Vehicles,Journey and Load.Strengthening local healthand safety management by developinga risk-based approachIn line with its Health and Safety ManagementSystem, the Group moved to a Risk BasedApproach starting in early 2012. The countriesassessed their Health and Safety relatedrisks, prioritized them and then addressedthem in compliance with the Group Standards,Advisories, Good Practices and Guidelines.This evolution provided countries withmore accountability and stresses individualresponsibility in managing Health and Safetyaccording to local needs, issues and priorities.To assist the countries, an Operational Health975312002200320042005975312006200720082009201020112012evolution of the employeeLTIFR SINCE 200220082009201020112012total injury freqUENCY rate(TIFR) SINCE 2008and Safety Matrix was launched in earlyOctober to provide management with a clearframework in identifying Health and Safetyissues and gaps, defining the path to correctiveactions and implementing proven goodpractices developed by the countries. TheMatrix is based on the Group’s three keypillars in managing health and safety: Rules& Standards, Leadership and Empowerment.In addition, Lafarge launched twoguidelines on the prevention of hand and eyeinjuries, representing about 30% and 20%respectively of all incidents in the Group(2010-2012). For the fifth year in a row,Health and Safety Month in June was anopportunity to engage everyone in everycountry and in every function, in raisingawareness and improving performance onrisk mitigation behaviors, not forgettingengagement with customers, contractorsand local stakeholders. Success is alsoconveyed by powerful new Health & Safetybest practices emerging more and morefrom the countries. For example, theManagement Accountability & Engagementprocess in Honduras and the “See Something,Do Something” program in WesternCanada are the types of initiatives developedlocally. Lastly, our Visible Felt Leadershipprogram, an initiative where managers andsupervisors reinforce good safety practicesand behavior, strongly continues.Developing an integratedhealth approachIn 2011 Lafarge developed a Health strategysupporting its goal of providing a healthy workenvironment and preventing occupationalillness. To complement this strategy, guidelineswere developed in 2012 to furtherexplain and simplify implementation of theHealth strategy. A fourth pillar – EnvironmentalHealth (also referred to as public health), hasbeen added to the existing three Health pillars:Occupational Health Risk Prevention, WorkplaceReintegration and Health Promotion.Five Group Health Standards were launchedin 2012. Additional Health Standards areexpected to be launched in 2013, includingone devoted to the handling of alternativefuels. Through the requirements of the RiskManagement Standard and the risk-basedapproach, the implementation of thesespecific Health Standards will be phased overthe next few years as determined by theprioritization process in each country. To assistcountries in managing Occupational Health,a guideline entitled ‘Baseline IndustrialHygiene measurements and service providers’was launched in October.

14 • 2012 Sustainability Report 2012 Sustainability Report • 15Employee Diversity and SkillsAt Lafarge, we areconvinced that diversityspeeds up change andis a source of performance,creativity and innovation.In terms of gender diversity,we have set an ambitiousobjective to have 35%of senior managementpositions held by womenby 2020.Adrian Marinescu,European Works CouncilFor Lafarge employeediversity is a necessity,considering its activitiescover a large geographicalarea with different cultures,habits, attitudes andbehaviors.performance. Lafargeinvests in maximizingemployee specificskills. It offers a positiveenvironment, whereevery employee canfeel valued so that theirskills can be used toa maximum in orderto achieve Group’s goals.For diversity to be wellmanaged, Lafarge takessurveys about: staffexpectations, incentivesand ways to stimulate theworkers, the level ofinforming and counseling,and the quality of theworkplace.For 2020increasing the numberof women in seniormanagement up to 35%is an achievable goal.Lafarge is convincedthat the personaldevelopment of itsemployees and anefficient organizationare key levers to achievecompetitive advantage,through talentattraction and retention,organ izationalperformance andinnovation-driven teams.39Hours of TrainingIn 2012 Lafarge continued toinvest significantly in thedevelopment of its employees,through regular trainingprograms, e-learning tools andon-the-job training. Managersbenefited from an averageof 39 hours of formal trainingduring the year. Non-managersbenefited from an averageof 33 hours.Lafarge’s commitment to people isbased on robust and innovative programsrelated, for instance, to diversity,skill development and career management.These programs support the Group’s strategy,performance and innovation.Strong investment in peopledevelopmentIn 2012 the Group continued to invest significantlyin training for its employees: theaverage number of training hours for managersdecreased slightly but remained highand increased by 14% for non-managers.Moreover, 88% of our management staffand 63% of non-managers benefited froman annual performance review, destined toaccompany them in defining an appropriatepersonal development plan.In its training programs, Lafarge is especiallycommitted to promoting diversity andinclusion in general. The percentage ofwomen in senior management positionsincreased from 15.8% in 2011 to 16.4%in 2012. The Group aims to increase thisproportion to 35% as part of its SustainabilityAmbitions 2020.To attract and retain talents, Lafarge promoteswell-being at work and endeavors tobecome an employer of choice in its countriesof operations. In 2012 satisfaction orwell-being at work surveys were carried outin countries such as Vietnam, Cameroonand Zimbabwe, following similar surveys ina number of European countries over theprevious two years. Brazil ranked amongthe 100 Best Places to Work. Only 4.6% ofemployees chose to leave the Group in2012, indicating that Lafarge is meeting itsobjective to fulfill employee expectations.Group reorganizations & SocialmeasuresOur employment policy aims to develop ourpeople and improve our efficiency. Jobreduction is the option of last resort. Theprinciples of our employment policy include:• Stakeholder dialogue: involving employees,employee and union representatives,local and national public authorities.• Solidarity and support to facilitate internalmobility, adapted measures for departingemployees, internal job placement andoutplacement.• Support to entrepreneurship outside theGroup. In France, for instance, Lafargecontributes to the creation of hundreds ofjobs every year. Many other countriesimplement similar actions, (training forbricklayers in India, support for privateenterprises in Central Europe, etc.) Ourobjective is to have 75% of Lafarge operationsimplementing a local job creationplan by 2020.At the end of 2012, the Group had 64,337employees, representing a reduction of3,587 employees (or 5.3%) compared toDecember 2011. The Group increased itsworkforce in Latin America, as well as inother emerging economies such as Nigeriaand Russia. However, this increase wasoffset by the reorganization of our activitiesto cope with local market situations, especiallyin China, Qatar, the United States andEurope. Divestments in China and NorthAmerica and Corporate reorganization alsocontributed to the reduction in headcount.workforce organizationOur compensation and benefits system ispredominantly handled directly by countries,except for the top management. However,some core principles applyeverywhere. These include respect for legaland contractual minimum wages and, inline with external practices, a pay packageconsisting of a fixed portion and a flexibleportion dependent on the completion ofobjectives (which include Health andDiversity is a source ofperformance, creativityand innovation, whichthe Group can exploitto achieve a competitiveadvantage.Lafarge usesdiversity to help identifyopportunities for eachemployee to increasetheir own potential, aswell as the organization’sSafety). Benefits include medical insuranceand a retirement plan. In addition,enforcing our commitment to work/life balance,43% of our country headquartersalready have a flexible hour system andmost entities offer additional holidays forfamily events.In 2012 Lafarge worked with 31,577 outsourcedcontractors (5.5% less than2011), accounting for some 33% of theworkforce (same as in 2011). Lafargeextended its Health & Safety practices tocontractors, resulting in a reduction inoccupational accidents. Furthermore, severalpilot actions were conducted in emergingcountries, aimed at improving workingconditions for contractor employees, professionalizingthe business relationshipswith contracting parties and increasingLafarge efficiency.Social dialogueLafarge values the involvement of employeerepresentatives, especially in a rapidlychanging business environment. Therefore,high quality social dialogue is soughtat the country, regional and internationallevel. Because of the Group’s reorganizationin 2012, information and consultationprocesses were conducted regularly atevery level in many countries and at theGroup’s headquarters. The EuropeanWorks Council, including its restricted committeeand health commission, met ninetimes on these topics.

16 • 2012 Sustainability Report 2012 Sustainability Report • 17figuresemployees diversityand skillsEmployees by Geographical Zone50% 50% 702010 2011 2012404060Headcount % Headcount % 11 vs 10 Headcount % 12 vs 1150Western Europe 15,626 20.7% 12,202 18.0% (21.9%) 11,448 17.8% (6.2%)North America 10,748 14.2% 9,604 14.2% (10.6%) 8,821 13.7% (8.2%)Middle East and Africa 18,843 24.9% 20,376 30.0% 8.1% 19,644 30.5% (3.6%)302030204030Central and Eastern Europe 7,652 10.1% 7,464 11.0% (2.4%) 7,041 10.9% (5.7%)Latin America 3,355 4.4% 2,535 3.7% (24.5%) 2,609 4.1% 2.9%10102010Asia 19,454 25.7% 15,742 23.1% (19.1%) 14,774 23.0% (6.1%)Total 75,677 100% 67,924 100% (10.2%) 64,337 100% (5.3%)020102011201202010201120120201020112012Employees by Business Line2010 2011 2012Headcount % Headcount % 11 vs 10 Headcount % 12 vs 11Cement 44,253 58.5% 43,392 63.9% (1.9%) 41,249 64.1% (4.9%)Average Numberof HOURS of TRAININGManagersNon-managersDiversity PROGRAMS in COUNTRIES% of entities with arecruitment and/orcareer developmentplan aimed at aspecific population.Of which, % of entitieswith a specific programfor women.% of employeesaged under 30Age diversity% of employeesfrom 30 to 50years of age.% of employeesover 50 yearsof age.Aggregates & Concrete 23,438 31.0% 23,242 34.2% (0.8%) 21,780 33.9% (6.3%)Others 7,986 (2) 10.5% 1,289 (1) 1.9% (83.9%) 1,308 2.0% 1.4%Total 75,677 100% 67,923 100% (10.2%) 64,337 100% (5.3%)(1)Including headcount of our residual Gypsum activities and Gypsum activities held for sale. (2) Including headcount of our Gypsum activities the majority of which were sold in 2011.Outsourcing by Field of ActivityIncreasing Women in Senior Management ActivityAverage number of hours of trainingage diversity(%) 2010 2011 2012(%) 2010 2011 20122010 2011 20122010 2011 2012Production 38% 36% 36%Maintenance and Cleaning 26% 27% 27%Transport 19% 20% 18%Security and Guarding 10% 11% 9%Others (IT, accounting, etc.) 7% 6% 10%Board of Directors 17.0% 17.6% 18.8%Senior executives and managers(Lafarge grades 18+)13.5% 15.8% 16.4%Senior executives (Lafarge grades 23+) 9.9% 10.8% 11.2%Senior managers (Lafarge grades 18-22) 13.9% 16.2% 16.7%Managers (all categories) 18.7% 18.8% 19.7%Non-managers 16.0% 15.0% 14.9%Managers 45 41 39 Percentage of employees aged under 30 16.7% 16.1% 15.0%Non-Managers 31 29 33 Percentage of employees from 30 to 50 years 63.3% 63.0% 63.6%Percentage of employees over 50 years 20.0% 20.9% 21.4%Employees Covered by Collective Agreements(%) 2010 2011 2012Diversity programs in countries2010 2011 2012% of entities with a recruitment and/or career development plan aimed at a specific population 45% 31% 45%Of which, percentage of entities with a specific program for women 72% 75% 76%Of which, percentage of entities with a specific program for disabled workers 29% 25% 33%Health and Safety 51% 59% 62%Restructuring 47% 57% 58%Compensation and benefits 52% 58% 62%Others 25% 35% 28%Staff employees represented by staff representativesor trade union organizations67% 70% 70%Countries with collective agreements 71% 74% 78%

18 • 2012 Sustainability Report 2012 Sustainability Report • 19Community Development and OutreachPhilippe Lévêque,CAREIn 2012 Lafargemade the strategicshift to conductits operations bycountry ratherthan by businessline. Maintaininggood relations withthe countries andthe populations thathost Lafarge’sactivities will haveto be even more atthe center of thegroup’s attention.Through this report,Lafarge demonstratesits commitment tocreating favorableconditions for a localenvironment that isconducive to all.Indeed, the groupwill have to furtheradvance its localanchoring with thecommunities aroundits sites. Communitydevelopmentprograms must becompletely integrated,at country level andin each productionunit, and developthrough tangible,measurable,significant andpositively “impactful”actions: actionsco-developed withlocal partnersrepresenting localcommunities; fairand balanced actionsthat are inscribedin the long-term,across the entirevalue chain. For this,the company mustmobilize significantresources over thecoming years. Asan engaged memberof the stakeholderpanel, I will payparticular attentionto these issues.Consistent with Lafarge’slong tradition ofcommunity development,one of the three mainpillars of Lafarge’sSustainability Ambitions2020 focuses on “BuildingCommunities”. Building onour experience, it sets newambitious targets for alloperations worldwide.2,500meetings with stakeholderswere recorded in 2012.Dialogue and socio-economicdevelopment are at the heart ofLafarge’s approach towardslocal communities and ensurethe success of its actions.Lafarge believes its success will be greaterif its practices enhance the competitivenessof the company while simultaneouslyadvancing social and economicconditions in the communities in which theGroup operates. We have three core priorities:enhancing stakeholder relations, being a driverof local socio-economic development and supportinglocal communities in areas of Lafargeexpertise. Through volunteer work within thesepriorities, we can leverage our contribution tourban and community development in a professionaland optimized manner.partnership with communitiesOver the last 10 years Lafarge has developedand implemented a methodology which is usedby its operations to identify and engage withstakeholders and as a framework to evaluateactions with communities. In 2012 64% ofcement industrial site managers and 41% ofA&C area / product line managers had participatedin stakeholder training – a decreaseon 2011 results. This reflects the Group reorganizationin 2012 that led to the postponementof certain stakeholder actions andtraining until the new organization was inplace. Lafarge focuses on two main outputs:(1) the number of sites meeting regularly withtheir communities and (2) the number of sitesdeveloping stakeholder engagement actionplans. These indicators track both planningand dialogue for each site. Improvementswere shown during 2012 within A&C, , with40% of sites meeting with their stakeholdersregularly and 29% developing action plans.Figures for Cement are 77% and 64%respectively, a slight decrease from 2011.During 2012 45% of sites reported difficultrelations with local stakeholders, consistentwith levels recorded in 2011. Of those sitesreporting issues, 68% classified them asminor incidents which could be quicklyresolved; a further 15% reported conflicts thatimpacted on the sites’ business. Case studiesdrawn from examples of difficult relations incountries such as Slovenia, India, Indonesiaand the United States are available on theLafarge website. These examples reinforceour belief that it is critical to be an activemember of the community, and that thisbelonging and the local nature of our businesscreate expectations that we must address.Being a driver of localsocio-economic developmentLafarge intends to be a driver of socioeconomicdevelopment, especially in thefields of job creation, education, health,urban development and environmentalconservation. Each year our sites implementprograms to address community needs incooperation with local NGOs. In 2012 over1,000 community programs were reportedby Lafarge sites.Examples include setting up an educationalcampaign for road safety in Egypt,supporting community educational skills inIndia, sharing in-house biodiversity expertisein the United Kingdom, support toentrepreneurship in Romania andMorocco, alongside long-running initiatives,such as public health programs inUAE, Ecuador and Zambia (where mobilemedical units tour neighboring communities).Examples from all around the worldare available on www.lafarge.com.Volunteer working to boostlevel of employee engagementoutside our operationsVolunteer working was identified as anopportunity for employees to contributeto urban development and communities.In 2012 over 15,000 volunteering hourswere recorded, with employees involvedspending, on average, just over a dayvolunteering on community projects.Examples include a river clean-up in theUSA and a project to improve the qualityof life of disadvantaged citizens in Serbia.For 2013 the challenge will be to plan andimplement volunteering programs incountries with various socio-economicand cultural contexts. Our operationsworldwide will be able to capitalize onongoing initiatives such as the one implementedby Lafarge Cameroon since2009; Lafarge volunteers are given theopportunity to work with a local entrepreneurto build wells and train villagers onthe maintenance of water cleanliness toavoid the spread of diseases such as cholera.Volunteers have also joined WWF’sefforts for reforestation. At the Figuil plantin North Cameroon, over 900 workinghours have been dedicated to volunteeringand 4,500 trees have been planted.measuring socio-economic footprintIn 2011 Lafarge and CAREFrance developed a tool tomeasure the socio-economicfootprint of operational sites,through collection andanalysis of qualitative andquantitative information.In 2012 the partnershipfocused on piloting the useof the tool. As a result,one-week long visits weremade to Mbeya plant(Tanzania) and Otavalo plant(Ecuador), where workshops,data collection andCase Studyinterviews with stakeholderswere undertaken by teamsconsisting of Lafargepersonnel andrepresentatives from CARE.These trips aimed atimproving the functionalityof the footprint tool andproviding the site team withfeedback and proposedengagement actions. This isparticularly important in thecontext of the SustainabilityAmbitions, which target theuse of the tool by 75% ofcountries by 2020. ForMbeya and Otavalo, the useof the tool will allow the siteto communicate their roleto stakeholders, in termsof direct, indirect andinduced employmentand the level of economicactivity generated. Ideashave emerged, includingdeveloping partnershipswith local companiesto tackle local issues suchas access to water.

2012 Sustainability report • 2102buildingsustainablyUrbanization is one of the 21 st century’s biggest challenges.By 2030 two thirds of the world’s inhabitants will be livingin towns and cities. The built environment will therefore beat the center of many social and environmental challenges,ranging from poverty, health and quality of life to climatechange, waste management and resource consumption.These issues are core to Lafarge’s business, where we worktowards designing more eco-efficient and cost-effectiveproducts and solutions and ensuring sustainable sourcingfor our operations. The Group is also partnering with othersin the construction chain to promote more sustainableconstruction practices and develop solutions for affordablehousing. Several billion people today lack access to decenthousing and an estimated one billion live in slums.To contribute to overcoming financial obstacles in itscommunities, Lafarge, in partnership with a number ofgovernment agencies and NGOs, has set up a microcreditprogram for affordable housing.1 SuStainableconStruction & citieS p.222 acceSS to houSing p.243 SuStainable Supply chain p.27New housing project in paris, France. Lafarge’s ultra-high performanceconcrete Ductal ® has been used to create an innovative ‘latticework’facade, designed to imitate the surrounding vegetation.

22 • 2012 Sustainability report2012 Sustainability report • 23susTainable consTrucTionand ciTieslivia TironeArchitectsustainability needsto permeate thebuilt environmentno matter wherewe are. In the presentpositioning it isclear that Lafargerecognizes theurgency of addressingurbanization– and this alreadyincludes engagingwith less formalsectors, that hostclose to 1 billionpeople in largeand very large cities,where the paceof transformationrarely allows roomfor planning.Lafarge is beginningto interact with thesenew markets byproviding them withthe products theyhave selected fromthe existing offer, butthere are many moreopportunities thatneed to be addressedto improve livingconditions in theseinformal urbancontexts. In isolation,governments, NGOsand communitiesdon’t seem to havethe required powerto reach these vastpopulations and totackle their real needs.Is there a localcreative leadershiprole Lafarge cantake on and support,collaborating withthe abovementionedactors and involvingthe wider businesssector, to embrace theopportunities of thestill unraveleddimensions of theurbanization challengeand make a largerdifference to these1 billion people?Rapid development oftowns and cities worldwideand the associatedsocial, economicand environmentalchallenges are drivingchange throughout theconstruction sector.Lafarge is innovatingto develop moresustainable, cost-effectiveconstruction solutions.€116mLafarge invested€116m in 2012in product innovation andindustrial performanceimprovement.Abuilding’s environmental footprintmust be optimized over its fulllifecycle, starting from the designphase. this is why lafarge has createdan in-house team of constructionspecialists.this team provides advice on buildingdesign and engineering from a very earlystage in a given project, as well as on thesolutions that lafarge can provide tooptimize building performance throughoutits usage phase and contribute to climatechange adaptation.Tailoring innovaTion To meeTlocal markeT needslafarge takes into account local needsand product safety requirements (1) , whichcan vary considerably due to specificenvironmental constraints, culturalhabits, social needs and regulatoryframeworks. in 2012 lafarge Shui on inchina launched a new, innovative constructionsystem called Wallmaster tomeet the challenge of chongqing’s rapidurban growth while complying with localregulatory requirements in terms ofenergy efficiency. Wallmaster is a newwall-fill and thermal solution using autoclavedaerated concrete blocks, coupledwith a lightweight concrete solution forfloor insulation. it contributes to improvingenergy efficiency in buildings and asa ready-mix solution it is easier to installthan existing local solutions, allowing asignificant reduction in construction timeand costs.our innovation is supported by our inhouseresearch center. Situated nearlyons in France, it is the world’s leadingresearch center on building materialsand brings together approximately 240researchers of over a dozen differentnationalities and with a wide range ofscientific competencies.our research teams work in close collaborationwith the group’s regional technicalcenters and constructiondevelopment laboratories (cdl) aroundthe world. Following the opening of a firstcdl in chongqing (china) in September2011, a new laboratory was inauguratedin Mumbai (india) in March 2012. in2013 we plan to open new laboratories inboth algeria and brazil. these laboratoriesallow lafarge to respond to constructiontrends in these key markets, adaptingour solutions in order to address specificlocal needs.delivering on our valueproposiTionlafarge reorganized its teams in 2012 tobuild a strong value proposition for localconstruction markets around the world.Sustainable construction is now under theresponsibility of the executive Vice presidentfor innovation, within a function thatbrings together the whole value chain,from research and development and marketingby specific segment to distribution.in 2012 the group enriched its catalog ofefficient building Systems, adding newsystems as well as guidelines on commercializationand on how to adapt systemsto specific local contexts.this catalog provides detailed informationon the technical, environmental and aestheticperformance of concrete, based ona wide range of construction projects fromaround the world. it also includes calculationtools to model the contribution oflafarge’s different concrete solutions tothe cost and overall mechanical and environmentalperformance of buildings.parTnering for successlafarge is convinced that the challengeof sustainable construction requires a collectiveeffort. We therefore work in partnershipwith all the other actors in theconstruction value chain: architects, engineeringdesign offices, property developersas well as world-class researchcenters and universities. lafarge continuesto take the lead in a number of sectoralbodies promoting sustainableconstruction solutions and standards.We co-chair task forces within the cementSustainability initiative (cSi), launchedunder the auspices of the World businesscouncil for Sustainable development(WbcSd) and which brings together 24major cement producers with operationsin more than 100 countries. We are alsoactive members of cembureau, the europeancement association and of manynational associations.in 2012 we took the decision to co-chairthe second phase of the WbcSd’s energyefficiency in buildings initiative (eeb 2.0)with united technologies. bringingtogether major companies in the constructionvalue chain, eeb 2.0 focuses onthe implementation of the recommendationsand roadmap that were producedas part of the initial eeb project for atransformation of the building sector toreach an 80% reduction in energy use by2050. eeb 2.0 will involve both publicand private initiatives to develop energyefficient building projects at a variety oflocations around the world.(1)lafarge maintains for its customers’ use an up-to-datedata base with precise information on product safety andon the related handling requirements.A building’s environmentalfootprint must be optimizedover its full lifecycle,starting from the designphase. Lafarge’s in-houseteam of constructionspecialists provide adviceon building design andengineering very earlyon in a project.

24 • 2012 Sustainability report2012 Sustainability report • 25affordable HousingpiloTing projecTs around THe worldworld urban forumfranceHondurascameroon nigeriaZambiaindiaTHe pHilippinesindonesiaLAFArge showcAsed its Affordablehousing program at UN habitat’s worldUrban Forum on ‘The Urban Future’in september 2012. As part of theprogram, Lafarge’s constructiondevelopment Lab in Mumbai (India)is developing solutions to increasethe durability of traditional earthenhouses (see photo).The Lafarge AffordableHousing Projectaims to implementa range of initiativesto provide decent,affordable housingand financing forhome extensions,constructions andrenovations, for 2 millionpeople by 2020.€10mThis is the amount targeted tobe invested over the next 2years as part of Lafarge’smicrofinance programfor affordable housing.In 2012 Lafarge signed its firsttwo partnerships under thisprogram: with GlobalCommunities (previously CHF)and the Agence Françaisede Développement.The lafarge affordable housing projectis our business response to one of thegreatest development challenges ofour time, with 4 billion people at the “baseof the pyramid” (1) and many people excludedfrom decent housing in developed countries.lafarge is committed to contributing to urbandevelopment by delivering constructionsolutions for everyone. to do this, innovationin materials is only one part of the solution;we also need innovative finance, innovativeways of delivering solutions to the end-userand innovative partnerships. For lafarge, thismeans creating new markets andcontributing to urban planning efforts forgrowing cities.creaTing an affordable Housingbusiness offerin order to achieve its ambition of enabling2 million people to have access to affordableand sustainable housing by 2020, lafargehas set up a dedicated team at group levelto provide expertise and coordinate projectsin the key market segments identified asbusiness opportunities: microcredit forindividual home improvement or extension,slum rehabilitation, developers’ housingprograms and new social housing projectsin developed countries. projects are runlocally by a dedicated manager, with groupsupport, and are fully integrated into themarketing plans of the countries concerned.innovaTive finance for HouseexTensionsthe lafarge microfinance program foraffordable housing brings together thecomplementary competencies ofmicrofinance institutions, retail networks andlafarge teams to develop a tailor-made localaffordable housing offer. lafarge salespeopleprovide promotional materials to localretailers to present the offer to potentialcustomers and they also publicize this viavillage meetings and at local markets.customers are provided a loan with amicrofinance institution selected by lafarge(approximately 2,000 euros on average).lafarge technical experts then provide adviceon design and construction, using a lafargecatalog of house designs and innovativeconstruction systems developed specificallyfor this type of construction project.customers thereby receive assistance andsupport throughout their project.this program is still in its infancy. amicrofinance pilot project was first run inindonesia and then rolled out in honduras,nigeria, the philippines and Zambia during2012, after adaptations for the specificcharacteristics of each market.delivering concreTe in informalseTTlemenTslafarge has developed an innovative solutionto deliver concrete to slums in Mumbai, indiaand plans to expand its reach in 2013, therebycontributing to the urban development of oneof the world’s fastest growing economies.concrete offers a number of advantagescompared to the traditional solutions used inslums, in particular speed of implementationand resistance to tropical weather conditions.the main challenge is delivery, as customersin slums typically need small quantities anddelivery cannot be carried out by truck due toroadways that are not adapted to large vehicles.lafarge has set up a dedicated concrete plantto serve these settlements and has developedan innovative solution to deliver concrete inbuckets or bags by rickshaw to slum dwellers.the lafarge construction development lab,which opened in Mumbai in 2012, hasdeveloped a new formulation for this concreteto ensure quality and homogeneity when it isdelivered to the customer.(1)the bop population segment is defined as those withannual incomes less than $3,000 per capita per year(2002 purchasing power parity).sHeila kHamaamerican center for economictransformationlafarge’s affordableHousing ambition is oneof the most importantsustainability issues in thecompany’s long term strategybecause it addresses a universaland ever increasing humanchallenge. Global demographicsconsistently point to threemajor challenges of sustainabledevelopment. Firstly, an everincreasing rate of populationgrowth. Secondly, a rise inthe numbers and levels ofpoverty. Finally, a rapid rateof urbanization with morethan half of the world’s 7 billioncitizens in cities today. All threeplace tremendous pressureon an already decliningnatural resource base andare particularly severein developing countries.Lafarge’s partnership approachis particularly appropriatebecause urbanization to theworld’s poorest not only callsfor affordable housingalternatives but for urbanregional planning whichincorporates sustainability.This is the role of nationalgovernments, but sadly manyeither lack resources or areindifferent to the negativeimpact of poor planning.Therefore, to the degreethat Lafarge is able to raiseawareness and create a senseof urgency in the countriesin which the company operates,this will be a valuable first stepand contribution to a globalproblem. However, in the longrun strategic partnerships withall of Lafarge’s stakeholdersis a critical success factor’.

26 • 2012 Sustainability report2012 Sustainability report • 27case sTudyfugitant uitaniquepurum grauiter rerumultaque sunt oculisdumhaec in orienteaguntur, arelate hiememagens constantiuspost theatralisludos atque circensesambitiososusTainable supply cHainconstruction of an innovative duplex residence designed to achieve zero net energy use. The use of precastconcrete panels, produced at a nearby lafarge facility, allowed for fast and efficient on-site assembly.a successful experimenT in susTainable Home designand consTrucTion To acHieve Zero neT energy consumpTionOver the past three yearsLafarge has workedtowards the integrationof sustainabilityassessment into itssourcing process . Aspart of its SustainabilityAmbitions 2020, theGroup has committedto ensuring that itssupply chain respectsthe principles of the UNGlobal Compact.since May 2012 country purchasingteams have started to hold suppliersresponsible for compliance with theten un global compact principles in all purchaseorders. as of december 2012, lafargehas 13 countries who have adopted the standardclause. For 2013 our target is to have allcountries comply with this requirement. inaddition, lafarge has decided to carry out acategory risk mapping of its suppliers to assesstheir sustainability risk. the group isevaluating suppliers on potential risks linkedto social, environmental and ethical practices.in order to facilitate the evaluation, lafargeworks with ecovadis, a company that specializesin supplier assessments. in 2012 over1,000 critical suppliers were identified for assessment.Where necessary, country purchasingteams will use this information towork with suppliers on action plans. this willcontribute to capacity building and improvelocal sustainability practices. our ambition isto have 12,000 suppliers assessed by 2015.susTainable sourcing in paperlafarge purchases approximately 1.1 billionpaper cement bags each year. as part of itspartnership with WWF international, thegroup announced to its suppliers in 2012 thatit would not accept paper bags containingfiber from “unknown” or potentially “controversialsources”. as a result, from 2013 alllafarge suppliers use paper from wood thatis sourced legally and non-controversially.LAFArge IN wesTerN cANAdA,in partnership with international architectureand engineering firm stantec, developed aninnovative, energy-efficient, precast concreteduplex residence. The house was builtfor two families selected by habitat forhumanity in Alberta, canada. The aim wasto design and build a cost-effective, zeronet energy housing solution that could serveas a model for future sustainable housingdevelopment.cUTTINg edge BUILdINg INForMATIoNModeLINg was used in the design phaseto assess physical and functionalcharacteristics of the house. Lafarge’sprecast concrete was then selected as theprimary building material for an air-tight andenergy-efficient building envelope. Lafargeready mix concrete was used for the duplex’sfooting and basement floor slab and toprovide a 2-inch layer of topping over theprecast hollow core slabs.The dUpLex Is desIgNed To AchIevezero NeT eNergy Use, i.e. over a yearits energy consumption for heating, cooling,lighting, water and cooking should be zero.It has photovoltaic and thermal solar panelson the roof and the units share ageothermal heat pump for heating andcooling. It takes advantage of the densityof the concrete, using its thermal massto retain heat from the daytime sun andrelease it during the night. The homes arealso more fire and sound-resistant thanstandard residences. The construction istargeted to achieve platinum-level Leed ®certification from the canada greenBuilding council.MAssAchUseTTs INsTITUTeoF TechNoLogy will monitor, over athree-year period, the energy performanceof this unique duplex, with its two residentfamilies, compared by unit, as well asagainst similar wood frame structures inthe area to determine the added value ofsustainable precast concrete constructionfor residential applications. In themeantime, Lafarge has already appliedlessons from the duplex to new assistedliving and mid-rise multifamily projects.alasTair mcinTosH,Center for Human Ecologyi have reached mytenth year on thelafarge Panel andhave decided it istime to move on.But what a report onwhich to exit! Here,on page 27, we see thegroup placing higherexpectations on itssupply chain. Thismatters becausesustainability cannothappen in isolationfrom suppliers.In such ways, Lafargeraises the level of thewhole industry’splaying field. Wehear a lot aboutcorporations drivingstandards down, buthere is one that drivesthem up. That ishow we can togetherleverage a betterworld.I am alsopleased to see areminder (p.43) ofLafarge’s pioneeringrecognition of the UNDeclaration on theRights of IndigenousPeoples, and seekinggood relationshipswith communities.So much is beingachieved by BrunoLafont’s team. On rareoccasions over thepast decade when Ihave raised concernsthey have always beenpromptly addressed.My time on the panelhas been rewarding,effective andenriching, and I moveon with muchadmiration and everyblessing.

2012 Sustainability Report • 2903buildingthe circulareconomyLafarge believes it is possible to create synergies betweenmultiple industries so that waste from one company can beused as fuel or raw materials for another, thus preservingnatural resources. The Group has developed this practiceover the past three decades, helping to eliminate wasteand reducing the overall environmental footprint of itsoperations. Lafarge has renewed its commitment to buildingthe circular economy in order to address the challenges ofurbanization and the development of more natural resourceand waste-intensive lifestyles. Lafarge’s goal is to makea net positive contribution to society and nature throughimprovement in the key areas of climate, water, air, rawmaterials and energy. All are essential to the balance ofecosystems, agriculture, human settlement and economicgrowth. We need not only to preserve biodiversity butto enhance it. We need to contribute to better water and airquality and improved energy and raw material management.Beyond pure environmental benefits, these actions createjobs and contribute to sustainable societal development.1 Energy consumptionand resource management p.302 Natural resources:Biodiversity and water p.323 Co 2 & air emissions p.37Bath cement plant, Canada. As part of the Group’s partnershipwith WWF, the plant has developed a project to grow crops for use asbiofuel in its kiln, reducing fossil fuel use, CO 2 emissions and costs.

30 • 2012 Sustainability Report 2012 Sustainability Report • 31Energy consumption andresource managementour alternative fuel projects worldwidefigures% 1512963Mature co-processingof alternative fuelsNewdevelopments0201020112012Solid wasteLiquid wastePure biomassTiresBreakdown of alternative fuelsIn 2012 Lafargecontinued to increase itsuse of alternative fuelssuch as industrial ormunicipal waste andbiomass. As part of itsSustainability Ambitions2020, the Group aims touse 50% of non-fossilfuels in its cement plantsby 2020, 30% of whichshould be biomass.5.4million tonsThis is the CO2 avoided fromLafarge plants in 2012 thanksto the use of alternative fuels.Our 50% alternative fueltarget for 2020 wouldrepresent 7.4 millions tonsof CO2 avoided.We believe that integrating our operationswithin the circular economyis the most effective responseto the challenges of natural resourcemanagement and the growing competitionfor resources between different activities. Byextracting value from waste, Lafarge can notonly improve its competitiveness by reducingfuel costs, but also save non-renewableresources and cut net CO 2 emissions byreducing fossil fuel consumption. Furthermore,this activity provides a service to thecommunity, offering a sound route for thesafe disposal of a broad range of waste, andthe processing of waste in Lafarge cementplants generates local economic activity.The eight golden rules of ourindustrial ecology policyThe growing importance of this activity droveus to rework our industrial ecology policy in2012, which today includes eight goldenrules:• Protect the health and safety of ouremployees, contractors and localcommunities• Respect the environment• Guarantee the quality of our cementproducts• Have appropriate operational controls• Have appropriate waste quality control• Ensure full transparency with our stakeholders• Be recognized as a service provider• Use sustainable biomass productionThrough 2012 we progressed each monthin the fuel substitution rate and reached anaverage of 14% for the year (15.5% on anequity consolidated basis). We continued todevelop our activities in all countries, utilizingmany types of waste, with a growing emphasison biomass and municipal waste.Projects in over 40 countriesA portfolio of projects in more than 40 countriesis currently being developed by theIndustrial Ecology team, including partnershipswith local companies or investmentfunds specializing in sustainable developmentprojects. New installations were startedin Asia, the Middle East, Europe, LatinAmerica and North America based on localwaste generation. R&D and knowledge progressedin 2012 in the area of municipalwaste so that today Lafarge is in a positionto offer municipalities a complete solutionfor the treatment of this waste stream.An increasing focus on biomassWWF International was invited to review andchallenge Lafarge’s roadmap, as part of itsglobal partnership with the Group. In particularwith respect to biomass, Lafarge’spolicy has since been extended to avoidcompetition with food production. In 2012the Group also started working with WWFin Hungary to develop a project that couldallow the use of various local biomasssources as alternative fuel for its cementplant, including non-indigenous invasiveplants that are growing out of control.In Uganda we distributed more than 1 millioncoffee seedlings to help a local populationof more than 40,000 people create anew farming activity and thus increase localprosperity. Coffee husks will be a source ofalternative fuel for our Hima cement plantafter the coffee beans are extracted.Several captive plantations on the Africancontinent are being studied, incorporatingkey principles such as not replacing food,sharing prosperity, integration with otheragriculture benefits for the local populationand maintaining or improving biodiversity.Industrial by-productsas alternative raw materialsIn 2012 we also prepared to roll out projectsin 20 plants to increase the use of alternativeraw materials, such as slag from steel-industryblast furnaces or fly ash from coalfiredpower plants. These cementitiousproducts have similar hydraulic bindingproperties to cement and can be used eitheras substitute raw materials or to replaceclinker in the finished product (cement), toproduce less carbon intensive blended cements,and offer specific properties in awide range of applications.Scaling up our recycling practicesFor many years Lafarge has used recycledmaterials in its manufacture of aggregates,concrete and asphalt, helping to reduce theuse of virgin materials and raw material costsand offering other industries specific usesfor some of their waste products. As part ofits Sustainability Ambitions 2020, Lafargeset ambitious new targets for recycling: by2020, 20% of its concrete will contain reusedor recycled materials and 15 milliontons/year of its aggregates sold will be manufacturedfrom recycled/reused materials.Lafarge has major recycling operations inthe UK, Canada, the USA and France andin 2012 the Group sold 2.66 million tons ofrecycled aggregates, produced from a varietyof materials, including construction anddemolition waste, glass and recycled asphaltpavement. It also launched Aggneo, arange of high-quality recycled aggregates,offering a performance close to natural aggregatesin applications such as pathways,road bases and bedding sand. Source materialsare carefully processed to separatedeleterious and other recyclable materials,such as steel, gypsum and asphalt, and toensure consistency and performance.Lafarge continues to engage with specifiersand other influencers to help ensure thatspecifications and quality expectations allowfor the highest possible use of recycled aggregates.As a result these types of materialsare increasingly being used for the productionof concrete products.public positionBuilding the circular economyfor the long term requires working on aregional basis and fostering recycling andvaluable use of waste locally. Lafarge isconvinced that it is possible to create asymbiotic relationship between multipleindustries so that waste from onecompany can be used as fuel or rawmaterials for another. Strong publicincentives are needed to develop therecycling industry, by limiting wasteburying and promoting the reuse of wastematerials from an industry by others.

32 • 2012 Sustainability Report 2012 Sustainability Report • 33BiodiversityfiguresProgress with ambitions for rehabilitation and biodiversitysample of 708 quarries2012Achievement1001 2 3% of quarries with rehabilitation plans (target 85% by 2010) 84.6%80% of quarries screened for international biodiversity sensitivity usingIBAT data 100%60% of quarries which operate within or adjacent to a protected area (1) 18.5%Of which have a site biodiversity program (target 100% by 2012) 99.2%% of quarries which have red-listed species (2) 17.8%% of quarries engaged in formalized partnerships with NGOs for natureconservation 34.6%402002011201220112012201120121 Screenedfor biodiversitysensitivity2 With rehabilitationplan3 Sensitive siteswith a biodiversitymanagement plan(1)Quarries within 500 m of IUCN I-VI, Ramsar, IBA, Natura 2000.(2)A species categorized by the IUCN as threatened.Active quarriesIn 2012 Lafarge continuedto professionalize itsbiodiversity practices,developing a BiodiversityManagement Plantemplate to assist sites intheir work to protect andpromote biodiversity. Aspart of its SustainabilityAmbitions 2020, Lafargeaims to implement theseplans in all its quarriesand cement plants.99.2%Lafarge implementedBiodiversity ManagementPlans in 99.2% of its quarrieslocated in or near biodiversitysensitive areas.Biodiversity is an area of longstandingimportance for Lafarge and one of theoriginal work streams of the Grouppartnership with WWF International. Ecosystemsplay an important role in the quality oflife in an area and our operations can impact(positively or negatively) on local ecosystems.One of the ways in which we manage impactsis through our actions to protect and promotebiodiversity at our sites. This work, carried outin partnership with local stakeholders, is keyto addressing the concerns of the communitiesin which we operate and also helps tosecure our license to operate.New tools to help sites managebiodiversityIn 2012 we finalized a Biodiversity ManagementPlan (BMP) template for roll-out acrossour quarries. This template helps site teamsto identify specific conditions to take into accountwhen developing the site plan, suchas the targets in regional biodiversity actionplans, the surrounding flora and fauna andrecommendations from local experts andnature groups. In 2013, Lafarge will work withWWF International to adapt this template foruse in other sectors.Lafarge, in partnership with IUCN France,WWF France and WWF International, alsobecame one of the first companies to developa toolbox of methods to monitor biodiversityover time. The toolbox includes simplemethods such as the use of photographicimages to track the change in habitats overtime, but also more complex methods suchour Long term Biodiversity Index (LBI), whichwas revised and released internally in 2012following extensive consultation with manystakeholders including our International BiodiversityPanel.Raising Awareness on BiodiversityLafarge continued to work on raising awarenesson biodiversity both internally and externallyin 2012. Following the developmentin 2011 of a groundbreaking BiodiversityGuidance manual, in partnership with WWFInternational and the Group’s InternationalBiodiversity Panel, an internal competitionwas conducted in 2012 to promote the implementationof this guidance at both quarry andnon-quarry sites. The winning projects, selectedby the Panel, were those that showedthe best application of the guidance to theirspecific local project. The Biodiversity Guidancewas also publically released at the24 th Wildlife Habitat Council symposium inNovember. Lafarge participated in theRamsar Conference held in Romania in July.Lafarge presented on biodiversity and watermanagement at the event alongside WWFand a wetland area created in Lafarge’s FuseaQuarry was one of the official visits open toconference delegates.Roll-out of the BiodiversityManagement Plan templateIn 2011 our screening program using IBAT,a global mapping tool of international biodiversitysensitive areas, identified 18% of ouractive quarries as being in or within 0.5 kmof a sensitive area. Lafarge set an objective todevelop Biodiversity Management Plans(BMPs) for these sensitive quarries by 2012.In order to achieve this, Lafarge and WWFemployed ecology graduates to help developthese plans in close partnership with the environmentand operational teams in severalcountries. This was a great opportunity forstudents to get practical experience and toshare the new techniques they had learntthrough their studies. Thanks to these partnershipsLafarge was able to complete 99.2%of its BMPs of sensitive quarries by yearend, just short of the 100% target.Best practice in biodiversity managementLAFARGE’S internal 2012BIODIVERSITY AWARDS highlightedmany good examples of biodiversitymanagement at both its quarry andnon-quarry sites. The winning quarryproject, selected by the Group’sInternational Biodiversity Panel,concerned the Saint Etienne quarryon Reunion Island. Lafarge’s existingproduction site and new quarry site arelocated either side of the Saint EtienneRiver, which is internationally recognizedfor high biodiversity. Following Lafargeresearch, a new river crossing was builtto safeguard the passage of migratoryfish and macro-crustaceans, includingsome IUCN Red List species. MonitoringCase Studyis undertaken every three monthsto ensure the effectiveness of the newmeasures. This initiative, recognizedas the first of its kind on Reunion Island,involved hydrology and aquatic speciesexperts, as well as consultation withlocal fishermen and other localstakeholders.THE Winning NON-Quarry PROJECTwas Lafarge’s Alpena plant in the USA,which has developed a pollinator gardento provide an active biodiversity/wildlifearea near the plant for the localcommunity. The aim is to increasepublic awareness of the importanceof pollinators in our lives and providea learning environment to view them.The garden improves neighborhoodaesthetics and provides a green, relaxingoasis in the city’s industrial corridorwhile enhancing the habitat for pollinatorand other species. The garden is selfsustaining,with a rainwater collectionsystem to help weather dry spells and aselection of hardy, disease, insect andanimal resistant plant species.

34 • 2012 Sustainability Report 2012 Sustainability Report • 35Waterfigureslafarge’s water footprint in 2012(in million m 3 ) 2012Cement Aggregates Concrete TotalBasinRelated riskHigh0 15 0Low riskMedium riskSurface water including from rivers, lakes, wetlandsand oceans190.6 29.7 1.2 221.5Ground water Ground water 21.4 15.9 3.2 40.5Medium083 0High riskRainwater harvest 2.3 13.3 0.5 16.1Municipal water supplies or other water utilities 5.5 1.5 4.7 11.7Total withdrawal (1) otal withdrawal 219.8 60.4 9.6 289.8Water returned to same catchment area 165.4 0.0 0.0 165.4Net withdrawal Net withdrawal 54.4 60.4 9.6 124.4(1)According to GRI G3 EN 8.Low063 0Low Medium HighWater Risk FilterUsing the WWF Water Risk Filter,Lafarge identified 15 cement sitesas being located in high-risk basins.IndustryRelated riskLafarge has beenworking for severalyears to measure andreduce the waterfootprint of itsoperations. Today it isgoing beyondconservation to evaluatewater risks in the widerbasin and engage withother stakeholders inhigh-risk basins topromote sustainablewater management.15cement plants identified throughthe WWF Water Risk Filteras being located in high-risk waterbasins. As part of its SustainabilityAmbitions 2020, Lafarge will workwith local stakeholders in thesehigh-priority basins to improvewater management.Water is an essential and, in someregions of the world, increasinglycontested resource. While wehave already taken actions to assess andreduce our water footprint, it is not enoughfor Lafarge to be an efficient water user atsite level: we need to contribute to responsiblewater stewardship in the wider waterbasin. In 2012, we therefore moved fromaddressing site-level water use to examiningwater risks, to allow us to identify river basinsfor high-priority actions.Lafarge’s water footprint in 2012The systems that we have put into place tomeasure and report on our water footprintaccording to GRI definitions have given us aclearer picture of water withdrawals at ouroperations. In 2012 our reported measuredwater withdrawal increased; the installationof meters at several aggregates sites enabledus to correct previous underestimations.However, over the last three years, we havedeveloped good practices across all productlines, as part of our climate adaptation strategy,and we have managed to reduce thedependency of our sites on municipal andgroundwater supplies. In the UK, for example,our Cement business received theLafarge Business EMAS (1) Award for its innovativepractices in water managementacross six of its sites, which today meet alltheir process water needs through rainwaterharvesting and recycling.Establishing high priority basinsIn 2011 Lafarge set an objective to assessthe water risk for its cement and aggregateoperations worldwide in order to identifysituations at risk and set plans accordingly.A first risk assessment exercise was carriedout in 2011, focusing on the sole dimensionof water scarcity. This showed that 25% ofour cement production was located in areasof water scarcity or high water scarcity, basedon 2025 projections of Annual RenewableWater Supply per Person (see Lafarge SustainabilityReport 2011).In 2012 we completed this assessment byusing the WWF Water Risk Filter (WRF),which takes into account not only physicalrisks such as water scarcity, but also regulatoryand reputational risks. The graph hereaftershows the evaluation of our cementactivities.Fifteen Lafarge cement sites were identifiedas being located in high-risk basins (indicatedin orange in the graph). The site-specificrisks for these operations were rankedas medium. Ten priority basins have beenidentified: Indus (Pakistan), Damodar & Mahanadi(India), Djebel Zerouala, El Fedj andMenasria (Algeria), Panuco (Mexico), DeadSea (Jordan), Hong (China), Groot-Vis (SouthAfrica), Tigris and Euphrate (Iraq), Nile(Uganda). Lafarge will work to reduce waterimpact and develop a watershed sustainabilityplan in these water impacted areas.Engaging with local stakeholdersFrom 2013 we will start analyzing the specificitiesof each basin by collecting local informationon physical characteristics andlocal regulatory frameworks, identifying anyexisting water initiatives and platforms andmapping key stakeholders with a role in watershedgovernance. On this basis we willdefine the appropriate type and level of localengagement for each water basin. Typicalcollective action areas for Lafarge could becontributing to the provision of water for agriculturalneeds, reuse of waste water, stormwater management and flood control, contributingto projects to access safe water andsanitation or educational and public awarenessprograms.(1)European Eco-Management and Audit SchemeUsing the WWF Water Risk Filter (WRF),Lafarge identified Pánuco basin, whereits Tula plant is situated, as one of its top15 high-risk basins. The basin’s physicalrisk is high (3.9/5), due to its proximityto “Aguas del Valle de Mexico” that coversMexico City and its region, with its21.4 million inhabitants. Panuco river islocated downstream from “Aguas del Vallede Mexico” and receives part of the wastewater of Mexico City. Most of the waterconsumed in the basin (4,854 hm 3 )is for agriculture and domestic use.Lafarge Mexico’s water consumptionin 2012 was 0.15hm 3 .EFFECTIVE ACTIONS TO REDUCE SITEWATER FootprintThe Tula plant’s WRF rating was good asit had already reduced its waterconsumption. It had installed a watertreatment station, recycling the treatedwater in its production process to achievea 15% reduction in groundwaterwithdrawal, and created two ponds forrainwater harvesting, collecting over500m 3 of water in the wet season forindustrial cooling and irrigation. The planttoday consumes 75 l/t cement produced,Case StudyWorking towards water stewardship in MexicoIIIIIVIIIranking it among Lafarge’s top tenperforming plants.VIVIIIVIXengaging WITH other ACTORSIN THE BASINLafarge Mexico also started several externalinitiatives with stakeholders, in line withthe Group’s ambition to work on improvingwatershed management in high-risk basins.These include participation in a trainingprogram on water preservation at nearbyschools, and work with landowners andnational water authorities to reduce waterconsumption for agriculture, helping toreduce pressure during shortages in thePánuco river. Lafarge has also participatedin the planning process for water-relatedprojects with the local municipal authority.VXXIIIXIXII

36 • 2012 Sustainability Report 2012 Sustainability Report • 37Jean-paul jeanrenaud,WWFLafarge madegood progressin improving itsbiodiversityperformance in2012, including bycreating biodiversitymanagement plans for99% of quarries ininternationallysensitiveareas, andin developing a newBiodiversity Strategyfor the Group. Weespecially welcome thenew commitment onprotected areas, andthe ambition to havea net positive impacton biodiversity at thesite level. Similarly,we welcome thepublication of Lafarge’sBiodiversity Guidance,which was developedin partnership withWWF, and whichprovides all Lafargesites (includingquarries, plants andoffices) with practicalguidance on how toprotect, restore andenhance localbiodiversity. ThisBiodiversity guidancedocument should alsoprove useful to manyother companies, ina variety of sectors.We are also pleasedto see Lafarge workon the responsiblesourcing of papercement bags, includingthe new preference forFSC paper and the useof WWF’s Check YourPaper tool.On the Climate front,we applaud Lafarge’snew commitment toincrease the portionof biomass in itsalternative fuel to30% by 2020 and itscommitment to onlyuse sustainablesources. We would havehoped to have seengreater progresstowards an increasein Lafarge’s share ofrenewable electricity.Although weunderstand that thisis not core businessfor Lafarge, in absoluteterms Lafarge is a verybig purchaser ofelectricity, and thushas a responsibilityto play its part inpromoting the shiftto renewables. Lookingforward we expectto see Lafarge playa leading role inadvancing ambitiousglobal and regional EUclimate deals.CO 2 & AIR emissionspublic positionWe are convinced thatour extracting practiceis compatible with biodiversityprotection. Lafarge can have apositive impact on biodiversityprotection and ecosystemmanagement by adoptingappropriate planning forresource extraction andrehabilitation programs. In sodoing, natural resources canbe protected in the long term.public positionLafarge believes waterpolicies need to cover threeessential aspects, namely:resource availability,quality and ecosystemmanagement. We operatein places with very differentwater profiles. In waterstressedregions, access towater and availability of waterWe support public policiesand regulations that combinebiodiversity preservation,sustainable development ofour ecosystems and expansionof our business. In order to dothis, it is essential to enableraw material sourcing andextraction close to productionsites. This is achieved throughappropriate planning andefficient allocation of licensesfor communities is a matter ofcorporate social responsibility.Lafarge believes publicpolicies need to beimplemented locally. Theyshould aim at maximizingbenefits for all stakeholdersequitably throughcoordination on water, landand other resourceto operate. In addition,we consider that quarryrehabilitation is the bestway to protect biodiversity,as opposed to financialcompensation.management, withoutjeopardizing ecosystems.Such public policies shouldresult from dialogue betweenall stakeholders, includingthe private sector.For a large industrialcompany like Lafarge,managing its emissionsis not only a key part of itsindustrial performanceand its environmentalstewardship, but alsocentral to its responsibilitytowards local communitiesand public health.Emissions reductions aretherefore an importantpart of its SustainabilityAmbitions 2020 program.24.7%Lafarge has reduced its CO 2emissions per ton of cement by24.7% compared to 1990,thanks to intensified performanceefforts to improve kiln energyefficiency, increase the use ofalternative fuels and develop newblended products for a rangeof applications usingcarbon-neutral additives.We have developed a number ofstrategies to reduce our environmentalfootprint, contributing toboth our economic competitiveness and ourindustrial performance. They include anticipatingchanging regulations and benchmarkingeach plant’s emissions, both internallyand against international standards, inorder to anticipate and prioritize emissionreduction investment. We also contribute tosetting standards for the industry through theCement Sustainability Initiative and manynational and regional associations.Mitigating climate changeAs announced in June 2011, our objective isto reduce our net carbon emissions per ton ofcement by 33% in 2020 compared to 1990.At the end of 2012 we managed to reduce ouremissions by 24.7% compared to 1990, representinga 192 kg reduction in CO 2 emittedper ton of cement and approximately 30 milliontons of carbon emissions avoided for 2012.Included in this report are third-partyverified Scope 2 emissions (related topower consumption). Due to the decreasein our market capitalization, we were noteligible for ranking in the Carbon DisclosureProject (CDP) Global 500 ClimateChange Report in 2012.Our CO 2 performance is the result of ourlong-term industrial performance programs:• Improvements in kiln energy efficiency.• Efforts to accelerate the transition towardsnon fossil fuels which now account for 14%of our fuel mix, with a 50% target for 2020.• Product development and innovation tobring lower carbon cement solutions tomarket. We continue to reduce the carbonintensity of our cements, which is reflectedby the decrease in our clinker factor from84.6% in 1990 to only 72.6% in 2012.In 2012 Lafarge successfully completed itssecond industrial trial for Aether ® , its newgeneration clinker formulated for lower carboncements. The trial confirmed the feasibilityof industrial-scale production of Aether ®cements, which offer similar characteristicsto Ordinary Portland Cement, while allowinga 25-30% reduction in CO 2 emissions.Reducing emissionsGrowing urbanization around the worldposes new challenges in terms of publichealth, particularly due to air pollution.Lafarge is conscious of the positive impact itcan have on this phenomenon by soundmanagement of its own emissions. Regulatorsrightly continue to focus their attentionon NOx reduction from industrial

38 • 2012 Sustainability Report 2012 Sustainability Report • 39karina litvack,IndependentThis report is chockfullof impressivemilestones, as well asbold targets, initiativesand ambitions, manylinked to climateprotection: 33% onCO 2, 50% on alternativefuels, Aether, climatelobbying, conservation.And yet these floatalongside, rather thansquare the circle with,two key challenges:the world’s overconsumptionofresources, as theSustainabilityAmbitions rightlyacknowledge, andLafarge’s day job –delivering sustainedprofit growth.Where is this missingfil conducteur that canweave together, in oneintegrated corporatestrategy, customersatisfaction,shareholder valueand Net PositiveContribution forsociety as a whole?The promise lies in theCircular Economy,where Lafarge hasmade real strides.Rather than just sellingbuilding materials,however innovative,and driving downharmful impacts,however ambitiously,Lafarge can recastitself as a true cradleto-cradlebusiness,one that transformsmaterials intomaterials, some ofthem virgin but moreand more of themderived from otherpeople’s waste, makinga profit at each turnand deliveringessential servicesthroughout the cycle.7060504030figuresContinuing Progressin Emissions Reduction800700600% clinkerin cement90807060205005010combustion sources. More stringentstandards, be it in China, the United States,or Europe, are continuing to be implementedin legislation, regulation, permit renewals,or bi-lateral agreements with companies,all requiring investment in NOxreduction technology.Addressing local concernsBeing not only a positive and responsiblecontributor to society, Lafarge also endeavorsto be a good neighbor. Our longlastingrelations with our local stakeholdershighlight the importance of reducingdust emissions and local impact (blastvibration, noise, etc.). Lafarge has thereforeset standards for emissions for all ofits plants and is implementing a replacementand upgrade program that meetsboth regulatory and internal standards.In addition, blast vibration is strictly monitored.Our use of advanced blasting technologyhas reduced vibration levels. Asfar as noise is concerned, we have setnew targets within our Sustainability Ambitions2020 and started to implement adedicated roadmap. At this stage, 74.4%of our cement sites have measured noiseat site boundaries over the past five years.Lafarge, through its partnership withWWF International on persistent pollutants,has been addressing both mercuryand dioxin/furan emissions for more thanten years. This work has focused on definingand implementing best practicesfor control and reduction of emissions,testing and analysis protocols to ensureaccurate measurement of emissions, andis implementing a program for the reductionof emissions at higher emittingplants. Mercury emissions from the cementindustry are also a continuing focusof both international organizations anddomestic regulators. In January 2013Lafarge welcomed the completion of theinternational negotiations held under theauspices of UNEP (United Nations EnvironmentProgramme) to conclude aglobal legally binding instrument on mercury,which will apply to the cement sector,amongst others. As part of its SustainabilityAmbitions 2020, Lafarge has setitself the ambitious target of reducing itsmercury emissions by 30% per ton ofclinker by 2020, compared to its baselineemissions in 2010.public positionBecause these issues are closelyintertwined, public policies shouldaddress carbon emissions, energy andenvironmental matters in a coordinated,holistic and integrated manner.In order for industrial companies to planand implement their necessary investmentsand remain internationally competitive,these energy and climate related policiesshould have a stable and predictableframework with clear objectives, and shouldbe fully articulated with other economic,industrial and fiscal policies.We are in favor of policies that togethertackle both CO2 emission reductionsand promote energy efficiency andinnovation in the value chain (especiallyin the building sector).We support market mechanisms, includingthe European Union Emissions TradingScheme (EU ETS), which are the mostcost effective way to trigger CO2 emissionreductions in the industrial sector.0persistent polluTantMercury / dioxin-furanOur emissions reductions from 2011levels are 30% and 1% respectively fordioxin/furan and mercury.mg Hg / t kk ng Dioxin / Furan /t kk180160140120100801990201020062011200720122008Carbon Efficiency in OperationsIn 2012 we produced 69% more cement than in 1990but our net CO 2 emissions increased by only 27%over the same period.Net CO2Cement Produced2009201040019902006200720082009201020112012net and gross CO 2 emissionsIn 2012 our gross CO 2 emissions per tonof cement were 22.5% lower than 1990levels, and our net CO 2 emissions were24.7% lower than 1990 levels.2011Net CO2 emissions(kg/ton cement)2012Gross CO2 emissions(kg/ton cement)3 0002 5002 0001 5001 00050002005200640Clinker factor (% clinker in cement)Clinker, the component of cementwhose production is responsiblefor CO 2 emissions, has decreasedby 14.4% since 1990.2007Nox, SO 2 & Dust EmissionsNOx, SO 2 and Dust emissions have decreased34%, 61% and 45% respectively since 2005, exceedingthe reduction targets set at the beginning of the program.g Dust Emissions/tKKg SO2 Emissions / tKKg NOx Emissions / tKK19902006200720082009201020112012200820092010Dust TargetSO 2 TargetNOxTarget20112012

GOVERNANCE041 business ethics p.422 stakeholder panelcomment p.443 reporting methodology p.46Strong governance is at theheart of Lafarge’s approachto sustainability and keyto achieving strong businessperformance. It reflectsthe Group’s commitment toembody its core values ofcourage, integrity, respect andtransparency in everything itdoes, a commitment that hasbeen rewarded by Lafarge’sinclusion in the Dow Jones SustainabilityIndex for the thirdyear running.Lafarge has been a member ofthe UN Global Compact since2003 and ensures that its 10key principles are reflected inGroup policies and actions.In 2012 it achieved AdvancedStatus. Its Code of BusinessConduct, first established in2004, covers a wide range ofareas, including compliancewith laws and regulations onfree competition and trade,corruption and insider trading;conflicts of interest; health andsafety; prevention of discriminationand harassment; andrespect for the environment. AllLafarge employees are to followthese principles. Our commitmentto good governance basedon strong ethical principles isboth a collective and personalone that needs to be renewedevery day, particularly in thesetimes of rapid social, politicaland cultural change in many ofour markets.

42 • 2012 sustainability report2012 sustainability report • 43BuSiNESS EthiCSmARiON hEllmANNBuilding and Wood WorkerInternationalLafarge’s Code ofBusiness Conductcovers a wide rangeof areas, includingcompliance with laws andregulations on freecompetition and trade,corruption and insidertrading; conflicts ofinterest; health and safety;prevention ofdiscrimination andharassment; and respectfor the environment.However Business Ethicsis more than abiding by‘customs’ and ‘laws’.Trade unions welcomethat Lafarge recognizesthe utmost importance ofrespecting human rightsin all countries where itoperates and that humanrights are addressed inbusiness-decision making,in Russia, Qatar, Chinaand elsewhere wherehuman and trade unionrights are not guaranteedby governments. Lafargetook the right wayforward: firstly, employeeawareness-buildingand training andverification at countrylevel and global reportingthat show that thecompany respects humanrights in practice. TheUnited Nations GuidingPrinciples on Businessand Human Rights statethat showing involvescommunication, providinga measure of transparencyand accountability toindividuals or groupswho may be impactedand to other relevantstakeholders, includinginvestors. Lafarge’s nextsustainability reportshould take this upand contribute to moretransparency andaccountability withregard to Human Rights.Secondly Lafarge’s supplychain assessment and thecommitment to ensuresuppliers’ compliancewith the ten UN GlobalCompact principles in allpurchase orders is a realbenchmark against itscompetitors. However,reporting on the resultswould be appreciated.Lafarge’s sustainabilityagenda is driven fromthe very highest levelwithin the Group. BrunoLafont, Chairman andCEO, plays a personalrole in shaping thesustainability agenda.100%Our Competition Complianceprogram has been implementedin 100% of our businesses.To ensure its effectiveness, theGroup Legal Departmentconducts regular unannouncedcompliance checks andverifications.The group executive committeeapproves sustainability strategyand policies according to lafarge’svision and values.GOVERNANCE StRuCtuREthe group’s 16 board directors carry outtheir duties in line with its director’scharter. the corporate governance codeapplicable to the board is that of theFrench employers’ organizations aFepand medeF. lafarge complies in all majorareas except length of service. the proportionof women on the board remainedstable at 17% in 2012, still below the standardsof aFep-medeF. diversity andlength of service remain two areas ofimprovement for lafarge’s governancestructure. in 2012 62.5 % board membersare considered independent.sustainability issues are addressed by adedicated board committee. sustainabilityis under the responsibility of the executiveVice president for strategy, developmentand public affairs. the sustainable developmentand public affairs departmentoversees the implementation of the groupsustainability strategy at country level. thedepartment liaises with sustainabilityrating agencies, non-governmental organizations,business associations and publicauthorities. sustainable development isembedded in every manager’s personalobjectives and every industrial site hasenvironmental targets, part of a group-wideenvironmental management system. aspart of sustainability ambitions 2020, anethics committee composed of the headsof major functions and operations will beset up and will report directly to thechairman of the board. it will review theethicality and consistency of group policiesand ensure the effectiveness of the roll outof the code of conduct.OuR COdE Of BuSiNESS CONduCtiN PRACtiCElafarge recognizes the utmost importanceof respecting human rights in all countrieswhere it operates. lafarge believes thathuman rights must be addressed in business-decisionmaking, according to itscode of business conduct, first adoptedin 2004. given the geographical scope ofits operations, the group will always besubject to scrutiny by competition authorities.moreover, given the utmost importanceof competition issues in its industry,lafarge publicly reports on ongoing mainantitrust litigation (see table p.48-51,annual report note 29 and www.lafarge.com). lafarge absolutely forbids anticompetitivebehavior wherever it is present.since 2007 lafarge has operatedaccording to the group competitioncompliance program, which also appliesto third parties. the program is deployedcontinuously and includes worldwideemployee awareness-building and training,verification at country level and globalreporting by competition correspondentsbased in the countries where the groupoperates. 100% of our operations havebeen tested as part of our ongoing internaltesting program, which started in 2006.lafarge does not make contributions toinfluence the political process but engagesin lobbying efforts, consistent with itsstated public positions. however, in theunited states, any group of individualswho want to contribute to federal candidatesor parties may do so through apolitical action committee (pac). this isa separate legal entity from the companyand lafarge does not necessarily agreewith all the policy positions of candidateswho receive its contributions. support tocandidates is based on whether the candidateis attuned to the wellbeing of thecompany and its employees and the abilityof the candidate to work towards thesegoals. additional information can be foundon www.lafarge-na.com.PuBliC AffAiRSin accordance with the group’s lobbyingcharter (see www.lafarge.com), the grouppublic affairs department continued theprofessionalization of its practices in 2012,creating and managing a network of dedicatedmanagers in countries. an inductionprogram incorporating lafarge ethical principles,key policies, methods and toolsavailable for the public affairs practice wasdesigned and will be rolled out globally in2013. lafarge contributes actively to thepublic debate on issues of importance toits business, such as energy, climatechange, use of natural resources and fiscalpolicies. besides public affairs officers,many senior managers contribute to thework of business associations (see the liston www.lafarge.com), attending meetings,chairing working groups or drafting recommendationsand public positions. lafargebelieves that dialogue with all stakeholdersis at the heart of sustainable developmentgovernance. lafarge was present at thefirst earth summit in 1992 in rio andbruno lafont attended the rio+20 summitin June 2012. a speaker in several sideevents, he also met with personalities suchas mr r.k. pachauri, president of theintergovernmental panel on climatechange. rio+20 was the opportunity toreaffirm through its sustainability ambitions2020 the group’s commitment tomake a net positive contribution towardsa more sustainable world.Lafarge recognizesthe UN Declarationon the Rights of IndigenousPeople, the OECD Principlesof Corporate Governance,and UN Global Compactand is committed to reflectingthose principles throughits policies, and inday-to-day practice.

44 • 2012 sustainability report2012 sustainability report • 45OuR StAkEhOldER PANElmEmBERS Of thE lAfARGE StAkEhOldER PANEl• Adrian Marinescu(European Works Council)• Marion Hellmann(Building and Wood WorkersInternational)• Jean-Paul Jeanrenaud(WWf)• Sheila Khama(African Center for EconomicTransformation)• Philippe Lévêque(CARE)• Karina Litvack(Independent)• Alastair McIntosh(Center for Human Ecology)• Frank Rose(Independent)• Livia Tirone(Architect)“I am convinced thatour approach must beconstantly challengedand questioned.”Bruno LafontFor the last ten years, the lafarge stakeholderpanel has served as the company’sgroup of “critical friends”, challenginglafarge’s approach to sustainability,helping the company anticipate emergingissues, testing the boundaries of good practice,and pressing lafarge to exercise leadershipin the building industry.our meetings are conducted twice a year withfrankness, constructive criticism and freshthinking: we particularly value the fact thatthe lafarge chairman and ceo personallyleads the process and encourages robustchallenge, making our engagement effectiveand rewarding.our oversight covers all areas of sustainability,including strategy, delivery and reporting:it includes evaluating performance againstambitions 2012 as well as advising on forward-lookingpolicy objectives. in this statement,we comment on progress achievedduring 2012.imPROVEmENt iN REPORtiNGthis year, lafarge has significantly improvedthe quality of its report, incorporating our earlierfeedback and recommendations: comparedto previous years, this report strikes abetter balance between selected performancedata, short narrative and clear forward-lookingstrategy. We find it informativeand reader-friendly, while combining broadposition statements and focused data.a number of challenges still lie ahead forlafarge on its path to more effective sustainabilityperformance: the first is to better contextualizeand benchmark against externalstandards, sector peers, other industry leaders,globally and locally. the second challenge,now that the group has a new organizationaround country units (instead offunctional and product lines), will be to introducea country-flavor in its reporting as well,and a new segmentation of reporting, assembledby country, in order to show howlocal ownership of the global strategy is promotedand how innovation is driven by localconditions and stakeholder expectations.going further on local reporting, we wouldlike lafarge to enable comparison of performanceto local context and issues, especiallyon issues with strong localism like water.AddRESSiNG SOCiEtAl ChAllENGESWhen the ambitions 2020 were published,we commended lafarge for their vision andaspirations, particularly the focus on anintegrated approach encompassing thewhole lifecycle of buildings, cities and wid-er infrastructure. We also welcome the clearand explicit link made in the report betweenthe old and new ambitions, since 2012marks the end of one set of ambitions andthe opening of a new one.We also particularly appreciate the factthat sustainability has remained an integralpart of group strategy, despite the currenteconomic downturn. and we like the waylafarge now frames the challenges its facesin broad systemic terms (whether demography,urbanization or mankind’s overconsumptionof resources), clearly statingits will to introduce new business modelsthat meet customer needs while also addressingthese macro-challenges. a verygood job was done in linking corporate targetsto overall societal needs, aspirationsand imperatives - as exemplified in thisreport by the sections on sustainable constructionand the circular economy.BuildiNG thE CiRCulAR ECONOmyiNtO CORPORAtE StRAtEGyWe particularly applaud the group’s ambitionon specific enterprises, that appear togo way beyond the conventional businessrole to incubate new and often disruptivebusiness ideas with strong potential – suchas the affordable housing project for mumbaislums (india), the flexible social housingproject developed in bègles (France), thetarget on alternative fuels, the group’s leadershipon biodiversity management, or theinvestment in decentralized research andsolutions, adapted to local contexts.this is made even stronger by the way lafargeframes this in terms of the circulareconomy. the group was historically oneof the first industrial companies to articulatea proactive strategy on industrial ecology,and it has now taken its focus on the subjectto a new level. however, we would like tosee how the circular economy will actuallyunderpin the basic corporate strategy. Westrongly believe that this subject has thepotential to demonstrate how sustainabilityand commercial success can be woventogether into a genuinely integrated strategyto drive forward a sustainable business.lOOkiNG fORwARdon other issues, the panel hopes to seeswift improvement on health and safety issuesand, over the course of the next years,on diversity issues - including gender. aclear strategy for rolling-out low-carbon solutionsfor cities and rural areas would alsobe most welcome, as well as a plan to addressthe issue of water life-cycle in an urbancontext, related to how lafarge’s solutionscan help cities harvest and recyclewater, and much more.CONCluSiONto conclude, we are delighted to see thatin spite of the global context, and now thatthe low-hanging fruits have been picked,lafarge continues to invest in sustainabilityand takes its approach even further: thegroup appears to be have more confidencein embracing challenges and entering areasthat would have been too unusual or uncomfortableto explore a few years ago.We are living in an era of cultural changesand shifting attitudes towards corporations:the panel welcomes the opportunities thatit has to explore these with the managementof lafarge in ways that perhaps help tomake the difference to the emerging world.lastly, we wish to say farewell and thankyou to our fellow panelist alastair mcintosh,a scottish academic and activistwhose participation has repeatedly broughtfresh ideas and robust challenge to ourdiscussions. it has been a privilege to servelafarge as members of this panel with you,alastair.

46 • 2012 sustainability report2012 sustainability report • 47REPORtiNG mEthOdOlOGyASSuRANCE By BuREAu VERitAS CERtifiCAtiONREPORtiNG StANdARdSthe rules for computing the kpis are consistentwith the gri (global reporting initiative)g3 reporting standard. Where detailed definitionsof kpis are defined by Wbcsd - csi(World business council for sustainable development– cement sustainability initiative),the recommended csi methodology is usedfor the calculation of the kpi. all elements forcalculating kpis are documented in a glossaryspecifi c to the cement, gypsum oraggregates and concrete businesses. compliancewith gri g3 and a summary of reportingstandards used is documented online at www.lafarge.com.health and safety data is collected separately,taking into account our internal guidelines andexternal best practice. the group’s socialpolicies department conducts a separate surveyon social data. the kpi related to the trainingon stakeholder relationship is also trackedand verified. local stakeholder relationshipmanagement training is organized aroundplant managers in cement and area/regionalmanagers in aggregates and concrete. our2008, 2009, 2010, 2011 and this 2012 reportwere gri a+ application level checked.SCOPE Of CONSOlidAtiON ANdREPORtiNG mEthOdOlOGiESthe reporting covers all business units andtheir industrial production sites under thegroup’s management control throughout theworld. When a new site is acquired by lafarge,procedures and definitions for sustainabilitydata are not necessarily in line with lafargestandards. accordingly we give new sites amaximum of four years to meet our standardsbut performance and emissions reporting areincluded from the start up date. this periodis necessary to implement the appropriatemanagement systems. When a plant is sold,we cease to include its performance data andwe remove its data from the baseline dataused for our sustainability ambitions, whetherthe reference year is 1990 or 2005. For plantsdivested during the year, social data isexcluded for the entire year; for environmentaland health and safety, data is included up untilthe time of divestiture.We use the csi protocol V3 to calculate co 2emissions between the 1990 baseline and thereporting year. in 2011 we changed our methodologyfor calculating air emissions to be inaccordance with the march 2012 csi guidelinesfor emissions monitoring and reportingin the cement industry (wbcsdcement.org).previously, gas factors based on the type ofkiln process were utilized whereas we nowuse gas factors based on the energy consumptionof the specific kiln; prior years data andour baseline (2005) is restated using the thismethodology for comparison.For dust, so 2 and nox emissions, we usestandard emission concentrations based onthe site’s kiln process when no measurementsare available and we use the prior year’sreporting in cases where the current year datais not available. in 2012 the standard emissionconcentration was applied to 1.4% of clinkerproduction and for dust emissions, 1.2% forso 2 emissions and 3.0% for nox emissions.For water, dewatering of quarries and noncontactcooling water taken from surfacewater and returned to the same catchment isnot included in net withdrawal. For the calculationof safety kpis that include contractors,contractor off-site hours are not included inthe divisor and therefore these indicators mayslightly overstate the frequency rates.social data and health and safety data iscollected by business units and consolidatedat group level. social data for 2012 in thisreport is derived from a social survey covering98 business units representing 100% of thetotal group workforce and includes majorityowned entities and managed assets. headcountdata is compiled by an external consultantsupervised by corporate and countryfinance departments. absenteeism data is notconsolidated due to the various national definitionsunder which this data is captured.CONtROl ANd ASSuRANCEenvironmental data is collected by businessline and consolidated at group level. For cement,environmental experts in the regionaltechnical centers (beijing, cairo, montréal,kuala lumpur and Vienna) review and validatethe performance data for the plantswithin their regions.bureau Veritas certification provides independentverification for sustainability data. a selectionof key quantitative indicators (lost timeinjury frequency rate and fatality rate; totalheadcount, workforce covered by collectiveagreements and types of contracts and bystatus, workforce hirings, resignations, retirements,redundancies and death; women insenior and executive management; sites environmentallyaudited, quarries with rehabilitationplans and quarries screened for biodiversityand those having biodiversity managementplans; consumption of energy, fuels used, co 2dust, nox, so 2, mercury, Voc and dioxins/Furans emissions, water withdrawals bysources and consumption quarried and alternativeraw materials consumption) were reviewedto issue a limited assurance report.more details may be found on the verificationworks and conclusion in bureau Veritascertification’s independent assurancereport provided in our registration document,section 4.Year ended December, 31, 2012At the request of Lafarge S.A., Bureau VeritasCertification performed an independentverification of the information contained withinsection 4 “Social and environmentalresponsibility” of the Lafarge RegistrationDocument. This addressesthe requirements of the French decreeNo.2012-257 relative to the requirementsof transparency of companies on the disclosureof environmental and social topics, and providesa limited assurance opinion on publishedperformance indicators identified in the“reporting methodology” of section 4.5.2.The reviewed information subjectto verification covers the reporting period ofJanuary 1 st 2012 to December 31, 2012.This opinion is independently stated, andwithout partiality. Our work has been conductedaccording to the professional practice andinternal protocol of Bureau Veritas Certificationfor assurance of non-financial information.The preparation and presentation of thequalitative and quantitative data within theRegistration Document is the sole responsibilityof Lafarge. The collection and management ofthis information has been coordinated by theTechnical Director for Environment of theLafarge, in accordance with:• The reporting procedure Group “Groupenvironmental standard” version V3.7.2;• The Group specific instructions andprocedures, a summary of which is provided inSection 4.5.2 (under the heading “social andenvironmental responsibility”), relating directlyto the table of the Key performance indicatorsin section 4.5.1. This is further named“the reporting methodology” and availableat Lafarge’s Head Office.• NAtuRE ANd SCOPE Of OuR wORkWe undertook the review of the followingquantitative social, societal and environmentalinformation, including the following.• Review of “the reporting methodology” withregard to relevance, completeness, neutrality,understandability and reliability of information,relating to good practice within the sector;• Conducted at corporate level, interviews withkey personnel responsible for safety,environment and social data and informationmanagement in order to verify the correctapplication of the “the reporting methodology”;• Conducted at the Aggregates & Concrete, andCement business lines, interviews with keypersonnel responsible for environmentalreporting, in order to verify the correctapplication of the “the reporting methodology”;• performed an analytical review on a sample ofdata to check the effectiveness of consolidationof the information at the corporate level;• Selected for environmental, Health & Safetyand social indicators, a sample of entities onthe basis of their activities and contributionsto the Group’s consolidated data: ten cementsplants, two regional technical center, sevenbusiness units, two concrete plants, onaggregates quarry, two cements quarries andthe GIE Aggregates & Concrete. Selectedentities are located across the globe (France,USA, Austria, UK, China, Russia)• Tested at site level, the understanding andcorrect application of “the reportingmethodology”, conducted detailed checkson a sample of collected data, its supportingevidence and calculation methodologyand formulas applied.• At the Cement business line, checked theconsistency of CO2 emissions for sites in Francewith those figures declared to the appropriateauthorities in accordance with reportingobligations under the Framework of the2003/87/CE European Directive on EUETS‘allowances’. We undertook the reviewof the following qualitative social, societaland environmental information, includingthe following.• Conducted at the corporate level and selectedsites the checking of the qualitative information,except that included within section 3 ofregistration document duly supported bypersonnel, interviews and checking of thequalitative information on a sampling basis.The sites and technical centers sampling hascovered more than 50% of clinker production.More than 20% of the environmental data wasreviewed at operational sites 1. Investigationson site at the social level covered more than20% of the workforce.• iNfORmAtiON ABOut thE REPORtiNGmEthOdOlOGy ANd thE VERifiEd dAtAWe draw your attention to the followingcomments on the guidance and the informationpreparation processes:• Relevance:The published information is widely based onthe professional reporting guidelines (WBCSDCSI: World Business Council for SustainableDevelopment – Cement Sustainability Initiative).• Completeness:The quantitative information represents theoperational activities of the Group worldwide;The data relating to the activities of Tulsa andSugar Creek plants, which were both divestedduring the second half of the reporting year,have been included in the reporting and theverification activities.• Reliability:As water consumption indicators are new,additional verification of Technical Centerwas required and implemented to compensatefor any reporting difficulties at plant level.The method to account for subcontractoremployee headcount differs between sites;however, at the global level the data is seento be consistent on a year to year basis;Although no major anomaly was detectedon safety indicators, the collection of hoursworked of the subcontractors could bestrengthened.• PRESENCEAll the information required by the French decreeNo. 2012-257 on 24 April 2012 is presentin Lafarge’s reporting with the exception of“absenteeism” for which justification is provided.• CONCluSiON: SiNCERity ANd limitEdASSuRANCE• For the reported quantitative information,the data testing by Bureau Veritas Certificationconducted on a sample basis has not revealedany significant discrepancy, error or misstatementat the corporate level.• For the reported qualitative information, thework conducted did not reveal any significanterror, bias or mis-statement in assertions made.• On the basis of the defined scope work, wehave issued the above comments, and nothinghas come to our attention to suggest that theinformation communicated by the Lafargein its registration document is not reliable.puteaux, march, 1, 2013Etienne Casal, managing director, bureau Veritascertification France s.a.s.

48 • 2012 Sustainability Report2012 Sustainability Report • 49Building communitiesKey performance indicatorsHealth & Safety unit 2010 2011 2012 Perimeter ReferenceFatalities Fatalities (directly employed) # 9 8 5 Group GRI (LA7)Fatalities per 10,000 directly employed # 1.18 1.11 0.77 Group GRI (LA7)Fatalities (indirectly employed) # 24 17 12 Group GRI (LA7)Fatalities (3 rd party) # 11 9 8 Group GRI (LA7)total # 44 34 25 Group GRI (LA7)Employeesby businessunit 2010 2011 2012 Perimeter ReferenceResignations # 3,752 3,770 2,996 Group GRI (LA2)Retirements # 1,057 776 910 Group GRI (LA2)Redundancies # 3,986 4,308 3,298 Group GRI (LA2)Deaths # 142 125 98 Group CSI (3.2 & 3.8)GRI (LA7)Male / Female fatalities # 33M/1F 24m/1f Group GRI (LA7)Employees in cement # 44,253 43,392 41,249 CementEmployees in Aggregates and Concrete # 23,438 23,242 21,780 A & CEmployees in other businesses (gypsum) # 7,986 1,289 1,308 GypsumEmployees by region Employees in Middle East and Africa # 18,843 20,376 19,644 GroupEmployees in Central & Eastern Europe # 7,652 7,464 7,041 GroupEmployees in Western Europe # 1,626 12,202 11,448 GroupEmployees in Asia # 19,454 15,742 14,774 GroupEmployee in North America # 10,748 9,604 8,821 GroupEmployees in Latin America # 3,355 2,535 2,609 GroupLost Time Injuries Lost Time Injuries (directly employed) # 120 93 105 Group GRI (LA7)Lost Time Injuries per 1 million manhours# 0.76 0.63 0.75 Group GRI (LA7)(directly employed)Lost Time Injuries (indirectly employed - contractors# 111 62 51 Group GRI (LA7)and sub contractors on site)Lost Time Injuries per 1 million manhours# 0.94 0.58 0.47 Group GRI (LA7)(indirectly employed)total # 231 155 156 Group GRI (LA7)Training and skillsdevelopmentHours of training % 1,921,137 1,611,339 1,577,585 GroupHours of training for management staff (average) % 45 41 39 Group GRI (LA10)Hours of training for non-management staff (average) % 31 29 33 Group GRI (LA10)Managers attending training courses % 80 86 79 GroupNon managers attending training courses % 75 75 72 GroupAmount spent on training €m N/A 28.4 23.7 GroupManagers who had an annual performance review % 94% 91% 88% Group GRI (LA12)Non managers who had an annual performance review % 64% 62% 63% GroupCommunity Development and OutreachSites footprint Industrial sites (1) # 1,963 1,604 1,570 GroupCement plants # 168 166 161 CementIndustrial sites in Latin America (2) # 60 60 62 GroupIndustrial sites in North America # 560 354 346 GroupIndustrial sites in the Middle East and Africa # 208 241 230 GroupIndustrial sites in Europe # 867 759 709 GroupIndustrial sites in Asia # 191 190 153 GroupLocal stakeholdersTarget population (regional and area managers) who have% 81%76%64Group CSI (6.3)managementbeen trained on the Group stakeholder methodologyCementCementcement80%41A & Ca & cSites that organize regular meetings with their stakehold-% 85% 88% 76 Cementers / local communitiesSites with an annual local action plan detailing plannedstakeholder engagement% 64% 69% 65 Cement CSI (5.5)Employee Diversity and SkillsWorkforce Total Headcount # 75,677 67,923 64,337 Group GRI (LA1)Full-time employees % 99.1 99 99.1 Group GRI (LA1)Part-time employees % 0.9 1 0.9 Group GRI (LA1)Permanent employees % 96.0 97.0 96.4 Group GRI (LA1)Fixed-term contract employees % 4.0 3.0 3.6 Group GRI (LA1)Employees under the age of 30 % 16.7 16.1 15.0 Group GRI (LA13)Employees between 30 and 50 % 63.3 63.0 63.6 Group GRI (LA13)Employees above 50 % 20.0 20.9 21.4 Group GRI (LA13)Turnover Employee turnover rate % N/A N/A 14.2% GroupVoluntary employee turnover rate % N/A N/A 4.6% GroupHirings # 5,991 7,400 5,544 Group GRI (LA2)Diversity Female share of total workforce % 16.6 15.8 15.9 GroupWomen in senior management positions % 13.5 15.8 16.4 GroupDisabled people employed % N/A 0.9 0.6 GroupWell beingUnits with a comprehensive employee occupational healthprogram in place% N/A 68 76 GroupSocial dialogue Countries with strike actions # 14 9 4 GroupCountries where employees are covered by collective agreements % 71 74 78 Group GRI (LA4)Total workforce represented in Health& Safety Committees% 97 98 99 Group GRI (LA6)GovernanceBoard governance Board size / number of directors # 18 17 16 GroupExecutive directors # 1 1 1 GroupNon executive directors # 17 16 15 GroupIndependent directors # 11 10 10 GroupDirectors with 4 or less other mandates # 8 13 13 GroupWomen on Board % 17 18 19 GroupAverage Board meeting attendance % 93 93 94 GroupAudit fees €m 16.1 18.8 14.4 GroupTotal annual compensation of the CEO €m 1,994 1,778 1,628 GroupCode of BusinessConduct andCompetition issuesSecurityPolitical contributions €m 0 0 0 GroupOngoing antitrust main litigations # 4 5 5 GroupAmount of financial provisions made for pending€m 24 24 24.5 Groupor in anticipation of antitrust litigationCountries that have implemented theCompetition Compliance Program% 96 96 100 GroupBusiness units contracting security agencies% 69 68 74 Groupto protect personnel and property% of which employ armed personnel % 24 29 23 Group(1)Including gypsum sites. (2) Gypsum sites are not included in regional breakdown.

50 • 2012 Sustainability Report2012 Sustainability Report • 51Building the circular economyCO 2 and Air Emissions Unit 2010 2011 2012 Perimeter ReferenceCarbon emissions Total CO 2 emissions - gross Mt 91.8 96.5 96.7 Cement CSI, GRI (EN16)Total CO 2 emissions - net Mt 89.4 93.7 93.8 Cement CSI, GRI (EN16)Specific CO 2 emissions - grossSpecific CO 2 emissions - netGHG emissions from energy purchasedand consumed (scope 2)kg/tcementitious620 610 603 Cement CSI, GRI (EN16)kg/t 604 592 585 Cement CSI, GRI (EN16)cementitiousMt 8.390 9.003 8.907 GroupAir emissions Total NOx emissions t/year 198,022 188,828 187,554 Cement CSI, GRI (EN20)Specific NOx emissions g/t clinker 1,810 1,636 1,611 Cement CSI, GRI (EN20)Total SO 2 emissions t/year 47,309 49,404 41,076 Cement CSI, GRI (EN20)Specific SO 2 emissions g/t clinker 432 428 353 Cement CSI, GRI (EN20)Total Dust emissions t/year 17,332 16,842 15,463 Cement CSI, GRI (EN20)Specific Dust emissions g/t clinker 158 146 133 Cement CSI, GRI (EN20)Mercury emissions t/year 3.5 3.8 3.8 Cement CSI, GRI (EN20)Mercury emissions mg/t clinker 31.7 33.0 32.7 Cement CSI, GRI (EN20)Dioxin/Furans emissions g TEQ/year 7.1 4.7 3.3 Cement CSI, GRI (EN20)Dioxin/Furans emissions ng/t clinker 64.7 40.4 28.1 Cement CSI, GRI (EN20)VOC emissions kt/year 4.1 4.5 3.8 Cement CSI, GRI (EN20)VOC emissions g/t clinker 37.7 39.0 32.8 Cement CSI, GRI (EN20)Heavy Metals’ emissions (“HM1”): Cd+Tl* t/year 4.06 4.26 Cement CSIHeavy Metals’ emissions (“HM1”): Cd+Tl* mg/t clinker 35.2 36.6 Cement CSIHeavy Metals’ emissions (HM2):t/year 124.15 115.3 Cement CSIPb+As+Co+Ni+Sb+Cr+Cu+Mn+V**Heavy Metals’ emissions (HM2):Pb+As+Co+Ni+Sb+Cr+Cu+Mn+V**mg/t clinker 1,075 991 Cement CSIClinker produced with monitoring dust, SO 2and NOx emissionsClinker produced with continuous monitoringdust, SO 2 and NOx emissionsClinker produced with monitoring “HM1”emissionsClinker produced with monitoring “HM1”emissionsEnergy Consumption and Resources Management% 90 94 97 Cement CSI% 62 66 71 Cement CSI% 44 56 Cement% 45 58 CementNatural ResourcesBiodiversityUnit 2010 2011 2012 Perimeter ReferenceNon hazardous waste recovered kt 171.0 221.4 352.9 Group GRI (EN22)Non hazardous waste disposed kt 110.2 314.7 367.3 Group GRI (EN22)Hazardous waste recovered kt 18.6 8.1 6.0 Group GRI (EN22)Hazardous waste disposed kt 35.1 2.1 2.0 Group GRI (EN22)Sites with quarry rehabilitationplans in placeQuarries within, containing, or adjacent toareas designated for their high biodiversityvalue, as defined by GRI EN11 (numberand coverage)Quarries with high biodiversity valuewhere biodiversity management plansare actively implementedActive quarries that have been screened forbiodiversity according to WWF’s criteriaQuarries engaged in formalized partnershipswith NGOs for nature conservation% 84.5 86.4 84.6 Group CSI, GRI (EN 14)# N/A 132 131 Group CSI, GRI (EN 11)% N/A 49.2 99.2 Group CSI, GRI (EN 14)% 90.7 97.2 100 Group CSI, GRI (EN 14)% N/A 28.6 34.6 Group CSI, GRI (EN 14)Materiality (3) Environment capital expenditure €m N/A 73.6 64.1 Group GRI (EN 30)Environment operating expense (4) €m N/A N/A 138.5 Group GRI (EN 30)Water (5) Sales generated in water stressed regions (6) % N/A 24.7 20.3 GroupTotal water withdrawal from ground water Mm 3 96.4 41.7 40.9 Group GRI (EN8)Total water withdrawal from open water Mm 3 182.2 211.6 221.5 Group GRI (EN8)Total water withdrawal from other sources Mm 3 15.2 13.6 12.5 Group GRI (EN8)Rainwater harvested Mm 3 23.4 15.7 16.1 Group GRI (EN8)Net water withdrawal Mm 3 174.9 120.8 125.6 GroupQuantity of water consumed Mm 3 97.19 81.78 82.56 GroupSites equipped with a water recycling system % 72.9 68.5 69.7 Group GRI (EN10)Specific water consumption l/t 317 314 305 CementVerificationSites (in terms of revenues) audited as partof our Environmental Management System% 99.2 88.4 89.3 Group(1)Cadmium & Thallium.(2)Lead, Arsenic, Cobalt, Nickel, Antimony, Chromium, Copper, Manganese & Vanadium.(3)In 2012, environmental fines amounted to €305,000, in addition to the US$740,000 announced in our 2011 Sustainability Report.(4)In 2012, we started measuring operating expenses. That is why we report this figure for 2012 only. Figures reported previously were estimated.It includes the cost of one spill of cement due to a failure of a dust collector in the United States.(5)Including gypsum.(6)In 2011 only cement operations were reported. In 2012 our reporting scope also includes the aggregate operations, 16% of which are situated in water stressed regions.Energy efficiency Total energy consumption PJ 431.5 464.6 456.6 GroupDirect energy consumption by primaryenergy sourceM TEP 9.88 10.39 10.44 Group GRI (EN3)Electricity purchased GWh 14,819 16,003 15,653 GroupSpecific heat consumption of clinker MJ/t clinker 3,671 3,661 3,653 Cement CSIproductionClinker Intensity % 73.9 73.0 72.6 Cement CSIAlternative fuels Alternative fuels % 11.5 12.8 13.9 CementBiomass Fuel rate % 4.0 4.7 5.5 Cement CSI, GRI (EN4)Materials Quantity of quarried material Mt 360.0 373.9 375.1 Group CSI, GRI (EN1)Alternative raw materials rate % 8.22 8.24 8.78 Group CSI, GRI (EN2)Consumption of material Mt 395.9 415.3 420.9 Group CSI, GRI (EN1)Waste Dust disposed on-site kt 687 556 557 Cement GRI (EN22)Lafarge Group Communications - Photo Credits: Cover: Wind turbines in Central Park, New York (USA), © Corbis / © Lafarge Media Library p.3: Charles Plumey-Faye (Photographer) /p. 4: Dubai aerial subway and Infinity Tower - Ignus Gerber (Photographer); Employees at Arcos cement plant (Brazil) - Carolina Reis (Photographer) / p.10: Village near Arasmeta plant, India- Ignus Gerber (Photographer) / p.12: Employees fixing equipment before working at height (Poland) - Mikolaj Katus (Photographer) / Health & Safety meeting with employees at Simsimahquarry (Qatar) - Peter Casamento (Photographer); Employees at Thu Duc concrete plant (Vietnam) - Brice De Belleroche - I-look - Image’in (Photographer) / p.18: Community clean-up projectin Serbia; tree planting in Cameroon / p.20: Housing project in Paris (France) - Emmanuel Gabily (Photographer) - Badia Berger Architectes / p.22: Refurbishment of Rabat-Salé airport(Morocco) with double-skin in Ductal ® - Zhor Jaidi-Bensouda (Architect); Lafarge Research Center (France) – Claude Cieutat (Photographer) / p.24: Delivery of concrete to a Mumbai (India)slum settlement - Urbanology LLP (photographer); Lafarge microcredit program in Indonesia / p.25: Lafarge Construction Development Lab in Mumbai (India) / p.26: Zero Net Energy duplexin Canada - Stantec Architecture Ltd / p.28: Bath Cement Plant, Canada / p.30: Biomass project at Bath Cement Plant, Canada; Tires used as alternative fuel in Lafarge plant in Romania -Justin Creedy Smith (Photographer) / p.32: Rehabilitated quarry at Cauldon cement plant, UK. Construction-Photography.com - Paul McMullin (Photographer); Biomass project at BathCement Plant, Canada / p.33: Biodiversity preservation project at Saint Etienne quarry, Reunion Island. / p.34 Artificial lake for rainwater harvesting at Cauldon cement plant, UK; Desert inSyria - Daniel Riffet (Photographer) / p.36 Rehabilitated quarry at Volos cement plant (Greece); M’Sila cement plant (Algeria) / p.37: Wind farm at Tetouan cement plant (Morocco) - IgnusGerber (Photographer); Aether ® industrial trial at Le Teil plant (France) - Yves Chanoit (Photographer) - Printed by Dridé - Design, production and writing: (RALA012)Contact: Senior Vice President Sustainable Development and Public Affairs: Kareen Rispal Tel: + 33 1 44 34 11 11 - Fax: + 33 1 44 34 12 00 - krispal@lafarge.com

LAFARGE61, rue des Belles-Feuilles – BP 4075782 Paris Cedex 16 – FranceTél: + 33 1 44 34 11 11Fax: + 33 1 44 34 12 00www.lafarge.comkrispal@lafarge.com