G1 Business conduct

We believe that our shared core values – People First, Client Success, Integrity, Sustainability and Collaboration – contribute to our how we fulfil our mission of Improving Quality of Life. They are the foundation of Arcadis General Business Principles (AGBP). In the AGBP we outline our responsibilities to our people, clients, shareholders, business partners, society and governments. The AGBP reflect our commitment to comply with the laws, regulations and culture of the countries in which we operate.

The AGBP apply to everything we do. They form our code of conduct, guiding the behavior we expect of our people when conducting business anywhere in the world. We also expect our business partners to operate according to these or equivalent principles. 

The material topic within this ESRS is about ‘Management of relationships with suppliers and payment practices’, given the significant role of third-party suppliers and non-employees (i.e. contingent workers) in our project delivery and in our value chain.

Impacts, risks and opportunities

The Compliance function provides governance and maintains a compliance management system. The scope and responsibilities covered by the Compliance function are communicated via a compliance charter with compliance committees at various levels of the organization. Arcadis leadership reflects the experiences of our colleagues, clients and partners in many countries worldwide where it is active. The diversity of thought and experience in relation to business conduct and integrity matters is reinforced by the composition of the Executive Board and the Supervisory Board which both represent leadership with, among others, risk management, sustainability and People and culture experience.

The Global Compliance Officer reports on AGBP integrity, compliance and related (alleged) issues ultimately to the Executive Board, the Arcadis Audit and Risk Committee of the Supervisory Board (AARC) or directly to the Supervisory Board. Further details on this, and on the role and expertise of administrative, management and supervisory bodies on business conduct matters, are explained the Business ethics paragraph and the Other governance information paragraph in the Governance and Compliance part of this Annual Integrated Report.

Policies related to management of relationships with suppliers

We believe that establishing a sustainable supply chain is our responsibility as a company and a key enabler of our success. To do this, we seek to establish best practices, leverage digital tools, and develop clear policies that govern our actions throughout our supply chain.

Our Procurement Policy is guided by the AGBP, our Sustainability Policy, Third Party Due Diligence Policy and our Human Rights Policy, which further detail Arcadis’ integrity, sustainability, and people first core values. The Procurement Policy applies to the purchases of goods and services by Arcadis.

The Global Procurement Policy applies to all purchases of goods and services by Arcadis, whether acting on behalf of a client (direct spend), or on its own behalf (indirect spend) – our value chain. The objective of this Policy covers two main areas where we can deliver sustainable procurement results: (1) sustainable supply chains and (2) strategic procurement. This policy documents our procurement ambition. As the Global Procurement function is still maturing, Arcadis follows an implementation roadmap to implement this policy across our value chain. Our Chief Delivery Officer is primarily responsible for our procurement approach, with ultimate accountability with the Chief Executive Officer and our Executive Board.

As outlined in our Supplier Code of Conduct, we expect our suppliers to conduct their operations in an environmentally, socially, and economically responsible way and use their influence to help facilitate that the same happens within their own supply chains. Our suppliers are responsible for ensuring that their employees as well as their suppliers, conduct business in a responsible manner. We also expect suppliers to adhere to applicable legal and regulatory requirements, and to respect international standards in relation to sustainability, human rights, labor conditions, the environment, health and safety and integrity. Specific training material is available for all Arcadis employees and for suppliers to confirm understanding and compliance with our Supplier Code of Conduct.

The Third Party Due Diligence Policy outlines the global approach for conducting risk based due diligence in selecting, evaluating and monitoring a third party that Arcadis would like to do business with (or continue to do business with). The results of the due diligence process will support the business in making informed and sustainable decisions in engaging third parties, in accordance with our risk appetite and in compliance with internal policies and laws and regulations. This Policy is applicable to the functions designing and operating due diligence processes for third parties that Arcadis is planning to do business with and/or review if we continue to do business with. This Policy is available on the intranet and acts as an overview (umbrella document) and refers to other Global Policies, Procedures and Guidance notes, which provide more detail with respect to requirements for Third Party types aligned with accountabilities (e.g. Growth for Clients and Delivery for Suppliers). Our Global General Counsel is the ELT sponsor of the policy, with ultimate accountability with the Chief Executive Officer and our Executive Board.

Metrics related to payment practices

We recognize the need for increased transparency regarding our payment practices, particularly concerning payment practices to SMEs. Our suppliers are pivotal in the delivery of our projects and should be treated as such. The Global Accounts Payable Practices Policy seeks to govern the expectations of timely payment of payables and includes requirements to cover timely payment of SMEs. The policy outlines the roles and responsibilities of the several involved departments such as the Accounts Payable department, and defines the payment schedules and other items. Final responsibility of the implementation of this policy is with the CFO. It also sets the reporting methodology, content and frequency.

The nature of Arcadis’ business is that we take a project-specific approach, carried out over many jurisdictions and multiple accounting systems. The project-specific approach entails customized payment terms per supplier and procurement activities take place at local project level.

For the year of 2024, the vendor master data and administration was not yet sufficiently developed to fully carve out the SME suppliers and handle every labeling of payment moments. To still identify the suppliers that qualify as SME, an internal analysis was carried out based on the revenue definitions of SMEs that are defined by the EU recommendation 2003/361. This EU recommendation defines SMEs with an FTE classification and a revenue classification of up to EUR 50M.

Arcadis considered that if its total spend is less than 500k at a supplier, thus less than 1% of the threshold on revenue established by the EU, then Arcadis assumes that supplier is an SME. This is for 98% of our supplier base the case. To take account of estimation uncertainty, a 2% uncertainty boundary is applied. As a result, for 2024, we report over the total amount of our suppliers in the main ledger system Oracle rather than the 98% mentioned above. Oracle covers ~70% of total Arcadis spend currently.

Payment practices

As explained above, the standard payment terms are individually agreed per engagement with the relevant supplier. There are a variety of payment terms in place ranging from between 1 day and 120 days. No external target has been set on the measurement of payment terms. Internal dashboards and service level agreements have been created though for progress tracking. There were no (outstanding) legal proceedings related to late payments during 2024.

Arcadis is determined to improve in future our reporting and approach on this. Plans are being made on this, by e.g. moving other ledger systems towards Oracle, improve the measurement processes and define internal targets based on the 2024 insights.