Supply chain integrity

Sourcing goods and services from a diverse supply chain promotes economic inclusion, generates new and innovative ideas, and builds supply chain resilience. Testimony to our ‘Think Global, Act Local’ approach, our incredible track record of delivering iconic nationally critical infrastructure and projects at the heart of local communities has been built with our local supply chain partners who, in 2023, generated £902 million of social value whilst delivering for our customers and the communities we operate in.

As well as our local partners, we have had great success working with social enterprises and charitable organisations. This includes through our Social Enterprise Accelerator & Development programme which provides the opportunity for our employees to support small business and social enterprises by volunteering their time and expertise.

Supported by our UK Construction Services leadership team who volunteered their expertise on business strategy and growth, the programme has helped 12 social enterprises develop their businesses. Four of the social enterprises that took part are now Balfour Beatty approved suppliers.

The goods and services we purchased in 2023, represented 86% of our Scope 3 carbon emissions, and included hard to decarbonise products like concrete, steel and aggregates. As we do not directly control these emissions, this area is our biggest challenge and that is why we have set an ambitious, but realistic target of reducing these emissions by 25% by 2030. To meet this target, we are focussing our efforts on three key groups:

• Our procurement teams – responsible for the day-to-day selection of our supply chain partners for the products and services we buy, this group are growing their sustainability knowledge through the roll-out of training that helps them to consider carbon alongside other factors when making decisions. Using our sustainability heatmap tool, they have identified the partners that can have the biggest impact on reducing our Scope 3 carbon emissions and are working on initiatives including Cement 2 Zero - a trial of the world’s first zero emissions cement at an industrial scale.
• Our supply chain partners – all of our UK supply chain partners work to our Sustainable Procurement Policy which outlines a number of priorities including minimising carbon emissions over the lifecycle of a product or service and enabling the reporting of Scope 3 carbon emissions. To help our supply chain meet these requirements, we are collaborating with them on a range of innovative projects including the development of a software solution that uses invoice data to provide embodied carbon data. This data can be used to benchmark the carbon footprint of different products and services, and be considered alongside other factors when choosing supply chain partners.
• Our customers and design teams - a key lesson from our ‘Towards a Zero Carbon Construction Site’ initiative at the Royal Botanic Garden project in Edinburgh, was working closely with customer and design teams, to embed low-carbon solutions early. Early engagement and decision making is vital to reducing carbon emissions during the design, construction, operation and decommissioning of an asset.

At Balfour Beatty, doing the right thing - operating responsibly, with integrity guiding our actions - is a critical element of how we do business. As part of this commitment, we are determined to fight against slavery and human trafficking. This includes making sure we have the systems and processes in place to ensure that all our dealings and relationships uphold the highest ethical standards. While we believe the risk of modern slavery within our own operations is relatively low (due to the strength of these systems and processes and our clear line of sight to who we are directly employing) we acknowledge that the potential for incidences of modern slavery is higher within our supply chain – particularly our indirect supply chain.

We are therefore actively collaborating with and supporting our supply chain partners to address this pressing issue and have taken actions including working with ConstructionLine to develop additional pre-qualification criteria for all suppliers to our UK business. Following these changes to ConstructionLine, we have now mandated that prequalified UK supply chain partners provide us with their own modern slavery statement by the end of 2024.

In 2023, we also undertook over 120 risk-based supply chain compliance audits based on the sustainability heatmap produced in 2022. In 2024, we redesigned the audit to provide more targeted and specific improvement actions and enhanced guidance for the supply chain to improve their approach.

The audit report and guidance also signposts supply chain partners to the free resources available within the Supply Chain Sustainability School and training resources including the School’s People Matter Charter to which Balfour Beatty is a signatory. As we continue to support cross-sector collaboration by contributing to industry guidance and toolkits and helping our supply chain partners upskill, in 2025 and beyond we plan to realign our focus to our operations. This includes leveraging technology and digital solutions to reduce the risk of modern slavery and labour exploitation on our projects.

To read our Modern Slavery Statement and find out about our latest progress in this area, please visit: balfourbeatty.com/modern-slavery

¹ Measured against a 2020 baseline