Independent Assurance

Learning from our independent assurance process

We engaged Ernst & Young (E&Y) to carry out an independent review of our 2007 Corporate Responsibility Report. The review focused on the processes we have in place over the management and reporting of social and environmental risks, the progress we have made in Corporate Responsibility (CR) in 2007, and our corporate aggregation of HSSE, community and employee data. E&Y’s report is found within the Independent Assurance statement. E&Y identified particular strengths in our processes and plans:

The development of the Social Performance Standard. This Standard is designed to provide a more consistent approach to addressing community relations across the Group.
A continued focus on addressing safety issues at assets. In particular, the identification and dissemination of lessons learned from serious incidents involving third party contractors and in non-operated joint ventures.
A strong commitment to developing people. This commitment was repeatedly emphasised by the leadership of the assets visited, and staff interviewed were positive about the development opportunities and support made available to them.
The Chief Executive and executive leadership set a clear ‘tone from the top’ in relation to CR issues, including CR objectives in their performance targets, some of which are linked to their remuneration.

E&Y identified areas for improvement in the evolving process of implementing CR. Over the coming year, we will be working on the areas shown below, which are also incorporated into our targets on pages Summary of Performance, where appropriate:

Clarify asset-level understanding of CR and better communicate the breadth and scope of the CR Committee. Although there is clear accountability for each element of CR at a corporate level, it is sometimes unclear to the assets who is responsible for the CR agenda. Additionally, consider improving the alignment between governance structures of the business and CR communications.
This Report includes little discussion on how BG Group exerts influence over partners and joint ventures in relation to achieving performance and behaviours which are consistent with BG Group’s Business Principles. As partnerships and joint ventures account for a significant proportion of BG Group’s business, further consideration should be given to coverage of these issues in future CR reports.
BG Group is taking steps to assess the compliance of key contractors against the Business Principles. 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.
Provide a consistent framework for decision making with regards to social investment. Although BG Group supports many worthwhile and beneficial projects across the assets, the theme of ‘opportunities and skills for development’ is too broad. The implementation of the Social Performance Standard should help to address this.
BG Group is in the process of implementing a consistent approach to the challenge of localisation. BG Group is also strengthening its approach to employee diversity and will launch a new strategy in 2008. The Group will need to ensure that this is clearly communicated and sensitively applied across its assets.

E&Y identified seven areas for improvement in their review last year (see Independent assurance section of our 2006 Corporate Responsibility Report). This 2007 Corporate Responsibility Report describes how we addressed these seven areas and the table below summarises our progress.

Areas for improvement identified in the 2006 assurance process		Our progress in 2007
Consider whether appropriate assurance is given to the roll out of Core Controls and Standards, including the commissioning of specific audits		Assurance over the implementation of Core Controls and Standards is primarily assessed through the GSA process described within the Conduct section. In addition, a number of internal audits have been carried out in the year to assess the implementation of the Group’s CR related Core Controls and related Standards.
Ensure those with responsibilities for implementing new or revised Core Controls and Standards are given timely training		In 2007, Business Principles workshops included training on the Gifts & Hospitality, Anti-Corruption, Conflicts of Interest and Political Donations Standards.
Establish clear criteria on when and how to apply the Voluntary Principles for Security and Human Rights		Our corporate security team have created clear criteria to decide in which countries the Voluntary Principles (VPs) are applicable based on an initial risk assessment and regular risk reviews. A new Group document, the Voluntary Principles on Security and Human Rights: Implementation Guide, provides a Guideline to asset security and PCA managers on how to apply the VPs.
Define the extent to which BG Group should exert and report externally on the influence over partners and joint ventures in achieving performance and behaviours consistent with BG Group’s Business Principles		BG Group seeks to ensure that the performance and behaviours of partners and joint ventures are consistent with BG Group’s Business Principles. The extent to which the Company exerts influence is reflected in our risk assessment process. This is a challenging and sensitive area, but we will continue to address this on a case-by-case basis in 2008.
Provide guidance and help assets set expectations and monitor performance against Business Principles for third party contractor relationships		All significant contracts and invitations to tender require our contractors to perform work in accordance with our Business Principles. In 2007, we launched a pilot project to monitor the compliance of key contractors with our Business Principles. This project is ongoing (see Conduct section)
Develop clear, credible targets against which progress in reducing climate change impacts can be measured		GHG emission target set as one million tonnes annual saving of carbon dioxide equivalent by 2012, as against a ‘no-action’ base case (see Combating Climate Change).
Provide greater clarity to assets on community investment		Guidelines for social investment are being developed as part of the Social Performance Standard, to be rolled out in 2008. The Guidelines are based on a Group-wide review of current practice, along with leading international practice within the extractive sector.

Independent assurance report to BG Group plc on its 2007 Corporate Responsibility Report

BG Group plc’s (BG Group) 2007 Corporate Responsibility Report (the Report) 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 AA1000AS^(a) 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 ISAE3000^(b) 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 Principles of Materiality, Completeness and Responsiveness we undertook the steps outlined below:

Interviews with a selection of BG Group executives and senior managers to understand the current status of Corporate Responsibility (CR) activities and progress made during the reporting period.
Visits to BG Group’s assets at Oman and Tunisia to review the systems and processes in place for managing and reporting on CR activities at asset level and to review evidence in support of claims made in the Report regarding BG Group’s CR performance.
Review of selected corporate level documents to assess management awareness of performance against non-financial policy commitments and test the coverage of the Report.
Review of documents from stakeholder engagement activities, including documents summarising engagement with the socially responsible investment community.
Review of social investment, employee and health, safety and environmental (HSE) data samples and processes to assess whether they have been collected, consolidated and reported appropriately at corporate level and at the assets visited.
Test the consistency of the claims made in the Report regarding BG Group’s CR 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

With the exception of how BG Group seeks to influence the CR activities of its partners in joint ventures and non-operated assets, we are not aware of any material aspects concerning BG Group’s CR activities that have been excluded from the Report.

Completeness

We are not aware of any material issues excluded from BG Group’s judgements 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 CR activities.

HSE, Social Investment and Employee Data

We are not aware of any material 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

With the exception of the issue highlighted in relation to Materiality, we are not aware of any additional issues of stakeholder interest that are not currently included in the Report’s scope and content.

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 in the Independent Assurance statement. In addition, we have been asked to provide specific observations on selected matters discussed in the Report. These observations are spread throughout the report. Our observations do not affect our conclusions on the Report set out above.

OUR INDEPENDENCE

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

OUR ASSURANCE TEAM

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

Ernst & Young LLP
London
4 April 2008

(a): AA1000AS – AA1000 assurance standard from the Institute of Social and Ethical Accountability
(b): ISAE3000 – International Federation of the Accountants’ International Standard for Assurance Engagements Other Than Audits or Reviews of Historical Financial Information

LONDON BENCHMARKING GROUP ASSURANCE STATEMENT

We have been asked to assess BG Group’s use of the London Benchmarking Group (LBG) model to measure and report on its corporate community involvement activity during 2007.

The LBG model was developed by a group of companies in 1995 as an internal evaluation tool and as a way to ensure greater consistency and comparability in external reporting. Today more than 100 leading international companies apply the model around the world.

The LBG model helps businesses to improve the management, measurement and reporting of their corporate community involvement programmes. It moves beyond charitable donations to include the full range of contributions (in time, in kind and in cash) made to community causes, and assesses the actual results for the community and for the business. (See www.lbg-online.net for more information)

As manager of the LBG, we have worked with BG Group to review its understanding of the LBG model and its application to the wide range of community programmes.

Our aim has been to ensure that the evaluation principles are correctly and consistently applied. We are satisfied this has been achieved. Our work has not extended to an independent audit of the data presented in this report.

The quality of the data reported by BG Group’s operations continues to improve. Last year we highlighted that there are certain areas of activity, such as support for sport and arts projects, where caution needs to be exercised in differentiating costs that are of benefit to the community (e.g. using sport as a means to benefit disadvantaged groups) from those that are more strictly commercial in nature (e.g. professional sports sponsorship). The data this year demonstrates that operations have clearly understood and applied this distinction.

Overall, BG Group’s operations continue to classify the majority of their activities as local or regional community investment and only a small proportion as charitable gifts, continuing the trend away from reactive cash donations towards more strategic investment in the community.

Last year we highlighted that a challenge for BG Group is to assess more comprehensively the achievements of its community programmes. The data from operations indicates that some assessment of key projects is being made at local level. Collecting further data on the aims of major activities and the extent to which these are achieved, in terms of additional resources attracted (leverage), community benefits and the business case (outputs and impacts), will help BG Group obtain a broader understanding of its impact on the communities where it operates.

Corporate Citizenship
www.corporate-citizenship.com
February 2008

LEGAL NOTICE

Certain statements included in this Corporate Responsibility Report contain forward-looking information concerning the Group’s strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the countries, sectors or markets in which the Group operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which are within the Company’s control or can be predicted by the Company. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. For a detailed analysis of the factors that affect our business, financial performance or results of operations, we urge you to look at the “Risk Factors” included in the 2007 Annual Reports and Accounts. Nothing in this Corporate Responsibility Report should be construed as a profit forecast, and no part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in BG Group plc or any other entity, and must not be relied upon in any way in connection with any investment decision. The Company undertakes no obligation to update any forward-looking statements.

BG Group is subject to the regulatory requirements of the Financial Services Authority of the United Kingdom. BG Group is a “designated foreign issuer” for the purpose of National Instrument 71-702 “Continuous Disclosure and Other Exemptions” of the Canadian Securities Administrators.

Corporate Responsibility Report 2007

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