Cemex SAB de CV

CEMEX's risk management model is a combination of both a 'bottom-up' and 'top-down' system, that is, one that connects top management insights with the rest of the organization to manage risks and opportunities comprehensively. The risk management process is implemented in a standardized way by the ERM representatives who are present at global, regional, and country levels. The risk and opportunity agendas are developed twice a year and updated on an ongoing basis. A sustainability specialist focuses on regulatory and other risks (such as reputational or market), whereas physical risks related to climate change (e.g., increased probability of flooding, potential interruptions of the supply chain) are covered by regional and local representatives. In addition, the Sustainability expert in the ERM network collaborates with regional and local sustainability staff to monitor and analyze corresponding developments. For example, regional experts constantly follow legislative developments related to CO2 and meet every quarter to share their progress, analyze potential impacts for CEMEX, and immediately report any material changes (such as new emission taxes or important adjustments to emissions trading systems) to the ERM network and Corporate Sustainability. Once the risks are fully identified, CEMEX's Global risk agenda is developed and presented to the Executive Committee and the Board of Directors for its insight and approval. The Global Risk Agenda is ­formally updated twice a year. All contributors (direct and indirect) constantly monitor the evolution of important topics (regulatory, scientific and other developments), and changes identified as material will trigger a process designed to ensure that appropriated adjustments are implemented. Through its Sustainability Committee, the Board of Directors oversees and discusses in detail the climate-related risks and opportunities previously identified in the Global risk agenda. These risks and opportunities are included in the Sustainability Risk & Opportunity Agenda.

Governments and Policymakers

We cooperate and engage with governments, regulators, and legislators—both directly and through business associations—responsible for regulating and defining relevant policies for our industry. We actively participate in global and national industry policy discussions covering issues related to climate change, sustainable infrastructure, innovation, digital transformation, operational efficiency, health & safety, circular economy, alternative fuels, and waste management frameworks, among others. We strive to conduct our business and relations with government entities in a manner consistent with our values, our Code of Ethics, and Business Conduct, policies and guidelines, and the law. [...] Business Associations

We actively participate in various business associations at global, regional, and national levels to develop partnerships and promote our core cement, ready-mix concrete, aggregates, and urbanization solutions businesses within the sector. Our active involvement in these associations gives us a crucial perspective to support, along with other companies, fundamental topics for our sector. As a founding member of the GCCA, and together with other member companies, in compliance with antitrust laws, we speak with a single voice on behalf of the cement and concrete industry and actively promote the use of concrete as an essential material for sustainable construction."
"Through its Sustainability Committee, the Board of Directors oversees and discusses in detail the climate-related risks and opportunities previously identified in the Global risk agenda. These risks and opportunities are included in the Sustainability Risk & Opportunity Agenda. [...] For example, regional experts constantly follow legislative developments related to CO2 and meet every quarter to share their progress, analyze potential impacts for CEMEX, and immediately report any material changes (such as new emission taxes or important adjustments to emissions trading systems) to the ERM network and Corporate Sustainability. [...] Once the risks are fully identified, CEMEX's Global risk agenda is developed and presented to the Executive Committee and the Board of Directors for its insight and approval. The Global Risk Agenda is formally updated twice a year. All contributors (direct and indirect) constantly monitor the evolution of important topics (regulatory, scientific and other developments), and changes identified as material will trigger a process designed to ensure that appropriated adjustments are implemented.

Cemex's commitment to anti-corruption, transparency, and ethics in business is fundamental to the company's core values and applies to all advocacy engagements Cemex participates in. We aim for our direct and indirect advocacy activities to comply with all applicable laws. Cemex abides by its Code of Ethics and Business Conduct and the Global Anti-Corruption Policy to ensure this.

It is in our best interest that the industry and trade associations of which we are members align with the Paris Agreement and with our climate action advocacy goals and climate policy positions.

To that end, we participate in comprehensive trade association climate advocacy reviews, while at the same time, we also intend to launch certain reviews from our part with the objective of assessing the alignment of the associations we collaborate with regarding our climate and environmental objectives.

We believe that substantially all of our key associations have alignment with the Paris Agreement goals and Cemex's policy positions on climate change. We base our assessment on a review of the organizations' publications, social media, websites, and public statements.

Additional reviews will be conducted during the remainder of 2023 to confirm the alignment of key associations' policy positions and climate advocacy goals. Upon finalizing the assessment, a climate advocacy review report is expected to be published, and if needed, we intend to address any alignment areas that may require further clarification proactively.

In any case, where we may be unable to realign activities and strategies, Cemex will evaluate separating itself from the association in question or ultimately dissolve its membership.

It is in our best interest that the trade associations of which we are members align with the Paris Agreement and with our climate action advocacy goals and climate policy positions. To that end, we are conducting a comprehensive trade association climate advocacy review to assess the alignment of the associations we collaborate with regarding our climate and environmental objectives. [...] Upon finalizing the assessment, a climate advocacy review report will be published, and if needed, we will proactively address any alignment areas that may require further clarification. In any case where we may be unable to realign activities and strategies, Cemex will evaluate separating itself from the association in question or ultimately dissolve its membership.

Through its Sustainability, Climate Action, Social Impact and Diversity Committee, the Board of Directors oversees and discusses in detail the climate-related risks and opportunities previously identified in the Global Risk Agenda. These risks and opportunities are included in the Sustainability Risk & Opportunity Agenda. [...] On a quarterly basis, the Cemex "CO2 Regulation Focus Group", comprised of Public Affairs, Operations, and Sustainability members in each region, shares the insights from this collaboration with governments and identifies any risk in emerging regulations.

A key component of achieving our climate action targets and ambition to become a net-zero company is promoting public policies that enable the decarbonization of the cement and concrete industry. We firmly believe that implementing policies based on green and circular economy principles offers significant opportunities to achieve substantial emissions reductions across multiple sectors, with the cement and concrete industry playing a central role. [...] Cemex is committed to lobbying and advocating for public policies and regulations in line with the goals of the Paris Agreement of restricting global temperature rise to 1.5°C above pre-industrial levels. Additionally, we are committed to advocate and lobby aligned with the Paris Agreement within the industry trade associations of which we are a member. To ensure this alignment, we have conducted a comprehensive review of our trade associations' climate policy positions. [...] To conduct the trade association climate advocacy review, we originally selected 17 main trade associations that advocate for policy issues related to the cement and concrete industry, accurately reflecting the company's geographical footprint and representing most of our trade association budget. [...] We evaluated these associations based on the following criteria: 1. Paris Agreement and the Net-Zero Agenda [...] 2. Circular Economy Directives [...] 3. Lower-Carbon Products [...] 4. Clean Electricity [...] 5. Emissions Trading Systems [...] 6. Research & Development (R&D) Funding for Decarbonization Technologies. [...] The review consisted of two components: (1) an independent analysis of publicly available information: reviewing public statements, media releases, social media, and publications; and (2) a survey sent to the trade associations to complement the analysis and bring their direct position into the review. The review was led by the global public affairs team, collaborating with regional and local public affairs team members and the trade associations. Results were validated by the global sustainability team.

Attach commitment or position statement(s)[…]Integrated report (IR) 2021 (page 36) - GCCA, where CEMEX is a founding member - "The GCCA has published a detailed roadmap that sets out the industry's path to fully decarbonize by 2050, a target aligned with the Paris Agreement to limit global warming to 1.5°C. The move by the members of the GCCA marks the most significant global commitment by industry to net-zero so far". Page 37, "LEADING OUR INDUSTRY THROUGH PARTNERSHIPS TO ACCELERATE CLIMATE ACTION: CEMEX has signed the Business Ambition for 1.5°C commitment; CEMEX joined The Race to Zero Campaign of the UNFCCC; CEMEX is one of the founding members of the First Movers Coalition (...) the FMC is a group of global companies joining together to scale up critical emerging technologies essential to the net zero transition."
Page 37: " COMMITTED TO CLIMATE ACTION DISCLOSURE. (...) Creating a common understanding of climate-related risks and opportunities across the cement and concrete industry is key in the delivery of the Paris Agreement goals. Disclosures of information on climate-related governance, strategy, risk, and metrics is essential for successful long-term investors."

Link to IR: https://www.cemex.com/documents/20143/57102208/IntegratedReport2021.pdf/ca7f90b7-d742-314c-de70-7de4bf8f5431?t=1648173083550

Describe the process(es) your organization has in place to ensure that your engagement activities are consistent with your overall climate change strategy[…]CEMEX is engaged in different associations/initiatives that are fully aligned with Paris Agreement Goals, like "Business Ambition for 1.5ºC", "Race to Zero" and "GCCA". Before we become signatories of any of these initiatives, we ensure that their position is consistent with our climate change strategy by exploring their ethics policies and public positions regarding climate and ensure that they are aligned to our core principals: supporting the Paris Agreement Net-Zero ambition, promoting a carbon pricing mechanism to realize the Net-Zero goal and promoting the use of low-carbon products. Once we engage, we always keep track of their publications, or even take part in the discussions before launching any public position, by ensuring that their position is always aligned with our core principles and strategy. In case of any misalignement in the positions, which is fortunately very rare, CEMEX drops off the position or evaluate whether it has to drop of the association or initiative.

Does your organization have a public commitment or position statement to conduct your engagement activities in line with the goals of the Paris Agreement?[…]Yes

Overview

Cemex believes that climate change is one of the biggest challenges of our time and supports collective action to ensure compliance with the Paris Agreement commitments and fulfillment of the United Nations Sustainable Development Goals on climate action. As part of our commitment to addressing climate change, we launched Future in Action, our global climate action program focused on developing products with sustainable attributes, solutions, and processes to become a net-zero CO2 company by 2050.

Since launching Future in Action in 2020, Cemex has reduced its CO2 emissions by 13%, which in the past would have taken us 15 years to achieve. We also have become among the first companies in the cement industry to have our 2030 and 2050 decarbonization goals validated by the Science Based Targets initiative (SBTi), including our 2050 goal of becoming a net-zero company in alignment with their 1.5°C scenario, the most ambitious pathway defined for the industry.

A key component of achieving our climate action targets and ambition to become a net-zero company is promoting public policies that enable the decarbonization of the cement and concrete industry. We firmly believe that implementing policies based on green and circular economy principles offers significant opportunities to achieve substantial emissions reductions across multiple sectors, with the cement and concrete industry playing a central role.

Close collaboration across industry stakeholders is crucial for accelerating the adoption of climate-friendly policies and regulations. We actively work with industry peers and external trade associations to promote the policies and regulations that enable the transition to a carbon-neutral future. Cemex is committed to lobbying and advocating for public policies and regulations in line with the goals of the Paris Agreement of restricting global temperature rise to 1.5°C above pre-industrial levels. Additionally, we are committed to advocate and lobby aligned with the Paris Agreement within the industry trade associations of which we are a member. To ensure this alignment, we have conducted a comprehensive review of our trade associations' climate policy positions.

Cemex Trade Association Climate Advocacy Review – March 2024

Scope & Methodology

To conduct the trade association climate advocacy review, we selected 17 main trade associations that advocate for policy issues related to the cement and concrete industry. These associations accurately reflect the company's geographical footprint and represent most of our trade association budget. The list includes organizations whose mandate is related to public policy advocacy that could influence climate policy. We evaluated these associations based on the following criteria: Supports the goal of the Paris Agreement to limit the increase in the global average temperature to well below 2°C above pre-industrial levels, and to pursue efforts to limit temperature increase to 1.5°C above pre-industrial levels; move the world to net-zero CO2 emissions.

1.

2.

3.

Paris Agreement and the Net-Zero Agenda

Circular Economy Directives

Supports policies and regulations that enable utilizing non-recyclable waste as alternative fuel to substitute conventional energy sources or as substitute for raw material consumption.

Lower-Carbon Products

Supports policies that encourage the adoption of lower-carbon building materials that have lower clinker factors and other sustainable attributes.

4. Clean Electricity

Supports policies that enable the deployment of clean energy sources such as wind, solar, and hydro for electricity grids.

5. Emissions Trading Systems

Supports the implementation of market-based mechanisms such as Emissions Trading Systems (ETS) to regulate CO2 emissions.

6. Research & Development (R&D) Funding for Decarbonization Technologies

Supports government investment in the R&D of new, innovative decarbonization technologies such as Carbon Capture, Utilization, and Storage (CCUS) to bridge the gap to net-zero in hard to abate sectors.

The review consisted of two components: (1) an independent analysis of publicly available information: reviewing public statements, media releases, social media, and publications; and (2) a survey sent to the trade associations to complement the analysis and bring their direct position into the review. The review was led by the global public affairs team, collaborating with regional and local public affairs team members and the trade associations. Results were validated by the global sustainability team.

Cemex Trade Association Climate Advocacy Review – March 2024

Trade Association Positions

Geography Association

Global

Europe

Latin America

Colombia

Czech Republic

Dominican Republic

France

Germany

Guatemala

Mexico

GCCA

CEMBUREAU

FICEM

PROCEMCO

SVC

ADOCEM

UNICEM

VDZ

ICCG

CANACEM

Supports Paris Agreement and the Net-Zero Agenda?

Yes

Yes

Yes

Supports Circular Economy Directives: utilizing waste as alternative fuel or raw material?

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Other

No formal position

Yes

Yes

Yes

Yes

Yes

Yes

Other

No formal position

Yes

Supports policies that encourage adoption of Lower-Carbon Products?

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Cemex Trade Association Climate Advocacy Review – March 2024

Supports transition to Clean Electricity?

Supports Emissions Trading Systems?

Supports R&D Funding for Decarbonization Technologies?

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Other

No formal position

Yes

Yes Yes

Yes Yes

Yes Yes

Yes

Yes

Yes

Other

Not applicable

Yes

Other

No formal position

Yes

Yes

Yes

Other

No formal position

Yes

Yes

Other

No formal position

Yes

Trade Association Positions

Geography Association

Philippines

Poland

Spain

UK

USA

CEMAP

SPC

IECA

OFICEMEN

MPA

NRMCA

PCA

Supports Paris Agreement and the Net-Zero Agenda?

Yes

Supports Circular Economy Directives: utilizing waste as alternative fuel or raw material?

Yes

Yes Yes

Yes Yes

Yes Yes

Yes Yes

Yes Yes

Yes Yes

Supports policies that encourage adoption of Lower-Carbon Products?

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Level of alignment:

Yes - Public position is aligned with Cemex No - Moderate misalignment may exist due to advocacy against the Cemex position Other - Not applicable to the activities of the association; or the association lacks a formal position We found no major misalignments between the trade associations' climate policy positions and our own policy positions. Of the 17 associations evaluated, we found 12 were completely aligned with the Paris Agreement and Cemex's climate policy positions. The remaining five associations lacked a formal position in some of the advocacy priorities either due to the activities not being applicable, or the topic not being present in a national debate.

Cemex Trade Association Climate Advocacy Review – March 2024

Supports transition to Clean Electricity?

Supports Emissions Trading Systems?

Supports R&D Funding for Decarbonization Technologies?

Other

No formal position

Yes

Other

No formal position

Yes

Yes

Yes

Yes

Other

No formal position

Yes

Yes

Yes

Yes

Other

No formal position

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Main Findings & Next Steps

1. Paris Agreement and the Net-Zero Agenda: There is near unanimous support for the goals of the Paris Agreement and the importance of decarbonizing the industry. Sixteen of the 17 associations evaluated formally support the goals of the Paris Agreement, and a vast majority of the organizations have also developed decarbonization roadmaps to guide their decarbonization activities.

2. Circular Economy Directives: Sixteen of the 17 associations evaluated have a formal position supporting regulations and policies that enable the utilization of waste as energy recovery or material reuse in the cement process, with only ICCG not having a formal position on circular economy directives.

3. Lower-Carbon Products: All organizations evaluated are active in promoting policies that encourage the use of lower-carbon products, including through changes to the regulatory framework and public procurement.

4. Clean Electricity: A majority of the associations evaluated fully support policies that enable an energy transition from fossil fuels to renewable sources of energy to power electricity grids. Only three organizations (NRMCA, CeMAP, and ICCG) do not have a formal position on the transition to clean electricity.

5. Emissions Trading Systems: A majority of the organizations evaluated engage with government authorities to promote market-based carbon pricing mechanisms in the form of Emissions Trading Systems. This topic identified the largest number of associations evaluated that do not have a formal position, either because their activities are not covered by an ETS (UNICEM), or because there is not a robust debate for carbon prices in the national scene (NRMCA, CeMAP, ICCG).

6. R&D Funding for Decarbonization Technologies: Fifteen of the 17 associations evaluated fully support government R&D funding to develop innovative decarbonization technologies such as CCUS that enable the decarbonization of the industry. Of the two remaining associations, there is little to no government funding available for R&D at the national level (ADOCEM and ICCG) Cemex will continue working closely with our trade associations to consistently ensure alignment between their policy positions and our own. We recognize that some associations may not have taken a public position on topics included in this review due to local differences in political context, regulatory maturity, or association activity scope. Where applicable, Cemex will work with the associations that lack a formal position through various subcommittees and leadership positions to develop a position that is fully aligned with our own. During future reviews, if a significant misalignment between an association's position and our own is identified, we will increase our engagement in the association to attempt to improve the alignment. If the association repeatedly pursues policies and actions that are contrary to Cemex's positions, we will publicly state our disagreement and conduct an internal analysis to determine if rescinding membership may be needed. Cemex will conduct its Trade Association Climate Advocacy Review biannually going forward to ensure alignment.

Next Steps

Cemex Trade Association Climate Advocacy Review – March 2024