Stakeholder engagement and material themes

Stakeholder engagement

BAM recognises that real business benefits can only be achieved by involving all stakeholders in the process. In 2017, BAM met with its customers, main suppliers and other stakeholders in a multi-stakeholder forum, with the aim of further aligning BAM's policy with the wishes of stakeholders.

The Group has defined its stakeholders as those groups which significantly influence or are influenced by the economic, environmental and social performance of BAM. The Group has identified its stakeholders based on the risks and opportunities for its business performance, strategy execution and strategic objectives.

BAM continuously engages with its stakeholders to understand their priorities and concerns through benchmarking, sector meetings, client surveys and direct contacts. BAM’s key stakeholder groups, and its interactions with those stakeholders are:

Clients
BAM is in daily conversation with its clients about project expectations and projections. In addition, BAM organises client meetings to share knowledge, best practices and innovation within its value chain. Some customers have developed their own sustainability benchmarks, including government implementing organisation ProRail, responsible for the maintenance and expansion of the Dutch railway infrastructure, with its CO2 performance ladder.
Positioning on the ladder forms part of the tender evaluation process and and has a positive influence on BAM’s ability to win contracts. It is therefore important that BAM remains informed of and proactively responds to these and similar initiatives.

Providers of financial capital
Communication with investors, financial institutions and the financial community in general is actively pursued and usually takes place through meetings, project visits, road shows, seminars, presentations, investment meetings and press releases. The main recurring topics of discussion are financial performance, transparency and control. All dates and locations of road shows, seminars and other investor relations activities are published on the BAM website. The Group has also been responding to CDP’s investor information requests since 2008.

Employees
BAM’s employees are the company's most important asset. As part of BAM’s performance management process, the personal learning and development plans of employees are evaluated annually between manager and employee. The most important discussion points are development plans and expectations. BAM also has active works councils within the operating companies to discuss organisational changes and other related matters. For younger employees in the Netherlands and in the United Kingdom ‘Young BAM’ commitees organise events to learn about projects and inspire to provide feedback.

Suppliers and subcontractors
BAM’s procurement officers are in daily contact with suppliers and subcontractors to discuss health and safety, among other things. Circular economy practices and waste-reducing activities are also increasingly being discussed. Supply chain partners are increasingly involved in the early stages of the bidding process and in the development and planning of BAM projects through lean planning meetings. This optimises the efficiency of the construction program via the value chain. By involving its partners in the supply chain, BAM invests in relationships. 

Society
By its nature, the construction and civil engineering works of BAM have an impact on local communities, residents and other users of buildings and on infrastructure and society as a whole. Main discussion points differ per governmental body, but health and safety as well as human rights are common. Chapter 4 of this report describes BAM's results and provides examples of its activities for social involvement in 2017. BAM’s target of improving a million lives shows its ambition to increase its positive impact on the social level.

Regulators 
By delivering projects, BAM is in constant contact with local government authorities about issuing permits, compliance with regulations and monitoring its activities.
BAM is involved in many governmental initiatives including several Green Deals in the Netherlands. BAM Nuttall and BAM Construct UK are members of the UK Green Building Council. BAM aims to engage regulators in issues such as carbon-free buildings, carbon impact in the infrastructure life cycle and other sustainability-related issues within the built environment.

Multi-stakeholder dialogue

In addition to its engagements with different stakeholders across its operating companies, the Group organises annual multi-stakeholder meetings hosted by BAM’s CEO. Both local smaller parties and managers of international stakeholders and government agencies and institutions have been present. These meetings are used not only to present and check BAM’s strategy to and with all parties directly or indirectly involved,  but more importantly to jointly discuss cross industry trends and movements throughout the entire construction value chain. 

In 2017 BAM organised its stakeholder meeting with the theme ‘Creating value through cooperation’. The stakeholders selected for the dialogue were some 60 representatives of clients, financial institutions, suppliers, architects, startups, NGOs, and knowledge institutes that are actively involved with BAM activities. BAM executives and internal stakeholders from the BAM operating companies also took part in the meeting.

At this year's meeting, BAM used an interactive voting tool to allow all participants in the programme to express their opinions on the topics discussed. The programme consisted, among other things, of project-oriented interviews and an interactive panel interface. The interviews were conducted with both a client and a BAM representative and with the subject of how open collaboration could improve the value of the projects and the relationship between BAM and its clients. The panel consisted of a governmental client, a supplier, a digital partner and the CEO of BAM, and focused on the following themes:

  • Digitalisation in the (pre-)building process. Items discussed were the possible differing motivation of different stakeholders in  going digital. Conclusion: the industry is in a transition phase;
  • Sustainable processes leading to a sustainable world. The conclusion for this theme was that taking too large steps may lead to paralysis. Start small and together (client-contractor) and test before scale-up;
  • End user involvement: this remains a challenge in industry due to the scale of projects;

The conclusions of the multi-stakeholder dialogue are shared with relevant BAM colleagues to ensure that the lessons learned are used in practice. 

Material themes

As part of the development of the strategic agenda for 2016-2020, the Group carried out a materiality assessment. Material themes are themes that significantly influence BAM's ability to create value in the short, medium and long term.

As a first step in the process of identifying material themes, BAM selected relevant issues from a long list of topics based on their ability to influence financial, environmental and social value creation for BAM's stakeholders. This longlist included aspects derived from the Global Reporting Initiative (GRI), the Group's strategy, the results of research into stakeholders’ interests and feedback from stakeholder dialogues and general meetings of shareholders.

Subsequently, a groupwide selection of BAM employees assessed the importance of these relevant matters on their known or potential effects on the activities, products, services and relationships of BAM, both within and outside BAM, in the timeframe 2016-2020. ‘Effect’ within BAM was defined as ‘impact on BAM’s success’.


9 - Materiality matrix

 

Stakeholders were asked to identify and prioritise the potential impact of these matters on themselves and on society. Most relevant for the clients group were ‘health and safety’ and ‘project and product quality and control’. The group of employees specifically indicated ‘employee recruitment, development and retention’ as a material theme. Providers of financial capital indicated that BAM’s performance on ‘project and product quality and control’ is most relevant to their organisations, next to ‘business conduct and transparency’. BAM’s subcontractors and suppliers as well as the group representing society – NGOs, government and knowledge institutes – specifically indicated ‘business conduct and transparency’ as the most material theme. They were also asked to introduce and assess matters that were missing in BAM’s original materiality assessment. A topic that was added as important was 'supplier environmental assessment'. BAM already has tools for assessing suppliers and will pay even more attention to purchasing in the coming year.

The stakeholders that were invited to the stakeholder dialogue were asked to fill out a materiality survey. 

The materiality matrix displays the prioritisation of the matters based on their relative importance to BAM and to BAM’s stakeholders. It should be noted that opinions of various stakeholders and appreciation in BAM’s home markets may vary.

This report has been structured according to the material themes. It addresses BAM’s performance in relation to the following topics that are positioned in the materiality matrix:

Health and safety

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

Impact: ‘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.

Management approach: 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 ladership, in the first quarter of 2017 BAM 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

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

Impact: 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.

Management approach: BAM has the tender prpocess 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 chapters 2.2 Strategy and 2.4 Risk management.

Business conduct and transparency

Definition: 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. 

Impact: 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 BAM's 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.

Management approach: 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 ajoining 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

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

Impact: 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.

Management approach: 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% by 2020. 
For BAM’s performance, see chapter 3.1 Financial performance.

Employee recruitment, development and retention 

Definition: 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.

Impact: 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.

Management approach: 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

Definition: 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.

Impact: 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 through 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 GHG 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.

Management approach: 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

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

Impact: 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 influcences 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 percent 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 the material 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.

Management approach: 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

Definition: The relationships with the communities surrounding BAM’s activities.

Impact: 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 initiatives.Initiatives such as these can be defined as providing 'social return on investment'.

Management approach: 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.

Procurement strategy

Definition: 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.

Impact: 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.

Management approach: 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 dilligence, 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.

Innovation

Definition: The creation of new viable business offerings. 

Impact: 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. 

Management approach: 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.

Human rights

Definition: 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.

Impact: 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.  

Management approach: BAM 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. All subcontractors must comply with labour conditions as stated in the general 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.

Fair tax

Definition: 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.

Impact: 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.

Management approach: 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. 

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