GRI [305-1/305-2] DIRECT AND INDIRECT GHG EMISSIONS OF CEMENT tCO2

Measurement baseline year 2006 2014 2015 2016 2017

Direct Emissions in Colombia1 4,222,233 4,591,981 3,972,698 3,708,683

Caribbean Direct Emissions2 616,777 633,265 638,773 590,029

USA Direct Emissions3 3,070,970 3,129,755 2,998,647 3,176,833

Direct GHG emissions tCO2 7,909,980 8,355,001 7,610,118 7,475,544

Indirect Emissions in Colombia4 (704,709) 33,038 29,661 8,095

Caribbean Indirect Emissions5 1,197,969 66,228 63,881 69,741

USA Indirect Emissions6 140,811 216,455 226,705 340,022

Indirect GHG Emissions tCO2 634,071 315,721 320,246 417,858

Direct and Indirect GHG Emissions from Cement tCO2 8,544,051 8,670,722 7,930,364 7,893,403

GRI [102-48] RECALCULATION OF CO2 EMISSIONS

The direct CO2 emissions of the cement operations of the three regional branches (Colombia, Central America & the Caribbean, and the United States) were recal-culated for the years 2014, 2015 and 2016 in order to comply with the guideline established in the “CO2 and Energy Accounting and Reporting Standard for the Cement Industry – Cement CO2 and Energy Protocol” (WBCSD - CSI, 2011) in section 7.5 “Baselines, Acquisitions and Divestitures”, which specifies the process to be used for the recalculation of the CO2 emissions for the base year and the historical data. The criteria used to perform the recalculation were as follows:

1. Structural changes were identified within the company, brought on specifically by the acquisition of cement assets in the Central America & Caribbean and the United States regions. Therefore, with this recalculation, the emissions generated by cement plants acquired by Argos that were in operation during 2014, 2015 and 2016 were added to the company’s CO2 inventory.2. We determined that the data for the calculation variables 12a-17a of the WBCSD-CSI Cement CO2 and Energy Protocol (2011) were made on a wet basis and were then corrected to a dry basis, as established by the protocol.3. Some CO2 emission calculation variables were corrected for two cement plants in Colombia (Sogamoso and Yumbo) for the year 2014 based on the WBCSD-CSI Cement CO2 and Energy Protocol (2011).

2 | CLIMATE CHANGE

CLARIFICATION OF STANDARDS, METHODOLOGIES AND ASSUMPTIONS USED FOR THE CALCULATION

· GREENHOUSE GASES INCLUDED IN THE CALCULATION: This indicator includes CO2 emissions only because emissions of other greenhouse gases are not significant in the cement-making process. Also, the CO2 and Energy Accounting and Reporting Standard for the Cement Industry is limited to the CO2 inventory only (please see: The Cement CO2 and Energy Protocol - CO2 and Energy Accounting and Reporting Standard for the Cement Industry). World Business Council for Sustainable Development (WBCSD) - Cement Sustainability Initiative (CSI), 2011. Available at: http://www.wbcsdcement.org/index.php/key-issues/climate-protection/co-accounting-and-reporting-standard-for-the-cement-industry

· APPROACH TO THE CONSOLIDATION OF EMISSIONS: We considered an operational control approach to calculate the emissions, including all cement operations contemplated in the Integrated Report.

· REGULATIONS, METHODOLOGIES, AND ASSUMPTIONS USED FOR THE CALCULATION AND SOURCE USED FOR EMISSION FACTORS: The methodology used to calculate the direct and indirect emissions is the one established by the Cement Sustainability Initiative (CSI) of the World Business Council for Sustainable Development (WBCSD): “The Cement CO2 and Energy Protocol – CO2 and Energy Accounting and Reporting Standard for the Cement Industry” (2011).

Direct emissions (Scope 1) occur from sources that are owned orcontrolled by the reporting company. In cement plants, direct CO2 emissions are generated by the following sources: 1. Calcination of carbonates and combustion of organic carbons contained in raw materials. 2. Combustion of kiln fuels related to clinker production. 3. Combustion of non-kiln fuels. 4. Combustion of fuels for on-site power generation.

Indirect emissions (Scope 2) are caused by the consumption of electricity purchased from the national grid.

Gross direct emissions are reported for cement operations and correspond to the total direct emissions generated by raw materials, kiln fuels related to clinker production, and non-kiln fuels. CO2 generated by on-site power generation is not included.

Biogenic emissions (from the combustion of biomass) are not included because they are considered neutral.

Source of the CO2 emission factors for each type of fuel: “The Cement CO2 and Energy Protocol – CO2 and Energy Accounting and Reporting Standard for the Cement Industry” WBCSD – CSI (2011).Available at: http://www.wbcsdcement.org/index.php/key-issues/climate-protection/co-accounting-and-reporting-standard-for-the-cement-industry

· Source of the CO2 emission factors from the generation of electricity in each country, except Colombia and the United States “CO2 emissions from fuel combustion – Highlights” International Energy Agency - IEA, 2013 edition.

1 2 3 4 5 6 | appendix | 3

Source of the CO2 emission factors from the generation of electricity in Colombia: We used the average of the factors reported by the Mining Energy Planning Unit (UPME, for its Spanish acronym) in their monthly report on generation variables and the Colombian electricity market. Available at: http://www.siel.gov.co/Inicio/Generaci%C3%B3n/Estad%C3%ADsticasyvariablesdegeneraci%C3%B3n/ta-bid/115/Default.aspx

Source of the CO2 emission factors from the generation of electricity in the United States: We used the emission factors reported by the EPA (Environmental Protection Agency) in its Emissions & Generation Resource Integrated Database (eGRID) for each of the states in the country, and in its revised version of February 2017. Available at: https://www.epa.gov/energy/emissions-generation-resource-integrated-database-egrid

Selection of the Base YearThe baseline year is 2006, due to the fact that the merger of the different cement companies was completed that year, thus creating Cementos Argos. Therefore, the consolidated information regarding the production and flow of materials and energy to calculate the emissions is available as of that year.

COMMENTS

· DIRECT GHG EMISSIONS tCO2 1 Colombia: There was a decrease of direct emissions due to the reduced production of clinker and the increased consumption of natural gas instead of coal. 2 The Caribbean and Central America (CCA): There was a decrease of direct emissions proportional to the reduced clinker production. 3 United States (USA): There was an increase of direct emissions proportional to the increased clinker production.

· INDIRECT GHG EMISSIONS tCO2 4 Colombia: There was a reduction of indirect emissions due to the significant decrease of electricity purchased from the grid (due to the operational transforma-tion of the company) and the reduced CO2e emission factor from the national grid of Colombia, which went from 219 to 135 kg CO2/MWh. 5 CCA: The increase of indirect emissions during 2017 is due to the inclusion of the San Lorenzo (Honduras) and San Juan (Puerto Rico) plants in the calculation of the indicator. 6 USA: In 2017, indirect emissions increased in proportion to the increase in electricity purchased and the inclusion of the Martinsburg plant in the calculation of the indicator. The variation was consistent with the change in the CO2e emission factors of the electric grid. In 2016, we used a country emission factor (503 kgCO2/MWh) that was published by the IEA in 2013 and it was applied equally to all operations in the USA. In 2017, we used a different emission factor for each plant based on the state where each one is located: Harleyville plant (South Carolina: 391 kgCO2/MWh), Roberta and Atlanta plants (Georgia 522 kgCO2/MWh), Newberry and Tampa plants (Florida: 490 kgCO2/MWh), and Martinsburg plant (West Virginia: 631 kgCO2/MWh). Until 2014, indirect emissions from the net movement of clinker input and output (due to the purchase and sale of clinker) were reported within Scope 2, as specified by the WBCSD-CSI (2011) CO2 and Energy Protocol. However, for comparability purposes with national GHG reports and GHG reports from other indus-tries, in 2015 we started to report only indirect emissions generated by the purchase of electricity from the national grid of each country. The negative value for operations in Colombia in 2014 is due to the emissions of plants that were net exporters of clinker, that is, those in which the amount of clinker that left the plant was greater than the amount that came in.

4 | CLIMATE CHANGE

GRI [305-1/305-2] DIRECT AND INDIRECT GHG EMISSIONS OF CONCRETE tCO2

2014 2015 2016 2017

Direct Emissions in Colombia1 36,239 39,353 35,640 32,964

Caribbean Direct Emissions2 6,049 5,438 5,716 5,412

USA Direct Emissions3 30,552 103,155 26,774 97,545

Direct GHG emissions tCO2 72,840 147,946 68,130 135,921

Indirect Emissions in Colombia4 934 1,458 1,626 1,021

Caribbean Indirect Emissions5 822 1,246 867 781

USA Indirect Emissions6 21,201 17,090 18,118 16,098

Indirect GHG Emissions tCO2 22,957 19,794 20,610 17,900

Direct and Indirect GHG Emissions from Concrete tCO2 95,797 167,740 88,741 153,821

CLARIFICATION OF STANDARDS, METHODOLOGIES AND ASSUMPTIONS USED FOR THE CALCULATION

· GREENHOUSE GASES INCLUDED IN THE CALCULATION: Only CO2 emissions were included in this indicator.

· APPROACH TO THE CONSOLIDATION OF EMISSIONS: We considered an operational control approach to calculate the emissions, including all concrete operations contemplated in the Integrated Report.

· REGULATIONS, METHODOLOGIES, AND ASSUMPTIONS USED FOR THE CALCULATION AND SOURCE USED FOR EMISSION FACTORS: The methodology used to calculate the direct and indirect emissions is the one established by the Corporate Accounting and Reporting Standard - The Greenhouse Gas Protocol of the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (2004). Direct emissions (Scope 1) occur from sources that are owned orcontrolled by the reporting company. We took into account the following equation in order to calculate the direct emissions of the concrete operations: Direct concrete emissions = Fuel consumption * Lower heating value of the fuel * Emission factor of the CO2 associated with the fuel. Indirect emissions (Scope 2) are caused by the consumption of electricity purchased from the national grid. We took into account the following equation in order to calculate the indirect emissions of the concrete operations: Indirect concrete emissions = Consumption of electricity purchased from the national grid of each country * CO2 emission factor of the national grid of each country Source of the CO2 emission factors for each type of fuel: “The Cement CO2 and Energy Protocol – CO2 and Energy Accounting and Reporting Standard for the Cement Industry” WBCSD – CSI (2011). Available at: http://www.wbcsdcement.org/index.php/key-issues/climate-protection/co-accounting-and-reporting-standard-for-the-cement-industry Source of the CO2 emission factors from the generation of electricity in each country, except Colombia: “CO2 emissions from fuel combustion – Highlights” International Energy Agency - IEA, 2013 edition. For Colombia we used the average of the factors reported by the Mining Energy Planning Unit (UPME, for its Spanish acronym) in their monthly report on generation variables and the Colombian electricity market. Available at: http://www.siel.gov.co/Inicio/Generaci%C3%B3n/Estad%C3%ADsticasyvariablesdegeneraci%C3%B3n/tabid/115/Default.aspx

1 2 3 4 5 6 | appendix | 5

COMMENTS

· DIRECT GHG EMISSIONS tCO2 1 Colombia: The decrease of direct emissions was proportional to the decrease in concrete production. 2 CCA: There was a decrease of direct emissions proportional to the decrease of concrete production. 3 USA: There was a significant increase of direct emissions due to the facts that in 2017 the Southeast Zone (SEZ) started reporting the fuel consumption of mixer trucks and the Gulf Zone (SCZ) reported the actual fuel consumptions generated by the information system, whereas in 2016 said consumption was merely estimated because the information was not available in the system.

· INDIRECT GHG EMISSIONS tCO2 Colombia: The decrease of direct emissions was proportional to the decrease in concrete production. CCA: There was a decrease of direct emissions proportional to the decrease of concrete production. USA: There was a significant increase of direct emissions due to the facts that in 2017 the Southeast Zone (SEZ) started reporting the fuel consumption of mixer trucks and the Gulf Zone (SCZ) reported the actual fuel consumptions generated by the information system, whereas in 2016 said consumption was merely esti-mated because the information was not available in the system.

6 | CAMBIO CLIMÁTICO_INDICADORES WEB

GRI [305-1/305-2] DIRECT GHG EMISSIONS FROM THE GENERATION OF ELECTRICITY tCO2

2014 2015 2016 2017

Direct Emissions in Colombia1 621,258 551,257 488,804 536,932

Caribbean Direct Emissions2 21,501 17,275 16,758 16,347

USA Direct Emissions NA NA NA NA

Direct GHG emissions tCO2 642,759 568,532 505,562 553,278

CLARIFICATION OF STANDARDS, METHODOLOGIES AND ASSUMPTIONS USED FOR THE CALCULATION

· GREENHOUSE GASES INCLUDED IN THE CALCULATION: Only CO2 emissions were included in this indicator.

· APPROACH TO THE CONSOLIDATION OF EMISSIONS: We considered an operational control approach to calculate the emissions, including all electricity generating operations contemplated in the Integrated Report.

· REGULATIONS, METHODOLOGIES, AND ASSUMPTIONS USED FOR THE CALCULATION AND SOURCE USED FOR EMISSION FACTORS: The methodology used to calculate the direct emissions is the one established by the Cement Sustainability Initiative (CSI) of the World Business Council for Sustainable Development (WBCSD): “The Cement CO2 and Energy Protocol – CO2 and Energy Accounting and Reporting Standard for the Cement Industry” (2011). Direct emissions (Scope 1) occur from sources that are owned orcontrolled by the reporting company. We took into account the following equation in order to calculate the direct emissions of on-site electricity generating operations: Direct emissions from on-site electricity generating operations = Fuel consumption * Lower heating value of the fuel * Emission factor of the CO2 associated with the fuel. Source of the CO2 emission factors for each type of fuel: “The Cement CO2 and Energy Protocol – CO2 and Energy Accounting and Reporting Standard for the Cement Industry” WBCSD – CSI (2011). Available at: http://www.wbcsdcement.org/index.php/key-issues/climate-protection/co-accounting-and-reporting-standard-for-the-cement-industry

COMMENTS

1 Colombia: two of the plants where electricity is generated (the Cairo and Nare plants), which represents 26% of the total production of energy, are hydroelectric plants whose direct emissions are zero. Direct emissions from other on-site electricity generating plants increased in proportion to the increased production of elec-tricity. 2 CCA: The decrease of direct emissions was proportional to the reduced production of electricity.

1 2 3 4 5 6 | Anexos | 7

GRI [305-1/305-2] DIRECT AND INDIRECT GHG EMISSIONS OF AGGREGATES tCO2

2014 2015 2016 2017

Direct Emissions in Colombia1 1,404 1,548 1,851 2,597

Caribbean Direct Emissions2 NA NA 703 546

Direct GHG emissions tCO2 - Aggregates 1,404 1,548 2,554 3,143

Indirect Emissions in Colombia3 546 966 1,089 649

Caribbean Indirect Emissions4 NA NA 326 227

Indirect GHG Emissions tCO2 546 966 1,414 877

Direct and Indirect GHG Emissions from aggregates tCO2 1,950 2,515 3,969 4,019

CLARIFICATION OF STANDARDS, METHODOLOGIES AND ASSUMPTIONS USED FOR THE CALCULATION

· GREENHOUSE GASES INCLUDED IN THE CALCULATION: Only CO2 emissions were included in this indicator.

· APPROACH TO THE CONSOLIDATION OF EMISSIONS: We considered an operational control approach to calculate the emissions, including all aggregate operations contemplated in the Integrated Report.

· REGULATIONS, METHODOLOGIES, AND ASSUMPTIONS USED FOR THE CALCULATION AND SOURCE USED FOR EMISSION FACTORS: The methodology used to calculate the direct and indirect emissions is the one established by the Corporate Accounting and Reporting Standard - The Greenhouse Gas Protocol of the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (2004). Direct emissions (Scope 1) occur from sources that are owned orcontrolled by the reporting company. We took into account the following equation in order to calculate the direct emissions of the aggregate operations:

Direct aggregate emissions = Fuel consumption * Lower heating value of the fuel * Emission

factor of the CO2 associated with the fuel.

Indirect emissions (Scope 2) are caused by the consumption of electricity purchased from the national grid. We took into account the following equation in order to calculate the indirect emissions of the aggregate operations:

Indirect aggregate emissions = Consumption of electricity purchased from the national grid of each country * CO2 emission factor of the national grid of each country

8 | CLIMATE CHANGE

Source of the CO2 emission factors for each type of fuel:“The Cement CO2 and Energy Protocol – CO2 and Energy Accounting and Reporting Standard for the Cement Industry” WBCSD – CSI (2011). Available at: http://www.wbcsdcement.org/index.php/key-issues/climate-protection/co-accounting-and-reporting-standard-for-the-cement-industry Source of the CO2 emission factors from the generation of electricity in each country, except Colombia: “CO2 emissions from fuel combustion – Highlights” International Energy Agency - IEA, 2013 edition. For Colombia, we used the average of the factors reported by the Mining Energy Planning Unit (UPME, for its Spanish acronym) in their monthly report on gene-ration variables and the Colombian electricity market. Available at: http://www.siel.gov.co/Inicio/Generaci%C3%B3n/Estad%C3%ADsticasyvariablesdegeneraci%C3%B3n/tabid/115/Default.aspx

COMMENTS

· DIRECT GHG EMISSIONS tCO2 1 Colombia: emissions increased due to the fact the one of the mines started having fuel combustion information available and thus started reporting it in 2017. 2 CCA: emissions decreased due to the transfer of a large part of the equipment and vehicles from the mine with the highest production of aggregates to a mine with a smaller production.

· INDIRECT GHG EMISSIONS tCO2 3 Colombia: Indirect emissions decreased due to the reduced CO2 emission factor of the Colombian national grid, which went from 19 to 135 kgCO2/MWh. 4 CCA: indirect emissions decreased due to the suspension of operations at the largest aggregate production mine.

DIRECT, INDIRECT AND TOTAL GHG EMISSIONS OF CEMENTOS ARGOS tCO2

2014 2015 2016 2017

Total direct emissions tCO2 8,626,983 9,073,027 8,186,365 8,167,887

Total Indirect emissions tCO2 657,574 336,482 342,271 436,634

Total Emissions tCO2 9,284,557 9,409,509 8,528,636 8,604,521

1 2 3 4 5 6 | appendix | 9

GRI [305-4] GHG EMISSIONS INTENSITY

2014 2015 2016 2017

CCA COL USA TOTAL CCA COL USA TOTAL CCA COL USA TOTAL

Intensity of the GHG emissions in cement production (kg CO2/t cementitious products)1 641 384 651 719 640 373 663 729 644 382 624 716 627

Intensity of the GHG emissions in the production of concrete (kg CO2/m3 concrete)2

6.54 13 11 14 13 14 11 4 6 14 12 14 13

Intensity of the GHG emissions in the production of aggregates (kgCO2/t product)3

0.55 NA 0.70 NA 0.70 2 1 NA 1 3 1 NA 1

Intensity of the GHG emissions in electricity generation (kg CO2/kWh)4

1,051 723 949 NA 940 752 854 NA 850 769 781 NA 781

COMMENTS

1 (102-48) Recalculation of direct CO2 emissions: The direct CO2 emissions of the cement operations of the three regional branches (Colombia, Central America & the Caribbean, and the United States) were recalculated for the years 2014, 2015 and 2016 in order to comply with the guideline established in the “CO2 and Energy Accounting and Reporting Standard for the Cement Industry – Cement CO2 and Energy Protocol” (WBCSD - CSI, 2011) in section 7.5 “Baselines, Acquisitions and Divestitures”, which specifies the process to be used for the recalculation of the CO2 emissions for the base year and the historical data. The criteria used to per-form the recalculation were as follows:

1. Structural changes were identified within the company, brought on specifically by the acquisition of cement assets in the Central America & Caribbean and the United States regions. Therefore, with this recalculation, the emissions generated by cement plants acquired by Argos that were in operation during 2014, 2015 and 2016 were added to the company’s CO2 inventory. 2. We determined that the data for the calculation variables 12 a-17a of the WBCSD-CSI Cement CO2 and Energy Protocol (2011) were made on a wet basis and were then corrected to a dry basis, as established by the protocol. 3. Some CO2 emission calculation variables were corrected for two cement plants in Colombia (Sogamoso and Yumbo) for the year 2014 based on the WBCSD-CSI Cement CO2 and Energy Protocol (2011).

1 Numerator: Direct gross emissions (corresponding to GRI 305-1) Denominator: Production of cementitious material Coverage: Cement operations in the Colombia, Caribbean & Central America, and United States regional branches.

2 Numerator: Direct emissions GRI 305 - 1 Denominator: Concrete production. Coverage: Concrete operations in the Colombia, Caribbean & Central America, and United States regional branches.

10 | CLIMATE CHANGE

3 Numerator: Direct emissions GRI 305 - 1 Denominator: Aggregate production Coverage: Aggregate operations in the Colombia, Caribbean & Central America, and United States regional branches.

4 Numerator: Direct emissions GRI 305 - 1 Denominator: Electricity production Coverage: On-site electricity generating operations in the Colombia, Caribbean & Central America, and United States regional branches.

[A-EC1] NET SPECIFIC CO2 EMISSIONS (KG/T CEMENTITIOUS MATERIAL)

Environmental Policy Indicator 2014 2015 2016 2017

Specific Net CO2 Emissions 633 628 632 618

Baseline year 2006

Year for which the goal is set 2025

Reduction goal of cement GHG emissions 544

Reduction compared to baseline year 2006 -16%

GRI [102-48] NOTE – RECALCULATION OF CO2EMISSIONS

The direct CO2 emissions of the cement operations of the three regional branches (Colombia, Central America & the Caribbean, and the United States) were recalculated for the years 2014, 2015 and 2016 in order to comply with the guideline established in the “CO2 and Energy Accounting and Reporting Standard for the Cement Industry – Cement CO2 and Energy Protocol” (WBCSD - CSI, 2011) in section 7.5 “Baselines, Acquisitions and Divestitures”, which specifies the process to be used for the recalculation of the CO2 emissions for the base year and the historical data. The criteria used to perform the recalculation were as follows:

1. Structural changes were identified within the company, brought on specifically by the acquisition of cement assets in the Central America & Caribbean and the United States regions. Therefore, with this recalculation, the emissions generated by cement plants acquired by Argos that were in operation during 2014, 2015 and 2016 were added to the company’s CO2 inventory.2. We determined that the data for the calculation variables 12 a-17a of the WBCSD-CSI Cement CO2 and Energy Protocol (2011) were made on a wet basis and were then corrected to a dry basis, as established by the protocol.3. Some CO2 emission calculation variables were corrected for two cement plants in Colombia (Sogamoso and Yumbo) for the year 2014 based on the WBCSD-CSI Cement CO2 and Energy Protocol (2011).

1 2 3 4 5 6 | appendix | 11

COMMENTS

For cement operations, there was a 2% reduction of the net specific CO2 emissions per ton of cementitious material. While the production of cementitious material increased by 1%, net CO2 emissions dropped by 1% due to a decreased specific heat consumption per ton of clinker (which corresponds to 2.1%) and to a 9-percen-tage point increase in the use of natural gas in the mix of kiln fuels.

This indicator was calculated using the methodology established by the Cement Sustainability Initiative (CSI) of the World Business Council for Sustainable Development (WBCSD): “The Cement CO2 and Energy Protocol – CO2 and Energy Accounting and Reporting Standard for the Cement Industry” (2011). The variable of the methodology used to calculate this indicator is the number 74.

Numerator: Net direct CO2 emissions (Total CO2 emissions excluding CO2 emissions from on-site power generation and the CO2 emissions generated by the consump-tion of alternative fuels). This corresponds to calculation variable 71 of “The Cement CO2 and Energy Protocol – CO2 and Energy Accounting and Reporting Standard for the Cement Industry”

Denominator: Production of cementitious material. This corresponds to calculation variable 21a of “The Cement CO2 and Energy Protocol – CO2 and Energy Accounting and Reporting Standard for the Cement Industry”

Coverage: Cement operations in the Colombia, Caribbean & Central America, and United States regional branches.

12 | CLIMATE CHANGE

GRI [305-3] OTHER INDIRECT GHG EMISSIONS (SCOPE 3)

Emission sourcesScope 3

Category Evaluation status 2014 2015 2016 2017

Percentage of emissions

calculated using data obtained from suppliers or value chain

partners

Standards, methodologies and assumptions in the

calculation, gases included in the calculation, as well as the

source of emission factors and GWP

Comments

Purchased goods and services

1 Relevant,

calculated3.538.365 3.394.391 3.006.946 2.701.706 0%

The calculation for this category was performed using Quantis Enterprise’s Quantis SUITE 2.0 software, which works based on the methodology of the GHG Protocol “Corporate Accounting and Reporting Standard” (Scope 3) “Corporate Value Chain” (Scope 3) World Business Council for Sustainable Development (WBCSD), World Resources Institute (WRI) (2011).Coverage: Cement, concrete, and aggregate operations in the Colombia, Caribbean & Central America, and United States regional branches.

Out of the 15 categories that make up Scope 3, Argos prioritized 5 categories as “Relevant”. The prioritization process was based on the results of the study carried out by Quantis for Argos titled “Calculation of Cementos Argos’ GHG Emissions from Priority Sources of Scope 3 Emissions” and on the guidelines set out in the Cement Sector Scope 3 GHG Accounting and Reporting Guidance developed by the Cement Sustainability Initiative (CSI). Among the 5 relevant categories is Category 1 (Purchased goods and services).

Capital goods 2 Not relevant NA NA NA NA NA NAThis category is not considered relevant to the company’s Scope 3 emissions.

Fuel and energy related activities

3 Relevant,

calculated

285.317 356.197

442.514

577.917

0%

The calculation for this category was performed using Quantis Enterprise’s Quantis SUITE 2.0 software, which works based on the methodology of the GHG Protocol “Corporate Accounting and Reporting Standard” (Scope 3) “Corporate Value Chain” (Scope 3) World Business Council for Sustainable Development (WBCSD), World Resources Institute (WRI) (2011).Coverage: Cement, concrete, and aggregate operations in the Colombia, Caribbean & Central America, and United States regional branches.

Out of the 15 categories that make up Scope 3, Argos prioritized 5 categories as “Relevant”. The prioritization process was based on the results of the study carried out by Quantis for Argos titled “Calculation of Cementos Argos’ GHG Emissions from Priority Sources of Scope 3 Emissions” and on the guidelines set out in the Cement Sector Scope 3 GHG Accounting and Reporting Guidance developed by the Cement Sustainability Initiative (CSI). Among the 5 relevant categories is Category 3 (Fuel and energy-related activities).

1 2 3 4 5 6 | appendix | 13

Upstream transportation and distribution

4 Relevant,

calculated66,565 202,228 195,717 193,865 35.3%

At the Colombia regional branch, information was collected from Logitrans, one of the most representative companies among transporters of raw materials and products in process. We also included information provided by the company Geodis.In order to calculate emissions of the other two regional branches, we used Quantis SUITE 2.0 software, which works based on the methodology of the GHG Protocol “Corporate Accounting and Reporting Standard” (Scope 3) “Corporate Value Chain” (Scope 3) World Business Council for Sustainable Development (WBCSD), World Resources Institute (WRI) (2011).Coverage: Cement, concrete, and aggregate operations in the Colombia, Caribbean & Central America, and United States regional branches.

Out of the 15 categories that make up Scope 3, Argos prioritized 5 categories as “Relevant”. The prioritization process was based on the results of the study carried out by Quantis for Argos titled “Calculation of Cementos Argos’ GHG Emissions from Priority Sources of Scope 3 Emissions” and on the guidelines set out in the Cement Sector Scope 3 GHG Accounting and Reporting Guidance developed by the Cement Sustainability Initiative (CSI). Among the 5 relevant categories is Category 4 (Upstream transportation and distribution of water).

Waste generated in operation

5 Not relevant NA NA NA NA NA NAThis category is not considered relevant to the company’s Scope 3 emissions.

Business travels 6 Relevant,

calculated1,274 5,128 4,820 2,596 81%

For the Colombia and United States regional branches, we collected information from the travel agencies that operate the logistics of corporate travel. In order to calculate emissions of the Caribbean and Central America regional branch, we used Quantis SUITE 2.0 software, which works based on the methodology of the GHG Protocol “Corporate Accounting and Reporting Standard” (Scope 3) “Corporate Value Chain” (Scope 3) World Business Council for Sustainable Development (WBCSD), World Resources Institute (WRI) (2011).Coverage: Cement, concrete, and aggregate operations in the Colombia, Caribbean & Central America, and United States regional branches

Out of the 15 categories that make up Scope 3, Argos prioritized 5 categories as “Relevant”. The prioritization process was based on the results of the study carried out by Quantis for Argos titled “Calculation of Cementos Argos’ GHG Emissions from Priority Sources of Scope 3 Emissions” and on the guidelines set out in the Cement Sector Scope 3 GHG Accounting and Reporting Guidance developed by the Cement Sustainability Initiative (CSI). Business travel (Category 6) is found among the 5 relevant categories.

14 | CLIMATE CHANGE

Employee commuting

7 Not relevant NA NA NA NA NA NAThis category is not considered relevant to the company’s Scope 3 emissions

Upstream leassed assets

8 Not relevant NA NA NA NA NA NA This category is not considered relevant to the company’s Scope 3 emissions.

Total Upstream Emissions tCO2e Scope 3

3,891,521 3,957,945

3,649,996

3,476,085

Downstream transportation and distribution

9 Relevant,

calculated33,237 87,932 93,854 95,606 28.0%

At the Colombia regional branch, information was collected from Transportempo and Imbocar, which are two of the most representative companies among transporters of finished products.In order to calculate emissions of the other two regional branches, we used Quantis SUITE 2.0 software, which works based on the methodology of the GHG Protocol “Corporate Accounting and Reporting Standard” (Scope 3) “Corporate Value Chain” (Scope 3) World Business Council for Sustainable Development (WBCSD), World Resources Institute (WRI) (2011).Coverage: Cement, concrete, and aggregate operations in the Colombia, Caribbean & Central America, and United States regional branches.

Out of the 15 categories that make up Scope 3, Argos prioritized 5 categories as “Relevant”. The prioritization process was based on the results of the study carried out by Quantis for Argos titled “Calculation of Cementos Argos’ GHG Emissions from Priority Sources of Scope 3 Emissions” and on the guidelines set out in the Cement Sector Scope 3 GHG Accounting and Reporting Guidance developed by the Cement Sustainability Initiative (CSI). Among the 5 relevant categories is Category 9 (Downstream transportation and distribution of water).

Processing of sold products

10 Not relevant NA NA NA NA NA NAThis category is not considered relevant to the company’s Scope 3 emissions.

Use of sold product

11 Not relevant NA NA NA NA NA NAThis category is not considered relevant to the company’s Scope 3 emissions.

End of life treatment of sold products

12 Not relevant NA NA NA NA NA NAThis category is not considered relevant to the company’s Scope 3 emissions.

Downstream leased assets

13 Not relevant NA NA NA NA NA NAThis category is not considered relevant to the company’s Scope 3 emissions.

Franchises 14 Not relevant NA NA NA NA NA NAThis category is not considered relevant to the company’s Scope 3 emissions.

Investments 15 Not relevant NA NA NA NA NA NAThis category is not considered relevant to the company’s Scope 3 emissions.

1 2 3 4 5 6 | appendix | 15

Total Downstream emissions tCO2e Scope 3

33,237 87,932 93,854 95,606

Total Emissions of Greenhouse Gases tCO2e Scope 3

3,924,758 4,045,877 3,743,850 3,571,690

GRI [305-5] REDUCTION OF GHG EMISSIONS

Initiative

Base year for the

calculation of the

reduction

Reduction of emissions

(t CO2) up to 2017

Indicate whether reduced emissions

correspond to Scope 1, 2 and/or 3

Gases included

in the calculation

Description of the initiative

Colombia - Cartagena Plant: Plant Efficiency Opportunities Plan

2016 340 Scope 2 CO2 The plant’s duty cycle increased by 2 percentage points by reducing the consumption of heat and electricity. A program was implemented to increase admixtures in cement grinding. This helped to reduce the consumption of electricity by 2 kWh/t.

Colombia - Rioclaro Plant: Stabilization of the new MC5 grinding station and improvement plans for admixtures.

2016 651 Scope 2 CO2 Improved performance of the vertical mill and implementation of a program to increase admixtures in cement grinding. This helped to reduce the consumption of electricity by 3 kWh/t.

Colombia - Sogamoso Plant: Optimization of the use of correctors in raw meal.

2016 1,173 Scope 1 CO2 The use of correctors (ashes) improved the consumption of heat by saving 5%.

Colombia - Sogamoso Plant: Optimization of the use of admixtures in cement.

2016 275 Scope 2 CO2 A program was implemented to increase admixtures in cement grinding. This helped to reduce the consumption of electricity by 3 kWh/t.

CCA - Piedras Azules Plant (Honduras): Product quality monitoring program

2016 1,331 Scope 2 CO2 We worked on a clinker quality monitoring scheme that helped reduce the consumption of electricity, which saved 4% of electricity consumption.

USA - Roberta Plant: Energy Management Plan

2016 828 Scope 1 CO2 Reduced consumption of heat due to the implementation of an energy management plan. Three per cent savings in the consumption of fuel, focused on controlling the kiln operation for a high duty cycle. Energy Star certified.

16 | CLIMATE CHANGE

USA - Roberta Plant: Energy Management Plan

2016 9,455 Scope 2 CO2 Reduced consumption of electricity due to the implementation of an energy management plan. Eleven per cent savings in the consumption of electricity, focused on managing grinding operations and measurements. Energy Star certified.

USA - Harleyville Plant: PIP2017 Energy Management Plan

2016 346 Scope 1 CO2 Reduced consumption of heat due to the implementation of an energy management plan. Three percent savings in the consumption of fuel.

USA - Harleyville Plant: PIP2017 Energy Management Plan

2016 7,436 Scope 2 CO2 Reduced consumption of electricity due to the implementation of an energy management plan. Sixteen percent savings in the consumption of electricity.

USA - Roberta Plant: Increased use of alternative fuels as substitutes for traditional fuels.

2016 494 Scope 1 CO2

Increased percentage of substitution of traditional fuels (coal and natural gas) for alternative fuels, such as mixed industrial waste, tires and biomass. Mixed fuels went from 17.5% to 20.9% in the clinker kiln.The “CO2 and Energy Accounting and Reporting Standard for the Cement Industry – The Cement CO2 and Energy Protocol” (WBCSD – CSI, 2011) was used for this calculation

Colombia - Rioclaro Plant: Increased use of alternative fuels as substitutes for traditional fuels.

2016 4,471 Scope 1 CO2

Increased percentage of substitution of traditional fuels (coal and fuel oil for alternative fuels, such as tires. Mixed fuels went from 3.0% to 4.9% in the clinker kiln.The “CO2 and Energy Accounting and Reporting Standard for the Cement Industry – The Cement CO2 and Energy Protocol” (WBCSD – CSI, 2011) was used for this calculation

Colombia - Cairo Plant: Reduction of the clinker/cement factor

2016 375 Scope 1 CO2 Reduction of the clinker/cement factor by 0.7 percentage points.The “CO2 and Energy Accounting and Reporting Standard for the Cement Industry – The Cement CO2 and Energy Protocol” (WBCSD – CSI, 2011) was used for this calculation.

Colombia - Rioclaro Plant: Reduction of the clinker/cement factor

2016 26,904 Scope 1 CO2 Reduction of the clinker/cement factor by 1.0 percentage points.The “CO2 and Energy Accounting and Reporting Standard for the Cement Industry – The Cement CO2 and Energy Protocol” (WBCSD – CSI, 2011) was used for this calculation.

Colombia - Sogamoso Plant: Reduction of the clinker/cement factor

2016 7,048 Scope 1 CO2 Reduction of the clinker/cement factor by 1.3 percentage points.The “CO2 and Energy Accounting and Reporting Standard for the Cement Industry – The Cement CO2 and Energy Protocol” (WBCSD – CSI, 2011) was used for this calculation

Colombia - Toluviejo Plant: Reduction of the clinker/cement factor

2016 17,821 Scope 1 CO2 Reduction of the clinker/cement factor by 1.5 percentage points.The “CO2 and Energy Accounting and Reporting Standard for the Cement Industry – The Cement CO2 and Energy Protocol” (WBCSD – CSI, 2011) was used for this calculation.

Total 78,948

1 2 3 4 5 6 | appendix | 17

GRI [201-2] FINANCIAL IMPLICATIONS AND OTHER RISKS AND OPPORTUNITIES DERIVED FROM CLIMATE CHANGE

RISKS DERIVED FROM CLIMATE CHANGE

Driver Description Potential impact

Time frame

Direct/indirect

Likelihood of Occurrence Magnitude

Estimated Financial

Implications

Management Method Management Costs

Changes to the applicable standards and regulations (international agreements)

The COP21 conference recorded the commitment of countries to keeping the rise in global temperature below 2° Celsius compared to the pre-industrial age. Locally, this was reflected in the targets each country’s set and committed to for their nationally determined contributions (NDCs). The implementation of these targets will involve taking measures for industries with an intensive use of fuels, energy and CO2 emissions, such as the cement industry. Regarding Argos’ areas of operations, the USA committed to decreasing absolute emissions by 26 % to 28 %, while Colombia committed to decreasing them by 20% by the year 2030 with a Business-As-Usual (BAU) scenario. Similarly, several countries in the Caribbean and Central America committed to reducing their CO2 emissions, such as Honduras, which committed to 15% under the BAU, by 2030.The COP21 commitment is that these targets should be increasingly ambitious, since current commitments will not keep the temperature within the expected range.The main implications for Argos operations are political measures, the implementation of economic instruments (taxes or CO2 market) and incentives, as well as mandatory reporting and verification systems.

Loss or decrease of income

1-3 years Direct Very Likely Medium-High

It is expected that the agreement reached at the COP21 will result in the implementation of some type of economic instrument over the next few years, whether that is a carbon market or taxes on emissions, for the purpose of reducing CO2 emissions in the regions where Argos operates.Signs by the governments of the countries where Argos operates indicate that the cost to the company for the implementation of this type of instruments could be within a wide range between USD 2 and USD 30/ton CO2.

Monitoring and mitigation of this risk are included in the company’s risk management system. Likewise, Argos’ Environmental Policy and Energy Policy include lines of action that enable us to monitor and implement actions to reduce GHG emissions, such as: CO2 inventory (Scope 1, Scope 2, and Scope 3), CO3 reduction target, energy efficiency, use of alternative fuels, reduction of the clinker/cement factor, and the increased efficiency of the value chain, among others.

In 2017, Argos finished and developed new projects and initiatives that involved investments of approximately USD $11.2 million. Some of these projects and initiatives include the following:- Continuation of the production management system focused on finding the best operational practices, which has led to improvements in process efficiency and a lower consumption of energy.- Optimization of processes through thermal and electric efficiency projects within the framework of the energy task list and other initiatives.- Increased use of alternative raw materials in cement and concrete operations.- Reduced clinker content in all types of cement.- Increased substitution of traditional fuels with alternative fuels.- Energy Star certification for the Newberry and Roberta plants in the USA.

18 | CLIMATE CHANGE

Changes in applicable regulations and standards (CO2 emissions market).

In 2015, the company classified the risks inherent to climate change, which enabled it to identify the CO2 market schemes as the economic instrument that will most likely be implemented over the next few years in the locations where Argos operates.The highest risks have been identified for the USA and Colombia, which represents an exposure to this risk for most of the company’s cement operations

Loss or decrease of income

3-6 years Direct Very Likely Medium-High

There is currently a high level of uncertainty about the operation of the possible CO2 market schemes that could be implemented in the regions where Argos operates. The most unfavorable scenario, based on currently available information, involves a CO2 market in which the governments of the USA (depending on its withdrawal from the Paris Agreement) and Colombia impose a reduction target on the cement industry that matches each country’s target, which is 26% and 20%, respectively. Argos’ analyses show that a cap-and-trade scheme could have an impact on operating costs between USD 4.3 million and USD 18.8 million.

Monitoring and mitigation of this risk are included in the company’s risk management system. Likewise, Argos’ Environmental Policy and Energy Policy include lines of action that enable us to monitor and implement actions to reduce GHG emissions, such as: CO2 inventory (Scope 1, Scope 2, and Scope 3), CO3 reduction target, energy efficiency, use of alternative fuels, reduction of the clinker/cement factor, and the increased efficiency of the value chain, among others

In 2017, Argos finished and developed new projects and initiatives that involved investments of approximately USD $11.2 million. Some of these projects and initiatives include the following:- Continuation of the production management system focused on finding the best operational practices, which has led to improvements in process efficiency and a lower consumption of energy.- Optimization of processes through thermal and electric efficiency projects within the framework of the energy task list and other initiatives.- Increased use of alternative raw materials in cement and concrete operations.- Reduced clinker content in all types of cement.- Increased substitution of traditional fuels with alternative fuels.- Energy Star certification for the Newberry and Roberta plants in the USA.

Changes to the applicable standards and regulations (tax on carbon)

Although it is still an instrument that will likely be implemented in the geographical areas where Argos operates, it is less politically accepted than schemes related to the CO2 emissions market. However, this economic instrument is still being studied by several government of countries where Argos operates, so it may become a reality in the medium term.In 2016, there was a tax reform in Colombia that approved the carbon tax on liquid fuels and natural gas. Because this taxes fuel and not CO2 emissions, the company did not change the evaluation of this risk.

Loss or decrease of income

> 6 years Direct Very Likely Medium-High

Assuming a tax on GHG emissions due to the use of fuels, the impact would be between USD 2.6 million and USD 8.6 million.

Monitoring and mitigation of this risk are included in the company’s risk management system. Likewise, Argos’ Environmental Policy and Energy Policy include lines of action that enable us to monitor and implement actions to reduce GHG emissions, such as: CO2 inventory (Scope 1, Scope 2, and Scope 3), CO3 reduction target, energy efficiency, use of alternative fuels, reduction of the clinker/cement factor, and the increased efficiency of the value chain, among others.

In 2017, Argos finished and developed new projects and initiatives that involved investments of approximately USD $11.2 million. Some of these projects and initiatives include the following:- Continuation of the production management system focused on finding the best operational practices, which has led to improvements in process efficiency and a lower consumption of energy.- Optimization of processes through thermal and electric efficiency projects within the framework of the energy task list and other initiatives.- Increased use of alternative raw materials in cement and concrete operations.- Reduced clinker content in all types of cement.- Increased substitution of traditional fuels with alternative fuels.- Energy Star certification for the Newberry and Roberta plants in the USA.

Changes in applicable regulations and standards (mandatory CO2 emissions report).

Because the Paris Agreement involves a review of each country’s NDC commitments every 5 years, mandatory reporting is almost a reality. It is the only way for each country to identify the progress it has made towards its target.

Damage to the company’s image

1-3 years Direct Very Likely Medium-High

There is no financial implication associated with this risk given that Argos currently reports its CO2 emissions voluntarily. A good CO2 emission performance prevents any negative financial implications for the company.

Monitoring and mitigation of this risk are included in the company’s risk management system. Likewise, Argos’ Environmental Policy and Energy Policy include lines of action that enable us to monitor and implement actions to reduce GHG emissions, such as: CO2 inventory (Scope 1, Scope 2, and Scope 3), CO2 reduction target, energy efficiency, use of alternative fuels, reduction of the clinker/cement factor, and the increased efficiency of the value chain, among others.

The management cost associated with this risk is already included in the budget and it corresponds to the environmental team in the corporate structure.

1 2 3 4 5 6 | appendix | 19

RISKS DERIVED FROM CHANGES TO PHYSICAL CLIMATE PARAMETERS

Driver Description Potential impact

Time frame

Direct/indirect

Likelihood of Occurrence Magnitude

Estimated Financial

Implications

Management Method Management Costs

Effects on operations caused by natural events

Monitoring and mitigating risks derived from changes in climate parameters are included in Argos’ strategic risk management work. These risks include the effects on operations due to different climate events. In 2015, Argos started a risk analysis process related to natural disasters, which include hurricanes, floods, and landslides, among others. This analysis has enabled the company to identify the impact of these natural events on the efficiency of the supply chain, which is a strategic risk for the company.

Reduction/interruption of production capacity

< 1 year Direct Likely Medium-High

The natural risk disaster analysis developed in 2015 has allowed the company to identify the financial implications derived from impacts on logistical operations due to an interruption to the production capacity of the main cement plants in Colombia. The impacts were estimated for intervals of 6, 12 and 18 months.We have determined that revenues would decrease somewhere between USD 6 million and USD 27 million

Monitoring and mitigation of this risk are included in the company’s risk management system. The potential impacts that were identified have enabled Argos to implement actions aimed at optimizing the logistics chain in order to reduce the magnitude of the impact. The Supply Chain Excellence department is responsible for modeling scenarios and proposing actions to reduce the exposure to risks

The cost of managing this risk is associated with the adaptation measures that must be implemented for each operation.

RISKS DERIVED FROM OTHER CLIMATE-RELATED VARIABLES

Driver Description Potential impact

Time frame

Direct/indirect

Likelihood of Occurrence Magnitude

Estimated Financial

Implications

Management Method Management Costs

Serious damage to the company’s image

Argos considers that a negative effect to its image and reputations is a risk that could materialize based on any of the other strategic risks that have been identified.It is clear that under the current global context, industries with intensive CO2 emissions must demonstrate their commitment by adequately managing the risks derived from climate change and by reducing their CO2 emissions.It is also evident that public opinion is ever less accepting of CO2 emission intensive processes, which is why a management and performance that falls below the expectations of stakeholders would very likely result in events that damage the company’s reputation.

Damage to the company’s image

1 - 3 years Direct Very Likely High

It has been established that reputational risk can generate significant impacts for the company, including: negative impact on the perception of shareholders and other stakeholders, financial impacts, impact on sales and on the market value of the company. However, the magnitude of the financial impact these effects would have has not been estimated.

Monitoring and mitigation of this risk are included in the company’s risk management system. Additionally, the following mitigation measures have been considered: Crisis Management Manual, which takes into account the possible scenarios associated with events that affect operations and Sustainability Talks with stakeholders.

The management cost associated with this risk has not been estimated.

Risks associated with the availability and variability of the cost of energy resources for our operations and their efficient use.

Risks associated with the availability, reliability and variability of energy resources due to new regulations for the energy industry that imply reduced energy prices, effects on the offer of fossil fuels or a higher demand and competition for sources of alternative fuels.

Loss or decrease of income

> 6 years Direct Relatively Certain Medium-High

Long-term projections indicate that by 2019 the price of electricity will increase as a consequence of the implementation of the clean energy plan in the USA. The price of electricity could rise by more than 10%.

Monitoring and mitigation of this risk are included in the company’s risk management system. The company’s Strategic Resources department is responsible for taking actions to mitigate this risk, which is also included in the company’s Energy Policy.

The magnitude of the management cost is represented by the team dedicated to managing this variable.

20 | CLIMATE CHANGE

OPPORTUNITIES DERIVED FROM CHANGES TO REGULATIONS

Driver Description Potential impact

Time frame

Direct/indirect

Likelihood of Occurrence Magnitude

Estimated Financial

ImplicationsManagement Method Management

Costs

Changes to the applicable standards and regulations (international agreements

Although there are risks associated with climate change (such as risks generated by changes to GHG regulations), it is possible to identify that risk factors are also opportunities that allow the company to increase its operational efficiency, reduce operating costs, and offer value-added products to its customers.In order to fulfill the COP21 agenda, the governments of the countries where Argos operates are apparently taking measures to facilitate the transition to a low-carbon economy. In the cement and concrete industries, these measures to reduce CO2 intensity will leverage opportunities such as the increased use of alternative materials to replace the main raw materials, innovation of low-carbon products and services, substitution of fossil fuels by alternative fuels, and increased energy (heat and electricity) efficiency, among others.

Reduction of operating costs

1-3 years Direct Very Likely Low-MediumThe financial implications of this opportunity have not been estimated.

Argos has identified opportunity factors with the potential to generate significant changes in its commercial operations. The most important include the following: Improvement of the energy efficiency of the cement manufacturing process; expansion of the supply, availability, and use of high-quality alternative fuels and raw materials; reduction of the clinker content in cement, and the development of new low-CO2 products, services, and applications. Argos’ corporate structure includes departments that are responsible for managing issues related to each of these identified opportunities. They are as follows: Strategic Resources Team, Alternative Resources, R&D, and Environmental Management.These identified opportunities have enabled Argos to implement initiatives to take full advantage of the opportunities derived from issues related to climate change regulations, even before regulatory measures are taken

The management cost of this opportunity is budgeted every year and it depends on the initiatives and projects that will be developed.

Changes in applicable regulations and standards (CO2 emissions market).

This type of economic instrument favor companies with the best performance in terms of CO2 emissions as well as those that can reduce their emissions at a lower cost. Argos has identified this opportunity factor that has the potential to generate significant changes in its commercial operations in terms of revenues or reduction of expenses. The most important factors include the following: Improvement of the energy efficiency of the cement manufacturing process; expansion of the supply, availability, and use of high-quality alternative fuels and raw materials; reduction of the clinker content in cement, and the development of new low-CO2 products, services, and applications

Reduction of operating costs

3-6 years Direct Very Likely Low-Medium

The initiatives and projects related to increasing the use of alternative materials in cement and concrete, substituting traditional fossil fuels for alternative fuels, optimizing the consumption of electricity and reducing the consumption of heat have a positive impact on the operating costs of the company.

Argos has identified opportunity factors with the potential to generate significant changes in its commercial operations. The most important include the following: Improvement of the energy efficiency of the cement manufacturing process; expansion of the supply, availability, and use of high-quality alternative fuels and raw materials; reduction of the clinker content in cement, and the development of new low-CO2 products, services, and applications. Argos’ corporate structure includes departments that are responsible for managing issues related to each of these identified opportunities. They are as follows: Strategic Resources Team, Alternative Resources, R&D, and Environmental Management. Through its Energy Policy, Argos has established specific targets to reduce the consumption of heat and electricity in order to drive the company’s competitiveness and minimize risks (it is expected that by 2025 heat consumption will be reduced by 10% and electricity consumption will be reduced by 15%, taking 2012 as the base year). The Environmental Policy has also established targets to increase the use of raw materials and alternative fuels (see chapter on Circular Economy).Additionally, Argos’ innovation strategy seeks to turn innovation into a source of income and savings, and has established the goal of increasing the company’s revenues by 20% through innovation products and services, as well as new channels and businesses.

The management cost of this opportunity is budgeted every year and it depends on the initiatives and projects that will be developed.

1 2 3 4 5 6 | appendix | 21

Changes to the applicable standards and regulations (tax on carbon)

This type of economic instrument favor companies with the best performance in terms of CO2 emissions as well as those that can reduce their emissions at a lower cost. Argos has identified this opportunity factor that has the potential to generate significant changes in its commercial operations in terms of revenues or reduction of expenses. The most important factors include the following: Improvement of the energy efficiency of the cement manufacturing process; expansion of the supply, availability, and use of high-quality alternative fuels and raw materials; reduction of the clinker content in cement, and the development of new low-CO2 products, services, and applications.

Reduction of operating costs

1-3 years Direct Very Likely Low-Medium

The initiatives and projects related to increasing the use of alternative materials in cement and concrete, substituting traditional fossil fuels for alternative fuels, optimizing the consumption of electricity and reducing the consumption of heat have a positive impact on the operating costs of the company

Argos has identified opportunity factors with the potential to generate significant changes in its commercial operations. The most important include the following: Improvement of the energy efficiency of the cement manufacturing process; expansion of the supply, availability, and use of high-quality alternative fuels and raw materials; reduction of the clinker content in cement, and the development of new low-CO2 products, services, and applications. Argos’ corporate structure includes departments that are responsible for managing issues related to each of these identified opportunities. They are as follows: Strategic Resources Team, Alternative Resources, R&D, and Environmental Management. Through its Energy Policy, Argos has established specific targets to reduce the consumption of heat and electricity in order to drive the company’s competitiveness and minimize risks (it is expected that by 2025 heat consumption will be reduced by 10% and electricity consumption will be reduced by 15%, taking 2012 as the base year). The Environmental Policy has also established targets to increase the use of raw materials and alternative fuels (see chapter on Circular Economy).Additionally, Argos’ innovation strategy seeks to turn innovation into a source of income and savings, and has established the goal of increasing the company’s revenues by 20% through innovation products and services, as well as new channels and businesses.

The management cost of this opportunity is budgeted every year and it depends on the initiatives and projects that will be developed

OPPORTUNITIES DERIVED FROM CHANGES TO PHYSICAL CLIMATE PARAMETERS

Driver Description Potential impact

Time frame

Direct/indirect

Likelihood of Occurrence Magnitude

Estimated Financial

Implications

Management Method Management Costs

Changes to physical climate parameters (droughts and extreme rainfall)

The consequences of climate change include more intense rainfall events caused by different factors. In this regard, the areas where Argos operates must develop resistant infrastructures that will allow them to adapt to the new climate conditions.Concrete will be a fundamental element in the development of these resilient structures.

Higher demand for existing products/services

3 - 6 years Direct Very Likely Low-Medium

Due to the fact that national adaptation plans in the areas where Argos operates are still under development, the financial implications of this opportunity have not been estimated

Management methods include: market monitoring, benchmarking with other companies in the industry, and market intelligence to identify business opportunities for Argos products. The main approach is to improve the capacity to satisfy new market needs (products and services) related to climate change and to develop them in every region where Argos is located.

The management cost of this opportunity is budgeted every year and it depends on the initiatives and projects that will be developed.

22 | CLIMATE CHANGE

OPPORTUNITIES DERIVED FROM OTHER CLIMATE-RELATED VARIABLES

Driver Descripción Impacto potencial

Marco de tiempo

Directo / Indirecto

Probabilidad de

ocurrenciaMagnitud

Implicaciones financieras estimadas

Método de gestión Costos de la gestión

Changes in consumer behavior

Other opportunities associated with climate change are related to changes in consumer behavior, which implies that current and potential customers will demand more products with better environmental performance and products with environmental statements or that allow them to obtain sustainable construction certifications.

Higher demand for existing products/services

1 - 3 years Direct Very Likely Medium

The financial implications of changes in consumer behavior due to the climate change variable have not been estimated.

Management methods include: market monitoring, benchmarking with other companies in the industry, and market intelligence to identify business opportunities for Argos products. The main approach is to improve the capacity to satisfy new market needs (products and services) related to climate change and to develop them in every region where Argos is located

The management cost of this opportunity is budgeted every year and it depends on the initiatives and projects that will be developed.

Reputation

Issues related to climate change have become an important point to the public, shareholders, and the corporate agenda. In terms of climate change, management transparency and alignment with world-class practices has become an opportunity to avoid any type of negative impact to the company’s reputation and image

Improvement to the reputation and image of the company

< 1 year Direct Relatively Certain Medium-High

The financial implications of an improved reputation due to a positive perception of the company’s climate management work have not been estimated.

At Argos, we have a reputation management model based on the identification of those responsible for maintaining relationships with the company’s stakeholders. Some of the strategies in the model include:- Media management.- Sustainability talks with stakeholders.- Reputation measurements MERCO

The management cost of this opportunity is budgeted every year and it depends on the initiatives and projects that will be developed.

1 2 3 4 5 6 | appendix | 23