ScottishPower commissioned Two Tomorrows (Europe) Limited* to undertake independent assurance of its CSR Annual Review, as published at www.scottishpowercsrannualreview.com The assurance process was conducted in accordance with AA1000AS (2008). We were engaged to provide Type 2 assurance, which covers

• evaluation of adherence to the AA1000APS (2008) principles of inclusivity, materiality and responsiveness (the Principles) and
• the reliability of specified sustainability performance information.

The performance information included in scope was all data and claims in the Review, with checking processes prioritised according to materiality. The assurance scope excluded financial information taken from annual reporting processes, financial investment data, and any data already submitted to regulatory audit or other third party checks.
We used the Global Reporting Initiative (GRI) Quality of Information Principles as Criteria for evaluating performance information.
The scope of our work excluded Company reporting relating to the operations of ScottishPower Renewables, and the material included under 'TV Station'.
The scope of our work did not include a review of the Review against the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines.

The directors of ScottishPower have sole responsibility for the preparation of the Review. In performing our assurance work, our responsibility is to the management of ScottishPower, however our statement represents our independent opinion and is intended to inform all of ScottishPower stakeholders including the management of ScottishPower.
We were not involved in the preparation of any part of the Review. We have no other contract with ScottishPower and this is the seventh year that we have provided assurance. We adopt a balanced approach towards all ScottishPower stakeholders.
Our team comprised Jon Woodhead, Louise Hawson, Alex Nichols, Dave Knight and Elvin Ozensoy. Further information, including individual competencies relating to the team can be found at: www.twotomorrows.com

Our work was designed to gather evidence with the objective of providing moderate assurance as defined in AA1000AS (2008). We undertook the following activities:

• Review of the current sustainability issues that could affect ScottishPower and are of interest to stakeholders
• Interviews with selected directors and senior managers responsible for management of sustainability issues and review of selected evidence to support issues discussed. We were free to select these interviewees as we saw fit. The objective of these discussions was to understand ScottishPower's governance arrangements and management priorities, in particular with reference to the nature and extent of the company's adherence to three Accountability Principles.
• Review of ScottishPower's approach to stakeholder engagement and recent outputs. As part of this, we attended the Stakeholder Session held by the company in Chester in December 2008.
• Review of information provided to us by ScottishPower on its reporting and management processes relating to the Principles.
• Site visits to the company's offices and customer call centre at Cathcart to review process and systems for preparing site level data and implementation of strategy with regard to support for customers with special circumstances. We were free to choose the site for our visit.
• Review of supporting evidence for key claims in the Review.
• Review of the processes for gathering and consolidating data reported within the company's Credit 360 reporting tool, and, for a sample, checking the data consolidation. We met with managers responsible for gathering data within the Credit 360 system, reviewed their processes for gathering and ensuring the accuracy of data, and requested supporting evidence.

We reviewed and provided feedback on drafts of the Review and where necessary changes were made. On the basis of the work undertaken, nothing came to our attention to suggest that the Review does not properly describe ScottishPower's adherence to the Principles or its performance.

Without affecting our assurance opinion we also provide the following observations.

• ScottishPower has continued to provide highly detailed reporting across the 12 impact areas as defined in 2005. We recommend that it would be beneficial to review the use of the 12 impact area structure of reporting, with the aim of improving the presentation of the most significant issues addressed during the year by the company, including greater clarity on the specific challenges that ScottishPower face going forwards.
• This year's Review continues to include key information on progress towards emissions reductions targets and other measures by the company to address climate change. The links to the separate web-pages on carbon capture and storage are particularly significant, given the long term importance of achieving successful progress in this area.

Inclusivity concerns the participation of stakeholders in developing and achieving an accountable and strategic response to sustainability.

• ScottishPower has conducted a range of stakeholder consultation activities during the year, including stakeholder workshops. Whilst it is clear from our assurance work that these events have been used, in addition to other forms of stakeholder dialogue, to inform strategy and decision-making, reporting on the substance of these discussions could be improved.
• For example, we recommend that future reports include details of how stakeholder concerns about issues such as the development of the company's social tariff, issues relating to price and value or customer service have been included in relevant decision making processes.

Material issues are those which are necessary for stakeholders to make informed judgments concerning ScottishPower and its impacts.

In our opinion the Report includes information on ScottishPower's main corporate responsibility performance issues and should enable stakeholders to make informed judgements. We make the following recommendations for improvement in future reports.

• We recommend that future reports provide a fresh picture of ScottishPower's assessment of materiality, taking account of the changing sustainability context, evaluating issues against a range of criteria, and showing integration with the company's corporate risk management approach.
• In our statement last year we recommended that future reports should set out a clear vision for how the company expects to manage its carbon footprint for the period up to 2012 and the possibilities for the period 2012-2020. ScottishPower reports on an increasingly wide range of activities that contribute to reductions in the company's carbon footprint, and is investing in research into possible new reduction technologies. Given the breadth of these activities, it is difficult to get an overall perspective on how much further the company can reduce its carbon emissions over the short term, and how much it might be able to reduce emissions in the long term. We recommend that ScottishPower consider ways to communicate a clear vision of possible future scenarios in this area, detailing the assumptions made, to inform stakeholders' views on the opportunities and constraints which shape the company's management approach.
• Last year we recommended that future reports provide further information on the company's work on social tariffs, and the impact of the scheme planned for introduction in 2008, and we note the increased reporting in this area this year.

Responsiveness concerns the extent to which an organisation responds to stakeholder issues

• In our statements in previous years we have recommended that the Review would be improved through specific recognition of how the company understands the concerns of its stakeholders, and explicit links to where the Review provides information on the company's response. We re-state this recommendation.
• The Review includes many examples of ScottishPower's input to local and national economies for example through its investment in new infrastructure and spending on community programmes. We recommend that future reports should include a wider analysis of the connection of ScottishPower to the economy, including direct and indirect benefits and detailing ScottishPower's views on the outcomes of these investments.

Performance Information

We found evidence that appropriate systems are in place for monitoring and gathering information on relevant management arrangements and performance. While we did not identify any significant errors or omissions, we offer the following specific observations:

• ScottishPower continues to strengthen environmental data measurement and reporting across the business, and we note in particular the strengthening of waste data in this year's Review.
• We restate our recommendation from last year that ScottishPower considers reporting H&S data in respect of contractors to improve report completeness.

Two Tomorrows (Europe) Limited*
London
May 2009

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* Two Tomorrows (Europe) Limited Limited trading as Two Tomorrows was formed from the merger of Csrnetwork and Sd3 in January 2009, Two Tomorrows is an international consultancy that helps companies to perform better and create value by doing business in a sustainable way. www.twotomorrows.com