Sustainability statement annex

Reference table

The table below presents the ESRS Disclosure Requirements (DR) in ESRS 2 relevant to Arcadis' material topics. Incorporation by reference is marked with an asterisk (*). The cross-referenced sections within the scope of the Sustainability Statement are detailed in the explanatory notes.

Data points that derive from other EU legislation

The table below shows the data points listed in ESRS 2 Appendix B that are considered immaterial for Arcadis.

Due Diligence Statement 

In 2024, Arcadis has strengthened our due diligence processes as mentioned in ESRS2. As part of our continuous improvement, our near-term objective is to develop procedures that further enhance the implementation of these policies. Specific planned actions to achieve this include:

• Developing procedures and implementation plans with clear tasks and assignments to support the roll-out of the new or updated policies across the organization with the help of a change management team.

• Creating a feedback loop to capture due diligence insights for inclusion into the future updates of our double materiality analysis.

• Deepening our dialogue with stakeholders on environmental and human rights risk and impacts to inform our material outcomes in our environmental & human rights due diligence approach and process. 

• Creating awareness of our human rights focus in our upstream and downstream value chain to improve our insights and explore ways to address salient environmental and human rights risks and impacts.

• Using environmental and human rights due diligence to identify, prevent, mitigate, and account for environmental and human rights impacts in our value chain and our client and opportunity go / no-go procedures.

• Creating additional visibility for our grievance mechanisms which we see as an important tool to signal actual or potential human rights issues.

• Monitoring the effectiveness of how we address grievances and integrating that process and due diligence findings in our business practices and processes.

• Developing key performance indicators, both qualitative and quantitative, for environmental and human rights due diligence.

• Regularly assessing the effectiveness of our due diligence process.

Our current reporting reflects the progress made on due diligence processes and tools that are in place, augmented by expert assessments to evaluate both potential and actual negative impacts, in line with DMA methodology. The following mapping captures these elements as of the reporting period (FY2024). Looking forward, Arcadis plans to integrate more due diligence insights into operational practices.

EU Taxonomy full note

Context

Since 1 January 2021, Arcadis has been subject to the EU Environmental Taxonomy Regulation 2020/852. This regulation mandates Arcadis to disclose its economic activities annually, by 31 December, in terms of turnover, capital expenditures, and operational expenditures that align with the Taxonomy's environmental objectives. The Taxonomy Regulation aims to unify classification for sustainable investments, driving capital towards the EU's environmental goals.

The EU taxonomy covers the following six objectives:

• Climate change mitigation (CCM)

• Climate change adaptation (CCA)

• Sustainable use and protection of water and marine resources (WTR)

• Transition to a circular economy (CE)

• Pollution prevention and control (PPC)

• Protection and restoration of biodiversity and ecosystems (BIO)

The EU taxonomy comprises two levels of assessments: eligibility and alignment. The eligibility assessment determines whether activities defined in the EU Taxonomy are present in the operations of Arcadis. The alignment assessment determines if an eligible activity identified within Arcadis is aligned with the technical criteria set out in the EU Taxonomy, combined with compliance to the minimum safeguards.

For FY23, the eligibility assessment was required for all six objectives. However, the alignment assessment was only required for the climate objectives (CCM and CCA). Starting this year, the alignment assessment is required for all activities under any of the six objectives.

Application to Arcadis Activities

Arcadis places sustainability at the core of its business model, dedicating efforts to shape designs and plans that enable clients to achieve their sustainability objectives. However, our primary focus on consultancy services—including Project and Program Management, Design and Engineering, Contract Solutions, and Commercial and Procurement strategies—means that these advisory activities are often not recognized under the EU Taxonomy, which favors physical implementation and works. Consequently, many of Arcadis' significant contributions to sustainability are excluded from the Taxonomy, despite our role in promoting sustainable practices through expert consultancy.

Eligibility Assessment Methodology

Solution level assessments

Arcadis categorizes its value propositions into Solutions. At the initiation of each project, the ERP system tags them, facilitating the classification by Global Business Area, Solution, and/or type of Service. Arcadis systematically screens each Solution, collaborating with Solution leaders to identify potential eligible activities. In cases where additional scrutiny is required, detailed analyses are conducted with the involvement of project managers, finance personnel, and other pertinent stakeholders. The screening also includes activities of the recently acquired IBI and DPS.

Group level assessments

Capital expenditures related to “6.5 Transport by motorbikes, passenger cars and light commercial vehicles” and “7.7 Acquisition and ownership of buildings” are accounted for under IFRS 16 and are managed at the group level. As such, the eligibility assessment for these two activities is done at a group level.

Eligibility Assessment Results

As a result of the eligibility assessment, previously identified activities were once again confirmed. This year, there are additions for: Activity CCA 9.3 - Consultancy for physical climate risk management and adaptation. This activity was newly added to the EU taxonomy and subsequently identified at Arcadis during this year's screening. Also for Remediation of contaminated sites and areas eligible activities were found after extra analysis, which also was the reason for a retrospective update of the 2023 reported eligibility results. The following table summarizes this year’s findings:

The assessment covered all the GBAs, Solutions, Services, and Subsidiaries with likely eligible activities generating turnover or engaging a CAPEX or an OPEX. No further taxonomy eligible activities have been identified.

Alignment Analysis: Technical Screening Criteria

All eligible activities were analyzed for alignment. The substantial contribution and DNSH criteria for each activity were considered, see also below. Many Minimum Safeguards criteria have been met, but one of the various tests led to the conclusion that the alignment criteria are not yet fully reached. The ongoing effectiveness tracking of our adherence to UN Global Principles on Human Rights is on several ways already in place, but not yet on all aspects, and by that not meeting all alignment criteria over the year 2024 and retrospectively also for 2023, and for both years the alignment figures are reduced to zero. Opex was analyzed but given the small size of the results it was labeled as immaterial. 

CCA 9.1 – Engineering activities & related technical consultancy dedicated to adaptation to climate change & CCA 9.3 - Consultancy for physical climate risk management and adaptation

Many projects in our Climate Adaptation solution fitted into both activities CCA 9.1 and CCA 9.3. The activities in this business were screened and found fit with the Substantial Contribution Criteria, since the main purpose of this solution is to offer nature-based solutions, such as flood prevention, restoration of biodiversity loss and integration of green areas in cities, to adapt to climate change in densely populated and affected areas. Only one criterion concerning architectural services was considered as “non applicable”, since no projects offer services in architecture. In addition to being key parts of the design process, all projects respect stringent local regulations on environmental impact assessments and water quality assessments, as required by DNSH 3 (Sustainable use and protection of water and marine resources). Part of our Sustainability Advisory solution fitted into CCA 9.3 Consultancy for physical climate risk management and adaptation as well. 

CCM 6.5 – Transport by motorbikes, passenger cars and light commercial vehicles

All leased fleet vehicles with CO2 emissions lower than 50kgCO2/km (electric and hybrid (PHEV) vehicles) were considered meeting the substantial contribution criteria. Screening of the circular economy DNSH was conducted regarding end-of-life use and waste management, while all European vehicles are compliant with EU directives regarding eco-design and pollution prevention. The circular economy DNSH criteria on waste management has been decisive and led to exclusion of an important number of vehicles.

CCM 6.14 – Infrastructure for rail transport

All substantial criteria have been examined, while DNSH criteria related to circular economy and pollution have been judged non-applicable for activity (6.14) given that Arcadis is a Design & Engineering firm never involved in actual works. Arcadis, consequently, does no significant harm to the transition to a circular economy nor to pollution prevention and control.

CCM 7.7 – Acquisition and ownership of buildings

The new buildings taken into use in 2024 as well as renewed leases are labeled as eligible. To demonstrate compliance with the substantial contribution criteria, adequate evidence has been examined on those buildings. All eligible buildings were built before 31 December 2020. Consequently, the buildings that have at least an Energy Performance Certificate (EPC) class A or that are within the top 15% of the national or regional building stock, were found fit with the Substantial Contribution Criteria. For projects based outside of the EU, and for EU countries with no solid national classification, the analysis was based on the European top 15% threshold. We have based our alignment analysis for buildings in the USA on the threshold for the top 15^th percentile of office buildings as defined by the Commercial Buildings Energy Consumption Survey “CBECS”. All DNSH criteria are non-applicable except for the Climate Change Adaptation according to (Annex 1) of the EU Taxonomy. That last requirement has a company wide approach which is explained in the section Alignment Analysis: Adaptation to climate change and in Alignment Analysis: Minimum Safeguards.

CCM 9.1 - Close to market research, development and innovation

Some projects in our Energy transition solution fitted in some of the Alignment criteria, by contributing to new solutions that lead to significant lower GHG emissions and offering significant (financial) and logistic advantages. 

CCM 9.3 – Professional services related to energy performance of buildings

All MEP projects in Arcadis involve technical consultations (energy simulations, & project management) linked to the improvement of energy performance of buildings. For activity (9.3), according to (Annex 1) of the EU Taxonomy, all DNSH criteria are non-applicable except for the Climate Change Adaptation.

CE 4.1 – Provision of IT/OT data-driven solutions

Upon considering all the substantial contribution requirements and the DNSH requirements only projects under Intelligence were compliant with technical screening criteria.

WTR 4.1 – Provision of IT/OT data-driven solutions for leakage reduction

Upon considering all the substantial contribution requirements and the DNSH requirements only projects under Intelligence for water customers were compliant with technical screening criteria.

Four eligible activities were found non-aligned already during the eligibility investigations. Activities within 1.1 Conservation of habitats, 2.1 Environmental protection and restauration activities and within 2.4 Remediation of contaminated sites and areas need very long term obligations for remeasurement of the site conditions, this was not seen feasible for the eligible projects. Activities within 4.27 Construction and safe operation of nuclear power plants were not meeting some of the many alignment criteria.

Alignment Analysis: Adaptation to the climate change

A climate risk and vulnerability study has been conducted by the specialized company Jupiter on behalf of Arcadis. It assessed the physical climate risks on the Arcadis’ activities using the highest available resolution, state-of-the-art climate projections across the existing range of future scenarios consistent with the expected lifetime of the activity (2020-2100). This study started in 2022 with analysis of 124 offices, followed by 44 acquired offices and 86 of the largest project sites. In 2024 another 75 project sites, and a set of 82 offices of Arcadis were analyzed as well. Arcadis was found not to be vulnerable to any significant climate change hazards as the business is spread over a wide variety of geographies, and offices are on locations that are not directly exposed to high risk climate hazards. Furthermore, Arcadis has defined physical and non-physical solutions applicable in the short-term, mid-term, and long term. These solutions have been integrated to Business Continuity Plans. These elements combined allow Arcadis to be aligned with the requirements of the generic criteria for Do No Significant Harm criteria (DNSH) to climate change adaptation. 

Alignment Analysis: Minimum Safeguards

Arcadis has been a member of the United Nations Global Compact (UNGC) since 2009 and supports the Ten Principles regarding four areas: human rights, labor standards, environmental stewardship, and anticorruption. Our operations and strategy reflect the UNGC principles, and our membership to UNGC is a statement of our commitment and our ambition to be a sustainability leader. We integrated all principles and rights set out in the International Labor Organization's Declaration on Fundamental Principles and Rights at Work and the International Bill of Human Rights.

Human Rights Due Diligence

Arcadis made progress on implementing a human rights due diligence process in order to prevent, mitigate, and remediate any negative human rights impacts caused by, contributed to, or linked to our business activities. Arcadis’ approach to human rights is grounded in our human rights policy. To understand potential and actual human rights impacts, Arcadis conducts proactive and reactive due diligence. As to the former with respect to our employees, in 2022, Arcadis conducted its first human rights impact assessment (HRIA) of one of our operating countries. Follow-up recommendations were provided, and Arcadis is committed to continuous improvement in this area. As to reactive due diligence, Arcadis responds to potential or actual impacts when they are reported to one of the companies’ three grievance mechanisms: Health and Safety (H&S) for H&S, our Integrity Line (which allows for anonymity for those who want this), and our People (Human Resources) department for matters that are reported to them. The ongoing effectiveness tracking of our adherence to UN Global Principles on Human Rights is on several ways already in place, but not yet on all aspects, resulting in not meeting this alignment criterium.  

Anti-bribery and corruption

Arcadis is committed to preventing corruption and bribery through specific guidelines that are an integral part of its General Business Principles. The company has established Speak Up procedures, including the 24/7 multilingual internal and external Integrity Lines, hosted by an independent third party.

Taxation

Arcadis’ commitment to sustainability, our core values and the AGBP form natural and essential foundations of our approach to tax which is laid down in the Arcadis Tax strategy and principles as published on our external website. Arcadis has also endorsed the VNO-NCW Tax Governance Code, which is largely aligned with the Arcadis Tax strategy and principles. For further information, we refer to our external website where we have published “Our Approach to tax: tax principles and tax strategy” and the “Arcadis’ tax report 2024”.

Fair Competition

Arcadis supports the principle of free enterprise and unrestricted competition as a basis for conducting our business and we observe applicable competition laws and regulations. Specific guidance on fair competition is included in our Arcadis General Business Principles.

Legal Monitoring

Arcadis closely manages its key legal claims and proceedings and collaborates with the Risk team to address potential legal risks. Arcadis provides its workforce with regular trainings on legal topics, including new legislation and legal risks.

Key Performance Indicators as of 31 December 2024

The figures reported below relate to the consolidated companies included in Arcadis consolidated financial statements.

Turnover

As of 31 December 2024, the total turnover used as a denominator for the calculation of the Taxonomy Turnover KPI amounts to €4,995 million and corresponds to the group Gross turnover as set up in the Group’s consolidated financial statements. The eligible turnover amounts to €1,624 million and represents 32.5% of the group’s gross turnover. For 2023, the restated eligible turnover amounts to €1,741 million and represents 34.8% of the group’s 2023 gross turnover. The delta in both years is stemming from our Environmental Restauration solution. The aligned turnover is nil for both 2024 and retrospectively for 2023 because of not meeting all criteria of one of the minimum safeguards. 

Capital Expenditure

As of 31 December 2024, the total capital expenditures used as a denominator for the calculation of the Taxonomy CapEx KPI amounts to €88.2 million and corresponds to additions to tangible and intangible assets over the period, including increases in IFRS 16 right-of-use and additions related to business combinations, expenditures on software, and PP&E. It is important to highlight that Arcadis does not typically incur CapEx amounts directly associated with activities generating turnover, due to the nature of the services we provide, which are primarily Design and Engineering. Goodwill is not included in CapEx, as it is not defined as an intangible asset in accordance with IAS 38. The figures can be reconciled to note 14, 15 and 16 of the financial statements. As of 31 December 2024, eligible capital expenditures amount to €42.7 million and relate to increases in IFRS 16 buildings' right-of-use (€35.5 million), IFRS 16 company cars' right-of-use (€7.2 million). The aligned CapEx is nil for both 2024 and retrospectively for 2023 because of not meeting all criteria of one of the minimum safeguards.

Operating Expenditures

As of 31 December 2024, the total operating expenditures used as a denominator for the calculation of the Taxonomy OpEx KPI amounts to €9.9 million and corresponds to Research and Development, and Operation and Maintenance expenses only. This amount being not significant compared to the total OpEx of Arcadis Group, the Group opted for the materiality exemption for the OpEx. The amount of eligible OpEx is considered as null.