Stakeholder engagement and material themes
BAM recognises that real business benefits can only be achieved with the involvement of its stakeholders. During 2015 BAM met with its clients, main suppliers and other stakeholders in multi- stakeholder forums to further align BAM’s policies with stakeholder demands.
The Group has defined its stakeholders as those groups which significantly influence or are influenced by the economic, environmental and social performance of BAM. BAM 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 contracts. BAM’s key stakeholder groups, and interactions with them, are:
BAM is in daily discussion with its clients and sustainability is an increasingly important topic in these discussions. In addition, BAM organises client meetings to share knowledge, best practices and innovation with its value chain. Some clients have developed their own sustainability benchmarks, including ProRail, the government task organisation that takes care of maintenance and extensions of the Dutch railway network infrastructure, with its CO2 Performance Ladder. Positioning on the ladder forms part of the tender evaluation process and positively affects BAM’s ability to win contracts. It is therefore important that BAM keeps itself informed of and is able to respond proactively to these initiatives.
Providers of financial capital
Communication with investors, financial institutions and the financial community in general, usually takes place through meetings, project visits, road shows, seminars, presentations, investment meetings and press releases. 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.
BAM’s most important asset are its employees. As part of BAM’s performance management process, employees’ personal learning and development plans are evaluated annually between manager and employee.
Suppliers and subcontractors
BAM’s procurement responsibles are in daily contact with suppliers and subcontractors to discuss responsible sourcing in relation to health and safety and environmental management. Supply chain partners are increasingly being involved at the early stages of the bidding process and helping to develop and plan BAM’s projects through lean planning meetings and optimising the efficiency of the build programme through the value chain. BAM involves its supply chain partners by investing in relationships.
By its very nature, BAM’s construction and civil engineering works have an impact on local communities, occupiers and other users of buildings and infrastructure and society as a whole. Chapter 3.2 of this report describes BAM’s results and gives several examples of its community engagement activities in 2015.
Through its delivery of projects BAM has ongoing contact with local government bodies regarding the issuing of permits, compliance with regulations and supervision of its activities. BAM is involved in many governmental initiatives including several Green Deals in the Netherlands. In the UK, BAM responded to Government consultations on the Carbon Reduction Commitment (CRC) and Energy Efficiency Scheme (EES), among others.
In addition to its engagements with different stakeholders across its operating companies, the Group organises a yearly multi-stakeholder meeting. In 2015, as part of BAM’s strategy defining process, BAM wanted to think together with its most important stakeholders about what the construction and civil engineering industry will look like in 2020 and how to anticipate on this.
During the meeting, stakeholders attended a presentation on a BAM icon project and technology, big data and smart cities. The stakeholders reflected on industry impact, discussed the BAM’s emerging 2020 vision and how BAM’s stakeholders could be involved in this journey. The stakeholders selected for the dialogue comprised fifty management level representatives of clients, financial institutions, suppliers, architects, start-ups, NGOs, and knowledge institutes that are active with BAM and thirty executive representatives of the same organisations. BAM executives and internal stakeholders from BAM’s operating companies attended the meeting as well. All were invited to participate in preparation of the meeting by means of a survey questionnaire. BAM used the key messages from this survey to strengthen its strategy.
During the 2015 meeting, stakeholders indicated the following cross industry trends for 2020 and beyond:
- Individualisation, personalisation, collaboration;
- Changing fundamentals: innovation, sharing economy, digitalisation;
- Population: aging, growth, migration.
For the construction industry in 2020 they listed the following dilemma’s:
- Standardisation versus personalisation;
- the need for a higher quality of workforce and productivity;
- the need for collaboration and partnerships;
- the conservative character of the industry and low margins could hamper innovation.
This resulted in the following input from stakeholders for BAM towards 2020 and beyond:
- Offer a product that is dynamic, appealing and flexible;
- Move from offering goods to services;
- Specialise and create partnerships;
- Invest in innovation and ICT;
- For a better revenue model: expand the business and focus on added value;
- Become an open platform for knowledge and skills sharing.
The 2015 multi-stakeholder dialogue was a first step in integrating the construction value chain into an integrated platform.
As part of the development of the strategic agenda for 2016-2020 and in keeping with BAM’s aim to create an integrated approach that concentrates on matters that are critical to achieving BAM’s goals and managing its impact on society, the Group has conducted a materiality assessment. Material themes are those that substantively affect BAM’s ability to create value over the short, medium and long term.
As a first step in the process of identifying material themes, BAM selected relevant matters from a long-list of topics, based on their ability to affect financial, environmental and social value creation for BAM’s stakeholders. This long-list included aspects derived from the fourth edition of the Guidelines of GRI (Global Reporting Initiative), BAM’s Group strategy, the results of research into stakeholders’ interests and feedback from previous stakeholder dialogues and general meetings of shareholders.
A selection of BAM employees with a Group-wide presentation then evaluated the importance of these relevant matters in terms of their known or potential effect on BAM’s activities, products, services and relations, both within and outside of BAM, within the timeframe 2016-2020. ‘Effect’ within BAM was defined as ‘impact on BAM’s balance sheet’.
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 ‘circular economy’ is most relevant to their organisations. BAM’s subcontractors and suppliers as well as the group representing society (NGO’s, 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 omitted from BAM’s initial materiality assessment. No new topics were added.
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 differ.
This report 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. Occupational health and safety contributes to the satisfaction of the Group’s employees and their relatives, BAM’s subcontractors, its supply chain partners and others involved with BAM’s construction sites. Safety also affects BAM’s clients and BAM’s reputation.
Management approach: A Group-wide guideline for safety management provides BAM’s operating companies with a framework within which their safety management system must comply.
BAM has started an international safety campaign ‘Making BAM a safer place’ to move towards an open safety culture, where BAM’s employees actively call each other to account on unsafe behaviour. Three safety principles (respect, comply and intervene) underpin ten safety rules that encourage employees to hold each other to account on safety.
At the annual Safety Awareness Audit (SAA), BAM monitors the extent to which the safety management systems of operating companies comply with the guideline and the extent to which employees are aware of the safety risks inherent in their projects. The audits also highlight areas where the safety management system can be improved.
While the SAA score gives an indication of the extent to which risks and hazards are managed, the BAM incident frequency (IF BAM) can be seen as the result of effort. The IF is an indicator which is used to establish an organisation’s actual safety performance. In the absence of an internationally recognised indicator, BAM has introduced its own definition, which the operating companies use to compare their performances.
From 2015 onwards BAM’s safety targets will extend focus on BAM’s responsibility towards its value chain. Safety statistics will include accidents involving absence of BAM employees, hired employees, subcontractors and other third parties involved with BAM’s activities. BAM is in the process of enhancing the reporting process for worked hours of subcontractors and it is expected to report this information and therefore the ‘IF Total’ of BAM including the IF for subcontractors in the 2016 Integrated Report. The Group is working to obtain reliable information for example by implementing automated on-site entrance systems as tourniquets, fingerprint readers, iris scans and card systems.
When a fatal industrial accident occurs, involving a BAM employee or a subcontractor, the following actions take place:
- The operating company informs the Executive Board and the Corporate Safety Officer (CSO) directly after the accident;
- The first details of the accident are communicated within 24 hours of the accident;
- No later than the day following the fatal accident, a message will be published on BAM’s intranet;
- If the accident occurred in Western Europe, the COO, assisted by the CSO, will pay a visit to the operating company within 15 days after the accident;
- For accidents occurring outside Western Europe: video- conference; and
- Three weeks after the accident a ‘safety start’ takes place in the country where the fatality occurred; A safety presentation/bulletin has been produced highlighting the lessons learned and who must have intervened. This has to be briefed out to all operatives.
More insidious than the fatal and serious industrial accidents is the number of workers who suffer impaired health or long-term illness caused or made worse at work. Many of these illnesses only manifest themselves years after exposure and many are ultimate fatal. BAM believes that all injuries, deaths and illnesses can and should be prevented. BAM has yet to develop a management approach for health. However, within ENCORD, Europe’s forum for industry-led research, development and innovation in the construction industry, the Group has put on the agenda research and development regarding quartz dust and asbestos inhalation, diabetes and skin cancer.
> For BAM’s performance, see pages 53-55.
Project and product quality and control
Definition: Quality of tender process, efficient project management and effective project execution with the aim to meet or exceed clients’ expectations.
Impact: To exceed clients’ expectations, BAM needs to continuously improve the (perceived) performance of BAM’s products. Product quality means that BAM does what it has promised to do, within the budget and on time. Product responsibility compliance, contract management and innovation are key value drivers. Operational performance is crucial to realising the appropriate level of financial and non-financial results on construction projects.
Management approach: Since 2014 BAM has increased its efforts to improve the quality of its tender process in order to safeguard its current and future results arising from construction projects. BAM has continued to cascade its internal risk management framework down through the Group. In addition, the evaluation of BAM’s internal governance framework has resulted in the update of Company Principles and Management Guidelines, including strengthening BAM’s project selection and tendering process for large and high-risk projects. In connection with this development, peer reviews on project estimates are undertaken under the leadership of the Tender Desk Director.
In order to comply with product responsibility, BAM makes sure that all 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. Quality managers have company-wide meetings in which they discuss findings and evaluate their management systems. 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 pages 58-61.
Business conduct and transparency
Definition: Openness regarding, and adherence to, generally accepted standards and values and compliance with local statutory and other rules and regulations, particularly with respect to the acquisition and performance of contracts.
Impact: BAM’s reputation and licence to operate depend on responsible business conduct, by stimulating dialogue on dilemmas. Ensuring compliance with anti-corruption legislation enhances efficiency by reducing transaction costs for BAM and for BAM’s stakeholders. Furthermore, BAM believes that doing business honestly is vital to increasing competitiveness for BAM and for BAM’s partners. Competitive behaviour contributes to innovation and collaboration. It creates an environment in which the best products will win and where BAM’s stakeholders 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: Chapter Business conduct on page 40 describes BAM’s management measures related to business conduct as part of BAM’s management approach related to specific risks.
> For BAM’s performance, see pages 56-59.
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, which leads to the opportunity to develop new activities and to pay BAM’s employees and shareholders.
Management approach: Continuous focus is put on strengthening BAM’s balance sheet by improving its financial processes to ensure
a solid track record on project execution and margin stability, including close monitoring of its cost base in line with BAM’s portfolio. Additionally, working capital management and the execution of a property divestment programme are key elements.
> For BAM’s performance, see pages 39-51.
Employee recruitment, development and retention
Definition: Stimulating employees to use their competencies, capabilities and experience in a way that adds value to the business, providing personal growth, technical innovation and profit.
Impact: BAM increases its intellectual capital and the human capital of its stakeholders by investing in employee development. While the impact of employee development on wider society is minimal, within BAM, employee development contributes to employee engagement 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 aims. 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 connect better to the wishes and expectations of it’s clients and to society in all BAM markets. In line with its vision on diversity BAM aims to attract people with different profiles and backgrounds in order to build teams that are fit for future challenges and will contribute to achieving BAM’s strategic goals.
Management approach: The Group’s development approach is to encourage the employees to take ownership of their development with the manager / company adopting a supportive / facilitating role. The employee’s personal development is captured 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, all accessible via the internal My BAM Career site. Across the Group, BAM works with a number of universities externally and internally with the Group’s training centres to ensure BAM continues to offer high-quality training and development programmes.
Employee development at BAM is enhanced by the performance management process, in which the consequences of – among other things – commercial goals are translated in terms of individual contributions (and targets). Continuous performance management creates a learning loop for the individual and a learning environment for the entire company.
With BAM Business School, BAM offers an integrated approach to support employees in achieving their goals. The training portfolio allows employees to keep their professional knowledge up to date and to further develop the wider skills related to their role. In this way, BAM Business School also supports the various career paths that can be realised within the organisation. The training courses support the focus on collaboration between different disciplines, promote synergy between subsidiaries and play an important role in knowledge management within the Group. These courses include topics like integrity, entrepreneurship, commerce, new contract forms, project development, 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 pages 59-60.
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. As a large player in an industry with a relatively high energy consumption versus other industries, its energy usage has a great impact on society. Business conduct and transparency account for 40 per cent of European Union (EU) final energy demand. The renovation of existing buildings represents more than 17 per cent of the primary energy saving potential of the EU up to 2050.
Through the Energy Agreement for Sustainable Growth and the Agreement for Energy Saving for Corporations (Convenant Energiebesparing corporatiesector), the Dutch government has set the following targets for the construction industry: From 2020 onwards, all newly built houses and buildings should be energy neutral; From 2050 onwards, all existing buildings should be energy neutral; In 2021, all 2.4 million houses owned by housing corporations should be retrofitted into an average energy label B standard. Emissions that relate to the Group’s energy usage, are relevant to BAM due to risks driven by changes in regulation, mainly in the case of the EU Emissions Trading System regarding the Group’s asphalt plants. Buildings account for 30 per cent of EU CO2 emissions. The operation of a building accounts for 80 per cent of the total CO2 emissions through the building’s life cycle. Most of those existing today will still be standing in thirty years’ time; the rate of new construction continues to remain low. In the field of energy and emissions, BAM can create value by building energy efficient buildings and by renovating buildings to higher energy performance standards.
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. BAM focuses on reducing its direct CO2 emissions by lowering energy use during the construction process. The Group uses renewable energy.
By joining the Dutch Climate Coalition (Nederlandse Klimaat Coalitie), BAM has committed to: Having climate neutral operations in 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; If desired, playing a role in the 2015 World Climate Summit.
> For BAM’s performance, see pages 64-68.
Definition: An economy which aims to keep materials, components and products at their highest utility and value, at all times.
Impact: Globally the construction industry accounts for 40-50 per cent of natural resource use and 25 per cent of all timber use. BAM has a continuous need for raw materials, water and energy. This means primary processes are affected by increasing volatility in raw material and energy prices. The products produced by the Group must also meet current and future demands, where the impact of changing laws and regulations, in particular, has proved to be very significant. Waste production affects BAM’s licence to operate and is an indicator of the efficiency of BAM’s processes. Also, waste incurs costs due to the low value of residual material. Activities involved in the construction process generate approximately 25-30 per cent of total waste within the European Union. As a large construction company, the Group’s waste production affects society. As approximately 80 per cent of materials are recycled, it concerns large amounts of materials that are to be reused. BAM has identified opportunities for innovation based on changing client requests, particularly in relation to a greater focus on the recycling of materials and the use of sustainable materials, including timber sourced from sustainable forests.
Management approach: Firstly, BAM innovates to reduce material consumption during the design process;
The Group works with its supply chain partners to identify more sustainable alternatives both in the upstream and downstream of manufacturing and operational processes; BAM focuses on improving the percentage of recycled materials used as well as renewable materials, by asking its main suppliers to provide an insight into the source of the materials; BAM has set targets for both waste reduction and recycling. The Group monitors and benchmarks progress on these targets on a quarterly basis for different activities within the company.
> For BAM’s performance, see pages 68-76.
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, occupiers and other users of buildings and infrastructure and society as a whole. Community engagement affects the Group’s licence to operate and allows BAM to build faster, which directly leads 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. BAM considers that community engagement and involvement of less privileged employees are an opportunity to create value. This is known as ‘social return’ and BAM actively supports its implementation. People who have been unemployed due to various causes, such as physical handicaps, unfinished educations or lack of opportunity to be employed in or outside the industry for a longer period of time, are considered to benefit from social return initiatives.
Management approach: On many of its projects, BAM makes an inventory of local interests and, based on this, opts for the best approach to increase its licence to operate (which could be participation in local events). In addition, BAM participates in the Considerate Constructors Scheme in the United Kingdom and in Dutch Considerate Constructors (Bewuste Bouwers) in the Netherlands.
BAM manages social return on a project basis and considers social return a part of its office operations, since in both cases it creates human capital and license to operate in local communities. Social return may never lead to a reduction of safety for all involved, and therefore no compromises are made on required skills and trainings before job sites are open to people who are contracted under social return conditions.
> For BAM’s performance, see page 61.
Definition: Selecting and stimulating suppliers to practise their skills and products in a way that adds long-term value to BAM and
its suppliers, providing technical innovation and profit.
Impact: Labour practices of the Group’s suppliers affect BAM’s reputation and are associated with the risk of losing work. The Group’s suppliers have to bring their practices at least to BAM standards to be able to work for the company and in doing so will have a good influence outside of the Group as well.
Management approach: To develop the Group’s supply chain and incorporate its values, BAM seeks added value, long-term, mutually beneficial relationships with partners who can help improve the Group’s supply chain. The challenge is to select supply chain partners, products and services that really make a difference. Suppliers are assessed against five different themes (safety, quality, total cost, logistics and engineering and process). If the score is lower than required, 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 page 61.
Definition: The exploration of new solutions as well as the application of better solutions that meet new requirements, anticipated and existing market needs.
Impact: Ability to adapt to changing market needs, competitiveness with current competition and future entrants into our market.
Management approach: BAM is creating a future portfolio by delivering construction services using a digital construction platform. BAM intends to be at the forefront of digitalisation by using cutting edge design and visualisation tools and keeping close to customers’ evolving requirements. BAM will facilitate this transition by investing in innovation to create an attractive environment for partnerships and rapid prototyping to shorten time to market.
> For BAM’s performance, see pages 28-29.
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 at least to BAM standards to be able to work for the company and in doing so will have a good influence outside of the Group as well.
Management approach: In 2006, BAM and Building and Wood Workers’ International (BWI), signed a framework agreement to promote and protect employee rights. By signing the agreement BAM agrees 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 Principle 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. BAM is committed to achieving social justice and sustainable development in its activities with its trading partners, subcontractors and suppliers. In that regard, BAM and BWI will work together to ensure that the following social criteria are effectively applied:
- A ban on forced labour;
- The right to equality and diversity in terms of ethnicity, race, gender, religion, political affiliation, nationality or other distinguishing characteristics;
- A ban on child labour;
- A safe and healthy working environment;
- The right to establish and join trade union organisations;
- The right of employees to receive fair pay and respect for the minimum wage;
- The right to suitable working conditions (working hours, facilities, learning and development, health and safety).
Regular meetings are held with management representatives from BAM and trade union organisations, including BWI, to monitor implementation of the agreement.
Sub-subcontractors ought to comply with labour conditions as BAM enforces them on subcontractors.
> For BAM’s performance, see page 61.
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 business 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 a responsible approach to tax as an integral part of its sustainability agenda.
Find BAM’s responsible tax statement on its website www.bam.eu.
> For BAM’s performance, see page 59.