Environmental Supply Chain Management at Skanska in Sweden

Karin Jönsson, Licentiate in Engineering1 Staffan Söderberg, M Sc, M A2

1Skanska Teknik AB. 169 83 Solna. Sweden. Phone: + 46 (0)8 504 350 00. Fax:+ 46 (0)8 753 60 48. E-mail: [email protected]. 2Skanska Teknik AB. 169 83 Solna. Sweden. Phone: + 46 (0)8 504 350 00. Fax:+ 46 (0)8 753 60 48. E-mail: [email protected]

1. INTRODUCTION Skanska Sweden is a business unit within the international Skanska Group, focused on construction of infrastructure, residential and commercial buildings. Skanska Sweden is the largest construction company in Sweden, with about 15 000 employees. As part of Skanska’s commitment to sustainability, a strong focus area is adaptation of products and materials used in construction towards resource efficiency and minimization of hazardous chemicals. In order to achieve such a development, a number of changes in the operations of several individual actors in the supply chain, as well as in their interaction with other actors, are required.

How has Skanska dealt with the challenge of establishing efficient environmental management in a chain of actors that covers approximately 15 000 suppliers and subcontractors and 60 000 building products? Several means of evaluation and communication have been developed and implemented within the framework of the environmental management systems of Skanska Sweden - in order to ensure that both internal and external environmental requirements are communicated and followed up efficiently throughout the supply chain.

2. SUPPLIER EVALUATION AND COMMUNICATION The purchasing function and Skanska Sweden’s main suppliers is of crucial importance in order to ensure success in achieving the overall environmental ambitions of Skanska Sweden. Skanska Sweden thus promotes development of environmental management of our main suppliers including environmental product development and eco-labelling. It is also of importance to secure a high minimum level of environmental performance from suppliers that are identified as critical from an environmental perspective in certain selected projects.

In order to communicate the environmental requirements on suppliers and products to the suppliers, a web site called Miljöwebben, “The Environmental Web” (http://www.inkop- miljo.skanska.se) has been established by Skanska Sweden. The purpose of the web site is to serve as a tool for management of environmental supplier evaluations. The supplier evaluations are used to ensure that the suppliers of Skanska Sweden are aware of and comply with legal requirements as well as Skanska Sweden’s minimum requirements on suppliers and their products. In addition, by giving suppliers an opportunity to comply with requirements beyond minimum requirements, and hence market themselves in terms of environmental aspects, the intention is to stimulate suppliers to develop environmental management and provide incentives for environmental excellence among our main suppliers. The result of the environmental supplier evaluation is then integrated into the total supplier evaluation performed by the purchasers, which also takes into consideration parameters such as economy, quality, time, technology and level of co-operation. As a result of the environmental supplier evaluation, the supplier will be placed in one of four categories of suppliers: Not Approved (level 0), Approved (level 1), Good (level 2), and Very Good (level 3). The questionnaire that is the basis of the evaluation is divided into three parts, of which all the requirements of the first part need to be met by the supplier in order to be approved.

The requirements of the first part mainly aims to secure compliance with environmental and occupational health legislation, and that the supplier complies with minimum Skanska requirements such as at-source waste separation at project sites, that products sold do not contain restricted substances and that the supplier will identify products that contain hazardous substances that Skanska has decided to phase-out. To become a supplier evaluated as Good, all the requirements of the second part of the questionnaire have to be fulfilled. These requirements entail for example that suppliers must work according to established environmental policy, targets and programs, which are followed up by documented internal audits. It is also required that environmental information in the form of Building Product Declarations is supplied for delivered products. To become rated as Very Good, for example means that the supplier needs to have implemented a certified environmental management system, that the supplier has in-house environmental specialists as well as reference projects with high environmental profile, and that the supplier provides products that fulfil criteria of environmental labelling where applicable.

The supplier answers the questionnaire on-line. The evaluation is later performed by an editor of the web-site, which is associated with the Environmental Unit of Skanska Teknik. The result is then communicated to the purchaser at Skanska that is the contact of the supplier. If requirements are not met, the purchaser has to support the supplier to improve in order to continue to co-operate. Otherwise, an alternative supplier has to be identified. The supplier can at anytime enter the web-site using his unique user name and pass word, and update his questionnaire. The supplier is able to view the result of the evaluation of his company, but not of the competitors. The latter information is only available when logged on as a Skanska employee.

The Environmental Web makes it possible to communicate general requirements and principles to a larger number of suppliers, as well as giving them an entry to ask questions regarding the requirements. At present, more than 700 prioritised suppliers have been evaluated through the Environmental Web, of which approximately 80% has been graded as Approved, 10 % Good and 1% Very Good suppliers. The information provided on the Web by the suppliers, is then used as a basis for a discussion of the suppliers’ environmental performance held in the regular follow-up meetings held between Skanska purchasers and the suppliers.

3. PRODUCT EVALUATION AND COMMUNICATION The Skanska in Sweden Product Evaluation Method has a strong focus on contents of hazardous substances in chemical products and other building products used in construction. The basis of the Evaluation method is the chemical substances lists, consisting of the List of Restricted Substances, the List of Phase-out Substances, and the Surveillance List. Further, the method also includes criteria for recommended products.

The List of Restricted Substances (“Förbudslistan”) is based on the Skanska Group list of five globally restricted substances, which for Skanska in Sweden has been extended to cover 15 groups of substances that are not allowed to be present in products purchased by Skanska in Sweden or any of its subcontractors. The restricted substances are primarily examples of substances which use is not in compliance with Skanska environmental policy or Swedish and international legislation.

The Skanska in Sweden List of Phase-out Substances (“Avvecklingslistan”) is a list of 24 substances, or groups of substances, that are to be phased out from products purchased in the Swedish Skanska companies. The selection of substances is based on an analysis of which substances that are to be phased out on a short-term basis due to their especially harmful environmental and health characteristics, and their relevance to the building sector in terms of volumes used. Also this list could be seen to constitute a list of examples of substances that are to be phased out, as the intention is not to replace them with not mentioned alternatives which possess the same negative characteristics.

Skanska Sweden has established an environmental target associated with the chemical lists, which entails that by the end of the year 2004 no phase out substances should be present in purchased products. An exception is made for brominated flame retardants, which has been selected as a priority issue and which should therefore be phased out by the end of year 2002. For products covered by central and regional purchasing agreements, the time table is more strict, and the target is set such that no substances on the phase out list should be present in products through central agreements by the end of year 2002. Other examples of substances present on the phase out list are phthalates, cadmium, mercury, lead, chlorinated paraffines and nonylphenoletoxylates.

The Surveillance List (“Bevakningslistan”) is a selection of substances that is given special attention due to their negative characteristics from an environmental and health perspective, but are for different reasons not currently selected for phase-out. Still, it is considered preferable to choose a product that does not contain any substances on the surveillance list than one that does.

In order to enable all parts of the organisation to comply with the product requirements and to be able to select products that do not contain phase out substances, two database tools have been developed: “The Chemical Database” (Kemdatabasen) and “The Environmental Database for Building Products” (Miljödatabas Byggvaror). The Chemical Database is available on the intranet and consists of more than 5000 evaluated chemical products used in Skanska in Sweden and their Material Safety Data Sheets (MSDS). Only products that have been subject to purchases are included.

All chemical products that are to be purchased or used within Skanska in Sweden have to be evaluated in the Chemical Database. If someone in the organisation intends to use or purchase a product that is not evaluated, the product’s Material Safety Data Sheet is to be sent to the local environmental co-ordinator that performs an initial screening of the information and secures that the Data Sheet reaches the editor of the Chemical Database. The editor is an environmental specialist working at the Environmental Unit of Skanska Teknik, and who performs the evaluation of the product based on the chemicals lists. A product that contains substances on the List of Restricted Substances is labelled as “Forbidden”, products that contain substances on the List of Phase-Out Substances receive the grade “Phase-Out”, and products that contain substances on the Surveillance List are evaluated as “Approved under Surveillance”. Products that do not contain any substances listed are simply “Approved”. Finally, certain criteria for products that are recommended, such as products with an official eco-label, are considered as “Skanska’s Environmental Choice”. If the quality of the information in the Material Safety Data Sheets is to poor, which is a decreasing but still common problem, this will also be a criterion for valuing a product as “Phase Out”. The latter has been an important driver for improved quality of provided information.

Figure 1 The Skanska in Sweden Chemical Database

The Chemical Database is equipped with a search engine, where products can be searched based on product name, supplier name or product type. Further, advanced searches based on for example substances, valuation, and date of Material Safety Data Sheet, can be performed in combination with other parameters. With each product item in the database, the associated Material Safety Data Sheet is available in digital format. The evaluation of the product is also followed by an explanation where the reason for giving the product as certain grade is given.

An important function of the database is also the possibility to establish and maintain site specific registers of chemicals used. Such registers are required by law, and keeping the register directly in the database is associated with many advantages. The register can be viewed by all persons associated with the project, and the right to update the register can be given to as many persons as is considered relevant. Links to Material Safety Data Sheets is placed directly in the database, and when the project is finished it is a simple task to save the register to a disk or CD and hand it over to the contractor - who is in a simple form given complete files of all chemical products used in the construction of the building.

Also, keeping site registers of chemicals in a common database provides a useful opportunity to get an overall picture and statistics of chemicals used in the organisation and assessments of how well this use corresponds to the set environmental targets and requirements.

Table 1 Chemical products in the Skanska in Sweden Chemical Database 2001 2000 Total number of evaluated products 4749 3184 Skanska’s Environmental Choice 71 40 Approved 2249 1415 Approved under surveillance 1540 956 Phase Out 878 765 Forbidden 11 8

As a complement to the Chemical Database, also The Environmental Database for Building Products is available on the intranet. This database consists of more than 700 evaluated complex building products (not chemical products) and associated Building Product Declarations. The database is used to provide evaluations and environmental information for such products that are not classified as chemical products, and thus are not covered by the legal requirements concerning Material Safety Data Sheets. Instead, the Swedish Building Sector has agreed on a common format for voluntary Building Product Declarations that are to be supplied with all building products.

Building Product Declarations contain environmental information such as material contents, resource use during production and use, end-of-life management, indoor emissions, and similar. These Building Product Declarations are used as the basis for evaluation of products such as flooring, insulation, and windows. The number of Building Product Declarations on the market is still limited. Similar to the Chemical Database, it is the organisation that supplies the database with its contents, and by doing so also makes the results of one project’s efforts available to all the rest of the Skanska projects.

4. FUTURE REQUIREMENTS ON SUPPLIERS AND PRODUCTS Several different trends that will effect the way suppliers and products are evaluated in the future can be observed. Firstly, it is likely that the increasing focus on corporate social responsibility, in combination with the increasing globalisation of the construction supply chain, will mean that the concept of environmental supply chain management will be broadened. Supplier requirements will to a larger extent also cover aspects such as human rights, business ethics and occupational health. This fact provides new challenges in terms of formulating, communicating and auditing such requirements.

Another development that is expected is an increasing complexity of product requirements. When it comes to requirements on product contents and use of chemical substances, the future development will require more knowledge on behalf of the suppliers. Focus will shift from phase out of a selected numbers of substances, to restrictions on all substances with certain undesired characteristics (such as carcinogenic, hormone disruptive, persistent and bio- accumulative substances). This will ensure that substances are not replaced by alternatives that are worse. It will also force producers to charge an overall responsibility to gain knowledge about the substances present in their products and to assess the characteristics associated with these. The development is also in line with the direction of future demands from the authorities concerning use of chemical substances, as pointed out in policy documents from the Swedish Parliament as well as the European Union. In order to enable also smaller market actors to comply with such requirements, it will be necessary to continue to provide both suppliers and members of the Skanska organisation with tools that in a simple way communicates which products that fulfil the criteria.

For other product groups, where the environmental aspects are not associated primarily with material contents, an increasing focus is expected in terms of other product characteristics associated with our significant environmental aspects, such as suppliers’ end-of-life management of products. The challenge here is to develop and communicate requirements that are targeted towards specific prioritised product groups. It is likely that a high degree of co-operation with the main suppliers concerning relevant requirements to be met will be part of the development. Demands will thus grow more complex, but also more specific and targeted.

5. CONCLUSIONS Early on in the process of introducing environmental supply chain management at Skanska in Sweden, it became evident that it is important to provide supporting tools that enable the non- specialist to make environmentally sound choices of suppliers and products. As a consequence, Skanska in Sweden has developed a set of web-based databases that function as tools for evaluation and communication. The experiences of using the databases where environmental information of products used is provided, together with an evaluation against the product requirements at Skanska performed by a specialist, have proved that it is a successful way of empowering the members of the Skanska organisation. The databases have a high frequency of use, and are considered a simple way to secure that minimum requirements are met at the same time as more complex information for use in risk minimisation at specific project sites is provided in an accessible form.

The trends in future development of supplier and product requirements points towards a direction where requirements will become more complex in terms of what knowledge is required by the suppliers. However, requirements will also become more specific and targeted towards identified groups of prioritised product groups, that are considered relevant based on their influence on Skanska’s significant environmental aspects. In order not to exclude smaller suppliers from the market, it will be necessary to continue the development of tools that communicate complex requirements in a way that is simple enough for all to use.