Cemex's US network includes 11 cement plants. Picture from Shutterstock/Yes Market Media
This new series illustrates the different effects of ESG issues on various industries and explores how leading companies measure, manage and disclose these issues.
I had a conversation with Lucy Rodriguez, the executive vice president and chief communications officer of Cemex, a multinational building materials company based in Mexico, and discussed the most critical ESG issues in the construction industry and how materiality assessments can be disclosed Provide information and the role of science-based goals.
Neil Stewart: What role do you play in Cemex's promotion and execution of ESG strategy?
Lucy Rodriguez: As the Chief Communications Officer and a member of the Cemex Executive Committee, my job is to understand Cemex’s climate action goals and implementation roadmap, and to correctly communicate the strategy to external audiences.
This requires the integration of technical and engineering discussions into clear and concise information for use by our stakeholders. We define it as employees, customers, suppliers, analysts, investors and shareholders, and non-market stakeholders. Including community members, non-governmental organizations and industry associations. At the same time, I act as a channel to capture stakeholders’ concerns on climate action and provide timely feedback to senior management.
Another key responsibility is to keep up with the best ESG disclosure practices. My job is to engage with stakeholders and understand their expectations. I work with senior management and the board to review these practices and identify those that provide value within our industry and geographic footprint.
Finally, I represent Cemex on the Communications Subcommittee of the Global Cement and Concrete Association. In this forum, we promoted industry cooperation and the sharing of best practices among members to standardize the measurement and reporting of greenhouse gas emissions on a global scale.
Stewart: How does Cemex incorporate ESG issues into the decision-making process?
Rodriguez: Sustainability is one of Cemex's five strategic priorities. It penetrates all aspects of our business, and its strategic focus starts at the board level and is promoted throughout the organization.
In 2014, Cemex's board of directors established a sustainability committee to support the board in formulating the company's sustainability strategy, assessing our ambitions for our goals, and monitoring our performance against these goals, especially in areas related to ESG. The Sustainability Committee provides guidance to our CEO and senior management team on the direction of our sustainable development strategy. The committee is composed of four board members and meets quarterly to analyze and discuss the progress of our ESG strategy and actively participate in the relevant decision-making process.
In addition to the supervision of ESG issues at the board level, a member of the Cemex Executive Committee is also responsible for the implementation of the company's sustainable development strategy. The global head of sustainable development reports directly to him and coordinates with regional and national sustainable development representatives to ensure the consistency, progress and consistency of our entire business.
Stewart: Can you talk about the importance analysis process of Cemex? What prompted your company to develop such a process? How does it benefit the business?
Rodriguez: Cemex’s materiality assessment is a common practice we adopted a few years ago. It brings together the financial and non-financial topics that the company and our stakeholders (including investors) have identified that are most relevant to our business. Using GRI's framework and materiality principles and SASB disclosure topics for the building materials industry, our key stakeholder groups and management team identify and rank the topics to be addressed in our strategic plans and comprehensive reports.
Our last materiality assessment was conducted in 2020. We conducted industry-level assessments and studied economic, environmental and major social trends and challenges. In order to understand the importance of these topics to our stakeholders, we launched a global importance survey of employees, customers, suppliers, analysts and investors, as well as non-market stakeholders (including community members, NGOs) And industry associations) are involved. In all regions where Cemex operates, we received a total of 2,410 responses. These responses serve as the "stakeholder attention" axis of our updated matrix.
Materiality assessment work helps us to prioritize our efforts and minimize any gaps in our business strategy. In addition, it provides consistent feedback on the evolution of economic, environmental, social, and governance issues in the eyes of stakeholders.
You can find more detailed information on the latest update of Cemex Material Priorities on page 12 of our 2020 Comprehensive Report.
Stewart: What are the biggest areas of sustainable development risks and opportunities in the building materials industry? How does sustainability disclosure enable Cemex to measure and manage these risks and opportunities?
Rodriguez: We believe that the materiality assessment reflects the most relevant risks and opportunities related to ESG, especially those with the highest importance and higher. For our industry, the biggest risk areas are health and safety and climate action.
Consistent and clear disclosure of the most important issues keeps the company and stakeholders focused, and leads to more substantive discussions, and a better assessment of progress towards these goals and any gaps in implementation that may arise, and what we should The impact of actions taken will be considered when we adjust future plans and so on.
Regarding climate action, in addition to our annual disclosures, we now report our carbon dioxide emissions quarterly. We believe that including this detail will provide our stakeholders with greater visibility while linking mid-term goals to our short-term actions.
Our goal is to lead our industry in terms of climate action disclosure. We report according to the most commonly used investor disclosure standards: Climate-Related Financial Disclosure Working Group, SASB Standards, United Nations Global Compact, CDP, etc.
In 2019, we were recognized by CDP as our A-list for disclosing climate action. Our goal is to continuously improve and align with best disclosure practices, while recognizing that standards and expectations are evolving very rapidly. Therefore, we have pledged to seek to verify our new 2030 climate action targets through the Science-Based Targets Initiative (SBTi) and believe that this will support us in further upgrading our ratings in the future.
Stewart: What do investors ask when they talk about sustainability? Does ESG data enable management to make better decisions and improve investor relations? Can you share a specific example?
Rodriguez: In the past few years, interest in sustainability has grown exponentially. ESG topics are frequently discussed with investors, and their focus is mainly on climate action. The discussion includes the CO2 reduction target, the relevant levers to achieve the target, and the key innovations and investments needed to achieve the mid-term target and the 2050 net-zero status.
The data and transparency surrounding our goals, leverage, and progress lead to valuable discussions with our stakeholders. The cement industry's carbon emissions account for about 7% of the world's carbon emissions. However, unlike other heavy industries, the elasticity and strength properties of our final product concrete are irreplaceable, and it is an indispensable cornerstone of construction.
The world cannot simply stop building. Therefore, as an industry, we must find a solution to the carbon emitted during the chemical process of heating limestone to make cement. It is very helpful to engage with stakeholders who recognize the role of cement in carbon emissions, the basic nature of the product to society, and the regulatory changes that promote the decarbonization of the industry. Ambitious goals with clearly marked milestones are an important tool that enables stakeholders to monitor our progress.
Conversations about ESG always bring valuable feedback to our company. Stakeholder expectations for climate action are rapidly evolving. We do our best to incorporate the latest best practices into our climate action strategy "Future in Action" launched in February 2020.
The initial plan included a 35% reduction in cement production carbon emissions by 2030, and a goal of net zero concrete carbon emissions by 2050. The 2030 target has been verified by the Carbon Trust, an internationally recognized consulting company that provides a rigorous third-party assessment of carbon emission reduction plans and is consistent with the previous 2°C SBTi scenario.
With the onset of the pandemic in March 2020, stakeholders urged us to work more actively and strengthen supervision, so as to achieve our new 2030 carbon emission target of 475 kg of carbon dioxide per ton of cementitious material, a reduction of 40%. %, and we will advance the previous CO2 target for 2030 by five years to 2025. Our new 2030 target is currently the highest level of commitment in the industry and is consistent with the scenario where SBTi is far below 2 degrees Celsius.
Stewart: How important is the consistency and comparability of ESG data for management and investors, and what is the role of standards?
Rodriguez: The consistency and comparability of ESG data are extremely important for management and investors. For more than two decades, Cemex and our industry have recognized this responsibility. Since 1999, we have established the Cement Sustainability Development Plan in cooperation with other industry counterparts. This is the first industry organization in the world to jointly commit to sustainable development within the World Business Council for Sustainable Development. Importantly, the cement industry is the first industry to monitor and report carbon emissions and create a global carbon dioxide emissions database.
Cemex began to measure and monitor CO2 emissions in 1997. Consistency is essential, and so is measurement. In order to improve any indicator, first of all it needs to be reliable, and Cemex has been doing this. Regarding disclosure, we report on a wide range of available standards: SASB, TCFD, GRI, CDP, UNGC, etc. Investors need to measure ESG data consistently across companies in order to make informed decisions based on important information. We believe that over time, consensus will emerge and be consolidated.
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