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.

Best workplace

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 second quarter and over a rolling twelve month period the number of serious accidents at our workplaces amounted to 30 (32 per March 31, 2021), of which 16 involved our own personnel and 14 involved subcontractors. During the period April to June 2021 there were four serious accidents in total. Unfortunately one of our subcontractors suffered a fatality at Peab’s operational area E6 in Kungälv. Every accident is a failure, and every accident with this outcome is not only a huge loss for families and loves one, for colleagues but for society at large. This is why we will never stop working for safe workplaces.

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 June 2021 Peab had 16,142 employees, of which 9,005 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 second quarter of the year there were 43 (34 per March 31, 2021) and the LTIF4 frequency rate was 6.6 (6.6 per March 31, 2021).

Every remedied risk is one less potential accident, which is why we are highly focused on reporting and remedying risk observations*. During the second quarter 2021 the organization reported 16,750 risk observations, which brought the total number of reported risk observations for the first half-year 2021 to 33,250.

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

Attractive employers (eNPS)

We will be the obvious choice for anyone who wants to work in the industry. Everyone will be part of safe and including workplaces with good work conditions and opportunities to develop at Peab. Twice a year we hold our personnel survey The Handshake so that we can continuously develop and improve as co-workers and teams. The questions in The Handshake mainly concern productivity, the team’s sustainability and if employees are willing to recommend Peab as an employer to friends and acquaintances (eNPS). The latter is also one of our nine external targets that we report twice a year.

Participation in the spring survey was a record-breaking 85 percent in the Group, accompanied by many suggestions for improvement. This shows the great interest our employees have in contributing to developing our business.

Within the Best workplace target the eNPS (recommend Peab) value should be above the benchmark. The eNPS value for the Group has gone up slightly (+1) since the previous evaluation and was at 19 in the spring survey. This is clearly above the Nordic benchmark for our industry (Industry) which is 10. The value contracted slightly in the response from white-collar workers in Sweden. On the other hand development is positive on the side of skilled workers in Sweden as well as skilled and white-collar workers in Norway and Finland.

Leader in social responsibility

Activities during the second quarter

At the beginning of the year Peab Asfalt launched ECO-Asfalt (eco-asphalt) in Finland and during the quarter followed in Denmark and Norway making Peab Asfalt the first actor in these countries to offer environmentally adapted asphalt.
In collaboration with Järfälla Municipality Peab Asfalt has paved another test stretch of Viksjö Road with lignin. Lignin is the natural binder in wood which creates environmental and technical advantages when it partially replaces oil-based bitumen.
Since 2016 Peab Asfalt has continuously invested in converting to biofuel in the manufacturing process in its stationary asphalt plants. During the quarter the last five asphalt plants in Sweden were converted, which means that all Swedish production units can offer ECO-Asfalt.
Peab’s subsidiary Byggelement has introduced the environmentally adapted ECO-Prefab. Now when Peab builds Brf Mälarparken in Södertälje for the first time all the flat concrete bases, double walls and external walls are made of concrete where some of the cement has been replaced by slag-based binder, which lowers its environmental impact. On top of that the reinforcement in ECO-Prefab consists of recycled steel, the electricity used in the factories is green and the external walls are shipped by train.
Peab’s subsidiary Swerock built a new concrete plant in Malmö. The plant heating system is fossil free and the environmental consideration has been in focus throughout the process – from operation and production to finished products and shipping. In the ECO-Betong (eco-concrete) manufactured in the plant 65 percent of the cement has been replaced by an environmentally adapted binder.
In June, 77 students graduated from Peab’s own high school system, The Peab School. This means a total of 1,143 students have graduated from The Peab School that is now in its fifteenth year.
During the spring several social partnership projects with youths have been carried out in their local communities within the framework of Peab Life. They have involved, for example, participation in planning a new school and in particular designing the toilets (collaboration with Friends), designing a schoolyard as well as summer jobs. Peab Life enables as many children and youths as possible in the Nordic region to have equal access to a good education and meaningful free time while it raises awareness about the construction industry’s different professions.

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. 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.

On July 6, 2021 the Supreme Land and Environment Court dismissed Cementa’s application for a renewed permit to quarry limestone in Slite on Gotland. As a result of the decision there is a risk that almost all Swedish production of cement will cease on November 1, 2021. Should a tangible shortage of cement occur it would impact the entire construction and civil engineering market in Sweden. As a significant actor Peab would also be affected by the situation. Peab has already begun working with our own alternatives to binder and certain degree of cement importation.