Lean

Scope 1 & 2 carbon emissions

Since establishing its baseline in 2010, Balfour Beatty has reduced its Scope 1 and 2 emissions1 by 21,919 tonnes of CO2 equivalent (CO2e), which equates to a 5% reduction.

The Group’s CO2e/£m turnover has dropped from 46.8 tonnes of CO2e/£m to 44.9 tonnes of CO2e/£m since 2010, which equates to a 4.1% reduction.

Balfour Beatty has seen a slight increase in its absolute Scope 1 and 2 emissions from 407,823 tonnes of CO2e to 415,198 tonnes over the last year and has also seen an increase in its emissions intensity over the same period from 40.3 tonnes of CO2e/£m to 44.9 tonnes of CO2e/£m.

Figure 1: Scope 1 & 2 emissions in tonnes of CO2e/£m

 

Balfour Beatty’s 2020 goal is to achieve a 50% reduction per million turnover of its Scope 1 and 2 emissions (against a 2010 baseline). Whilst the business has only five years to achieve this target, it has recently appointed a dedicated energy team to reduce fuel and energy use which will lead to a reduction in Scope 1 and 2 carbon emissions. As part of its strategy, Balfour Beatty is also implementing ISO 50001 across some of its operations.

These targets will mean reduced operating costs for its businesses and therefore improved value to its clients and shareholders. Additionally, a number of its clients have expressed an intention to prequalify contractors on the basis of their carbon performance in the future.

Gammon Construction Ltd. and its joint venture with Jardine Matheson, accounts for approximately 29% of the Group’s Scope 1 and 2 emissions. In 2014, it became the first construction company in Hong Kong to be awarded the Carbon Care Label® that covers all of its operations in Hong Kong (except joint venture projects). This is in addition to the ISO 14064-1 international standard for quantifying and reporting of greenhouse gas (GHG) emissions it holds. Its Scope 1 and 2 GHG emissions are independently verified by SGS.

Table 1: Scope 1 & 2 emissions in tonnes of CO2e

         

Absolute tonnes of CO2e

 

Base year 2010

2012

2013

2014

2015

Scope 1

320,307

317,518

278,241

302,701

288.664Δ

Scope 2

116,427

145,623

129,489

105,122

126,534Δ

Total gross emissions

436,734

463,141

407,730

 407,823 

  415,198  

Total carbon emissions
per £m revenue

46.8

48.2

37.3

40.3  

      44.9

 

1Scope 1 emissions include those resulting from the combustion of fuel and operation of facilities, scope 2 emissions result from the purchase of electricity, heat, steam and cooling for own use. The full description of Balfour Beatty’s definitions can be found within its reporting guidance found at http://www.balfourbeatty.com/enablon 

Gas oil used for generators and plant constitutes 18% of Balfour Beatty's carbon emissions

In 2015 Balfour Beatty undertook energy audits across its projects to identify energy savings and has since been conducting a number of trials on new solutions and technologies.

The Group has taken a number of measures to reduce its emissions and has introduced a policy of connecting to the electricity grid on construction sites early on in order to avoid running generators, which have a greater carbon footprint and are expensive to operate. As a result some of its Scope 1 emissions have moved to Scope 2. Additional Scope 1 savings have been achieved by ensuring that generators are sized correctly. The Group has also used hybrid generators and batteries to provide power at low loads such as at night, automatically controlling the generator.

Further contributions have come from the use of more efficient equipment such as LED lighting rigs that draw less power and the use of eco-site cabins that make use of lighting proximity detectors, enhanced insulation and timers on heaters.

Balfour Beatty has been working closely with its supply chain to inform areas for improvement such as on telemetry to reduce the idling of equipment.

Diesel and petrol accounts for 42% of Balfour Beatty's emissions

In the UK, our average emissions for all new passenger vehicles was 115g CO2/km, which is significantly below the EU 2015 target 130g CO2/km.

Further reductions have been achieved by the uptake in use of tele- and web-conferencing and an initiative to reduce travel costs, significantly reducing its Scope 1 and 3 carbon emissions from associated travel.

Balfour Beatty Plant & Fleet Services was awarded ‘Cost Saving Initiative of the Year’ at the 2016 Fleet News Awards for its efforts to improve fuel efficiency and its advanced reporting and telematics system that are changing driver behaviours.

Electricity, gas and boiler fuel account for 38% of Balfour Beatty's emissions

The Group is continually looking at ways to reduce its carbon emissions from its offices, depots and factories. In 2015, the Group funded energy efficiency improvement measures for some of its key locations by undertaking energy audits and installing energy efficiency measures such LED lighting, BMS controls, boiler controls, voltage optimisation systems, and variable speed drives.

Balfour Beatty has been undertaking energy surveys on project sites to identify opportunities reduce power consumption.

Apart from improving the efficiency of its buildings, Balfour Beatty is also improving energy efficiency across its operations by raising awareness.

GHG reporting and assurance

Balfour Beatty’s greenhouse gas (GHG) emissions are reported in accordance with the UK Government’s GHG reporting requirements covering all six Kyoto gases.

Balfour Beatty uses the operational control approach under the GHG Protocol Corporate Accounting and Reporting Standard as of 31 December 2015 to report emissions from its operations around the world. However, it has chosen not to report against the market-based approach. Even though it procures significant amounts of renewable electricity, it has used the average DEFRA/DECC conversion factors for carbon reporting purposes in order not to detract from reducing energy intensive operations. The Group has also reported on energy consumption in MWh for the first time to allow readers to make more informed comparisons on its energy use.

As illustrated in table 2, although its CO2 emissions went up by approximately 7,000 tonnes from 2014 to 2015, the number of MWh over the same period actually dropped from 1,364,007 MWh to 1,302,406 MWh.

Table 2: MWh of energy used across Balfour Beatty’s operations.

   

 MWh

Fuel

2014

2015

Diesel

435,640

648,774

Gas oil/red diesel

575,512

288,687

Electricity

179,055

213,395

Motor gasoline (petrol)

121,866

112,562

Natural gas

20,100

18,173

Boiler fuel

22,253

11,409

LPG

339

3,973

Propane

7,692

2,790

Heat & steam

1,476

2,603

Butane

70

38

CNG

5

1

Total

1,364,007  

   1,302,406

The difference can be explained by the fact that different fuels have different carbon conversion factors with some fuels attracting greater carbon conversion factors than others. Furthermore, the MWh table does not include fugitive emissions.

Table 2 illustrates that despite using approximately 4.5% less energy than in 2014, its fuel mix led the Group to emitting more Scope 1 and 2 emissions. This includes assets that are otherwise not referred to across the rest of the financial statements as defined in Balfour Beatty’s reporting guidance http://www.balfourbeatty.com/enablon that are specific to its business. Balfour Beatty developed reporting guidance specific to its business for the calculation of GHG emissions as well as other sustainability metrics.

The Group has determined and reported the emissions it is responsible for within this boundary and does not believe there are any material omissions. Balfour Beatty uses the UK Government’s carbon conversion factors that were updated in 2015 to calculate its emissions into equivalent tonnes of carbon dioxide (CO2e).

It has removed the Scope 1 and 2 data for Parsons Brinckerhoff and Rail Austria which were disposed of in 2014 and 2015 respectively and stripped out this data from the original baseline.

The Group engaged KPMG LLP to undertake an independent limited assurance engagement, reporting to Balfour Beatty plc, using the assurance standards ISAE 3000 and ISAE 3410 over the Greenhouse Gas data that have been highlighted in this report with the symbol Δ. Their full statement is available on Balfour Beatty’s website at www.balfourbeatty.com/IIA

The level of assurance provided for a limited assurance engagement is substantially lower than a reasonable assurance agreement. In order to reach their opinion they performed a range of procedures over the Greenhouse Gas data including: interviewing management responsible for the data, examining reporting processes and documentation, agreeing a selection of the data to the corresponding source documentation at an operating company level and performing analytical procedures over the aggregated data at a Balfour Beatty Group level. A summary of the work they performed is included within their assurance opinion.

Non-financial performance information, greenhouse gas quantification in particular, is subject to more inherent limitations than financial information. It is important to read the Greenhouse Gas data in the context of the full limited assurance statement and the reporting criteria as set out in the Balfour Beatty reporting guidelines available at http://www.balfourbeatty.com/enablon

Waste intensity

At present, there are limitations on the completeness of Balfour Beatty’s waste data, making like for like comparisons of its annual data difficult. Comparing waste data year on year will also vary depending on the type of projects the Group undertakes and what stage the projects are at. Balfour Beatty is working with its operating businesses to improve this.

In 2015, over 2,567,067 tonnes of waste that Balfour Beatty produced was recycled. This equates 86% of the total amount of waste that Balfour Beatty produced in 2015, but does not include materials that were reused directly without entering the waste stream.

As illustrated below, Balfour Beatty has steadily reduced the total amount of waste it produced/£m revenue over the last four years. This includes both materials sent to landfill and materials that are recycled.

Figure 2: Tonnage of waste produced/£m revenue

Tonnage of waste produced 

Water intensity

Water intensity is an optional indicator in Balfour Beatty’s sustainability strategy. It is measured in cubic metres per £m revenue. Depending on the geography the Group operates in, water can be a sparse or abundant commodity. Almost all of its operating businesses in Europe, the UK, the Middle East and Hong Kong reported on water. None of its North American businesses elected to monitor water use as an optional indicator.

Since improving its approach to monitoring water the Group has seen a decrease in its water intensity in the areas of its business where it monitor this.

Figure 3: Water intensity

Water intensity 

The Group’s focus has largely been on supporting its clients, especially in the utilities business, to reduce water consumption through innovation. The Group has reduced water consumption in a number of its buildings by introducing water saving urinals, improved flush controls and flow restrictors. However, its water consumption is heavily dependent on the projects it carries out. Damping down (especially in warmer climates) and wheel washing are key sources of water use.

Supply chain management

In the UK, Balfour Beatty has been improving its approach to sustainable procurement developing a new policy and specific guidance for suppliers and buyers. In 2014 Balfour Beatty was recognised by the Prime Minister when it became the first UK company to ever publicly commit to spend £1billion with small businesses. Since then Balfour Beatty has spent over £3bn with SMEs, with £2bn going to small and micro businesses confirming its status as the largest net spender with small businesses of all main contractors.

The Group is a funding Partner and Gold Member of the Supply Chain Sustainability School and has held a number of engagement events and workshops with its supply chain and increased the number of Balfour Beatty suppliers to over 1,600 who are now registered with the school bringing the total number of suppliers in the school to over 6,500.

In the UK, Balfour Beatty adheres to the Government’s Fair Payment Guidelines. In 2010 it was the first in its sector to sign up to the Prompt Payment Code and it adheres to the 11 principles of the Construction Supply Chain Charter. It also continued the roll out its supply chain finance initiative, providing suppliers with faster access to their payments than their standard payment terms for work carried out and enabling the supply chain to keep their cash flows operating at a maximum. The Group also continued to increase the use of payment cards to help suppliers receive payment more quickly.

In both the US and UK construction businesses its vendor qualification process has been expanded to identify vendors with sustainability programs in place and to allow project teams to provide feedback on vendor performance specifically around safety, sustainability, schedule and quality. As contracts are renegotiated with Impendi in the USA, under BB Group’s procurement strategy, Balfour Beatty ensures vendors include sustainable measures as a key part of their revised service offerings. That means providing data about carbon use or matching green product pricing with less sustainable options. In the UK, Balfour Beatty has introduced Balfour Beatty Core to simplify the process for lower risk suppliers.

The Group’s US Investments business implemented a “green purchasing” program through HD Supply. The program identified high use maintenance supplies across over 44,000 homes managed by BB Communities in the U.S., then carefully selected more sustainable products. The energy and water saving products were procured at a significant discount—providing reduction of expenses, conservation of natural resources, and increased profitability across the portfolio.

Gammon Ltd., Balfour Beatty’s joint venture construction arm in Hong Kong, has a comprehensive green procurement programme in place and has adopted PAS 2050 (Specification for the assessment of the life cycle greenhouse gas emissions of goods and services) for 25 of its ready mix concrete products and the Construction Industry Council’s carbon label for ten of its concrete mixes. Six of these were graded as “Outstanding” and four were graded “Highly Commended”. The independent verification under the scheme provides clients confidence in the accuracy of products’ carbon footprint when selecting lower carbon construction materials. Gammon Construction Ltd. is currently helping its cement supplier with their application and will apply for carbon labels for more of its concrete mixes in the future.

It has also increased the use of Biofuel B5 to over 50% of all construction plant and equipment and introduced a formaldehyde standard for carpentry and joinery trades to ensure that by the end of 2015 over 95% of all timber falsework and formwork was from sustainable sources. As part of its ISO50001 system, has developed an energy efficiency purchasing specification to integrate energy efficiency into its purchasing decisions.

In December, Gammon Construction Ltd. was awarded a Gold ‘Green Purchaswi$e Award (Corporate)’ for its concerted efforts on green governance and purchasing. It was also awarded “Sustained Performance (6 years+) - (Corporation)”, which recognises the company’s unwavering commitment to constructing the greenest possible industry for the benefit of future generations. It is also won “Asia’s Best Supply Chain Reporting” award at the 2015 Asia Sustainability Reporting Awards in Singapore. The award, organised by CSR Works, recognises sustainability reporting leaders in Asia.