Argos ONE

Climate
Change

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At Cementos Argos, we have understood the need to act decisively and effectively to contribute to the mitigation of the impacts of climate change. That is why our actions in climate matters are an important part of our company’s strategic framework.

Strategic framework

At Argos we manage sustainability based on a strategic framework that includes our sustainability strategy, materiality analysis, comprehensive risk system, and goals and work plans.

 

With regard to climate change and its effects, we have a climate change strategy that defines the company’s framework for action, guidelines and goals to contribute to its mitigation and adaptation.

Climate-Change Strategy

At Argos we take climate change as a challenge, but also as a unique opportunity for our operations and value chain; therefore, we are committed to mitigating direct and indirect CO₂ emissions, generating the necessary capacities for adaptation and advancing in the research and development of carbon capture technologies, and emissions compensation, hand in hand with our business group.

Governance

The main activities of the Argos Board of Directors is decision-making aimed at meeting the strategic objectives and monitoring the actions taken to achieve them.

 

Climate change is a priority issue for Argos; therefore the Board supervises the strategy and its implementation plans in order to achieve the goals and commitments established.

 

Through its three committees, the Board aligns the design, execution and control of all actions to contribute to the mitigation of climate change.

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Our actions

At Argos, we have taken the opportunity to contribute to the mitigation of climate change beyond the reduction of CO2 emissions from our production processes; for this reason, we are increasingly focusing on the life cycle of our products and solutions to, thus, enable a more-sustainable, efficient construction.

 

We want to be a relevant actor in the transition process of the construction sector towards a low-carbon economy, which is why it is relevant for us to work on the following axes:

Green Products
and Services

The Circular
Economy

Decarbonization of
Our Operations

Applied Innovation
and Alliances

Promoting a
Green Economy

Our Commitment:

Producing Carbon-Neutral Concrete by 2050

At Argos, we are moved by making the construction of housing and infrastructure dreams, which enable a more-sustainable, prosperous and inclusive society possible. That is why we have understood the need, as a Company, to act resolutely and relevantly in the face of the most-relevant challenge that humanity faces today: climate change and its consequences.

As a company that produces construction materials and solutions, we are aware of the impact, in terms of CO2 emissions, that our processes have. And although concrete is “not only the most-used construction material, but also the second most-used material in the world after water” due to its unique properties, as producers we understand the call to contribute to mitigating the effects of climate change by reducing CO2 emissions in our production processes and developing new and better products and solutions.

Our Commitment
in Numbers

Commitment to Reducing CO₂ Emissions

A Comparison against Our 2006 Baseline Year

Cement

0 %
Less CO₂ per Ton of Cementitious Material by 2030

Concrete

0 %
To offer carbon-neutral concrete by 2050

Our Path to
Carbon-Neutral Concrete

  • To scale up the use of calcined clays
  • To Increase the replacement rate of alternative fuels to 33%
  • Increase the use of low-carbon fossil fuels
  • Increase the use of supplementary cementitious materials in our concrete

Our Progress
in 2022

0 %

Reduction of CO₂ emissions compared to the 2006 base year

0 %

Alternative fuel substitution

0 %

Clinker/Cement factor

0 %

Energy purchased, which is certified as renewable energy

Adhesions and Initiatives

In coherence with the challenges posed by climate change and the impacts it has on our operations and value chain, in 2022 we obtained the validation of our CO₂ emission reduction goals, direct and indirect, for the purchase of electricity, by 2030 from the Science-Based Targets Initiative (SBTi).

Relevant documents

SASB

CDP

TCFD

Climate Change METRICS

Climate action:

Decarbonization
of our
operations

We are aware of the impact that our production processes generate. For this reason, we have designed a path to decarbonize our operations and, thus, contribute to the mitigation of climate change.

 

We are part of the group of companies whose emission mitigation goals have been scientifically validated by SBTi.

 

We will reduce CO₂ emissions per ton of Scope 1 and 2 cementitious material by 21% from our businesses as a whole by 2030, compared to 2021 levels.

Our CO₂ Emissions

Direct emissions

Emissions generated from production operations The Cement Business generates 94% of the emissions

Indirect emissions – Purchase of energy

Emissions generated from the purchase and consumption of electrical energy in operations

Other indirect emissions

Other indirect emissions generated in the Argos value chain

Technical route to
reduce our emissions

Reduction of direct CO₂ cement emissions

The following are our levers to reduce emissions:

  • Increased thermal substitution with alternative fuels
  • Reduction of clinker in our cements
  • Thermal efficiency
  • Conventional low-carbon fuels

Alternative
fuels

Using waste to replace fossil fuels

Reduction of clinker in cement

Clinker generates 98% of cement emissions

Thermal
efficiency

Reduction of the energy intensity of the process

Conventional low-carbon fuels

Fuels with less carbon reduce emissions

Decarbonization of the process

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Reduction of indirect cement CO₂ emissions

Electrical
efficiency

Technological transformation to reduce consumption

Renewable-generation
assets

Development of renewable-generation projects

Renewable Matrix
Suppliers

Purchase contracts from carbon-neutral suppliers

Decarbonization of the process

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Atmospheric emissions

We are committed to reducing our emissions through actions that achieve more efficient processes and the implementation of abatement measures, contributing to good air quality in the places where we operate.  Our cement-, concrete- and aggregate-production processes generate punctual and scattered particulate matter (PM) emissions, as well as emissions of sulfur oxides (SO2) and nitrogen oxides (NOx) in the clinkering furnaces of the cement plants.

  • For society:  To contribute to mitigating the impact on air quality in the areas where we operate, acting responsibly and promoting relationships of trust with our Stakeholders.

 

  • For the company:  To develop more efficient processes that allow us to reduce our atmospheric emissions and contribute to responsible production, complying with local regulations in the countries where we operate and – in some cases – going beyond compliance with said regulations, contributing to the profitability of the business and preparing to face future challenges.

The “Emissions” pillar of our Environmental Strategy focuses on: Working on the adequate measurement, control and reduction of SO2, NOx and particulate-material (PM) emissions generated by our production processes in the cement business and on the prevention and mitigation of our dispersed emissions of particulate material (dust), originated mainly by the activities of transportation, transfer, unloading and storage of materials in the cement, concrete and aggregate processes. The foregoing, through operational control, optimization and renewal of emission-control systems to achieve continuous improvement.

Industry positioning

We position ourselves as strategic allies for the development of the territories where we are present, directly and through the empowerment of our value chain.  We do it through the construction of housing and sustainable infrastructure that enables the closing of socioeconomic gaps, the generation of employment, the improvement of the quality of life and the reduction of the impacts generated.

  • For society:  To sustainably respond to the growing demand for housing and infrastructure of the world population with the aim of improving people's quality of life, interconnecting regions and developing innovative solutions. 

 

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    For the company:  To be strategic allies of the actors in our value chain in order to maintain the Company's leadership in the market, ensure its competitiveness over time and increase the generation of sustainable value.

We are committed to the role we have as a Company in the achievement of the 2030 Agenda goals, the consolidation of territorial development plans where we operate, and the economic reactivation of the countries affected by the pandemic. Therefore, we focus our efforts in the development of sustainable housing and infrastructure projects that contribute to closing socioeconomic gaps, generating employment under safe conditions, environmental protection, and investment in improving people’s health systems and quality of life. 

Our work unfolds in three large lines:

 

Cities for everyone:

 

With nearly 54% of the world  population living in urban areas, the pandemic made inequality of those who live in the cities of the world

manifest. Nearly 90% of the COVID-19 cases are concentrated in the urban

centers that have, among others, challenges associated with access to basic services and decent housing conditions. For this reason, we work together with our value chain to develop projects that benefit the lessfavored population, facilitate access to housing, and promote development in

the areas of influence.

 

Interconnected cities

 

The need to connect urban areas with rural areas to expand the coverage

of basic services, such as health, has been a priority of developing countries

since before the pandemic. Therefore, during 2020, we continued working on creating innovative solutions that allow us to be present in the large projects of the countries and territories where we are present.

 

Intelligent cities

 

In recent years, the acuteness of the effects of climate change became the

risk of greatest impact to the world. Therefore, in the global stage, a need

has grown to transition to a low-carbon economy, an opportunity that becomes more relevant amid post-pandemic recovery scenarios and the effort we are making as a Company to generate new business models that respond to environmental and social challenges. For this reason, our Climate-Change Strategy includes actions aimed at mitigating the impacts associated with our productive processes, adapting our operating model and innovating from the identification of optimization opportunities.

Supplier management

Supplier management is a fundamental pillar of our Supply Chain Strategy; it seeks to build and strengthen relationships with strategic allies who have the ability to contribute to the Company in terms of efficiency, productivity, customer service and innovation.  For this reason, we carefully select our suppliers, transfer knowledge to promote their development, promote good practices and recognize those who are an example of sustainable, innovative, safe and responsible management.

  • For society:  To develop our suppliers, promote transparent practices and responsible conduct, to improve the productivity and competitiveness of our society and support the construction of a better future.

 

  • For the company:  To seek to add value throughout the Company's supply chain, from the purchase of goods and services to the delivery of products to clients.  Through the mitigation of risks and potentiation of opportunities, the implementation of good contracting practices and service excellence, we create relationships of trust and turn suppliers into business allies.

Our management is divided into five stages:

  1. Identification: We determine the goods and services required for our operation and the category to which they belong, according to our Category Tree. This groups our suppliers into macro-categories which – in turn – are subdivided into two more specific levels.
  2. Pre-Selection: We validate the suitability of suppliers through due diligence and review aspects of sustainability and financial health to ensure long-term relationships.
  3. Negotiation: We select suppliers with high standards, considering technical, economic, sustainability and service aspects.
  4. Retention and evaluation: We carry out knowledge-transfer processes with those suppliers with growth potential.
    • We characterize our suppliers as critical suppliers or with potential risk in sustainability.
    • We measure the management of critical suppliers through performance evaluations in terms of quality, service, occupational health and safety, having constant feedback and identifying key factors for their development.
    • We apply the Sustainability Index to suppliers with potential sustainability risks, to identify challenges, opportunities, and to develop joint action plans in environmental, economic, social and Human-Rights matters.
    • We implement additional controls and development plans to suppliers belonging to categories where the greatest potential risks have been identified. This is how, for example, we develop road-safety strategies for our logistics suppliers; with mining suppliers, we carry out a more rigorous pre-selection process, and with contractors, we have special controls on occupational health and safety.
    • We have a Transparency Line for Stakeholders to report possible improper actions and to implement the pertinent corrective actions. 
  5. Recognition:  Every two years, through Growing Together (Creciendo Juntos), we recognize the suppliers that have shown outstanding performance in innovation, sustainability, health and safety and development and comprehensiveness.

 

Additionally, we have:

 

Contracting manual: transparent action framework that guides the negotiation and contracting of our suppliers to allow the process to be agile, make use of best practices and carry out adequate risk management.

 

Code of conduct for suppliers: in which we define the principles and behaviors that we expect from our allies in terms of respect for human rights, protection of workers, environmental management, business ethics and responsible business practices.

Ethics and compliance

We are convinced that ethics and integrity are fundamental and non-negotiable; that is why we live by these principles, integrating them into our operations, processes, and strategy, thus generating value responsibly for our business, our Stakeholders, and for society.  Through the Global Governance and Compliance Program, our ethics and business conduct system, we seek to promote that our actions are consistent with the pillars of corporate culture and integrity as the guiding principle of our business activity.

  • For society:  To promote transparent, competitive, and sustainable business environments that strengthen trust and ethics in business, generating positive impacts for the market and society.

 

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    For the company:  To promote that our actions are consistent with the pillars of culture and that integrity is the inspiring principle of all members of the Organization.  This is how we consolidate ourselves as a competitive, reliable company in the eyes of investors and other Stakeholders.

We have voluntarily adopted a self-regulatory framework that confirms our commitment to business ethics as a way to promote transparent practices that contribute to the development of competitive environments. This framework* incorporates mandatory principles of ethics and conduct:

 

 

For the proper implementation and application of these guidelines, the strengthening of the ethical culture, the prevention and control of incorrect actions, our Board of Directors approved the Global Governance and Compliance Program (GGCP, in Spanish). The program structure incorporates international best practices to evaluate compliance programs, such as ISO 37001, ISO 19600 and the United States Department of Justice (DOJ) guidelines. The program has the following scope:

 

 

Likewise, it systematically groups together the activities carried out to promote integrity in the Company's actions, its employees, and members

of the value chain, which allow the updating and permanent strengthening

of the program. Operating Scheme:

 

Efficiency and productivity

We materialize our Corporate Strategy through actions aimed at the efficient use of resources, the improvement of our financial flexibility and the maximization of income generation and business profitability.  We focus on the application of efficient, safe production processes and circular economy models, on the diversification of energy management models and on the efficient management of the supply chain.

  • For society:  To provide solutions and products that meet the needs of our clients through the responsible, appropriate use of resources and the incorporation of raw materials and alternative energy sources.

 

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    For the company:  To guarantee business sustainability, optimize working capital and capital investments, reduce costs and the level of indebtedness, and mitigate risks regarding the availability of resources necessary for our operation and the emergence of new business realities, environmental requirements and new regulations.

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