We want to drive social development forward

Sustainable throughout the entire chain

The production chain in the construction and civil engineering industry is complex and consists of many different actors. When it comes to the supply chain spe­ci­fically, the basis for a sustainable business is a supply chain where business ethics, human rights and the environment are fostered and respected. This requires governance from executive management right through to individual workplaces as well as specifying demands and monitoring every aspect of the production chain. This requires procedures to assess, prevent and manage ris­ks along with cooperation and trans­pa­rency. Once again Peab’s Code of Conduct is the foundation and during the year we have launched a Suppliers Code of Conduct that explicitly de­fi­nes our expectations of our ­part­ners.

Risk management in the supply chain

At Peab we manage 41,000 external suppliers annually. Around 1,500 suppliers make up 80 percent of the Group’s total purchase volume, of which 60 are internal suppliers. In other words, we are major buyers in the Nordic region which means we have a good platform for promoting secure and sustainable procurement along with supplier collaboration. This requires good purchasing governance, which Peab has prioritized for quite some time. The process begins when a supplier is first assessed and then continues via risk analysis, requirements, checks and follow-up. Because of the war in Ukraine we have emphasized the important of supplier checks and successively updated our procedures to include handle the work connected to sanctions.

Processes and procedures are important but they must also be complemented by reliable system support. We have digitalized checks in our supplier register, which provides us with a good overview and control of our suppliers. The system flags various risks which can then be handled based on the specific level of control required. We classify suppliers into three different levels depending on what their relationship to Peab is: safe workplace, secure payment and secure supplier.

We also monitor suppliers based on the measurement secure procurement. In short, the definition of a secure procurement is that it has been made from an approved supplier, is covered by a written agreement and is digitally traceable. A secure supplier meets both the requirements of the decision matrix and their social obligations such as regular payments of employer contributions. We also check that suppliers have collective bargaining agreements. Peab’s purchasing behavior is systematically monitored and documented quarterly. Peab also takes advantage of the chance to exchange experiences over borders. There is a team in the purchasing function that assesses our suppliers from a Nordic perspective. We also have joint Nordic purchasing forums that work with category steering, process and system matters.

The basis for a sustainable business is a supply chain where business ethics, human rights and the environment are fostered and respected.

Peab’s total purchasing volume is divided up into purchase categories. We currently have round 250 different purchase categories, of which frameworks and facades, installations and site transportation, and construction machine services are the largest. Each category has a contact person responsible for it. The point of a category-steered purchasing system is to gather Peab’s total purchase volume into a specific category in order to sign contracts for the entire category with advantageous prices and the right specifications. This way we can steer our purchase volumes to certain framework contract suppliers making it easier for production, since only call-off orders from approved suppliers with predefined terms are made, instead of signing contracts for each project. At the same time this facilitates our ability to manage risks in the supply chain. In addition, we continually follow a number of business critical categories like fuel, electricity, bitumen and steel based on parameters like availability and price.

Supplier checks and audits

Every year we conduct an analysis of our purchase categories and select several prioritized ones. We choose these categories based on a number of parameters, in particular issues related to human rights such as the work environment, child labor, discrimination and the environment. We then monitor our prioritized categories throughout the year and a cross-functional audit team consisting of category heads and QEW responsible supervisors conduct supplier audits. An example of a category-steered process is how we work with risk categories. A risk category is earmarked by a special or high level of risk concerning the work environment, labor conditions and other human rights. The risk categories Peab has identified are staffing, hole punching, demolition, cleaning, scaffolding construction, decontamination and security. As part of our continuous improvement work, several years ago we began increasing checks on our subcontractors and suppliers. As a result of this in Sweden more and more subcontractors apply the industry-wide requirements in “UE 2021 (Subcontractor 2021)”, which is a framework continually developing through cooperation in the industry, especially through tougher sustainability demands. This entails a responsibility for ensuring that all subcontractors in the supply chain have collective bargaining agreements and an F-tax certificate, and that they are not involved in disputes regarding back wages or other remuneration to employees. The primary purpose is to rid the industry of unscrupulous actors, get control over the subcontractor chain and create safe workplaces. This aligns with Peab’s ambition to strive for a healthy construction industry that safeguards good business ethics, quality, the work environment and environmental consideration.

In 2022 Peab’s cross-functional audit team continued to conduct onsite audits at our prioritized suppliers which have been identified based on volumes and assessed risk level. Our Code of Conduct is the basis of our requirements and follow-up and our method is always the learning dialogue. Our goal is to promote improvement and create a sustainable, secure production chain by working on it together. In 2022 we conducted 6 (15) supplier audits and broadened the scope of them through additional questions about quality. In 2023 we plan to increase the number of supplier audits. Among other things, we will review our audit program so that it becomes more efficient for us and suppliers.

Our goal is to promote improvement and create a sustainable, secure production chain by working on it together.

Order through third party checkpoints

Workplace inspections are a well-established method in Peab to promote safe workplaces. In 2021 Peab introduced third party checkpoints in Swedish operations to ensure that no unauthorized persons could have access to, or be at, our workplaces. During the year 21 (68) workplaces were inspected and checks of 421 (2,241) individuals were made. Results from these workplace inspections confirmed that everything is in order and that through the electronic personnel ledger system we can verify both the employee’s information and where they are employed. We also have a link to our supplier register where the employer is checked based on the criteria for “safe workplace”. Every night the system retrieves information from open sources and credit check companies, which means the information is always current.

Focus on environmental targets

The construction and civil engineering industry has a significant environmental and climate impact. Peab affects the environment and climate through our own operations and through the impact generated by, for example, suppliers and customers. At the same time conditions for our business are affected by environmental and climate changes. Together with other actors in the value chain we therefore work step-by-step to reduce our environmental and climate impact, in line with our set targets.

In recent years Peab’s climate and environmental work has become increasingly comprehensive and our targets and measurements more stringent. High ambitions and a rapid tempo is necessary since as the Nordic Community Builder we have a significant responsibility for reducing the construction and civil engineering industry’s environmental impact.

Environmental targets – our North star

Taking responsibility for the environment is key to our stra­te­gic target to be the leader in social responsibility. Peab has three long-term environmental targets that identify our focus areas and help us implement practical measures that improve the environment. These both support and strengthen each other. The most long-term target of Peab’s three comprehensive environmental targets is to be climate neutral no later than 2045, which aligns with the scientifically-based 1.5 degree target in the Paris Agreement. Our targets up to 2030 are to reduce carbon dioxide intensity by at least 60 percent (baseline 2015) in our own operations – Scope 1 and 2 – and for input goods and purchased services – Scope 3 – by half (baseline 2015). Peab’s second environmental target is to be completely resource efficient by 2040. This target also contributes to our climate target since resource consumption and producing material have a substantial climate impact. Within the framework of resource efficiency we also work actively to promote biodiversity. Peab’s third environmental target is to phase out environmentally and health hazardous products no later than 2030. We want to protect people and the environment from toxic exposure in both production and usage.

Climate neutrality: Focus on reducing emissions

According to the Swedish National Board of Housing, Building and Planning, developers and construction companies generate around 20 percent of Sweden’s carbon emissions. This means we have to move quickly if we are going to reduce emissions at the rate required by the Pa­ris­ agreement. We work systematically towards this goal and in Sweden we support the construction and civil engineering industry’s “Road map for fossil free competitiveness”. We have an advantage in that we can supply our contract construction operations and the projects we develop ourselves with input goods and raw material through our business area Industry, which enhances our ability to steer towards lower carbon emissions. We contribute to the ongoing climate transition through different kinds of investments, for example in our production and in electric machines and vehicles. In 2022 transition investments were around SEK 300 million.

Sources of our emissions

Peab’s operations primarily cause emissions of greenhouse gases by using various materials in production like concrete, steel and asphalt. Two other major sources of carbon emissions in production are energy consumption and transportation. Therefore our prioritized, emission reduction activities are centered on these areas. As community builders we also have a comprehensive perspective on our climate work and strive to contribute in the usage stage and to local community building on the whole. This can entail designing flexible constructions, investing in solar power plants, wind farms and railroads or by building in such a way that people can live more sustainably. We have a life cycle perspective in our operations and take responsibility for both making and meeting demands in the value chain in relation to our customers and suppliers.

The crucial issue of material

Since ma­te­ri­al­-re­la­te­­d emissions are clearly the largest source of greenhouse gases in our operations, and ce­ment is the single greatest generator, we are laser focused on reducing emissions through the material we choose and use along with recycling and reuse. Our ECO-​products are essential to this endeavor, and we continually develop them.

We produce our own slag-­ba­se­d bin­der Merit that, to a certain extent, replaces ce­ment in concrete. Ce­men­t represents 90 per­cent of concrete’s environmental impact. Our subsidiary Swerock uses Merit in the manufacture of its climate-improved ECO-​Betong (ECO-Concrete) thereby lowering carbon emissions by up to 50 per­cent and reducing excavation of virgin limestone. Our construction and civil engineering operations intend to increase the amount of climate-improved concrete in our projects to reduce our carbon footprint. Business area Civil Engineering always uses climate-improved concrete where it is technically possible and available, and business area Construction’s goal is that at least 50 per­cent of precast concrete will be ECO-​Betong no later than 2023. Our long-term goal is to make all concrete climate ne­u­tral, which entails investing resources in R&D, particularly regarding al­ter­na­ti­ve bin­de­rs and carbon dioxide capture.

Progress and collaboration in 2022:

• We prepared our first climate declaration according to the new law regarding climate declarations that became effective in 2022. The legal requirement entailed a major shift in the importance of climate issues in the construction industry.
• Our subsidiary Swerock launched climate-improved concrete (ECO-​Betong) on the Finnish market.
• For the first time we cast an overpass in Småland for The Swedish Transport Administration with concrete where the cement was replaced by 50 percent by Merit. Our comprehensive tests in the laboratory and onsite at the overpass demonstrated good durability and better strength than traditional concrete. Carbon savings amounted to more than 37 tons.
• We signed a partnership contract and became one of the owners of the Swedish start-up CemVision which works with producing a new climate neutral cement. Subsequently even Bill Gates has invested in the company through his mentorship program “Breakthrough Energy Fellowship Program” which supports the most promising innovations for the climate worldwide.
• Together with Wihlborgs our customer, we preliminarily certified our first construction project according to Net Zero Carbon Building. Read more about the project Kvartetten in Malmö here.

Expanding ECO-family

In addition to Merit and ECO-​Betong (ECO-Concrete) we work with several other ECO-​products. In 2021 subsidiaries Byggelement and Smidmek in­tro­du­ce­d the con­cep­t ECO-​Stomme (ECO-Frame) and ECO-​Prefab that are both built on the binder Merit. During the year Byggelement decided to develop this further in its most sweeping program so far. With an investment of close to half a billion Swedish kronor the company will double its pro­duc­tion ca­pa­ci­ty in walls and joists while halving the need for ce­ment­ by raising the portion of al­ter­na­ti­ve bin­de­r up to at least 50 per­cent. During the year Byggelement also launched the pro­duct solid wall with 50 per­cent al­ter­na­ti­ve bin­de­r, which reduces climate impact significantly compared to solid walls without the climate-improved concrete.

Energy on the agenda

The basis of oour productin of ECO-Asfalt is that biofuels replace fossil fuel oil when fring and heating the gravel material which is the most energy consuming part of the manufacturing process. This halves climate impact without affecting the end product’s properties. Subsidiary Peab As­falt currently has around 90 as­phalt plants in the Nor­dic area. Twenty of them in Sweden can offer ECO-​Asfalt. For nine of them, we have received funding for conversion from the investment support “Climate Leap” (the Swedish Environment Protection Agency). During the year the transition process has spread to our other countries with the conversion of four asphalt plants in Den­mark, three in Fin­land and two in Norway. Peab’s operation in Finland increased its energy efficiency in asphalt production by lowering the manufacturing temperature by 15 degrees. This was done through education, changes in local planning and weekly follow-ups.

In addition to Merit and ECO-​Betong (ECO-Concrete) we work with several other ECO-​products.

The work with ECO-​Asfalt is an example of how we can save energy and use renewable energy sources in our production to lower climate impact. We continued to test pave and develop asphalt with the natural binder in wood lig­nin, made from residual products from the forest industry, which can partially replace the oil-based binder bi­tu­men. During the year we tested paving as­phalt with lig­nin in Finnish Kotka in collaboration with Stora Enso. All in all we have test paved lig­nin on seven different stretches in the Nor­dic area. We are also doing R&D to find other alternative binders.

Higher energy requirements

Ener­gy requirements for the construction and civil engineering industry are rising and there is a bigger focus on the construction process itself. In order to reduce energy consumption in 2022 the Swedish construction industry, led by Peab, produced a joint standard for ener­gy class­ification of construction barracks and getting them on site. There are around 60,000 construction barracks in Sweden alone. All the suppliers have had their own class­ification system, but they have now agreed on common cri­te­ri­a. Subsidiary Lam­berts­son has construction barracks with an energy value that is among the best on the market and they are used extensively in Peab’s operations.

Lam­berts­son has also launched Lam­berts­son Con­trol, which enables measuring and steering energy and water consumption in a project. Energy consumption can be reduced 30-40 per­cent by using the measurements to find energy thieves and cut off effect spikes.

Electrical vehicles and machines

We have continued to work on replacing fos­si­l fuels with renewable ener­gy for our vehicles and machines during the year:

• Swerock invested in twelve concrete hybrid pumps that will be used in Sweden and Finland. Through them Swerock lowers its climate impact across the board, from production of ECO-Betong (ECO-Concrete) and delivery with electrical concrete mixer trucks to pumping it out with the new hybrid pumps.
• Four electric concrete mixer trucks are operating in Stockholm. This reduces carbon emissions annually by more than 80 tons per cement mixer compared to a diesel vehicle.
• As the first Nordic company Peab Asfalt tried out a 2.5 ton electric vibrating tandem roller which reduces emissions by ten kilos carbon dioxide per hour.
• Lambertsson is successively replacing its machines run on diesel with hybrid or electric ones, even the really big machines like excavators, dump trucks and wheel loaders.
• We are making a rapid transition to hybrid or electric alternatives in company cars and pickups. Of the company cars we ordered in 2022, 94 percent were hybrid or electric, and all in all more than every fifth car in the Group today is either a hybrid or electric car.

Optimizing transportation:

When it comes to transportation we strive to use the right kind of transportation for the right place, optimize logistics and handle excavation soil efficiently. For example, Lam­berts­son has been offering a construction logistic solution for more than a year now that includes lo­gistics ­per­so­nnel, a di­gi­tal delivery ­pla­nning tool, mixed loading and intermediate storage of construction ma­te­ri­al. Pla­nned and mixed load trans­portation flows are both efficient and reap environmental gains.

Resource efficiency:

Many roads to resource efficiency

Peab’s second environmental target for completely resource efficient operations by 2040 saves valuable natural resources and also contributes to our climate target since resource consumption and material production have a major impact on the climate. We include protecting biodiversity and ecosystem services in resource efficiency. We therefore strive for resource efficiency in production with effective use of material, responsible management of residual products and work methods that foster biodiversity. Our measures can entail designing resource lean constructions, purchasing circular products, minimizing waste, reusing material and making sure leftover material is recycled, using land respectfully, managing excavated soil efficiently as well as sorting material so that it can be recycled. We also maintain close collaboration with the other actors in the value chain to achieve circular flows. Three good ex­am­ples from our business are using reclaimed asphalt pavement, ECO-​Ballast (ECO-Mineral aggregates) and reuse in construction projects.

Circular material on its way

Besides replacing fossil fuel oil with biofuel in the manufacture of ECO-​Asfalt we are developing solutions for partially exchanging the binder bi­tu­men with residual pro­ducts from the forest industry. We also work to increase the use of reclaimed asphalt pavement in pro­duc­tio­n. The portion of reclaimed asphalt pavement in Peab’s Nor­dic as­phalt ­ pro­duc­tion in 2022 amounted to 27 per­cent (compared to 14 per­cent 2015).

Potential med mineral aggregates

ECO-Ballast (ECO-Mineral aggregates) is another concept Peab launched through Swerock in 2021. It can be used in the manufacture of, for instance, asphalt or concrete or as a construction material. ECO-Ballast is made of recycled raw materials that can come from construction or civil engineering projects or byproducts from industrial processes and therefore makes a significant contribution to circular community building. The product has the equivalent properties of virgin mineral aggregates and is quality-ensured with an environmental and health declaration.

Mineral aggregates may also have a role to play in Car­bon Cap­tu­re and Sto­rage (CCS), in other words capturing and per­ma­nently binding carbon dioxide to reduce the amount in the at­mo­sphere. We are running a research project until the spring of 2023 with fi­nan­cing from The Swedish Construction Industry’s Development Fund (SBUF) that examines the possibility of manufacturing new mineral aggregates as construction material by storing bi­o­genic carbon from wood and other bi­o­ma­te­ri­al in residual pro­ducts from quarry and concrete operations. We have the right prerequisites for this considering our business comprises the whole circle from excavation to use and finally recycling mineral aggregates.

From waste to circular material

Building creates waste. Every year vast amounts of building ­ma­te­ri­al is thrown away in construction projects. Peab has explicit guidelines on how to handle leftover ma­te­ri­al at construction sites aimed at enabling greater reuse and compliance with laws and our Code of Conduct. We also have a number of ini­ti­a­tives creating new ways to recycle and reuse this construction material. Particularly important is establishing a di­a­logue and collaboration with ma­te­ri­al suppliers and reuse actors early on so that we can manufacture and use more pro­ducts that contain reused ma­te­ri­al. For instance, we have continued to collaborate with reuse companies regarding insulation, windows and plastic.

With so-called C&D Recycling Wash Plants Peab’s subsidiary Swerock contributes to circular material flows by reducing the amount of surplus excavation soil that becomes landfill by up to 80 percent.

Peab’s civil engineering operations work increasingly with so-called in situ remediation which entails remediating contaminated land and dredged soil on site instead of removing the soil. This also means transporting less replacement soil for filling. According to our life ­cy­cle calculations in­ si­tu remediation and stabilization of polluted soil can lower carbon emissions by 80 per­cent.

Progress and collaboration in 2022:

• One of our largest projects, Platinan in Gothenburg, delivered more than five tons of leftover material for reuse and reused material in the building’s ceilings.
• We ran pilot projects for the reuse of wood, which is our largest waste fraction, and continued construction on Varvsstaden in Malmö where reuse is key to the development of the new city borough.
• We paved a test stretch with 50 percent reclaimed asphalt pavement in Drammen Municipality in Norway.
• We were the first construction and civil engineering company in Sweden to sign a contract with a supplier of circular salt in order to contribute to more climate-adapted summer and winter road maintenance on Swedish roads. By using circular salt we lower carbon emissions by 10,000 tons annually, which is the equivalent of a 90 percent reduction compared to traditionally produced salt.
• We were commissioned by the Danish Road Directorate to pave more than 50,000 tons of a climate-adapted wearing course, which lowers rolling resistance and cuts the fuel consumption of the vehicles on this stretch of the road.

Protection and development of biodiversity

Biodiversity means having variations within and between species as well as different types of life environments and is crucial to human welfare. Our environmental target for resource efficiency includes the issue of protecting, preserving and strengthening ecosystems and biodiversity when exploiting land and natural reserves. Peab’s operations encroach on nature and risk displacing species. This is why we are careful to take steps to protect life and species, and even add to the biodiversity in the environments where we operate. Peab fosters biodiversity by developing green and blue infrastructure like fish passes and fauna passageways. Biodiversity is also a factor considered in environmental certification of buildings, for example the Nordic Swan Ecolabel. Normally before Peab opens a quarry we make a natural value assessment in order to determine with the help of experts if the location is suitable and identify any possible protection measures. Sometimes Peab draws up biodiversity plans in connection with new quarry permits in order to identify the best way to protect and even benefit various species. In 2022 we prepared nine biodiversity plans in Sweden. Quarries offer unique life environments for a number of threatened species and can therefore contain higher natural values than their surroundings. Last year we made a biodiversity plan in one quarry when we discovered that the red-listed moor frog had found a cozy environment in one of the manmade dams. Peregrine falcons can now nest in a different quarry through measures taken there and in yet another, sand martins have made nests in stone flour piles.

Progress and collaboration in 2022:

• Together with companies in the industry and authorities we have run and participated in several developmental projects concerning combatting and managing invasive species that threaten biodiversity.
• We participated in two teams in an industry-wide project initiated by Ecogain aimed at producing a practical tool to evaluate the effects of measures taken to support biodiversity.
• Swerock is a member of the network Business@Biodiversity Sweden focused on biodiversity and business benefits.

Phasing out environmental and health hazardous products

Peab’s third environmental target is to phase out environmentally and health hazardous products no later than 2030. We have a responsibility to protect people and the environment from toxic exposure in both production and usage. We also want to avoid mixing in toxic substances in material that will be reused. Our ability to phase out environmentally and health hazardous products are largely dependent on making the right decision to begin with. Quite simply, hazardous products should never get into our operations.

Methods that facilitate product choices

To phase out environmentally and health hazardous products we use environmental assessment systems such as Byggvarubedömningen and Basta to help us choose products. We develop methods and systems to steer purchasing towards better product selection by, for instance, integrating information on environmental assessments and ecolabelling into our purchasing processes. Traceability helps us identify substances we do not currently consider hazardous but which may later prove to be so. Keeping a logbook on built-​in material is a way of ensuring traceability.

In order to phase out hazardous products we work together with suppliers and producers to find new and better alternatives. We have implemented a substitution staircase and defined the criteria which inform the phasing out process, the so-​called Peab criteria. We have continued to implement a digital chemical management system into a growing portion of our operations to facilitate monitoring and steering chemical consumption. Last year we also began to apply a system with traffic lights, a color code that signals whether or not a product is an approved choice at Peab. This is an aid that visualizes how to choose chemical products to achieve our third target.