Veidekke — Environmental & Social Information 2017

Apr 7, 2017

CSR Report 2016

CONTENTS

• Introduction by the President and CEO
• This is Veidekke
• Veidekke's CSR management system
• Stakeholder engagement
• Occupational health and safety
• Environment and climate change
• Ethics and compliance
• Suppliers and work on professionalism
• The people at Veidekke
• Report parameters
• GRI Index

INTRODUCTION BY THE PRESIDENT AND CEO

One of Veidekke's strategic goals is to be a leader in the industry in the area of sustainability. This means that we must be able to deliver products, services and solutions that balance considerations between economic growth, people and nature in a better way than today.

Sustainability and competitiveness are becoming ever more closely connected. Customers, owners, employees and partners will choose companies that have the capacity to operate profitably based on the principles of sustainability. One factor is innovation and long-term perspective in our product portfolio. This is about which materials, machinery and equipment we use in all our production, whether it involves residential construction, civil engineering activities, road surfaces or product development.

Another factor is the reduction of greenhouse gas emissions. We have committed to meeting the UN's two-degree target. Such targets help us live up to both external and internal requirements and expectations. A third factor is the corporate social responsibility we have as an employer. We will create safe and secure workplaces in which the rules of working life are observed, and where we ensure that our own internal guidelines for safety and ethics are complied with by both our own employees and our subcontractors. Altogether, these factors give us a boost as a sustainable company with good, safe and profitable operations.

The construction and civil engineering industry is associated with high consumption of resources, substantial emissions and a high risk of injuries and accidents. In addition, unprofessional actors and financial crime have been uncovered. The industry has a joint responsibility to prevent this, and Veidekke, as Norway's largest and Scandinavia's fourth largest contractor, has a special responsibility to do so. Therefore, we have assumed the role of an advocate in the industry in order to improve safety and counteract unprofessional conduct and crime. In order to ensure better control of our building sites, we prequalify and permit a maximum of two levels of subcontractors. Everyone who works with or for us must also comply with our ethical guidelines. A mandatory e-learning programme in ethics was launched in 2016, and in the course of the year, nearly half of our employees completed the training. In 2017, we will take new and important steps to improve our management systems in the area of ethics and compliance with rules.

Occupational health and safety is an integral part of our operations. We cannot view this in isolation, because good occupational health and safety is closely associated with good production and the ability to deliver as agreed. Good and safe production are two sides of the same thing. Our most important occupational health and safety goal is to enter 2020 with zero serious injuries. We have an annual target of a 20 per cent reduction in the overall number of injuries. We have managed to reduce the number of serious injuries by half in the last two years, and we are now preparing concrete measures and plans of action to achieve the target of zero serious injuries in 2020.

Veidekke has grown a great deal in recent years. In 2016, we rounded a milestone with revenue in excess of NOK 30 million. This is 70 per cent more than six years ago. Our business areas have invested a great deal of work in ensuring that greenhouse gas emissions will not increase in step with the growth in revenue, and it is very gratifying to see that this is no longer the case. We were given a score of A- in the international investor survey on climate change, CDP, in 2016. This is our best score to date and above the Nordic average. We are proud of this, but we know that we still have a significant potential for improvement.

Our obligation to meet the UN sustainability targets will provide the framework for Veidekke's sustainability efforts in 2017. We will clarify which goals we will assume a particular responsibility for and ensure that we contribute to the areas in which we have the greatest prerequisites for making positive changes.

Arne Giske President and CEO

THIS IS VEIDEKKE

Veidekke is one of Scandinavia's largest construction and property development companies. The company undertakes all types of building construction and civil engineering contracts, develops residential projects, maintains roads, and produces asphalt and aggregates. In 2016 Veidekke had revenue of NOK 30.1 billion and 7,400 employees. Veidekke is listed on the Oslo Stock Exchange, and a large proportion of the employees are shareholders in the company.

The company is organised into three business areas: Construction, Property Development and Industrial, with strong intra-group synergies. Veidekke is a specialised, competence-based company that carries out projects in collaborative interaction with its customers and suppliers. This participative approach helps ensure good solutions and results, good, safe operations, and continuous learning and improvement, as well as fostering loyalty and commitment.

Our most valuable resource is our employees and their expertise, and we therefore attach importance to targeted skills development and recruitment of new staff.

Multi-local strength is generated through our widespread presence in Scandinavia. Veidekke has strong local roots and proximity to customers, at the same time as we have both the size and the expertise to be able to undertake large, complex projects all over Scandinavia.

REVENUE NOK BILLION

PROFIT BEFORE TAX AND PROFIT MARGIN NOK MILLION AND %

The figures are taken from the segment accounts.

REVENUE DISTRIBUTED BY BUSINESS AREA

BUILDING 51% 25% 11% 13%

CONSTRUCTION

CIVIL ENGINEERING PROPERTY

DEVELOPMENT

INDUSTRIAL

BUSINESS AREAS

CONSTRUCTION OPERATIONS

Veidekke is engaged in nationwide building construction and civil engineering activities in Norway and Denmark, while operations in Sweden are concentrated in the largest cities. Construction operations accounted for 76% of Veidekke's revenue in 2016.

Building Construction builds commercial buildings, public buildings and residential buildings. Commercial buildings are mainly office buildings, shopping centres and hotels. Public buildings are primarily schools and health-care buildings. Building construction operations accounted for 69% of the business area Construction's total revenue in 2016.

Civil engineering operations accounted for 31% of the revenue in Veidekke's construction operations in 2016. Transport infrastructure projects (road and rail) and other public infrastructure provide the majority of Civil Engineering's revenue. The portfolio also includes projects in the energy sector and other industrial facilities.

REVENUE NOK 24.6 BILLION PROFIT BEFORE TAX NOK 804 MILLION PROFIT MARGIN 3.3%

PROPERTY DEVELOPMENT

Veidekke's property development operations purchase sites and develop them into residential buildings for sale to end customers, primarily in the largest cities in Norway and Sweden. Veidekke's construction operations are responsible for the construction of the residential buildings and are involved from the earliest phase, before the site has even been purchased, to ensure identification of opportunities and risks. The close collaboration between Veidekke's property development and construction operations provides synergies and is central to good profitability in Veidekke's residential segment. The development of residential buildings constitutes 11% of Veidekke's total revenue.

In Sweden Veidekke is generally the sole owner of residential projects, while in Norway most of the projects are done in joint ventures with other partners. The choice of business model is assessed individually for each project, and the project's scope, risk and financing are the decisive factors.

Property Development has a long-term perspective. It takes several years from a site being purchased to the home being handed over to the buyer. For this reason, the land bank is strategically important, and the portfolio is optimised through purchases and sales in accordance with the current strategy. At year-end 2016 the Group's had a land bank that is expected to yield 16,750 residential units: 7,900 in Norway and 8,850 in Sweden.

REVENUE NOK 3.2 BILLION PROFIT BEFORE TAX NOK 567 MILLION RETURN ON INVESTED KAPITAL 21.4%

INDUSTRIAL

Veidekke Industri AS (Industrial) is the largest asphalt contractor in Norway and the second largest producer of aggregates. Industrial is also a major player in the operation and maintenance of public roads in Norway. In 2016 Industrial accounted for 13% of Veidekke's total revenue.

Industrial's revenue for the 2016 financial year is distributed between the three business units as follows: Asphalt 59%, Road Maintenance 28% and Aggregates 13%.

The business area Industrial has 29 asphalt plants and 28 quarries located across Norway. In 2016 the company laid more than 2.5 million tonnes of asphalt, had 24 ongoing road maintenance contracts, and sold 8.1 million tonnes of aggregates. The Norwegian Public Roads Administration is Industrial's largest single customer.

REVENUE NOK 4.2 BILLION PROFIT BEFORE TAX NOK 136 MILLION PROFIT MARGIN 3.3%

VEIDEKKE'S CSR MANAGEMENT SYSTEM

Increasing requirements and demands for sustainable solutions affect the way that Veidekke works and thinks. Veidekke shall be an industry leader in the area of sustainability, and therefore work in the area of sustainability and corporate social responsibility is integrated into the company's management model and strategy towards the year 2020.

The Veidekke model

Corporate social responsibility is a key topic of Veidekke's business strategy for 2017-2020. Corporate social responsibility is a Board and corporate management responsibility.

The corporate management's role is to identify common needs across the Group, determine a common direction, and coordinate and follow up initiatives. They do this jointly with experts who are responsible for the key areas of corporate social responsibility: occupational health and safety, human resources, the environment, procurement, legal compliance and communication. Occupational health and safety and financial figures are reported monthly to the corporate management, while other figures in the area of corporate social responsibility are reported annually to the corporate management, the Board and the owners. Goals and measures are prepared in the various businesses, which together with common activities across the Group shall contribute to meeting the Group's primary goals These are discussed in detail in the relevant chapters of this report.

Veidekke's organisational model gives the managers a high degree of autonomy at the local level, but a clear duty to work in accordance with Veidekke's core values and frameworks. A separate compliance group has been established with representatives from each of the business areas. This group is responsible for ensuring that compliance with regulations is coordinated and identical throughout the entire organisation.

The "Veidekke House" builds on the company's four core values: professional, honest, enthusiastic and ground-breaking, and these form the foundation for value-creating partnerships between Veidekke's employees, customers and suppliers. The Veidekke House is also the starting point for our ethical guidelines, which provide guidance for our daily work. The ethical guidelines cover important topics such as health and safety, the environment, anti-corruption and correct market behaviour. It is the responsibility of the business units to ensure that they all comply with the guidelines and rules.

INTERNATIONAL STANDARDS

Through a global framework agreement with the trade unions and Building and Wood Workers International, Veidekke has committed to respect workers' rights and to work for continuous improvements in the areas of working conditions, industrial relations, health and safety in the workplace, and the environment. Under this agreement, Veidekke undertakes to comply with the following international standards:

• The ILO Declaration on Fundamental Principles and Rights at Work.
• The OECD Guidelines for Multinational Enterprises.
• The United Nations Universal Declaration of Human Rights. For more information on the framework agreement and the international standards, see: VEIDEKKE'S PRIORITY TOPICS WITHIN CORPORATE SOCIAL RESPONSIBILITYCUSTOMERS

http://veidekke.com/no/foretaksstyring/csr/article8642.ece

Priority areas

In 2015, Veidekke conducted a materiality assessment to survey the areas of corporate social responsibility that customers, owners, authorities, and environmental and industrial associations felt tha t the company should focus on. As part of this assessment, 30 different topics related to the environment, society and ethics were ranked by the stakeholders. In addition, the management and relevant experts have assessed the topics that must be given greater focus so that Veidekke can reach its strategic goals. The nine most important areas are listed in the figure below.

Veidekke is a major purchaser of goods and services. Our suppliers thus play a very central role in the company's ability to achieve its objectives within the priority areas. For this reason, all the topics are relevant to both Veidekke's own operations and to the suppliers. This materiality assessment also forms the basis for the topics covered in this report.

THE VEIDEKKE HOUSE IS BOTH A SYMBOL OF AND A GUIDELINE FOR OUR WORK

VEIDEKKE
ENVIRONMENT Greenhouse gas emissions Hazardous substances	PEOPLE Safety Working environment	SOCIETY Ethics Anti-corruption
Contaminated land Labour rights Competition, irregularities VEIDEKKE'S SUPPLIERS

STAKEHOLDER ENGAGEMENT

Veidekke is a competence-based company that acquires and carries out projects in partnership with – and with the involvement of - customers and suppliers, which creates good solutions and results. This approach characterises Veidekke and will be increasingly important to our future development.

Good, safe operations and continuous learning and improvement are achieved through a participative approach. Our participative approach creates a sense of belonging and engagement, and as a result, our employees are satisfied on the job and contribute to a common effort to realise Veidekke's ambitions and goals. Employee co-ownership makes an additional contribution to creating a sense of belonging, engagement and active involvement.

Veidekke's ambition is to be the leader in the industry in value-creating partnerships. Our deliveries shall meet or exceed the customer's expectations, in addition to utilising and developing the expertise of our employees and suppliers. Being solution-oriented means that the focus is on the customer in all commercial relationships, and that the customer is involved in the development and execution of the projects.

The company's operations affect the daily life of many people. This may be as an employer, supplier or customer, or through work in the local communities where the company has projects. Veidekke therefore aims to maintain dialogue with the parties that in some way or other are affected by the company's operations. The Group collaborates with industrial associations, trade unions and special interest organisations. In addition, customers and local communities are involved through dialogue meetings, project websites and social media. Constructive dialogue with the stakeholders provides Veidekke with the opportunity to identify challenges early on and thereafter find the most sustainable solutions.

The table below summarises the main stakeholders, the topics they are concerned about and how Veidekke has responded.

Stakeholders	What topics are the stakeholders concerned about	Arena for dialogue	Veidekke's follow-up
Owners	Good corporate governance –	Quarterly presentations.	Information about our work on sus
	and how Veidekke sets goals and guidelines in these areas.	Meetings with investors and investment and analysis communities.	tainability.
Employees	Desire good information on the status and development of the company.	Daily dialogue with managers. Annual per formance appraisals, general meetings, involvement of employee representatives through the Board and in various forums.	Involvement through the line manage ment and through internal channels, such as the intranet and in-house magazine.
			Standard introduction programme for new employees.
Customers	Desire dialogue to discuss chal lenges and opportunities that arise in collaboration with Vei dekke, both in general and in each individual project	Customer meetings, seminars and events, such as Veidekke's collaboration conference and the MIPIM international property fair, as well as individual meetings in the projects. Online channels for dialogue with residential customers.	Customer surveys, customer inter views, customer dialogue in projects and focus groups. Participation in professional and indus try forums as well.
Suppliers	Collaboration on health and safety and professionalism. Ensure good, professional	Dialogue meetings and participation in industry forums.	Involvement of suppliers from an early stage to ensure optimum collabora tion and safety.
	suppliers.		Prequalification through StartBANK.
Local and central authorities	Efforts to promote more efficient development processes and more efficient planning permission processes in Norway. Influencing the framework conditions and financing for increased residential construction in Sweden.	Participation in industry forums and our own events: Arendal Week (Norway), Almedalen Week (Sweden). Contact with politicians and the authorities through the Confederation of Norwegian Enterprise (NHO), via the Federation of Nor wegian Construction Industries (BNL) and the Norwegian Contractors Association (EBA) in Norway. In Sweden and Denmark, Veidekke is involved in similar work through the Swedish Construction Federation (BI) and the Danish Construction Association (Dansk Byggeri). Dialogue meetings and par ticipation in local and regional forums (urban development), as well as direct dialogue with local authorities on individual projects.	Placing important problems on the agenda and participating in public debate on increased residential con struction, professionalism and perma nent employees.
The construction industry	Collaboration within the industry to improve safety and profession alism.	Dialogue meetings and participation in industry forums and committees.	Binding safety charter for the con struction industry with a vision of zero injuries. Tools and expertise of the member companies in the Norwegian Contrac tors Association (EBA) for climate and energy efficiency.
Society	Local effects of Veidekke's operations (workplaces, noise, environmental impacts). Ensure that Veidekke's strategy is in line with the authorities' objectives, in the environmental area, for example.	Membership organisations, industry forums, open meetings and public consul tations.	Active participation in public debates and advocacy work towards politicians, for example in efforts to increase profes sionalism in the construction industry. Collaboration with the environmental organisation ZERO on fossil-free build ing sites. In 2015, Veidekke committed to meeting the UN's two-degree target.

OCCUPATIONAL HEALTH AND SAFETY

Construction and civil engineering are one of the industries with the most serious accidents. Therefore, Veidekke's principal goal in the area of occupational health and safety is "zero serious injuries". Systematic efforts to achieve this goal have resulted in a reduction in the number of serious injuries by more than half.

In 2015, the management defined six priority areas for achieving the goal of zero serious injuries (see the illustration below).

In 2016, all the business areas prepared strategy and action plans based on these guidelines, which are to be carried out going forward towards the year 2020. An example of the measures that will be implemented is the training of managers in "Safety Interviews", an important tool for communicating safety work to on-site production. Other examples are to improve processes so that more risk is eliminated as early as possible in the planning phase, and that subcontractors are involved to an even greater extent in safety work.

In 2016, Veidekke registered a 36 per cent decrease in the number of serious injuries, while the total number of injuries rose by 26 per cent. The increase is attributed to an increased number of injuries reported by subcontractors. Among Veidekke's own employees, the total number of injuries in 2016 was the same as in 2015. A total of 344 injuries were reported. A total of 47 per cent of the injuries were incurred by our own employees and 53 per cent were incurred by subcontractor employees. The LTI-1 rate (lost-time injuries among own employees per million hours worked) was stable in 2016 at the same rate as in 2015. The LTI-1 rate is somewhat higher in Sweden than in the other countries. They have prepared strategy and action plans going forward towards the year 2020, which are expected to improve this result.

Sickness absence

Veidekke has low sickness absence relative to working life in general and to the industry in particular. One of the most important reasons for this is the high level of satisfaction. When asked "Are you satisfied with your job", the average score for the employees in Norway was 6 (on a scale from 0 to 7), while 83 per cent of the employees of Veidekke Sweden responded that they look forward to going to work. The employees stated that the reason for the high level of satisfaction are good colleagues, a good working environment and exciting tasks.

Prevention of sickness absence is a high priority, and good routines have been established for close follow-up of employees on sick leave in order to facilitate their prompt return to work. Sickness absence was 3.7 per cent, down from 3.9 per cent the previous year. The rates for the individual countries were: Norge 3.9 per cent (4.2 per cent), Sverige 3.9 per cent (3.6 per cent) and Denmark 1.6 per cent (1.9 per cent). This is below the industry average in Norway and Denmark, but slightly higher than the average in Sweden. Differing regulations make it difficult to compare the sickness absence figures between the countries.

Workers on construction sites are exposed to health risks caused by heavy physical labour, repetitive movements, noise and dust. To reduce the likelihood of strain injuries we are taking specific steps to avoid prolonged static work and ensure good planning so that unnecessary lifting can be avoided. Hearing impairment is also a common problem in the construction and civil engineering industry, which can only be avoided by preventing employees from being exposed to hazardous noise. To reduce the probability of this, the corporate health

The figures include our own employees and subcontractors working on Veidekke projects.

Sickness absence for the Group as a whole was 3.7 per cent, which can be broken as follows: Norway 3.9 per cent, Sweden 3.9 per cent and Denmark 1.6 per cent.

service prepared the campaign "One Bang Can Be Enough" to increase awareness of damage from mechanical noise. A broad assortment of hearing protection has also been prepared to make it easier to find hearing protection that is suitable for each individual in various work situations.

Veidekke offers employees with alcohol, drug or gambling addiction problems help through AKAN – the workplace

Lost-time injuries among our own employees per million working hours (LTI-1 rate)

advisory centre for issues relating to alcohol, drugs and addictive gambling and gaming. Everyone who entered into an AKAN agreement in 2016 is still employed. This proves that Veidekke's AKAN work is effective, with professional follow-up that inspires motivation and provides good support.

GUIDELINES FOR THE BUSINESS UNITS' SAFETY WORK

IMPROVED STATE OF SAFETY

TWOFOLD OBJECTIVE

PRIORITY 2

Annual reduction in number of injuries

Area	Our ambitions	Main targets for 2016	Target achievement 2016	Targets for 2017
Occupational health and safety	Priority 1: Zero serious injuries by 2020 Priority 2: Reduce the total number of injuries by 20 per cent per year. More good working years for everyone	Specify more detailed measures in all the units with a view to achieving the goal of zero serious injuries. Reduce the number of injuries by 20 per cent from 2015 to 2016.	All of Veidekke's units have specified measures for achieving the goal of zero serious injuries. The number of serious injuries was reduced by 36 per cent from 2015 to 2016. The total number of injuries increased by 26 per cent from 2015 to 2016.	Continue the reduction to achieve the goal of "zero serious injuries" by 2020. Reduction in the total number of injuries by 20 per cent. Implement the plans for measures that the businesses prepared in 2016.

CASE: CARE - SPEAK UP!

Veidekke's OHS week is arranged every year for our own employees and subcontractors. The aim is to increase awareness of selected OHS topics.

The main topic for OHS Week in 2016 was "We report when we discover situations that can be hazardous". The goal of the topic was to reinforce a culture in which the employees of Veidekke care about each other to an even greater degree.

During the OHS Week, employees were to find words they could use to report, which everyone could use when they discover something that can result in a hazardous situation. The desire was for this exercise to lower the threshold for reporting, increase the understanding of why we must report, increase understanding of when to report and give the employees training in how we should respond when others report to us.

VEIDEKKE'S 2016 OCCUPATIONAL HEALTH AND SAFETY AWARD

The renovation project Prinsens gate 26 in Oslo for the Storting received Veidekke's OHS Award for 2016. "This year's winner is a role model for clear OHS leadership", said President and CEO Arne Giske at the award ceremony.

The project, Prinsensgate 26, encompasses renovation of the old office building at Prinsensgate 26, and the construction of a new post and goods reception facility under Wessels plass. The project is referred to as one of Norway's most complex renovation projects ever,

"This project is a very good example of how OHS work should be carried out in general and under challenging framework conditions in particular. The project distinguishes itself by showing the importance of clear leadership in achieving good safety conditions in a very challenging renovation project", Giske concludes.

Occupational health and safety has the highest priority at Veidekke, and the Group's OHS Award has been handed out every year since 1997. The aim is to reward units, persons or projects that show a special commitment to OHS, and to illustrate useful experience, ideas, knowledge of OHS for use in further development.

ENVIRONMENT AND CLIMATE CHANGE

In November 2015 Veidekke committed to operating in accordance with the IPCC's two-degree target. All the units are in the process of defining specific measures that will collectively help the company reduce its greenhouse gas emissions.

The construction and civil engineering industry is associated with a substantial impact on climate and the environment. The industry has a sizeable ecological footprint due to its high consumption of energy and natural resources, high greenhouse gas emissions, large volumes of waste and impact on biodiversity. In addition, it is associated with large volumes of CO2 emissions relating to both supply chains and the use of products. As a major actor in the industry, Veidekke has a particular responsibility and a substantial opportunity to make a difference – for society, customers and employees.

In recent years, customers have become increasingly more aware of the environmental properties of both products and production processes. Veidekke is therefore noticing an increased demand for projects with environmental qualities. At the same time, the authorities and investors are placing greater demands on reporting and transparency with respect to the company's environmental impact and handling of climate risk. Veidekke shall be a leading actor in the industry in the reduction of greenhouse gas emissions and protection of the environment. Our environmental strategy will focus on making an effort where the impact is greatest, and where one can thus make the greatest contribution. For Veidekke, this means a primary focus on three areas: energy consumption and greenhouse gas emissions, environmental toxins and hazardous substances, and materials and products.

Climate

Being the best in the environmental area means in practice that Veidekke should be able to offer the customer climate-smart and innovative solutions, and have, for example, expertise in construction using sold wood and the most important environmental standards, such as BREEAM, LEED, DNGB, passive house, energy-efficiency class A, zero-energy buildings, energy-positive buildings and Nordic Ecolabel ("Svanen"). In 2016, Veidekke also entered into cooperation with the environmental organisation ZERO regarding fossil-free machinery, since a large share of Veidekke's greenhouse gas emissions are linked to transport and machinery. Veidekke works with both improving the efficiency of its machinery and testing new energy carriers.

In 2015, Veidekke committed to operate in accordance with the UN target of a maximum two-degree temperature increase by the year 2100. This is the critical limit for what nature can withstand before climate change becomes serious and uncontrollable. The two-degree target entails a reduction in global greenhouse gas emissions of at least 66 per cent in 2050 compared with 2010.

In 2016, Veidekke emitted 80,648 tonnes of CO2 from its own operations. This is a small increase relative to 2015. The increase is primarily attributed to the company's revenue growth of 23.3 per cent. Viewed in relation to revenue, however, Veidekke has made significant improvements in CO2 emissions from their own operations. Emissions have declined by 17 per cent per million in revenue from 2015 to 2016.

GREENHOUSE GAS EMISSIONS IN TONNES OF CO2

The figure shows Veidekke's own greenhouse gas emissions based on current measurement methods. The figures are stated in tonnes of CO2 equivalents. See the method in the GRI Index.

Each year, Veidekke completes the Carbon Disclosure Project (CDP) investor survey, which charts the greenhouse gas emissions of companies and their strategies for reducing them. Veidekke's score in 2016 was the company's best ever (CDP2016: A-) and above the Nordic average across all sectors (C).

Adapted measures

All the units of Veidekke are in the process of defining concrete measures that will contribute to the company operating in accordance with the two-degree target. The units within the Group are quite different and must therefore adopt different approaches to cutting greenhouse gas emissions, for example:

• The goal of Veidekke Industri (Industrial) is to reduce its climate impact by 5 per cent per year towards the year 2021. Veidekke Industri (Industrial) also has a goal that 40 per cent of all asphalt production will be low-temperature asphalt by 2021. In 2015, an investment programme for environmental measures was adopted, which will save energy and costs and thereby reduce CO2 emissions. Among other things, several plants have established ceilings for aggregates/ materials. In addition, 19 out of a total of 29 asphalt plants are now equipped to produce low-temperature asphalt. An important new project in 2016 has been the transition to pellets as a source of energy at two of Veidekke's largest asphalt plants. This will be completed by the start of the season in 2017. As a result of this, the annual greenhouse gas emissions from asphalt production at these factories according to Enova will be reduced by more than 8,600 tonnes of CO2, a reduction of more than 90 per cent. This corresponds to approximately 10 per cent of Veidekke's total emissions in 2016.
• In spite of a 10 per cent increase in the production of asphalt from 2015 to 2016, the emission level is the same in 2016

VEIDEKKE'S TOTAL CO2 EMISSIONS BY UNIT

Greenhouse gas emissions vary by unit due to their different activities and sizes. Property Development accounts for 0.08% of the total emissions – decisions made by Property Development primarily impact the CO2 emissions of the Construction business area.

as in 2015. This shows the impact of the environmental investments that have been implemented in 2016, with drier aggregates and a transition to gas. The impact then shows a 9.3 per cent reduction in greenhouse gas emissions per tonne of asphalt produced.

• Emissions from machinery shall be reduced by 40 per cent by 2030, and Veidekke Entreprenør (Construction) in Norway is therefore testing electrical machinery and synthetic diesel (HVO). These measures should satisfy the requirements for fossil-free building sites. In one civil engineering project in Bergen, two of the three concrete spraying rigs are electrically operated. This reduces the CO2 emissions by nearly 60 per cent. These rigs prove to function well in practice. Other advantages are lower investment costs and a better physical working environment.
• Property Development in Norway has set a goal to reduce greenhouse gas emissions from their residential projects in accordance with the two-degree target. The goal is to reduce emissions by 40 per cent by 2025, compared with an average building from 2010. The emission reductions will take place through the selection of climate-friendly materials, lower emissions from energy consumption in the buildings and through solutions that affect the transport patterns of the end users. Veidekke Eiendom (Property Development) has developed an apartment building in solid wood in Trondheim. CO2 emissions are reduced in this project by as much as 45 per cent through the use of solid wood, low-carbon concrete and the passive building standard.
• Veidekke Bostad (Property Development) in Sweden builds Nordic Ecolabel apartments, which have annual CO2 emissions per apartment that have been reduced by approximately 1,000 kg CO2 relative to the current statutory requirements.
• Hoffmann in Denmark has worked for a long time to strengthen its expertise in developing good environmental buildings, such as Frederiksbjerg Byggeriet. This is a new school for the Municipality of Aarhus with low energy class 2020 and a comprehensive focus on sustainability. The school received "Årets Byggeri" award in 2016, an honorary national prize that is awarded to the best and most important building of the year based on its importance to the building trades and society.
• Veidekke Entreprenør (Construction) and Veidekke Industri (Industrial) in Norway are ISO 14001 certified. Portions of Veidekke Bygg (Construction) and Veidekke Anläggning (Civil Engineering) in Sweden have been certified.

Waste management

Construction Norway has set a target of at least 70 per cent source separation in its projects and less than 40 kg of waste per square metre of new buildings after demolition. Construction Sweden has set a target of at least 75 per cent source separation in its projects and less than 10 per cent of the waste it generates going to landfill. In 2016, the construction operations in Norway and Sweden source-separated

ENVIRONMENTAL ASPECTS THAT VEIDEKKE WILL PROTECT, PREVENT AND REDUCE

approximately 90 and 77 per cent, respectively, of the waste from construction, renovation and demolition. In 2016, roughly 5 per cent of the waste in Sweden went to landfill, compared with 3 per cent in 2015. In Norway, waste per square metre of completed new buildings amounted to 29 kg for 2016..

Contaminated land

Contaminated land is a major environmental issue for all three business areas in Veidekke. In the Industrial business area, it is particularly relevant in connection with sites where we have had operations for several decades, because the regulations and practices concerning the treatment of hazardous waste have become more stringent over time. For the Property Development business area, contaminated land is one of the main aspects we investigate when purchasing sites for residential development. The Construction business has the remediation of contaminated land as one of its business areas, and it is extremely important to deal with the materials in the correct way to prevent new contamination.

In connection with entering into new leases or purchase agreements, Veidekke requires that the lessor/seller disclose information about any known contamination. Grounds surveys are carried out if and when required, i.e. if contamination is suspected or if the buyer or owner of the site so requires. In 2016, the Industrial business area in Norway cleaned up 0.8 hectares of "potentially contaminated land" in Kirkenes on owned land. Moreover, industrial operations in Norway have identified 13.5 hectares of owned land and 18.5 hectares of leased land that require remediation. There are also 22.3 hectares of owned land that might be contaminated and require assessment.

Environmentally friendly buildings and urban development

Veidekke is noticing a growing demand for eco-friendly products, and building construction projects with defined environmental objectives are increasing in both scale and number. This includes, among other things, the energy rating of buildings, passive house standard, BREEAM, LEED, Nordic Ecolabel ("Svanen"), the Sweden Green Building Council (Miljøbyggnad), the Norwegian Research Centre on Zero Emission Buildings (ZEB), the Future Built programme and fossil-free building sites. Property Development Sweden now only produces Nordic Ecolabel homes. These properties have low energy consumption, strict requirements regarding the energy consumption of appliances, high requirements regarding airtightness and are constructed using materials approved by Nordic Ecolabel. In 2016, a total of around 300 Nordic Ecolabel apartments were released to the market in Malmö, Gothenburg and Stockholm.

Environmental competence and innovation

To meet current and future needs, Veidekke is working to improve its environmental competence internally within the company. This is accomplished through courses under the direction of the Veidekke School, and certification of employees for BREEAM, CEEQUAL and the Nordic Ecolabel ("Svanen"), among other things.

In 2016, Veidekke established the "Environment and Civil Engineering Department" for the sale of environmental services. The primary aim of this department is to sell expert services and solutions to Veidekke's projects, for example in the area of BREEAM, environmental clean-up reports for buildings, waste management and downstream solutions. In addition, the department has expertise in the sampling, analysis and assessment of contaminated soil, ground water and seepage water.

Veidekke is involved in a number of research and development projects in the environmental area, and some examples of these are given below:

• The EBLE research project (evaluation of housing with low energy consumption).
• Byggande för framtida ändrat klima (Building for Future Climate Change), a project in cooperation with the Development Fund of the Swedish Construction Industry (SBUF).
• Durable Advanced Concrete Solutions (DaCS), design and construction for coastal and Arctic regions, a project in cooperation with Kværner, financed by the Research Council

of Norway, to find models and techniques to extend the life of concrete structures.

• Testing of various materials and combinations of materials for use in asphalt. The aim is to extend the life of asphalt decks, which will be a positive contribution to the environment.
• Locally-sourced stone, a collaborative project between SINTEF, the Norwegian University of Science and Technology (NTNU), the Norwegian National Rail Administration and the City of Bergen. The project is supported by the Research Council of Norway and will seek to ensure better and coordinated use of aggregates and surplus materials from civil engineering projects.
• The Industrial business area is developing an environmental product declaration calculator for the asphalt industry in collaboration with the Norwegian Contractors Association (EBA) and the industry. This will be completed in the spring of 2017.
• In Norway, Veidekke has several projects that have been submitted for consideration and approval by the Research Council of Norway.

Area	Our ambitions	Main targets for 2016	Target achievement 2016	Targets for 2017
Environment and climate change	To be a leading actor in our industry in the reduction of greenhouse gas emissions and protection of the	In order to ensure that oper ations are conducted in line with the two-degree target, all the units will now con	A number of initiatives have been introduced in the units.	Further specification of the reduction targets for the various units.
	environment	tinue working to define con crete measures.	Examples of specific initiatives:	Examples of reduction targets:
			Testing of electrically operated concrete spraying rigs	The Industrial business area has set a target of a 5 per cent annual reduction in
			Adaptation for use of pellets in two asphalt plants.	greenhouse gas emissions. The Property Development
			Initiated cooperation with Zero to accelerate the transition to fossil-free machinery.	business area in Norway has set a target to reduce greenhouse gas emissions from their construction projects by 40 per cent by
			Implemented climate change-reducing measures in a number of concrete	2025, then in comparison with a benchmark building. The machinery department shall reduce its emissions by 40 per cent by 2030.
			projects.
			Improved our expertise in climate accounting and the CEEQUAL environmental classification

SUSTAINABLE DEVELOPMENT OF THE NEW GREEN LILLEBY DISTRICT IN TRONDHEIM

The Lilleby smelting plant will be transformed from a heavily contaminated area to a new lush green district with around 1,100 new residential units. Veidekke Eiendom (Property Development) has been responsible for the demolition and remediation of the land for the

project that started in 2013 in collaboration with Fesil Invest and Labek Eiendom.

The project required extensive environmental soil surveys, environmental clean-up and a good dialogue with and disclosure of information to neighbours.

"We acknowledge that participating in such large urban development projects requires a great deal of us, but it is important for us to be able to accept corporate social responsibility. New Lilleby will be 'green' in several ways. The project is located in existing infrastructure where public transportation services function well, it is close to the city centre and there are green lungs in the immediate vicinity", says Pål Aglen, Regional Director of Veidekke Eiendom.

The environmental perspective is expressed in different ways at Lilleby. Among other things, Veidekke will be constructing the largest residential project built in solid wood for the commercial residential housing market. The consumption of concrete will be reduced by 450 tonnes in connection with the foundation work. The use of solid wood will reduce the emission of CO2 by 36 per cent. If low-carbon concrete and other materials with a low-carbon footprint are also selected, the total reduction will be around 45 per cent compared with a corresponding apartment building built with concrete.

VEIDEKKE'S SCANDINAVIAN ENVIRONMENTAL AWARD FOR 2016: MOHOLT 50I50, TRONDHEIM

Veidekke's Scandinavian Environmental Award is given to a unit, group or project that demonstrates a special commitment to the environment. A solid wood project at Moholt in Trondheim won the award for 2016.

"This is a pioneering project both environmentally and structurally. The outcome is more than 600 beautiful student accommodation units and a day care centre with very low energy consumption and a reduction in the greenhouse gas emissions by half. In addition, the construction process has been very short and effective", said President and CEO Arne Giske when he handed out the award.

ETHICS AND COMPLIANCE

Veidekke's employees regularly encounter ethical challenges and dilemmas. It is therefore important that everyone identifies with, understands and adheres to laws and the company's values and rules.

Veidekke operates primarily in Scandinavia, where social and business life are well-regulated and controlled. At the same time, both society and our industry face challenges from unprofessional actors. As one of Scandinavia's largest construction and property development companies, Veidekke has therefore a responsibility to contribute to a society that puts honesty and integrity first.

Veidekke should be characterised by wise choices. This means that all employees should make choices that can withstand public scrutiny and are based on the principle of equality. We shall deal with similar matters in the same way and treat all people with the same fundamental respect.

The rules and attitudes in society are constantly changing, and Veidekke's ethical guidelines must be in accordance with developments and what is expected by the world around us at any given time. In 2016, Veidekke's compliance group has led the work to revise Veidekke's ethical guidelines and e-learning programme. The ethical guidelines define the principles for how all employees shall behave. The guidelines apply to everyone who works in and for Veidekke, and everyone has a duty to familiarise themselves with and adhere to the ethical guidelines.

Veidekke aims to have a corporate culture marked by openness and trust. Everyone shall have the right and opportunity to raise matters they are concerned about and shall be met with feedback in a constructive and respectful manner. The company has routines for whistle-blowing in accordance with the rules of the Norwegian Working Environment Act, which also includes an external ombudsman. There is detailed guidance on whistle-blowing procedures on the company's intranet, and the ethical guidelines are available on Veidekke's website. In the Industrial business area, and in the Swedish operations, an Ethics Council has been established that can provide advice on individual matters and deal with whistle-blowing. Four meetings were held by the Ethics Council in Sweden in 2016.

In 2017, Veidekke will take new and important steps to improve the management system in the area of ethics and compliance. The entire management system will be reviewed and updated. A designated managerial role for the area will be established, as well as a uniform model for compliance work that covers the entire Group. This work will be led by Veidekke's compliance group.

Training and expertise

The company's most important measure for ensuring compliance is the training and knowledge of all employees. Veidekke runs a number of courses and programmes in ethics and compliance. All new employees at Veidekke must complete the company's introductory course during their first three months at the company. Ethics and compliance with internal and external laws and regulations are permanent topics of discussion there. In 2016, 475 new employees completed the course.

The "Integrity Programme", covering topics such as corruption, fraud and fair market conduct, was the Veidekke School's most important ethics training programme in 2015. In 2016, 143 employees completed the course.

The integrity programme has now been replaced by the e-learning programme "Wise Choices", which encompasses the company's most important issues and dilemmas within corporate social responsibility: occupational health and safety, climate change and the environment, the market and competition, anti-corruption, and suppliers and professionalism. The e-learning programme provides both guidance and exercises in how ethical problems and dilemmas should be handled, and it is mandatory for all the employees of Veidekke. In 2016, 3,603 employees completed the e-learning programme.

Area	Our ambitions	Main targets for 2016	Target achievement 2016	Targets for 2017
Ethics and compliance	Everyone who works for or represents the company has a duty to act in an ethi cally correct manner.	Launch of a mandatory e-learning programme.	The e-learning programme was launched in Norway in Q1 and in Sweden (early) in Q3 of 2016. In Denmark, it was launched late in 2016. A total of 3,603 employees completed the e-learning programme in Norway and Sweden.	Increase the number of employees who have completed the e-learning programme. Establish the compliance function in corporate management Recruit a new manager for compliance in the Group Update the scope of the compliance role and update the management system Prepare a compliance model that will apply throughout the Group.

SUPPLIERS AND WORK ON PROFESSIONALISM

Each year Veidekke purchases a large volume of goods and services from suppliers. Good environmental standards and responsible working conditions in Veidekke's supply chain are important with respect to complying with regulatory requirements, the company's core values, and to meet increasing demands and expectations from society.

Veidekke operates in an industry with a complex risk picture with respect to unprofessional actors, social dumping and poor occupational health and safety standards. There have been many positive results from work on professionalism, but major challenges still remain. Veidekke aims to ensure high environmental standards and responsible working conditions in its own value chain, while at the same time helping to raise standards in the construction and civil engineering industry in general.

Last year, Veidekke purchased goods and services for NOK 22 billion, NOK 5 billion of which was spent on goods, primarily concrete, hire of equipment, steel, oil/bitumen, and various types of construction materials. NOK 17 billion was spent on the procurement of services, primarily subcontractors who work on Veidekke's projects.

Veidekke works continuously to develop and improve routines for supplier management. The procurement strategy supports the specific corporate strategies that have been established for occupational health and safety and the external environment, for example. In 2017, a new procurement strategy will be established for the period up to 2020.

At Veidekke, collaboration with suppliers and subcontractors is managed through an overall procurement strategy with procurement managers in each unit. The company has routines to analyse the volume, products and contracts in the supply chain, and to prepare purchases. In recent years, Veidekke has also signed several large, long-term contracts with suppliers of goods, allowing a better overview and fostering loyalty between the parties involved.

Requirements for suppliers and partners

Throughout 2016, Veidekke has prioritised further improvement and reinforcement of systems and routines for prequalification and management of the company's subcontractors, since this is the segment where Veidekke faces the greatest challenges. During the year, a much greater number of prequalification processes were carried out than had been done previously. In our future work, there will be an increased focus on Veidekke's second level suppliers.

Veidekke sets requirements in contracts and collaboration agreements that suppliers must abide by the company's rules in respect of occupational health and safety, pay and working conditions, tax matters and the external environment. Our suppliers must also undertake to comply with the international agreement that Veidekke has concluded with trade unions. This agreement is based on the ILO Conventions and covers issues such as the right to exercise freedom of association, the right to collective bargaining, collective wages, terms and conditions of employment, and forced labour and child labour. Veidekke requires compliance with these rules and principles in the contracts with subcontractors and the suppliers of goods that the company has long-term agreements with. In connection with acquisitions, Veidekke conducts a due diligence investigation of the working conditions and environmental aspects as an integral part of the investment decision. The company cooperates closely with subcontractors and sets the same requirements for working conditions, safety and ethics for contracted workers and subcontractors as for our own employees. Injuries are reported in the same way as for our own employees. The business units observe a number of procedures to ensure the professionalism of Veidekke's projects:

• Identity checks and verification of completed safety training for everyone who works on Veidekke's construction and civil engineering projects.
• Veidekke Entreprenad (Construction) in Sweden has introduced a supplier register, financial controls and ethics agreements with suppliers.
• Veidekke Entreprenør (Construction) in Norway has introduced a system of maximum two levels of subcontracting to ensure better oversight of the value chain. This provision was also introduced in Sweden in 2016.
• Veidekke Entreprenør (Construction) in Norway has developed a system for prequalification of subcontractors in areas such as occupational health and safety, pay and working conditions, and tax matters. The system is based on StartBANK, and it has been developed in cooperation with Byggenæringens Landsforening (The Federation of Norwegian Building Industries). It is a requirement that all subcontractors that are used in the projects are prequalified through this system.
• In Norway, routines have been developed to check the subcontractors' pay and working conditions in line with the Regulation on Supervisory Controls and Regulation on Pay and Working Conditions in Public Contracts. This work is being implemented in the business units with a long-term goal of checking 10 per cent of the number of subcontractor contracts. In 2016, over 100 supervisory controls were carried out at Veidekke Enterprenør (Construction).

The target for 2017 is to implement the procurement system and strategy.

Area	Our ambitions	Main targets for 2016	Target achievement 2016	Targets for 2017
Suppliers	High environmental stand ards and responsible work ing conditions in Veidekke's value chain. Strengthen strategic collab oration with our suppliers and subcontractors.	Make a final decision on a new procurement system for the businesses in Norway and Sweden. Launch and implement the prequalification system in Norway. Establish a new procurements strategy for the period 2017–2020.	In 2016, a pilot project was carried out to evaluate a new procurement system. Launched and implemented a prequalification system in Norway. Work on the strategy has begun.	Continuation of work on a new procurement system. Increased focus on second level subcontractors for work on professionalism. Establish a new procurement strategy for the period up until 2020.

THE PEOPLE AT VEIDEKKE

The people at Veidekke are characterised by a high level of commitment and expertise. The culture is marked by a participative approach, in which our ambition is to ensure that the expert knowledge of the individuals is optimally used in high-achieving teams and that the employees develop collective skills.

Veidekke manages and carries out larger and more complex projects. Accordingly, efforts to attract, develop and retain the right people are increasingly more important to our ability to achieve our commercial goals.

Veidekke's participative approach requires that the expertise of our managers and craftsmen is developed systematically over time – jointly with each other during production. The company experience is that this creates continuity, good improvement processes and productivity, a favorable working environment and positive results. Veidekke thus has an express strategy to produce with its own craftsmen, and they account for more than half of the employees.

	Craftsmen	Salaried employees	Total
Norway	2 977 (2 912)	2 195 (2 088)	5 172 (5 000)
Sweden	663 (727)	1 051 (829)	1 714 (1 556)
Denmark	295 (234)	218 (205)	513 (439)
Total	3 935 (3 873)	3 464 (3 122)	7 399 (6 995)

The working conditions are well regulated in all the Scandinavian countries, so that work in this area is primarily managed on the national level. Training and competence assurance are largely managed locally. To ensure that everyone is on the same high level, the company has established several common Scandinavian frameworks for processes and systems. Among other things, this applies to the company recruitment process, which was implemented throughout the Group in 2016. Veidekke prioritises having a large percentage of its own skilled workers to ensure a high level of competence in its own house. Veidekke Enterprenør (Construction), for example, has a strategy for its own production that was prepared jointly with the company's employee representatives.

Confidence and transparency are key values for the company, and Veidekke has a well-functioning employee representation system. The employee representatives work closely with the management at all levels, from the central corporate management to the individual districts, in order to build and further develop the company. The employee representatives participate in all essential processes to ensure good cooperation.

Veidekke supports the UN human rights convention, and it is stated clearly in the company's ethical guidelines that no one should be discriminated against on grounds of race, gender, age, sexual orientation, language, religion, political or other opinion or due to national or social background. Veidekke offers equal opportunities and equal pay regardless of gender. Veidekke operates in a male-dominated industry, and the company's workforce reflects this, particularly among the skilled workers. The proportion of women among administrative staff is 22 per cent, compared with only 2 per cent among skilled workers. However the company is seeing a positive trend in the percentage of women among trainees, and the proportion of women was 31 per cent in 2016. In corporate management, one out of seven managers were women. Three of the six shareholder-elected board members are women. In 2017, the company will prepare a clear ambition for strengthening diversity at Veidekke. A total of 1,243 new employees started at Veidekke in 2016, around 84 per cent of whom were employed through recruitment efforts, while the remainder joined the team as a result of business acquisitions in Sweden, Denmark and Norway. At the end of 2016, the Group had 7,399 employees, divided into 5,172 in Norway, 1,714 in Sweden and 513 in Denmark. This is an increase of approximately 6 per cent compared with 2015. In addition, the Industrial business area in Norway and Sweden had 260 seasonal workers during the course of 2016. The total turnover was 11 per cent in 2016, which is a decline of 1 per cent from 2016.

Employee co-ownership

Veidekke believes it is important that the employees are engaged in their own company. To this end the company has a share programme where the employees can buy shares at a discount. The aim is to create loyalty and engagement among the employees, and support the development of a participatory corporate culture. The programme also contributes to increased ownership and understanding of the company's financial results and development. At the end of 2016, 50.9 per cent of the employees were shareholders in Veidekke. Overall, the employees owned 14.9 per cent of the company..

Recruitment

In an industry that is sensitive to economic fluctuations, it is important to have a long-term approach to recruitment in order for the company to succeed. Veidekke has a common Group recruitment process, which will help ensure professional recruitment and correct expertise throughout the entire organisation. Recently, Veidekke has worked purposefully to increase knowledge of the opportunities to build a career for oneself both at Veidekke and in the construction and civil engineering industry in general. This has shown results. In Universum's surveys for 2016 (Norway), Veidekke is the most popular employer among contractors, both among the students and among active workers with a few years of experience. In Sweden, the company has acquired a stronger position among engineering students, and also in Denmark among students at priority colleges and universities.

As part of the recruitment process, Veidekke has collaboration agreements with a number of schools and institutions, including the Technical University of Denmark (DTU), the Copenhagen School of Design and Technology (KEA), the Norwegian University of Science and Technology (NTNU), the Norwegian University of Life Sciences (NMBU), the University of Agder and the Centre for the Construction Industry at BI Norwegian Business School. Participation at career fairs is also a priority task in connection with recruitment, and in addition to our aforementioned partners, Veidekke also attends career events at several other colleges and universities in Scandinavia, including Chalmers University of Technology, KTH Royal Institute of Technology and the Faculty of Engineering at Lund University (LTH) in Sweden. Veidekke also collaborates with the Employment Service and Uppsala University in Sweden to provide non-Nordic academics with relevant work experience in the Swedish employment market..

Veidekke is one of the largest apprenticeship employers in Norway. The Group has a total of 232 apprentices, 171 of whom work in the Norwegian operations. The Public Procurement Act entered into force on 1 January 2017. The new Act stipulates requirements for the use of apprentices in public contracts and projects, among other things. Veidekke is concerned about safeguarding vocational training and facilitating a greater number of good apprenticeships. In 2016, Veidekke continued its "School on Site", a cooperative effort with the Akershus County Administration, which offers vocational training to students who perhaps do not fit in at traditional schools. In this manner, Veidekke can contribute to more young people completing their training and at the same time increase the recruitment of skilled workers.

The trainee scheme in Norway contributes to the systematic development of newly qualified engineers, and is an important scheme for attracting and developing managers. The Swedish operations started a trainee scheme, based on the model in Norway, with 12 trainees in the autumn of 2016. In 2017, a common trainee gathering will be arranged across Sweden and Norway, and the company is also looking at the opportunities to include Danish employees in these schemes.

Training and professional development

Veidekke aims to retain and develop its own employees, both skilled workers and managers at all levels. There is a low percentage of temporary employees and contracted manpower. The company's employees are offered courses and programmes as needed, including through the Veidekke School in Sweden and Norway. A number of topics are covered, including project and production management, finance and business administration, contract law, energy and the environment, occupational health and safety, compliance and management development. Veidekke's online learning portal is also available to subcontractors.

The annual performance appraisal is an important tool in employee development. Veidekke's goal is to conduct annual performance appraisals with all employees. The goal for 2016 was to increase the total completion rate by 20 per cent relative to 2015. In 2016, the completion rate for administrative staff was 49 per cent (60 per cent), while for craftsmen it was 29 per cent (35 per cent). This was a decline from 2015 and shows that the company must implement a stronger follow-up of the units to achieve this goal.

In 2016, Veidekke implemented a survey for all employees who choose to leave the company. The purpose of this survey is to increase our understanding of why people choose to leave, yielding important information that we can use to make Veidekke an even more attractive workplace. In 2016, efforts began to define other relevant key figures in connection with the HR area. The goal is to develop indicators that are of importance to the organisational results that are to be used for fact-based improvement processes.

NUMBER OF APPRENTICES AND TRAINEES

The corporate staff is organised under the Norwegian operations.

"Base Camp for Young Managers" was arranged for the first time in 2016. For three days, 38 young managers from all three countries assembled to create a network across a Scandinavian Veidekke. They were given five specific challenges by corporate management in strategically important areas, and used their expertise and their experience to give input to the management. The results were presented at the Group's management meeting in January 2017. "Base Camp for Young Managers" will continue in 2017.

USE OF VIRTUAL DESIGN AND CONSTRUCTION (VDC) IN VEIDEKKE SWEDEN'S LARGEST PROJECT TO DATE

In 2008, Veidekke became a member of CIFE (Centre for Integrated Facility Engineering) at Stanford University, the research centre that defined the concept of VDC (Virtual Design and Construction). Since then, Veidekke has worked in a structured and focused manner with this work methodology, and today it is the company with the greatest number of employees who have completed Stanford's certification programme for VDC.

Veidekke Sweden is in the process of building SEB's new sustainable offices, Pyramiden. To ensure close involvement by all the parties in the planning and production phases, VDC is used. A common data tool forms the basis for this. This intelligent 3D model, BIM, identifies faults and defects before the start of the construction process, and with a common tool, it is easier for all parties to understand each other's deliveries.

Emile Hamon, Strategy and Business Development Director at AO Bygg, says that "VDC is becoming an increasingly more important competitive advantage for us" since our customers are increasingly requesting this. For example, VDC was a directly decisive reason that we were awarded the Pyramiden project – Veidekke Sweden's largest project to date."

Area	Our ambitions	Main targets for 2016	Target achievement 2016	Targets for 2017
Employee development	Retain and recruit employees with good, future-oriented skills. Ensure compliance with Veidekke's values. Build solid management capacity.	Continue to work for a Scandinavian process and method for succession planning and development. Implement the resignation survey and start work to define relevant key figures for the HR area. Increase the completion rate for annual performance appraisals by 20 per cent.	Have defined various phases in the framework for a Scandinavian process and method for succession planning and development. The resignation survey has been implemented. Started work to define other key figures for the HR area. The completion rate for annual performance appraisals declined 18 per cent for administrative staff, while it declined 17 per cent for craftsmen.	Complete the framework and start the implementa tion of succession planning and development. Use key figures for strategic discussions and develop rel evant analyses. Define a clearer ambition for diversity at Veidekke. Start work to develop a new top management pro gramme. Increase the completion rate for annual performance appraisals by 20 per cent.

REPORT PARAMETERS

Veidekke aims to maintain an open dialogue with its stakeholders. The purpose of this report is to provide an account of Veidekke's impact on the environment and society and the results achieved, including areas where the company's performance needs to be improved.

Veidekke reports on corporate social responsibility issues in accordance with the Global Reporting Initiative (GRI)'s G4 Sustainability Reporting Guidelines and Construction and Real Estate Sector Disclosures. Veidekke finds that this report complies with GRI reporting principles and that the report is in accordance with G4 «Core» level. The GRI index indicates where information about the various GRI indicators is provided. Unless otherwise specified, the information in this report applies to the entire Group, i.e. all the business areas throughout the whole of Scandinavia, as well as subsidiaries and joint ventures. Acquired business is included in the corporate social responsibility reporting upon agreement between the businesses.

For more information about this report and corporate social responsibility at Veidekke, please contact:

firmapost@veidekke.no

or

hege.dillner@veidekke.no

GRI INDEX

GENERAL STANDARD DISCLOSURES

GRI Indicator	Description	Veidekke's reporting
	Strategy and Analysis
G4-1	CEO statement	p. 3
	Organisational Profile
G4-3	Organisation name	Veidekke ASA
G4-4	Primary brands, products and services	p. 4-8
G4-5	HQ locations	Veidekke ASA is headquartered in Oslo.
G4-6	Countries of operation	p. 4-5 In addition to Scandinavian operations Veidekke also has minor international activity in supplying equipment and consultancy work for the production of asphalt cores for hydroelectric dams.
G4-7	Ownership and legal form	p. 4
G4-8	Markets served	p. 4-8
G4-9	Scale of organisation	p. 4-5
		See also the 2016 Financial Report.
G4-10	Employee and workforce information	p. 29-30 Of the permanent employees, 831 are women and 6 568 are men. Of the temporary employees, 52 are women and 206 are men. Of the permanently employed women, 78 are part time employees and 753 are full time employees. Of the permanently employed men, 83 are part time employees and 6 485 are full time employees.
G4-11	Collective bargaining agreements	Approx. 65 %
G4-12	Supply chain description	p. 26-27
G4-13	Significant changes to organisation	None
G4-14	Precautionary approach	p. 18-23
G4-15	External charters and principles	p. 11
G4-16	Memberships of associations	p. 13

GRI Indicator	Description	Veidekke's reporting
	Identified Material Aspects and Boundaries
G4-17	Entities included in financial statements	p. 4-5
		See also the 2016 Financial Report.
G4-18	Report content and aspect boundaries	p. 10-11
G4-19	List of material aspects	p. 11
G4-20	Aspect boundaries within organisation	p. 11
G4-21	Aspect boundaries outside organisation	p. 11
G4-22	Effect of any restatements	None
G4-23	Significant changes to scope and aspect boundaries	None
Stakeholder Engagement
G4-24	List of stakeholder groups	p. 12-13
G4-25	Identification of stakeholders	p. 12-13
G4-26	Approach to stakeholder engagement	p. 12-13
G4-27	Issues raised by stakeholders	p. 13
Report Profile
G4-28	Reporting period	2016
G4-29	Date of previous report	April 2016
G4-30	Reporting cycle	Annual
G4-31	Contact point	p. 32
G4-32	Level of reporting, GRI content index and external assurance report preference	p. 32
G4-33	Policy and current practice with regard to seeking external assurance for the report	p. 32
Governance
G4-34	Governance structure	p. 10-11
Ethics and integrity
G4-56	Values, standards, principles and norms	p. 10-11 and p. 24-25

SPECIFIC STANDARD DISCLOSURES

GRI Indicator	Description	Veidekke's reporting	Omissions	Cross reference to UN Sustainable Development Goals
ENVIRONMENTAL
Emissions
G4-EN15	Direct Greenhouse Gas (GHG) emissions	p. 18
	(Scope 1)	Veidekke follows the GHG Pro tocol Corporate Standard (March 2004). Climate reporting is based on a control approach, including operational control.
		The climate reporting covers all business units, including subsid iaries and joint ventures with more than 50% owner's share.
		Factors from Defra. GWP: IPCC Second Assessment Report (SAR 100 year).
G4-EN16	Energy indirect Greenhouse Gas (GHG)	p. 18
	emissions (scope 2)	Veidekke follows the GHG Pro tocol Corporate Standard (March 2004). Climate reporting is based on a control approach, including operational control.
		The climate reporting covers all business units, including subsid iaries and joint ventures with more than 50% owner's share.
		Source: Annual statistics from the International Energy Agency on CO2 emissions, electricity generation.
CRE4	CO2 intensity for new construction and redevelopment activity	p. 18	Partial
G4-EN19	Reduction of Greenhouse Gas (GHG) emissions	p. 18-20
		Veidekke also reports to CDP. The report is publicly available on CDP's webpage : https://www.cdp.net/en

GRI Indicator	Description	Veidekke's reporting	Omissions	Cross reference to UN Sustainable Development Goals
	Land degradation, Contamination and Remediation
CRE5	Land remediation	p. 21
	Compliance Environment
G4-EN29	Monetary value of significant fines and total number of non-monetary sanctions for non compliance with environmental laws and regulations	None
	Supplier Environmental Assessment
G4-EN32	Percentage of new suppliers that were screened using environmental criteria	p. 27
EMPLOYEES
	Labour / Management Relations
G4-LA4	Minimum notice periods regarding operational changes, including whether these are specified in collective agreements	Sweden: Layoffs are regulated by collective agreements. Notifi cation rules for dismissals are regulated. Collectively agreed upon deviations may occur.
		Denmark: Layoffs are regulated through the Employers' and Salaried Employees' Act (Funks jonærloven). Minimum 1 month notice for dismissals.
		Norway: Statutory period of notice for layoffs is 14 days. Sta tutory period of notice for dis missals is 14 days during proba tion period and 1-6 months after probation period, depending on age and length of service.
	Occupational Health and Safety
G4-LA6	Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work-related fatalities, by region and by gender	p. 14-15	Injuries, sick ness absences, etc. are not reported by gender. LTI-1 rate is not reported for subcontractors.
CRE6	Percentage of the organisation operating in verified compliance with an internationally recognised health and safety management system	0 %
G4-LA7	Workers with high incidence or high risk of diseases related to their occupation	p. 14

GRI Indicator	Description	Veidekke's reporting	Omissions	Cross reference to UN Sustainable Development Goals
	Supplier Assessment for Labour Practices
G4-LA14	Percentage of new suppliers that were screened using labour practices criteria	p. 27
HUMAN RIGHTS
	Freedom of Association and Collective Bargaining
G4-HR4	Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights	p. 27
SOCIETY
Anti-corruption
G4-SO5	Confirmed incidents of corruption and actions taken	None
	Anti-competitive Behaviour
G4-SO7	Total number of legal actions for anti competitive behaviour, anti-trust, and monopoly practices and their outcomes	None
Compliance Society
G4-SO8	Monetary value of significant fines and total number of non-monetary sanctions for non compliance with laws and regulations	None
	Supplier Assessment for Impacts on Society
G4-SO9	Percentage of new suppliers that were screened using criteria for impacts on society	p. 27

VEIDEKKE'S HISTORY

Veidekke was founded in 1936 as a cobblestone cutting and laying company in Østfold county. The business gradually expanded and took on road improvement projects in several municipalities and counties in eastern Norway. The real breakthrough came in 1948, when the small company was awarded the major civil engineering contract for the construction of Sola Airport in Stavanger. With time Veidekke became a central player in airport construction in Norway, and in the late 1950s it undertook its first overseas assignment: construction of an airport in Ethiopia.

Large civil engineering projects accounted for the bulk of the business in the 1960s and '70s, and in the following decades the company became a sizeable road builder. Other major civil engineering projects, such as construction of power stations and large industrial facilities for the oil sector, were added as new market areas.

The 1980s were marked by structural changes in the construction industry, and several of the larger construction companies merged. Veidekke's strategy was to continue to develop as an independent company, marking the beginning of an era of acquisitions. A total of ten companies were merged into the Group during this decade. Since then, over 70 other companies have joined the Group. In the 1980s Veidekke expanded into a new market: residential and non-residential building construction. Another milestone was the listing on the Oslo Stock Exchange in 1986.

The acquisition of Aker Entreprenør in 1991 resulted in a doubling of the company's revenue, marking the advent of a decade of strong growth. In addition Veidekke decided to focus on the residential segment with property development as a new business area, while also looking to expand into neighbouring countries. The company established civil engineering operations in Gothenburg in 1998 in partnership with local players, marking the beginning of Veidekke's development as a Scandinavian construction company. In 2000 Veidekke acquired Denmark's oldest and fourth largest construction company, Hoffmann A/S, and in the same year the company also established construction and property development operations in Sweden.

Today Veidekke is Norway's largest and Scandinavia's fourth largest construction and property development company. The ambition is to continue to develop the company within the existing product and market segments, based on a strategy of profitable growth.

TOGETHER, WE BUILD THE FUTURE

Veidekke is one of Scandinavia's largest construction and property development companies. The company undertakes all types of building construction and civil engineering contracts, maintains public roads and produces aspahlt and aggregates. The company is characterised by involvement and local knowledge. Turnover is NOK 30.1 billion (2016), and half of the 7,400 employees own shares in the company. Veidekke is listed on the Oslo Stock Exchange and has always posted a profit since it was founded in 1936.

Veidekke – local presence, Scandinavian strength.

veidekke.com/en