ACCELERATING TOWARDS EXCELLENCE SUSTAINABILITY REPORT COCA-COLA FEMSA 2016 154 BRANDS IN 12 CATEGORIES MAKE UP OUR PORTFOLIO CLOSE TO 1 MILLION PEOPLE HAVE BEEN BENEFITED BY OUR HEALTHY HABITS PROGRAMS USD $11.9 MILLION INVESTED IN 46% COMPREHENSIVE TRAINING OF THE ELECTRIC POWER FOR OUR ASSOCIATES WE USE IN MEXICO AND 74% IN BRAZIL, COMES FROM CLEAN SOURCES CLOSE TO 20 BILLION TRANSACTIONS ANNUALLY COCA-COLA FEMSA, S.A.B. DE C.V. IS THE LARGEST FRANCHISE BOTTLER IN THE WORLD BY SALES VOLUME. THE COMPANY PRODUCES AND DISTRIBUTES TRADEMARK BEVERAGES OF THE COCA-COLA COMPANY, OFFERING A WIDE PORTFOLIO OF 154 BRANDS TO MORE THAN 375 MILLION CONSUMERS DAILY. WITH OVER 100 THOUSAND EMPLOYEES, THE COMPANY MARKETS AND SELLS APPROXIMATELY 4 BILLION UNIT CASES THROUGH 2.8 MILLION POINTS OF SALE A YEAR. OPERATING 66 MANUFACTURING PLANTS AND 328 DISTRIBUTION CENTERS, COCA- COLA FEMSA IS COMMITTED TO GENERATING ECONOMIC, SOCIAL, AND ENVIRONMENTAL VALUE FOR ALL OF ITS STAKEHOLDERS ACROSS THE VALUE CHAIN. G4-4 1.5 MILLION 93% INDIRECT JOBS CREATED OF THE WASTE ACROSS OUR VALUE CHAIN GENERATED IS RECYCLED 16 USD $58 OF OUR PLANTS MILLION INVESTED OPERATE UNDER THE IN SUSTAINABILITY ZERO WASTE INITIATIVE 100% OF THE WATER WE USE IN MEXICO AND BRAZIL TO PRODUCE OUR DRINKS IS RETURNED TO THE ENVIRONMENT 100% OF STRATEGIC INPUTS UNDER THE USD $29 GUIDING PRINCIPLES FOR SUPPLIERS MILLION SAVED WITH OF THE COCA-COLA COMPANY ENVIRONMENTAL EFFICIENCIES TABLE OF CONTENTS: 2 MESSAGE FROM OUR DIRECTORS 4 OUR COMPANY BUSINESS STRATEGY SUSTAINABILITY STRATEGY SUSTAINABLE DEVELOPMENT GOALS 2020 GOALS VALUE CHAIN PRODUCTS ECONOMIC VALUE 18 OUR PEOPLE CULTURE AND VALUES COMPREHENSIVE DEVELOPMENT TRAINING AND DEVELOPMENT 34 OUR COMMUNITY HEALTHY LIFESTYLES COMMUNITY DEVELOPMENT SUSTAINABLE SOURCING 50 OUR PLANET WATER WASTE AND RECYCLING ENERGY 72 CORPORATE GOVERNANCE ABOUT OUR REPORT GRI CONTEXT INDEX G4 EXTERNAL ASSURANCE G4-10, G4-LA12 OUR COMPANY OUR PEOPLE OUR COMMUNITY OUR PLANET CORPORATE GOVERNANCE AS THE LARGEST BOTTLER AND RETAILER OF COCA-COLA PRODUCTS IN THE WORLD WE MAINTAIN OUR PURPOSE OF CREATING ECONOMIC, SOCIAL, AND ENVIRONMENTAL VALUE. • ARGENTINA • BRAZIL • COLOMBIA • COSTA RICA • PHILIPPINES • • GUATEMALA • MEXICO • NICARAGUA • PANAMA • VENEZUELA • G4-6, G4-8 2016 SUSTAINABILITY REPORT 1 2016 IN NUMBERS 342 2.8 PRODUCTION LINES MILLION POINTS OF SALE +4,000 MILLION UNIT CASES SOLD CEDIS CEDIS 328 66 DISTRIBUTION CENTERS BOTTLING PLANTS +24,600 FREIGHT, DISTRIBUTION AND UTILITY VEHICLES +12,600 DELIVERY ROUTES 375 +101,000 MILLION ASSOCIATES1 CONSUMERS 1 Includes third-party personnel G4-9, G4-10, G4-EC8, G4-LA12 2 OUR COMPANY OUR PEOPLE OUR COMMUNITY OUR PLANET CORPORATE GOVERNANCE MESSAGE FROM OUR DIRECTORS AT COCA-COLA FEMSA WE ARE FIRMLY COMMITTED TO SIMULTANEOUSLY GENERATING ECONOMIC, SOCIAL, AND ENVIRONMENTAL VALUE. In 2016, Coca-Cola FEMSA faced important leadership and a work culture that encourages challenges inherent to the beverage collaboration and innovation. industry’s own dynamics and to the political, economic, and social context of the 10 In Our Community we are committed to countries where we operate. contributing to improve life quality by encouraging healthy lifestyles, promoting In order to address these challenges, we wellbeing, and fostering sustainable growth maintained focus on our Strategic Business among our suppliers. Framework based on a clear vision of becoming world leaders by offering clients and consumers a In 2016, we joined the Latin American Commitment wide portfolio of beverages; by making sure that for a Healthy Future, a multi-sector initiative led by our Centers of Excellence have the best operating companies in the beverage industry and focused practices to produce, distribute, and market our on promoting healthy lifestyles through education. products; by having a solid base of multicultural Six months after it was first launched in June 2016, talent that includes more than 100 thousand we have reached more than 114 thousand students associates, and by considering sustainability as a in Colombia and Mexico. Additionally, we benefited driver behind our business decisions. close to 1 million people through our healhty lifestyles programs. Having the privilege of serving more than 375 million consumers a day and maintaining our Following with our desire to improve and leadership as the largest bottler of The Coca- reinforce the way in which we understand Cola Company’s products, also entitles a great the needs of the people who make up our responsibility. That is why, at Coca-Cola FEMSA, communities, we launched our Model for we have the firm purpose of simultaneously Addressing Risks and Relations with the generating economic, social, and environmental Community (MARRCO) that helps us adapt our value throughout our value chain. projects to the reality being faced by each region and to generate greater social value. This year, we strengthened the way in which we align our actions to contribute to the United To strengthen our value chain, in 2016 we carried Nation’s Sustainable Development Goals, out a program to develop local suppliers by working prioritizing and contributing to those issues in with 61 small and medium-sized companies (SMEs) which, because of the nature of our business, in order to support their business performance and we can generate greater value. Additionally, sustainability practices. we continued to implement measures and initiatives aligned with the Strategic To contribute to Our Planet, we integrated Sustainability Framework, setting the map we systems into our operations that have helped will follow on the road to reach our 2020 Goals us increase our energy efficiency by 19% since in each of the three pillars: Our People, Our 2010, and we continue to include clean energy Community, and Our Planet. sources, reaching up to 46% of our energy consumption in Mexico and 74% in Brazil. These In the Our People pillar, we develop talent and we initiatives are an example of the commitment strive to be the place where our associates can we have established through the We Mean find personal and professional growth through Business platform in partnership with the Carbon Disclosure Project. G4-1, G4-2, G4-10, G4-LA12 2016 SUSTAINABILITY REPORT 3 Over the past six years, we improved our of the Mexican Stock Exchange, for the fourth efficiency in water consumption per beverage consecutive year we were included in the Dow produced by 12%, and we also returned to the Jones Emerging Markets Sustainability Index and, communities and to the environment more than we were listed for the first time in the FTSE4Good 100% of the water we consume in Mexico and Emerging Index and Vigeo-Eiris Emerging 70 Brazil. In 2016, we joined the UN’s Business Ranking indexes. Alliance for Water & Climate Change (BAfW) to develop water care and conservation projects. Within this Sustainability Report we describe the most relevant initiatives and results for 2016, that All these efforts contribute to the recognition were possible thanks to our associates, partners of our commitment towards sustainability. For and allies who join us in our purpose of generating the sixth consecutive year, we are one of the 30 shared value. companies included in the Sustainability Index JOSÉ RAMÓN JOHN MARTÍNEZ ALONSO SANTA MARIA OTAZUA CORPORATE AFFAIRS CHIEF EXECUTIVE OFFICER OFFICER G4-1 4 OUR COMPANY OUR PEOPLE OUR COMMUNITY OUR PLANET CORPORATE GOVERNANCE close to 20 billion transactions annually USD $8.6 billion in total income +4,000 million unit cases sold 2016 SUSTAINABILITY REPORT 5 OUR COMPANY CEDIS THE LARGEST COCA-COLA BOTTLER IN THE WORLD We are a multinational company that produces and distributes more than 154 of The Coca-Cola Company’s brands with operations in 10 countries in Latin America and Asia. G4-4 6 OUR COMPANY OUR PEOPLE OUR COMMUNITY OUR PLANET CORPORATE GOVERNANCE 01. STRATEGIC BUSINESS FRAMEWORK At Coca-Cola FEMSA we continue to evolve and in 2016 we took in 2016 we took on the task of reviewing and updating our Strategic Business Framework aligning it to the demands in our surroundings and seeking to continue to be at the forefront of the industry, by including sustainability as one of the three key aspects of our business strategy. BECOME A MULTI-CATEGORY BEVERAGE LEADER WITH GLOBAL FOOTPRINT CATEGORIES GEOGRAPHIES Protect and grow in sparkling drinks and Expand our presence in Latin America and Asia, diversify in still drinks, dairy products by capturing opportunities within and new categories. The Coca-Cola System. WINNING OPERATING MODEL CULTURAL PORTFOLIO BUILDUP TRANSFORMATION EVOLUTION Growth in sparkling drinks Commercial Digital Platform Collaborative spirit Profitable growth Scalable Solutions Maintaining our passion in still drinks in Supply Chain in execution Accelerated growth Global Business Services to Strengthening our in dairy products leverage our growth multicultural environment Innovative IT strategy STRATEGIC CAPITAL BUSINESS MERGERS AND ALLOCATION SUSTAINABILITY ACQUISITIONS This new Strategic Business Framework creates value for our company and stakeholders by promoting the collaboration of the whole operation to identify, share, and replicate best practices. 2016 SUSTAINABILITY REPORT 7 02. STRATEGIC SUSTAINABILITY FRAMEWORK RANSFORM OUR C LY T OMM VE UN SIT IT S IE PO S COMMUNITY DEVELOPMENT HEALTHY SUSTAINABLE LIFESTYLES SOURCING COMPREHENSIVE OUR DEVELOPMENT COMMUNITY WATER TRAINING AND WASTE AND DEVELOPMENT OUR OUR RECYCLING PEOPLE PLANET CULTURE AND VALUES ENERGY OUR ETHICS AND VALUES Transportation impacts Transportation management Waste development Supplier values and Culture Safety in our communities Compensation safety and Health impact environmental Local and Training development marketing Responsible our in Wellbeing communities Energy products Sustainable recycling and Packaging Nutrition and physical activation Water MATERIALITY MINOR RELEVANCE LEVEL MAJOR G4-14, G4-18, G4-19, G4-20, G4-21 8 OUR COMPANY OUR PEOPLE OUR COMMUNITY OUR PLANET CORPORATE GOVERNANCE 03. SUSTAINABLE DEVELOPMENT GOALS At Coca-Cola FEMSA we are committed to contribute to the Sustainable Development Goals that the United Nations has suggested every country should comply with by 2030.