Argos ONE

Climate change

At Argos we are aware of the evolution in the criticality of the effects of climate change over time, of the measures promoted both at a global and local level, by the public and private sectors to face this challenge of humanity, and of the crucial role that our Company has in the construction-materials sector in taking innovative, forceful and sustained actions that favor both mitigation and adaptation to climate change. Likewise, we recognize that climate change is an opportunity to promote and boost sustainable construction and, thereby, contribute to the creation of social value in the geographies where we operate.

 

For this reason, through our Climate Change Strategy, we have committed to acting throughout our value chain, mitigating direct and indirect CO2 emissions, generating the necessary capacities to adapt to their impacts, and researching and developing initiatives to advance in solutions aimed towards the capture, storage and use of carbon; thus seeking to contribute to the competitiveness and resilient growth of both the Company and its Stakeholders.

 

Together with the most important companies in the cement- and concrete-production sector in the world, we have adhered to the Climate Ambition Plan promoted by the Global Cement and Concrete Association (GCCA) to offer carbon-neutral concrete to society by 2050.

  • For society:  To contribute to meeting the challenges arising from climate change by developing initiatives to mitigate CO2 emissions, focused on the use of alternative fuels, optimization of the cement clinker factor and energy efficiency, in addition to strengthening efforts to generate innovative products and solutions with sustainability characteristics that leverage the capacities to adapt to climate change and that contribute to sustainable construction.

 

  •  For the company:  To mitigate the risks related to climate change, generate the necessary capacities to adapt to the impacts of this phenomenon and enhance the opportunities arising from said problem, through the efficient management of our operations and research and development of better processes, products and solutions, ensuring the competitiveness and permanence of the Company over time.

During 2021, we built the Technical and Financial Roadmap to reduce CO2 emissions and reach the goal set for 2030; the result of this Roadmap was the sum of efforts from multiple Company Departments that were aligned with the OKR (Objective Key Result) established from the Presidency and that called for action to “Become leaders in the industry in mitigation and climate-change adaptation in the next three years”.

 

Likewise, the mandate was established to constantly monitor compliance with the reduction goals, carry out a cyclical review of project validity or optimization, and evaluate the inclusion of new projects within the Board of Directors’ Sustainability and Corporate Governance Committee, the Climate-Change Cell and the committees of the three Regions, all in favor of fulfilling the commitments made with our Stakeholders.

 

To date, we have approved the premises and technical considerations that mobilize the levers to reduce CO2 emissions(1), the short-term resources within the company's CapEx, as well as the internal reserve of resources for the medium term,(2) (which guarantee the annual allocation of resources to fulfill the Roadmap).

 

  1. Within the initiatives and projects contained in the Technical and Financial Roadmap to reduce CO2 emissions by 2030, the following are considered:
    • The operational continuity of facilities with low performance in terms of CO2 emissions,  due to the nature of their technology.
    • The optimization of caloric consumption that depends on the operational and infrastructure adaptations that allow the Argos facilities to homogeneously expand and diversify their fuel mix.
    • The inclusion of oxygen-enrichment and hydrogen-injection technologies.
    • Optimization of the cement clinker factor under the premise of diversifying and enriching the Company's portfolio with low-carbon products.
  1. The investments approved in this Roadmap to reduce our direct emissions (Scope 1) amount to USD 52.9 million and will be distributed as follows:
    • We will invest 44% of the total in projects and initiatives that optimize caloric consumption.
    • Forty percent (40%) in co-processing projects.
    • Nine percent (9%) in projects that make feasible, energize and improve the fuel mix to achieve emission reductions.
    • Seven percent (7%) will be invested in initiatives to leverage the reduction of the cement/clinker factor.

The Climate-Change Strategy guides our actions in mitigation, adaptation to the impacts of climate change and research and development of technologies for carbon capture, use and storage (CCUS), allowing us to minimize risks and enhance opportunities associated with this phenomenon. This strategy permeates the entire value chain and was built with scenarios to mitigate CO2 emissions, with the possibilities of optimizing processes, and with analyses to identify and assess risks (physical and transition) and opportunities for innovation and sustainable growth that the construction-materials sector brings us.

 

The action framework of the Climate-Change Strategy considers:

 

  •   Management of Risks and Opportunities: Reducing the risks and enhancing the opportunities associated with climate change.
  •   Innovation: The search for permanent innovation.
  •   Green Financing: The use of financing mechanisms that include sustainability criteria.
  •  The Government: Preserving transparency in decisions and good Corporate Governance practices.

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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