Material themes and management approach

The content of this chapter is an integral part of the Executive Board Report as required under EU Directive.

Definition

Impact

Management approach


Health and safety


Health and safety (zero accidents) of all employees and subcontractors and everyone involved with BAM’s activities, including the general public.

‘BAM borrows its employees from their families’, is how BAM expresses its responsibility for everyone who works with and for BAM. There is nothing more important than everyone returning home safely. Health and safety at work contribute to the satisfaction of the employees of the Group and their family members, BAM’s subcontractors, its supply partners and others involved in BAM’s construction sites. Safety also affects BAM’s clients and BAM’s reputation.

BAM has developed a groupwide guideline for safety management. All safety management systems from operational companies must comply with this framework.

Meeting the strategy means focusing on the quality of the underlying goals: striving for the ambition ‘zero accidents’ every day is the goal for safety. Zero accidents means the mind-set (intrinsic motivation) and the true belief that it is feasible to create a safe working environment that means ‘everyone at home safely every day!’. To create a change in safety leadership, BAM has installed a Safety Leadership Team consisting of a representation of BAM’s managing directors and the Group’s Corporate Safety Officer. This team shows proactive ownership, open collaboration and accountability regarding the Group’s safety targets and focuses on a predictable safety performance on leadership, culture and behaviour. 

For BAM’s performance, see chapter 3.2 Social performance.


Project and product quality and control


Quality of the tender process, efficient project management and effective project execution with the aim to meet or exceed the expectations of the customer.

In order to exceed customer expectations, BAM must continuously improve the experienced performance of BAM’s products. Product quality means that BAM does what it has promised to do, within budget and on time. Operational performance is crucial for achieving the right level of financial and non-financial results for construction projects

BAM has the tender process focused on quality of its tenders in order to guarantee the current and future results of construction projects.

The evaluation of the internal governance framework has resulted in the updating of the business principles and management guidelines, including the strengthening of project selection and BAM’s tender process for large and high-risk projects. In connection with this development, peer reviews are carried out on project estimates under the leadership of the Tender Desk Director.

In order to comply with product responsibility, BAM assures that projects where its operating companies are responsible for design and construction are certified. In other projects (PPP projects) BAM uses verification and validation methods. Each operating company has a quality manager who is responsible for the quality control of the operating company’s processes. System audits are conducted by third parties. On all levels, outcomes are assessed by the senior management of BAM’s operating companies. 

For BAM’s performance, see chapter 2.2 Strategy and chapter 4 Risk management.


Business conduct and transparency


Openness and compliance with generally accepted standards and values and compliance with local legal and other rules and regulations, in particular with regard to the acquisition and execution of contracts.

BAM’s reputation and licence to operate depend on responsible business conduct, by stimulating dialogue about dilemmas. Ensuring compliance with anti-corruption legislation improves efficiency through lower transaction costs for BAM and its stakeholders. Moreover, BAM is of the opinion that doing business honestly is of vital importance for the strengthening of the competitive position of both BAM and its partners. Competitive behaviour contributes to innovation and collaboration. It creates an environment in which the best products will win and in which BAM’s clients will get the best products for the best price. The Group believes that by providing financial and non-financial information on the achievement of BAM’s strategic goals, it can continuously improve the reporting process as well as its performance.

For BAM, it is fundamental to comply with generally accepted standards and values but also with local legal and other rules and regulations, particularly with respect to the acquisition and performance of contracts. This is set out in the Group’s core values, the code of conduct and adjoining policies such as those relating to bribery, corruption and competition. All employees must act honestly, comply with agreements and deal carefully with customers and business partners, including suppliers and subcontractors. The Executive Board encourages this compliance, which is continuously evaluated in order to make integrity a fundamental part of the daily activities. The Group has an enhanced speak-up policy with an external reporting line, so that breaches of the code and policy can be reported through various channels. This policy is easily accessible to employees (e.g. on the intranet) and there is frequent communication around the themes. Compliance officers monitor compliance and advise on integrity issues.

For BAM’s performance, see chapter 3.2 Social performance.


Financial performance


Overall financial health, including balance sheet, profit and loss, property divestment and working capital improvement. 

A healthy financial performance provides BAM with the means to undertake transactions with its supply chain partners, leading to the possibility to develop new activities and to pay BAM’s employees and shareholders.

Constant attention is paid to strengthening BAM’s balance sheet and net results by improving financial processes to ensure a solid track record of project execution and margin stability, including rigorous monitoring of the cost base in line with BAM’s portfolio. Other key elements are working capital management and the execution of a property divestment programme.

Example KPI: Return on capital employed (ROCE) >10 per cent by 2020.     For BAM’s performance, see chapter 3.1 Financial performance.


Employee recruitment, development and retention


Encourage employees to use their skills, abilities and experience in a way that adds value to the company and delivers personal growth, technical innovation and profit.

BAM increases its intellectual capital and the human capital of its stakeholders by investing in employee development. Although the impact of the development of employees on society in general is minimal, it is much greater within BAM, where it contributes to the involvement of employees and lifelong learning. BAM recognises the importance of groupwide development and implementation of the talent strategy and agenda, succession planning and internal mobility, based on BAM’s organisational development and strategic objectives. Talent management allows BAM to attract, develop, motivate and retain productive, engaged employees, now and in the future. BAM is committed to the principles of equal opportunity and diversity. The Group believes that diverse teams are better aligned with the wishes and expectations of its clients and to society in all BAM markets. In line with its vision on diversity, BAM wants to attract people with different profiles and backgrounds to build teams that are suitable for future challenges and will contribute to the achievement of BAM’s strategic goals.

The Group’s development approach is aimed at encouraging employees to take their development into their own hands, with the manager/company taking on a supporting and facilitating role. The employee’s personal development is recorded in a personal learning and development plan. These plans are evaluated annually between manager and employee. BAM offers employees various tools that can be used in their personal development, and which are all accessible via the internal My BAM Career site. With the BAM Business School, BAM offers an integrated approach to support employees in achieving their goals. The training portfolio enables employees to keep up with their professional knowledge and to further develop the broader skills related to their role and career paths. Courses include topics like integrity, entrepreneurship, commerce, new contract forms, project and risk management, procurement and financial management. The Group aims to foster an open culture of learning and exchanging knowledge in the form of training and education, building on the knowledge and expertise available.

For BAM’s performance, see chapter 3.2 Social performance.


Energy and emissions


Energy consumption for BAM’s direct activities and the entire lifecycle of its products, and the CO2 emissions as a result of this energy consumption.

The Group’s energy consumption contributes to a significant amount of its costs and is an indicator of the efficiency of its processes. The construction industry has a high energy consumption compared to others, therefore BAM’s energy use has a major impact on society. Buildings represent about 40 per cent of energy demand in the European Union (EU). The renovation of existing buildings represents more than 17 per cent of the estimated primary energy saving potential within the EU up to 2050. In terms of energy and emissions, BAM can create value by building energy-efficient buildings and renovating buildings according to higher energy performance standards, since approximately 80 per cent of total CO2 emissions are emitted in the building’s lifecycle. Climate adaptation and mitigation options can help address climate change, but no single option is sufficient by itself. Effective implementation depends on policies and cooperation from governmental bodies. Urgent action is needed to significantly reduce greenhouse gas emissions and BAM supports global developments like the UN’s Sustainable Development Goals (see chapter 2.2 Strategy for BAM’s alignment), the Paris Agreement and the EU Emissions Trading System.

BAM innovates and works with value chain partners to identify possible reductions in both upstream and downstream manufacturing and operational processes.

BAM has calculated its carbon footprint in order to identify the main influences and therefore the key areas for potential reduction of emissions. The Group has set targets for both absolute and relative reduction of emissions. BAM monitors and benchmarks progress on these targets on a quarterly basis for different activities within the company. The Company focuses on reducing its direct CO2 emissions by lowering energy consumption during the construction process. The Group also maintains its efforts to use higher proportions of renewable energy. By joining the Dutch Climate Coalition (Nederlandse Klimaat Coalitie), BAM has committed to: 

  • Having climate-neutral operations by 2050 at the latest 
  • Providing insights into its carbon footprint 
  • Setting interim targets for climate neutrality 
  • Becoming an ambassador of the Dutch Climate Coalition within the construction industry.

Example KPI: To be included in CDP Climate A list Leadership.     For BAM’s performance, see chapter 3.3 Environmental performance.


Circular economy


An economy which aims to keep materials, components and products at their highest utility and value, at all times.

BAM has a continuous need for raw materials, water and energy. This means that primary processes are influenced by the increasing volatility of raw materials and energy prices. The products made by the Group must also comply with current and future requirements, with particular attention to the significant influence of changing laws and regulations. 

Waste production influences BAM’s licence to operate and is an indicator for the efficiency of the business processes. In addition, waste products lead to costs due to the low value of residual material. Approximately 25-30 per cent of the total demolition and construction waste in the EU is generated by the construction process. Being a large construction company, the Group’s waste production has an impact on society. Since about 83 per cent of all materials is recycled, it involves large quantities that have to be reused. BAM has identified opportunities for innovation on the basis of changing customer requests, especially with regard to greater attention for the recycling of materials and the use of sustainable materials, including wood from sustainable forests.

First, BAM is innovating to reduce material consumption during the design process. The Group works with its supply chain partners to identify more sustainable alternatives for production and operational processes, both upstream and downstream. BAM focuses on improving the recycling potential of materials and renewable materials by asking its most important suppliers to provide insight into their origin. 

BAM has set targets for waste reduction, waste recycling and responsible sourcing. The Group monitors and benchmarks progress on these targets on a quarterly basis for various activities within the company. BAM is also the only major construction member of the Ellen MacArthur Foundation’s CE100 programme, which promotes the circular economy.

Example KPI: source 100 per cent sustainable timber by 2020.     For BAM’s performance, see chapter 3.3 Environmental performance.


Local community engagement


The relationships with the communities surrounding BAM’s activities.

By its very nature, the Group’s construction and renovation work has an impact on the local community, residents and other users of buildings and infrastructure and society as a whole. Community engagement affects the Group’s licence to operate and enables BAM to build faster, leading directly to results. The Group’s impact on its surroundings immediately affects its employees and local suppliers. And BAM’s community engagement improves jobs and education in its environment, contributing to society as well. This requires a constant focus on everything BAM does to minimise the Group’s negative impact and create value for local communities by implementing community engagement programmes. Involvement of people from diverse backgrounds provides an opportunity to create social value. BAM actively supports social return, providing work for people who are unemployed for various reasons, for example due to poor education, health issues and people with disabilities. Through the support of BAM, these people benefit from ‘social return on investment’ initiatives.

For many of its projects, BAM identifies the local interests and, on that basis, chooses the best approach to increase the license to operate, which may mean that BAM participates in local events. BAM also participates in the Considerate Constructors Scheme in the United Kingdom, as well as its Dutch equivalent (Bewuste Bouwers).

Example KPI: Enhance one million lives in local communities by 2020.     For BAM’s performance, see chapter 3.2 Social performance.


Innovation


The creation of new viable business offerings. 

Innovation influences the ability to adapt to changing market needs and competitiveness in relation to current competition and future newcomers to the BAM market. Digital construction is a main theme within BAM’s innovation agenda. The benefits of digital construction for BAM and its stakeholders are higher resource productivity, end-user value, sustainability and outcome predictability. 

BAM shapes its future portfolio over two tracks. Both tracks are supported by an organisation and a lively ecosystem for innovation. In both tracks BAM focuses strongly on digital innovation.

  • Track one, ‘Business innovation’, follows an innovation stage gate-process to improve and align BAM’s current innovation portfolio.
  • Track two, ‘Scaling edges’, uses scalable learning and sprint methodology to develop and scale new business offerings at the edges of BAM’s current business. 

 For BAM’s performance, see chapter 2.2 Strategy.


Procurement strategy


Selecting suppliers and subcontractors and stimulating them to practise their skills and improve their products in a way that adds long-term value to BAM and its clients as well as the suppliers and subcontractors, providing process and product innovation and profit.

Labour policies of the Group’s suppliers and subcontractors can affect BAM’s reputation. Loss of reputation can lead to less work. The suppliers and subcontractors of the Group must at least adapt their policies to the BAM standards in order to be able to work for the company. As a result, these standards also have a positive influence outside the Group.

To integrate the development of the Group’s supply chain and its values, BAM strives for added value, long-term, mutually beneficial relationships with partners that can help to improve the Group’s supply chain. In order to achieve this, BAM is developing selected groups of suppliers and subcontractors on different levels – unit, operating company, country and Group level – within BAM. By having a preferred group of suppliers and subcontractors BAM is able to further interact with the supply chain on a regular basis, thereby creating the possibility to challenge each other to learn, innovate and improve its joint performance to the client. Based on the level of the relationship, there are different types of suppliers and subcontractors, such as preferred suppliers, partners and co-makers. Based on the challenges in client markets, development in the supply chain and performance of the suppliers and subcontractors, the position and role of the suppliers and subcontractors can change. The challenge is, on the one hand, to select up-front supply chain partners, products and services that really make a difference to the value proposition of BAM, and on the other hand let go of suppliers and subcontractors who add value. Apart from a more standardised due diligence, suppliers are assessed against five different themes: safety, quality, total cost, logistics and engineering and process. If they score below the required level, BAM starts a dialogue to improve their performance. If they are not willing and/or able to improve their performance, they will be excluded from future work with BAM.

For BAM’s performance, see chapter 3.2 Social performance.


Fair tax


Compliance to the letter and spirit of tax laws resulting in paying an appropriate amount of tax according to where value is created within the normal course of and being transparent about approach and outcome.

Tax is a relevant subject for BAM and its stakeholders. Tax payments to governments can contribute to the development of countries. On the other hand, optimisation of taxes is in the interest of the company and its financial position.

Therefore, BAM strives to come to a responsible approach to tax and supports it as an integral part of its sustainability agenda.

BAM’s tax policy statement is published on the website www.bam.com.

 For BAM’s performance, see chapter 3.1 Financial performance. 


Human rights


Ensuring compliance within the entire value chain regarding the basic rights and freedoms to which all humans are considered to be entitled, often held to include the rights to equality, a fair trial, freedom from slavery and freedom of thought and expression.

Human rights practices within BAM and its supply chain affect the reputation of the Group and are associated with the risk of losing work. Subcontractors have to bring their practices up to at least BAM standards to be able to work for the company and in doing so will have a positive influence outside of the Group as well.

BAM has signed a framework agreement with Building and Wood Workers’ International (BWI), to promote and protect employee rights. By signing the agreement BAM agreed to recognise and respect:

  • The fundamental principles of human rights as defined in the Universal Declaration of Human Rights
  • The ILO Declaration on Fundamental Principles and Rights at Work
  • The ILO Conventions in force
  • The ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy
  • The OECD Guidelines for Multinational Enterprises.

Within the agreement, BAM also endorses the need for fair negotiations with national trade unions and acknowledges that corruption, bribery and anti-competitive behaviour are not acceptable. Regular meetings are held with management representatives from BAM and trade union organisations, including BWI, to monitor implementation of the agreement. 

Subcontractors must comply with labour conditions as stated in BAM’s purchasing conditions. The UK Modern Slavery Act 2015 requires all larger companies to prepare a statement of its activities in this area. Both BAM Construct UK and BAM Nuttall have initiated working groups and are working towards developing their approaches.

 For BAM’s performance, see chapter 3.2 Social performance.

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