ESRS2

General Disclosures

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Basis for preparation of sustainability statements

Basis and scope

Peab has prepared this Sustainability Report on a voluntary and consolidated basis with inspiration from the EU’s Corporate Sustainability Reporting Directive (CSRD) and the underlying European Sustainability Reporting Standards (ESRS), which are implemented in Swedish legislation since July 1, 2024. This means that this Sustainability Report is based on and contains information about material impacts, risks and opportunities linked to Peab’s business. They have been identified in our operations and through our direct and indirect business relations in our value chains upstream and downstream after carrying out the double materiality assessment. Our goal has been to implement the basic structure of the ESRS standards during 2024 and integrate it with Peab’s Annual Report otherwise in order to fully report according to the new legal requirement in the 2025 Annual and Sustainability Report. In addition to further development of the structure this also entails a third party audited CSRD report as part of Peab’s Board of Directors’ Report. We have been working on complete compliance of CSRD throughout 2024 and will continue in 2025 and thereafter.

The Sustainability Report has not only been prepared with reference to ESRS, it also follows the GRI standard (Global Reporting Initiative), which we have reported in accordance with since 2010. However, the GRI index is not included in this document but it can be found in our web-based Annual and Sustainability Report 2024 at peab.com.

We have undertaken this comprehensive reporting standard in the belief that it ensures balanced, transparent and consistent reporting of sustainability information and we also consider it a catalyst for the practical measures and integration of sustainability work that is part of Peab’s core business. We have therefore identified a number of development areas, and for certain areas concrete plans, in order to be able to report according to CSRD.

The report covers the Peab Group’s operations in Sweden, Norway, Finland and Denmark and the companies where Peab has operational control. However, associated companies, joint ventures and joint operations are not included in the consolidated sustainability reporting.

This Sustainability Report discloses information about the material value chains – upstream and downstream – that we have identified within the framework of the double materiality assessment we have conducted. We have analyzed and assessed impacts, risks and opportunities in the upstream and downstream value chains in accordance with the sustainability topics defined in the ten different ESRSs. In total we have determined eight different value chains in Peab’s operations that we consider key to our business and in addition we have particularly examined certain value chains per country as well as the value chains for our most important input materials.

For more information concerning our method regarding the double materiality assessment read more on pages 49-50.

The Sustainability Report follows the financial year and comprises the period from January 1 to December 31. It is published annually and this year’s Sustainability Report was published on April 1, 2025. The Sustainability Report also includes the statutory sustainability report according to the previous wording of Swedish Annual Accounts Act, Chapter 6, Section 11, which was in effect before July 1, 2024.

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Disclosures in relation to specific circumstances

By conducting the double materiality assessment we have ensured that the report is focused on the issues where our business has the greatest impact from a sustainability perspective. We revised our material sustainability aspects when we made this assessment in the fall of 2023 and the spring and fall of 2024, which was also when we adopted a new business plan for the period 2024-2026. All ESRS sustainability topics are material for Peab, although not all subtopics or sub-subtopics are material within each thematic sustainability topic. Since 2021 Peab’s reporting has been based on four strategic targets that contain nine external targets. Six of these targets are sustainability-related and constitute Peab’s material sustainability aspects.

A number of disclosure requirements are reported in other sections apart from this Sustainability Report. In these cases, there are further references. In ESRS S3, Affected Communities, we have described our work with local communities more broadly than what the set sustainability topics dictate.

We have made certain assumptions, assessments and estimates when reporting several disclosure requirements such as data for Peab’s Scope 3 emissions. We continuously work to improve the processes and data quality involved in reporting. We have consistently applied the same calculation methods and accounting principles during the financial year and for comparative figures. Calculation methods, including calculation factors and accounting principles, are described in connection with the reported information. Any changes in delimitations and/or accounting principles in specific disclosures for one of the reported years is noted in direct connection with the reported information. The reported metrics include upstream and/or downstream value chain reporting to the extent we consider it material and it is possible to evaluate and calculate outcomes.

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Governance and sustainability

Peab AB’s Board work ensures that relevant skills and the competency to oversee sustainability issues are available or developed, particularly through the work carried out in the Board’s various committees. Sustainability issues are an integral part of the decision-making processes and are addressed as both specific items and as part of other items on the Board’s agenda.

The Board committees’ specified responsibility provide and strengthen sustainability-related expertise. The Audit Committee plays a central role in overseeing and ensuring the reliability of the company’s sustainability reporting. The committee reviews the effectiveness of the company’s internal control and risk management. In addition, the committee monitors the audit of the Sustainability Report and how it affects the reliability of the reporting. The Audit Committee regularly reports about these matters to the Board ensuring that sustainability competence is always part of governance in Peab.

The Finance Committee contributes to the company’s sustainability work by overseeing financial strategies with an eye to sustainability aspects. The committee ensures that investments and financial decisions are in line with the company’s long-term sustainability targets.

The Remuneration Committee, which is responsible for preparing decisions on remuneration for senior executives, monitors and evaluates the way Peab’s sustainability targets are integrated into reward systems. This includes ensuring that incentives for senior executives are designed to promote sustainable development which requires understanding how sustainability matters affect the company’s long-term targets.

The combined sustainability expertise of the Board and its committees is directly related to Peab’s material impacts, risks and opportunities. By having committees with specific areas of responsibility related to sustainability the Board ensures that sustainability matters are integrated into the company’s overall strategy and business decisions and also minimizes risks.

In summary, the working structure of the Board is designed, through its committees, to provide and develop the sustainability-related competence required for Peab to effectively manage and report on its material sustainability risks and opportunities.

Governance in the business

Peab has several executive management forums that are key to Group governance. They are responsible, among other things, for overseeing and managing the risks, opportunities and impact within their respective areas connected to sustainability-related aspects. The Sustainability Council, which is led by the CSO and consists of the COO, Head of Compliance, Head of Non-Financial Reporting, Head of Investor Relations, Environmental Manager and Sustainability Controller, is a cross-functional unit that oversees, coordinates and develops sustainability work at Peab and ensures that operations comply with internal and external regulations, standards and laws. Each role in the council is responsible for overseeing and managing impacts, risks and opportunities in their designated area. The members work together to integrate due diligence into Peab’s governance, strategy and business model. The council also includes several adjunct experts in specific areas of sustainability such as HR, the work environment and the environment. The council continuously considers if there is a need for further sustainability competence, internal or external, and if so presents proposals to executive management regarding it. Each business area is responsible for ensuring that the right sustainability competence is available in their operations and that they follow established strategies and decisions. There are four councils concerning the environment: the Climate Council, the Chemicals Council, the Biodiversity Council and the Circularity Council which put together a group-wide perspective on their respective area and work for continuous progress. All this expertise works according to the Group’s business plan where sustainability work is an integral part. Two Group programs are essential to the business plan: “Climate Road Map and strategic input goods” and “Quality-assured and traceable value chain,” which are based on the above.

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Sustainability in incentive systems

Peab’s remuneration policy aims to contribute to the company’s strategies, long-term value creation and sustainability, and that Peab has the right competence in leading positions such as heads of function and key expertise. This is ensured through the fundamental principles of:

• offering market-based remuneration so that Peab can attract and retain competent senior officers. Remuneration levels are regularly compared with other companies operating in the same markets.
• offering long-term incentive and bonus programs focused on the above.
• annually evaluating individual performance and goal fulfillment in relation to Peab’s financial results.

In Peab’s current short-term incentive program (STI), outcomes are linked to the company’s strategy in terms of profitability, sustainability and work environment. The sustainability and the work environment targets together account for at the most 34 percent of the total bonus outcome. The first target is calculated as a weighted outcome of the business areas’ performance regarding reducing carbon emissions and this includes promoting environmentally improved products and reuse. The second target is a contracting trend in serious workplace accidents. These targets underscore our commitment to being a leader in social responsibility in the industry.

The long-term incentive program (LTI) measures the two predetermined performance measures of median profitability and carbon emission reductions during the period 2024-2026. Carbon emission reduction is weighted at ten percent of the total performance target. On recommendation of the Board and after a decision by Peab’s Annual General Meeting Peab’s intends to start new three-year programs every year.

Performance targets in the Performance Share Program are as follows:

Performance target	Formula for calculating the outcome	Weighting
Earnings per share, 2024-2026	Minimum level: SEK 13.50 kr, maximum SEK 20 , linear allocation in between	90%
Carbon dioxide emissions (CO2e)	Less than 155,000 tons CO<sub>2</sub>e, calculated on direct (Scope 1) and indirect emissions (Scope 2) based on calculation principles according to the GHC protocol	10%

 

Peab’s Remuneration Committee prepares the Board’s decisions on remuneration principles, remuneration and other terms of employment for senior officers. It monitors and evaluates ongoing, and during the year concluded, programs for variable remuneration for senior officers. The Remuneration Committee also evaluates how the Remuneration Policy, which is adopted each year by the Annual General Meeting, is applied as well as current remuneration structures and levels in the Peab Group. Read more about the Remuneration Committee’s responsibility on page 217 in the Corporate Governance Report, about remuneration at Peab on pages 155-158 in note 9 and Peab’s remuneration report 2024 at peab.com.

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Due diligence

Working with due diligence is crucial to becoming a sustainable business and reducing negative consequences for humans, the environment and society. By integrating due diligence into our governance, strategy and business model we not only want to live up to both internal and external expectations, we also want to create value for our stakeholders and contribute to taking responsibility throughout our value chain.

Due diligence work is complex and requires continuous development. During the year we have identified areas where we need to become even better, particularly in strengthening risk management in our supply chains and deepening cooperation with business partners. For example, we received valuable feedback last year through the audits that highlighted areas where our work can be reinforced. These kinds of insights guide us on how to continuously hone and define our processes and working methods. We are also further developing our key performance indicators to measure and monitor this work even more efficiently. The Sustainability Council is responsible for developing due diligence work and continuously improve integrating due diligence into Peab’s governance and business model.

The due diligence process is based on the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.

Structured process

We have established a systematic process for due diligence which in summary comprises the following steps:

Incorporating responsibility into policies and management systems: Our governing documents form the basis for due diligence work. The Code of Conduct (due diligence is described in point 8) and the Suppliers’ Code (due diligence is described in point 6) are adopted by the Board and guidelines for the due diligence process are decided by the CEO. These guidelines are integrated into appropriate working methods throughout the Group and in our value chain through training, communication and compliance checks.

Identifying and evaluating negative consequences and risks: Supported by routine risk assessments and through the double materiality assessment we identify actual and potential negative consequences in the sustainability topics. These are prioritized based on severity and likelihood with a particular focus on the most material topics.

Avoiding, mitigating and managing consequences: We implement measures to avoid and minimize risks and mitigate consequences. When we identify impacts, for example in our supply chain, we work out action plans in close collaboration with business partners and other stakeholders.

Monitoring and improving: Routine monitoring is a cornerstone of our process. Internal and external audits help us ensure that our measures are efficient and that we learn from experience so we can develop our working methods.

Reporting and being transparent: We report openly about our due diligence work, focusing on the largest risk areas and measures taken. Transparency is an important part of our responsibility to our stakeholders.

Remediation when needed: We strive to provide or collaborate on providing remediation if we identify negative consequences. This includes repairing environmental damage, financial compensation or other corrective action.

For further information on Peab’s corporate governance, including sustainability-related governance, please see the “Corporate Governance Report 2024” on pages 212-224.

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Risk management and internal control of sustainability reporting

Peab has an established process for managing risks and working with updating the process for identifying sustainability risks based on the CSRD framework (see the section Risks and risk management). Material risks from the double materiality assessment have been integrated into the overall risk management process to ensure systematic risk work and comprehensive risk management in the organization.

Risks are identified on different levels in the Group – from project level to business area and Group level.

Peab is working on further developing the internal control program for sustainability reporting based on new demands. It will contain controls to ensure compliance with regulatory demands and controls to ensure reported data are feasible.

The scope, main functions and components in Peab’s processes and systems for risk management and internal control in relation to sustainability reporting are:

Scope: Our risk management and internal control process comprises all business areas and Group functions involved in sustainability reporting. The process is run on Group level and in our four business areas.

Main Functions: We use a method for risk management and internal control that includes risk identification, assessment, management and monitoring. See below for Peab’s risk assessment method.

Components: Our fundamental components in the risk management process are our risk register, matrix for assessment and system for management and documentation of response plans.

The outcome of the risk assessments by the business areas and Group functions as well as central monitoring of response plans is consolidated at Group level before further reporting to executive management, the Board and external stakeholders. See more about reporting below.

Risk assessment method

Our risk assessment method comprises risk identification, assessment and prioritization methodology. We strive to use both quantitative and qualitative analyses to identify and prioritize risks in Peab’s value chains. The initial risk identification takes place at business area level, the risks are then assessed and thereafter consolidated at Group level. We separate sustainability risks into two overarching categories: the risk that we negatively impact humans and the environment negatively and the risk that Peab is impacted negatively. Risks related to the process for the double materiality assessment and risks related to the method for data compilation of sustainability-related data are spotlighted.

Risks related to humans and the environment

• Risks that impact humans and the environment are assessed based on their scope (1-3), magnitude (1-3), restorability (1-3), and the likelihood of occurrence (1-5).
• Risks are assessed based on the short-term horizon (less than 1 year), medium-term horizon (2-5 years) and long-term horizon (more than 5 years).
• We calculate the figure for scope, magnitude and restorability (total 3-9) based on this assessment and multiply this figure by likelihood (1-5) to get a risk value (3-45).
• Risks assessed to have a risk value exceeding 25 are considered relevant risk and thus prioritized.

Risks to Peab

• Risks that impact our company are assessed based on the likelihood of occurrence (1-5) and the impact on the company if they occur (1-5).
• We assess risks in the short term (less than 1 year), medium term (2-5 years) and long term (more than 5 years).
• Based on the above assessment, we calculate a product (1-25).
• Risks assessed to a product exceeding 6 are considered relevant and thus prioritized.

This is how the double materiality assessment is integrated into Group risk processing. The material risks identified and measures to manage them are described in the respective ESRS sections.

Examples of sustainability-related risks that have been identified and examples of measures to manage them are:

Material impacts, risks and opportunities related to humans and the environment:

1. Climate change, including a higher frequency of extreme weather – choice of method, material and property
2. Access to critical input material – alternative supply plans for strategic input goods
3. Workers’ rights in our value chains – ensure compliance of the procurement process

Material impacts, risks and opportunities related to Peab:

1. Requirements regarding climate adaptation – follow internal and external climate targets
2. Workplace accidents – safety rounds, monitor incidents, risk observations, preventive information
3. Compliance – focus on governance documentation, internal control and regulation compliance

Integration into internal functions and reporting

We integrate the results of our risk assessment and internal control into relevant internal functions and processes by:

• Incorporating risk management practices into our strategic planning and operational routines.
• Ensuring collaboration between business areas and Group functions to manage risks comprehensively.
• Regularly updating our internal policies and procedures based on the results of risk assessments.
• Internal control of sustainability data strives to follow the same procedures as financial reporting in the long-term.
• Regularly evaluating the efficiency of our internal control to identify measures for improvement according to already established procedures.
• Regularly reporting the results to executive management, The Audit Committee and the Board.

Read more in the section “Risks and risk Management”.

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Strategy, business model and value chain

Collaboration between business areas in the value chain and local presence are the two cornerstones of our business model that generate synergies in operations and prerequisites that enable us to reduce our environmental and climate impact, promote social responsibility and positive community development and run a responsible business.

Peab’s operations aim to improve everyday life where people live it and contribute to building sustainable communities. Building everything from homes, schools, retirement homes and hospitals to constructing bridges, roads and other infrastructure in our communities is inherently closely related to sustainability and business conduct. This we do for customers throughout the Nordic region – from a small inland town in the north and a coastal city in the west to a metropolis in the south.

Business model

Our operations are based on four business areas: Project Development, Construction, Civil Engineering and Industry. Each one is independent and has its own customer base. Sometimes all four business areas deliver to the same customer, sometimes only one business area has the account.

Our business model is reinforced when business areas collaborate with each other in the value chain, from acquiring land to production and operation. This gives us unique opportunities, together with our strategic assets, our own resources and good control over the value chain, to meet customer needs and external expectations. In particular, it increases our ability to steer the business in a more sustainable direction and reduce negative impacts on humans and the environment. The business model allows us to utilize local resources in the form of our own input goods, skilled and engaged employees and local subcontractors. Naturally this includes our sustainability offer in the form of ECO-products, recycling and reuse, as well as local social responsibility in the places where we operate. With our four business areas we can offer customers a broad range and reliability while we increase our productivity and can take advantage of both financial and operational synergies. This way we not only reduce the negative impact of our operations but also create long lasting and sustainable values.

Peab’s highly processed business in collaboration helps us achieve broad target fulfillment. Here is a list of the advantages of Peab’s business model:

• Higher degree of processing
• Income diversification and risk spreading
• Investment opportunities and financial strength
• Locally produced through local resources (input goods and personnel)
• Innovation and product development capability
• Experience exchanges
• Advantages and effects of scale
• Job opportunities and local development
• Capable of steering towards sustainability:
  • Good work environment and safety
  • Lower environmental and climate impact
  • Ethical business practices
  • Greater equality and diversity

In practice Peab creates value mainly through six activities in the processing chain, through our four business areas: 1) acquisition, 2) development and planning, 3) procurement and production 4) civil engineering and construction, 5) divestment and 6) operation, maintenance and further development. The business areas and the operations they run have their own logistics and are structured according to the conditions of their respective markets and submarkets and are divided into product segments and geography.

Revenue in business areas Construction and Civil Engineering comes from construction contracts for both private and public customers. Business area Industry has both construction contracts and sells products and services to Nordic construction and civil engineering companies. Business area Project Development divests homes to private persons and commercial properties and community properties to public and private customers.

Sustainability in business model and strategy

Sustainability has been integrated into our strategy and business model since the company was founded 65 years ago. When brothers Mats and Erik Paulsson started Peab on the Bjäre Peninsula their original business idea was to take on waste collection and sanitation contracts in the municipality. The business quickly grew to include renting machines and civil engineering operations. After that they added construction work and in the 1990s they acquired the first manufacturing business, making concrete and mineral aggregates production part of the Group. Operations have always been close to our customers and with our local resources Peab offers supplementary and collaborative construction and civil engineering contract services. This minimizes costs, reduces transports and results in efficient use of local resources.

Today these principles are part of our strategic positioning “Locally Produced Community Building.” Producing locally means supplying our projects with local resources like input goods, material and the labor force as much as possible. In addition to the accompanying environmental benefits, we also contribute to creating local jobs. By being capable of controlling the value chain we can extend our responsibility for sustainability throughout the delivery – from the materials included and technical solutions to the labor force, the work environment as well as the safety and working conditions for everyone at our workplaces.

We also steer the business based on overall Group targets, several with a clear connection to sustainability. Our strategic targets Best workplace and Leader in social responsibility comprise Peab’s environmental, climate and work environment targets as well as the goal of promoting equality in the industry. We also break down strategic targets into sub-targets in our business areas depending on the operations (see the table below). Our overarching target of climate neutrality is reflected in concrete operational goals such as increasing the portion of ECO-Betong (ECO-Concrete) in our construction contracts or the portion of alternative binders in our concrete and prefab production. Greater resource efficiency in practice becomes goals such as increasing the portion of recycled asphalt in our paving contracts or reducing the amount of waste and scrap in construction contracts. We have targets for so-called secure procurements in all our operations. These are purchases from framework contract suppliers that meet our requirements on business ethics, the work environment and working conditions as well as more traditional metrics such as financial position, price worthiness and quality.

Sustainability topic	Group target	Examples of sub-targets in our business areas
E1 – Climate change	Climate neutrality by 2045	Increase sales of ECO-products Lower energy intensity in our projects Raise the portion of alternative binders in our concrete production
E2 – Pollution	Phase out environmentally and health hazardous products and substances by 2030	Increase portion of unique chemical products that meet  Peab criteria
E3 – Water and marine resources	Peab has no Group targets
E4 – Biodiversity and ecosystems	Peab has no Group targets
E5 – Resource use and circular economy	100% resource efficient business by 2040	Lower waste intensity Increase sorting rate Raise the portion of recycled asphalt Increased sales of ECO-Ballast (ECO-Mineral aggregates)
S1 – Own workforce	Zero vision for serious accidents Recruitment of women > education market	Promote safety culture through risk observations, safety rounds and safety walks 100% risk analysis in all work preparations
S2 – Workers in the value chain	Zero vision for serious accidents	Promote safety culture through risk observations, safety rounds and safety walks
S3 – Affected communities	Peab has no Group targets	Local sponsorship in all projects in Housing Development
S4 – Consumers and end users	Customer Satisfaction Index >75	Lower complaint costs Fewer guarantee errands
G1 – Business Conduct	Peab has no Group targets	Increase the number of secure procurements 100% log index at our workplaces

The table above shows how we govern the business based on set targets linked to sustainability. Peab has targets on both Group level and targets broken down at business area level.

Operations in all the business areas have both positive and negative impacts regarding sustainability aspects. In addition to, for example, building roads for more efficient and safer transportation many of Peab’s projects contribute to the ongoing climate transition by limiting emissions and adapting communities to climate change. Some examples are developing ports, preparing land areas and building factories that enable the green transition, or enabling wind and solar power production and dimensioning water and wastewater networks for more rainfall.

Developing sustainable customer and market offers is a cornerstone of our strategy and business model. We environmentally label our housing projects in business area Project Development such as Swan certification. In business area Construction customers increasingly demand sustainable construction and energy efficient buildings and we offer concepts like NärBo with tangible sustainability advantages. In business area Civil Engineering there are significant investments in water and wastewater facilities and Peab is working on several industrial projects that are important for climate transition. Business area Industry provides the market with a wide range of  products under our ECO-brands that contribute to lower greenhouse gas emissions compared with traditional alternatives.

We provide our employees with secure employment and meaningful careers with development opportunities. This includes everything from striving for safe workplaces without accidents and actively promoting gender equality and diversity in the traditionally male-dominated construction and civil engineering industry to limiting the risks of ethical violations in the complex value chains that also characterize the community building sector. Therefore our operations have a responsibility to ensure that we and our suppliers act ethically and take the environment and human rights into consideration.

Sustainability challenges

The main challenges we work with regarding sustainability are summarized as follows:

• Variation in customer needs and demands
• Technical and production-related challenges
• Traceability-related challenges
• Broad and complex supplier base Variation in customer needs and demands

Variation in customer needs and demands

One construction project rarely resembles another. The broad range of customers and the variation in customer needs and demands mean that projects are highly customized. A residential building, an office or a bridge has a lifespan over decades which requires unique adaptations and characteristics for almost every final product. The extent of sustainability demands varies. Nonetheless, we strive to create standardized and sustainable solutions as far as possible. One step in this is our focus on input goods where we have made great strides. Input material, groundwork, foundations, prefabricated building elements and frames are examples of components regardless of what is being built. We have also developed the standardized housing concept Närbo, our apartment buildings where we have compiled and packaged years of experience and expertise from our best practice construction methods. We are further developing these housing and real estate concepts with the growing customer demand.

Technical and production-related challenges

Developing technical and production-related solutions for increased sustainability is an important investment. The climate neutrality target requires solutions or alternatives for 1) cement/concrete, 2) steel, 3) fuel, 4) bitumen/asphalt, 5) electricity/energy and 6) transportation. Currently existing technology can partially reduce carbon emissions but not entirely. New technology often brings new production-related challenges such as longer curing times for concrete that contains a higher portion of alternative binders. Increasing sustainability entails continuously developing production methods.

Traceability-related challenges

Another challenge we work with is industry-wide: the digital traceability of sustainability-related information. A turnkey contract in construction, for example, is a composite service where the amount of input goods and products is extensive. Additionally, a turnkey contract usually consists of subcontracts where suppliers provide labor and materials to various degrees.

Peab has made progress in several areas. Since we have input goods, groundwork, foundations and frames in our own operations we have the ability to trace material impact through EPDs. Increasing digital traceability in material flows is a challenge we are working on and it will be crucial to enabling even more detailed management and reporting of sustainability-related data. Above all, it requires industry collaboration on issues such as selected standards and digital delivery notes.

Broad and complex supplier base

The number and variation of suppliers and subcontractors we collaborate with in a construction project can be extensive and vary depending on where in the Nordic region it is carried out. Excavation services, for example, is an area where the market consists of a large number of small businesses that operate locally. Another aggravating factor is the kind of purchasing we do, particularly regarding procured and complex services. Installations are an example of where we procure both the installation work and the material from the installator who in turn can have different material suppliers. Increasing control and traceability over our supplier base is a massive undertaking but we are making progress. Part of the solution is in more delineated category and supplier governance as well as greater collaboration in the industry, especially in standardizing.

The business 2024-2026

The primary areas of the Peab Group business plan for 2024 to 2026 are customer focus, sustainability and sustainable offers and efficiency. Collaboration in our geographies is a prerequisite for success in all these areas. We have established two Group development programs that support these shifts: “Climate Roadmap and strategic input goods,” which, by breaking down our climate targets into action plans with measures, aims to ensure that we achieve our climate and environmental targets and secure access to critical input goods, and “Quality assured and traceable value chain,” which will both support the first program and contribute to our work with, and responsibility for, Peab’s value chains.

Value chains

Given Peab’s broad operations there are many value chains. Construction has one type of value chain while Civil Engineering has another. The value chain in business area Project Development differs yet again and there are several value chains in Industry, particularly in supplying rentals, prefab, paving and materials. In addition, there are often variations within each value chain due to the fact that production chain in the construction and civil engineering industry is complex and consists of many actors. In connection with Peab’s double materiality assessment the company took a closer look at a total of eight value chains.

Peab’s primary value chains are:

• Construction
• Civil Engineering
• Prefabricated construction elements
• Rentals
• Paving
• Concrete
• Raw material supplies
• Project Development

Upstream

Peab handles around 41,500 external suppliers each year. About 3,000 suppliers account for 80 percent of the Group’s total purchase volume. In other words, we are a major purchaser in the Nordic region and can therefore promote secure and sustainable procurements and supplier partnerships.

We allocate Peab’s total purchasing volume into different purchasing categories. We currently have about 260 different categories, of which frames and facades, installations, civil engineering transportation and construction equipment services are the largest.

For us continuous access to a number of strategic input goods – cement, bitumen, electricity, fuel, steel and certain wood products – is a necessity for community building. Therefore we work continuously and systematically with these input goods to both secure access to them and contribute to their transition. In this way we reinforce Peab’s resilience, minimize vulnerability and accelerate the transition to future renewable products, solutions and construction methods.

Production of these materials is also what causes the largest amount of greenhouse gas emissions. To reduce material-related emissions we work intensely with material selection, optimized material use, recycling and reuse. All this requires collaboration among the various value chains with both suppliers and customers.

We are also working to develop solutions that enable substituting materials which currently have a large climate impact where possible considering technology, performance, quality and market, and that conditions for reuse are constantly improved. What are not considered strategic input goods today may become ones tomorrow.

Specifically this means, among other things, that Peab:

• has cross-functional teams that work to ensure access to strategic input goods.
• ensures steering, in consideration of stakeholder demands, aimed at planning for and achieving progress.
• strives for good control over supply chains and risks.
• works together with suppliers.
• prepares for future technological development, innovation and requirements.

Downstream

Peab has a broad customer base that spans over our four business areas. Sometimes all four business areas deliver to a customer, sometimes only one business area has a customer account. The total number of customers is about 18,000.

The construction and civil engineering industry has historically been customer-driven where the overwhelming majority of construction projects are customized to customer needs. However, we are increasingly taking an active role in the early stages of the planning and design phase of planned projects. This increases our ability to influence projects in a more sustainable direction.

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Stakeholders’ interests and views

We have ongoing dialogues with representatives from our various stakeholder groups, both those who are in some way impacted or can be impacted by our operations and those who use our sustainability reporting for various purposes. The first category includes customers, suppliers and employees as well as neighbors and other actors in the local community. The second includes, for example, existing and potential owners and investors, loan givers and insurance companies as well as other users such as business partners, labor market partners, non-government organizations, government agencies and academics.

Through our ongoing dialogues with representatives from our stakeholder groups we keep updated on the expectations and demands they have on Peab and what issues are most important to them. These dialogues occur in many different parts of our organization in both informal meetings with customers, suppliers, employees and other stakeholders and in more structured contexts like supplier audits, meetings with politicians and other decision-makers, owner and investor dialogues and seminars at colleges and other educational institutions. A representative number of these stakeholder dialogues are collected and documented. The accumulated result from these dialogues partly forms our double materiality assessment and sustainability topics we have identified as material.  The outcome of the stakeholders’ various demands and desires successively crystalize into how Peab runs projects and composes offers, especially when it comes to the ongoing climate transition. An example of this is the development of the various ECO-products or the two Group programs described above. We can clearly see the connection between driving development in our operations in this direction and our increasing attraction for customers, employees, investors and other stakeholders. For more details concerning these two programs and anticipated results see the description above.

In the dialogues – independent of which stakeholder group – we inform about the progress being made in our operations, provide good examples and initiatives but also point out the challenges. In this way we can create and maintain constructive and transparent conversations and promote collaboration that leads to actual sustainable development.

The table on page 48 presents Peab’s most important stakeholders, the kind of dialogues we have with them, what their expectations of us are and the value Peab creates for our stakeholders through our business.

SBM-3

Material impacts, risks and opportunities in relation to strategy and business model

In the following we report on where in our value chains impacts, risks and opportunities occur and we describe them in more detail. We have aggregated the outcome on Group level per ESRS topic. As is apparent from the diagram below Peab has determined that all ten sustainability topics are material, although not all the subtopics or sub-subtopics.

In the following pages in the respective ESRS sections we will exemplify the sustainability-related impacts (positive and negative) as well as the risks and opportunities contained or possibly contained in each sustainability topic that we have determined material for Peab. We also note whether or not the impacts and risks are in our own operations and/or in upstream or downstream activities in the value chain.

We are continually developing our work on the double materiality assessment and its consequences and successively improve the methodology along with our ability to report on the disclosures we have identified as material. This is part of developing the business to meet the “gaps” we have identified in the double materiality assessment.

IRO-1

Impacts, risks and opportunities

How we have determined material impacts, risks and opportunities

In preparation for CSRD legislation we conducted a double materiality assessment during 2023 and 2024 in order to update Peab’s material sustainability aspects. In accordance with the guidelines in ESRS 1 we have examined the actual and potential positive or negative impacts – including risks and opportunities – of Peab’s business on humans and the environment (impact materiality, inside-and-out) and external impacts on our business (financial materiality, outside-and-in). In this assessment we have assumed a value chain perspective, i.e. in addition to our own operations we have also taken into consideration activities upstream and downstream in the processing chain.

As previously noted Peab’s broad operations mean we have different business models that generate revenue and create value, all of them with their various relationships and dependencies. Based on this we have assessed and mapped eight primary value chains in order to determine our sustainability topics. These value chains are construction, civil engineering, prefabricated construction elements, rentals, paving, concrete, raw material supplies and project development. We have also conducted specific assessments of upstream value chains for the input goods we have identified as strategic for our business: concrete, cement, bitumen/asphalt, steel, wood products, electricity and fuel. We have made a similar analysis of household goods. We have made separate assessments regarding the value chain construction for Sweden, Finland and Norway and for value chain civil engineering there are separate assessments for Sweden and Norway.

The assessments have mainly been conducted by members from the functions environment, work environment, HR and controllers from both central and business area levels. Additionally, category managers from our purchasing organization have mapped materiality in our strategic input goods. The CSO and COO from executive management have also participated in materiality assessments all the while this work has been continually checked by Peab’s executive management and Board. The work has been led by Peab’s non-financial reporting function with support from external advisors.

Our experts from respective operations have assessed the materiality of their value chain based on the ten ESRSs in the areas environment (E1-E5), social responsibility (S1-S4) and business conduct (G1), all the way down to sub-subtopics. EFRAG and other sources have guided us in our assessments and we have made our own interpretations based on our operations. We have also built up a methodology for rating and assessing the value chains. We have taken Peab’s stakeholders into consideration by collecting documentation from relevant interactions with them and incorporated their demands and desires into our assessments. Read more about Peab’s stakeholders on pages 47-48.

Regarding impact materiality, we have assessed materiality in every sustainability topic by weighing the severity and likelihood of impacts, risks and opportunities. The degree of severity is determined by scale, scope and restorability as well as if there are risks regarding human rights. Actual impact is rated as a five on a five degree scale. In the same way, we have assessed potential impact through a scale of between one to five points. The degree of severity consists of a scale between one and three for each factor where 1=low, 2=medium and 3=high (see the figure below). We have assessed the time interval for both impact materiality and financial materiality according to the time horizons in ESRS for short-, medium- and long-term.

Compilation of the outcome of our first assessment of Peab’s double materiality assessment

The figure above shows that all the ESRS topics are material for Peab and the degree of materiality of the various ESRSs based on impact materiality and financial materiality. The two fields to the right are material in Peab’s initial assessment. After reviewing the subtopics we have determined that not all of them are material even if the ESRS topic per se is.