Sustainability and risk management

Sustainability

For more than 60 years Peab has contributed to sustainable social development and worked to improve everyday life for people in the local community. We do this by building everything from homes, schools and hospitals to bridges, roads and other infrastructure. Working sustainably is a strategic matter for Peab that in practice always takes place locally, connected to everyday life based on our core values, business concept, mission, strategic targets and Code of Conduct.

As of 2021 we monitor our business based on nine external targets – both financial and non-financial targets – that also identify our prioritized sustainable aspects. We monitor our targets quarterly, semiannually or annually. In addition to our financial targets we quarterly monitor workplace accidents and our target of zero fatal accidents and a contracting trend of serious accidents.

Serious accidents

A safe work environment is the foundation of our business. Everyone at our workplaces should be able to be there under safe and secure conditions, despite the fact that there are risks involved in the work we do. In order to prevent accidents and incidents at our workplaces we develop quality-ensured work methods and train our employees. Focus is on planning and risk assessment in projects as well as learning from the reported risk observations, incidents and accidents.

There is a downward trend in serious accidents* after the first quarter and over a rolling twelve month period the number of serious accidents at our workplaces amounted to 32 (39 per December 31, 2020), of which 18 involved our own personnel and 14 involved subcontractors. During the period January to March 2021 there were seven serious accidents in total. Peab employs a high portion of own skilled workers compared to other actors in the construction and civil engineering industry in addition to our many subcontractors. At the end of March 2021 Peab had 15,129 employees, of which 8,130 were skilled workers. As of 2021 we also monitor the number of workplace accidents with more than four days absence, excluding the day of injury (LTI4), and workplace accidents according to the same definition per one million hours worked (LTIF4) for our own employees. In the first quarter of the year there were 34 and the LTIF4 frequency rate was 6.6.

Every remedied risk is one less potential accident, which is why we are highly focused on reporting and remedying risk observations*. During the first quarter 2021 the organization reported 16,500 risk observations.

* For a definition see section Alternative performance measures and definitions.

Other

• Peab launched the new concept NärBo for predesigned apartment buildings. In NärBo Peab has compiled and packaged years of experience and knowledge with its best practice construction methods and a clear environmental profile. The result is an almost finished construction solution where all the steps up to construction start are already prepared and the process of producing turnkey housing has been streamlined. Installations, material and interiors are chosen with care to ensure quality and long-term environmental friendliness. This includes ECO-Betong (concrete), using local resources and focus on energy and resource efficiency. The apartment buildings are also built to be Swan ecolabeled.
• Peab’s subsidiary Swerock launched the product ECO-Ballast (mineral aggregates) in Sweden which is produced with at least 50 percent recycled raw material making it an important contribution to circular community building. The goal is to progressively increase the range of products and volumes.
• The subsidiary Peab Asfalt continues its investment in sustainable development by becoming a main partner to the European Green Capital Lahti 2021. Peab Asfalt is organizing events in Lahtis throughout 2021 to spotlight climate issues related to building infrastructure, which has a central role in emissions in cities.
• Starting in Lahtis Peab Asfalt launched ECO-Asfalt (asphalt) in Finland. This development will halve climate emissions from Finnish asphalt production, where the company already has a high percentage of reclaimed asphalt in operations and has gone over to renewable electricity. In ECO-Asfalt Peab replaces fossil fuel with bio fuel in drying and warming the gravel material, which is the most energy consuming part of the manufacturing process.
• Peab’s team for traffic arrangement was one of the three finalists for Maintain Zero’s Work Environment Prize 2021. The prize is awarded annually and spotlights initiatives that promote safety in the construction and property industry. Peab’s team supports operations with expertise and know-how concerning traffic arrangements as well as makes unannounced controls of Peab’s workplaces to monitor compliance with legal and contract requirements.
• Peab is working on implementing the digital safety course Safe Construction Training for anyone working on construction and civil engineering sites where we are the employers or coordinate the work environment and that require wearing an ID06 card. The Swedish Construction Federation has produced the course which will be standard for the industry in Sweden and a requirement for working on construction and civil engineering sites. This education contributes to achieving our work environment target of zero fatal accidents and fewer serious accidents at workplaces.

Risks and uncertainty factors

Peab’s business is exposed both to operative and financial risks as well as compliance risks and external and market risks. How much risks af­fect Peab’s prof­its and po­si­tion de­pends on how well the com­pa­ny han­dles daily op­er­a­tions. External and market risks are events that are out of Peab’s control but which affect the business environment. These are, for example, developments in the economy, customer behavior, climate impact and political decisions.

Man­ag­ing op­er­a­tive risks is a con­tin­u­ous process con­sid­er­ing the large num­ber of projects the Group is al­ways start­ing up, car­ry­ing out and com­plet­ing. Op­er­a­tive risks are man­aged in the line or­ga­ni­za­tion in the busi­ness areas through es­tab­lished pro­ce­dures, process­es and con­trol sys­tems. Peab’s busi­ness is large­ly project-​​re­lat­ed. There are a num­ber of dif­fer­ent con­tract forms where risk lev­els vary de­pend­ing on the type of con­tract. How­ev­er, with any type of con­tract am­bi­gu­i­ties can arise con­cern­ing the terms, which can lead to de­lim­i­ta­tion is­sues that cre­ate a dis­pute with the cus­tomer.

Financial risks are primarily associated with the company’s need for capital, tied up capital and access to financing. Financial risks are managed on Group level. For further information about risks and uncertainty factors, see the Annual and Sustainability Report 2020.

In the be­gin­ning of 2020 the coro­n­avirus spread over a large part of the world. Gov­ern­ments and cen­tral banks have im­ple­ment­ed dif­fer­ent forms of cri­sis pack­ages to re­duce the neg­a­tive fi­nan­cial ef­fects. The en­tire glob­al econ­o­my is af­fect­ed but it is dif­fi­cult to say how deeply and for how long. So far the ef­fects of the coro­n­avirus on Peab’s op­er­a­tions have been lim­it­ed. We close­ly fol­low de­vel­op­ments in order to as­sess the ef­fects in the long run. For more in­for­ma­tion see the sec­tion Coro­n­avirus under Im­por­tant events dur­ing the pe­ri­od.