Sustainable Procurement Robin Horsman – Supply Chain Manager

Sustainable Procurement Robin Horsman, Supply Chain Manager Sam Brewitt, Sustainability Manager

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4 The role of our Supply Chain £112.5m (6 months to end June 2012) 55% Subcontracted 20% Plant Associated 10% Major Materials

5 The Challenges The cheapest supplier always wins Sustainable options are more expensive Sustainability is just environmental issues Lack of awareness and understanding

6 What is sustainable procurement? It’s all about cutting procurement costs by achieving efficiency savings which usually means that we’d be buying less and therefore impacting the environment less. It’s all about having a greener procurement process – reducing our carbon footprint, using more recycled materials and less water. It’s all about considering the long term impact of what we buy and who we buy it from. It’s all about finding the appropriate balance between key principles such as: reducing our waste, supporting the local economy, collaborating with suppliers, reducing carbon and water and enhancing biodiversity.

7 What is sustainable procurement in practice - materials? A sustainable material is one which is high in recycled content, readily replenished, non-hazardous, responsibly sourced, and reusable or recyclable and durable with a suitable lifecycle A sustainable material is one which has the lowest environmental impact for the lowest upfront cost. A sustainable material is one which is durable and lasts a long time. A sustainable material is one which doesn’t produce harmful substances when it degrades. One of the key principles of Sustainable Procurement is selecting sustainable materials. But what is a sustainable material?

8 Please rank the following statements on a scale of 1 to 10 Material choice – we need evidence that suppliers are choosing recycled content in their products. How easy is this for you to do using current processes? (with 1 = extremely difficult - 10 = extremely easy) Material choice – by 2015 BBR aims to ensure that 100% of timber and 50% of major materials (ready mixed and precast concrete, aggregate and steel) procured by our suppliers (on BBR’s behalf) are from recognised responsible sourcing schemes (e.g. FSC, PEFC, BES6001, BS8902). How easy is this for you to comply with? (1 = extremely difficult - 10 = extremely easy) Recycling - can the products you supply be re-used/recycled when they come to the end of their life with BBR. Is this something considered in your current activities? (1 = not considered at all - 10 = considered for all products) Carbon reporting – we need suppliers to start sharing information on the carbon embodied in the materials they provide BBR. How easy is this for you do using current processes? (1 = extremely difficult - 10 = extremely easy)

9 What is sustainable procurement in practice? Another key principle of the Balfour Beatty Rail Roadmap is supporting the local economy. But what should this mean in practice? How should Balfour Beatty Rail most support the local economy through its procurement practices? Through buying materials or services from local suppliers or organisations rather than from global suppliers. By maximising opportunities to engage the local supply chain and encouraging Balfour Beatty’s existing supply chain to give opportunities to local labour and apprentices. By sharing innovative ideas and knowledge with the local supply chain. By procuring from the cheapest source regardless of location

10 Please rank the following statements on a scale of 1 to 10. (1 = extremely difficult - 10 = extremely easy) Local recruitment – where possible we need labour suppliers to be sourcing their staff locally. On long term projects we intend to work closely with our suppliers to encourage them to train up a local workforce – giving back to community and enabling BBR to meet targets set by local councils. How easy is this for you to implement? We need Suppliers to share information on the locality of their staff (particularly labour suppliers) – e.g. on Thameslink KO2 Project we are asking for information on the levels of locality staff are travelling to our sites from (in the local council area / within 10 miles / within 20 miles / within 30 mile / 30+ miles). How easy is this to do using your current processes?

11 Timber Procurement - local or global supply? We have an international client in the US who wants the roof of a new station to be constructed from wood. We’ve narrowed down the selection to two possible suppliers. One who’s based in Houston and another that’s based in South America. We’ve weighed up the pros and cons of each supplier: The South American supplier can provide you with the materials that you need for half the price with the transport to Houston included in the price We have checked the CEPT website and only the US supplier can provide Forest Stewardship Council (FSC) certification. As the South American supplier is outside the US, we would be required to undertake further due diligence as an importer of the wood.

12 Timber Procurement - local or global supply? Bearing in mind the pros and cons of each, which supplier should we buy from? The Supplier in Houston. We should only buy timber from certified suppliers (such as FSC or PEFC) who can provide chain of custody certificates for the product we are buying, even if it’s more expensive. The supplier in South America. Although the costs and carbon footprint of long distance transport is high, the money saved from buying from the South American supplier could be used to purchase solar panel heating for the station, which would have a greater impact on the station’s overall sustainability rating.

13 Summary BBR have challenging sustainability targets We are looking for our supply chain to work towards the same goals