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What is materiality

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What is materiality

Materiality analysis is a methodology that allows us to identify the key issues for business strategy and stakeholder relations. It becomes the guide for short- and medium-term management, and helps the company prepare for the future: making sounder decisions, evaluating new business opportunities, weighing potential risks and improving communication strategies.

Learn about double materiality

Double materiality

During 2022 we updated the materiality for Argos, using a double materiality methodology, which allowed us to analyze how the company impacts the environment and society and how these also impact the company:

Financial materiality

Environmental and social impacts of the company

Environmental and social materiality

Impacts of the company on the environment and society

Company

Environmental and social

Company

Environmental and social

Source of decision making for the company on strategic financial issues

Financial materiality

Environmental and social impacts of the company

Company

Environmental and social

Source of decision making for the company on strategic financial issues

Environmental and social materiality

Impacts of the company on the environment and society

Company

Environmental and social

Civil society, clients, employees and investors

What is the process for identifying material issues?

The process for the new ESG materiality was developed in 4 steps:

Analysis of the external context

Using specialized software, an exercise was carried out to monitor external risks and opportunities related to ESG issues in different industries and peers in the construction sector, identifying prioritized stakeholders. Through this tool we obtained data on regulatory environments, media, corporate disclosure, among others.

Analysis of the internal context

Critical issues for the organization were identified based on the previous materiality exercise, understanding of risks, trends and the connection with the new strategic pillars.

Whiteboard qualification exercise

Conversations and interviews were held with different strategic areas of the company in all the regions and teams that lead the relationship with the different stakeholders. These allowed us to analyze, complement and validate the issues initially identified in the external and internal referencing.

Consolidation of materiality catalog

The results obtained in the previous steps were verified and analyzed to obtain the consolidated information in a materiality catalog that includes: the company’s strategic pillars, final material issues, alignment with GRI, SASB and Sustainable Development Goals indicators, prioritized stakeholders and performance indicators. The materiality assesment results were signed off by the board of directors. 

What is the relationship between materiality and our corporate strategy?

As a company we have 6 strategic pillars that guide our planning and action. These were the base input for the definition and prioritization of the 11 material issues.

Corporate materiality

Strategic pillars

Customer Experience

Our clients are our raison d'être. In addition to delivering products and services that satisfy all their needs, our premise is to provide a differentiated, safe and effective service through proposals and technological solutions that are accessible, affordable and innovative, which allow them to improve their management and even save time and costs. Thus, we seek to mobilize the transformation of the industry, be market leaders and become strategic allies for the construction of sustainable housing and infrastructure.

For Society: To facilitate the development of sustainable, intelligent and interconnected cities that respond to the current challenges facing the planet, positioning ourselves as permanent allies for our clients and society.

 

For the Company: To improve he commercial experience through client-focused initiatives and digital transformation in our value chain.

We Offer Opportunities to Transform Your Home and Your Business into the Desired Place

 

Colombia
Through the CONSTRUYÁ program and its financial allies, we provide access to financing not only our products but also other construction materials, to promote the population with no prior banking experience access to microcredits that allow them to improve their quality of life by transforming their home and their business.

 

Guatemala
The AmigoPaq initiative originated from understanding the needs of the final consumer; it seeks to give the population with no prior banking experience access to working capital, which allows the construction worker to grow in his business, and enable the housing reform of the final consumer. This is a new program in the country, and although this has meant several challenges in its execution, we continue with the purpose of accompanying our clients in the construction of dreams.

 

We Contribute to the Qualification of the Profiles of Construction Workers
In the constant search to improve the quality of life of those who day by day have in their hands the walls of hundreds of people's dreams, we make programs available to construction workers that strengthen their skills and knowledge to ensure that through training and certification, they can deliver safe structures and gain rank in their careers.

 

In Colombia we trained 1,092 foremen.

 

Our Digital Strategy
Our Digital Strategy has two fundamental pillars: customer experience and the digital transformation of the value chain.
Firm in our purpose of delivering extraordinary solutions to clients and becoming their best allies, we created the Argos One Platform in Colombia, the United States, Panama and Honduras, which integrates the different digital services that we make available, simplifying and streamlining the interactions with our Company.

To achieve our goals, we focus our efforts on four lines:


1. Portfolio of products and services
2. Digital channels
3. New business models
4. Future initiatives

Environmental Management

We consciously and responsibly manage renewable and non-renewable natural resources that interact with our operations and the value chain, through the identification and management of environmental impacts that enable the prioritization of lines of action in the Environmental Strategy and the implementation of the Management System.

 

 

We are convinced that proper environmental management allows us to continuously improve and generate sustainable value for the Company and our Stakeholders, which is essential to develop and maintain prosperous, healthy economies that last over time.

For Society: To contribute to the availability of valuable environmental services for current and future generations, through the implementation of controls and Impact Management Plans in our operations


For the Company: To manage renewable and non-renewable natural resources associated with our operations, through the prevention, mitigation, correction and compensation of impacts; acting responsibly and promoting relationships of trust with our Stakeholders.

Water Risks
We continue to assess the water risk in all our active facilities. Supported by technological tools, we determined the level of water stress, based on the relationship of total annual catchments, including local municipal and industrial, catchments and the total annual flow available in the area.


The UN Conference on Biodiversity
In October 2022, we signed the COP15 Business Declaration. The initiative focuses on guaranteeing the preservation of the environment through the implementation of regulations that limit the negative impact of organizations on the planet. The goal is to conserve natural resources and promote sustainable practices globally.


The signatory companies are calling on world leaders to set mandatory standards for all large corporations and financial institutions to assess and report their impact on biodiversity by 2030.


Other Emissions
We are focused on the proper measurement, control and reduction of SO2, NOx and particulate-matter emissions generated by our production processes, as well as the prevention and mitigation of our dispersed emissions of particulate matter (dust), through operational control, optimization and renewal of emission-control systems.


Circular Economy
We are aware that the circular economy is a change in the way of producing and consuming, applying principles of the circular model, in which waste and pollution are reduced by design and the materials that enter the economic cycle are used for as long as possible.

Argos' Environmental Strategy is the roadmap to achieve high environmental performance and proper management of natural capital, through:


1. Comprehensive water management
2. Measurement and reduction of other gas emissions into the atmosphere
3. Achieving a net-positive impact on biodiversity, leveraged on the commitment of no-net deforestation and not to operate in protected areas or areas declared as high value for biodiversity
4. Implementing circular-economy models in our processes to manage products from their preparation to their disposal
5. Contributing to closing the waste cycle in the geographies where we operate through the co-processing and recovery of waste in our process

Emisiones atmosféricas

Estamos comprometidos con la reducción de nuestras emisiones mediante acciones que logren procesos más eficientes y la implementación de medidas de abatimiento, contribuyendo a una buena calidad del aire en los lugares donde operamos. Nuestros procesos productivos de cemento, concreto y agregados generan emisiones de material particulado (MP) puntuales y dispersas, así como emisiones de óxidos de azufre (SO2) y óxidos de nitrógeno (NOx) en los hornos de clinkerización de las plantas de cemento.

  • Para la sociedad: Contribuimos con la mitigación del impacto en la calidad del aire en las áreas donde operamos, actuando responsablemente y promoviendo relaciones de confianza con nuestros grupos de interés.

 

  • Para la compañía: Desarrollar procesos más eficientes que permitan reducir nuestras emisiones atmosféricas y contribuir a una producción responsable, cumpliendo con las regulaciones locales en los países donde operamos y, en algunos casos, yendo más allá del cumplimiento de dichas normas aportando a la rentabilidad del negocio y preparándonos para enfrentar desafíos futuros.

Plan de prevención y control de emisiones dispersas 

Continuamos implementando medidas de mitigación para controlar las emisiones fugitivas, las cuales incluyen la construcción de cerramientos para el almacenamiento de materiales y combustibles y pavimentación de vías, caminos internos y riego continuo. 

Reemplazo de los filtros de los colectores de polvo de la Planta de Concreto Surinam 

Realizamos el cambio de 64 bolsas filtrantes de los colectores de polvo de nuestra Planta de Concreto en Surinam para mejorar el sistema de extracción de este material en la instalación; este proceso tuvo una gran inversión y permitió una reducción importante en las emisiones dispersas de material particulado.

El pilar de emisiones de nuestra Estrategia Ambiental se enfoca en trabajar en la adecuada medición, control y reducción de las emisiones de SO2, NOx y material particulado (MP) generadas por nuestros procesos productivos en el negocio de cemento, y en la prevención y mitigación de nuestras emisiones dispersas de material particulado (polvo), generadas, principalmente, por las actividades de transporte, transferencia, descarga y almacenamiento de materiales en los procesos de cemento, concreto y agregados a través del control operacional, la optimización y la renovación de sistemas de control de emisiones para lograr el mejoramiento continuo.

Ética empresarial, cumplimiento e integridad

Nuestros valores de ética e integralidad son fundamentales y no negociables, esto nos ha permitido consolidarnos como una compañía confiable para todos nuestros grupos de interés. Estos principios los integramos a todo lo que hacemos, generando valor de forma responsable a nuestro negocio y a la sociedad, mediante el desarrollo de un entorno ético y transparente que fomente la correcta manera de hacer negocios, asegurando la integridad del mercado y la industria.

 

Nuestro sistema está preparado para definir planes de remediación y definir mecanismos de control cada vez más seguros que eviten la materialización de riesgos de fraude, corrupción, lavado de activos, financiación del terrorismo, incidentes de seguridad de la información y de tratamiento de datos personales, violación de normas de competencia, incumplimiento de derechos humanos, entre otros.

Para la sociedad: Desarrollar e implementar comportamientos transparentes y sostenibles en las negociaciones y relaciones con los grupos de interés, para generar impactos positivos en la sociedad.

 

Para la compañía: Promover la alineación de los colaboradores con los pilares éticos y culturales de manera integral. Así nos consolidamos como una compañía competitiva y confiable frente a los inversionistas y demás grupos de interés.

Fortalecimiento del programa de cumplimiento en materia de libre competencia.
Avanzamos en el fortalecimiento del programa de cumplimiento en materia de libre competencia apoyados por FTI consulting Inc., consultor externo especializado, quien ha estado trabajando con nosotros para brindar soporte en la evaluación integral de riesgos del Programa e identificar oportunidades de mejora con la finalidad de mejorar los controles y crear medidas preventivas de los riesgos de competencia.


Formación en conducta.
Divulgamos nuestros principios de conducta empresarial y sus políticas relacionadas para el personal administrativo/corporativo en el curso anual de conducta denominado El Poder de tu Decisión- Tercera Temporada, donde a través del estudio de casos prácticos y dilemas éticos, colaboradores del Grupo Empresarial Argos interactuaron para aplicar pautas de comportamiento y resolver los dilemas y tomar una decisión. Dicha formación se adaptó a los diferentes idiomas y transmitió las pautas de conducta en materia de LAFT, Datos personales, Soborno y Corrupción y Conflictos de interés.


Línea de transparencia.
La Línea de Transparencia es un canal para que nuestros grupos de interés reporten comportamientos contrarios al Código de Conducta Empresarial u otras políticas corporativas y se implementen las acciones correctivas o sanciones disciplinarias a las que haya lugar. Los reportes son recibidos por un tercero independiente, lo que garantiza la protección de la identidad de quien reporta y la no retaliación frente a denuncias de buena fe.


Durante el 2022 se ejecutó un plan de divulgación sobre el funcionamiento de la Línea de Transparencia a todos nuestros grupos de interés, permitiendo que para este fueran reportados 174 casos, de los cuales 94 casos fueron cerrados.

Hemos adoptado voluntariamente un marco de autorregulación que incorpora principios y normas de obligatorio cumplimiento en materia de ética y conducta, lo cual ratifica nuestro compromiso con la ética en los negocios como una forma de promover prácticas transparentes que aporten al desarrollo de mercados competitivos.

Portfolio of products, solutions, and services with sustainability features

Aware of the challenges we face as a society and the importance of being part of the transformation of the industry, we are committed to continuous improvement, innovation of our business model and production processes. As part of our value proposition to the world of the future, at Argos we offer our clients a portfolio of products, solutions and services that present sustainability characteristics and which - in turn - respond to the current challenges of achieving resilient territories.

For Society: To respond sustainably to the growth of the world population with the aim of improving people's quality of life, interconnecting regions and developing innovative solutions.

 

For the Company: To respond efficiently to the challenges of future sustainability, the needs of our clients and end users, consolidating ourselves as strategic allies of the industry for the design and construction of more environmentally friendly projects through our portfolio of products, solutions and services with sustainability characteristics.

The BIM Portfolio
The Building Information Modeling (BIM) is an integral system that allows the design of three-dimensional plans of any structure and/or building, taking into account the characteristics of each element. In addition, it makes it easier for the project information to be concentrated in one place, and, thus, all those involved in each stage of the work can make their annotations and access them.

 

In Colombia, BIM entered this sector with force. So much so, that in November 2020, the Government presented the National BIM Strategy 2020-2026, which - little by little - will become the guideline for public-works tenders.

 

At Argos, we have made progress in generating valuable information for BIM users, which allows them to correctly select the materials within the broad portfolio, which includes not only the general specifications of the concretes given in the materials library, but also the alternatives. of application in the typical elements of the works, and additionally, the assessment of the impacts of these materials and elements through a report on the reduction of CO2 emissions according to the types of concrete and the volumes of the project.

 

The Green-Solutions Portfolio
Based on the analysis of our clients' needs, the challenges posed by sustainable construction and the strengths that we have developed as a Company, we have segmented our Portfolio of Products, Solutions and Services with sustainability characteristics into two groups:

 

LOW CARBON: Represented by our Portfolio of Cement and Concrete Products with lower CO2 emissions during the production phase, which compared to international standards, we achieved significant reductions.

 

CONSCIOUS CONSTRUCTION: A Portfolio of Products, Solutions and Services that contribute to adaptation, climate change and the circular economy, since they reduce the use of non-renewable resources in the manufacturing stage and/or in the construction stage, increase the useful life of the infrastructure, allow the management of water as a resource and contribute to well-being, comfort and health.

 

Use of Construction and Demolition Waste (CDW)
With the purpose of strengthening our Circular-Economy Vision during 2022, we developed the project for the storage and use of construction and demolition waste (CDW) for its use in concrete plants (For more information, see page XXX – the Environmental Management Chapter)

 

Argos Super UHPC: The Concrete of the Future, Now
We launched the new SUPER UHPC - an ultra-high performance concrete developed under a rigorous research process - in the North American market. This particularly innovative product is made up of a series of specially selected cementitious materials and fibers that give it outstanding mechanical and durability properties. This product is very versatile and has a wide range of applications, among which the construction of pedestrian and vehicular bridges, façade panels and pavements for roads stand out.

Our commitment and efforts to be active agents in the construction of a more sustainable and resilient future in which we see ourselves and the relationships we establish with nature in a new way have led us to focus our efforts on the development of innovative products, solutions and services with sustainability characteristics. This is why we are working on two important focuses:

 

- A portfolio of low-carbon products.

- Alignment with our higher purpose, to enable the construction of housing and infrastructure dreams that enable a more sustainable, prosperous and inclusive society.

Resilient Supply Chain

At Argos, we work to have a resilient supply chain that allows us to forecast, anticipate and respond to operational interruptions quickly and reliably. Our continuous, integrated supply-chain planning is connected to the Company's long-term strategy. This leads us to minimize risks, improve opportunities, meet client expectations and maintain high levels of service, while maintaining working capital and a profitable operation. We also work with our suppliers to build long-term relationships and promote sustainable best practices.

For Society: To promote transparent practices and responsible behavior to offer the best possible service to clients. In addition, to improve the productivity and competitiveness of our society and support the construction of a more -sustainable future.

 

For the Company: To add value throughout the strategic planning of the Company's supply chain in the short, medium and long term, from the purchase of goods and services to the delivery of the product to clients. In addition, through transparent management, risk mitigation and profit maximization, we create relationships of trust and turn suppliers and clients into business partners.

The Caribbean and Central America Regional Regional-Network Model
We have an integrated supply-Chain network model, which allows us to generate optimal plans, with different business scenarios in different time horizons. This has allowed us to maximize profitability and minimize the impact on operational costs, freeing bottlenecks and generating solutions that precisely meet client needs. To date, this model has allowed us:

• Savings of USD 317,000, due to adjustments in the stoppage program of the plants in Honduras for the first half of the year.
• The assignment of a better origin for clinker and cement in Honduras. As of September 2022, the benefit has been USD 400,000.
• To reduce the risk of product shortages in Puerto Rico.
We continue working to strengthen our suppliers.


Aligned with our purpose of continuing to strengthen the best practices in sustainability in our suppliers, we continue to carry out evaluations on environmental, social and economic issues.
We highlight the participation of 7 of our Colombian suppliers in the supplier development program of the Technological Center of Antioquia. In which they had methodological support to improve the provision of their services, on topics such as: reduction of charging times, improvements in route planning and micro-distribution monitoring, reduction of transit times due to unscheduled maintenance and improvement in the communication of technical specifications and quality standards linked to purchase orders.


In the case of the Caribbean and Central America region, during the year we held training spaces in: risk management that included water and climate change issues.


Application of Data Analytics in Transport and Supply Processes
Through the application of tools, such as statistical models, machine learning and Python, we have been able to understand the historical behavior of the purchasing categories, as well as prospect, predict and/or identify the variables that generate the greatest impact in changing situations and high uncertainty, which could generate detriment to the profitability of the business, and jeopardize its continuity.


Some of the notable achievements are:
1. The identification of restrictions of some of the most-relevant transportation contracts, where - through logistics models - reductions of 9% were achieved in unit costs per ton, thus mitigating the uncertainty of the increase in freight in the sector by 2023.
2. The identification of the indexation percentage suggested to be applied in the coal negotiations for the year 2023, as well as the external international macroeconomic variables, responsible for generating the most-dramatic changes in the local coal market.

Our management is based on five priorities:

 

1. Supply-chain planning
2. Collaborative relationships with suppliers
3. Digital transformation
4. Safe operations
5. Increasing profitability and market share

Mitigation and Adaptation to Climate Change

At Argos, we implement actions to mitigate, adapt and be resilient in the face of climate change; for this, we focus on developing initiatives to reduce CO2 emissions, aimed at the use of alternative fuels and optimization of the use of fossil fuels, the optimization of the clinker-factor cement and energy efficiency; research and development of better processes, products and solutions; and the minimization of risks and the enhancement of opportunities associated with this phenomenon. Thus, we ensure the Company's competitiveness and permanence over time.

For Society: To contribute to face the challenges derived from climate change through the development of initiatives to mitigate CO2 emissions; in addition, to strengthen efforts to offer products, solutions and services with characteristics of sustainability and low carbon that help to leverage adaptation capacities to climate change and promote and boost sustainable construction, contributing to the creation of social value in the geographies where we are present.

 

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 derived from this problem through the efficient management of our operations and research and development of better processes, products and solutions to ensure the Company's competitiveness and permanence over time.

Mitgation of CO2 Emissions
In 2022, we carried out conscious work on the review of our Scope 1 goals and the definition of Scope 2 goals in the Cement Business. Likewise, we made the application of these objectives to the Science-Based Targets initiative (SBTi) in order to validate them and continue working in a committed amnner in their achievement.

 

• The Science Based Target initiative (SBTi) is a collaboration of the Carbon Disclosure Project (CDP), the United Nations Global Compact, the World Resources Institute (WRI) and the World Wildlife Fund (WWF), which is the highest authority in terms of science-based climate-action goals.

 

Cementos Argos commits to reduceSscope 1 and 2 greenhouse-gas (GHG) emissions by 21% per ton of cementitious material by 2030, compared to the base year 2021*.
*Target limit includes emissions and removals related to bioenergy feedstocks.

 

Hydrogen Injection in the Combustion Process at the Piedras Azules Plant
During 2022, the hydrogen-injection test was successfully carried out in the furnace of the Piedras Azules Plant in Honduras. The main result was to increase clinker production by 3%, in addition to reducing the consumption of fossil fuel, such as petcoke, by 2% (better combustion efficiency) and allowing an increase in the substitution percentage of alternative fuels, such as whole tires. This project, with an investment of US 1.1M, has been in operation since July 2022.

 

Scope 2 Roadmap
Scope 2 indirect CO2 emissions correspond to 3% of Argos' total emissions. This type of emissions corresponds to those generated by the purchase and consumption of electrical energy in all our productive operations.

 

In 2022, we defined a roadmap in order to reduce these types of emissions and, thus, contribute to meeting the Company's objectives.

 

To achieve this goal, three levers have been defined that should make it possible to reduce not only consumption, but also associated emissions, through the increase in the purchase of energy from suppliers whose energy matrix contains a greater proportion of renewable sources.

 

- Electrical energy efficiency
- Power Purchase Agreements (PPAs)
- Renewable energy projects

 

Adaptation to Climate Change
Regarding the second line of action of our strategy, we focus on identifying and evaluating the physical risks to which our operations are exposed, as well as establishing the measures that allow them to be mitigated.

 

We highlight that, in 2022, our cement, concrete and aggregates facilities applied the physical risk-assessment tool, which is the main input for the following stages of the adaptation plan. We have begun exploring adaptation measures to increase operational resilience, a process that will continue and be implemented throughout 2023. Based on the progress made this year, we will continue prioritizing, approving, and implementing the measures identified, along with up-to-date monitoring and evaluation mechanisms.

Through its Climate-Change Pillar, the Environmental Strategy guides our actions in the mitigation of CO2 emissions, adaptation through the analysis of physical and transition risks and research and development of technologies, which allows us to minimize risks and enhance the opportunities associated with this phenomenon, managing to permeate the entire value chain.

 

The Action Framework of this Pillar considers:

 

1. The management and reduction of risks and the empowerment of opportunities associated with climate change.
2. The search for permanent innovation.
3. Green financing through mechanisms that include sustainability criteria.
4. Maintaining the transparency of decisions and good Corporate Governance practices.

Talent and Inclusion Management

At Argos, we provide a work space with the highest standards, which allows teams to face the present and future challenges posed by the environment, with a balance between profitability and social and environmental development. It contemplates management to attract and retain the best talent, under a culture of respect and appreciation of differences, in safe, healthy, equitable and inclusive work environments to build a society where all people can develop their maximum potential.

For Society: To transform our society through the development of people who are aware of their environment, who transcend and create value with each of their actions to attract, retain and develop employees willing to make a difference in the societies they impact. The foregoing, under diversity and inclusion criteria and behaviors that transcend our operations and generate well-being and a positive impact on communities.

 

For the Company: To consolidate a great team that welcomes change as an opportunity, that creates shared value in collaborative, inclusive work environments to face present and future challenges and that is an ally for business growth and the generation of innovative solutions in a clear balance between profitability, social development and environmental impact.

We Started the Management Capacities Development Program with an Emphasis on Gender Equality
Women occupy 29.8% of the leadership positions.
Our commitment to female leadership is integral and, for this reason, we seek to strengthen the mobilization of high-performance women with development potential towards managerial and leadership levels. The first cohort of 24 women, from different geographies and areas of the Company, had a comprehensive evaluation to identify opportunities that raise their profile of managerial and executive skills. At the end of 2022, 92% of the participants in this program have a defined Individual Development Plan.

 

At Argos, We Promote Social Dialogue and Respect the Free Right of Association
In 2022, collective negotiations were held in Panama and the United States within a framework of respect and sustainability. Additionally, the International Framework Agreement between Argos and the International Federation of Building and Wood Workers (IFBWW) with an initial scope in Colombia, Panama and Honduras was endorsed. This Agreement strengthens the relationship between the parties and the commitment in the geographies where it applies, constituting the first agreement of its kind in the global south.

 

Culture Measurement
For Argos, culture is the collective expression of the behaviors, values and beliefs of employees. It serves as a foundation for driving the Company's strategy and purpose.

 

In 2022, the results of the culture measurement in Argos showed a positive alignment between the desired culture to move toward the objectives and the current culture of the employees, reaffirming our purpose to transcend.

Our Talent Management is focused on the human aspect and seeks to offer the best experience to our employees, so that they assume their development with co-responsibility and flexibility. We are convinced that diversity enriches and adds value; for this reason, it is necessary to have people who develop, grow and contribute the best of themselves. At Argos, Talent Management focuses on three main lines:

 

1. Development, maintenance and strengthening of critical competencies
2. Attraction, retention and development of the best talent
3. Promotion of high standards in labor practices

Safety, health, and personal well-being

Our Health and Safety Strategy transcends the most-demanding global standards for risk management. We focus on strengthening visible leadership and relationships of trust as key elements to take care of each other.

 

As a company, we are inspired to contribute to the development of a safe, healthy society, which is why we focus beyond ZERO: zero injuries, illnesses and affectations to our employees and Stakeholders, generating awareness about well-being and the value of life.

For Society: To go beyond our places and work hours, to contribute to the development of safe, healthy territories, generating a positive impact on the well-being of our contractors, employees, their families and the different communities with which we interact.

 

For the Company: To remain safe and healthy inside and outside the Company's facilities by teaming up and strengthening the leadership and empowerment of all. To achieve this, we facilitate participation, feedback, and recognition mechanisms.

I ACT 
Our I Promise Management System constitutes a ""toolbox"" that makes it easier for us to achieve and sustain our goal of zero occupational injuries and illnesses.

 

How do we achieve this goal? Is it enough to have a Management System to remain safe and healthy? These are questions that we constantly ask ourselves, both personally and at work; and the answer is found in the decisions we make daily, and making a decision means taking ACTION.

 

This is how I Act was born, the ACTION before the PROMISE to take care of ourselves and take care of others, putting into practice the tools that the I Promise Management System offers us, empowering ourselves and raising our level of consciousness, always making the best decisions when facing the dangers in all our actions.

 

I Act strengthens our safety culture, promoting that each individual action contributes to the collective achievement of staying safe and healthy inside and outside our facilities.

 

The experience of integral growth and cultural transformation, I Act for a conscious and empathetic leadership, is aimed primarily at employees with people for whom they are in charge and the ease of influencing and inspiring their team to work in a safe, healthy manner; it is made up of the following modules:

 

1. Leadership skills. strengths and opportunities for improvement and, thus, establish their growth path.
2. Roles and responsibilities.
3. Risk and emotion management.
4. Powerful conversations.

 

In 2022, 76% of our leaders were trained for the first generation in Colombia, the Caribbean and Central America; in the coming years, it is expected to continue with "I act" in all territories.

 

Safety in Major Maintenance Stoppages
Maintenance stoppages are one of the most risky activities that are carried out during the year in all cement plants; Completing a maintenance shutdown without injury has always been a challenge due to the simultaneity of high-risk activities, non-routine tasks, and the varying levels of awareness of non-regular contractors.

 

During 2022 we had 12 major stoppages in six countries, where more than 2,000 people participated. These were carried out under the standard for risk identification and controls in the activities to be carried out:
• Addressing routes for daytime and nighttime behaviors.
• Daily talks including calisthenics exercises;
• Audit of standards that save lives.
• Inspection of tools.
• Alcohol and drug tests.

 

One Hundred Percent (100%) of the major stoppages achieved the goal of zero injuries to people. This is for us a sample of the visible, coherent and empowered leadership in Health and Safety issues in all our activities.

 

Checkpoints or Safe Points on the Road
The objective is to carry out an audit in the field of the basic factors of mobility in the driving activity, analyzing the physical and emotional conditions of the driver, the technical-mechanical condition of the vehicle, the characteristics of the infrastructure and recommending road-safety actions for the prevention of road incidents.

 

Since 2018, random checkpoints, called “Safe Points”, have been established organizationally or in conjunction with transit authorities, the Police and/or the Army.

 

To date we have impacted
• +10,000 road stakeholders involved in traffic education during 2022 (pedestrians, cyclists, motorcyclists, light-vehicle drivers, other cargo drivers, traffic authorities)

 

During 2022, we were recognized by the National Road Safety Agency in Colombia as the best among more than 70 road-safety practices postulated by different companies.

Our Management System has had an evolution that has responded to global needs and trends. That is why we recently integrated Health and Well-being with a personal approach, developing a model that will leverage the purpose of becoming a healthy organization and that will be progressively integrated into our current Health and Safety Strategy.

 

Comprehensive Health and Safety Strategy:

 

Leadership and responsibility
Competency development and comprehensive risk management
Communication and culture
Operational excellence

 

The Well-being Model:

The implementation of the model will allow us to consolidate ourselves as leaders and an example in health & well-being practices, as well as incorporating technologies, data and analytics, which will define the clear path to strengthen ourselves as a healthy organization.

Social Value

This material issue refers to the permanent work carried out by the Company to contribute to the development of society through relations with its communities, taking into account the responsibility of our operational actions, respect for and promotion of human rights and the construction of relationships of trust that generate development opportunities to promote joint growth, transcending our role in the territory.

For Society: To promote development opportunities to increase the quality of life and improve social conditions in the territories where we are present, addressing the long-term development needs of communities and seeking an equitable win-win relationship without creating a culture of dependency.

 

For the Company: To contribute to the construction of sustainable, prosperous and inclusive communities, guaranteeing the sustainability of the business and our Corporate Objectives, minimizing social risks and obtaining the support of society to continue operating with a high reputational standard.

Making Dreams of Decent Housing - Healthy Homes
Through Healthy Homes (Hogares Saludables), we have been able to improve the habitability quality of homes, generating healthier spaces for coexistence among the same family members, and we also help to weave community ties. This program attests to how Argos executes its Relationship Strategy with the communities through the generation of development opportunities and the promotion and management of human rights within our communities. During 2022, the program impacted the lives of more than 6,300 people with the direct intervention of more than 2,100 homes in Colombia. This program plans to intervene 10,000 homes in five years and take the working model to countries, such as Panama, the Dominican Republic and Honduras.

 

Respecting Human Rights in Yumbo Communities
In its business practice and with its firm commitment to the protection and recognition of the human rights of the communities, Argos carried out a community-participation exercise that would allow the cement operation located in Yumbo, a Colombian municipality in the Department of Valle del Cauca, to extend the useful life of the La Calera Mine associated with this operation for 14 more years and promote that this mining project be carried out within a framework of relationships of trust, responsible action and generation of opportunities in the territory.

 

To achieve this, all the guidelines and good practices in terms of participation with three (3) ethnic groups certified by the Directorate of Prior Consultation of the Ministry of the Interior of Colombia were followed: the Community Councils of Mulaló, San Marcos and Manga Vieja, and also the participation of non-ethnic groups belonging to the communities of the area of influence.

 

The outstanding achievements in this process of citizenship for development were the complete execution of the prior consultation methodological route legislated by the Colombian Government, the protocolization of agreements with the Community Councils, the participation exercise carried out with non-ethnic groups as social organizations , community leaders and inhabitants; the strengthening of the relationship between the community and the Local and National Authorities, such as Ombudsman, the Office of the Mayor, Municipal Council, the Ministry of the Interior and the Ministry of Environment and Sustainable Development; the development of skills in Argos for future participation processes with ethnic groups; the management of the Environmental License required for the extension of the useful life of the La Calera Mine and the concertation of social investments that will contribute to the development of the territory.

We create value by contributing to the progress of the regions where we are present, facing the current challenges of society and transcending our role in the territory. We frame ourselves in the following lines:

 

1. Acting responsibly by respecting and promoting human rights in our operations.
2. Building relationships of trust through a fluid, transparent dialogue.
3. Generating development opportunities to boost the growth of the territories.

Human Rights

Human Rights are a global commitment that are part of our vision of sustainability. We understand that the best way to create value is to bet on the development of respectful operations and relationships, ensuring the protection and promotion of the human rights of our Stakeholders, in order to contribute to the growth of all the areas where we operate and the scope of the goals of the Sustainable Development Goals established in the UN 2030 Agenda.

For Society: To promote and sensitize Stakeholders in respect for human rights and in the prevention of actions that generate risks in this matter, in order to avoid affecting the integrity of people both internally and externally in the organization.

 

For the Company: To manage human-rights risks in operations, promote our cultural pillars and maintain relationships of trust with all Stakeholders.

Update on critical issues for communities
During the year 2022 in communities we continued with the assessment of Human Rights risks in the prioritized operations in order to achieve a complete diagnosis of corporate risks that will allow us to sensitize the operations on the importance of taking into account the Human Rights of the communities, train local teams on how to detect human rights impacts and especially, identify preventive actions to protect our communities. All this in the midst of a constructive and open conversation during the evaluation of operational risks in which four of the seven assessed risks are measuring the effects of our operation on human rights in the territories which are, negative impacts to the integrity and property of the members of the community and/or the operation, affectation by environmental and operational impacts, affectation by land management, affectation to ethnic groups and especially vulnerable people.

 

 

Human Rights Committee
During 2022 we created this committee with the objective of following up on the due diligence and risk management process in human rights with prioritized stakeholders. It is made up of a representative from the following areas of the company: talent, suppliers, compliance, risk, community relations and ESG.

By 2025, we will ensure that the HR committee is operational four times a year.

 

 

Second Chances Program Argos USA
Over the last few years, our Florida hiring team has implemented a program that helps to include people who have been incarcerated or have criminal records in formal employment, providing them with equal opportunities for vindication and reintegration into society, making them feel productive and included, giving them a second chance.

 

We integrate the principles of human rights into the day-to-day of our actions, operations and relationships with all our Stakeholders. Likewise, we have a Due-Diligence and Risk-Management process that allows us to monitor the behavior of both the Company and our prioritized Stakeholders, which implies knowing the reality of our operations and the challenges of diversity, origins, cultures and thoughts that our Organization has. This process consists of four steps:

 

1. Risk identification
2. Action and Remediation Plans
3. Tracking and monitoring
4. Risk update

The Company's Profitable Growth and Core Value

At Argos we are aware of the competitiveness of the market and the challenges that we are currently experiencing as a Company. As a result, we propose to grow intelligently and profitably in the long term, seeking to maximize the generation of value for our investors and different Stakeholders.

 

This is why we are committed to increasing our operational efficiency, optimizing our logistics network, strengthening our value proposition, and developing and implementing innovative initiatives and solutions that allow us to maximize the value of your investment.

For Society: To adapt to changes and fluctuations in the global macroeconomic context, seeking to strengthen our value proposition in order to generate profitability with sustainability as the central axis of our strategy.

 

For the Company: To respond to the demand for sustainable, profitable value generation for our various Stakeholders, convinced that this translates into business strength and growth, long-term profitability for all our investors and the construction of a better society.

Logistics Network Optimization
One of the most-relevant milestones in terms of profitability for the Company was the optimization of the logistics and operations network in our three regional offices. This was the result of a conscious, consistent exercise of disinvestment and improvements in our export capacity, seeking - through an efficient logistics connection - to meet increased demand in territories that offer greater value for the product and integrate operations where previously, third-party sourcing was required, which is a great competitive advantage for the Company.


Environmental, Sustainability and Governance (ESG) Indicators: A Strong Competitive Advantage when Accessing Financing
The possibility of financing ourselves through loans tied to Environmental, Social and Governance (ESG) criteria enables us to access financial products with better conditions. As of 2022, the Company has four loans tied to sustainability indicators. We highlight that Argos North America Corp. signed a credit agreement linked to sustainability indicators for USD 750 million for a term of five years to refinance its debt.

 

Management and Decision Making Based on the Behavior of our Share
To close this gap between the Company's fundamental value and the market value, we are working on a plan that includes several initiatives:
- Improvement of our financial performance with an emphasis on profitability, sustainability and growth.
- In 2021, the Organization's Board of Directors authorized the Administration to carry out the necessary steps for its United States business to list and issue shares on the New York Stock Exchange (NYSE) to promote its value capture, optimize the capital structure and obtain the necessary resources to continue the execution of the Growth Strategy.
- Structuring mechanisms that allow us to make distributions to Shareholders other than dividends and that are not limited by Net Profit or Book Reserves.

 

Transition to Portland Limestone Cement (PLC) in the United States
This project continues to make significant progress and has been instrumental in achieving volume growth in a depleted market and an improvement in the sales margin.

To achieve our goals, we focus our efforts on five lines:

 

1. Financial Management: Management of the sources and uses of the Company's resources to ensure a capital structure that supports the generation of long-term value
2. Profitability of our operations
3. Management and decision making based on the behavior of our Share
4. Scaling of digital solutions
5. New initiatives

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:

 

Creamos valor construyendo relaciones sólidas que transforman el futuro de la sociedad

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.

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.

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.

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.

Creamos valor a través de nuestro compromiso con el desarrollo responsable y transparente de nuestras actividades.