Learning from our independent assurance process

We engaged Ernst & Young (E&Y) to carry out an independent review of our 2008 Sustainability Report. The review focused on the processes we have in place over the management and reporting of social and environment risks, the progress we have made in sustainability in 2008, and our corporate aggregation of HSSE, community and employee data. E&Y’s report is found below. E&Y identified particular strengths in our process and plans:

• The redefinition of social investment categories and increased scrutiny of their application, aimed at focusing on sustainable community benefit. E&Y saw evidence that some assets were commissioning and using socio-economic baseline studies to identify key community needs and priorities as a basis for targeting social investment projects.
• The implementation of Business Principles online training during the year. E&Y saw evidence at the sites visited that the employees interviewed had completed the online training and that mechanisms were in place to monitor the completion of Business Principles training within the assets.
• An initiative to align major contractors with Business Principles, which began with a series of contractor workshops held at Group level. This process will be rolled out to priority assets in 2009. E&Y noted that it will be important for the Group to understand the implications for contractors of aligning themselves to the Group’s Business Principles, and to establish a mechanism to monitor contractor compliance, particularly with higher-risk contractors.
• A number of focused safety initiatives, developed in response to the Group’s safety performance during 2008. E&Y noted that this approach included a new safety leadership course for all managers, targeted process hazard reviews in key assets, increased accountability and enhanced tone from the top through an ‘Adopt an Asset’ initiative for Executive Vice Presidents. The Group also formalised its ‘lessons learnt’ process where the findings from the investigations of high-potential incidents, near-misses, and fatalities, are circulated to all the assets within seven days of completion.

E&Y identified areas for improvement in the evolving process of implementing sustainability. Over the coming year, BG Group will be working on the areas shown below:

• BG Group has appointed a Group-level manager to support the implementation of the localisation strategy. In addition, a diversity steering group has been set up to address wider diversity issues. The Group should ensure its approach also considers diversity within local cultures, which may impact on local recruitment, development and promotion.
• The Group Executive Committee (GEC) has set a number of long-term Business Principles targets that are widely communicated around the business. Although the Group has a stated aim of achieving world-class safety performance, E&Y noted that there is currently no target for the GEC relating to safety.
• BG Group has informal ad hoc communications with a wide range of stakeholders at Group and asset level. However, formalised stakeholder mapping or stakeholder engagement is limited. Stakeholder concerns are therefore not systematically captured and prioritised at asset or Group level to identify emerging themes or concerns.
• During the year, a number of new Standards were launched and implemented relating to HSSE, Conduct and Social Performance. The assets visited had completed their gap analysis for performance against the Standards and, where needed, had asked the Group for extra time to align local procedures and practices with the new Standards. The gap analysis had also been completed for the joint ventures visited, however E&Y were told that the scope to fully implement these Standards in the joint venture organisations was limited.

Areas for improvement identified in 2007 assurance process		Our progress in 2008
Clarify asset-level understanding of Corporate Responsibility (CR) and better communicate the scope of the CR Committee. Improve alignment between governance structures and CR communications		The term ‘Sustainability’ has been adopted in place of ‘Corporate Responsibility’. In March 2009, the BG Group Board approved new terms of reference for the Corporate Responsibility Committee which included a new name: the Sustainability Committee. See Conduct section for further details.
Describe how BG Group exerts influence over partners and joint ventures to achieve performance and behaviours consistent with BG Group’s Business Principles		We describe our approach to working with partners and joint ventures in relation to our Business Principles in the Conduct section.
Guidance should be provided to assets on expectations to set for contractors in relation to the Business Principles, and contractors’ performance against these expectations should be monitored		We raised awareness of our Business Principles in 2008 among over 40 top-tier contractors at a series of events in the UK and Nigeria. We also issued detailed questionnaires to test contractors’ alignment with our Business Principles. In 2009, our assets will focus on direct engagement with their contractors. We will also design and test a risk-based assurance system to manage the material risks of non-compliance among suppliers.
Provide a consistent framework for decision making with regards to social investment		The Social Investment Guidelines launched in 2008 provide a consistent decision-making process, including a project selection, planning, implementation and monitoring framework.
The Group will need to ensure that the strategy on employee diversity is clearly communicated and sensitively applied across its assets		A GEC member has been appointed as diversity champion, and a steering group is in place to drive delivery throughout 2009 and beyond.

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Independent Assurance Statement to BG Group Management

BG Group plc’s (BG Group) Sustainability Report 2008 (the Report) which includes both the printed report and additional online content, has been prepared by the management of BG Group, who are responsible for the collection and presentation of information within it. Our responsibility, in accordance with BG Group management’s instructions, is to carry out a limited assurance engagement on the Report in order to provide conclusions in relation to the AA1000AS¹ Principles of Materiality, Completeness and Responsiveness. We do not therefore accept or assume any responsibility for any other purpose or to any other person or organisation. Any reliance any such third party may place on the Report is entirely at its own risk.

What we did to form our conclusions

Our assurance engagement has been planned and performed in accordance with the AA1000AS and ISAE3000² Standards. The AA1000 assurance principles have been used as criteria against which to evaluate the report.

In order to form our conclusions in relation to the AA1000AS (2003) Principles of Materiality, Completeness and Responsiveness, we undertook the steps outlined below:

1. Interviews with a selection of BG Group executives and senior managers to understand the current status of Sustainability activities and progress made during the reporting period.
2. Visits to BG Group’s assets in Houston and Egypt to review the systems and processes in place for managing and reporting on sustainability activities at asset level and to review evidence in support of claims made in the Report regarding BG Group’s sustainability performance.
3. Review of selected corporate-level documents to assess management awareness of performance against sustainability objectives and test the coverage of the Report.
4. Review of documents from stakeholder engagement activities, including documents summarising engagement with the socially responsible investment community.
5. Review of social investment, employee and health, safety, security and environmental (HSSE) data samples and processes to assess whether they have been collected, consolidated and reported appropriately at corporate level and at the assets visited.
6. Test the consistency of the claims made in the Report regarding BG Group’s sustainability performance against the evidence obtained through our work.

Level of assurance

Our evidence-gathering procedures have been designed to obtain a limited level of assurance (as set out in ISAE3000) on which to base our conclusions. The extent of evidence-gathering procedures performed is less than that of a reasonable assurance engagement (such as a financial audit) and therefore a lower level of assurance is provided.

The limitations of our review

The scope of our work was limited to corporate-level activities and visits to two of BG Group’s assets. We did not attend any stakeholder engagement activities. Therefore, our conclusions on Materiality and Responsiveness are based on our discussions with BG Group management, our review of selected media and the review of documents provided to us by BG Group.

Our conclusions

Based on the scope of our review our conclusions are outlined below:

Materiality

• We are not aware of any material aspects concerning BG Group’s sustainability activities that have been excluded from the Report.

Completeness

• We are not aware of any material issues excluded from BG Group’s judgments on the content of the Report.
• We are not aware of any misstatements in the assertions made by BG Group management in the Report regarding sustainability activities.

HSSE, social investment and employee data

• We are not aware of any reporting units that have been excluded from the Group-wide data relating to the topics above.
• Nothing has come to our attention that causes us to believe that the data relating to the above topics has not been collated properly from information reported at operations level.
• We are not aware of any errors that would materially affect the data as presented in the Report.

Responsiveness

• We are not aware of any additional issues of stakeholder interest that are not currently included in the Report’s scope and content.

Global Reporting Initiative

Does the Report meet the requirements of the A+ application level of the Global Reporting Initiative (GRI) G3 Guidelines?

• Based on our review, including consideration of the printed and online Report and elements of the BG Group Annual Report and Accounts 2008, nothing has come to our attention that causes us to believe that BG Group management’s assertion that their sustainability reporting meets the requirements of the A+ application level of the Guidelines is not fairly stated.

Observations and areas for improvement

Our observations and areas for improvement will be raised in a report to BG Group’s management. Selected areas for improvement have been included in the ‘Learning from our independent assurance process’ section of the Report. In addition, we have been asked to provide specific observations on selected matters discussed in the Report. These observations are spread throughout the report (see the Environment, Society, Our People, Conduct sections). Our observations do not affect our conclusions on the Report set out above.

Our Independence

This is the fourth year that Ernst & Young LLP has provided independent assurance services in relation to BG Group’s sustainability reporting. With the exception of this work we have provided no other services relating to BG Group’s approach to sustainability reporting.

Our Assurance Team

Our assurance team has been drawn from our global climate change and sustainability network, which undertakes similar engagements with a number of significant UK and international businesses.

Ernst & Young LLP
London
March 2009

1. 1 AA1000AS – AA1000 (2003) assurance standard fromthe Institute of Social and Ethical Accountability.
2. 2 ISAE3000 – International Federation of the Accountants’ International Standard for Assurance Engagements Other Than Audits or Reviews of Historical Financial Information.

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