Climate change strategy

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Climate Change Strategy

(103-1) Grupo Argos highlights the importance of natural resources for the operation of its subsidiaries and recognizes the risks and opportunities arising from climate change and its effects on business strategy.

(102-11) Aware of the above, it aims to integrate activities with a focus on adaptation to the effects of climate change in all its businesses, as well as prevention, mitigation and compensation of the impacts they generate.

(103-2) To ensure corporate commitment to the effects of climate change, Grupo Argos has steering mechanisms from the Sustainability Committee, in which all its subsidiaries participate. Additionally, these effects are included in the Risk Matrix presented in the risk management chapter and in the Appendices, which details the impacts and mitigation plans of the strategic risks.

(103-2/103-3) Emissions of Greenhouse Gases – GHG

Grupo Argos recognizes that the operations of its subsidiaries are intensive in GHG emissions. For this reason it is promoting the measurement of the carbon footprint as a first step to formulate reduction plans and initiatives that contribute to mitigate the impact generated.

Grupo Argos

In 2016, an environmental goal was established for the conglomerate: reduce direct CO2 emissions by 20% per million Colombian pesos in revenues by 2025, using 2015 as base year.

Cement

Climate change is one of the pillars of Argos’ environmental policy, which aims to reduce CO2 emissions by 35% per ton of cement by 2025. Likewise, Argos has a climate strategy that allows it to mitigate the risks arising from climate change, while generating new opportunities through innovation in processes, products and solutions. This increases the operational efficiency and reduces costs.

Highlights of the 2016 period:

  • The specific net emissions in 2016 were 600 kg CO2 per ton of cementing material, equivalent to a reduction of 29% over the base year (2006).
  • Formulation of emission reduction plans for the year 2025 for the regions of Colombia, the Caribbean and Central America, including annual reduction targets and activities required to achieve this objective.
  • Reduction of 102,346 tons of CO2 with the implementation of different initiatives in the three regions where the business operates.
  • Establishment of an agreement with CarbonCure Technologies, whose purpose is to use the CO2 captured to improve resistance of some mixtures of concrete and therefore contribute to the reduction of CO2 emissions. Argos was the first company in the United States offer its customers a product with recycled CO2 without sacrificing its high quality.
  • Reduction of around 564 million MJ (megajoules) as part of the implementation of projects established in the energy policy roadmap.
  • Replacement of 6.8% in caloric consumption from fossil fuels by alternative fuels.
Energy

In 2016, as part of its environmental policy, Celsia formulated commitments on climate change, which include, among others, the diversification of the generation matrix by promoting alternative non-conventional and low carbon energies, improved operational efficiency and appropriate management of emissions. To ratify its commitment, Celsia has proposed reducing the intensity of GHG emissions associated with the generation of energy by 25% by the year 2025, which implies limiting growth in coal-fired power plants and increasing wind, solar and hydraulics power generation in the company.

As a result of the management carried out in 2016, the following is highlighted:

  • Start of the first solar project, Celsia Solar Yumbo. This is a 9.9 MW project, consisting of 35,000 solar panels on an 18-hectare site in the municipality of Yumbo, Valle del Cauca (South West of Colombia), which will generate approximately 16 GWh per year, which is equivalent to the monthly basic consumption of energy of eight thousand houses. The solar farm starts construction in March 2017 and will start operating in the third quarter of that year.
  • Measurement of the first GHG inventory for operations in Central America.
  • Improvements in the thermal efficiency of the Flores IV cycle, through the chemical cleaning of the condenser, which recovered 5.9% of efficiency, which translates into a reduction of the Heat Rate of 1.7%.
  • Installation of 180 photovoltaic solar systems in the transmission and distribution business for the power supply of the reclosers (power network protection equipment). These systems are replacing 214 kWh / year of conventional electric power by solar energy.

Concessions

Odinsa seeks to reduce consumption and promote a culture of savings; so during 2016, in addition to its own initiatives, the company added efforts to the Colombian National Government’s campaign “Apagar paga” (“Turn off payment”). As a result of the initiatives carried out, there was an approximate reduction of 13.9% in the consumption of electric power at Bogotá’s headquarters.

Likewise, it identified the main operational risks, within which are the risks derived from climate change. One of the main risks identified is the possible involvement of the air operation and the roads due to adverse weather conditions. The business will work to reduce and mitigate the risks and thus contribute to the fluidity of operations by carrying out maintenance work and working hand in hand with authorities.

Ports

A pilot project started in 2016 to switch from conventional lighting to LED lighting in Barranquilla and Cartagena, is now expected to achieve energy savings of 7% and 47%, respectively. Also, the change in hydraulic bands opened by closed chain conveyors was carried out, from using a 30 HP motor to one of 7.5 HP, which reduces energy consumption and particulate matter.


The figures for Urban Development in 2016 are included in those of Grupo Argos, since this operation was absorbed into the parent company.

For more information on the management of emissions by businesses:
Cement, click here.
Energy, click here.

(103-2/103-3) Water Protection

The availability of natural resources, such as water, constitutes an indirect strategic risk for Grupo Argos through its subsidiaries, since these depend on the water resource to guarantee the viability of the operation in the long term. The parent company has the Grupo Argos Foundation, whose intervention model is based on the articulation of public and private resources for environmental initiatives, which foster the development of projects for water resources protection and reforestation of forests as initiatives for adaptation to climate change.

Grupo Argos

Among the main initiatives developed in 2016 are:

  • City of Medellin Water fund “Cuenca Verde”: Through this fund, 1,730 hectares of watersheds were impacted, 87 conservation agreements with farmers in the area were signed, 117 water sources were protected and 117 ha of forests were restored. In addition, monitoring of actions already implemented was initiated, where changes in the quality and quantity of water resources could be evidenced, as well as the improvement in the quality of life of impacted communities, based on physicochemical analyses, landscape connectivity and man’s relationship with the resource. For more information on the project see: www.cuencaverde.org.
  • Creation of the Cartagena Water Fund: which seeks to protect the Canal del Dique and the lagoon system, areas that supply drinking water to the city of Cartagena. In 2016 the strategic intervention plan was carried out, which includes the following lines of work:

    • Sustainable production systems and land use.

    • Strengthening of water governance with stakeholders in the territory.

    • Area restoration and conservation.

    • Basic sanitation and good environmental practices.

    • Education for sustainable development.

  • Reforestation and restoration of forests: 312,813 species of native and forest trees were planted with the support of Tekia, a company 100% owned by the Foundation. The sowing and planting of these tree individuals contributes to a potential capture of 771,000 tons of CO2. Sowings were made in different areas of the country in order to protect biodiversity and water resources. Native species and forest plantations produce countless environmental services, which benefit populations and may help regulate water resources, food, shade, purer air and associated biodiversity that contributes to our natural heritage.

  • Carrera Verde: This initiative seeks to mobilize the population of the most contaminated cities of the country, Medellín and Bogotá, to generate environmental awareness and the planting of native species in areas destined to conservation in perpetuity, under the ecological restoration plan. Three trees are planted on each corridor. In 2016 the second version of the Carrera Verde in Bogotá was carried out, which resulted in the planting of 18 thousand trees with the contribution of land corridors, and five thousand more with the contribution by the Botanical Garden of Bogota of native species in conservation areas with a capture potential of 5,520 tons of CO2. Positive impacts of the initiative are identified as: capture of CO2, increased connectivity and positive perception by the community.

Energy

Among the main initiatives developed in 2016 were:

  • Execution of the ReverdeC Project, a voluntary initiative of the organization, through which 562,775 new trees were planted in the Valle del Cauca (Colombia), contributing to the restoration of 12 basins in 16 municipalities and the protection of more than 785 hectares with 83.1 km of isolation.
  • Development of the agreement with the Farallones Natural National Parks (NNP) of Cali and Las Hermosas, through which Celsia has carried out the inventory and monitoring of water sources and the isolation of 10 water sources that supply the power stations and some community aqueducts, as well as the isolation of 5 kilometers where 20 hectares of the Elsa gorge that supply the Bajo Anchicayá reservoir are protected.

  • Alliance with the Fundación Fondo Agua por la Vida y la Sostenibilidad en el Valle del Cauca, (Water for Life and Sustainability in the Valle of Cauca Foundation Fund) through which isolations are made for the protection of native forests, establishment of agroecological and silvopastoral systems, strengthening of rural aqueducts and planting of 15,000 native trees.

  • Forest isolation of 20.1 km of areas surrounding the Cucuana and Amaime hydroelectric power stations, 12 hectares of livestock reconversion and the protection of six water sources that supply community aqueducts.

  • Planting of 12,000 native trees in the vicinity of the Dos Mares hydroelectric power station in Panama, thus contributing to the conservation of the Chiriquí River basin.

  • Linking and contribution to the Rios Tulua y Morales Foundation, an entity that carries out programs for the conservation and protection of these watersheds through reforestation, isolation and conservation of strategic areas for water resources.

For more information on water protection management carried out by the Energy business, click here.

To consult other relevant indicators of Grupo Argos’ businesses, see the Appendices to this report./p>

(103-2)

  • Consolidate the emission reduction plan, which will define a route to quantify the contribution and role of each business in meeting the emissions target of the Business Group.
  • Continue to implement restoration actions in watershed margins, conservation agreements with communities, sanitation and education and awareness actions, within the framework of the Medellín City Water Fund project, “Cuenca Verde”.
  • Carry out the measurement of the carbon footprint (scopes 1 and 2) in the Concessions business.
  • Strengthen funding mechanisms for the conservation and management of strategic areas through the strengthening of sustainable production systems, ecosystem restoration and conservation, institutional coordination, basic sanitation and education for sustainable development.