Arcadis NV (ARCAD) Earnings Call Transcript & Summary

Welcome, everyone, to this interactive sustainability-focused event. I hope that you got excited about what's to come today. I'm Jurgen Pullens, Director of Investor Relations, Arcadis. We are delighted to be joined by clients, investors, analysts and journalists to share with you how we can collectively create a more sustainable future and what this means for our clients and the communities we live and work in. You join us today at a wonderful Green Pavilion at the Baarn Center in Netherlands, which translates as the tree center here in Baarn in the Netherlands. It supplies thousands of trees to municipalities across the country, helping make our communities greener and more pleasant places to live, work and play. For us at Arcadis, this sustainable event space, which is powered by solar to heat the building and uses water to cool it, is the perfect location to share with you our journey to create a more sustainable world. So what can you expect from today? You will be hearing from our speakers for an hour. They will share with you our ambition to accelerate to a net zero world in a way that improves quality of life for all. They will launch our new global net zero target for our own operations as well as, most importantly, explain how we help our clients make their sustainability goals a reality through the consolidation of our regional sustainability advisories into one truly global sustainability advisory service. We will then move on to the Q&A, which will last about 30 minutes. We welcome your questions and encourage you to add these in the Q&A chat box during the event. And at the end, we will try to answer as many questions as we can. Now let me start by introducing our 2 presenters today. You definitely already know them, our Chief Executive Officer and our Chief Sustainability Officer, Peter Oosterveer and Alexis Haass. Over to you, Peter and Alexis. The floor is yours.

Thank you very much, Jurgen. Hello, everyone, and thanks for taking time out of your busy schedule to be with us today.

Hello, everyone. Thank you so much for joining us. We look forward to walking you through this event.

In November of last year, we launched a new 3-year business strategy and reinforced our commitment to put sustainability at the heart of everything we do. This commitment is not only a logical evolution of the journey, which began when Arcadis was founded more than 130 years ago, it is also the result of increased collaboration with all our stakeholders, including clients, shareholders and investors as well, obviously, as with our own people, recognizing the necessity to accelerate our sector towards net zero while simultaneously enhancing Arcadis' purpose, which is improving quality of life. And almost 1 year on, with the effects of climate change being felt more and more and the science being overwhelmingly clear, as highlighted in the recent damning report by the United Nations, we brought you all together today to share the more recent journey we've been on in our collective race to net zero.

Thank you, Peter. We need to be clear from the start. Tackling climate change will be the greatest challenge of our generation. We must limit global temperature rise ideally to under 1.5 degrees before it's too late. Why? We only need to look around the world today to see the devastating effects of extreme weather. From the heat waves and the wildfires in North America, the record levels of flooding in Chinese megacities and the rivers overrunning their banks in Northern Europe, they're creating chaos. In fact, in Germany, the country where I live, 2 days of heavy rainfall led to a loss of life and over EUR 30 billion of damage to homes and vital infrastructure. What's sobering is that scientific studies now show a direct and quantifiable link between human behavior, extreme weather events and climate change. For example, human-caused global warming has made downpours in Northern Europe up to 20% heavier. And a recent attribution analysis showed that the heat wave in North America was made 150x more likely due to climate change. This means more extreme weather events occurring is effectively a certainty for our future. The UN's report has called it a code red for humanity. Their message: We must act now. It's time to change. It's time for us all, including us at Arcadis, to step up in the race to reduce emissions. I truly believe the sectors in which we, at Arcadis operate, the built environment, including infrastructure, real estate and industry; and the natural environment, including water management and habitat preservation, these have the potential to make the biggest difference. Building and construction alone are responsible for 39% of all carbon emissions in the world. 1/4 of emissions come from transport including road, rail and air. But the sequencing, the transition of those individual sectors does matter. And in order to speed up the change, the global energy sector must be at the forefront. Our recent research, Supercharging Net Zero shows it will need to cut its emissions in half by 2029 and rapidly expand electricity generation capacity as every other sector, including transport and industry is dependent on a decarbonized grid to achieve their own net zero goals. This model-based research by Arcadis showed that EUR 6 trillion of capital investment is required to transition the energy sector alone. I'm delighted that we can hear from Manon van Beek, CEO of TenneT, one of our growing clients, to describe the challenge and the opportunity associated with greening the energy network in Europe.

The target to decarbonize the European economy until 2050 makes it inevitable to start scaling up now. If we want to reach the commission score of 300 gigawatt offshore wind power on the North Sea until 2050, we have no time to lose. Today, only 3 gigawatt of renewable energies are built and connected offshore in Europe each year. We have to multiply the connection of gigawatts per year after 2030. That means an annual offshore generation capacity in the magnitude of 7 large power plants. TenneT will invest up to EUR 5 billion to EUR 6 billion per year in the energy transition in the next years. However, if 300 gigawatt of wind is to be connected until 2050, a new and integrated European energy system is key. I strongly believe in green recovery. We can invest ourselves out of this crisis. Especially now, political courage, support and European collaboration are needed to achieve our climate targets and to give the economy a green impulse for growth. The European Green Deal brings the opportunity to build back much better.

Thank you, Manon, for that excellent summary. TenneT's ambition is impressive. And we're pleased to be working with them to make this ambition a reality, which you'll hear a little bit more about later. These are big challenges to overcome. And let's be honest, we all collectively need to do way more than we have, but we can accelerate the transition, if we act now. We have made some good steps and there are pockets of best practice where Arcadis has been advancing sustainable solutions.

At Arcadis, we've been supporting our clients by providing pioneering solutions to protect, restore and improve our planet for as long as we've been in existence. From our beginnings in 1888, transforming unusable wetlands in the Netherlands into land for people to farm and build communities, to designing a storm-protection system in New Orleans. That recently helped defend the city from the worst impacts of Hurricane Ida. It is clearly in our DNA. And I'm proud of the many examples with which we help our clients deliver on their sustainability goals and want to share a few more recent examples. Since Hurricane Sandy in 2012, Arcadis has been supporting New York City develop a blueprint to strengthen the shoreline around Manhattan and protect 62,000 residents against rising sea levels. Our experts have created a climate resilience strategy that will see the extension of Lower Manhattan shoreline by up to 500 feet or 2 full city blocks. And land around the shoreline will also be elevated by 20 feet above sea level, acting as a flood barrier during storms. And once finished, the $800 million project will be a true game changer for New York. It will safeguard 19 out of 28 subway lines from flooding, create new green spaces and reinvigorate neighborhoods on the lower east side. The results, a more resilient and more livable city for future generations. Alexis, why don't you give another example?

Sure, Peter. In the U.K., our 5-year partnership with High Speed 2, a demanding and exciting high-speed railway project, is also reaping benefits. As the biggest construction project in Europe, one of the aims of the project is to reduce the carbon emissions as the line is built. Our team of engineers working on the stretch of railway between London and Birmingham are using their expertise to tackle carbon through the design, construction and operation of green tunnels and viaducts, ultimately, using less concrete. The results are phenomenal. A 43% reduction in forecasted carbon emissions and a net gain in new biodiversity areas along the line. The reduction in concrete alone will save over 200,000 tonnes of carbon. So can you top that example, Peter?

Thanks, Alexis, and that's a hard challenge. But over in Australia, we're working on the Sydney Metro at Barangaroo, designing one of the first stations recognized by the Green Building Council of Australia as showing world leadership in sustainable buildings, giving it the 6 Green Star status. Throughout the design and build stages, sustainable solutions are being embedded into the station. Most notably, the installation of a new seawater cooling system, which is forecast to see a 45% reduction in energy consumption and a 90% decline in water demand once complete. And when it opens in 2024, the station will not only transform local community access to this new business district, but also provide connectivity to nearby residential areas. So resilient infrastructure, green transport solutions and sustainable buildings. These are the types of projects that will help our clients reach their sustainability goals. And our focus now is on how we further standardize scale and consistently implement these solutions to make net zero a reality across the world. But in order to do this, we all need to be clear on what the big issues are and what the complex language often used to describe the climate emergency really means. So let me now hand back to Alexis to get us all on the same page on these big issues.

Thanks, Peter. Indeed, if we were to succeed and address the problems outlined, we need to act fast and ensure everyone is on the same page. So let's speak clearly. While building out our strategy and ambition, we spoke to people who care passionately about this topic; our clients, shareholders, fellow Arcadians and the next generation, who, as you might expect, asked us the toughest questions of all. They were exactly the type of questions we should be asking now. So I thought I could answer a few of them again here.

Hi, everyone. My name is Marc Kefford, and I lead our Urban Development team here in Sydney, Australia. I also hold a position on the Lovinklaan Foundation Board. Lovinklaan being Arcadis' major shareholder.

My name is [ Aidy ], and I am 8 years old, and I represent future generation. I care about sustainability and the Arcadis commitments to it.

As both an Arcadian and a major shareholder, I also care about our commitments. Companies talk about emission reductions in terms of scope, 1, 2, and 3.

1, 2, and 3.

And their commitments to these. And I was hoping if you could clarify what's the difference between these scopes and what we at Arcadis hope to achieve? Thank you. Bye-bye.

Bye.

Marc, [ Aidy ], I'm happy to. The most important thing for us to do now is to move our entire economy rapidly towards net zero, meaning ramping down global emissions to basically zero. In fact, the world should be on track to have global emissions by 2030. That's why we at Arcadis believe our company and all in our sector need to be setting goals to reach net zero fast. You can think of scopes, like circles, which take bigger and bigger bites out of a company's footprint. Scope 1 emissions are the direct emissions from company-owned and controlled resources, like Arcadis vehicles. Scope 2, our indirect emissions that come from purchased energy, like the indirect emissions generated when we wanted to turn on the lights or turn up the heat. Scope 3 emissions are indirect greenhouse gases resulting from operations throughout the value chain. An example would be all the impacts, flights, hotels, food caused by some of our business travel. For most companies, scope 1 and 2 will be tiny in comparison to scope 3. In our opinion, any net zero target should cover all 3 scopes because that's the true impact of a company. And that's how we will set our target to net zero. How about we take another question?

Hi, Alexis and Peter. I'm [ Barbara Meirelles ] from Arcadis Brazil. I'm Corporate Sustainability analyst. And I would like to listen from you what are the Science Based Targets and why they're so important?

Barbara, that's a good question. Science Based Targets provide company with a clearly defined pathway, specifying how much and how quickly they need to reduce their greenhouse gas emissions. Science Based Targets initiative, or SBTi for short, is an organization that sets the best practice and offers guidance, independently assessing and improving company's targets. So for example, indicating that a credible net zero target would be one that covers scopes 1 to 3 and aligns with the Paris Agreement target to limit global warming preferably to 1.5, but at a minimum, to well under 2 degrees. Arcadis's net zero commitment targets that 1.5 degrees and maps to SBTi's pending guidance. I think we have time for one more.

Hello. My name is Peter Bakker, CEO of the World Business Council for Sustainable Development, or WBCSD for short. The WBCSD Vision 2050 report outlines clear transformation step for industry. The latest IPCC assessment report depicts a code red for humanity and states that the pace of change will be key. What will Arcadis do to scale its ambition and solutions needed to decarbonize the projects and solutions in which it is involved?

Peter, I agree. The UN IPCC report shows us that we must change the pace and the ambition with which we tackle climate change. Aiming for 2050 is simply too late. We must act now. Arcadis plans to do this both by accelerating our commitment to reach net zero in our own operations as well as accelerating the global transition through the solutions we bring to our clients. This means we will prioritize and focus on strategic pursuits that decarbonize and support the transition to net zero. We'll make sure to build sustainable solutions into what we provide, into everything we provide, which will help us achieve net zero faster. You'll hear about how we have formalized our sustainability advisory practice later just to do that. Thanks again for these great questions. I hope that gave a little more context around the terminology we use when we talk about climate change. We need to change our sense of urgency. It's time to up our ambition and it's time to up it when it comes to tackling climate change.

At Arcadis, we have a specific sustainability ambition. We want to accelerate the transition to a net zero world in a way that simultaneously improves quality of life for all. We want to get to net zero, but in a way that also builds broad-based prosperity.

To give one example, this means success isn't just seeing the emergence of a few renewable energy billionaires. It's about how switching to renewables can reduce everyone's energy bills and importantly, provide access to energy for those who don't currently have it. So when I tell folks, our ambition is to accelerate the transition to net zero, the most frequent question I get in response is, "But net zero, isn't that too narrow? Where does biodiversity, water or social inequality, where do those fit in?" The answer is, if we're smart, and we pick the right solutions, we can do both. Solutions that do the double duty of addressing climate change, biodiversity, water and societal and equity. Those will both solve our immediate climate crisis and create a better world. Easy to understand is better with an analogy of a boat. So if you have a hole in your boat, you're going to need a lot of tools and techniques to plug it before it sinks, materials, glue, reinforcements. Our emissions are causing the hole. Electrification, nature-based solutions, addressing environmental injustice, these are effective materials and glue. And if we pick the right solutions, we can keep the boat from sinking and have a better quality of life. That's why our ambition is to accelerate the transition to net zero in a way that improves quality of life for all. As I mentioned earlier, our sector is one of the biggest emitters. And we have a fundamental role to play in changing the pace at which we tackle climate change. Governments and our clients want it and are seeking solutions. We see strong commercial opportunities and returns. It makes business sense. So Peter, why are we in the perfect position to lead?

Well, Alexis, first, our heritage and our culture. As Arcadians, we share a vision for the future, underpinned by our proud Dutch heritage and unique culture to better the communities we live and work in. With the urgent problems societies are facing and the pressing need for a green recovery, we know that we have the skills to deliver it. With our global reach and local presence, we are well positioned to provide our clients with truly end-to-end sustainable services and solutions, integrated and at scale. Secondly, innovation and collaboration. We pride ourselves on taking an open source approach, bringing together the best minds inside and outside the company to solve problems. Take, for example, our partnership with Techstars, the start-up accelerator. For the past 3 years, we've been partnering with new businesses, testing ideas, creating solutions and failing fast if it didn't work. We also benefited from this experience as we launched Arcadis Gen in 2020, providing next-generation digital products and solutions to our clients. We want to be bold. We want to be fresh and agile, constantly challenging industry norms. And this kind of innovation also reminds me of some of the great projects we're doing here in the Netherlands, like where we are using the heat from cow's milk to warm the reception building at the dairy campus in Leeuwarden. And the third reason why we are in the perfect position to lead, obviously, our people. Our people believe in our mission to improve quality of life, and it keeps them coming to work. When you spend most of your week at work, don't you want to make it a difference? Most people join our sector because they literally want to build our world back better. And that's why, for example, we help one of our clients create a group of new islands in Lake Markermeer in the Netherlands that now serves as a nature reserve or transformed a former hospital site into a sustainable urban residential area for communities to enjoy in Germany. Our people want to play their part and they have the skills and expertise to match their passion.

Peter, I get it. Heritage, innovation and our team, all 3 give us a head start to drive this huge and timely opportunity to accelerate where our sector currently is and most importantly, to get us to where we need to be. We know the time to act is now. So what are we doing to bring to life our ambition to accelerate the transition, Peter?

Thanks, Alexis. Good question. As you say, our ambition is to accelerate the transition to a net zero world in a way that also improves quality of life for all. But as I mentioned earlier, this is not a new initiative for Arcadis. We are starting from strong foundations, underpinned by our heritage and countless awards and recognition in this field. We are, for example, ranked in the top 1% of our industry by Sustainalytics, meaning we have one of the lowest environmental, social and governance, or ESG risk ratings. And only a few weeks ago, EcoVadis, an independent sustainability rating agency that assesses over 60,000 companies worldwide, upgraded our rating from silver to gold, pivoting us into the top 2% of companies in our sector. And I'm also delighted to announce that we have joined the UN Race To Zero campaign with a coalition of over 4,000 businesses, cities and investors to rally climate leadership. This all highlights our collaborative nature and commitments to a more sustainable future for our businesses, for our clients and our communities. We have already committed to Science Based Targets that align with the 1.5-degree ambition of the 2015 Paris Agreement. And now we want to go even further with a clear plan to achieve this.

Our ambition is to accelerate the transition to a net zero world in a way that improves quality of life for all. That starts with us. We have set an ambitious target to be net zero within our global operations by 2035. Reducing scope 1, 2 and 3 emissions according to the latest climate science. This will help keep global warming below 1.5 degrees Celsius compared to pre-industrial levels. So we can hit the Paris Climate Agreement target in half the time. To get there, we've set milestones. We will source 100% renewable electricity by 2022. By 2025, we will reduce our flight emissions by 50%. We will cut our total company emissions in half by 2028 and transition our entire global company fleet to electric vehicles by 2030 or sooner. As we work towards these reductions, we are investing in high-quality offset projects, like saving 110 hectares of protected forest land in Cambodia, restoring our ecosystems to help mitigate the effects of climate change. It's time to accelerate towards a better world.

As you can see, we are committing to fully reducing our scope 1, 2 and 3 emissions by 2035. In short, getting to Paris in half the time. This should actually not be special. In fact, I sincerely hope that all businesses would aspire to get there by their time. We should all be committing to drop our emissions to the absolute minimum as quickly as we possibly can. So we've set the ambitious targets but you might be thinking, where does the improving quality of life part come in.

We know it's the poorest and most vulnerable no matter where in the world that feel the effects of climate change the most. That could be in the Mississippi Delta wetlands, which are under threat from rising sea levels or it could be in Bangladesh, where it's estimated that by 2050, 18 million people will be displaced by climate change. That's 1 in every 7 people. Tackling climate change is not just about saving the planet, it's about saving our communities.

Arcadis has been responding to the effects of climate change events in many ways. Through the solutions we bring to the table, our partnerships like with the World Business Council for Sustainable Development, where I'm proud to be on the Executive Committee, and through the grassroots activities that 28,000 Arcadians regularly take part in, our role is in creating and influencing equitable and sustainable development for all. Arcadians around the world are leading this charge. And let's have a look at just a few of those great examples from Germany, from the U.K. and from Asia. [Presentation]

We believe that if these are the kind of people who choose to join Arcadis, then we can be confident that there are 28,000 more who, just like them, believe in our ambition and want to do their part in getting Arcadis to the goals of Paris in half the time. They will be eager to show how our sector can accelerate the transition in a way that improves quality of life for all. The opportunity, therefore, doesn't just lie within our own business. It is the collective impact we make with our clients to deliver against their climate ambitions and targets. That is the biggest opportunity for us all. For me, the biggest and most obvious impact we can make on the world's climate emergency is addressing and minimizing the carbon footprint associated with the work we do for our clients. This could be through a flood defense scheme in Limburg or Louisiana or an energy transition project in Scotland or in Sydney. Arcadians are ready to put their talents to work on our clients' challenges of today and their aspirations of tomorrow. We develop strategies, and we turn them into action. We take every opportunity to help clients make net zero a reality through the practical solutions we implement across every project. And I'm delighted that you'll be hearing today from Heather Polinsky, from Mark Cowlard and from Greg Steele, who lead our resilience, places and mobility global business areas. So they can share how their teams are already helping clients create a more sustainable future. Let's hear first from Heather Polinsky who leads our resilience business.

I'm Heather Polinsky, and I am proud to lead 7,000 Arcadians as the Global Business Area Officer for Resilience. Arcadis is committed to improving quality of life by responding to the challenges of our clients and society. Our work in this space includes supporting our clients and transitioning to a low-carbon future. We also support our clients in preparing defensible ESG and climate reports. Arcadis leverages our global expertise and our local presence to support both public and private clients. We do this by providing solutions in climate adaptation, energy, water, environmental restoration, sustainable operations, sustainability advisory and enviro-socio permitting. Rest assured, Arcadis embeds sustainability in everything we do. Energy transition is underway around the world. Shifting the energy sector from fossil-based to zero-carbon sources is critical. In Germany, we are supporting their transition to net zero. TenneT chose us to support them in a grid expansion project that will increase transmission capacity from Northern to Southern Germany. When this 130-kilometer, 380-kilovolt project is complete, safe transport of renewable energy will be possible across Germany. For example, energy generated by offshore wind in the North Sea will be able to be transported to Southern Germany, protecting our environment and water resources as well as powering our world for future generations is part of Arcadis's DNA.

Thanks, Heather. We were indeed lucky to also hear from Manon van Beek, the CEO of TenneT earlier. And I'm proud of the impact we are making together to accelerate the energy transition. Let's now hear from Mark Cowlard, who leads our places business.

Hi. I'm Mark Cowlard, and I'm the global leader of our places business here at Arcadis. Places are the spaces people occupy. They are the building blocks of communities and cities. At Arcadis, we create smart, sustainable and safe places for people to move, live, learn, work and play. We bring innovative, future-facing end-to-end solutions and products, which consider the whole life of the asset, ultimately creating exceptional outcomes for our clients, their consumers and society. With buildings generating up to 40% of annual global greenhouse gas emissions, along with population growing around the world, we see a higher demand on places. In response to this, we take our role seriously in embedding sustainability into everything that we do. Arcadis can, for example, help to reduce carbon over the life cycle of an asset or we can help scale or repurpose existing assets and optimize life cycle costs. One example of where we're currently creating an amazing sustainable place is the Venlo Holland Casino in the Netherlands. It's a government-owned business that operates in a socially responsible manner. This project is a fantastic example of biomimicry. The central structural design of the building represents a tree-like structure. It is a showcase of sustainable development. We have considered the building as an organism with skin, skeleton, brain and its own metabolism. The whole roof is covered in a PV foil to harvest solar energy, which powers the breathable facades LED lighting. And rainwater is used for part of the building's cooling. And of course, it's smart as it adjusts its energy, water and air needs based on the number of occupies. The building has achieved the highest possible sustainable rating. So at Arcadis, we are committed to enhancing sustainability in the places that makeup our world and improving the communities and cities where we operate.

Thanks, Mark, for sharing this fascinating project too. This kind of innovative, sustainable design reminds me of our recent appointment by Leicester City Council to deliver the U.K.'s first-ever carbon-neutral bus station. So next, let's now hear from Greg Steele, who leads our mobility business.

Hi, I'm Greg Steele, Global Leader of the Mobility business area here at Arcadis. Mobility is pretty important to me and Arcadis as it provides opportunity for all and literally keeps the world moving. Importantly, for our clients, Arcadis has local presence and global reach, offering design and engineering, asset management, program management, cost and commercial management and advisory services. Regarding sustainability, the mobility sector contributes to over 1/4 of the world's greenhouse gases. This is mostly contributed to by passenger vehicles and trucks. The conundrum is that over the next 30 years, passenger and freight demand is expected to more than double. Therefore, it is crucial that the mobility sector acts now to ensure that there is a significant reduction in carbon emissions by 2030. There are 2 key areas we're focusing on for sustainability and mobility, and that is decarbonization and commuter travel behavior. MaaS or Mobility as a Service is a key tool in changing commuters travel behavior towards a more sustainable means. Arcadis is already a leader in MaaS. MaaS provides integrated multimodal travel options for the commuter. While making choices easier and travel easier for commuters, this leads to commuters taking a more sustainable path for their travel. In Amsterdam, the Amaze app also calculates the carbon footprint for route choices for the commuter, thus enabling sustainability to be front of mind for that commuter. At Arcadis, we design and deliver real mobility solutions. And importantly, we are enabling our clients to deliver a low carbon emission future as well.

Thanks also, Greg. Great work we're doing with the Amaze app. And I'm actually pleased to say that the app has already been downloaded 4,000 times which is before it will be officially launched to the public tomorrow. And I know that in Scotland, we're also supporting the Highlands and Islands Transport Partnership to create a Mobility as a Service app for the whole region. These projects showcase our creative zeal and our ability to help clients with their most-pressing challenges today. But what about clients' aspiration for tomorrow? Companies need comprehensive, holistic sustainability strategies to both mitigate their impact and help them prepare to adapt to the changing physical and business environment.

Let me echo what Peter just said. We will never realize our aspirations of tomorrow and get to a net zero world if organizations do not have a comprehensive strategy and plan. We're already helping clients globally like AkzoNobel and locally, like Tesco in the U.K. set their sustainability strategies and make the right decisions that will have the greatest impact. But the challenges are getting bigger, and the target dates are drawing closer and time is running out. We must look at things holistically. We need strategic plans designed to be practically implemented. I'm thrilled to announce that we have unified our sustainability strategy services into a truly global advisory practice. Arcadis's Sustainability Advisory will be headed by Josh Nothwang, a creative and energetic leader with nearly 20 years' experience founding, growing and leading sustainability advisory in management consulting and engineering and design. So let's hear from Josh about how his team will help governments and businesses develop comprehensive and holistic sustainability strategies that will drive profitable growth.

I'm passionate about my role because climate change isn't a distant future possibility. The effects of climate are here today. You need to act is now to accelerate the transition to net zero. We have the ambition, talent and expertise to really lead our industry and to help our clients lead theirs at a time when it's most needed. Arcadis's own sustainability ambition is what excites me the most, and the desire to connect that vision to the services we provide. Already, we're collaborating with clients across continents to develop their enterprise-level sustainability strategies in energy and resources, manufacturing, transportation and others. We work on some of the most iconic projects, shaping communities, infrastructure and the human experience. Our opportunity today lies in bringing the best of our expertise to clients wherever they may be, delivering end-to-end solutions from consulting on program ambition to embedding design elements into projects. Sustainability Advisory is a link that will deepen and strengthen our client relationships. For our clients and the work we're doing today, we're seeing the value of this approach resonate in the market. Our recent announcement of Sustainability Advisory has already translated into opportunities. From here, our clients will see both strategic and technical expertise and to deliver, we'll engage all our global business areas and our diverse sustainability experience to meet client needs.

Thank you, Josh. It's great to have you on board. Now you may be thinking, but don't others offer such services too? Yes, some do, but we're uniquely placed with deep industry and asset knowledge. And it's this, combined with the strength of our advisory that I believe makes us the best end-to-end sustainability services and solutions provider. We're proud of the steps we're taking within our own business, and with our clients to make net zero a reality. But there's always more to be done. Right, Peter?

There is indeed always more to be done, Alexis. Very true. This is an exciting chapter for our business. It is one in which our company's success is intrinsically linked to our generation's biggest challenge, climate change. So our pledge to you is to accelerate the transition to a net zero world in a way that improves quality of life for all. No more proclamations and long-term goals without immediate actions. We've made our own ambitious net zero commitments and set our plan. We are going to accelerate, and we will structure our business around this acceleration. We are committed to safeguarding our clients' businesses, opening new markets and importantly, creating a sustainable future for the communities we all serve. What you can expect from Arcadis is that we will lead by example, be a truly global partner to stand by your side with the best end-to-end sustainable solutions and project know-how. By doubling down on sustainability and climate solutions, we can help you, our clients, their communities and ensure our own growth and continuity. I think we all have the ambition to make net zero a reality. So let's accelerate together in our collective race towards a sustainable future. Now is the moment, it's time.

Thank you, Peter. Thank you, Alexis, and all our contributors, including TenneT, WBCSD and Lovinklaan. We are now going to move into the Q&A section. And we have seen already some great questions coming through. So why don't we start with our first question.

The first question, Peter, is I think, for you, and it's about our organic growth target. We have seen, of course, that climate change is an enormous challenge, but at the same time, it's also an opportunity. So the question is, what's our guidance target to have a mid-single-digit revenue growth in -- by 2023 and every year, not too conservative?

Yes, that's a question we've had before, Jurgen, as you know. Let me take you back in recent history. So it's less than a year ago, November of last year when we had our Capital Markets Day. And in there, we identified 4 megatrends which impact our business. And climate change, obviously, was one of those megatrends. And we also explained to you at that time that these megatrends will translate into opportunities. And as a result of that, we set our goals for 2023. And that goals include, indeed, the mid-single-digit organic growth. And at this point in time, we're charging nicely ahead. So let's first deliver on the goals we have committed in November of last year before we raise the targets even further. The opportunity might be there, but I first want to deliver on what we committed to you before.

Thanks, Peter. That's clear. Another question and maybe a bit more for you, Alexis, and we hear that question even more. Will you be able to find the right people and talent for your business, also given the war for talent we currently see?

I'm actually really glad you asked that question. I can say yes, and part of it is actually through my own experience. The people who join this field, who want to go work in the area of sustainability, they're motivated by the ability to make an impact. I am. And I actually came to Arcadis because I see the opportunity to make the biggest impact at the time that it matters the most. And actually, my experience in trying to attract talent since I've joined has been nothing but positive. And the reason why is because of our ambition. Our ambition to accelerate the transition to a net zero world in a way that improves quality of life for all, that is exciting to people. It matters most. It actually pulls people towards us. I've had people actually reaching out to me to say, can they come join our organization? So I'm pretty confident that not only is it the skill set that we have, the industry that we're in, and particularly, the ambition that we have that will make it easy for us to attract the right kind of people to drive our ambition further.

Thanks. Thanks, Alexis. Something to add, Peter?

Yes, I'm finding that increasingly, people want to work for companies who have a clear purpose. And how much better can the purpose be than improving quality of life? And therefore, I expect that people will continue to want to join Arcadis.

Thanks. Actually another interesting question, I think, for you, Peter, is we talked a lot about what we can do for our clients. But the question is, how strong do you push your clients to commit and accelerate their part to net zero and how do you make sure you do not come across as just trying to secure more business for yourself?

Yes, this is not only about securing more business. This is about serving allegedly one of the biggest crisis in recent history. This is also about ensuring that my children and their children in the future, and your children and their children will have a planet to live on. So it's not just about business. We are trying to persuade our clients to accept our ideas and our sustainable solutions. Increasingly, we are seeing that, that persuasion is really not necessary anymore. However, if we do ultimately have to conclude that clients cannot be persuaded, then we will draw our own conclusion, and that will mean that we will move on to other opportunities.

Thanks, Peter. The question more about, say, the net zero target, Alexis. And the question is how much of your net zero target is based on emission reduction versus offsets? And how do you verify emission reductions from offsets?

That's actually a really great question. I'm glad it was asked. And the reason is because a true net zero target means you're ramping down to zero. You're not counting on offsets. And so actually, what we're doing is ramping down to zero by 2035. That's our commitment. And in the interim, we want to mitigate the harm of any emissions that are still left. We are using very high-quality offsets, using the appropriate verifications of this. But frankly, that is a temporary state because what we're doing is actually delivering true net zero, ramping our emissions down to the absolute minimum. If there should be any 1%, 2% left, that is where carbon removal comes in, not offsets. And this is where we hope everybody is going when it comes to net zero.

Thanks. I think very clear what net zero means. Another question that came in, and that is about our uniqueness. So the question is how unique is Arcadis with regards to sustainability strategy? And what differentiates Arcadis from our competition? I look to you, Peter.

I don't think that we're necessarily unique in having a sustainability strategy. I hope that everyone will ultimately develop a sustainability strategy. I think any operation does need a sustainability strategy because sustainability is not a responsibility of a few, it is a collective responsibility. So having the strategy in itself is not making us unique. What makes us unique is some of the things we mentioned in our prepared remarks, our heritage, our people, the experience and the fact that we have set ambitious targets, which we will deliver on, and we hope others will follow.

Am I allowed to jump in with the built?

Of course. Of course, yes.

I think I have to say this is unique in Arcadis. I have never seen a company with such intense commitment both from the Board and from the leadership to actually put this at the very heart of its strategy to drive business this way. I recently heard this from some of our new leadership joining from the outside that they haven't seen this in their organizations. So it's true. There are others who put sustainability in their strategy. The question is, is it truly at the core of what they do? And how much do they mean it? I can guarantee you, this is what it does here.

Thanks for that contribution, Alexis. Another question for you, basically. What is Arcadis expecting to come out of the COP26?

Well, what I hope to come out of COP26 is some clear commitments and guidance, particularly on the part of country commitments. Because, frankly, what we need now is clarity for the market. People want to be investing in this net zero future. In fact, what we see from our own clients is that, that level of certainty would drive innovation and investment in exactly the right place. If we're lucky, we will get a very successful COP out of this November, and we're actually advocating for that to be the case, both within our sectors and with all the parties with whom we're engaging.

Thanks. I see more questions coming in. This one is for you, Peter, I think. Besides clients, who else will you partner with to collaborate and help drive this big agenda?

I think there's a couple of inherent answers in the question itself. It is a very, very big agenda. And the question also suggests that individual parties will not be able to solve this, and you couldn't be more correct. This is a collective responsibility. You've probably heard us say throughout our comments that we see ourselves as a company which can be on the forefront and will start a movement, and that is exactly what we're planning to do. So that means that we will make the movement as big as we can potentially make the movement. It will, of course, include clients, but it will definitely also include other eco partners, people who are as passionate about this journey as we are. So if you are ready and interested, just let us know.

Something to add to that, Alexis?

I can't say that I have seen any more interest in developing ecosystem partnerships than I have here. This is a rather fragmented sector, to be frank. And this is going to be important that those levels of open source collaboration and innovation exists in order for actually us to deliver that kind of innovation at scale.

Thanks. Another question and that is more about tracking. On what metrics will we be able to track the impact that Arcadis is making, not only for our own operations, but also for its clients?

There are several key metrics that we need to pay attention to. Of course, carbon is one of them. One thing though I should probably mention pretty early on, I did say that this is a rather fragmented sector, and this is true for almost any sector I have seen. It is hard to get the level of ground level data that you need to measure the exact quantification of the impact that you have. So what a really good tried-and-true method of doing is you look at the hotspots. Where are the biggest leverage points that you can actually do the measurement and where would matter the most to change things? Steel, concrete, these are big hotspots in our industry. Operational carbon. These are things that we will look into already setting guidance and benchmarks on and tracking those specific areas because that will tell you the big swings in where we're making impacts for our clients. We will continue to build out systems where we can actually track the impact through our projects. But very important is to pay attention to those hotspots.

Yes, yes, clear. Peter, this one is for you. How will your people be reskilled to deliver these services to your clients?

Yes, keeping people adequately skilled is an ongoing activity for us. And let me start off with answering this question, then Alexis can add. You might have heard about a program, which we rolled out about 4 years ago called Expedition DNA. And Expedition DNA is a program, by the way, sponsored -- cosponsored by one of our large shareholders, Lovinklaan. And the program is focused -- or was initially focused on digital to ensure that people eventually will all speak the same language. It would also be a means to upskill our people. And I'm really proud to say that, that program has had tremendous traction and lots of people -- the fair majority of Arcadians have signed up, and signing up meaning actually taking the program in their own time. We've recently expanded the program with a sustainability model. So it's just one of the means we have available to upskill the capability of our people.

Alexis, do you want to add anything?

Sure. As a company that is strong in engineering, I have to say there's some good models out there of ways that you can ladder your employees up in terms of both knowledge and the behaviors that they need. We're actually copying some of these models. The Six Sigma and Lean of the world, where they actually look into delivering knowledge as well as the behaviors you need to actually put that into practice and then finding practical ways to practice it and be mentored in doing so. We're building out that essentially for sustainability in order to get our employees from no matter where they are right now to a level of excellence that is really at the top of what we choose to offer.

Thanks. I see, again, a few more questions. How do you envision yourself partnering with your clients to push the full industry forward?

Some of our clients are some of the most innovative companies that there are out there. In fact, many of them are excited about trying some of these cutting-edge technologies, again, low-carbon concrete or new innovative materials or even new kinds of designs. They want to try this. Luckily, they are actually approaching with us to partner on several of these projects. We'll be reaching out to do so. And one of the things that we'll be doing is looking for cross-partnerships, not just with clients as well as with academia as well as with other partners. Ecosystem partnerships is something that we do well. And this is something we bring to the table to offer both to our clients in these pilots as well as just simple, good practice.

Okay. Thanks. Clear. This is a nice one as well and not maybe a new one for you, Peter, I think. Do you consider acquisitions in the field of sustainability advisory business?

That is a question we've had before as well and understandably so. And it's actually good news for Arcadis is that we get this question. When I joined 4.5 years ago, we didn't get this type of questions simply because people knew that we couldn't afford to even think about it. But in the 4.5 years, we have developed, we've advanced and we've progressed, and we now have a situation which is so much better. So acquisitions are now indeed on our scheme. But that being said, I will be consistent in my messaging, big -- really big acquisitions you shouldn't expect from us. Acquisitions obviously need to fit our strategic intent, which almost by definition means, to your question, that it will be in the sustainability area and/or in the digital area or ideally in both. And then ideally, as a third box to check, it should also have a presence and an ability to actually deliver services in regions where we already have a presence as we speak.

Thanks, Peter. And also another, I think, very relevant. It is more a technical question, I think, but also for you, Alexis. Can you elaborate or what's your view on the EU taxonomy that's coming? Also important for investors.

Definitely important. And in fact, actually, a welcome way that we can actually start to establish a way of orienting businesses towards making the core of their business, about helping deliver climate adaptation solutions or climate mitigation solutions. This is where EU taxonomy is today, and we are actually participating in help shape where it is today and tomorrow. We've been reached out to, to actually be a partner in helping develop the next set of categories that are coming along. So we actually have heard from others, citing Kepler, for example, that they expect over 80% of our business to actually be covered under EU taxonomy. That amount of revenue is actually directly going towards the goals here. I think one of the things that we need to do is also help support that rollout further and the development of it further. Like we say, right now, there's only the first 2 categories that have been released, and they're asking for input on the remaining 4. So this is something that we're actively participating in, and we think we'll be welcomed as it gets rolled out.

Very clear. So it needs some time, still needs some time to be fully clarified and so. Okay. Not a question. Please detail the breakdown of net zero, emission reductions versus offset purchase. And for offsets, how do you verify emissions absorbed? I think we got more or less a similar question earlier.

Maybe just to clarify it again, why don't you go over it again, Alexis?

Okay.

Because it is important because the discussion about offsets in the context of net zero is something we want to be absolutely crystal clear about.

Perhaps then just for emphasis one more time, what's really important to us is that we're talking about net zero in the context of actually ramping your operations down to zero emissions. So yes, it is important as you're doing that ramp down and hopefully, that ramps down very quickly, that's why we've chosen 2035, to actually bring it down and also compensate with offsets on the process. Those need to be high-quality offsets and well verified. That is what we're doing. However, when you do get down to net zero with the only 1% or 2% left, that is where actually offsets are no longer sufficient. You should be going for carbon removal actually. And this is definitely core to how our strategy is. So I would say in terms of breakdown, in the final state, they really don't play a part in our end state of our net zero strategy.

I think maybe another time, but I think this is really clear now. So what net zero is. Another question is about can we share examples of Arcadis circular economy solutions?

It's interesting. I was just having a conversation last night with the British Ambassador here in The Hague. And what we were talking about was some of the examples and the work that we've been doing in the U.K. around actually looking into retrofits of other buildings, creating solutions where actually we build with the full life cycle in mind and actually reuse materials in our buildings right now. So much so for the fact there was an earlier question about what we're offering in, in terms of advice and hopes that comes out of COP. That was part of my conversation with the ambassador last night is that we hope that there's actually more support and more direction going in this for retrofits.

Okay. It's already almost time for a last question, Alexis. And I think it was also illustrated and explained in the presentation. But we mentioned that we want to get to Paris in half the time, and how do we expect to achieve this? Maybe you can tell it again or explain it again?

Sure. So one of the things that came out through our video was about talking that green electricity really matters. And we set a target of 2022 in order to do this. I'm actually very excited to tell people that we've actually been able to accomplish this a year ahead of schedule. I apologize. I said 2022, we set that target for 2021. And we just managed to complete it already actually in 2020. So that's one of the steps along the way. A huge part of our business is actually travel or consultants. This is something that we are ramping down very quickly. And that is one of the next targets coming up 50% reductions by 2025. Now in terms of electric vehicles, we actually have quite a fleet of electric vehicles. And this matters that we want to promote this around the world. We named a date that sounds a little far off maybe in the video. But actually, what we're targeting is getting 95% of the way there much sooner. What we're trying to make sure is that we stimulate the infrastructure in the rest of the world to do that kind of charging in places quite far away that don't have it. And therefore, it might take us a little longer for the last 2% to 5%. But these are some of the steps along the path.

Thanks. Thanks. And I mentioned the last question, but I do see also that -- and we have a little bit of time so we can do also the last one. Peter, how do you characterize the acquisition pipeline? And do you see also sustainability-related boutiques? And do you see that on your radar screen?

Yes, we're not going to reveal our entire acquisition strategy at this point in time. So the quick answer is that the acquisition pipeline is active. And not just the acquisition pipeline we will be looking at, but the acquisition pipeline other companies are looking at as well. And clearly, that boutique firms who have a sustainability resume or sustainability pedigree are part of that pipeline. So for sure, the answer is yes.

Thanks, Peter. So thank you, Peter. Thank you, Alexis, for shedding some light on all the questions that came in. And it has been very clarifying and at the end of this program, and therefore, it's, I think, time to give the floor to you, Peter, for your final thoughts.

Thank you, Jurgen. First of all, I want to, of course, thank you all for your participation, clients, investors, analysts, journalists and all other stakeholders for taking your time out of your busy schedule and join us today. But also, thank you for the questions you've raised that made for a really lively conversation. I sincerely hope that we have conveyed our enormous drive to become a sustainability leader and also that we were able to give a flavor of how we are supporting our clients to achieve their sustainability goals. We very much look forward to working and engaging with you on this journey and hope to see you again soon. In the meantime, please stay safe and healthy.