CEO Statement:

H.E. Ban Ki-moon
Secretary-General
United Nations
New York, NY 10017
USA

Dear Mr. Secretary-General,

I am pleased to reconfirm National Grid’s support of the ten principles of the Global Compact on human rights, labour, environment and anti-corruption. With this communication, we express our continued intent to advance these principles within our sphere of influence.

In 2014 we were name UK Responsible Business of the Year, Business in the Community’s highest award. This accolade recognised our commitment to live up to the ten Principles, to get involved with the things that really matter to use and to society; and to do the right things in the right way.

We recognise that a key requirement for participation in the Global Compact is the annual submission of a Communication on Progress that describes our company’s efforts to implement the ten principles. Our website, http://www2.nationalgrid.com/Responsibility, meets this requirement by setting out our approach to ensuring that our everyday operations meet society's need for safe, reliable and affordable energy. It also shows how we are creating shared value by undertaking innovative activities that are good for our business and have a positive impact on those around us.

Yours sincerely

Steve Holliday
CEO

A copy of the signed CEO letter will be available on our website at http://www2.nationalgrid.com/responsibility/how-were-doing/How-we-report/ (sixth tab)

PLEASE NOTE: We consider our web-based CR report to act as our annual Communication of Progress. As we do not produce a print / PDF version of this report, we are unable to submit as an active level company.

We have therefore elected to use this basic template to provide links to the relevant information on our website.

Certain elements of the relevant information is available in our Statutory Annual Report and Accounts, but we do not specifically identify it as our COP.

Annual Report & Accounts 2014/15: http://investors.nationalgrid.com/~/media/Files/N/National-Grid-IR/reports/2015/NG_Interactive_15.pdf

Reference is also made to our GRI map, which links the various metrics used by the GRI to pages and document on our website where supporting information can be found.
GRI map: http://www2.nationalgrid.com/responsibility/how-were-doing/How-we-report/ (fourth tab)

National Grid does not operate in countries of concern with respect to human rights. As a result, National Grid does not have a specific policy relating to human rights, but respect for human rights is incorporated into our employment practices and our values, which include respecting others and valuing diversity.

‘Doing the Right Thing’ is our guide to ethical business conduct. The way in which we conduct ourselves allows us to build trust with the people we work with. We earn this trust by doing things in the right way, building our reputation as an ethical company that our stakeholders want to do business with, and that our employees want to work for.

Our procurement policies integrate sustainability into the way we do business throughout our supply chain, so that we create value, preserve natural resources and respect the interests of the communities we serve and from which we procure goods and services.

Additionally, through our supplier code of conduct, we expect our suppliers to keep to all laws relating to their business, as well as the principles of the United Nations Global Compact, the United Nations Declaration of Human Rights and the International Labour Organization (ILO).

Link to Doing the Right Thing: http://www2.nationalgrid.com/About-us/Doing-the-Right-Thing/
Link to Supplier code of Conduct: http://www2.nationalgrid.com/UK/Industry-information/Suppliers/

We aim to develop and operate our business with an inclusive and diverse culture, with equal opportunity to all in recruitment, career development, training and reward. This applies to all employees regardless of race, gender, nationality, age, disability, sexual orientation, gender identity, religion and background. Where existing employees become disabled, our policy is to provide continued employment and training wherever practical. Our policies support the attraction and retention of the best people, improve effectiveness, deliver superior performance and enhance our success.

Link to Inclusion & Diversity / Human Resources policy: http://www2.nationalgrid.com/About-us/Inclusion-diversity/

The following links provide information on the various activities we have in place to promote gender equality and encourage women to take up engineering as a career.

The links also highlight what we are doing to support education, in particular to promote STEM (Science, Technology, English and Maths) in schools in the regions in which we operate.

http://www2.nationalgrid.com/responsibility/Connecting-for-tomorrow/Inspiring-for-the-future/
http://www2.nationalgrid.com/responsibility/Connecting-today/in-the-us/
http://www2.nationalgrid.com/responsibility/Connecting-today/in-the-uk/

The safety of the public in the communities we serve is of prime importance to us.

We provide a range of material aimed at educating the public about how to use gas and electricity safely, as well as what the do in the event of an emergency. Example of this information can be found at:
http://www2.nationalgrid.com/UK/Safety/Gas-emergency/
http://www2.nationalgrid.com/UK/Safety/Safety-in-the-home/
https://www1.nationalgridus.com/SafetyandOutageLanding

As at 31 March 2015, 23.6% of our around 24,274 employees were female and 14.1% were from ethnic minority groups. This compares with 23.1% and 13.9% respectively at 31 March 2014.

Around 24.1% of our management team are female; around 3.7% are from ethnic minority groups.

As at 1 July 2015, 27.3% of our Board members are female; 9.1% are ethnic minorities.

In 2014/15, 32 members of the public (excluding fatalities) were injured as a result of our activities, compared with 37 in 2013/14.

Regrettably, there were two fatalities during 2014/15 – a member of the public in the UK who fell when climbing on one of our pipelines, and a contractor at our Rhode Island gas distribution business.

The principal causes of injury continue to be slips, trips and falls around our street works and road traffic collisions with our vehicles.

Our performance in these areas for the past five years is reported on our website:
Inclusion and Diversity: http://www2.nationalgrid.com/Responsibility/How-were-doing/Grid-data-centre/Employees/
Public safety: http://www2.nationalgrid.com/responsibility/how-were-doing/grid-data-centre/Safety-and-wellbeing/

Reference is also made to our GRI map, which links the various metrics used by the GRI to pages and document on our website where supporting information can be found:http://www2.nationalgrid.com/responsibility/how-were-doing/How-we-report/ (fourth tab)

Our Human Resources and Safety & Wellbeing policies set out our approach to labour rights

Safety & Wellbeing: http://www2.nationalgrid.com/About-us/Corporate-governance/Documents-and-policies/ (third tab)
Human Resources: http://www2.nationalgrid.com/About-us/Inclusion-diversity/

Our procurement policies integrate sustainability into the way we do business throughout our supply chain, so that we create value, preserve natural resources and respect the interests of the communities we serve and from which we procure goods and services. Additionally, through our supplier code of conduct, we expect our suppliers to keep to all laws relating to their business, as well as the principles of the United Nations Global Compact, the United Nations Declaration of Human Rights and the International Labour Organization (ILO).

Link to Supplier code of Conduct: http://www2.nationalgrid.com/UK/Industry-information/Suppliers/

Our Company-wide injury frequency rate of 0.13 is better than last year and means that we bettered our target of 0.15. However, we did not meet our ambition to reach a world-class level by 2015.

Amongst our programmes for 2014/15 we have worked to address the stigma and discrimination associated with mental health. We signed the UK Government-led ‘Time to Change’ pledge and have trained a further 92 employees in mental health first aid. In the US we have refreshed our soft tissue injury programme, aimed at helping reduce muscular skeletal disorders.

With our major cancer charities (Macmillan Cancer Support in the UK and The American Cancer Society in the US), we have raised money and awareness.

Our employee opinion survey continues to show our employees have a growing awareness of our wellbeing programmes

We operate separate UK and US employee helplines, which provide advice and guidance on a wide range of issues, such as debt advice, living well, bereavement, caring for sick relatives and consumer rights.

Further information on the benefits we offer our employees, education and training opportunities, community volunteering opportunities and employee support groups can be found in the careers section of our website: http://www.nationalgridcareers.com/Working-at-National-Grid/

We report our employee lost time injury frequency rate (IFR), expressed as lost time injuries per 100,000 hours worked, as a key measure that can be compared with other companies.

In 2014/15, our employee IFR was 0.13, compared to 0.14 in 2013/14, illustrating we have bettered our target of 0.15.

The number of employee lost time injuries in 2014/15 was 70, compared with 80 in 2013/14.

We identified 138 high potential incidents, compared with 208 the previous year. High potential incidents are any incidents that had the potential for one or more serious injuries or fatalities.

We believe everyone who works for us is entitled to high levels of safety, whether they are a direct employee or employed by one of our contract partners.

During 2014/15, there were 40 contractor lost time injuries, compared with 60 in 2013/14.

Regrettably, there were two fatalities during the year – a member of the public in the UK who fell when climbing on one of our pipelines, and a contractor at our Rhode Island gas distribution business. We can never be complacent about our performance and will continually strive to improve.

During 2014/15, we provided around 1,320,000 hours of training for our employees. This equates to around 54.8 hours per employee.

We measure how engaged our people are through our employee engagement index, calculated from certain questions in our employee survey. The results of our 2015 survey, which was completed by 83% of our employees, has seen a 4% improvement compared to last year; our engagement index this year was 75%. This is the highest engagement score since we started conducting our Group-wide employee opinion surveys.

Performance in these areas for the past five years can be found on our website:
Safety: http://www2.nationalgrid.com/responsibility/how-were-doing/grid-data-centre/Safety-and-wellbeing/
Employee training: http://www2.nationalgrid.com/responsibility/how-were-doing/grid-data-centre/Employees/

Reference is also made to our GRI map, which links the various metrics used by the GRI to pages and document on our website where supporting information can be found:http://www2.nationalgrid.com/responsibility/how-were-doing/How-we-report/ (fourth tab)

Our ambition is to embed the principles of the circular economy to protect and preserve natural resources and benefit the communities in which we operate.

Our approach to the environment is set out in our Environment Policy: http://www2.nationalgrid.com/About-us/Corporate-governance/Documents-and-policies/

This is supported by 'Our Contribution', which sets out National Grid’s ambition to transform the way we do business and provide a sustainable legacy as a result of our operations.

Our Contribution: http://www2.nationalgrid.com/responsibility/Connecting-for-tomorrow/Preserving-for-the-future/sustainability/

Our total Scope 1 and 2 emissions (excluding line losses) for 2014/15 were around 7.3 million tonnes carbon dioxide equivalent. This represents a 63% reduction on our 1990 base line.

Our total Scope 1 and 2 emissions (including line losses) were around 11.3 million tonnes carbon dioxide equivalent (2013/14: 11.3 million tonnes).

We also measure our carbon intensity. For 2014/15, excluding line losses this was 478 tonnes carbon dioxide equivalent per £ million of revenue compared with 501 tonnes in 2013/14.

Performance data on climate change, water use, waste management, SOx and NOx emissions, and environmental incidents for the last five years can be found on our website:
Climate change: http://www2.nationalgrid.com/responsibility/how-were-doing/grid-data-centre/climate-change/
Other environmental impacts: http://www2.nationalgrid.com/responsibility/how-were-doing/grid-data-centre/environmental-impacts/

Reference is also made to our GRI map, which links the various metrics used by the GRI to pages and document on our website where supporting information can be found:http://www2.nationalgrid.com/responsibility/how-were-doing/How-we-report/ (fourth tab)

We continue to implement environmental management systems certified to the international standard ISO 14001. 100% of our material operations are covered by ISO 14001 environmental management systems.

The way in which we are implementing our environment policy and 'our contribution', is set out on our website at: http://www2.nationalgrid.com/responsibility/Connecting-for-tomorrow/Preserving-for-the-future/sustainability/

100% of our material operations are covered by ISO 14001 environmental management systems. At 31 March 2015, approximately 93% of our employees worked to certified ISO 14001 environmental management systems the same level as last year. The remaining 7% are mainly office based employees in the US.

Our Scope 1 and 2 greenhouse gas emissions are reported in line with the WRI/WBCSD Greenhouse Gas Protocol Corporate Standard for all six Kyoto gases and using the operational control approach for emissions accounting.

Prior to 2012/13, we reported greenhouse gas emissions attributable to electricity transmission line losses as a Scope 3 emission. On the advice of our GHG emission data verifier, we have now reclassified this emission source as Scope 2.

Our Scope 1 and 2 emission reduction targets exclude line losses, so we report our Scope 1 and 2 emission both including and excluding this emission source.

These Scope 1 and 2 emissions are independently assured against the international standard ISO14064-3 Greenhouse Gas Assurance Protocol.

We remain committed to our targets of a 45% reduction in Scope 1 and 2 greenhouse gas (GHG) emissions (excluding line losses) by 2020 and 80% by 2050 against our 1990 baseline.

Our total Scope 1 and 2 emissions (excluding line losses) for 2014/15 were around 7.3 million tonnes carbon dioxide equivalent. This represents a 63% reduction on our 1990 base line.

Our total Scope 1 and 2 emissions (including line losses) were around 11.3 million tonnes carbon dioxide equivalent (2013/14: 11.3 million tonnes).

We also measure our carbon intensity. For 2014/15, excluding line losses this was 478 tonnes carbon dioxide equivalent per £ million of revenue compared with 501 tonnes in 2013/14.

Performance data on climate change, water use, waste management, SOx and NOx emissions, and environmental incidents for the last five years can be found on our website:

Climate change: http://www2.nationalgrid.com/responsibility/how-were-doing/grid-data-centre/climate-change/
Other environmental impacts: http://www2.nationalgrid.com/responsibility/how-were-doing/grid-data-centre/environmental-impacts/

Reference is also made to our GRI map, which links the various metrics used by the GRI to pages and document on our website where supporting information can be found:http://www2.nationalgrid.com/responsibility/how-were-doing/How-we-report/ (fourth tab)

National Grid's approach to business ethics, including anti-corruption, is set out in our Global Code of Business Ethics, 'Doing the Right Thing'. It is supported by other group policies, covering such issues as bribery and anti-fraud and whistleblower provisions.

Doing the Right Thing and the other policies can be found at: http://www2.nationalgrid.com/responsibility/how-were-doing/grid-data-centre/Safety-and-wellbeing/

Doing the Right Thing sets out specific actions to address various ethical issues.

All employees are required to complete annual basic ethics training and employees at risk carry out additional training covering issues such as UK bribery act, anti-fraud, competition law, and US lobbying requirements.

We have anonymous whistle blower and ethics helplines for all employees.

In 2014/15, there were 231 potential breaches of our Standards of Ethical Business Conduct, of which 97 were substantiated. This equates to 4.0 substantiated breaches of the Standards per 1,000 employees compared with 18.8 during 2013/14.

We take all breaches very seriously and disciplinary action can range from a verbal warning to dismissal. In 2014/15, there were 24 terminations of employment (2013/14: 58) resulting from substantiated breaches for offences such as fraud and theft, drugs and alcohol abuse, safety violations and misuse of company assets.

During 2014/15, around 87% of our employees in the UK completed some form of ethics training

Performance in this area for the past five years is reported on our website: http://www2.nationalgrid.com/Responsibility/How-were-doing/Grid-data-centre/Employees/

Reference is also made to our GRI map, which links the various metrics used by the GRI to pages and document on our website where supporting information can be found:http://www2.nationalgrid.com/responsibility/how-were-doing/How-we-report/ (fourth tab)