CSR Report 2016

Number of injuries reduced by 36% from 2015 to 2016

Improved CDP score to A- CONTENTS

3 Introduction by the President and CEO 4 This is Veidekke 10 Veidekke’s CSR management system 12 Stakeholder engagement 14 Occupational health and safety 18 Environment and climate change 24 Ethics and compliance 26 Suppliers and work on professionalism 28 The people at Veidekke 32 Report parameters 33 GRI Index CSR REPORT 2016 VEIDEKKE ASA 3

INTRODUCTION BY THE PRESIDENT AND CEO

One of Veidekke’s strategic goals is to be a leader in the industry in the area of sustainability. This means that we must be able to deliver products, services and solutions that balance considerations between economic growth, people and nature in a better way than today.

Sustainability and competitiveness are becoming ever more Occupational health and safety is an integral part of our closely connected. Customers, owners, employees and part- operations. We cannot view this in isolation, because good ners will choose companies that have the capacity to operate occupational health and safety is closely associated with profitably based on the principles of sustainability. One factor good production and the ability to deliver as agreed. Good is innovation and long-term perspective in our product portfo- and safe production are two sides of the same thing. Our lio. This is about which materials, machinery and equipment most important occupational health and safety goal is to enter we use in all our production, whether it involves residential 2020 with zero serious injuries. We have an annual target of construction, civil engineering activities, road surfaces or a 20 per cent reduction in the overall number of injuries. We product development. have managed to reduce the number of serious injuries by Another factor is the reduction of greenhouse gas emis- half in the last two years, and we are now preparing concrete sions. We have committed to meeting the UN’s two-degree measures and plans of action to achieve the target of zero target. Such targets help us live up to both external and serious injuries in 2020. internal requirements and expectations. A third factor is the Veidekke has grown a great deal in recent years. In 2016, corporate social responsibility we have as an employer. We we rounded a milestone with revenue in excess of NOK 30 will create safe and secure workplaces in which the rules of million. This is 70 per cent more than six years ago. Our busi- working life are observed, and where we ensure that our own ness areas have invested a great deal of work in ensuring that internal guidelines for safety and ethics are complied with by greenhouse gas emissions will not increase in step with the both our own employees and our subcontractors. Altogether, growth in revenue, and it is very gratifying to see that this is these factors give us a boost as a sustainable company with no longer the case. We were given a score of A- in the inter- good, safe and profitable operations. national investor survey on climate change, CDP, in 2016. This The construction and civil engineering industry is associated is our best score to date and above the Nordic average. We with high consumption of resources, substantial emissions are proud of this, but we know that we still have a significant and a high risk of injuries and accidents. In addition, unpro- potential for improvement. fessional actors and financial crime have been uncovered. Our obligation to meet the UN sustainability targets will The industry has a joint responsibility to prevent this, and provide the framework for Veidekke’s sustainability efforts in Veidekke, as Norway‘s largest and Scandinavia’s fourth largest 2017. We will clarify which goals we will assume a particular contractor, has a special responsibility to do so. Therefore, responsibility for and ensure that we contribute to the areas we have assumed the role of an advocate in the industry in which we have the greatest prerequisites for making pos- in order to improve safety and counteract unprofessional itive changes. conduct and crime. In order to ensure better control of our building sites, we prequalify and permit a maximum of two levels of subcontractors. Everyone who works with or for us must also comply with our ethical guidelines. A mandatory e-learning programme in ethics was launched in 2016, and in the course of the year, nearly half of our employees completed the training. In 2017, we will take new and important steps to improve our management systems in the area of ethics and Arne Giske compliance with rules. President and CEO 4 CSR REPORT 2016 VEIDEKKE ASA

THIS IS VEIDEKKE

Veidekke is one of Scandinavia‘s largest construction and This participative approach helps ensure good solutions and property development companies. The company undertakes results, good, safe operations, and continuous learning and all types of building construction and civil engineering improvement, as well as fostering loyalty and commitment. contracts, develops residential projects, maintains roads, and produces asphalt and aggregates. In 2016 Veidekke had Our most valuable resource is our employees and their revenue of NOK 30.1 billion and 7,400 employees. Veidekke expertise, and we therefore attach importance to targeted is listed on the Oslo Stock Exchange, and a large proportion skills development and recruitment of new staff. of the employees are shareholders in the company. Multi-local strength is generated through our widespread The company is organised into three business areas: presence in Scandinavia. Veidekke has strong local roots Construction, Property Development and Industrial, with and proximity to customers, at the same time as we have strong intra-group synergies. Veidekke is a specialised, both the size and the expertise to be able to undertake competence-based company that carries out projects in large, complex projects all over Scandinavia. collaborative interaction with its customers and suppliers.

REVENUE PROFIT BEFORE TAX PROFIT MARGIN 30.1 1.5 4.8% NOK BILLION NOK BILLION

REVENUE PROFIT BEFORE TAX AND PROFIT MARGIN NOK BILLION NOK MILLION AND %

35 1 600 5

30 1 400 4 25 1 200 1 000 20 3 800 15 600 2 10 20.5 21.2 23.9 24.5 30.1 680 776 967 1 043 1 460 400 1 5 200 0 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

Profit before tax Profit margin

The figures are taken from the segment accounts. CSR REPORT 2016 VEIDEKKE ASA 5

GEOGRAPHICAL DISTRIBUTION

REVENUE BY COUNTRY NUMBER OF EMPLOYEES

Norway 5 172 Sweden 1 714 6% Denmark 513 31% 63%

Norway Sweden Denmark

REVENUE DISTRIBUTED BY BUSINESS AREA

51% 25% 11 % 13% BUILDING CIVIL ENGINEERING PROPERTY INDUSTRIAL CONSTRUCTION DEVELOPMENT 6 CSR REPORT 2016 VEIDEKKE ASA

BUSINESS AREAS

CONSTRUCTION OPERATIONS

Veidekke is engaged in nationwide building construction and business area Construction’s total revenue in 2016. civil engineering activities in Norway and Denmark, while Civil engineering operations accounted for 31% of the operations in Sweden are concentrated in the largest cities. revenue in Veidekke’s construction operations in 2016. Transport Construction operations accounted for 76% of Veidekke’s infrastructure projects (road and rail) and other public infra- revenue in 2016. structure provide the majority of Civil Engineering’s revenue. Building Construction builds commercial buildings, public The portfolio also includes projects in the energy sector and buildings and residential buildings. Commercial buildings are other industrial facilities. mainly office buildings, shopping centres and hotels. Public buildings are primarily schools and health-care buildings. Building construction operations accounted for 69% of the

REVENUE NOK 24.6 BILLION PROFIT BEFORE TAX NOK 804 MILLION PROFIT MARGIN 3.3%

25 1 000 3.5

3.0 20 800 2.5

15 600 2.0

1. 5 10 400 16.3 1 7. 0 18.5 19.8 24.6 497 446 549 644 804 1. 0 5 200 0.5

0 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

Profit before tax Profit margin CSR REPORT 2016 VEIDEKKE ASA 7

PROPERTY DEVELOPMENT

Veidekke’s property development operations purchase sites In Sweden Veidekke is generally the sole owner of residential and develop them into residential buildings for sale to end projects, while in Norway most of the projects are done in joint customers, primarily in the largest cities in Norway and ventures with other partners. The choice of business model is Sweden. Veidekke’s construction operations are responsible assessed individually for each project, and the project’s scope, for the construction of the residential buildings and are invol- risk and financing are the decisive factors. ved from the earliest phase, before the site has even been Property Development has a long-term perspective. It takes purchased, to ensure identification of opportunities and risks. several years from a site being purchased to the home being The close collaboration between Veidekke’s property develop- handed over to the buyer. For this reason, the land bank is ment and construction operations provides synergies and is strategically important, and the portfolio is optimised through central to good profitability in Veidekke’s residential segment. purchases and sales in accordance with the current strategy. At The development of residential buildings constitutes 11% of year-end 2016 the Group’s had a land bank that is expected to yield Veidekke’s total revenue. 16,750 residential units: 7,900 in Norway and 8,850 in Sweden.

REVENUE NOK 3.2 BILLION PROFIT BEFORE TAX NOK 567 MILLION RETURN ON INVESTED KAPITAL 21.4%

3.5 600 21 3.0 500 18 2.5 15 400 2.0 12 300 1. 5 9 200 1. 0 2.1 1. 8 2.3 2.1 3.2 6

0.5 100 173 220 280 306 567 3

0 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

Profit before tax Return on invested capital 8 CSR REPORT 2016 VEIDEKKE ASA

INDUSTRIAL

Veidekke Industri AS (Industrial) is the largest asphalt contractor The business area Industrial has 29 asphalt plants and 28 in Norway and the second largest producer of aggregates. quarries located across Norway. In 2016 the company laid Industrial is also a major player in the operation and maintenance more than 2.5 million tonnes of asphalt, had 24 ongoing of public roads in Norway. In 2016 Industrial accounted for road maintenance contracts, and sold 8.1 million tonnes of 13% of Veidekke’s total revenue. aggregates. The Norwegian Public Roads Administration is Industrial’s revenue for the 2016 financial year is distributed Industrial’s largest single customer. between the three business units as follows: Asphalt 59%, Road Maintenance 28% and Aggregates 13%.

REVENUE NOK 4.2 BILLION PROFIT BEFORE TAX NOK 136 MILLION PROFIT MARGIN 3.3%

5 250 5.5 5.0 4 200 4.5 4.0 3.5 3 150 3.0 2.5 2 100 2.0 3.2 3.5 4.1 4.0 4.2 158 210 190 136 1. 5 1 50 1. 0 38 0.5 0 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

Profit before tax Profit margin

10 CSR REPORT 2016 VEIDEKKE ASA

VEIDEKKE’S CSR MANAGEMENT SYSTEM

Increasing requirements and demands for sustainable solutions affect the way that Veidekke works and thinks. Veidekke shall be an industry leader in the area of sustainability, and therefore work in the area of sustainability and corporate social responsibility is integrated into the company’s management model and strategy towards the year 2020.

The Veidekke model communication. Occupational health and safety and financial Corporate social responsibility is a key topic of Veidekke‘s busi- figures are reported monthly to the corporate management, ness strategy for 2017-2020. Corporate social responsibility is a while other figures in the area of corporate social responsibility Board and corporate management responsibility. are reported annually to the corporate management, the Board The corporate management‘s role is to identify common and the owners. Goals and measures are prepared in the various needs across the Group, determine a common direction, and businesses, which together with common activities across the coordinate and follow up initiatives. They do this jointly with Group shall contribute to meeting the Group’s primary goals These experts who are responsible for the key areas of corporate are discussed in detail in the relevant chapters of this report. social responsibility: occupational health and safety, human Veidekke‘s organisational model gives the managers a high resources, the environment, procurement, legal compliance and degree of autonomy at the local level, but a clear duty to work CSR REPORT 2016 VEIDEKKE ASA 11

in accordance with Veidekke‘s core values and frameworks. A Priority areas separate compliance group has been established with represent- In 2015, Veidekke conducted a materiality assessment to survey atives from each of the business areas. This group is responsible the areas of corporate social responsibility that customers, owners, for ensuring that compliance with regulations is coordinated and authorities, and environmental and industrial associations felt tha identical throughout the entire organisation. t the company should focus on. As part of this assessment, 30 The “Veidekke House” builds on the company’s four core different topics related to the environment, society and ethics values: professional, honest, enthusiastic and ground-breaking, were ranked by the stakeholders. In addition, the management and these form the foundation for value-creating partnerships and relevant experts have assessed the topics that must be given between Veidekke’s employees, customers and suppliers. The greater focus so that Veidekke can reach its strategic goals. The Veidekke House is also the starting point for our ethical guide- nine most important areas are listed in the figure below. lines, which provide guidance for our daily work. The ethical Veidekke is a major purchaser of goods and services. Our guidelines cover important topics such as health and safety, the suppliers thus play a very central role in the company’s ability to environment, anti-corruption and correct market behaviour. It is achieve its objectives within the priority areas. For this reason, all the responsibility of the business units to ensure that they all the topics are relevant to both Veidekke’s own operations and to comply with the guidelines and rules. the suppliers. This materiality assessment also forms the basis for the topics covered in this report.

INTERNATIONAL STANDARDS THE VEIDEKKE HOUSE IS BOTH A SYMBOL OF Through a global framework agreement with the trade unions AND A GUIDELINE FOR OUR WORK and Building and Wood Workers International, Veidekke has committed to respect workers‘ rights and to work for continuous improvements in the areas of working conditions, VALUE-CREATING PARTNERSHIP industrial relations, health and safety in the workplace, and the environment. Under this agreement, Veidekke undertakes to comply with the following international standards: • The ILO Declaration on Fundamental Principles and Rights at Work. •

The OECD Guidelines for Multinational Enterprises. SUPPLIERS EMPLOYEES CUSTOMERS • The United Nations Universal Declaration of Human Rights. MANAGEMENT For more information on the framework agreement and the

international standards, see: PROFESSIONAL – HONEST – ENTHUSIASTIC – GROUND-BREAKING http://veidekke.com/no/foretaksstyring/csr/article8642.ece

VEIDEKKE‘S PRIORITY TOPICS WITHIN CORPORATE SOCIAL RESPONSIBILITY

VEIDEKKE

ENVIRONMENT PEOPLE SOCIETY Greenhouse gas emissions Safety Ethics Hazardous substances Working environment Anti-corruption Contaminated land Labour rights Competition, irregularities

VEIDEKKE‘S SUPPLIERS 12 CSR REPORT 2016 VEIDEKKE ASA

STAKEHOLDER ENGAGEMENT

CU S ST ER O N M E W R O S

VEIDEKKE’S

STAKEHOLDER

CIRCLE

A E

N M P / D L Y S O T Y U Y E R E CI T PP ES O S L S U IER ND S I

Veidekke is a competence-based company that acquires and carries out projects in partnership with – and with the involvement of - customers and suppliers, which creates good solutions and results. This approach characterises Veidekke and will be increasingly important to our future development.

Good, safe operations and continuous learning and improvement in the development and execution of the projects. are achieved through a participative approach. Our participative The company’s operations affect the daily life of many people. approach creates a sense of belonging and engagement, and as This may be as an employer, supplier or customer, or through a result, our employees are satisfied on the job and contribute work in the local communities where the company has projects. to a common effort to realise Veidekke’s ambitions and goals. Veidekke therefore aims to maintain dialogue with the parties Employee co-ownership makes an additional contribution to cre- that in some way or other are affected by the company’s opera- ating a sense of belonging, engagement and active involvement. tions. The Group collaborates with industrial associations, trade Veidekke’s ambition is to be the leader in the industry in unions and special interest organisations. In addition, customers value-creating partnerships. Our deliveries shall meet or exceed and local communities are involved through dialogue meetings, the customer’s expectations, in addition to utilising and devel- project websites and social media. Constructive dialogue with oping the expertise of our employees and suppliers. Being the stakeholders provides Veidekke with the opportunity to solution-oriented means that the focus is on the customer in identify challenges early on and thereafter find the most sus- all commercial relationships, and that the customer is involved tainable solutions. CSR REPORT 2016 VEIDEKKE ASA 13

The table below summarises the main stakeholders, the topics they are concerned about and how Veidekke has responded.

What topics are the Stakeholders stakeholders concerned about Arena for dialogue Veidekke’s follow-up

Owners Good corporate governance – Quarterly presentations. Information about our work on sus- and how Veidekke sets goals and tainability. Meetings with investors and investment guidelines in these areas. and analysis communities.

Employees Desire good information on the Daily dialogue with managers. Annual per- Involvement through the line manage- status and development of the formance appraisals, general meetings, ment and through internal channels, company. involvement of employee representatives such as the intranet and in-house through the Board and in various forums. magazine. Standard introduction programme for new employees.

Customers Desire dialogue to discuss chal- Customer meetings, seminars and events, Customer surveys, customer inter- lenges and opportunities that such as Veidekke‘s collaboration conference views, customer dialogue in projects arise in collaboration with Vei- and the MIPIM international property fair, as and focus groups. dekke, both in general and in well as individual meetings in the projects. Participation in professional and indus- each individual project Online channels for dialogue with try forums as well. residential customers.

Suppliers Collaboration on health and Dialogue meetings and participation in Involvement of suppliers from an early safety and professionalism. industry forums. stage to ensure optimum collabora- Ensure good, professional tion and safety. suppliers. Prequalification through StartBANK.

Local and Efforts to promote more efficient Participation in industry forums and our Placing important problems on the central development processes and own events: Arendal Week (Norway), agenda and participating in public authorities more efficient planning Almedalen Week (Sweden). debate on increased residential con- permission processes in Norway. struction, professionalism and perma- Contact with politicians and the authorities nent employees. Influencing the framework through the Confederation of Norwegian conditions and financing for Enterprise (NHO), via the Federation of Nor- increased residential construction wegian Construction Industries (BNL) and in Sweden. the Norwegian Contractors Association (EBA) in Norway. In Sweden and Denmark, Veidekke is involved in similar work through the Swedish Construction Federation (BI) and the Danish Construction Association (Dansk Byggeri). Dialogue meetings and par- ticipation in local and regional forums (urban development), as well as direct dialogue with local authorities on individual projects.

The Collaboration within the industry Dialogue meetings and participation in Binding safety charter for the con- construction to improve safety and profession- industry forums and committees. struction industry with a vision of zero industry alism. injuries. Tools and expertise of the member companies in the Norwegian Contrac- tors Association (EBA) for climate and energy efficiency.

Society Local effects of Veidekke‘s Membership organisations, industry Active participation in public debates operations (workplaces, noise, forums, open meetings and public consul- and advocacy work towards politicians, environmental impacts). Ensure tations. for example in efforts to increase profes- that Veidekke‘s strategy is in line sionalism in the construction industry. with the authorities’ objectives, Collaboration with the environmental in the environmental area, for organisation ZERO on fossil-free build- example. ing sites. In 2015, Veidekke committed to meeting the UN’s two-degree target. 14 CSR REPORT 2016 VEIDEKKE ASA

OCCUPATIONAL HEALTH AND SAFETY

Construction and civil engineering are one of the industries with the most serious accidents. Therefore, Veidekke’s principal goal in the area of occupational health and safety is “zero serious injuries”. Systematic efforts to achieve this goal have resulted in a reduction in the number of serious injuries by more than half.

In 2015, the management defined six priority areas for achieving Prevention of sickness absence is a high priority, and good rou- the goal of zero serious injuries (see the illustration below). tines have been established for close follow-up of employees In 2016, all the business areas prepared strategy and action on sick leave in order to facilitate their prompt return to work. plans based on these guidelines, which are to be carried out Sickness absence was 3.7 per cent, down from 3.9 per cent going forward towards the year 2020. An example of the meas- the previous year. The rates for the individual countries were: ures that will be implemented is the training of managers in Norge 3.9 per cent (4.2 per cent), Sverige 3.9 per cent (3.6 per “Safety Interviews”, an important tool for communicating safety cent) and Denmark 1.6 per cent (1.9 per cent). This is below the work to on-site production. Other examples are to improve industry average in Norway and Denmark, but slightly higher than processes so that more risk is eliminated as early as possible the average in Sweden. Differing regulations make it difficult to in the planning phase, and that subcontractors are involved to compare the sickness absence figures between the countries. an even greater extent in safety work. Workers on construction sites are exposed to health risks In 2016, Veidekke registered a 36 per cent decrease in the caused by heavy physical labour, repetitive movements, noise number of serious injuries, while the total number of injuries and dust. To reduce the likelihood of strain injuries we are taking rose by 26 per cent. The increase is attributed to an increased specific steps to avoid prolonged static work and ensure good number of injuries reported by subcontractors. Among Veidekke’s planning so that unnecessary lifting can be avoided. Hearing own employees, the total number of injuries in 2016 was the impairment is also a common problem in the construction same as in 2015. A total of 344 injuries were reported. A total of and civil engineering industry, which can only be avoided 47 per cent of the injuries were incurred by our own employees by preventing employees from being exposed to hazardous and 53 per cent were incurred by subcontractor employees. noise. To reduce the probability of this, the corporate health The LTI-1 rate (lost-time injuries among own employees per million hours worked) was stable in 2016 at the same rate as in TOTAL NUMBER OF INJURIES 2015. The LTI-1 rate is somewhat higher in Sweden than in the other countries. They have prepared strategy and action plans 400 going forward towards the year 2020, which are expected to 350 improve this result. 300 250 Sickness absence 200 Veidekke has low sickness absence relative to working life 150 in general and to the industry in particular. One of the most 100 important reasons for this is the high level of satisfaction. When 50 asked “Are you satisfied with your job”, the average score for the employees in Norway was 6 (on a scale from 0 to 7), while 83 0 2014 2015 2016 per cent of the employees of Veidekke Sweden responded that they look forward to going to work. The employees stated that Total number of injuries Serious injuries the reason for the high level of satisfaction are good colleagues, The figures include our own employees and a good working environment and exciting tasks. subcontractors working on Veidekke projects. CSR REPORT 2016 VEIDEKKE ASA 15

SICKNESS ABSENCE IN VEIDEKKE LOST-TIME INJURIES

5 15

12 4

9 3 6

2 3

1 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

Norway Sweden Denmark Group Norway Sweden Denmark Group

Sickness absence for the Group as a whole was 3.7 per Lost-time injuries among our own employees per cent, which can be broken as follows: Norway 3.9 per cent, million working hours (LTI-1 rate) Sweden 3.9 per cent and Denmark 1.6 per cent.

service prepared the campaign “One Bang Can Be Enough” advisory centre for issues relating to alcohol, drugs and to increase awareness of damage from mechanical noise. addictive gambling and gaming. Everyone who entered into A broad assortment of hearing protection has also been an AKAN agreement in 2016 is still employed. This proves that prepared to make it easier to find hearing protection that is Veidekke’s AKAN work is effective, with professional follow-up suitable for each individual in various work situations. that inspires motivation and provides good support. Veidekke offers employees with alcohol, drug or gambling addiction problems help through AKAN – the workplace

GUIDELINES FOR THE BUSINESS UNITS’ SAFETY WORK

PLANNING PRODUCTION EQUIPMENT Optimal framework conditions Effective and safe Safe and correct

TOTAL NUMBER OF INJURIES ORGANISATIONAL CONDITIONS

HUMAN CONDITIONS MANAGEMENT Clear and committing COLLEGIATE Care about each other

THE INDIVIDUAL Competence and a good attitude

IMPROVED STATE OF SAFETY 16 CSR REPORT 2016 VEIDEKKE ASA

TWOFOLD OBJECTIVE

PRIORITY 1 PRIORITY 2 0 20% Serious injuries in 2020 Annual reduction in number of injuries

Area Our ambitions Main targets for 2016 Target achievement 2016 Targets for 2017

Occupational Priority 1: Zero serious Specify more detailed All of Veidekke’s units have Continue the reduction to health and injuries by 2020 measures in all the units specified measures for achieve the goal of “zero safety with a view to achieving the achieving the goal of zero serious injuries” by 2020. Priority 2: Reduce the total goal of zero serious injuries. serious injuries. number of injuries by 20 per Reduction in the total cent per year. Reduce the number of The number of serious number of injuries by 20 per injuries by 20 per cent from injuries was reduced by 36 cent. More good working years 2015 to 2016. per cent from 2015 to 2016. for everyone Implement the plans for The total number of injuries measures that the increased by 26 per cent businesses prepared in from 2015 to 2016. 2016. CSR REPORT 2016 VEIDEKKE ASA 17

CASE: CARE - SPEAK UP!

Veidekke’s OHS week is arranged every year for our own employees and subcontractors. The aim is to increase awareness of selected OHS topics. The main topic for OHS Week in 2016 was “We report when we se opp! discover situations that can be hazardous”. The goal of the topic was to reinforce a culture in which the employees of Veidekke care about each other to an even greater degree. Stopp en halv! During the OHS Week, employees were to find words they could use to report, which everyone could use when they discover something that can result in a hazardous situation. The desire was for this exercise Forsiktig... to lower the threshold for reporting, increase the understanding of why we must report, increase understanding of when to report and give the employees training in how we should respond when others report to us.

Bry deg - si ifra! Uansett hvor du jobber i Veidekke, er det viktig å si ifra når du oppdager situasjoner som kan medføre skade.

Hvordan synes du vi skal si ifra til hverandre?

VEIDEKKE‘S 2016 OCCUPATIONAL HEALTH AND SAFETY AWARD

The renovation project Prinsens gate 26 in Oslo for the framework conditions in particular. The project distinguishes Storting received Veidekke’s OHS Award for 2016. “This itself by showing the importance of clear leadership in year’s winner is a role model for clear OHS leadership”, said achieving good safety conditions in a very challenging President and CEO Arne Giske at the award ceremony. renovation project”, Giske concludes. The project, Prinsensgate 26, encompasses renova- Occupational health and safety has the highest tion of the old office building at Prinsensgate 26, and the priority at Veidekke, and the Group’s OHS Award has construction of a new post and goods reception facility been handed out every year since 1997. The aim is to under Wessels plass. The project is referred to as one reward units, persons or projects that show a special of Norway’s most complex renovation projects ever, commitment to OHS, and to illustrate useful experience, “This project is a very good example of how OHS work ideas, knowledge of OHS for use in further development. should be carried out in general and under challenging 18 CSR REPORT 2016 VEIDEKKE ASA

ENVIRONMENT AND CLIMATE CHANGE

In November 2015 Veidekke committed to operating in accordance with the IPCC’s two-degree target. All the units are in the process of defining specific measures that will collectively help the company reduce its greenhouse gas emissions.

The construction and civil engineering industry is associated are linked to transport and machinery. Veidekke works with with a substantial impact on climate and the environment. both improving the efficiency of its machinery and testing The industry has a sizeable ecological footprint due to its high new energy carriers. consumption of energy and natural resources, high green- In 2015, Veidekke committed to operate in accordance house gas emissions, large volumes of waste and impact on with the UN target of a maximum two-degree temperature biodiversity. In addition, it is associated with large volumes increase by the year 2100. This is the critical limit for what of CO2 emissions relating to both supply chains and the use nature can withstand before climate change becomes serious of products. As a major actor in the industry, Veidekke has a and uncontrollable. The two-degree target entails a reduction particular responsibility and a substantial opportunity to make in global greenhouse gas emissions of at least 66 per cent in a difference – for society, customers and employees. 2050 compared with 2010. In recent years, customers have become increasingly In 2016, Veidekke emitted 80,648 tonnes of CO2 from more aware of the environmental properties of both products its own operations. This is a small increase relative to 2015. and production processes. Veidekke is therefore noticing an The increase is primarily attributed to the company’s revenue increased demand for projects with environmental qualities. growth of 23.3 per cent. Viewed in relation to revenue, however, At the same time, the authorities and investors are placing Veidekke has made significant improvements in CO2 emissions greater demands on reporting and transparency with respect from their own operations. Emissions have declined by 17 per to the company’s environmental impact and handling of cli- cent per million in revenue from 2015 to 2016. mate risk. Veidekke shall be a leading actor in the industry in the reduction of greenhouse gas emissions and protection GREENHOUSE GAS EMISSIONS IN TONNES OF CO of the environment. Our environmental strategy will focus on 2 making an effort where the impact is greatest, and where one can thus make the greatest contribution. For Veidekke, this 100 000 10 909 means a primary focus on three areas: energy consumption 7 410 6 534 and greenhouse gas emissions, environmental toxins and 80 000 hazardous substances, and materials and products. 60 000

Climate 40 000 Being the best in the environmental area means in practice that 75 965 71 467 74 114 Veidekke should be able to offer the customer climate-smart 20 000 and innovative solutions, and have, for example, expertise in construction using sold wood and the most important 0 2014 2015 2016 environmental standards, such as BREEAM, LEED, DNGB, Indirect Direct passive house, energy-efficiency class A, zero-energy buildings, energy-positive buildings and Nordic Ecolabel (“Svanen”). In The figure shows Veidekke‘s own greenhouse gas emis- 2016, Veidekke also entered into cooperation with the envi- sions based on current measurement methods. The fig- ronmental organisation ZERO regarding fossil-free machinery, ures are stated in tonnes of CO2 equivalents. See the since a large share of Veidekke’s greenhouse gas emissions method in the GRI Index. CSR REPORT 2016 VEIDEKKE ASA 19 20 CSR REPORT 2016 VEIDEKKE ASA

Each year, Veidekke completes the Carbon Disclosure Project as in 2015. This shows the impact of the environmental (CDP) investor survey, which charts the greenhouse gas emissions investments that have been implemented in 2016, with drier of companies and their strategies for reducing them. Veidekke’s aggregates and a transition to gas. The impact then shows score in 2016 was the company’s best ever (CDP2016: A-) and a 9.3 per cent reduction in greenhouse gas emissions per above the Nordic average across all sectors (C). tonne of asphalt produced. • Emissions from machinery shall be reduced by 40 per cent Adapted measures by 2030, and Veidekke Entreprenør (Construction) in Norway All the units of Veidekke are in the process of defining concrete is therefore testing electrical machinery and synthetic diesel measures that will contribute to the company operating in (HVO). These measures should satisfy the requirements for accordance with the two-degree target. The units within the fossil-free building sites. In one civil engineering project in Group are quite different and must therefore adopt different Bergen, two of the three concrete spraying rigs are elec- approaches to cutting greenhouse gas emissions, for example: trically operated. This reduces the CO2 emissions by nearly • The goal of Veidekke Industri (Industrial) is to reduce its 60 per cent. These rigs prove to function well in practice. climate impact by 5 per cent per year towards the year 2021. Other advantages are lower investment costs and a better Veidekke Industri (Industrial) also has a goal that 40 per cent physical working environment. of all asphalt production will be low-temperature asphalt by • Property Development in Norway has set a goal to reduce 2021. In 2015, an investment programme for environmental greenhouse gas emissions from their residential projects in measures was adopted, which will save energy and costs accordance with the two-degree target. The goal is to reduce and thereby reduce CO2 emissions. Among other things, emissions by 40 per cent by 2025, compared with an average several plants have established ceilings for aggregates/ building from 2010. The emission reductions will take place materials. In addition, 19 out of a total of 29 asphalt plants through the selection of climate-friendly materials, lower are now equipped to produce low-temperature asphalt. An emissions from energy consumption in the buildings and important new project in 2016 has been the transition to through solutions that affect the transport patterns of the pellets as a source of energy at two of Veidekke‘s largest end users. Veidekke Eiendom (Property Development) has asphalt plants. This will be completed by the start of the developed an apartment building in solid wood in Trondheim. season in 2017. As a result of this, the annual greenhouse CO2 emissions are reduced in this project by as much as 45 gas emissions from asphalt production at these factories per cent through the use of solid wood, low-carbon concrete according to Enova will be reduced by more than 8,600 and the passive building standard. tonnes of CO2, a reduction of more than 90 per cent. This • Veidekke Bostad (Property Development) in Sweden builds corresponds to approximately 10 per cent of Veidekke’s Nordic Ecolabel apartments, which have annual CO2 emissions total emissions in 2016. per apartment that have been reduced by approximately • In spite of a 10 per cent increase in the production of asphalt 1,000 kg CO2 relative to the current statutory requirements. from 2015 to 2016, the emission level is the same in 2016 • Hoffmann in Denmark has worked for a long time to strengthen its expertise in developing good environmental buildings, such as Frederiksbjerg Byggeriet. This is a new school for the Municipality of Aarhus with low energy class 2020 and VEIDEKKE‘S TOTAL CO2 EMISSIONS BY UNIT a comprehensive focus on sustainability. The school received “Årets Byggeri” award in 2016, an honorary national prize that is awarded to the best and most important building of the year based on its importance to the building trades and society. 0% • Veidekke Entreprenør (Construction) and Veidekke Industri 40% (Industrial) in Norway are ISO 14001 certified. Portions of

60% Veidekke Bygg (Construction) and Veidekke Anläggning (Civil Engineering) in Sweden have been certified.

Waste management Construction Norway has set a target of at least 70 per cent source separation in its projects and less than 40 kg of Construction Industrial Property waste per square metre of new buildings after demolition. Construction Sweden has set a target of at least 75 per cent Greenhouse gas emissions vary by unit due to their different activi- source separation in its projects and less than 10 per cent ties and sizes. Property Development accounts for 0.08% of the total emissions – decisions made by Property Development primar- of the waste it generates going to landfill. In 2016, the con- ily impact the CO2 emissions of the Construction business area. struction operations in Norway and Sweden source-separated CSR REPORT 2016 VEIDEKKE ASA 21

ENVIRONMENTAL ASPECTS THAT VEIDEKKE WILL PROTECT, PREVENT AND REDUCE

PROTECT PREVENT REDUCE

Emission and dispersion of Energy consumption and Indoor air quality pollutants greenhouse gas emissions

Hazardous substances, Recycling Waste volumes materials and products

Cultural heritage Noise from business operations

Nature, trees, plants Dust from business operations and animals

Landscape

approximately 90 and 77 per cent, respectively, of the waste hectares of owned land that might be contaminated and from construction, renovation and demolition. In 2016, roughly require assessment. 5 per cent of the waste in Sweden went to landfill, compared with 3 per cent in 2015. In Norway, waste per square metre Environmentally friendly buildings of completed new buildings amounted to 29 kg for 2016.. and urban development Veidekke is noticing a growing demand for eco-friendly Contaminated land products, and building construction projects with defined Contaminated land is a major environmental issue for all three environmental objectives are increasing in both scale and business areas in Veidekke. In the Industrial business area, it number. This includes, among other things, the energy rat- is particularly relevant in connection with sites where we have ing of buildings, passive house standard, BREEAM, LEED, had operations for several decades, because the regulations Nordic Ecolabel (“Svanen”), the Sweden Green Building and practices concerning the treatment of hazardous waste Council (Miljøbyggnad), the Norwegian Research Centre on have become more stringent over time. For the Property Zero Emission Buildings (ZEB), the Future Built programme Development business area, contaminated land is one of and fossil-free building sites. Property Development Sweden the main aspects we investigate when purchasing sites for now only produces Nordic Ecolabel homes. These properties residential development. The Construction business has the have low energy consumption, strict requirements regarding remediation of contaminated land as one of its business areas, the energy consumption of appliances, high requirements and it is extremely important to deal with the materials in the regarding airtightness and are constructed using materials correct way to prevent new contamination. approved by Nordic Ecolabel. In 2016, a total of around 300 In connection with entering into new leases or purchase Nordic Ecolabel apartments were released to the market in agreements, Veidekke requires that the lessor/seller disclose Malmö, Gothenburg and Stockholm. information about any known contamination. Grounds surveys are carried out if and when required, i.e. if contamination is Environmental competence and innovation suspected or if the buyer or owner of the site so requires. In To meet current and future needs, Veidekke is working to 2016, the Industrial business area in Norway cleaned up 0.8 improve its environmental competence internally within the hectares of “potentially contaminated land” in Kirkenes on company. This is accomplished through courses under the owned land. Moreover, industrial operations in Norway have direction of the Veidekke School, and certification of employees identified 13.5 hectares of owned land and 18.5 hectares for BREEAM, CEEQUAL and the Nordic Ecolabel (“Svanen”), of leased land that require remediation. There are also 22.3 among other things. 22 CSR REPORT 2016 VEIDEKKE ASA

In 2016, Veidekke established the “Environment and Civil of Norway, to find models and techniques to extend the life Engineering Department” for the sale of environmental ser- of concrete structures. vices. The primary aim of this department is to sell expert • Testing of various materials and combinations of materials for services and solutions to Veidekke’s projects, for example use in asphalt. The aim is to extend the life of asphalt decks, in the area of BREEAM, environmental clean-up reports for which will be a positive contribution to the environment. buildings, waste management and downstream solutions. • Locally-sourced stone, a collaborative project between In addition, the department has expertise in the sampling, SINTEF, the Norwegian University of Science and Technology analysis and assessment of contaminated soil, ground water (NTNU), the Norwegian National Rail Administration and the and seepage water. City of Bergen. The project is supported by the Research Council of Norway and will seek to ensure better and coor- Veidekke is involved in a number of research and development dinated use of aggregates and surplus materials from civil projects in the environmental area, and some examples of engineering projects. these are given below: • The Industrial business area is developing an environmental • The EBLE research project (evaluation of housing with low product declaration calculator for the asphalt industry in energy consumption). collaboration with the Norwegian Contractors Association • Byggande för framtida ändrat klima (Building for Future Climate (EBA) and the industry. This will be completed in the spring Change), a project in cooperation with the Development of 2017. Fund of the Swedish Construction Industry (SBUF). • In Norway, Veidekke has several projects that have been • Durable Advanced Concrete Solutions (DaCS), design and submitted for consideration and approval by the Research construction for coastal and Arctic regions, a project in Council of Norway. cooperation with Kværner, financed by the Research Council

Area Our ambitions Main targets for 2016 Target achievement 2016 Targets for 2017

Environment To be a leading actor in our In order to ensure that oper- A number of initiatives have Further specification of the and climate industry in the reduction of ations are conducted in line been introduced in the reduction targets for the change greenhouse gas emissions with the two-degree target, units. various units. and protection of the all the units will now con- Examples of specific Examples of reduction environment tinue working to define con- initiatives: targets: crete measures. Testing of electrically The Industrial business area operated concrete spraying has set a target of a 5 per rigs cent annual reduction in greenhouse gas emissions. Adaptation for use of pellets in two asphalt plants. The Property Development business area in Norway Initiated cooperation with has set a target to reduce Zero to accelerate the greenhouse gas emissions transition to fossil-free from their construction machinery. projects by 40 per cent by Implemented climate 2025, then in comparison change-reducing measures with a benchmark building. in a number of concrete The machinery department projects. shall reduce its emissions Improved our expertise in by 40 per cent by 2030. climate accounting and the CEEQUAL environmental classification CSR REPORT 2016 VEIDEKKE ASA 23

SUSTAINABLE DEVELOPMENT OF THE NEW GREEN LILLEBY DISTRICT IN TRONDHEIM

The Lilleby smelting plant will be transformed from a project that started in 2013 in collaboration with Fesil heavily contaminated area to a new lush green district Invest and Labek Eiendom. with around 1,100 new residential units. Veidekke The project required extensive environmental soil Eiendom (Property Development) has been responsible surveys, environmental clean-up and a good dialogue for the demolition and remediation of the land for the with and disclosure of information to neighbours. “We acknowledge that participating in such large urban development projects requires a great deal of us, but it is important for us to be able to accept corporate social responsibility. New Lilleby will be ‘green’ in several ways. The project is located in existing infrastructure where public transportation services function well, it is close to the city centre and there are green lungs in the immediate vicinity”, says Pål Aglen, Regional Director of Veidekke Eiendom. The environmental perspective is expressed in different ways at Lilleby. Among other things, Veidekke will be constructing the largest residential project built in solid wood for the commercial residential housing market. The consumption of concrete will be reduced by 450 tonnes in connection with the foundation work. The use of solid wood will reduce the emission of CO2 by 36 per cent. If low-carbon concrete and other materials with a low-carbon footprint are also selected, the total reduction will be around 45 per cent compared with a corresponding apartment building built with concrete.

VEIDEKKE‘S SCANDINAVIAN ENVIRONMENTAL AWARD FOR 2016: MOHOLT 50I50, TRONDHEIM

Veidekke’s Scandinavian Environmental Award is given to a unit, group or project that demonstrates a special commitment to the environment. A solid wood project at Moholt in Trondheim won the award for 2016. “This is a pioneering project both environmentally and structurally. The outcome is more than 600 beautiful student accommodation units and a day care centre with very low energy consumption and a reduction in the greenhouse gas emissions by half. In addition, the construction process has been very short and effective”, said President and CEO Arne Giske when he handed out the award. 24 CSR REPORT 2016 VEIDEKKE ASA

ETHICS AND COMPLIANCE

Veidekke’s employees regularly encounter ethical challenges and dilemmas. It is therefore important that everyone identifies with, understands and adheres to laws and the company’s values and rules. CSR REPORT 2016 VEIDEKKE ASA 25

Veidekke operates primarily in Scandinavia, where social and In 2017, Veidekke will take new and important steps to business life are well-regulated and controlled. At the same improve the management system in the area of ethics and time, both society and our industry face challenges from unpro- compliance. The entire management system will be reviewed fessional actors. As one of Scandinavia’s largest construction and updated. A designated managerial role for the area will and property development companies, Veidekke has therefore be established, as well as a uniform model for compliance a responsibility to contribute to a society that puts honesty work that covers the entire Group. This work will be led by and integrity first. Veidekke’s compliance group. Veidekke should be characterised by wise choices. This means that all employees should make choices that can with- Training and expertise stand public scrutiny and are based on the principle of equality. The company’s most important measure for ensuring compli- We shall deal with similar matters in the same way and treat ance is the training and knowledge of all employees. Veidekke all people with the same fundamental respect. runs a number of courses and programmes in ethics and The rules and attitudes in society are constantly changing, compliance. All new employees at Veidekke must complete and Veidekke’s ethical guidelines must be in accordance with the company’s introductory course during their first three developments and what is expected by the world around us at months at the company. Ethics and compliance with internal any given time. In 2016, Veidekke’s compliance group has led and external laws and regulations are permanent topics of the work to revise Veidekke’s ethical guidelines and e-learning discussion there. In 2016, 475 new employees completed programme. The ethical guidelines define the principles for how the course. all employees shall behave. The guidelines apply to everyone The “Integrity Programme”, covering topics such as corrup- who works in and for Veidekke, and everyone has a duty to tion, fraud and fair market conduct, was the Veidekke School’s familiarise themselves with and adhere to the ethical guidelines. most important ethics training programme in 2015. In 2016, Veidekke aims to have a corporate culture marked by open- 143 employees completed the course. ness and trust. Everyone shall have the right and opportunity The integrity programme has now been replaced by the to raise matters they are concerned about and shall be met e-learning programme “Wise Choices”, which encompasses with feedback in a constructive and respectful manner. The the company’s most important issues and dilemmas within company has routines for whistle-blowing in accordance with corporate social responsibility: occupational health and safety, the rules of the Norwegian Working Environment Act, which also climate change and the environment, the market and compe- includes an external ombudsman. There is detailed guidance tition, anti-corruption, and suppliers and professionalism. The on whistle-blowing procedures on the company’s intranet, and e-learning programme provides both guidance and exercises the ethical guidelines are available on Veidekke’s website. In in how ethical problems and dilemmas should be handled, the Industrial business area, and in the Swedish operations, an and it is mandatory for all the employees of Veidekke. In 2016, Ethics Council has been established that can provide advice on 3,603 employees completed the e-learning programme. individual matters and deal with whistle-blowing. Four meetings were held by the Ethics Council in Sweden in 2016.

Area Our ambitions Main targets for 2016 Target achievement 2016 Targets for 2017

Ethics and Everyone who works for or Launch of a mandatory The e-learning programme Increase the number of compliance represents the company e-learning programme. was launched in Norway in employees who have has a duty to act in an ethi- Q1 and in Sweden (early) in completed the e-learning cally correct manner. Q3 of 2016. In Denmark, it programme. was launched late in 2016. A Establish the compliance total of 3,603 employees function in corporate completed the e-learning management programme in Norway and Sweden. Recruit a new manager for compliance in the Group Update the scope of the compliance role and update the management system Prepare a compliance model that will apply throughout the Group. 26 CSR REPORT 2016 VEIDEKKE ASA

SUPPLIERS AND WORK ON PROFESSIONALISM

Each year Veidekke purchases a large volume of goods and services from suppliers. Good environmental standards and responsible working conditions in Veidekke’s supply chain are important with respect to complying with regulatory requirements, the company’s core values, and to meet increasing demands and expectations from society.

Veidekke operates in an industry with a complex risk picture Last year, Veidekke purchased goods and services for NOK 22 with respect to unprofessional actors, social dumping and poor billion, NOK 5 billion of which was spent on goods, primarily occupational health and safety standards. There have been many concrete, hire of equipment, steel, oil/bitumen, and various positive results from work on professionalism, but major chal- types of construction materials. NOK 17 billion was spent on lenges still remain. Veidekke aims to ensure high environmental the procurement of services, primarily subcontractors who standards and responsible working conditions in its own value work on Veidekke’s projects. chain, while at the same time helping to raise standards in the construction and civil engineering industry in general. CSR REPORT 2016 VEIDEKKE ASA 27

Veidekke works continuously to develop and improve routines environmental aspects as an integral part of the investment for supplier management. The procurement strategy supports decision. The company cooperates closely with subcontrac- the specific corporate strategies that have been established tors and sets the same requirements for working conditions, for occupational health and safety and the external environ- safety and ethics for contracted workers and subcontractors ment, for example. In 2017, a new procurement strategy will as for our own employees. Injuries are reported in the same be established for the period up to 2020. way as for our own employees. The business units observe At Veidekke, collaboration with suppliers and subcontrac- a number of procedures to ensure the professionalism of tors is managed through an overall procurement strategy with Veidekke’s projects: procurement managers in each unit. The company has routines • Identity checks and verification of completed safety training to analyse the volume, products and contracts in the supply for everyone who works on Veidekke‘s construction and chain, and to prepare purchases. In recent years, Veidekke has civil engineering projects. also signed several large, long-term contracts with suppliers • Veidekke Entreprenad (Construction) in Sweden has intro- of goods, allowing a better overview and fostering loyalty duced a supplier register, financial controls and ethics between the parties involved. agreements with suppliers. • Veidekke Entreprenør (Construction) in Norway has intro- Requirements for suppliers and partners duced a system of maximum two levels of subcontracting Throughout 2016, Veidekke has prioritised further improvement to ensure better oversight of the value chain. This provision and reinforcement of systems and routines for prequalification was also introduced in Sweden in 2016. and management of the company’s subcontractors, since this • Veidekke Entreprenør (Construction) in Norway has devel- is the segment where Veidekke faces the greatest challenges. oped a system for prequalification of subcontractors in During the year, a much greater number of prequalification areas such as occupational health and safety, pay and processes were carried out than had been done previously. In working conditions, and tax matters. The system is based our future work, there will be an increased focus on Veidekke’s on StartBANK, and it has been developed in cooperation second level suppliers. with Byggenæringens Landsforening (The Federation of Veidekke sets requirements in contracts and collaboration Norwegian Building Industries). It is a requirement that all agreements that suppliers must abide by the company’s rules subcontractors that are used in the projects are prequalified in respect of occupational health and safety, pay and working through this system. conditions, tax matters and the external environment. Our • In Norway, routines have been developed to check the suppliers must also undertake to comply with the international subcontractors‘ pay and working conditions in line with the agreement that Veidekke has concluded with trade unions. Regulation on Supervisory Controls and Regulation on Pay This agreement is based on the ILO Conventions and covers and Working Conditions in Public Contracts. This work is issues such as the right to exercise freedom of association, being implemented in the business units with a long-term the right to collective bargaining, collective wages, terms goal of checking 10 per cent of the number of subcontrac- and conditions of employment, and forced labour and child tor contracts. In 2016, over 100 supervisory controls were labour. Veidekke requires compliance with these rules and carried out at Veidekke Enterprenør (Construction). principles in the contracts with subcontractors and the sup- pliers of goods that the company has long-term agreements The target for 2017 is to implement the procurement system with. In connection with acquisitions, Veidekke conducts a and strategy. due diligence investigation of the working conditions and

Area Our ambitions Main targets for 2016 Target achievement 2016 Targets for 2017

Suppliers High environmental stand- Make a final decision on a In 2016, a pilot project was Continuation of work on a ards and responsible work- new procurement system carried out to evaluate a new procurement system. ing conditions in Veidekke‘s for the businesses in new procurement system. Increased focus on second value chain. Norway and Sweden. Launched and implemented level subcontractors for Strengthen strategic collab- Launch and implement the a prequalification system in work on professionalism. oration with our suppliers prequalification system in Norway. Establish a new and subcontractors. Norway. Work on the strategy has procurement strategy for Establish a new begun. the period up until 2020. procurements strategy for the period 2017–2020. 28 CSR REPORT 2016 VEIDEKKE ASA

THE PEOPLE AT VEIDEKKE

The people at Veidekke are characterised by a high level of commitment and expertise. The culture is marked by a participative approach, in which our ambition is to ensure that the expert knowledge of the individuals is optimally used in high-achieving teams and that the employees develop collective skills.

Veidekke manages and carries out larger and more complex time – jointly with each other during production. The company projects. Accordingly, efforts to attract, develop and retain the experience is that this creates continuity, good improvement right people are increasingly more important to our ability to processes and productivity, a favorable working environment achieve our commercial goals. and positive results. Veidekke thus has an express strategy to Veidekke’s participative approach requires that the expertise produce with its own craftsmen, and they account for more of our managers and craftsmen is developed systematically over than half of the employees. CSR REPORT 2016 VEIDEKKE ASA 29

Salaried shareholder-elected board members are women. In 2017, the Craftsmen employees Total company will prepare a clear ambition for strengthening diversity at Veidekke. A total of 1,243 new employees started at Veidekke Norway 2 977 (2 912) 2 195 (2 088) 5 172 (5 000) in 2016, around 84 per cent of whom were employed through Sweden 663 (727) 1 051 (829) 1 714 (1 556) recruitment efforts, while the remainder joined the team as a Denmark 295 (234) 218 (205) 513 (439) result of business acquisitions in Sweden, Denmark and Norway. Total 3 935 (3 873) 3 464 (3 122) 7 399 (6 995) At the end of 2016, the Group had 7,399 employees, divided into 5,172 in Norway, 1,714 in Sweden and 513 in Denmark. The working conditions are well regulated in all the Scandinavian This is an increase of approximately 6 per cent compared with countries, so that work in this area is primarily managed on 2015. In addition, the Industrial business area in Norway and the national level. Training and competence assurance are Sweden had 260 seasonal workers during the course of 2016. largely managed locally. To ensure that everyone is on the The total turnover was 11 per cent in 2016, which is a decline same high level, the company has established several com- of 1 per cent from 2016. mon Scandinavian frameworks for processes and systems. Among other things, this applies to the company recruitment Employee co-ownership process, which was implemented throughout the Group in Veidekke believes it is important that the employees are 2016. Veidekke prioritises having a large percentage of its own engaged in their own company. To this end the company has skilled workers to ensure a high level of competence in its a share programme where the employees can buy shares own house. Veidekke Enterprenør (Construction), for example, at a discount. The aim is to create loyalty and engagement has a strategy for its own production that was prepared jointly among the employees, and support the development of a par- with the company’s employee representatives. ticipatory corporate culture. The programme also contributes Confidence and transparency are key values for the company, to increased ownership and understanding of the company’s and Veidekke has a well-functioning employee representation financial results and development. At the end of 2016, 50.9 system. The employee representatives work closely with the per cent of the employees were shareholders in Veidekke. management at all levels, from the central corporate management Overall, the employees owned 14.9 per cent of the company.. to the individual districts, in order to build and further develop the company. The employee representatives participate in all Recruitment essential processes to ensure good cooperation. In an industry that is sensitive to economic fluctuations, it Veidekke supports the UN human rights convention, and is important to have a long-term approach to recruitment in it is stated clearly in the company’s ethical guidelines that order for the company to succeed. Veidekke has a common no one should be discriminated against on grounds of race, Group recruitment process, which will help ensure profes- gender, age, sexual orientation, language, religion, political or sional recruitment and correct expertise throughout the entire other opinion or due to national or social background. Veidekke organisation. Recently, Veidekke has worked purposefully to offers equal opportunities and equal pay regardless of gender. increase knowledge of the opportunities to build a career Veidekke operates in a male-dominated industry, and the com- for oneself both at Veidekke and in the construction and civil pany’s workforce reflects this, particularly among the skilled engineering industry in general. This has shown results. In workers. The proportion of women among administrative staff Universum’s surveys for 2016 (Norway), Veidekke is the most is 22 per cent, compared with only 2 per cent among skilled popular employer among contractors, both among the students workers. However the company is seeing a positive trend in and among active workers with a few years of experience. In the percentage of women among trainees, and the proportion Sweden, the company has acquired a stronger position among of women was 31 per cent in 2016. In corporate management, engineering students, and also in Denmark among students one out of seven managers were women. Three of the six at priority colleges and universities.

As part of the recruitment process, Veidekke has collaboration agreements with a number of schools and institutions, including the Technical University of Denmark (DTU), the Copenhagen School of Design and Technology (KEA), the Norwegian University of Science and Technology (NTNU), the Norwegian University of Life Sciences (NMBU), the University of Agder and the Centre for the Construction Industry at BI Norwegian Business School. Participation at career fairs is also a priority task in connection with recruitment, and in addition to our aforementioned partners, Veidekke also attends career events at several other colleges and universities in Scandinavia, including Chalmers University of Technology, KTH Royal Institute of Technology and the Faculty of Engineering at Lund University (LTH) in Sweden. Veidekke also collaborates with the Employment Service and Uppsala University in Sweden to provide non-Nordic academics with relevant work experience in the Swedish employment market.. 30 CSR REPORT 2016 VEIDEKKE ASA

Veidekke is one of the largest apprenticeship employers in manpower. The company’s employees are offered courses Norway. The Group has a total of 232 apprentices, 171 of whom and programmes as needed, including through the Veidekke work in the Norwegian operations. The Public Procurement Act School in Sweden and Norway. A number of topics are cov- entered into force on 1 January 2017. The new Act stipulates ered, including project and production management, finance requirements for the use of apprentices in public contracts and business administration, contract law, energy and the and projects, among other things. Veidekke is concerned environment, occupational health and safety, compliance and about safeguarding vocational training and facilitating a greater management development. Veidekke’s online learning portal number of good apprenticeships. In 2016, Veidekke continued is also available to subcontractors. its “School on Site”, a cooperative effort with the Akershus The annual performance appraisal is an important tool in County Administration, which offers vocational training to employee development. Veidekke’s goal is to conduct annual students who perhaps do not fit in at traditional schools. In performance appraisals with all employees. The goal for 2016 this manner, Veidekke can contribute to more young people was to increase the total completion rate by 20 per cent rel- completing their training and at the same time increase the ative to 2015. In 2016, the completion rate for administrative recruitment of skilled workers. staff was 49 per cent (60 per cent), while for craftsmen it was The trainee scheme in Norway contributes to the sys- 29 per cent (35 per cent). This was a decline from 2015 and tematic development of newly qualified engineers, and is an shows that the company must implement a stronger follow-up important scheme for attracting and developing managers. of the units to achieve this goal. The Swedish operations started a trainee scheme, based on In 2016, Veidekke implemented a survey for all employees the model in Norway, with 12 trainees in the autumn of 2016. who choose to leave the company. The purpose of this sur- In 2017, a common trainee gathering will be arranged across vey is to increase our understanding of why people choose Sweden and Norway, and the company is also looking at the to leave, yielding important information that we can use to opportunities to include Danish employees in these schemes. make Veidekke an even more attractive workplace. In 2016, efforts began to define other relevant key figures in connection Training and professional development with the HR area. The goal is to develop indicators that are of Veidekke aims to retain and develop its own employees, importance to the organisational results that are to be used both skilled workers and managers at all levels. There is a for fact-based improvement processes. low percentage of temporary employees and contracted

EMPLOYEES IN VEIDEKKE NUMBER OF APPRENTICES AND TRAINEES

200 6 000 8 522 5 000 150 4 000 32 100 3 000 4 650 163 2 000 270 3,3 3,3 50 0 75 1 000 20/1 1 444 39 40 7/4 0/0 4 74 0 0 Apprentices Trainees Apprentices Trainees Apprentices Trainees Norway Sweden Denmark Norway Sweden Denmark Men Women Men Women

The corporate staff is organised under the Norwegian operations.

“Base Camp for Young Managers” was arranged for the first time in 2016. For three days, 38 young managers from all three countries assembled to create a network across a Scandinavian Veidekke. They were given five specific challenges by corporate management in strategically important areas, and used their expertise and their experience to give input to the management. The results were presented at the Group’s management meeting in January 2017. “Base Camp for Young Managers” will continue in 2017. CSR REPORT 2016 VEIDEKKE ASA 31

USE OF VIRTUAL DESIGN AND CONSTRUCTION (VDC) IN VEIDEKKE SWEDEN’S LARGEST PROJECT TO DATE

In 2008, Veidekke became a member of CIFE (Centre for Integrated Facility Engineering) at Stanford University, the research centre that defined the concept of VDC (Virtual Design and Construction). Since then, Veidekke has worked in a structured and focused manner with this work methodology, and today it is the company with the greatest number of employees who have completed Stanford’s certification programme for VDC. Veidekke Sweden is in the process of building SEB’s new sustainable offices, Pyramiden. To ensure close involvement by all the parties in the planning and produc- tion phases, VDC is used. A common data tool forms the basis for this. This intelligent 3D model, BIM, identifies faults and defects before the start of the construction process, and with a common tool, it is easier for all parties to understand each other’s deliveries. Emile Hamon, Strategy and Business Development Director at AO Bygg, says that “VDC is becoming an increasingly more important competitive advantage for us” since our customers are increasingly requesting this. For example, VDC was a directly decisive reason that we were awarded the Pyramiden project – Veidekke Sweden’s largest project to date.”

Area Our ambitions Main targets for 2016 Target achievement 2016 Targets for 2017

Employee Retain and recruit Continue to work for a Have defined various Complete the framework development employees with good, Scandinavian process and phases in the framework for and start the implementa- future-oriented skills. method for succession a Scandinavian process and tion of succession planning planning and development. method for succession and development. Ensure compliance with planning and development. Veidekke’s values. Implement the resignation Use key figures for strategic survey and start work to The resignation survey has discussions and develop rel- Build solid management define relevant key figures been implemented. evant analyses. capacity. for the HR area. Started work to define other Define a clearer ambition for Increase the completion key figures for the HR area. diversity at Veidekke. rate for annual performance The completion rate for Start work to develop a new appraisals by 20 per cent. annual performance top management pro- appraisals declined 18 per gramme. cent for administrative staff, Increase the completion while it declined 17 per cent rate for annual performance for craftsmen. appraisals by 20 per cent. 32 CSR REPORT 2016 VEIDEKKE ASA

REPORT PARAMETERS

Veidekke aims to maintain Veidekke reports on corporate social responsibility issues in accordance with the Global Reporting Initiative (GRI)‘s G4 an open dialogue with its Sustainability Reporting Guidelines and Construction and Real stakeholders. The purpose of this Estate Sector Disclosures. Veidekke finds that this report complies with GRI reporting principles and that the report is report is to provide an account in accordance with G4 «Core» level. The GRI index indicates of Veidekke’s impact on the where information about the various GRI indicators is provided. Unless otherwise specified, the information in this environment and society and report applies to the entire Group, i.e. all the business areas throughout the whole of Scandinavia, as well as subsidiaries the results achieved, including and joint ventures. Acquired business is included in the areas where the company’s corporate social responsibility reporting upon agreement performance needs to be between the businesses. improved. For more information about this report and corporate social responsibility at Veidekke, please contact:

[email protected]

or

[email protected] CSR REPORT 2016 VEIDEKKE ASA 33

GRI INDEX

GENERAL STANDARD DISCLOSURES

GRI Indicator Description Veidekke’s reporting

Strategy and Analysis G4-1 CEO statement p. 3 Organisational Profile G4-3 Organisation name Veidekke ASA G4-4 Primary brands, products and services p. 4-8 G4-5 HQ locations Veidekke ASA is headquartered in Oslo. G4-6 Countries of operation p. 4-5 In addition to Scandinavian operations Veidekke also has minor international activity in supplying equipment and consultancy work for the production of asphalt cores for hydroelectric dams. G4-7 Ownership and legal form p. 4 G4-8 Markets served p. 4-8 G4-9 Scale of organisation p. 4-5 See also the 2016 Financial Report. G4-10 Employee and workforce information p. 29-30 Of the permanent employees, 831 are women and 6 568 are men. Of the temporary employees, 52 are women and 206 are men. Of the permanently employed women, 78 are part time employees and 753 are full time employees. Of the permanently employed men, 83 are part time employees and 6 485 are full time employees. G4-11 Collective bargaining agreements Approx. 65 % G4-12 Supply chain description p. 26-27 G4-13 Significant changes to organisation None G4-14 Precautionary approach p. 18-23 G4-15 External charters and principles p. 11 G4-16 Memberships of associations p. 13 34 CSR REPORT 2016 VEIDEKKE ASA

GRI Indicator Description Veidekke’s reporting

Identified Material Aspects and Boundaries G4-17 Entities included in financial statements p. 4-5 See also the 2016 Financial Report. G4-18 Report content and aspect boundaries p. 10-11 G4-19 List of material aspects p. 11 G4-20 Aspect boundaries within organisation p. 11 G4-21 Aspect boundaries outside organisation p. 11 G4-22 Effect of any restatements None G4-23 Significant changes to scope and aspect boundaries None Stakeholder Engagement G4-24 List of stakeholder groups p. 12-13 G4-25 Identification of stakeholders p. 12-13 G4-26 Approach to stakeholder engagement p. 12-13 G4-27 Issues raised by stakeholders p. 13 Report Profile G4-28 Reporting period 2016 G4-29 Date of previous report April 2016 G4-30 Reporting cycle Annual G4-31 Contact point p. 32 G4-32 Level of reporting, GRI content index and external assurance report preference p. 32 G4-33 Policy and current practice with regard to seeking external assurance for the report p. 32 Governance G4-34 Governance structure p. 10-11 Ethics and integrity G4-56 Values, standards, principles and norms p. 10-11 and p. 24-25 CSR REPORT 2016 VEIDEKKE ASA 35

SPECIFIC STANDARD DISCLOSURES

Cross reference to GRI Veidekke’s UN Sustainable Indicator Description reporting Omissions Development Goals

ENVIRONMENTAL Emissions

G4-EN15 Direct Greenhouse Gas (GHG) emissions p. 18 (Scope 1) Veidekke follows the GHG Pro- tocol Corporate Standard (March 2004). Climate reporting is based on a control approach, including operational control. The climate reporting covers all business units, including subsid- iaries and joint ventures with more than 50% owner’s share. Factors from Defra. GWP: IPCC Second Assessment Report (SAR 100 year). G4-EN16 Energy indirect Greenhouse Gas (GHG) p. 18 emissions (scope 2) Veidekke follows the GHG Pro- tocol Corporate Standard (March 2004). Climate reporting is based on a control approach, including operational control. The climate reporting covers all business units, including subsid- iaries and joint ventures with more than 50% owner’s share. Source: Annual statistics from the International Energy Agency on CO2 emissions, electricity generation.

CRE4 CO2 intensity for new construction and p. 18 Partial redevelopment activity G4-EN19 Reduction of Greenhouse Gas (GHG) emissions p. 18-20 Veidekke also reports to CDP. The report is publicly available on CDP’s webpage : https://www.cdp.net/en 36 CSR REPORT 2016 VEIDEKKE ASA

Cross reference to GRI Veidekke’s UN Sustainable Indicator Description reporting Omissions Development Goals

Land degradation, Contamination and Remediation CRE5 Land remediation p. 21 Compliance Environment G4-EN29 Monetary value of significant fines and total None number of non-monetary sanctions for non- compliance with environmental laws and regulations Supplier Environmental Assessment G4-EN32 Percentage of new suppliers that were p. 27 screened using environmental criteria

EMPLOYEES Labour / Management Relations

G4-LA4 Minimum notice periods regarding operational Sweden: Layoffs are regulated changes, including whether these are specified by collective agreements. Notifi- in collective agreements cation rules for dismissals are regulated. Collectively agreed upon deviations may occur. Denmark: Layoffs are regulated through the Employers’ and Salaried Employees’ Act (Funks- jonærloven). Minimum 1 month notice for dismissals. Norway: Statutory period of notice for layoffs is 14 days. Sta- tutory period of notice for dis- missals is 14 days during proba- tion period and 1-6 months after probation period, depending on age and length of service. Occupational Health and Safety G4-LA6 Type of injury and rates of injury, occupational p. 14-15 Injuries, sick- diseases, lost days, and absenteeism, and total ness absences, number of work-related fatalities, by region and etc. are not by gender reported by gender. LTI-1 rate is not reported for subcontractors. CRE6 Percentage of the organisation operating in 0 % verified compliance with an internationally recognised health and safety management system G4-LA7 Workers with high incidence or high risk of p. 14 diseases related to their occupation CSR REPORT 2016 VEIDEKKE ASA 37

Cross reference to GRI Veidekke’s UN Sustainable Indicator Description reporting Omissions Development Goals

Supplier Assessment for Labour Practices G4-LA14 Percentage of new suppliers that were p. 27 screened using labour practices criteria

HUMAN RIGHTS Freedom of Association and Collective Bargaining

G4-HR4 Operations and suppliers identified in which the p. 27 right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights

SOCIETY Anti-corruption G4-SO5 Confirmed incidents of corruption and actions None taken

Anti-competitive Behaviour G4-SO7 Total number of legal actions for anti- None competitive behaviour, anti-trust, and monopoly practices and their outcomes Compliance Society G4-SO8 Monetary value of significant fines and total None number of non-monetary sanctions for non- compliance with laws and regulations Supplier Assessment for Impacts on Society G4-SO9 Percentage of new suppliers that were p. 27 screened using criteria for impacts on society

VEIDEKKE’S HISTORY

Veidekke was founded in 1936 as a cobblestone cutting and companies have joined the Group. In the 1980s Veidekke laying company in Østfold county. The business gradually expanded into a new market: residential and non-residential expanded and took on road improvement projects in several building construction. Another milestone was the listing on municipalities and counties in eastern Norway. The real break- the Oslo Stock Exchange in 1986. through came in 1948, when the small company was awarded The acquisition of Aker Entreprenør in 1991 resulted in a the major civil engineering contract for the construction of Sola doubling of the company’s revenue, marking the advent of a Airport in Stavanger. With time Veidekke became a central decade of strong growth. In addition Veidekke decided to focus player in airport construction in Norway, and in the late 1950s on the residential segment with property development as a it undertook its first overseas assignment: construction of an new business area, while also looking to expand into neigh- airport in Ethiopia. bouring countries. The company established civil engineering Large civil engineering projects accounted for the bulk operations in Gothenburg in 1998 in partnership with local of the business in the 1960s and ‘70s, and in the following players, marking the beginning of Veidekke’s development decades the company became a sizeable road builder. Other as a Scandinavian construction company. In 2000 Veidekke major civil engineering projects, such as construction of power acquired Denmark’s oldest and fourth largest construction stations and large industrial facilities for the oil sector, were company, Hoffmann A/S, and in the same year the company added as new market areas. also established construction and property development The 1980s were marked by structural changes in the operations in Sweden. construction industry, and several of the larger construction Today Veidekke is Norway’s largest and Scandinavia’s fourth companies merged. Veidekke’s strategy was to continue to largest construction and property development company. The develop as an independent company, marking the beginning of ambition is to continue to develop the company within the an era of acquisitions. A total of ten companies were merged existing product and market segments, based on a strategy into the Group during this decade. Since then, over 70 other of profitable growth. Design and production: Artbox AS. Print: Printbox AS, Photo: Veidekke. Photo: AS, Printbox Print: AS. Artbox production: and Design

TOGETHER, WE BUILD THE FUTURE

Veidekke is one of Scandinavia’s largest construction and property development companies. The company undertakes all types of building construction and civil engineering contracts, maintains public roads and produces aspahlt and aggregates. The company is characterised by involvement and local knowledge. Turnover is NOK 30.1 billion (2016), and half of the 7,400 employees own shares in the company. Veidekke is listed on the Oslo Stock Exchange and has always posted a profit since it was founded in 1936.

Veidekke – local presence, Scandinavian strength. veidekke.com/en