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
Project and product quality and control  
Promoting predictable performance, quality of tender process, efficient project management and effective project execution with the aim to meet and exceed client expectations. In order to meet and exceed client expectations, BAM must continuously improve the experienced performance of its 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 focused the tender process on the quality of its tenders in order to guarantee the current and future results of construction projects.
Evaluations of the internal governance framework have 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 3.2 Social performance.   
 
Financial performance 
Generating overall financial health, including balance sheet, profit & 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 2021. 
For BAM’s performance, see paragraph 3.1 Financial performance.
 
Decarbonisation
Reducing carbon emissions to limit global warming and its effects. The construction industry has a high energy consumption and carbon footprint compared to others; therefore, BAM’s energy use and carbon footprint contribute to climate change. 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, the Paris Agreement, the EU Emissions Trading System and the Science Based Target Initiative. 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 ambitious scope 1,2 and 3 reduction targets in line with climate science and externally verified (by the Science Based Target initiative). 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. 
Example KPI: CO2 intensity.
For BAM’s performance, see paragraph 3.3 Environmental performance.
 
Digitalisation and industrialisation
Integrating digital technologies (e.g. digital construction, cybersecurity, big data) to scale-up and automate project execution and the development of solutions. Digitalisation and industrialisation are key elements in a changing society, where data and digital solutions become increasingly important. In the construction sector, a digital approach is becoming essential in scaling-up and automate processes to increase efficiencies and develop new solutions. BAM embraces digitalisation and industrialisation to optimise building processes and support a lifecycle approach towards (information) management in its operations. BAM’s efforts aim to create the most effective and efficient way of working, reduce waste, get the most out of data in order to improve business performance and add value to BAM’s stakeholders. 

BAM applies technological innovations, such as BIM, robotics, virtual and augmented reality and modular and offsite construction practices, to build digitally before building on site, therefore reducing risks during construction and supporting a safer working environment for employees on construction sites.

BAM has not yet a quantitative KPI in place for digitalisation and industrialisation in place, as current measurements are unfortunately insufficient to provide a clear insight in BAM’s performance on this theme. BAM discloses details of an example of the Company pushing digitalisation, the DigiCon21 event, in paragraph 2.3.

 
Employee recruitment, development and retention
Empowering employees to use their skills, abilities and experience in a way that adds value to the business and provides personal growth, sustainable 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 Group-wide 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 with 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 regularly between manager and employee. BAM offers employees various tools that can be used in their personal development, which are all accessible via BAM’s intranet Connect. With BAM Learning, BAM offers an integrated approach to support employees in achieving their professional development 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 such as 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 within BAM as well as providing on-the-job development opportunities. For business and project leadership development (including early career), the Group has specialised programmes. 
For BAM’s performance, see chapter 3.2 Social performance.
     
Health, Safety and well-being
Fostering healthy and safe working and living environments. BAM is responsible for the occupational safety of everyone who works for BAM. This includes all people directly employed by BAM, but also everyone else working on sites managed by BAM. Health and safety at work contribute to employee satisfaction. A high level of safety performance gives BAM a competitive advantage. Incidents and adhering to rules and regulations regarding safety strongly affects BAM’s reputation. BAM has developed a Group-wide guideline for safety reporting. All safety management systems from operational companies must comply with this guideline. The design of the safety management system is responsibility of the operating companies, so safety processes are appropriate for local challenges and regulations. Safety performance is consolidated at Group level and discussed with the Executive Committee every quarter.
For BAM’s performance, see chapter 3.2 Social performance.
     
Circularity
Reducing resource consumption, eliminating waste and enabling continual material use to limit material depletion. 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 of the efficiency of the business processes. In addition, waste products lead to costs due to the low value of residual material. BAM being a large construction company, its waste production has an impact on society. BAM has identified opportunities for innovation based on changing customer requests, especially regarding greater attention for the recycling of materials and the use of sustainable materials, including certified timber from sustainable forests.

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. 

Example KPI: Construction and office waste intensity.
For BAM’s performance, see paragraph 3.3 Environmental performance.
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