BAM

Royal BAM Group
Quick Facts
Type	Public
sector	Construction
Headquarters (Benelux Organization)	Bunnik, the Netherlands
Year of Origin	1869
Emissions (All Scopes)	7.87 megatons of CO2 (2020)
NCI assessment	Moderate
Total Revenue	EUR 7.3 billion (2021)
Stock Exchange	Euronext (BAMNB)
Key People	Ruud Joosten, Henk Rottinghuis
Number of Employees	15,739
Subsidiaries	Interbuild Kairos Wayss & Freitag Ingenieurbau

Royal BAM Group, stylized as BAM, designs, builds and maintains buildings, homes and infrastructure for public- and private-sector clients. Its history goes back to 1869, although the current name derives from 1927. Headquartered in the Netherlands, BAM has divisions in the Netherlands, the United Kingdom and Ireland, as well as Belgium and Germany. It has about 15,000 employees and annual revenues of approximately €7 billion. Net result was €18.1 million. Due to deferred taxes, BAM’s effective tax rate was 74 percent. Without deferred taxes, the effective tax rate would have been 23 percent. Some of BAM’s highlights in 2021 were the completion of Zeesluis IJmuiden sea lock and De Zalmhaven residential tower (Rotterdam). The balance sheet value in 2021 was a little over €2 billion. Shares of BAM Group are listed on Euronext Amsterdam.

Company Structure

BAM is a large European construction firm with operating companies active in two business lines, Construction & Property and Civil Engineering, as well as in public-private partnerships. Currently, BAM is active in five European markets: the Netherlands, the United Kingdom, Ireland, Belgium and Germany. The company also has a presence in Denmark. BAM's leadership structure is a two-tier structure, where the day-to-day management is performed by an executive board and an executive committee, overseen by a supervisory board. In the Netherlands, most of BAM's activities take place in BAM Infra or BAM Bouw & Techniek. Additionally, there are smaller operations in BAM Residential and BAM Specials.

Most shares of BAM Group are held by Dutch shareholders. Currently, no shareholders hold more than 3 percent of all outstanding shares.

Board of Directors

Executive Board 2021

Name	Function	Remuneration EUR
Ruud Joosten	CEO	1.691.000 EUR
Frans den Houter	CFO	1.287.000 EUR

Executive Committee

The Executive Committee consists of the Executive Board and two Chief Operating Officers (one for the Netherlands division and one for the United Kingdom and Ireland division). The Executive Committee decides - with final responsibility resting with the Executive Board - on strategic issues and policies, based on input from the operating companies and staff departments. Its remuneration is not disclosed.

Management Board

Name	Function
Joost Nelis	Chief operating officer (NL)
John Wilkinson	Chief operating officer (UK & Ireland)

Supervisory Board

Supervisory Board

Name	Function	Remuneration EUR
Henk Rottinghuis	Chairman	102.000 EUR
Gosse Boon	Vice-chair	67.000 EUR
Bob Elfring	Member	62.000 EUR
Denise Koopmans	Member	65.000 EUR
Paul Sheffield	Member	59.000 EUR
Nina Skorupska	Member	42.000 EUR

Accountant

The external accountant of BAM Groep is Ernst & Young Accountants LLP. In the independent auditor report of 2021, the "assessed climate-related risks and the possible effects of the energy transition did not result in a key audit matter". However, the auditors did include the impact of climate-related risks and possible effects of the energy transition in their overall audit approach due to the importance of climate objectives and issues such as CO2  reduction in the coming decades.

Main Activities

BAM's companies are active in the business lines Construction & Property and Civil Engineering, as well as in public-private partnerships (PPP). Construction & Property is all about building. This includes residential, non-residential, technical installations, accommodation and design. Civil Engineering encompasses all larger projects, like infrastructural works, civil architecture and industrial construction. BAM also carries out international civil and marine engineering works.

Public-private partnerships are carried out by Invesis. This is a global investor in and developer of infrastructural projects. Invesis manages all aspects of an investment from development and financing to design, construction, maintenance and operations, all the way to handback. It is jointly owned by Royal BAM Group and PGGM, a pension fund manager and global investor.

Government

BAM has completed numerous projects for the Dutch government. Notable are the building of the Supreme Court of the Netherlands, the renovation of the Afsluitdijk causeway, the expansion of the Maasvlakte 2 port and the construction of Zeesluis IJmuiden sea lock. However, in the past decade, the risk to profit ratio changed drastically, making BAM reluctant to take on new projects of a similar scale. The construction of Zeesluis IJmuiden sea lock presented unexpected costs for BAM of nearly €100 million, putting great pressure on profit margins.

In 1994, BAM received royal status during its 125th anniversary. BAM has not received government support (Tijdelijke Noodmaatregel Overbrugging Werkgelegenheid, NOW) during the coronavirus crisis.

Paris Agreement until Today

BAM states the following CO₂ reduction targets in its 2021 Annual Report: Reduce Scope 1 and Scope 2 CO₂ intensity by 50 percent compared to 2015; Reduce Scope 3 CO₂ emissions by 20 per cent compared to 2017 (the first year BAM assessed its entire Scope 3 emissions).

Financial Results since 2015

No dividend is proposed over 2021. Also, no dividend was paid over 2020.

Financial situation

Year	Revenue	Profit (loss)	Dividend
2015	7.4 billion EUR	10.2 million EUR	5 million EUR
2016	7 billion EUR	48.6 million EUR	24.3 million EUR
2017	6.6 billion EUR	12.5 million EUR	27.3 million EUR
2018	7.2 billion EUR	23.8 million EUR	38.3 million EUR
2019	7.2 billion EUR	11.8 million EUR	5.5 million EUR
2020	6.8 million EUR	(122.4) million EUR	0 EUR
2021	7.3 billion EUR	17.0 million EUR	0 EUR

Current Emissions

It is notable that BAM discloses more information on emissions (especially in scope 3) to the non-profit organization The Carbon Disclosure Project than to its own shareholders through its annual reports.

Total emissions since 2015 ( in megatonnes CO₂-eq.)

Year	Scope 1	Scope 2	Scope 3	Total
2015 , ,	0.2	0.04	5.16	5.4
2016 ,	0.17	0.04	8.78	8.99
2017 ,	0.15	0.03	7.79	7.97
2018 ,	0.16	0.03	7.69	7.88
2019 ,	0.14	0.02	8.72	8.88
2020 ,	0.12	0.03	7.72	7.87
2021	n/a	n/a	n/a	n/a

Climate Policy and Plans

BAM formulated a strategy for 2021-2023, called 'Building a sustainable tomorrow'. This strategic plan is mainly dedicated to de-risking BAM’s portfolio and building on profitability in markets where BAM has competitive strengths. Reducing carbon emissions is not a main point of focus in this strategy.

By 2030, BAM wants to achieve a relative emission reduction in scope 1 and 2 of 50 percent compared with base year 2015. According to own reports, BAM has achieved 44 percent intensity reduction so far since 2015. However, BAM only includes a very limited report of its scope 3 emissions in its annual report. It does mention that it discloses its full scope 3 reports to the Carbon Disclosure Project. BAM wants to reduce scope 3 emissions by 20 percent by 2030 in comparison to base year 2017. This was the first year that BAM fully disclosed its scope 3 emissions. BAM plans to release new sustainability targets in 2022.

Climate plan

In April 2022, BAM released an updated sustainability strategy, in which it tightened its goals on all three scopes. BAM now aims to reduce the scope 1 and 2 emissions by 50% in 2023 (vs. 2015) and by 80% in 2026 (vs. 2015). The company has the ambition to reduce its scope 3 emissions by 50% in 2030 (vs. 2019). However, its is unclear what kind of scope 3 emissions are included in this ambition, as BAM's reporting on its scope 3 emissions is very limited (mostly based on estimations) and the reduction targets are not specified further. BAM also mentions that its first priority in achieving its scope 3 target is improving the measurement quality of its scope 3 inventory, with a strong focus on the high-impact materials concrete, steel and asphalt. They refer to the complexity of scope 3 emissions in the construction sector due to the large variety in products and supply chains. As BAM does not have good knowledge of its scope 3 emissions, it could be that its ambitions practically only cover a minor percentage of its total scope 3 emissions.

Due Diligence

Due Diligence

According to the environmental targets in its 2021 Annual Report, BAM strives to use 100% sustainable timber. It claims that 99% of its timber was sustainable in 2021, when looking at 89% of its organisation. However, it admits that it struggles to use sustainable timber in Ireland, which it excludes from this figure. In addition, it excludes its activities in Germany and Belgium, which would lower the percentage of coverage to 82%.

Scandals and controversies

During 2017, a car park under construction by BAM at Eindhoven Airport collapsed. In the aftermath of the disaster, BAM identified a further 25 hazardous constructions at other locations, also including the Ministry of the Interior as well as the Ministry of Justice and Security.

The same year, the construction by BAM of a new pier for large cruise ships on Curaçao destroyed a large portion of coral reef. Investigations indicated that BAM had neglected to follow the rules and regulations for the protection of the coral reef, to which it had consented in the building permit.

In 2020, BAM agreed to a €200-million settlement with the City of Cologne over the ill-fated construction of a new metro line in 2009. Among other things, these construction works caused the collapse of the Historical City Archives, killing two people as well as damaging adjacent buildings.

BAM has a long history of excessive money and time spent on projects. The new sea lock at IJmuiden cost an additional two years and €100 million until it was completed in 2021. Renovation of the Afsluitdijk causeway, slated for 2025, is now claimed to cost €400 million instead of the original €120 million.

International subsidiaries of BAM have repeatedly run into the same troubles. In Belgium, BAM Contractors and BAM Interbuild incurred total losses of around €60 million on projects in Antwerp before their activities were dissolved by BAM. The British subsidiary BAM Nuttall is refusing to compensate its subcontractors for debts incurred on the HS2 railway construction, which was slated to cost around GBP 30 billion and be finished in 2026 but is now planned no earlier than 2029 at a cost of GBP 87 billion.

On top of all, BAM Ireland has submitted almost 1,000 claims worth €542 million in total against the National Children's Hospital, even though it has failed to uphold its delivery in 2023 at a cost of €800 million. Instead, delivery is now planned for 2025 at a cost of €1.7 billion. Still, BAM claims that the hospital is to blame for incomplete design information.

Conclusion

BAM Group is one of the largest construction companies in the Netherlands. It is mainly known for huge infrastructural projects. BAM has a yearly revenue of about €7 billion, but the profit margins are very small (less than 1%). Therefore, hardly any dividend has been paid out over the last years. BAM formulated clear targets for 2030 and wants to be climate-positive by 2050. Despite being clear, the targets are not enough to be in line with the Paris Agreement. This is due to the scope 3 target being only a 20% reduction. Looking at the emission figures of the past years, there is no declining trend. Emission figures have been stable at around 8 megatonnes since 2016. BAM is currently not on track to reach its own climate targets, let alone the targets set out by the Paris Agreement.