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.