Governance and management
The Board
The Balfour Beatty Board sets policy for the Group’s performance in safety, health, the environment, business ethics, risk management, human rights and other social issues. In early 2001, a Business Practices Committee of the Board was established to review policy and practice in these areas.
Its terms of reference are currently under review.
Guiding principles
Balfour Beatty first produced a coherent set of “Company Principles” in 1986. Since then, they have been regularly reviewed and updated, most recently in 2006.
Two companion codes were also developed at that time. “Business Conduct Guidelines” explains to every employee what is expected of them in terms of behaviour, procedures and attitudes, when they are working or otherwise representing their company. In 2008, employees will receive online training in these guidelines.
“Stakeholder Codes of Practice” sets key operating principles and minimum standards for the Group’s operating companies when engaging with employees, customers, suppliers and the wider community.
Together, these documents constitute a comprehensive system of ethical governance.
Management systems
The Group-wide risk management framework provides a common system for identifying and controlling risks of all types. Each operating company, division and project is subject to rigorous risk analysis, evaluation and management. Major risks are reviewed regularly at senior management levels.
Safety and health issues are reviewed by the Health and Safety Council, with each main segment of the business having its own equivalent body. Balfour Beatty requires all its operating companies to have formal safety management systems, which are subject to external audit.
Environmental issues are reviewed at the Environmental Strategy Group comprised of representatives of the operating companies under the chairmanship of the director of Safety, Health and the Environment.
Environmental management systems are audited regularly and Group-wide statistics are collated in respect of the Group’s major environmental impacts.
Safety
The Group’s stated aim is to operate in such a way as to have zero fatalities, zero permanent disabling injuries and to be accident-free overall.
Over recent years, the Group and its subsidiaries have made good progress in reducing accidents. In 2007, its Accident Frequency Rate (AFR) was reduced by 16%, the fifth consecutive year of improvement, and stood at 0.21 reportable accidents per 100,000 man-hours worked. This has been achieved despite very significant increases in numbers employed. The safety statistics are subject to external audit.
Performance is benchmarked against industry norms in the UK, Germany, US and Hong Kong. This performance compares favourably with these external benchmarks.
Regrettably, there were 18 fatalities during the year, 14 of which were in joint venture businesses not controlled by the Group or its subsidiaries. This high level of fatalities during 2007, which has particularly affected our businesses in Hong Kong and Dubai, is the subject of intense investigation and a range of corrective actions has been implemented. Significant effort is made in improving safety management standards in the Group’s overseas subsidiaries, associates and joint ventures to match the high standards that are achieved in the UK.
Health
The rigorous standards which the Group applies to safety management are increasingly now being applied to occupational health. Occupational ill-health is often the result of prolonged exposure to substance, condition, process or activity and is not, therefore, easily tractable in the short term.
The Group’s approach is to identify the potential causes of ill-health and develop specific policies and programmes for each one. Active programmes exist for hand-arm vibration syndrome, disorders arising from manual handling, alcohol and drug abuse and substances hazardous to health. Occupational health support services provision was improved in 2007 and stress management arrangements were also further enhanced.
Environment
Balfour Beatty works systematically to prevent negative environmental impact from its activities and to improve its environmental performance at every stage of its work. The Group’s approach is structured and risk based with formal environmental management systems. It continues to take the necessary steps to embed environmental management systems into the business both in the UK and overseas.
The Group reviews and maintains progress by monitoring trends and performance in five specific areas. These are energy use and global warming; resource usage; waste and recycling; water consumption; and impact on environmentally-sensitive areas. The robustness of the Group’s environmental management systems is also measured.
Resource usage
There is an increasingly systematic focus on our sourcing of materials, usage of non-renewable resources and evaluating and managing the Group’s supply chain in respect of environmental issues.
Waste
The construction process typically generates large volumes of waste. Over the last six years, Balfour Beatty has raised the awareness of this problem across the business, and has improved its focus on waste reduction, recycling and measurement of construction waste.
The total amount of UK waste generated in 2007 was 155 tonnes relative to £m NSV, a 22% reduction.
Energy usage
Balfour Beatty has reduced its UK carbon footprint by 32% over the period 2002–2007. The Group invests in new and emerging technologies for vehicle emission reduction. Most particularly, significant improvements have been achieved by the use of GPS and vehicle tracking systems in more economical vehicle routing and usage.
Water consumption
Improved reporting of waster consumption data following the installation of water meters has resulted in an increase of 6% in reported water consumption in 2007.
Environmentally sensitive areas
The Group has extended its range of key indicators to include positive and negative effects on environmentally sensitive sites and is developing its policy on biodiversity. Archaeological aspects of sites are explored thoroughly before commencement of use.
Stakeholder engagement
There is a comprehensive corporate and operating company-based communications and engagement programme aimed at ensuring that all stakeholders most notably, employees, customers, suppliers, government, regulators and the communities around or affected by our projects, have access to the information they need and can represent their views to the company.
Employees
Most operating companies conduct regular employee attitude and opinion surveys. During 2007, the first Group-wide survey of employee opinion took place. In addition to other measures, this confirmed that employees were aware of the Group’s whistle-blowing policy and there were 16 cases raised during the year (eight in 2006).
The Group’s equal opportunities performance is measured annually. In 2007, 20.7% of UK employees were women and 9.4% were of ethnic minority origin. These statistics are considerably improved from when measurement of the issue first took place in 1999. At graduate intake level, the proportion of women is 20% and of ethnic minorities is 10%.
Shareholders
Balfour Beatty runs an active shareholder engagement programme involving regular roadshows and one-to-one meetings. During 2007, senior executives held over 100 meetings with shareholders, representing, in aggregate, approximately 60% of the issued share capital. All financial presentations are webcast in order to ensure that they are accessible to all shareholder groups and other interested parties.
Customers
Most of the Group’s operating companies run regular attitude and opinion surveys. A substantial proportion of the Group’s business is conducted with organisations with which its operating companies have long-term relationships.
Suppliers
An increasing proportion of the Group’s supply base is retained in long-term relationships based on compatibility of their values and behaviour as well as product quality and price. The Group has developed and implemented a “Supply Chain Environmental Risk and Impact Grading Tool” to assess supply chain risks.
Government and regulations
Over half of Balfour Beatty’s work is carried out for governments. The Group seeks active and positive relationships with governments, their officers and advisers and relevant industry regulators to ensure its policies align with their key requirements.
Communities around our projects
It is Balfour Beatty’s policy that all its major projects have a dedicated community relations team. Typically, major projects will be preceded by exhibitions, and regular newsletters and letter drops will keep interested parties informed at key project milestones. Key stakeholders will be offered direct access and, when necessary, there will be liaison with local police and other emergency services and help lines.
Building better communities
Our corporate responsibility programme
Balfour Beatty’s work enhances the physical environment. It creates educational, healthcare, transportation and other social capital. The Group believes that it has a responsibility to extend the positive impact which its work has on the lives of asset users to the wider community in which the company operates.
A key theme in Balfour Beatty’s CSR activities is enhancing the lives of young people, particularly those at risk or at some disadvantage, and improving the communities in which they live and grow. This theme finds expression through a number of initiatives, at corporate, operating company and local and individual project level.
London Youth Games
The London Youth Games is Europe’s largest youth sports programme, with the potential to engage the entire population of London’s state primary and secondary schools in sporting activities and competition.
In 2007, Balfour Beatty, which has been associated with the Games for the last two years, decided to take on the role of lead partner to the Games until 2013 with a sponsorship contribution of at least £1.7m over the period.
The organisers’ ambition is to greatly increase the size of and participation in the Games and Balfour Beatty’s funding and support guarantees that the Games will grow over the partnership period.
A substantial proportion of the funding is set aside for grant applications from the London boroughs for schemes that enhance grass roots participation and, in particular, promote involvement amongst disadvantaged groups including the disabled and children in areas of multiple deprivation.
Stoke Football Action
Over £100,000 of funding and substantial management support from Balfour Beatty has unlocked public sector funds to create a £320,000 three-year football coaching programme in Stoke, where Balfour Beatty is the PPP schools concession company. Now entering its final year, the programme has proven extremely effective in reducing vandalism and other anti-social behaviour amongst pupils at risk of social exclusion.
Groundwork UK
Balfour Beatty works with Groundwork UK, the network of local trusts which supports communities in need by working with partners to help improve the quality of people’s lives, their prospects and potential and the places where they work and play. Every year, Balfour Beatty finances three schemes, which enhance the physical environment close to its major projects and, in so doing, engages the energies and time of disadvantaged young people. Projects in 2007 included upgrading a recreation site in Hertfordshire, a woodland regeneration scheme in Merseyside and the development of an environmentally friendly, sustainable allotment garden in Stoke-on-Trent.
NCH
2008 will be the second year that NCH has been Balfour Beatty’s Charity of the Year.
NCH helps children achieve their full potential. Through its services, it supports some of the UK’s most vulnerable and excluded children and young people affected by issues such as poverty, disability and abuse. It is the UK’s leading provider of family and community centres, children’s services in rural areas, services for disabled children and their families and services for young people in care.
The Group gave over £115,000 to NCH in 2007. Over £80,000 of this total was raised by employees through a wide variety of events and activities. This included a combined team of 21 walkers from Haden Young and Balfour Beatty Construction Northern raising over £18,000 on the three peaks challenge.
Get into Construction
About one in five young people in the UK are not in work, education or training. The Prince’s Trust, the UK’s leading youth charity, gives practical and financial support to 14 to 30 year olds, helping them to tackle their problems and get their lives back on track. The charity focuses on those who have struggled at school, have been in care, are long-term unemployed or have been in trouble with the law.
Balfour Beatty is a founding sponsor and leading member of the Trust’s “Get into Construction” initiative, whereby young customers of the Trust are given a two-to four-week work experience programme which trains them in carpentry, plastering, bricklaying, painting and decorating.
Those who pass gain a Construction Skills Certificate Scheme Card and six months’ support from an adviser at the start of their apprenticeship, employment or training.
By the end of 2008, over 500 young people will have been through the regionally based courses. The programme is continuing to grow strongly.
Other aspects of our corporate responsibility programme include:
Fighting corruption
Balfour Beatty is a corporate supporter of Transparency International, the not-for-profit private company set up in 1993 to fight corruption. It is also a leading and active member of the UK Anti-Corruption Forum which promotes effective and co-ordinated action to reduce corruption on both a domestic and international basis on both the demand and supply side of construction and infrastructure markets.
Fighting poverty
Balfour Beatty is a major sponsor and principal supporter of the international charity, Engineers Against Poverty, which produces practical policies and innovative solutions to support the alleviation of poverty, create jobs and promote enterprise development in low income countries.
Fighting homelessness
Balfour Beatty is a patron of CRASH, the construction industry charity for the homeless. The Group supports the charity through participation in a number of its fundraising schemes. Chief Executive, Ian Tyler, is the organisation’s President.
