Impact assessment is the monetization of positive and negative externalities derived from our operations that are not reflected in the Financial Statements.
At Cemenntos Argos, we have developed a model that we call the Value Added Statement to Society (VAS), based on the KPMG True Value methodology, which allows us to convert social, economic and environmental impacts to US Dollars and, thus, determine our value generation to society.
Our VAS is composed of eleven externalities classified in three dimensions.
These were chosen to be part of our model due to the magnitude of the impact generated and their relevance to our stakeholders:
The results of the Statement of Value Added to Society evidence the social and economic influences we face. Economic growth in the countries where we are present, the reactivation of construction and consumer confidence were reflected in meeting the goals established by Argos. During 2021, we continued begging on the generation of value for society and for the company, especially emphasizing our shareholders.
In this period, we reached the highest EBITDA in the company’s 84-year history, which is also evidenced in a substantial increase in our retained benefit, which is the starting point of our valuation exercise, which grew by 59% – compared to the previous year – passing from USD 188.9 million to USD 300.2 million. In turn, and consistent with our good corporate results, the net value to society also presented a considerable increase, as it passed from USD 631 million to USD 764.5 million, 21% more. Taking into account both values, during 2021, we achieved 2.5 times more value to society than the benefit we retained as a company, which is aligned with our commitment to create sustainable value.
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The economic value generated in 2021 from externalities Wages and Benefits, Taxes and Interest and Dividends was USD 812,660,777. We continue to work with conviction so that our share price reflects the true value of the company and its multiple growth opportunities. At this point it is also worth mentioning our commitment to reduce the company’s leverage ratio from 4.5 times net debt as a proportion of EBITDA plus dividends at the beginning of 2021 to 3 at the end of the year. Thus achieving greater financial flexibility, which is a great achievement to highlight in our management during the year.
We generated social value equivalent to USD 4,626,039. In 2021, we continued with our desire to continue investing and generating development hand in hand with our communities, which explains the good performance of the externality “Investments in the community”, which, in line with the increase in our retained earnings, also presented an increase of 57%
In 2021 we generated environmental costs equivalent to USD -374,014,697, as a result of our greenhouse gas (GHG) emissions, atmospheric emissions, water consumption and impacts on biodiversity. In this dimension we also have a positive externality that evidences our efforts to replace traditional materials and fuels with less polluting ones, which was quantified at USD 20,985,071.
By paying taxes, we contribute to the development of the countries where we operate. During 2021, there was a return to normal, which is seen in the excellent financial results for the company and a significant increase in sales and consumer confidence, which bring with them higher income evidenced by more contributions in the economies where we are present. The foregoing explains the 47% increase in the tax-payment externality in the countries, which is in line with our commitment to grow hand in hand with the territories.
Our productive activities have an impact on ecosystems through water consumption and the effect on biodiversity. Although they are not the most representative of our operations, they have been prioritized by our stakeholders and that is why we quantify them as impacts on the VAS. By 2021, the cost associated with these externalities decreased by 24%, as a result of the divestment in Dallas, an operation with a significant impact on the water resource.
Materials and alternative fuels: One of our greatest wagers to face the challenges associated with climate change is the substitution of materials and traditional fuels for alternatives in our operations. Currently, our three regions use materials, such as ash and slag, and fuels, such as tires and biomass to reduce greenhouse-gas emissions in the production process.
The impact of this externality depends on the turnover of our employees, of the total hours of training offered and the ratio between men and women. During 2020, the pandemic brought with it a decrease in supply, for which the turnover item fell. In addition, virtuality changed the model of training hours, going from face-to-face to virtual, which – undoubtedly – was an enormous challenge in terms of training within the company. During 2021, we evidenced a positive increase of 4% in this externality, which is primarily explained by an increase in training hours for our employees, resuming face-to-face sessions and further strengthening the virtual model, for a total of 278,000 hours.
In 2021, we continued with our desire to continue investing in and generating development hand in hand with our communities, which explains the good performance of this externality, which – according to the increase in our benefit retained – also presented an increase of 57%, which reiterates our commitment to the territories. In this point, it is opportune to remember that, within the VAS model, there are specifically accounted for investment lines prioritized by the company: housing, educational and community infrastructure, scholarships and energy in Haiti; likewise, we want to point out that these lines carry out investments through three forms: commercial initiatives, community investments and donations.
For Argos, employee health and lift will always be the most important thing. After 2020, in which – unfortunately, we reported the fatality of one of our employees – our commitment in 2021 was to ensure the life and safety of all, thus achieving zero fatalities in our three regions, which is evidenced in an 82% improvement in the externality.