Lendlease Annual Report 2024

44 Lendlease Annual Report 2024 Supply chain risk management Our global Supply Chain Risk Framework focuses on the management of risks, such as the disruption caused by geopolitical events, insolvencies, and labour shortages, as well as issues such as modern slavery. This framework relies on the strength of our corporate risk governance, planning, capability development, integrated systems, tools, and standards. Additionally, it incorporates insights from targeted supplier risk assessments and audits, and is increasingly integrated into our investment and operational decision making processes. Lendlease takes a comprehensive approach to mitigating modern slavery risks in its operations and supply chains. Led by a dedicated risk team within the Group supply chain function, their efforts are overseen by the Chief Operating Officer and Chief Legal Officer, with Board-level engagement through the Lendlease Group Board Sustainability Committee. Overall, our regional supply chains have remained resilient in recent years; however, a range of issues still intersect with modern slavery risks, which are summarised along with our mitigating strategies in the below table. Further detail is outlined in the FY23 Modern Slavery Statement. Operating region Lendlease response Australia Insolvencies have been increasing with specific impact to general contractors and subcontractors. Concentration risk remained elevated across high priority trades, particularly relating to facades. Shipping congestion and costs from Asia moderated to pre-pandemic levels. We prioritised early engagement with general contractors and sub-contractors engaging labour, and diversified sourcing avenues to moderate concentration risk Asia (Singapore, Malaysia, China, Japan) While foreign worker numbers in SE Asia have surpassed pre pandemic levels, local construction contractors, particularly in Malaysia are still dealing with major labour shortages. Inflationary pressures are emerging in countries such as Japan. We focussed on early embedment of fair and ethical recruitment principles into project requirements and associated contractual documentation, for general contractors and major sub-contractors. Europe (including UK) The war in Ukraine and earthquake in Turkey in February 2023 influenced regional supply chains, though no significant delays or shortages were directly experienced. The region continued to see an elevation in insolvencies across all sectors, including construction. Energy and steel costs continued to moderate, though still higher than pre pandemic levels. We continued leveraging insights from the annual Achilles Ethical Labour Practices industry audit program, into our projects in Italy, and monitoring contractors who may be more highly exposed. Americas Geopolitical tensions continued to provide a risk point, with import bans under the US Uyghur Forced Labour Prevention Act 2021 extending to polysilicon and some aluminium products from the Xinjiang Autonomous Region, China. Metal products rose in price due to increased scrap pricing. Long product lead times for mechanical electrical and plumbing equipment is creating a backlog for construction projects. We monitor developments of U.S. Customs and Border Protection's implementation of the Uyghur Forced Labor Prevention Act , and conflict material risks.