Principales Riesgos del Proyecto (cualitativo)

Each organisation, each main actor type and even each professional body represented within the supply network appears to have their own sustainability goals and aspirations. Even within peers, operating at the same point within the network, different business drivers and market differentiators engender a range of sustainability focused actions. This proliferation of goals and associated metrics was raised as an issue by suppliers and featured in industry discussion. Main contractors, such as Carillion, were being forced to consider issues such as embodied carbon reporting for infrastructure clients and for many major Government led contracts provide data on SMEs and social value. To understand the level of fragmentation an initial analysis of the Annual Sustainability reports (2014-2015) of Carillion and four of its peers was undertaken. (This work, and other comparative ASR analysis is available in full in Appendix 2 and the methodology is presented in chapter 3, Section 3.4.2.2.). The analysis identified multiple different actions and processes but for the purposes of clarity it was further simplified (see Table 16) to present the most common areas of sustainability engagement and reporting.

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Table 16: Analysis of annual sustainability reports 2014/15 (Balfour Beatty plc 2014, Carillion plc 2016, Skanska 2016, Keir Group Plc 2016, Laing O'Rourke 2014) Company GRI Reporting used Signed up to UN Global Compact Promote buiding to Environmen tal

standards H&S Health Ethics

Community support Environmen tal Staff and Skills Indentifying value of sustainability to the business Materiality Scarcity of resources Sustainable supply chain Natural capital Balfour

Beatty yes yes yes yes Limited yes

Carillion yes yes yes yes Limited yes yes yes yes yes yes yes

Skanska yes yes yes yes yes yes yes yes yes yes yes

Keir yes yes yes yes yes yes yes yes yes

Laing

O'Rouke yes yes yes yes yes yes yes yes

135 Reporting is particularly strong for environmental issues, particularly those related to the construction site process and company operation. These issues include waste, carbon (scope 1 and 2 emissions) and to a lesser extent water. Skills and staff development also feature strongly. From a wider network perspective all organisations confirm that they are able to create structures to ‘Green Building standards’ such as BREEAM, CEEQUAL and all actively promote this to clients. However, the researcher also looked at the reports for issues which were of increasing concern to industry commentators and sustainability experts. Here a smaller number of main contractors were focusing on issues impacting beyond corporate boundaries, such as scarcity of resources, and natural capital as well as the economic value of sustainability to the company.

Interestingly, in a sector which is noted in academic literature to be lagging on sustainable supply chain management all organisations offered commentary on their support for sustainable supply chains. At its most basic this was little more than an extension of their Health and Safety programme to suppliers but more frequently it was identified as increased communication with Tier 1 suppliers. Three of the five organisations mentioned working with local businesses and SMEs (a requirement of Government contracts), others had sustainability charters and were offering meet-the- buyer events, workshops and toolbox talks. One contractor was working with cloud- based suppliers Achilles and Constructionline to map and support their Tier 1 procurement. Achilles construction database has 180 buyers and 8000 construction suppliers listed across North and West Europe (Achilles, 2018). It, and similar companies offered cloud-based software to reduce repetitive questions and improve information flows across networks. This was seen by their clients as ‘helping create transparency through the supply base’ (Heineken 2016). Carillion had elected to use an internal system, “My Register” which relied on supplier self-declaration and where sustainability data was unaudited.

Analysis of the main contractor peer group suggested that whilst there was developing work with the supply chain and with clients, main contractors were primarily focused on sustainability issues directly under their control; within their corporate boundaries.

136 Extension of their influence on sustainability issues beyond this controlled boundary comprised of limited upstream supply chain engagement, primarily through a sub- contracted supplier audit function. They also offered some supplier upskilling, carried out limited mapping and minimal scope 3 carbon reporting. Downstream contractors were working with stakeholders (primarily customers) to understand their sustainability aspirations and ensure they were reflected back in bids and tenders. Skanska had taken a stronger stance and created a rating system for all projects, “Deep Green”, which allowed them to present their performance and that of the client designed structures they created (Skanska, 2016). The variety of approaches, illustrated here at just one level of the supply network, is identified by Government as a barrier to more effective working across the supply network. At a meeting of industry main contractors and key suppliers, sustainability measurement requirements were discussed. It quickly became clear from the group that everyone was using slightly different descriptors when talking about outputs, goals, indicators, and targets. This was confusing to those discussing the topic, all of whom had considerable expertise on sustainability reporting, but they agreed it was ‘even more confusing for the suppliers that are being asked for such different information’ (D10). One major supplier summed this up succinctly during an interview:

‘The issue of getting data is the problem I think – so how do we collect it? how do others collect it? Are the boundaries the same? etc etc. So therefore, can you add them all up directly or are them some issues and then once you get around to looking the supply chain, the merchants, the contractors. Unless everyone is doing it the same way then it’s very difficult to add these up.’ (SUP-10)

He also pointed out that even if these problems could be overcome by the manufacturers, ‘every project has a different client. Every client has a different wish list’ (SUP-10).

The analysis of the main contractor peer group highlighted multiple approaches to sustainability, albeit those that they selected to present to their stakeholders, but it failed to offer an insight into the KPIs operating across the whole supply network. To achieve this more holistic view, organisations were selected from across different life phases of a built asset within the UK. The rational for the selection of the organisations

137 presented in Figure 19, and the methodology, are considered in chapter 3, Section 3.4.2.3.

Figure 19: KPIs supported by Investors, Developers/Clients, Main Contractors and Product Manufacturers (GRESB, 2016, M&S, 2015, Argent llp, 2016, Highways England, 2016, MOD, 2013, Network Rail, 2015, SDU, 2016, Carillion plc, 2016a, Keir Group Plc, 2014, Skanska, 2016, MPA, 2015, UK CARES, 2016)

138 Whilst this analysis cannot provide evidence of action and impact it does indicate that organisations have created key performance indicators (KPIs) and targets on a wide range of sustainability issues. This exercise, with a relatively small but representative sample of the network identified ninety-nine different indicators and sub indicators. It confirms that complexity and fragmentation of reporting increases across the supply network sector when upstream and downstream organisations are considered.

Environmental issues are well represented, with waste, energy, CO2 and water KPIs

being addressed by most of the supply network actors. It was relatively straightforward to group these indicators although metrics such as customers (measuring the number achieving sustainable builds) and building certificates, did not easily combine with more standard measures. Fewer social issues were identified and only employee wellbeing, fair treatment and skills were common across the network. The economic aspects of sustainability proved to be the most challenging to both identify and allocate. A separation by most organisations of financial and sustainability reporting appears to reduce, or most frequently fail, to offer sustainability indicators that link to economic issues. This is an interesting insight when one of the most common questions sustainability practitioners are asked is ‘does it mean more expense’ (SC-D).

This analysis would suggest that network actors focus on indicators that they perceived were most relevant to their position in the network or were required by clients or regulators. There are several examples which appear to validate this view, and these have been marked A in Figure 19. Developers and Investors consider the health and wellbeing of those in the buildings they commission or fund; Main contractors have a large number of indicators linked to employees and skills. This makes sense as they provide a service that is primarily skills and expertise based. Product Associations, in this case directly linked to extractive industries, have multiple indicators for resource use and biodiversity impacts. The growing number of investors that subscribe to GRESB are reporting on a sophisticated range of key and sub indicators around CO2 emissions; both

sending out a buying signal across the supply network, but potentially reflecting a longer-term concern about asset values. There was however, less emphasis on the use building standards (marked C in the diagram above) within their indicator portfolio. This

139 was surprising as there is a strong focus by green building NGOs, UK planning regulation and standards bodies on the benefits of green building standards. The indicators marked B on Figure 19 highlight where there appear to be gaps in reporting. Developers and Investors see their impact on local communities primarily in terms of health and wellbeing of completed buildings but not in terms of the construction of assets and product manufacturing. They also fail to have metrics to measure social issues across the supply network, it appears that this responsibility falls to main contractors and product manufacturers. Surprisingly only product manufacturers are measuring the economic impacts of resource use and scarcity. At the time of this analysis it is notable that no network actors were testing Circular economy indicators other than those associated with traditional waste recycling.

If the sectors self-developed indicators lead to multiple measurements, different emphasis and assumed responsibility by actors it was interesting to consider if an increased focus on standardised reporting was able to enhance cross-network goals. A small number of industry organisations were using global reporting frameworks such as the GRI index or the Carbon Disclosure Project (CDP) and social indices, for example, the UN Global Compact. There was also an increase in major UK construction companies committing to support the Sustainable Development Goals (SDGs), which had been agreed by the United Nations in 2015 (UNSD, 2017). Carillion’s corporate sustainability team had identified the SDGs as ‘the world’s development roadmap for the next 14 years’ and saw the global goals as a framework that that recognised the relevance of a whole system approach (Picton, 2016). The adoption of the goals, a survey carried out by the company with key stakeholders in 2016 and their long-term commitment to FSC chain of custody, provided a case study to examine if the SDGs could unify the construction network.

The analysis, represented in Table 17, considers how stakeholders in the FSC chain of custody perceive the importance of different SDGs based on their different perspectives with the supply network. These were derived from three sources, a materiality survey, Carillion’s Annual Sustainability Report and an FSC publication on SDGs. Carillion undertook a major materiality survey in 2016, asking staff, clients and other

140 stakeholders to identify the goals they felt Carillion could effectively support. Stakeholders identified five goals, all of which focused on social equality or business innovation. In 2017, Carillion published its Annual Sustainability Report identifying the companies support for nine SDGs. Additional goals had been incorporated by Carillion, recognizing that the board and corporate sustainability team identified additional goals addressing their supply network (SDG12) and environmental issues (especially SDG 15: Life on Land) (Carillion 2017). The Forest Stewardship Council carried out a similar assessment and identified that, for those within the supply network, FSC accreditation supports 11 SDG goals and 35 targets (FSC 2016). For FSC, Sustainable Consumption and Production, is one of the goals to which they aspire, closely aligned with the timber value chain, but, they do not see it as a primary focus. FSC believes that another goal, SDG 15—Life on Land—is most relevant to their work, specifically target 15.2: progress towards sustainable forest management. The goals selected by each stakeholder are highlighted in Table 17.

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Table 17 Analysis of SDGs across an FSC supply network (2016), (FSC 2016, Carillion 2017)

Key: Dark panels represented SDGs selected by the groups

This analysis offers a fascinating insight into how different network actors perceive roles and responsibilities within the network. Despite the SDGs offering a clearly defined set of goals and targets, and despite Carillion’s twenty year relationship with FSC chain of custody, only two SDGs are common between all network partners, those of Gender Equality (SDG 5) and Decent Work and Economic Growth (SDG 8). Such variation in goal alignment would suggest that the position and role of an organisation within the supply network influences its view of how it can effect change and thus which goals are most relevant. It also questions the benefit of apply top down goals across the network.

1. No Poverty FSC Additional Goals

2. Zero Hunger FSC Additional Goals

3. Good Health and Wellbeing

4. Quality Education

5. Gender Equality FSC Additional Goals

6. Clean water and

sanitation FSC Additional Goals

7. Affordable and

clean energy FSC Additional Goals

8. Decent work and

economic growth FSC Additional Goals

9. Industry, Innovation and Infrastructure 11. Sustainable Cities and Communities 12. Responsible Consumption and Production FSC Additional Goals

13.Climate Action FSC Additional Goals

15. Life on Land FSC Primary Goal

16. Peace, Justice and Strong Institutions

FSC Additional Goals

17. Partnerships for

the Goals FSC Additional Goals

Carillion Stakeholders Sustainable Development Goals 2015 Forest Stewardship Council Carillion plc

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