Corporate Social Responsibility

Introduction

This report describes the policies and procedures that the Board has put in place to ensure that Aggreko operates in a safe, ethical and responsible manner, which protects the environment as well as safeguarding the health and safety of its employees, its customers, and the communities in which it operates. The process for identifying, evaluating and managing the risks that are considered significant is summarised within Internal Control in the Corporate Governance section.

The nature of our business is that we work in many different countries, often in remote and difficult environments, with equipment and substances which, if improperly handled, are potentially dangerous to people and harmful to property and the environment. We frequently operate in response to natural or manmade disasters, where the infrastructure has been badly damaged and where operating conditions are far from ideal. Over time, therefore, we have developed a comprehensive range of operating procedures and processes to ensure that we minimise any risk of harm to people or to the environment.

Health and safety

Aggreko puts health and safety at the very heart of its operations. Most of our equipment is heavy, electromechanical equipment which is moved around frequently. Compressors and generators respectively produce high-pressure compressed air and high voltages electricity, either of which can be harmful to people if mishandled.

Aggreko's policy is to implement common health and safety operating procedures worldwide. Whether operating in the Australian bush, the Saudi Arabian desert or in downtown Manhattan, our operating procedures are the same high standard.

Among the key features of Aggreko's worldwide Health and Safety Policy are:

• ensuring that health and safety issues are at the forefront of considerations when we design our equipment;
• ensuring that our equipment is built and maintained to the highest standards;
• training and educating our staff worldwide in the safe operation of our equipment; and
• ensuring that health and safety issues have the appropriate level of focus throughout the management chain.

Aggreko has created its own Global Environmental Health and Safety Management System (GEMS) which has been implemented throughout the business. At the core of GEMS is a Best Operating Practice document that is published in 8 languages (English, French, German, Dutch, Spanish, Italian, Norwegian and Singhalese). The Best Operating Practice is updated in the light of experience and incidents.

GEMS incorporates a comprehensive reporting system which is designed to ensure that the Company knows of every incident, and can learn from it. A uniform accident and incident data collection procedure is implemented worldwide, and from this we can measure our performance and benchmark our operations. Performance measures are reported at a business unit level on a monthly basis. Any serious incident is immediately reported to the Executive Director responsible for the business unit concerned.

Meetings of the senior management of each region are held regularly; at each of these an Executive Director will normally chair the meeting, and incidents reported under GEMS are discussed. The Executive Director responsible for Health and Safety, George Walker, produces monthly reports, which are considered at each meeting of the Board.

Safety

Our business involves the frequent movement of heavy equipment which, in its operation, produces lethal voltages and contains thousands of litres of fuel. Rigorous safety processes are absolutely essential if we are to avoid accidents which could cause injury to people and damage to our reputation and property. Safety processes are also a basic benchmark of operational discipline and there is, in our view, a close correlation between a well-run business and a safe business.

The main KPI we use to measure safety performance is the internationally recognised Frequency Accident Rating ('FAR') which is calculated as the number of lost time accidents multiplied by 200,000 (being the base for 100 employees working 40 hours per week, 50 weeks per year) divided by the total hours worked. A lost time accident is a work related injury/illness that results in an employee's inability to work the day after the initial injury/illness.

The Group's FAR during 2011 was unsatisfactory, in that it increased markedly over the previous year. It is still better than the benchmark of 1.1 reported for US rental and leasing industries published by the US Department of Labor in 2010, but we expect to be much better than the rest of the pack, and we are dissatisfied with being only a little better. It is perverse that this statistic should get worse in a year in which safety processes have been strengthened in many areas: in particular, our manufacturing operation achieved OHSAS 18001 certification in the 2010, yet saw a sharp increase in FAR in 2011.

After a disappointing year, in which our FAR performance has come perilously close to being merely average for our industry, we intend to re-double our efforts in 2012 to make Aggreko a safer place to work in 2012.

FAR was as follows:

Finally, it is with great sadness that we report that we had our first fatality ever in Aggreko: in Mauritania, a service technician, being driven home at the end of his shift by a professional driver, was involved in a serious car crash and later died of his injuries. Our thoughts and condolences go out to his family.

Employees and equal opportunities

Aggreko is committed to promoting equal opportunities for all, irrespective of disability, ethnic origin, gender or any other considerations that do not affect a person's ability to perform their job.

The Group's policies for recruitment, training, career development and promotion of employees are based on the suitability of the individual and give those who are disabled equal treatment with the able bodied. Where appropriate, employees disabled after joining the Group are given suitable training for alternative employment with the Group or elsewhere.

The Group continues to operate team briefings throughout its business to keep employees informed of developments and plans, both in their own operations and in the Group as a whole. Employees have access to the 'Aggreko Resource Centre', an intranet based system, which provides them with a wide range of information on the activities of the Group around the world. The annual and interim results are publicised extensively throughout the business and are made available to all employees.

The Group introduced a whistleblowing hotline in April 2011, which now gives access for all employees to a confidential, multi-lingual service to report any cases of ethical non-compliance, bullying or discrimination.

The environment

Set out below is an explanation of the terms and abbreviations used in this section.

• CO₂ Carbon Dioxide.
• EPA Environmental Protection Agency.
• SCR Selective Catalytic Reduction.
• g/kWh Emissions in grams per kilowatt hour.
• kVA A thousand volt amperes.
• LWA Sound power level at source.
• MW A million watts.
• NOx Oxides of Nitrogen.
• Particulate In general this term relates to visible smoke.
• Tier 1, Tier 2, Tier 3, Tier 4 US Federal Government target emission reduction levels.

Environmental policy

Aggreko's equipment is designed to function in all continents and all types of terrain. By careful design and use of the most suitable technology, we also aim to minimise the environmental impact of that equipment. Aggreko makes available to its customers equipment and solutions that are designed to comply with applicable laws, regulations and industry standards wherever we operate in the world. In effect, this means they comply with the laws, regulations and standards of some of the most stringent jurisdictions in which we operate and, therefore, far exceed the levels required in many others.

The two major environmental issues we deal with in our business are emissions-to-air from our equipment – the vast majority of which is diesel powered, and the safe handling and disposal of fuel and oil.

Our Environmental Policies are managed in a similar way to safety. They comprise:

• ensuring that environmental issues are at the forefront of considerations when we design our fleet;
• ensuring that our equipment is built and maintained to the highest standards;
• training and educating our staff worldwide in the safe operation of our equipment; and
• ensuring that environmental issues have the appropriate level of focus throughout the management chain.

Emissions-to-air: exhaust gases and particulates

Emissions-to-air are an inevitable by-product of hydrocarbon fuelled engines. Over the years, as engines have become more efficient and legislation to limit emissions around the world has become stricter, emissions have reduced sharply. Aggreko works in co-operation with the manufacturers of diesel engines in order to meet new emission requirements in a timely manner.

The principal contribution we can make to reducing emissions to air is in maintaining our equipment in good order, and introducing engines into the fleet with good emissions performance.

In an increasing number of countries, air quality regulations stipulate emission standards with which new equipment being sold must comply. Generally countries allow equipment already operating to continue to do so for its useful life. This is called 'grandfathering'. The US EPA has introduced the earliest and most stringent regulation in this area, introducing reduction targets for emissions of NOx and particulate in Tiers, starting with Tier 1 in 1996, moving to Tier 4 final around 2014. The EPA requirements have therefore been the main driver of new generator development. The following graph llustrates the reduction targets for emissions under the EPA regime.

As our suppliers produce engines which comply with new emissions, we work with them to introduce the new engines into the fleet. In 2008, we started trialling new Tier 2 compliant engines for our high-horsepower range, and these were introduced into production in 2010. During 2011 we continued our investment in new emissionised fleet; by the end of 2012 we will have invested $135 million in our North American fleet renewal programme with the vast majority of our power fleet capable of operating at Tier 2 EPA standards or above. At lower horsepower sizes we have started to deliver Tier 3 and Tier 4i machines.

During 2011, over 50% of the new diesel engines introduced to our worldwide fleet were certified to at least Tier 2 in North America or the equivalent Stage 2 standard in Europe. At the same time, more than 10% of new sets were certified to Tier 3/Stage 3 or above. We expect this trend for increasing emissions compliance to continue in 2012.

Tier 4 emissions

Development is underway of diesel generators to meet up-coming Tier 4 standards for mobile generators. In 2008 a significant project was undertaken in Chile to deliver the lowest level of NOx yet stipulated by a standard. Seventy of Aggreko's project machines were fitted with an advanced SCR that reduced NOx by 90%. Similar technology will probably be required to meet EPA Tier 4 requirements in the US and in Europe shortly after. We are currently working closely with engine manufacturers to develop appropriate solutions for these requirements.

Aggreko natural gas generator development

We are constantly exploring new ways of reducing emissions, and have developed a gas-fuelled temporary power solution, which has significantly lower levels of emissions (see below).

Natural gas presents a competitive advantage over other energy sources. It is seen as economically more efficient because only about 10% of the natural gas produced is wasted before it gets to final consumption. In addition, technological advances are constantly improving efficiencies in extraction, transportation and storage techniques as well as in equipment that uses natural gas.

Natural gas is considered an environmentally-friendly clean fuel, offering important environmental benefits when compared with other fossil fuels. The superior environmental qualities over coal or oil are that emissions of sulphur dioxide are negligible and that the level of NOx and CO₂ emissions is significantly lower. Where the gas fuel is essentially a by-product of production or is derived from a biological source, a CO₂ and greenhouse gas reduction is realised. This helps to reduce problems of acid rain, ozone or greenhouse gases.

In many of Aggreko's target markets natural gas is effectively a stranded resource. Aggreko's service allows for generation of power from this valuable resource on a more flexible and scalable basis than existing solutions.

Alternative energy sources

In addition to the work we have undertaken developing natural gas-powered generators, we are constantly reviewing product technologies, looking for advances that we can adopt within our product portfolio. These include:

• Bio-fuels – Across some of our markets we have seen the emergence of Bio-diesel as an alternative energy source. These fuels are compatible with most of our generator fleet, either in a blended or pure format. Bio-fuel can reduce CO₂ emissions, given that the crop that derived the fuel has absorbed CO₂ from the atmosphere. While we will continue to support customers who wish to run our equipment on Bio-fuels, our main concern with this energy source is sustainability of the sources of production, and the environmental impact of certain production methods. Consequently, we are not actively promoting Bio-fuel use in our business.

• Fuel Cells – Whilst we keep a close watch on the development of Fuel Cell technology, we do not currently see any commercial application in our business. This may change as technology improves and costs reduce.

• Renewables – At present, it is hard to envisage the application of renewable energy sources to large temporary power generation projects. While we have, for example, reviewed the application of battery technology in combination with a diesel generator to provide hybrid power, which can improve efficiency and reduce fuel consumption, technology is not yet advanced enough to enable us to pursue a hybrid renewable option. We do however foresee a role for our products in supporting systems and grids which rely upon renewables, where seasonal restrictions can occur.

Emissions-to-air: carbon dioxide

All of Aggreko's core activities release CO₂ into the atmosphere to a greater or lesser extent. The most significant impact arises from power generation in Aggreko International owing to the intensiveness of our activities in providing temporary power stations. Any generation of electricity using hydrocarbon fuels inevitably causes the release of CO₂ and the performance of Aggreko's equipment is comparable to other equivalent power sources. Aggreko is actively researching the availability of alternative mobile power sources that will reduce the level of CO₂ emissions; until an economically viable alternative becomes available, the level of emissions will mirror the level of our business activity. The actual amount of CO₂ released by our engines is driven by the usage our customers make of our equipment on rent; an engine running 24 hours/day will emit much more CO₂ than an engine used for a few hours a day. These patterns of usage can vary widely from country to country and from year to year. We estimate that customers using Aggreko engines produced an average CO₂ emission rate of 619 g/kWh. The CO₂ intensity of UK grid power generation is approximately 594 g CO₂/kWh; given our mix of gas and diesel generating sets, it is therefore reasonable to assume that the CO₂ intensity of our customer's use of Aggreko equipment is likely to be similar to that of the UK National Grid.

Because customers operate and fuel much of our fleet, we do not have visibility of fuel consumption (and therefore CO₂ emissions), so we can only guess at what the emissions are in a year, but a reasonable estimate would be between 12 and 15 million tonnes of CO₂ world-wide; this compares with Drax power station in the UK, which has a capacity of 4,000MW and produces about 22 million tonnes of CO₂ per annum.

The graph below illustrates the relative emissions rates of Coal, Diesel and Gas for electricity production.

Petroleum spills and the safe disposal of waste fluids

Aggreko and its customers handle a considerable quantity of diesel fuel and the rare occurrence of accidental fuel spills is an area that the Group monitors very closely. The measure used by management to measure the performance of the Group in handling fuel is the 'Petroleum Release Rating' (PRR). This is calculated as litres released to ground, divided by the cumulative average MW on rent. The PRR performance over the past three years has been:

• 2011 – 0.62

• 2010 – 0.58

• 2009 – 0.49

Our equipment has been specifically designed to minimise the risk of fluid spillage through features such as a 'save-all base', double-walled storage tanks and fail-safe valves. A PRR score of 0.50 has been set by the Group as a target for 2012, based on 90% of the 3-year average experience.

Another potential source of environmental damage is in the disposal of consumables such as engine oil and filters. In our Local business, these are normally returned to our service centres where they are safely disposed of. In our International Power Projects business, site-specific arrangements are made to ensure the safe handling of these items.

Reporting of fuel spills is handled in a similar way to safety incidents, with monthly reports reviewed at each meeting of the Board.

Noise

Aggreko has built a competitive advantage through an equipment fleet that minimises external noise. This is done by the use of custom-built acoustic enclosures as well as high performance isolation and attenuation systems. Aggreko continues to work closely with its suppliers and local university research departments in order to develop its expertise in this field. As a result, our equipment is able to achieve the following performance standards that are well below the maximum levels permitted by current European legislation.

Refrigerant

In accordance with the timelines and accords set out by the Montreal protocol Aggreko has phased out CFC plant from its temperature control rental fleet and is in the process of phasing out HCFC plant; we have introduced HFC production models in all areas.

Social Responsibility

Policy

Aggreko has a policy of encouraging local teams to engage with the communities in which they work, and each year they undertake innumerable initiatives to help the disadvantaged or those affected by natural disasters.

Charitable donations

During the financial year the Group contributed to a range of charitable, community and disaster relief organisations. In terms of cash and value-in-kind this amounted to around £157,000 (compared to around £300,000 donated in 2010), but this is an estimate and probably an under-estimate, because it is hard to precisely quantify value-in-kind donations, and does not include a valuation of  employees' time. Of this total, £43,370 (2010: £43,256) was donated in cash to registered UK charities.

We have a policy of giving little donations to many organisations which are involved with the communities in which we work, rather than giving a lot of money to a few. Our largest single donation goes to Book Aid International, a charity promoting literacy in Africa, with whom we have been working since 2006. Book Aid has provided hundreds of thousands of books to schools and libraries. We admire their work enormously, and donations from Aggreko have enabled books to be distributed in Cameroon, Kenya, Namibia, Tanzania and Uganda. Books are, we feel, a good form of donation; they do not require maintenance; they can be used by many people; they are not open to corruption; they last a long time; and they help directly in the key task of helping people to help themselves.

No political donations were made during the financial year (2010: nil).

Business ethics

Ethics Policy

Aggreko has a reputation for delivering innovation, performance and solutions. Also at the heart of our long-term success is something less tangible and less easily illustrated with figures or case studies. This key element is integrity and honesty in our business dealings, a factor that contributes to our long-term relationships with customers. All Aggreko employees, as well as consultants and agents who we work with, are expected to behave ethically in their work, and our expectations of them are set out in a Corporate Ethics Policy. The objective of the Policy is to make Aggreko a good company to work for; to maintain our reputation for exceptional customer service and ethical business dealings; to compete ethically; and to ensure the business is managed to a consistently high standard. The Board has set up an Ethics Committee comprising Philip Rogerson (Chairman), David Hamill and Ken Hanna, to oversee the implementation of the Group's policies and procedures, and the report of the Committee is set out in the Ethics Committee Report. Further discussion of our policies for handling ethical risks is set out under Principal Risks and Uncertainties.

Employees who suspect any breaches of the Corporate Ethics Policy are encouraged to speak up, and their confidentiality and position is protected if they do so. The implementation of a Group-wide whistleblowing hotline, described above, helps this process.

See our Corporate Responsibility website

Further information and copies of the Environmental, Health and Safety Policy and Corporate Ethics Policy are available at
www.aggreko.com/investors/corporateresponsibility.