Italcementi Change 2016/Pages/D

Climate Change 2016 Information Request - Italcementi https://www.cdp.net/sites/2016/74/9574/Climate Change 2016/Pages/D...

Climate Change 2016 Information Request Italcementi

Module: Introduction

Page: Introduction

CC0.1 Introduction Please give a general description and introduction to your organization.

With an annual production capacity of 60 million tons and 42 cement plants Italcementi Group is one of the world’s largest cement producer with a strong focus on innovation and sustainable construction materials. Along with the cement plants, Italcementi Group’s industrial network includes 15 grinding centers, 6 trading terminals, 415 concrete batching units combining the expertise, know-how and cultures of 21 countries across four continents. In 2015 the Group reported consolidated revenues of 4.3 billion Euro.

Founded in 1864 and listed on the Italian Stock Exchange since 1925, Italcementi achieved important international status with the take-over of Ciments Français in 1992.

Following a period of re-organisation and integration that culminates in the adoption of a single corporate identity for all Group subsidiaries, the newly-born Italcementi Group began to diversify geographically through a series of acquisitions in emerging countries such as Bulgaria, Morocco, Kazakhstan, Thailand and India, as well as operating in North America. As part of the plan to further enhance its presence in the Mediterranean area, in 2005 the Group boosted its investments in Egypt becoming one of the market leaders. In 2007 it further strengthened its presence in Asia and the Middle East. In 2014 the Group approved an extraordinary plan aimed at strengthening and streamlining the group capital structure and organization. As a member of the World Business Council for Sustainable Development (WBCSD) Italcementi Group has signed the Cement Sustainability Initiative’s Agenda for Action, the first formal commitment that binds a number of world cement industry leaders. Moreover, Italcementi has adhered to the Global Compact, a strategic initiative promoted by the United Nations to align companies operations and plans with universally accepted principles in the areas of human rights, working conditions, environment and ethics. Through the activities of i.lab, the Research and Innovation Centre rated Leed Platinum and designed by American arch. Richard Meier, the Group intends to anticipate market trends and requirements promoting the concept of sustainable construction. Italcementi was a key player in the 2015 Milan Universal Exposition delivering innovative products. In particular, the new biodynamic cement characterizes the Palazzo Italia which is the heart of Milan Expo 2015. The Group has recently launched i.nova, the innovative market approach based on 11 families of performance through which Italcementi Group aims to offer its leadership in innovation to the building community. In 2015, the Innovation Rate, which represents the incidence of high-added-value products to total turnover, rose from 6.6% to 7.9%, with an overall value of more than 337 million euro. In 2013 Italcementi established the international award arcVision Prize - Women and Architecture, which aims at promoting the designers who best interpret the role of the architect through significant civil, residential and services construction projects, particularly in the social field.

CC0.2 Reporting Year Please state the start and end date of the year for which you are reporting data. The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first. We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting year if you have not provided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have been offered and selected the option of answering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting periods here. Work backwards from the most recent reporting year. Please enter dates in following format: day(DD)/month(MM)/year(YYYY) (i.e. 31/01/2001).

Enter Periods that will be disclosed Thu 01 Jan 2015 - Thu 31 Dec 2015

CC0.3 Country list configuration

Please select the countries for which you will be supplying data. If you are responding to the Electric Utilities module, this selection will be carried forward to assist you in completing your response.

Select country Belgium Bulgaria Egypt France India Italy Spain Thailand United States of America Morocco Kazakhstan Greece Canada

CC0.4 Currency selection

Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency.

EUR(€)

CC0.6 Modules As part of the request for information on behalf of investors, electric utilities, companies with electric utility activities or assets, companies in the automobile or auto component manufacture sub-industries, companies in the oil and gas sub-industries, companies in the information technology and telecommunications sectors and companies in the food, beverage and tobacco industry group should complete supplementary questions in addition to the main questionnaire. If you are in these sector groupings (according to the Global Industry Classification Standard (GICS)), the corresponding sector modules will not appear below but will automatically appear in the navigation bar when you save this page. If you want to query your classification, please email [email protected]. If you have not been presented with a sector module that you consider would be appropriate for your company to answer, please select the module below. If you wish to view the questions first, please see https://www.cdp.net/en-US/Programmes/Pages/More-questionnaires.aspx.

Further Information

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Module: Management

Page: CC1. Governance

CC1.1 Where is the highest level of direct responsibility for climate change within your organization?

Board or individual/sub-set of the Board or other committee appointed by the Board

CC1.1a Please identify the position of the individual or name of the committee with this responsibility

The Board Committee which is chaired by the Chief Operational Officer (COO) endorsed with the ultimate responsibility of climate change strategy.

CC1.2 Do you provide incentives for the management of climate change issues, including the attainment of targets?

Yes

CC1.2a Please provide further details on the incentives provided for the management of climate change issues

Who is entitled Incentivized to benefit from The type of performance Comment these incentives indicator incentives? No other indicator is more effective than CO2 intensity for climate change mitigation, as it combines most of the key levers of industrial efficiency. The CEO of Italcementi has a Long Term Incentive (LTI) of achieving the target of 640kgCO2/t cementitious by 2015 and 600kgCO2/t cementitious. The remuneration Committee of Italcementi Group has been informed of the fact that the target was not met and has received indications from Chief Executive Monetary Emissions the Sustainable Development Department. It is was worth noting that external factors, among other elements, Officer (CEO) reward reduction target were at the basis of the inability to reach the target. For example, the Government in Thailand lifted incentives for the use of biomass and Gas incentives in Egypt were also stopped. These situations led to the increased use of fossil fuels though in the case of Egypt the switch to alternative fuels helped to mitigate related emission increase. The Group acknowledges the great influence its employees can have on climate change issues and in particular in the domain of sustainable mobility. Cities increasingly face pollution problems due to the use of Monetary Behaviour change many and highly polluting vehicles. In a bid to encourage employees to actively participate in resolving this All employees reward related indicator issue, the Group covers a percentage of costs for employee public transport subscriptions and for the purchase of bicycles for commuting and other personal purposes. These incentives range from 30%-40% of full costs. Emissions reduction project Emissions reduction target Energy reduction Zone and Country managers who are sitting on the board are encouraged to take measures for reducing project impacts on climate change from Group's activities. They are rewarded when they achieve CO2 emissions Board/Executive Monetary Energy reduction reductions beyond company targets as published in the annual budget. Emission reduction projects applicable board reward target for these additional CO2 emissions reductions include using less carbon intensive fuels or carbon neutral fuels Efficiency project like biomass and reducing the clinker content of cement. Efficiency target Environmental criteria included in purchases

Further Information

Page: CC2. Strategy

CC2.1 Please select the option that best describes your risk management procedures with regard to climate change risks and opportunities

Integrated into multi-disciplinary company wide risk management processes

CC2.1a Please provide further details on your risk management procedures with regard to climate change risks and opportunities

Frequency of How far into the future are To whom are results reported? Geographical areas considered Comment monitoring risks considered? Board or individual/sub-set of the Board or Wherever the Group operates: North Africa and the Annually > 6 years committee appointed by the Board Middle east, Europe, Asia, North America.

CC2.1b Please describe how your risk and opportunity identification processes are applied at both company and asset level

Within Enterprise Risk Management (ERM), Italcementi appointed a Chief Risk Officer, head of the Risk Management Dept. with the goal to improve the ability to create value for stakeholders also through a better management of business risk. ERM uses the CoSO methodology (Committee of Sponsoring Organizations of the Treadway Commission) and is divided into the following phases: - identification of the main areas of risk in relation to the Group’s strategic objectives and definition of methodologies and tools for the analysis and assessment of related risk events; - assessment, both at plant and Group level, of identified events of risk in terms of impact, chance of happening and time frame, in order to have an overall picture of the Group’s risk portfolio; - selection of priority risks and definition of relevant reaction strategies, governance rules within the Group as well as the actions needed to supplement and improve risk management systems; several risks are managed locally for specific resources, while the management of those requiring coordination across the company, is centralized; - implementation of mitigation strategies/actions defined from time to time and development of the Enterprise Risk Management process; - information to the top management and control bodies on the main risks and their management and evolution. Risk quantification and occurrence are integrated into the company’s management system such as budgets, re-forecasts or analysis on the most important investment projects. Italcementi puts in place continuous actions which represents the subject on a program of activities integrated into business processes for the purpose of ensuring trustworthiness, accuracy, reliability and timeliness of financial reporting. Each subsidiary builds on work done to develop an Action Plan aimed at mitigating identified risks in Top Risk areas at facility level.

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CC2.1c How do you prioritize the risks and opportunities identified?

The Board of Directors establishes a multi-year plan under which it approves a budget on an annual basis. The plan takes also into consideration risk analysis based on quantitative (gross operating profit or loss) and qualitative(environmental, social, reputational, health etc) impacts, carried out by the Director in Charge of the Internal Control and Risk Management System with the support of the Chief Risk Officer, detailing the level of expected risk in each Country where the Group operates, as well as the various kind of risk. Impacts on the Group’s business objectives are therefore classified into Critical/high, Considerable, Significant, Moderate, Minor. When approving the annual budget, usually occurring at the first Board meeting of each fiscal year, the Board of Directors examines and quantifies the risks which the Company and the Group as a whole are subject to, depending on the strategic objectives it sets for itself. One of the ways the Group prioritizes risks is the setting of various targets and ambitions covering a period of not less than 7 years as our 2020 ambitions which were established in 2011.

CC2.2 Is climate change integrated into your business strategy?

Yes

CC2.2a Please describe the process of how climate change is integrated into your business strategy and any outcomes of this process

The Group, in accordance with the Enterprise Risk Management (ERM) principles, has identified and categorized risks related to climate change as significant. It has developed appropriate containment actions, identifying the Sustainable Development Department (SDD) as “Primary Risk Owner” with the task of coordinating and ensuring consistency in response to climate change related risks and opportunities. Guidelines, actions and controls have been defined alongside Strategies aimed at mitigating climate change related risks. The SDD has recently published the Materiality Matrix illustrating the business aspects with material risks for the Group, seen by Group function managers and stakeholders. Climate and energy were identified as significant risks for our business providing additional rationale for the Group to continue addressing the issue . Moreover, direct CO2 emissions are covered by regulations in Europe and Kazakhstan were we operate. To ensure the climate change risk is kept under control and integrated in our business strategy, we set short term targets and medium-long term ambitions in terms of specific direct CO2 emissions and share of renewable electricity production. The Materiality Matrix, Performance tracking and outcomes are reported in the Group's Annual Report further to intensive communication in various Group functions for consideration in long term budgeting activities. As a result of this strategy, investments relating to production process and products, have been put in place to achieve identified targets and thus manage climate change related risks and opportunities. For example, all new investments in technology are assessed considering carbon pricing, thus design solutions are compared also based on emissions and related costs. It was the case for the revamping of the two cement plants respectively in Italy and Bulgaria, that were still running with old technology kilns and have now dramatically reduced their CO2 emissions. The most substantial business decision made is the investment in renewable electricity , considered as an adaptation strategy towards grid supply disruptions, also due to extreme weather events, and electricity price spikes. Investments in renewable electricity are assessed in case of new developments or wherever local conditions are favorable (eg. Waste heat availability, strong wind). Consolidated technologies, such as wind, have been chosen for current projects; one example is our wind farm in Bulgaria which partially feeds our local cement plant. In addition, in a long term perspective, a solar concentration power pilot plant was recently inaugurated at Ait Baha, Morocco. R&D efforts have been aligned to address identified climate related risks during product design and choice of constituents in a bid to tap opportunities offered by the green market.. Following proper training, R&D researchers are considering carbon foot printing and Lifecycle Assessments when designing new products, as to be able to compare different options. Carbon footprinting and an Environmental Product Declaration tool have been made available by the Group, under the responsibility of SDD, to ensure a good positioning of our products through transparent communication of their pro-climate properties to our current and near future stakeholders.

The Group Global Purchase department has received a strong mandate to explore wider and cost effective use of alternative fuels, to replace fossil fuels, and alternative raw materials (and mineral inorganic components, as to reduce the CO2 content in cement. Purchase departments have also to address the risk of supply disruptions and ensure continuity of supply. This is a cost-effective way to reduce CO2 emissions related to our products which become more competitive.

CC2.2c Does your company use an internal price of carbon?

No, but we anticipate doing so in the next 2 years

CC2.3 Do you engage in activities that could either directly or indirectly influence public policy on climate change through any of the following? (tick all that apply)

Direct engagement with policy makers Trade associations Funding research organizations

CC2.3a On what issues have you been engaging directly with policy makers?

Focus of Corporate Proposed legislative Details of engagement legislation Position solution Mandatory In Kazakhstan the Group is a key player in the joint team bringing together the industry and Cap and trade system rewarding carbon Support Ministries engaged in defining the domestic ETS rules. We bring in experiences acquired in the industries that invest in energy reporting European ETS which was the first and unique fully fleshed carbon emissions trading scheme. efficiency and clean technology. Stakeholders engagement in renewable energy projects in Morocco, Egypt and Italy primarily Fiscal incentives/tax discounts addresses central and local Governments. Main projects developed by the Group, such as wind Clean energy addressing energy intensive Support farms, have been included, depending on the country, in the national Renewable energy plans, generation business to invest in captive power Carbon mitigation plans and NDCs, drafted by Governments to inform the UNFCCC international generation. climate framework. The Group’s Italian subsidiary is a founding and board member of the GBC Italia, which promotes Inclusion of sustainable the Leadership in Energy and Environmental Design (LEED), the internationally-recognized green construction criteria in Green Public Energy building certification system. LEED standards promote sustainability in the design, construction and Support Procurement for buildings and efficiency use of buildings through rating systems and also awareness campaigns. It provides a framework for construction works. Rewarding identifying and implementing practical and measurable green building design, construction, criteria in public tenders. operations and maintenance solutions.

CC2.3b Are you on the Board of any trade associations or provide funding beyond membership?

Yes

CC2.3c Please enter the details of those trade associations that are likely to take a position on climate change legislation

Is your position on climate Trade How have you, or are you attempting to, change Please explain the trade association's position association influence the position? consistent with theirs? Supportive of European climate policies but also very careful to Mainly aligned with the position; we emphasize the CEMBUREAU Consistent preserve competitiveness of the sector and level playing field with special situation of Southern countries in many issues

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Is your position on Trade climate change How have you, or are you attempting to, Please explain the trade association's position association consistent with influence the position? theirs? related with EU ETS, in terms of carbon leakage, importers. exposure to international competitiveness, difficulties in use of alternative fuels. The association is vocal in terms of specificity of the Italian market. Due to high market downturn, plants are run discontinuously and AITEC (Italian Aligned position; we bring in our expertise in the there are heavy restriction in use of alternative fuels. The association Cement Consistent broader European debate, being present in many EU promotes the use of Italian sectorial guidelines for Monitoring Association) countries. Reporting and Verification, to complement mandatory European guidelines . As international players, also present in other Interest in involvement of the sector in the international climate international markets, we bring best practice Egyptian Cement debate, in particular promoting crediting systems for carbon experience. We are actively promoting investments in Consistent association emissions reduction and energy efficiency/ renewable energy renewable energy being key sponsors of the projects (e.g. captive power). Renewable Energy Solutions for the Mediterranean (RES4MED).

CC2.3d Do you publicly disclose a list of all the research organizations that you fund?

CC2.3f What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climate change strategy?

The organizational structure of the Group ensures that climate change related activities are supervised by the Group function, Sustainable development department (SDD). All engagements by Italcementi members have to be in line with the Group Policies on Sustainability, Energy and Environment. In particular, the Energy policy clearly states the climate change strategy of the Group. SDD function is at central and subsidiary level, with the backing of International relations department. SDD is in charge of providing contents on overall climate change strategy for advocacy activities to local sustainability officers and general managers.

Further Information

Page: CC3. Targets and Initiatives

CC3.1 Did you have an emissions reduction or renewable energy consumption or production target that was active (ongoing or reached completion) in the reporting year?

Absolute target Intensity target Renewable energy consumption and/or production target

CC3.1a Please provide details of your absolute target

% Base year % of Is this a reduction Base emissions covered Target ID Scope emissions in science-based Comment from base year by target (metric year scope target? year tonnes CO2e) Italcementi Group has committed to the Science based target initiative and has Scope 2 No, but we anticipate submitted information to the quality check Abs1 (location- 100% 14% 2010 2674000 2020 setting one in the team. We are currently working towards based) next 2 years aligning this absolute target to the Sectorial Decarbonization Appraoch.

CC3.1b Please provide details of your intensity target

Normalized % % of base year Is this a reduction Base Target ID Scope emissions Metric emissions science-based Comment from base year year in scope covered by target? year target Italcementi Group has committed to the Science based target initiative and has submitted information to the quality Other: kg CO2 Scope check team. The quality check team Int1 100% 17% per tonne 1990 723 2020 Yes 1 confirmed the science based nature of cementitious this intensity target, in particular, its ambitiousness and alignment with the SDA of the cement Sector. Other: kg CO2 Scope Int2 100% 11.5% per tonne 1990 723 2015 Yes 1 cementitious

CC3.1c Please also indicate what change in absolute emissions this intensity target reflects

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Direction of change Direction of change % change % change anticipated in anticipated in anticipated in anticipated in ID absolute Scope 1+2 absolute Scope 3 Comment absolute Scope absolute Scope emissions at target emissions at target 1+2 emissions 3 emissions completion? completion? Group operates. Therefore, our current forecast is a cement production almost equivalent to the one in 1990. Scope 3 emissions decrease linked mainly to upstream emissions from fuels, treatment of alternative fuels, electricity generation from captive power.and fuel switch from coal to alternative fuels. The persistent economic downturn in Europe and the unsteady political framework in Egypt, were not fully compensated by increasing demand for cement in the other countries where the Group operates. Therefore, our current forecast is a cement Int2 Decrease 16 production almost equivalent to the one in 1990. Scope 3 emissions decrease linked mainly to upstream emissions from fuels, treatment of alternative fuels, electricity generation from captive power.and fuel switch from coal to alternative fuels.

CC3.1d Please provide details of your renewable energy consumption and/or production target

% renewable energy in Energy types Base Base year energy for energy % renewable energy Target ID target year Comment covered by target year type covered (MWh) in base year year RE1 Electricity consumption 1990 5494700 0% 2020 10%

CC3.1e For all of your targets, please provide details on the progress made in the reporting year

% % complete complete (emissions or Comment ID (time) renewable energy)

Abs1 50% 100% The market crisis allowed to meet earlier than scheduled the target set for 2020 in terms of absolute emissions 2015 values show a slight decrease in the intensity emissions. Further actions need to be implemented to achieve the Int1 83% 26% target through planned reduction clinker-cement and technology revamping for the few old plants remaining. 2015 values show a slight decrease in emissions. The efforts deployed to meet the 2015 target were disrupted due to some factors beyond our control. For example, the Government in Thailand lifted incentives for the use of biomass and Int2 100% 39% Gas incentives in Egypt were also stopped. These situations led to the increased use of fossil fuels though in the case of Egypt the switch to alternative fuels helped to mitigate related emission increase. The market crisis allowed to meet earlier than scheduled the target set for 2020 in terms of renewable energy RE1 50% 100% consumption as the share of electricity from renewable sources increased while total consumption decreased.

CC3.2 Do you classify any of your existing goods and/or services as low carbon products or do they enable a third party to avoid GHG emissions?

Yes

CC3.2a Please provide details of your products and/or services that you classify as low carbon products or that enable a third party to avoid GHG emissions

Taxonomy, project % revenue Are you % R&D in or methodology from low reporting low low carbon Level of Description of product/Group of used to classify carbon carbon product/s in aggregation products product/s as low product/s in Comment product/s or the carbon or to the avoided reporting calculate avoided reporting emissions? year emissions year Products for thermal insulation Under the CSI umbrella, we appliances (e.g. floors, panels for are currently working on envelops). In our portfolio we have a methodologies to measure world champion low carbon cement Other: Cement CO2 savings downstream Group of (sulpho aluminate), that is produced in Avoided Sustainability Initiative Less than or 1% and we will further products one of our plants in Italy, which can be emissions (WBCSD-CSI) Avoided equal to 10% demonstrate the positive used in both traditional and innovative emissions project contribution from innovative applications (e.g. in combination with products, services and other materials for thermal insulating applications panels).

CC3.3 Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and/or implementation phases)

Yes

CC3.3a Please identify the total number of projects at each stage of development, and for those in the implementation stages, the estimated CO2e savings

Stage of development Number of projects Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *) Under investigation 10 To be implemented* 3 100000 Implementation commenced* 2 400000 Implemented* 3 220000 Not to be implemented 0

CC3.3b For those initiatives implemented in the reporting year, please provide details in the table below

Estimated Annual Investment annual monetary Estimated Activity required (unit Payback Description of activity CO2e Voluntary/ savings lifetime of type Scope currency - as period Comment savings Mandatory (unit the specified in (metric currency - initiative tonnes as specified CC0.4)

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in CC0.4) CO2e) A new installation for use of Energy RDF (Refuse Derived Fuel) efficiency: and biomass, to replace coal, 70000 Scope 1 Voluntary 200000 2200000 4-10 years 16-20 years Processes started operations at the Suez cement plant in Egypt. In Helwan plant in Egypt, a Energy new installation for use of efficiency: RDF (Refuse Derived Fuel) 100000 Scope 1 Voluntary 1000000 1100000 1-3 years 16-20 years Processes and biomass, to replace gas, started operations. India was strongly committed in 2015 to sell products with less clinker content, replaced by fly ashes. Reduction attained was more than 2%. Scope 1 Process Technical and product quality Scope 2 emissions 50000 Voluntary 960000 100000 <1 year 6-10 years improvement and market (location- reductions actions have been put in based) place. New grinding aids have been introduced as well as new laboratory equipment installed

CC3.3c What methods do you use to drive investment in emissions reduction activities?

Comment Method R&D and Innovation departments are focused on designing low carbon products in line with sustainable construction. R&D activities are carried out by Dedicated the Group Technical Centre (CTG) based in Italy and France with a permanent staff of about 200 people. About 11.5M euro is invested every year for budget for low R&D activities apart from investments linked to low emissions technologies which are main reasons behind plant revampings. Apart from in-house carbon product research activities the CTG also promotes research partnerships with universities and other players of the sector on carbon mitigationCO2 issues. In R&D particular, the work on electrochemical valorization of CO2 and valorization of CO2 in suitable microalgae strains were top priorities of the CTG.

Further Information

Page: CC4. Communication

CC4.1 Have you published information about your organization’s response to climate change and GHG emissions performance for this reporting year in places other than in your CDP response? If so, please attach the publication(s)

Page/Section Publication Status reference Attach the document Comment

In mainstream reports (including an integrated https://www.cdp.net/sites/2016/74/9574/Climate Change 2016/Shared report) in accordance with the CDSB Complete 322-365 Documents/Attachments/CC4.1/SustainabilityReport2015.pdf Framework

Further Information

Module: Risks and Opportunities

Page: CC5. Climate Change Risks

CC5.1 Have you identified any inherent climate change risks that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply

Risks driven by changes in regulation Risks driven by changes in physical climate parameters Risks driven by changes in other climate-related developments

CC5.1a Please describe your inherent risks that are driven by changes in regulation

Potential Direct/ Estimated Risk Timeframe Likelihood Magnitude Management Cost of Description impact Indirect financial driver of impact method management implications EU ETS applies With an increase in to our European demand from one subsidiaries. We year to another there expect relevant may be a need to compliance costs increase production. from mid phase 3 On the contrary Actions are being due to strict allowance allocation implemented to allocation rules for phase 3 is based reduce emissions, based on on previous year including clinker Cap and Increased previous year’s Virtually production, this reduction, trade operational Up to 1 year Direct Medium-high 1 M€/year production. This certain implies an increase in alternative fuel and schemes cost implies there will production may lead raw material use be need to to exceeding the cap and plant purchase and the need to buy optimizations are allowances from extra allowances from part of this initiative. the market in the market. case there is a Considering the year on year countries involved in sudden increase the EU ETS, an in cement analysis based on

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Potential Direct/ Estimated Risk Timeframe Likelihood Magnitude Management Cost of Description impact Indirect financial driver of impact method management implications demand. This was the case in our 2013 versus 2014 Bulgarian plant indicates that the where there was Group may have to more than 20% spend 1 M€/year to increase in buy allowances for production in compliance. 2015. The likely outcome is an overall agreement setting targets/pledges by country and new In line with WBCSD sectorial market In line with WBCSD mechanisms. These CSI approach and International measures will affect latest developments climate policies developing countries, we are working on directly affect our who will have to take possible scenarios operations, since up emission reduction for the future. we are present in pledges unlike in the Together with 22 countries Kyoto Protocol. The closely monitoring worldwide, both Group will therefore international debate developed and be exposed to the risk to anticipate action, developing of acquiring emissions the Group is countries, many exceeding caps investing in energy of which are imposed by and process currently under Inability to International developing countries efficiency projects the Kyoto do Up to 1 year Direct Very likely Medium 0.1 M€/year agreements where we operate.For with an impact on Protocol 2. The business example, rules of the emissions, both upcoming COP Kazakhstan emission Scope 1 and Scope 21 climate trading scheme will 2 emissions. The meeting in Paris depend on outcomes new line in will bring about of COP21 in Paris. Kazakhstan and new emission One of the probable contracts signed to reduction effect will be the type use alternative fuels programs to of allocation adopted in our plants in which we will for increase capacity. Morocco, Egypt, have to align or Based on the Thailand are part of risk becoming hypothesis now under preparation towards uncompetitive. discussion the cost of the imminent purchased deficit in international the trading platform agreement. can be around 2 -2,5 M€/year, considering the new capacity of our Kazakhstan plant.

CC5.1b Please describe your inherent risks that are driven by changes in physical climate parameters

Estimated Risk Direct/ Likelihood Magnitude Management Cost of Description Potential impact Timeframe financial driver Indirect of impact method management implications In 2012, floods affected our supply chain in Thailand and this disrupted our operations. Recently in 2014, the heavy rains in Some of our morocco cut off the plants are plant from supplies situated or and paralyzed Secondary supply nearby areas production and network and subject to sales. This also dispatch roads are floods due to leads to fundamental or frequent unexpected kiln plants are forced to occurrence of stops which cause stop production. extreme an increase in We are diversifying The cost of covered precipitation production costs both type and fuel storage 1-2 M€ Change in (Egypt, India, and in emissions. source of raw per plant. Secondary precipitation Reduction/disruption Thailand, More likely Monthly sales materials and fuels supply network and extremes in production 1 to 3 years Direct Medium Morocco). than not dropped equivalent while prioritizing diversification of raw and capacity The most to about 6.5 M€. local sources. materials amounts to droughts recent flood Averagely, There is also need about 5 M€. per plant event was depending on to provide in risk zone. registered in various plant additional storage 2014 in capacities, in case of supply Morocco. stopping the kiln disruptions and Transportation leads to about 500 consequently or supply K€ worth of increased chain production. purchase costs. activities were Shortage in supply paralysed. usually leads to rise in prices and for especially fuel the increase can range from 1-5 M€/year depending on the plant capacity. Tropical storm A few minutes Some The cost of back-up Tropical Sandy power failure can sophisticated systems depends on cyclones inundated Reduction/disruption cause the backup systems the power installed in a More likely (hurricanes New York and in production Up to 1 year Direct Medium-high stoppage of the were installed to plant; for a big size than not and East Coast capacity kiln system which protect main plant they can reach typhoons) with extreme will take days to equipment. 1-2 M€. Barrier storm surge reach a steady Barriers, walls, Technology/protections

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Estimated Risk Direct/ Likelihood Magnitude Management Cost of Description Potential impact Timeframe financial driver Indirect of impact method management implications state production regime. Averagely, depending on recently. This various plant was the capacities losing a berms for exposed second most day's production plants to protect costly storm in leads to about from storm surge, US history. 150k-500k € loss in upgrade to water Disruptions to production. The management of power, access severity has led to sites to manage against storm surge is to water and Loss of higher levels of in the range of 0.5-1 personnel property/equipment rainfall were M€. We spent about 1 Storms of this that is located on installed. M€ for protecting our nature have coast (i.e. Protection of electrical appliances historically Terminals in New critical electrical from flood damage. increased Jersey) equipment from Climate Replacement of flooding/water/wind change large equipment damage are also impacts to (electrical present in the size and transformers etc.) various plants. severity of damage to control storms. equipment, CEMS. Amounts to about 1 million per system Inability to extract raw materials can cause the Heavy rains Maintain high stoppage of the and extreme inventory levels of kiln, reduction of low raw materials production and temperatures whose extraction is The cost of investment consequently impede or more vulnerable to for increasing the Change in Indirect inability to meet interrupt the Increased flooding and stock – extension of precipitation Up to 1 year (Supply Very likely Medium-high customer needs. quarrying of operational cost extreme low the existing storages pattern chain) Averagely, raw materials temperature. This or building new depending on needed to helps for a limited storage is about 10 M€ various plant produce time period due to capacities losing a clinker and limited storage day's production cement. space. leads to about 150 k€ loss of production.

CC5.1c Please describe your inherent risks that are driven by changes in other climate-related developments

Potential Magnitude Estimated Risk Timeframe Direct/ Likelihood Management Cost of Description impact of impact financial driver Indirect method management implications Research and innovation Research activities in 2014 Capacity building amounted to more This can lead to a in the Group than 10 M€. Cement substantial loss of Technological Activities include production is market share in Centre (CTG) the biological sometimes the construction having a focus on valorization of asociated woth materials sector in climate related CO2 in the high energy the range of 2-5%. performance production of consumer and In countries where products suitable micro-algaes or in high CO2 Reduced green building for specific Indirect More likely the production of Reputation emissions demand for 1 to 3 years Medium schemes are applications. (Client) than not methanol through production. There goods/services established public Research on high innovative 's the risk of procurement insulation cement catalysts and perception that policies adopt low blocks, led to the photocatalytic cement/concrete emitting materials production of reactions. In the are not suitable and this may Bravo block. case of Bravobloc materials for penalize the These provided us development, each climate change. cement/concrete market year not less than sector. opportunities in 200 k€ is invested countries like Italy for product and the Spain. performance research.

Further Information

Page: CC6. Climate Change Opportunities

CC6.1 Have you identified any inherent climate change opportunities that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply

Opportunities driven by changes in regulation Opportunities driven by changes in physical climate parameters Opportunities driven by changes in other climate-related developments

CC6.1a Please describe your inherent opportunities that are driven by changes in regulation

Estimated Opportunity Potential Magnitude Management Cost of Description Timeframe Direct/Indirect Likelihood financial driver impact of impact method management implications Emission In India, a Reduced Failure to attain Implementation Virtually 80 M€ ongoing reporting baseline and operational Up to 1 year Direct Medium energy of action plan to certain investment. obligations credit scheme costs efficiency reduce energy

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Estimated Opportunity Potential Magnitude Management Cost of Description Timeframe Direct/Indirect Likelihood financial driver impact of impact method management implications on plant energy efficiency is operational; the first compliance cycle is 2011-2015. Both Indian plants fall targets will under the cause a scheme and competitive received a disadvantage for consumption. A specific energy the Group as new system for reduction target. production costs the use of low An emission will be higher. emissions trading scheme This will alternative fuels is being put in certainly lead to and a solar place in a loss in market energy plant Kazakhstan, share of about have been based on 5% in the installed in India. grandfathering materials Kazakhstan new with progressive construction kiln line reduction of sector. construction is allocation. Furthermore a 2 ongoing which is Energy and M€ penalty in aimed to improve emissions have terms cost of energy efficiency high costs. The energy and reduce caps imposed efficiency emissions by will enable cost certificates is at more than 25%. saving stake yearly for investments for our Indian the plants plants. involved and also this best practice will be taken up by other plants of the Group.

CC6.1b Please describe the inherent opportunities that are driven by changes in physical climate parameters

Opportunity Direct/ Magnitude Estimated Potential Timeframe Likelihood Management Cost of driver Description Indirect of impact financial impact method management implications Vulnerable areas to climate Research change will Capacity building experience in the Group extreme Technological weather Centre (CTG) conditions more Failure to having a focus on often or manage this climate related changes in the opportunity performance environmental implies missing products suitable Research and condition. on the potential for specific innovation Adaptation benefits of new applications. Two activities in 2015 measures will product design examples: amounted to require resilient and development of more than 11,5 materials for Increased Other physical development. In high recycled M€. This amount infrastructure demand for Indirect climate Up to 1 year Very likely Medium 2014 content mortar was used in new which also have existing (Client) opportunities approximately i.bio Dinamic with product mitigation products/services 43% of the more than 80% development properties. turnover in our recycled and also in CO2 Cement and Spain plants materials, and emissions concrete are came from i-hydro drain valorization viable exports, most of product with high research. candidates for them towards drainage capacity the fast growing emerging for flood areas. economy in countries. These products emerging were selected for countries (India, many Egypt, Morocco constructions in etc) where the 2015 EXPO vulnerability to Milan. climate change is also highest.

CC6.1c Please describe the inherent opportunities that are driven by changes in other climate-related developments

Opportunity Direct/ Estimated Potential Timeframe Likelihood Magnitude Management Cost of driver Description Indirect financial impact of impact method management implications Addressing The UN Green Checking different Climate Fund and legislation humanitarian other similar changes, looking needs can be a initiatives are for different social direct stimulating available for and innovative factor for climate change opportunities, increased mitigation and > 50k Euro a Increasing developing consumption of Investment Indirect More likely resilience part from humanitarian 1 to 3 years Medium relations with construction opportunities (Client) than not investments. investments in demands experts, State materials for These funds will R&D. agencies and different social have to be NGO, participating facilities; at the invested in in domestic and same time it can projects that can international have a positive be implemented conferences and effect on the by private workgroups.

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Further Information

Module: GHG Emissions Accounting, Energy and Fuel Use, and Trading

Page: CC7. Emissions Methodology

CC7.1 Please provide your base year and base year emissions (Scopes 1 and 2)

Scope Base year Base year emissions (metric tonnes CO2e) Scope 1 Mon 01 Jan 1990 - Thu 31 Dec 2020 36800000 Scope 2 (location-based) Fri 01 Jan 2010 - Thu 31 Dec 2020 2747350 Scope 2 (market-based)

CC7.2 Please give the name of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions

Please select the published methodologies that you use WBCSD: The Cement CO2 and Energy Protocol

CC7.2a If you have selected "Other" in CC7.2 please provide details of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions

CC7.3 Please give the source for the global warming potentials you have used

Gas Reference CO2 IPCC Fifth Assessment Report (AR5 - 100 year) CH4 IPCC Fifth Assessment Report (AR5 - 100 year) N2O IPCC Fifth Assessment Report (AR5 - 100 year) HFCs IPCC Fifth Assessment Report (AR5 - 100 year) PFCs IPCC Fifth Assessment Report (AR5 - 100 year) SF6 IPCC Fifth Assessment Report (AR5 - 100 year) NF3 IPCC Fifth Assessment Report (AR5 - 100 year)

CC7.4 Please give the emissions factors you have applied and their origin; alternatively, please attach an Excel spreadsheet with this data at the bottom of this page

Fuel/Material/Energy Emission Factor Unit Reference Petroleum coke 0.093 metric tonnes CO2 per GJ Laboratory Analysis in accordance with ISO 17025 Brown coal 0.095 metric tonnes CO2 per GJ Laboratory Analysis in accordance with ISO 17025 Natural gas 0.056 metric tonnes CO2 per GJ Standard value from WBCSD,the Cement CO2 and Energy Protocol Residual fuel oil 0.0777 metric tonnes CO2 per GJ Laboratory Analysis in accordance with ISO 17025

Further Information

Page: CC8. Emissions Data - (1 Jan 2015 - 31 Dec 2015)

CC8.1 Please select the boundary you are using for your Scope 1 and 2 greenhouse gas inventory

Operational control

CC8.2 Please provide your gross global Scope 1 emissions figures in metric tonnes CO2e

29189561

CC8.3 Does your company have any operations in markets providing product or supplier specific data in the form of contractual instruments?

CC8.3a Please provide your gross global Scope 2 emissions figures in metric tonnes CO2e

Scope 2, location-based Scope 2, market-based (if applicable) Comment 2031205

CC8.4 Are there are any sources (e.g. facilities, specific GHGs, activities, geographies, etc.) of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure?

Yes

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CC8.4a Please provide details of the sources of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure

Relevance of Scope Relevance of Relevance of market-based Source 1 emissions from location-based Scope 2 Scope 2 emissions from this Explain why the source is excluded this source emissions from this source source (if applicable) These emissions are not addressed under Concrete and Emissions are not Scope 1 because of their insignificant Aggregates No emissions excluded No emissions excluded relevant contribution with respect to the CO2 emissions business intensive cement business.

CC8.5 Please estimate the level of uncertainty of the total gross global Scope 1 and 2 emissions figures that you have supplied and specify the sources of uncertainty in your data gathering, handling and calculations

Main sources Uncertainty Scope of Please expand on the uncertainty in your data range uncertainty Italcementi has drafted a detailed Group procedure for the calculation of its GHG emissions. In addition each subsidiary covered by the EU ETS has implemented its own procedure which takes into account peculiarities due to the application of EU ETS monitoring and reporting guidelines in the local context. The Group has also implemented a software to More than 2% calculate and report CO2 emissions, highly reducing uncertainties from calculations. According to the Group procedure, Data Scope 1 but less than or two levels of validation are foreseen, one at plant/ subsidiary level and one at Group level: A formal feedback and Management equal to 5% approval process is in place at Group level for annual reports and related KPIs. A vertical approach is applied, by comparing emission data results across the years at plant level, taking into account any relevant changes (a check list is prepared). Inaccuracies or errors encountered are formally reported back to plants/ subsidiaries for analysis, review and correction. The checks are necessary due to the high volume of data that needs to be handled. Scope 2 More than 2% Metering/ Electricity consumption is measured accurately at plant level through meters; it is one of the technical performance (location- but less than or Measurement indicators.For the electricity emission factor we use national average grid emission factor (EF) as from GHG Protocol based) equal to 5% Constraints (source GHG Protocol, version 4.8). Uncertainty linked to these values are not under our control. Scope 2 (market- based)

CC8.6 Please indicate the verification/assurance status that applies to your reported Scope 1 emissions

Third party verification or assurance process in place

CC8.6a Please provide further details of the verification/assurance undertaken for your Scope 1 emissions, and attach the relevant statements

Status in the Proportion of Verification or Type of current Page/section Relevant reported Scope 1 assurance verification or Attach the statement reporting reference standard emissions cycle in place assurance year verified (%) https://www.cdp.net/sites/2016/74 Limited /9574/Climate Change 2016/Shared Annual process Complete 361-364 ISAE3000 100 assurance Documents/Attachments/CC8.6a /SustainabilityReport2015.pdf https://www.cdp.net/sites/2016/74 European Union Reasonable /9574/Climate Change 2016/Shared Emissions Annual process Complete Full document 34 assurance Documents/Attachments/CC8.6a/CO2 Trading System Verificatiopn Reports.zip (EU ETS)

CC8.7 Please indicate the verification/assurance status that applies to at least one of your reported Scope 2 emissions figures

Third party verification or assurance process in place

CC8.7a Please provide further details of the verification/assurance undertaken for your location-based and/or market-based Scope 2 emissions, and attach the relevant statements

Proportion of Status in Location-based Verification Type of reported the current Page/Section Relevant or market-based or assurance verification Attach the statement Scope 2 reporting reference standard figure? cycle in place or assurance emissions year verified (%) https://www.cdp.net/sites/2016/74 Limited /9574/Climate Change 2016/Shared Location-based Annual process Complete 361-364 ISAE3000 100 assurance Documents/Attachments/CC8.7a /SustainabilityReport2015.pdf

CC8.8 Please identify if any data points have been verified as part of the third party verification work undertaken, other than the verification of emissions figures reported in CC8.6, CC8.7 and CC14.2

Additional data points verified Comment Year on year change in emissions (Scope 1 and 2) Year on year emissions intensity figure Progress against emission reduction target

CC8.9 Are carbon dioxide emissions from biologically sequestered carbon relevant to your organization?

Yes

CC8.9a Please provide the emissions from biologically sequestered carbon relevant to your organization in metric tonnes CO2

591414

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Further Information

Page: CC9. Scope 1 Emissions Breakdown - (1 Jan 2015 - 31 Dec 2015)

CC9.1 Do you have Scope 1 emissions sources in more than one country?

Yes

CC9.1a Please break down your total gross global Scope 1 emissions by country/region

Scope 1 metric tonnes CO2e Country/Region Belgium 1062154 Bulgaria 785655 Egypt 6073455 France 3259960 India 2471693 Italy 3269196 Spain 1263897 Thailand 4508450 United States of America 3058570 Morocco 2214397 Kazakhstan 559790 Greece 148800 Canada 513544

CC9.2 Please indicate which other Scope 1 emissions breakdowns you are able to provide (tick all that apply)

By business division

CC9.2a Please break down your total gross global Scope 1 emissions by business division

Business division Scope 1 emissions (metric tonnes CO2e) Cement 29189561 Concrete and Aggregates 0

Further Information

Page: CC10. Scope 2 Emissions Breakdown - (1 Jan 2015 - 31 Dec 2015)

CC10.1 Do you have Scope 2 emissions sources in more than one country?

Yes

CC10.1a Please break down your total gross global Scope 2 emissions and energy consumption by country/region

Purchased and consumed low carbon Scope 2, Scope 2, Purchased and consumed electricity, heat, steam or cooling Country/Region location-based (metric market-based (metric electricity, heat, steam or accounted in market-based approach tonnes CO2e) tonnes CO2e) cooling (MWh) (MWh) Belgium 48420 0 228398 0 Bulgaria 64620 0 109341 18375 Egypt 409010 0 921193 0 France 30897 0 657391 0 India 301451 0 310651 14690 Italy 244367 0 331101 297970 Spain 51690 0 169476 0 Thailand 265099 0 639029 118200 United States of 300985 0 596496 0 America Morocco 208532 0 299185 20400 Kazakhstan 41276 0 89537 0 Greece 20948 0 30581 0 Canada 19825 0 131290 0

CC10.2 Please indicate which other Scope 2 emissions breakdowns you are able to provide (tick all that apply)

By business division

CC10.2a Please break down your total gross global Scope 2 emissions by business division

Business division Scope 2 emissions, location based (metric tonnes CO2e) Scope 2 emissions, market-based (metric tonnes CO2e) Cement 2010802 Concrete&Aggregates 20403

Further Information

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Page: CC11. Energy

CC11.1 What percentage of your total operational spend in the reporting year was on energy?

More than 25% but less than or equal to 30%

CC11.2 Please state how much heat, steam, and cooling in MWh your organization has purchased and consumed during the reporting year

Energy type Energy purchased and consumed (MWh) Heat 0 Steam 0 Cooling 0

CC11.3 Please state how much fuel in MWh your organization has consumed (for energy purposes) during the reporting year

36097136

CC11.3a Please complete the table by breaking down the total "Fuel" figure entered above by fuel type

Fuels MWh Brown coal 15455556 Residual fuel oil 2022222 Petroleum coke 10255556 Waste oils 363350 Waste tire derived fuels 1127317 Refuse-derived fuel 507758 Waste plastics 83850 Natural gas 3719444 Other: animal biomass 335400 Other: vegetable biomass 628875 Other: Sludge and liquid waste 703408 Other: Solid waste fuel 894400

CC11.4 Please provide details of the electricity, heat, steam or cooling amounts that were accounted at a low carbon emission factor in the market-based Scope 2 figure reported in CC8.3a

MWh consumed associated with Basis for applying a low carbon emission low carbon electricity, heat, Comment factor steam or cooling This corresponds to captive electricity production, self-generation of Off-grid energy consumption from an onsite installation 125100 electricity from Solar concentration and waste heat recovery systems or through a direct line to an off-site generator in our plants . It is consumed but not purchased. Grid-connected electricity generation owned, operated This corresponds to captive electricity production, self-generation of or hosted by the company, where electricity attribute electricity from renewable sources, owned wind farms and 344600 certificates do not exist or are not required for a usage hydroelectric plants, that are then consumed in our plants. It is claim consumed but not purchased.

CC11.5 Please report how much electricity you produce in MWh, and how much electricity you consume in MWh

Consumed electricity Total renewable Consumed renewable electricity Total electricity Total electricity that is purchased (MWh) electricity produced that is produced by company Comment consumed (MWh) produced (MWh) (MWh) (MWh) 4984000 4514365 469635 469635 469635

Further Information

Page: CC12. Emissions Performance

CC12.1 How do your gross global emissions (Scope 1 and 2 combined) for the reporting year compare to the previous year?

Increased

CC12.1a Please identify the reasons for any change in your gross global emissions (Scope 1 and 2 combined) and for each of them specify how your emissions compare to the previous year

Emissions value Direction of Reason Please explain and include calculation (percentage) change The actions undertaken to reduce Scope 1 emissions have been offset by the Emissions reduction activities 0.3 Increase increase in clinker production. Divestment 0 No change Acquisitions 0 No change Mergers 0 No change Change in output 0 No change Change in methodology 0 No change Change in boundary 0 No change Change in physical operating 0 No change conditions Unidentified No change Other No change

CC12.1b

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Is your emissions performance calculations in CC12.1 and CC12.1a based on a location-based Scope 2 emissions figure or a market-based Scope 2 emissions figure?

Location-based

CC12.2 Please describe your gross global combined Scope 1 and 2 emissions for the reporting year in metric tonnes CO2e per unit currency total revenue

Metric % change Metric numerator (Gross Direction of Intensity denominator: Unit Scope 2 from global combined Scope 1 change from Reason for change figure = total revenue figure used previous and 2 emissions) previous year year Optimization of new kilns which went into operation in 2014 as well the 0.007 metric tonnes CO2e 4301640000 Location-based 3 Decrease continuous attention paid to increasing the efficiency of existing plants.

CC12.3 Please provide any additional intensity (normalized) metrics that are appropriate to your business operations

Metric Direction % change numerator (Gross Metric of change Intensity Metric Scope 2 from global combined denominator: from Reason for change figure = denominator figure used previous Scope 1 and 2 Unit total previous year emissions) year The projects to increase the use of biomass fuels and increase the plants efficiency represent a permanent commitment of the Group to reduce emissions as well as the reduction of the Other: tonnes 0.691 metric tonnes CO2e 42249932 Location-based 0.1 Decrease clinker/cement ratio, which has a cementitious significant impact on the intensity target. This decrease is seen despite the slight increase (year on year) of clinker production which has an increasing effect on absolute emissions.

Further Information

Page: CC13. Emissions Trading

CC13.1 Do you participate in any emissions trading schemes?

Yes

CC13.1a Please complete the following table for each of the emission trading schemes in which you participate

Period for which data is Allowances Allowances Verified emissions in metric Details of Scheme name supplied allocated purchased tonnes CO2e ownership European Union Thu 01 Jan 2015 - Thu 31 Dec Facilities we own and 10489149 0 9789662 ETS 2015 operate

CC13.1b What is your strategy for complying with the schemes in which you participate or anticipate participating?

The Group aims at ensuring compliance at minimum cost. We regularly monitor technical parameters that affect CO2 emissions and performance. During the year, we update actual and year-end gap between allowances and emissions and define our strategy based on this data. Actions in the strategic plan to aid compliance to the EU ETS include: • kiln upgrades, progressively replacing all non dry-technology kilns through major plant revampings • improvements in maintenance and working conditions of kilns as to enhance efficiency, • fuel switch to lower carbon content fuels • clinker cement ratio decrease

CC13.2 Has your organization originated any project-based carbon credits or purchased any within the reporting period?

Yes

CC13.2a Please provide details on the project-based carbon credits originated or purchased by your organization in the reporting period

Number of Credit Number of credits Verified to credits origination or (metric tonnes Credits Purpose, e.g. Project type Project identification which (metric credit CO2e): Risk cancelled compliance standard tonnes of purchase adjusted volume CO2e) CDM (Clean India:Allain Duhangan Hydo Credit purchase Hydro Development 3228 3228 Yes Compliance 192 MW Mechanism) China: Yunnan Whitewaters CDM (Clean Credit purchase Hydro Hydropower Development Development 3073 3073 Yes Compliance Project (GYHDP) Mechanism) CDM (Clean Tunisia: Gas Recovery and Credit purchase Landfill gas Development 760 760 Yes Compliance Flaring for Nine Landfills Mechanism) Tunisia: Djebel Chakir CDM (Clean Credit purchase Landfill gas Landfill Gas Recovery and Development 1910 1910 Yes Compliance Flaring Mechanism) Energy China: NISCO Converter CDM (Clean Credit purchase efficiency: own Gas Recovery and Utilization Development 2547 2547 Yes Compliance generation for Power Generation Project Mechanism)

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Further Information

Page: CC14. Scope 3 Emissions

CC14.1 Please account for your organization’s Scope 3 emissions, disclosing and explaining any exclusions

Percentage of emissions Sources of metric calculated using Evaluation Scope 3 tonnes Emissions calculation methodology data obtained Explanation status emissions CO2e from suppliers or value chain partners Activity data: Goods and services purchased from procurement department based on purchase invoices. Sources GHG emission factors: Ecoinvent. Sources Purchased Relevant, GWP: IPCC 2007 values with timeframe 100 years goods and 877742 100.00% calculated Methodology: Quantities purchased multiplied by cradle- services to-gate GHG emissions factors. Allocation of emissions is based on physical properties, by mass. Waste and secondary goods are allocated zero emissions. Italcementi Group, has as core activity the production of mineral construction materials. Consequently, associated Not relevant, capital goods have very minor GHG Capital goods explanation footprint. (Frieschknecht et al., 2007). provided In related Product Category Rules for LCA, capital goods are excluded from reporting boundary due to insignificant contribution to GHG emissions. Activity data :Fuel and energy purchases from invoices. Sources GHG emission factors: Ecoinvent for fuel and published Country grid emission factors for electricity. Sources GWP: IPCC 2007 values with timeframe 100 Fuel-and-energy- years Methodology: Fuel and energy quantities related activities Relevant, 2878943 purchased were multiplied by cradle-to-gate GHG 100.00% (not included in calculated emissions factors. Purchased energy invoices were Scope 1 or 2) used and allocation of emissions is based on physical properties (fuel mass and energy quantities). Waste, secondary fuels and renewable energy sources are allocated zero emissions e.g biomass. Activity data: transported quantities and distances as in bill of lading and other transportation documents. Upstream Sources GHG emission factors: Ecoinvent for road and Relevant, transportation 1464866 rail transport, IMO for ship transportation. Sources 100.00% calculated and distribution GWP: IPCC 2007 values with timeframe 100 years Methodology: cradle to gate emission factors for transportation activity applied to quantities and distance. Disposal and treatment of waste generated in cement and concrete production operations in the reporting year (in facilities not owned or Not relevant, Waste generated controlled by Italcementi Group). explanation in operations Cement kilns recover their waste and provided also use waste from other processes as alternative raw materials and fuels e.g. RDF. Therefore waste generated in operations is insignificant. Activity data :Fuel consumption and total distance travelled from accounting department and travel Relevant, agencies. Sources GHG emission factors: Ecoinvent for Business travel 12152 100.00% calculated car and flight. Sources GWP: IPCC 2007 values with timeframe 100 years Methodology: emission factors applied to fuel consumption or to distance travelled. Activity data :Average total distance covered daily to work and total number of employees. Information from Employee Relevant, human resources. Sources GHG emission factors: 10877 100.00% commuting calculated Ecoinvent database. Sources GWP: IPCC 2007 values with timeframe 100 years Methodology: emission factors applied to total distance travelled by all employees. Italcementi Group does not lease Not relevant, Upstream leased assets apart from cars used for explanation assets employee business travel accounted provided under the Business travel category. Activity data :transported quantities and distances from Sales department. Sources GHG emission factors: Downstream Ecoinvent for road and rail transport, IMO for ship Relevant, transportation 972581 transportation. Sources GWP: IPCC 2007 values with 100.00% calculated and distribution timeframe 100 years Methodology: cradle to gate emission factors for transportation activity applied to quantities and distance. Activity data: Products sold from sales department based on sales invoices. Sources GHG emission factors: Ecoinvent. Sources GWP: IPCC 2007 values Processing of Relevant, 499 with timeframe 100 years Methodology: Quantities sold 100.00% sold products calculated multiplied by GHG emissions factors of processing activities. Allocation of emissions is based on physical properties, by mass. Use of cement and concrete sold in the reporting year. Cement is an intermediary product, its use phase is Not relevant, Use of sold unknown and thus not accounted for as explanation products required by the WBCSD/WRI Scope 3 provided Accounting and Reporting Standard. Concrete products, on the other hand, do not emit emissions during the use

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Percentage of emissions Sources of metric calculated using Evaluation Scope 3 tonnes Emissions calculation methodology data obtained Explanation status emissions CO2e from suppliers or value chain partners phase. Activity data: quantity of cement, RMC and aggregates sold from Sales dep’t. Landfilling assumed as end of life treatment. Source landfilling GHG emission factors: End of life Relevant, Ecoinvent. Source of GWP: IPCC 2007 values with treatment of sold 1185550 100.00% calculated timeframe 100 years Methodology: Quantities sold products multiplied by cradle-to-gate GHG emissions factors. Allocation of emissions is based on physical properties, by mass. Not relevant, Downstream Italcementi Group does not lease out explanation leased assets its assets. provided Not relevant, There are no franchising activities in Franchises explanation Italcementi Group. provided All investments of the Group is linked to production in plants, core activities. Not relevant, Related emissions have already been Investments explanation covered in Scope 1 and Scope 2 provided alongside above mentioned Scope 3 categories. Other (upstream) Other (downstream)

CC14.2 Please indicate the verification/assurance status that applies to your reported Scope 3 emissions

Third party verification or assurance process in place

CC14.2a Please provide further details of the verification/assurance undertaken, and attach the relevant statements

Status in the Proportion of Verification or Type of current Page/Section Relevant reported Scope 3 assurance verification or Attach the statement reporting reference standard emissions verified cycle in place assurance year (%) https://www.cdp.net/sites/2016/74 Limited /9574/Climate Change 2016/Shared Annual process Complete ISO14064-3 100 assurance Documents/Attachments/CC14.2a /FY16_Italcementi_CO2.pdf

CC14.3 Are you able to compare your Scope 3 emissions for the reporting year with those for the previous year for any sources?

Yes

CC14.3a Please identify the reasons for any change in your Scope 3 emissions and for each of them specify how your emissions compare to the previous year

Sources of Emissions Reason for Direction Scope 3 value Comment change of change emissions (percentage) Mainly due to the strategy to buy less clinker implemented in Egypt. The clinker is manufactured in the plant where an increased fuel switch to alternative fuels was recorded together with other Purchased Emissions process optimizations. The choice to produce clinker instead of purchasing led to an increase in goods & reduction 50 Decrease Scope 1 emissions in Egypt of about 20% versus the high decrease in the purchased goods and services activities services category. This shows that despite the increase in self-clinker production, our Egyptian plant is more efficient with respect to average production practices, due to implemented emission reduction activities. Processing of Change in 100 Increase It was not reported in previous years because of lack of clear methodology sold products methodology

CC14.4 Do you engage with any of the elements of your value chain on GHG emissions and climate change strategies? (Tick all that apply)

Yes, our suppliers

CC14.4a Please give details of methods of engagement, your strategy for prioritizing engagement and measures of success

We developed a Group standard for qualification of suppliers. Environmental issues, and particularly GHG emissions, are covered. Our suppliers need to be informed on developments related to CO2 emissions and climate change as a whole. Italcementi Group is at the forefront of discussions and private sector activities linked to mitigating climate change. We share and alert our suppliers on what is/will be required from them. One practical way we do this is to accompany our requests for climate change data with a full explanation of the main issues at stake. This has been the approach which has triggered some of our suppliers to carry out lifecycle assessments of the global warming potential of their products. In the early years of engagement with our suppliers on climate change issues, they had little or no GHG data to disclose and we had to fill the gap with assumptions and qualitative information. In recent years there has been an increase of feedback from our suppliers having implemented many measures as a result of our collaboration Our engagements focus on suppliers of those products with high GHG footprints but which present a good opportunity for implementing emissions reduction measures. Another outcome of our engagement activities is the increased trend of recycled material use in our products, from our suppliers due to a shift to recycling processes versus those which use virgin materials. This can be seen especially in the increased use of alternative fuels at Group level.

CC14.4b To give a sense of scale of this engagement, please give the number of suppliers with whom you are engaging and the proportion of your total spend that they represent

Number of suppliers % of total spend (direct and indirect) Comment 600 100%

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CC14.4c If you have data on your suppliers’ GHG emissions and climate change strategies, please explain how you make use of that data

How you make Please give details use of the data Managing the impact GHG data of our suppliers is one of the inputs to the Group's procurement platform to which the Sustainable development department evaluate of regulation in the following developments in the regulations on CO2 emissions. A shift to low risks products related to regulatory framework is the desired outcome of supply chain this process. The standardization of purchasing activities opened the possibility to set a common language and an unified reporting system in procurement Use in supplier management, valid for the entire Group. Single metrics based on specific key performance indicators have been established for the assessment of scorecards procurement performances. The Group pre-requisites include the mitigation of impacts on the environment. Additional information is available in the Group’s focus on Supplier Management, available on the corporate website.

Further Information

Module: Sign Off

Page: CC15. Sign Off

CC15.1 Please provide the following information for the person that has signed off (approved) your CDP climate change response

Name Job title Corresponding job category Stefano Gardi Director Sustainable Development Environment/Sustainability manager

Further Information

CDP: [W][-,-][AQ][Pu][E2]

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