S2 – Workers in the value chain

Peab and workers in the value chain

Positive impacts / opportunities

Negative impacts / risks

Production chains in the construction and civil engineering industry are complex and consist of a number of actors, both local and global. Promoting sustainable value chains where workers’ rights are protected and respected is a cornerstone of Peab’s business. We want to collaborate with actors that take care of their employees, provide them with good working conditions and development opportunities and are secure, safe and inclusive workplaces.

Since Peab works in both large and small locations throughout the Nordic region and with many different projects we have a lot of suppliers and other partners in our value chain. We manage around 41,500 suppliers annually, of which  3,000 suppliers represent 80 percent of the Group’s total purchase volume. In other words, we are major buyers in the Nordic region and therefore we have a responsibility for promoting secure and sustainable procurement along with supplier collaboration, including responsibility for workers in the value chain. Behind every supplier are even more subcontractors with their employees.

Respect for human rights is given in every aspect of Peab’s business and throughout the entire value chain. This is founded on our compliance with the extensive Nordic legislation in this area. We also protect the right to freedom of association and workers’ rights to organize and collective bargaining. Our approach to human rights and freedom of association underlines Peab’s commitment to a work environment that is both safe and healthy as well as inclusive and fair. By supporting these work environment principles and encouraging our suppliers to integrate them in their processes, we contribute to strengthening human rights and labor laws. We work continually with evaluating and rectifying shortcomings in our own operations and conduct reviews of our suppliers.

Workers in the value chain comprises:

• Workers that perform contracted work at Peab’s workplaces, for example workers in charge of security or who deliver IT and other administrative services.
• Workers from Peab’s suppliers.
• Workers further down the supply chain who extract raw materials that are refined into input goods and components that are part of Peab’s offer.
• Workers at Peab’s customers and other actors in the value chain downstream, for example property managers.

Non-employed workers, for example subcontractors, workers from temporary employment agencies and consultants that work for Peab are not included. They are included under ESRS S1, own workforce.

Regarding workers in the value chain, Peab’s impact is material in the three sustainable topics working conditions, gender equality and equal pay for work of equal value and other work-related rights. All the sub-topics, however, are not considered material for Peab. Materiality is as follows:

• Working conditions: secure employment, reasonable wages, health and safety
• Equal treatment and equal opportunity for everyone: gender equality and equal pay for work of equal value, measures against violence and harassment in the workplace, diversity
• Other work-related rights: child labor, forced labor, water and sanitation, data security and privacy, adequate housing.

Below are examples of activities regarding workers in the value chain that have or can have an impact:

Upstream and downstream:

• We continuously make risk assessments and conduct audits of our suppliers based on working conditions, equal treatment and other work-related rights.
• We clarify mechanisms for employees to report abuse or other incidents anonymously and safely.
• We develop guidelines and procedures regarding labor laws and human rights our suppliers must follow.

Workers in the value chain is linked to the UN’s 8th global goal for sustainable development: Decent work and economic growth.

Process regarding materiality

We have conducted a double materiality assessment for S2, workers in the value chain, on Group level. Peab’s impacts, risks and opportunities in relation to workers in the value chain have, in addition to our identified eight main value chains, been evaluated specifically based on value chains for the input goods cement, bitumen, electricity, fuel, steel and certain wood products as well as household appliances and transportation services. The double materiality assessment has primarily been conducted by Peab’s group purchasing function and category managers for each strategic input material. In addition, a number of employees from Group functions have participated in the work. The work has been carried out through meetings and workshops where Peab’s sustainability topics for S2 have been compiled and evaluated according to the template we produced. The function non-financial reporting has coordinated the process regarding materiality, which has been conducted as described in the section ESRS 2 on page 49.

This is how we work

Our work and the responsibility we take for workers in the value chain is primarily regulated by national laws, trade agreements and collective bargaining agreements, all of which we comply with and encourage all the actors in the value chain to also comply with. Our work is supported by complying with international guidelines, norms and initiatives: such as UN Global Compact, UN’s Human Rights Declaration, UN’s Global Goals, ILO’s core conventions on fundamental principles and rights at work, OECD’s Guidelines for Multinational Enterprises, UN’s Guiding Principles on Business and Human Rights (UNGP), the general principles in the international regulations for human rights and The OECD Anti-Bribery Convention and its recommendations. Our policies and guidelines conform to these commitments.

Responsibility and policies

The basis of Peab’s work with workers in the value chain is our core values – down-to-earth, developing, personal and reliable which help us to form our culture and guide us in our business.

In addition to these values Peab has a Supplier Code of Conduct that defines our expectations of our partners and their partners in the value chain. Among other things, the Supplier Code of Conduct regulates working conditions and employment conditions and includes Peab’s demands that concern human rights such as freedom of association, prohibition of child and forced labor and discrimination. The Code emphasizes that suppliers must have processes in place to handle actual and potential impacts on human rights and the environment, which requires guidelines and policies as well as board of directors and management responsibility for business ethics and sustainability matters, along with regular education of employees.

The responsibility begins with executive management and goes via line managers out to each workplace where requirements are set and monitored in the value chain. This requires procedures for both assessment, prevention and management of risks as well as collaboration and transparency.

Work methods and focus areas

Peab primarily controls and sets requirements for our partners in the purchasing process and in workplace introductions before the work begins. In order to become a contracted Peab supplier the Supplier Code of Conduct must be adopted.

Incidents and possible damages as well as infringements against the company’s values, rules and codes are investigated and can require action. If a supplier does not comply with the Supplier Code of Conduct we can, as a final resort, end the business relationship. Peab’s guidelines on the process of due diligence serve us well in these instances. They describe how we identify and assess potential negative consequences for humans and the environment and actively work to avoid or minimize them.

In order to further strengthen our work with the value chain we encourage our suppliers to communicate to their employees that they can use the whistleblowing system if something happens that goes against the Supplier Code of Conduct or the law. This gives workers at our suppliers and even their sub-suppliers the possibility to report suspicions of infringements of the Supplier Code of Conduct or the law.

One of Peab’s two development initiatives for the business plan period 2024-2026 concerns quality-assuring the work in our value chains and especially increasing traceability. Within the framework for the initiative, work is being done to develop work processes, metrics and the dialogue with, and control of, our suppliers. Naturally this also includes matters that deal with human rights and the environment.

Working conditions

Regarding working conditions we prioritize issues that include secure employment, reasonable wages and health and safety. With good working conditions we want workers at our partners and their partners to have a good platform for both work and leisure. For this reason we are clear about our expectations of the actors that in some way work together with us and contribute to our value chains

In addition to Peab’s workplaces being alcohol and drug free, we put great emphasis on safe workplaces. Preventive measures are key to our work environment work to reduce the number of workplace accidents. We are constantly working on our safety culture and we make it clear that everyone at Peab’s workplaces has the explicit right to refuse to do a job if it cannot be done safely. Read more about Peab’s work environment work, including our zero vision for fatal accidents and the target of a contracting trend of serious workplace accidents on page 82. The target comprises both our own employees and everyone else on site.

Equal treatment and equal opportunity for all

Equal treatment and equal opportunity for all includes gender equality and equal pay for work of equal value, diversity and measures against violence and harassment in the workplace. The principle of equal treatment is a general principle in European legislation stating that all individuals in comparable situations should be treated equally.

Everyone has the right to a safe and inclusive work environment and therefore Peab’s work environment work includes everyone at our workplaces. We can never accept any form of social exclusion at our workplaces or workplaces in our value chains. We make sure that everyone at our workplaces has access to our policies, including Peab’s equal opportunity plan that includes guidelines against harassment and discrimination.

The issue of equal opportunity in construction and civil engineering is an industry-related challenge. We have a small number of female workers at Peab, especially among skilled workers and therefore we work actively with this issue. We are convinced that greater diversity creates better workplaces and a more successful business.

Other work-related rights

Peab’s Code of Conduct clearly establishes that we never accept child labor, human trafficking, forced labor or labor linked to any kind of threat or punishment. Working must always be voluntary.

Because Peab’s business operates exclusively in the Nordic region with a large portion of Nordic workers and we do not hire guest workers from informal actors, we can further minimize the risks of breaches in work-related rights including child labor, forced labor, inadequate housing or abuses of personal integrity. For example, all the Nordic countries have ratified ILO Co₂9, Forced Labor Convention, 1930 (No.29) which reduces the risk of forced labor. At the same time our dependency on suppliers in the value chain creates risks for breaches in work-related rights. Our ability to oversee others’ operations decreases the farther down the value chain they are. The process of due diligence serves us well in these instances.

Purchasing governance is fundamental

Risk management in the value chain requires good purchasing governance. Among other things, Peab works with category-based purchasing. The point is to gather Peab’s total purchase volume into a purchase category in order to sign joint contracts with advantageous prices and the right specifications. This way we can steer our purchase volumes to certain framework contract suppliers making it easier for the production to only call-off orders from approved suppliers with predefined terms. At the same time this facilitates our ability to continuously expand our knowledge of the various purchase categories in a structured manner. We can increase comprehension of the risks and opportunities and thereby have a positive impact on workers in the value chain.

We currently have approximately 260 different purchase categories, of which frameworks and facades, installations, site transportation and construction equipment services are the largest. In addition, we continually monitor business critical categories like fuel, electricity, bitumen and steel.

Another characteristic of category-based purchasing is that we work with risk categories with higher risks regarding the work environment, working conditions and human rights or other sustainability-related areas. Risk categories that Peab has identified are staffing, drilling, demolition, cleaning, scaffolding construction, remediation and security.

Category work is governed and coordinated by a category manager and every category has a dedicated contact. The work is performed within the framework of a category team consisting of representatives from other special functions like quality and environment coordinators, finance, HR and relevant functions in the business areas.

Processes and procedures are complemented by supporting systems. We check suppliers through our supplier register. Suppliers are assessed through a decision matrix consisting of four parameters: safe workplace, secure payment, secure supplier and sanctions. We also monitor suppliers based on the metric 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 their social obligations such as regular payments of employer contributions. We also check that suppliers have collective bargaining agreements. In addition we have joint Nordic purchasing forums that work with category steering, processes and system matters.

Supplier audits

Every year we conduct an analysis of our purchase categories and select several suppliers based on parameters such as human rights, the work environment, child labor, discrimination and the environment that we audit. Supplier audits are conducted by a cross-functional audit team consisting of category managers and QEW responsible supervisors.

In 2024 Peab continued to conduct onsite audits at our prioritized suppliers which have been identified based on volumes and assessed risk level. Our Supplier Code of Conduct is the basis of our follow-up, and our method is always the learning dialogue. Our goal is to drive improvement and promote a sustainable, secure supply chain. In 2024 we conducted 72 (37) supplier audits and in 2025 we plan to overhaul our audit program so that it becomes more efficient for us and the suppliers.

Other controls

As part of our continuous improvement work, several years ago we began to increase our control of 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 with tougher sustainability demands. In part this entails a responsibility for ensuring that subcontractors have collective bargaining agreements and an F-tax certificate. The primary purpose is to rid the industry of unscrupulous actors 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.

Since 2021 we have third party controls in the Swedish operations to ensure that no unauthorized persons have access to, and are visiting our worksites. During last year 12 (35) worksites were inspected and controls of 335 (1,298) individuals were made. The results from these worksites 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.

At year-end 2024/2025 we made changes in how we handle subcontractors which in part entails that subcontractors must be pre-notified digitally and in part that our main principle now allows for only two levels of subcontractors. The background to the change is our work on increasing traceability and monitoring in the value chain to promote a sustainable construction industry. We already apply this “two-level rule” to a certain extent in our Norwegian and Finnish operations.

Since the war in Ukraine broke out we have emphasized the importance of supplier checks and updated our procedures to include handling current sanctions.

Reporting channels

In matters that concern employees’ rights and conditions, dissatisfaction or incidents workers should first of all contact their closest supervisor or senior supervisor and secondly the local HR function at Peab. Workers are also encouraged to turn to safety reps or union reps or the occupational health service. Peab also has a whistleblower system which is available to external parties that is both safe and allows reporting anonymously. Read more about Peab’s whistleblower system on pages 102-103. We encourage our suppliers and their suppliers to have their own complaint mechanisms and channels for whistleblowing.

Looking ahead

Peab’s focus going forward will be to continue to quality-assure the work in value chains and increase traceability. In 2025 we will monitor the work on digital pre-notification and limits on the number of subcontractor levels.

Targets and metrics

Currently we do not have any targets or metrics but we intend to evaluate the need for them.