Workers in the value chain

ESRS 2 SBM-3

STRABAG supports, respects and is committed to the protection of internationally proclaimed human rights. As our corporate responsibility also includes a responsibility for all workers in our upstream and downstream value chain, the same principles apply here. STRABAG’s value chain is highly complex and characterised by a great diversity of different projects. Due to the presence of construction projects around the world, along with the global sourcing of building materials, our value chain includes a large number of different business partners, suppliers and their workers.

The topic of social responsibility, and with it the assumption of responsibility for human rights throughout the value chain, was included as an integral part of our corporate sustainability strategy during its expansion. The social aspects of the sustainability strategy are based on internationally recognised standards and are aligned with the identified risks and material impacts. This gives rise to the three focus topics – our employees, human rights throughout the value chain and added value for society – with the identified risks and impacts from the risk analysis and the double materiality assessment incorporated into strategic considerations. For the focus topic “human rights throughout the value chain”, the strategic objectives are to implement the Social Compliance Management System (SCMS) across the group, to uphold human rights and to implement our corporate due diligence. An action package put together for this purpose includes, among other things, the expansion of risk analysis to other Group companies as well as a strengthened dialogue with our business partners through stakeholder dialogue formats on the topic of responsibility along the supply chain.

Implementation of due diligence

Our Social Compliance Management System applies to the entire value chain and is monitored by the corporate Human Rights Officer. Cooperation with various corporate entities is essential for the implementation and Group-wide application of the SCMS. Purchasing deserves special mention in this regard. Supplier management plays an important role in the purchasing process when it comes to implementing human rights standards throughout the supply chain and integrating them into the procurement strategy. The definition and subsequent implementation of sustainability requirements and criteria for the purchasing and procurement process are to be driven forward in the Group through corresponding projects involving the purchasing organisation.

As part of our due diligence, we identify and assess and are committed to preventing, mitigating, minimising, remediating and monitoring actual and potential adverse impacts arising from our business activities along our value chain. During identification of the material impacts, we considered the upstream and downstream supply chain as well as different groups of workers in the value chain. This includes, for example, people working at our own locations on behalf of other companies as well as workers who are particularly vulnerable to certain risks. As part of the risk assessment, country indices were used to identify in particular those workers in the lower tiers of the value chain (tier-n) who work in countries where human rights are not protected by law.

If the risk analysis identifies a heightened human rights risk at a supplier or other business partner, the first step is to verify the risk using questionnaires sent to the business partners, in which they are asked to provide information about themselves with regard to the identified risks, and through supplier audits. If the situation does not improve and the risk does not decrease, the last step is to terminate the business relationship.

Different risk assessments

The double materiality assessment identified the following topics at STRABAG as having a material impact on workers in the supply chain: working hours, adequate wages, health and safety, child labour, forced labour, fatal work-related accidents and the impact our suppliers have on the natural basis for life. In particular, the impact of working hours, adequate wages, health and safety, fatal work-related accidents, child labour and forced labour are to be regarded as systemic. These occur primarily in individual countries with inadequate regulations, standards or laws, or, in the case of child and forced labour, primarily in certain industries. Supplier impact on the natural basis for life occurs only in certain cases.

The extent to which the impacts mainly apply to the groups of people listed below can be seen from the risk assessment by country and industry risks. The impacts of work-related safety violations particularly involve employees and workers at subcontractors performing manual and physical labour on construction sites as well as those with language barriers. Child labour involves underage workers in the lower, upstream value chain, particularly in the extraction of raw materials. The risk of forced labour particularly involves low-income persons who are unaware of their rights, have no access to the legal system and may end up on our construction sites through employment agencies or subcontractors. We aim to continuously improve our understanding of the extent to which certain groups are at greater risk of harm.

Violations of the prohibition of child or forced labour may result in a fine and the immediate termination of the business relationship with the client or investor. This also includes noticeable restrictions on business relationships with financial institutions and providers of financial capital, as well as with suppliers. The risks of child and forced labour can result in lost revenue, a reduction in brand value, disruptions in the supply chain or delivery delays, criminal charges, and limited or restricted access to capital in the short, medium or long term. A resilience analysis was not performed

The risk analysis conducted in accordance with the German Supply Chain Act identified certain regions with an increased risk of forced labour. In particular, STRABAG suppliers based in Serbia, Russia and Oman showed a significantly increased risk of forced labour. With regard to the risk of child labour, Bulgaria, Oman and China were identified as countries with increased risk along the supply chain. The risk analysis in accordance with the German Supply Chain Act covers large parts of STRABAG SE and will be extended to the entire Group in 2025.

Our business activities also create opportunities. For example, our operations ensure the creation of jobs and provide a livelihood for workers in the value chain.

Policies

ESRS S2-1

STRABAG has a Supplier Code of Conduct and a Supply Chain Management Policy that apply to the entire value chain and the workers in that value chain.

The STRABAG Supplier Code of Conduct serves to communicate our ethical principles to our business partners and, through their signature, to commit them to compliance. The Supplier Code of Conduct is generally valid for all suppliers and is usually anchored in the General Terms and Conditions. The contents of the Supplier Code also form part of sustainability audits. The Supplier Code is part of the Group-wide Ethics and Business Compliance Systems and as such is subject to control by the central staff division Corporate Responsibility Office (Business Compliance Group).

The ethical principles addressed in the Supplier Code of Conduct include respect for universal human rights, ensuring fair labour practices and acceptance of social responsibility. The code was revised in 2024 and expanded to include human rights and environmental topics. Additions related to human rights and employment conditions include the prohibition of violence by security forces, compliance with fair working conditions, land use rights and the rights of local communities, as well as the avoidance of impacts on consumers and end users. The environmental aspects were expanded to include climate change mitigation, circular economy, environmental protection, biodiversity and responsible procurement. The Supplier Code of Conduct also makes reference to the whistleblower platform for reporting violations of the defined principles.

This includes compliance with the prohibition of:

slavery and human trafficking
child labour
discrimination and harassment
violence by security forces

Compliance with the following topics is also covered:

universal human rights
freedom of assembly
rules on occupational safety and health
fair working conditions, including fair working hours, fair pay and benefits
land use rights and respect for the rights of local communities
consideration and avoidance of impacts on consumers and end users

The purpose of the Supply Chain Management Policy is to disclose STRABAG’s procurement and purchasing strategy and to outline the sustainability requirements for the procurement process. The document is valid for the entire Group. Procurement is the responsibility of the operating entities, supported by a central procurement management team. At the Group level, committees have also been set up to develop and revise (further) standards and strategies, including the contents of the Supply Chain Management Policy, on behalf of the Management Board, and to plan their introduction. In contrast to the Supplier Code of Conduct, the policy is not passed on to our suppliers, subcontractors or business partners, but serves as a framework for our purchasing and procurement process. The Supply Chain Management Policy is currently being revised and is to be expanded to include further human rights and environmental risks and obligations, among them the obligation to comply with international standards on human rights, such as the Core Conventions of the International Labour Organization (ILO) and the UN Universal Declaration of Human Rights. The revision will fully integrate sustainability into the calculation and purchasing process and will define minimum requirements and sustainability criteria to be included in the policy. The overarching goal is to create more transparency along our supply chain.

Processes for engaging with workers in the value chain and providing remedy

ESRS S2-2, ESRS S2-3

Information about possible incidents and complaints is essential for STRABAG to implement appropriate preventive measures and remedies. The STRABAG whistleblower system is available to all internal and external employees. The whistleblower system is also included as an action within the revised sustainability strategy. The tips received can be incorporated into strategic considerations for the adaptation of actions to address negative impacts. Annual effectiveness reviews by the Human Rights Commissioner, along with reviews of all incoming reports, are used to highlight possible systemic problems that require long-term, strategic countermeasures. The whistleblower tips we have received to date indicate that the system is also utilised by external parties. The whistleblower system can be used to report information and incidents and to provide feedback on the system itself. Feedback on the system can also be provided to the ombudspersons and the Human Rights Officer.

In 2024, five tips were received involving workers in the value chain in the categories of “human rights and employment conditions” and “discrimination”.

None of the tips that were received constituted a violation of the law. Whenever we receive a tip, we conduct a review to identify any potential structural or systemic issues that would require further action. A full review of the tips received for possible structural or systemic issues had not yet been completed by the time of the 2024 reporting.

In addition to the whistleblower system, STRABAG also conducts stakeholder dialogues as a way of including the concerns of workers and their representatives in the value chain in its risk and opportunity management.

Actions and projects

ESRS S2-4

Once we have identified the risks, we implement targeted preventive actions and remedies. The aim is to reduce, prevent and remediate human rights violations to ensure compliance with our Group Directives. It is not possible to quantify the financial resources required to implement the individual actions, as these activities are usually ongoing and cross-departmental and are not assigned to a fixed project budget or similar.

The preventive measures include, among other things, appropriate contractual provisions as well as training and sustainability audits along the supply chain for suppliers, subcontractors and business partners to reduce and avoid negative impacts and risks related to human rights and the environment. Following a pilot phase in 2023, the implementation of sustainability audits was further developed in 2024 and incorporated into a structured process. The selection of suppliers to be audited is now risk-based. The audits serve to uncover possible grievances or negative impacts such as violations of occupational safety and health standards and to implement or further develop appropriate remedies. The evaluation of the audits from 2024 is not yet complete. There is no specific target for the number of suppliers to be audited due to the risk-based approach to sales. This is based on the identification of risks or is carried out in the event of violations. The target is therefore not a specific number of audits but a high level of effectiveness and improvements that can be initiated as a result of auditing.

The overarching topic of human rights is addressed in various training courses to communicate informative and job-specific content. Training and awareness-raising actions are particularly important for our employees in purchasing, who receive special training on human rights topics along the supply chain. In the reporting year, the training on human rights due diligence in purchasing was converted into an e-learning course as a way to broaden access. The training content includes legal requirements, information on the Social Compliance Management System and on due diligence obligations, and how to carry out plausibility checks. The e-learning programme is open to all employees throughout the Group. The annual e-learning requirement applies to purchasing employees in a large number of corporate entities and countries. The next step is to make the e-learning available in other languages besides German and English. A revision is also planned to adapt the e-learning for employees in estimation.

We provide remedy where a violation has occurred and assess each case individually. The conception of the remedy action plan provides for an immediate process that offers guidance in the event of a violation. Remedies include, first and foremost, putting a stop to the violation, planning the necessary actions and initiatives on a case-by-case basis and, if no other solution can be found, taking further consequences such as disciplinary action and the suspension or termination of the business relationship. Compensation can also be provided. Restitution payments are used on a case-by-case basis, with the amount and scope reviewed and adjusted depending on the incident. A structured, Group-wide documentation of the implemented remedies and compensation payments made does not exist. A full survey is planned for the future.

To ensure the effectiveness of our preventive measures, they are implemented on a risk-related basis. Remedies, on the other hand, are carried out independently of the regions and stakeholder groups affected.

The effectiveness of the actions can be determined on the basis of the number of reports received through the STRABAG whistleblower system. An annual effectiveness measurement is also carried out in accordance with the German Supply Chain Act to review the actions.

We aim to actively involve the stakeholders in our value chain through regular dialogue. Our goal is to involve stakeholders from our own business area and from within the value chain as well as representatives of the public. We hope that the dialogue will enable an active exchange with the stakeholders in the value chain, such as suppliers, business partners and employee representatives. As part of the stakeholder dialogue in 2024 on the topic of sustainability in the supply chain, relevant actions on the topic of shared responsibility for human rights were discussed in various formats. Raising awareness and transparency, communicating the existence of whistleblower platforms, and certifications along the supply chain were identified as important starting points in the effort to prevent forced labour. The insights and feedback from participating stakeholders are being incorporated into the further consideration and development of the actions. An additional concern that was successfully implemented was the cultivation of relationships and the establishment of new contacts with stakeholders in the value chain.

Targets

ESRS S2-5

For 2025, we have set ourselves the target of implementing the Social Compliance Management System throughout the Group. To date, the system is being used for a number of companies representing 49% of the Group output. Implementation will also enable us to identify human rights risks for workers in the value chain and to implement appropriate preventive actions and remedies, as well as ensuring compliance with our Group Directives. Cooperation with various corporate entities ensures implementation at the operating level. The Social Responsibility group is responsible for developing the objectives. After development, the targets to be set are communicated to the Steering Committee Sustainability and the Management Board before final approval by the Management Board of STRABAG SE. As these are Group-wide, overarching targets for the implementation of a management system and not the design of its content, workers in the value chain or their representatives were not involved in setting the targets. The corporate Human Rights Officer reviews the effectiveness and monitors the achievement of the targets.