Cementos Argos

Cementos Argos commits to reduce its scope 1 and 2 emissions by 21% per tonne of cementitious product by 2030 compared to 2021, which is validated by the Science Based Targets initiative (SBTi) as consistent with a well-below 2°C pathway. Furthermore, the company commits to reduce 29% of its scope 1 specific CO2 emissions stemming from its cement business by 2030 compared to 2006 emissions and to reduce 24% of its scope 2 specific CO2 emissions compared to 2021 emissions. As a long-term goal, Cementos Argos aims to produce carbon-neutral concrete by 2050.

The company has a Sustainability & Corporate Governance Committee, which is a supporting committee of its board of directors and has oversight of climate issues. The committee members have some tangible expertise in the low-carbon transition. Additionally, the company’s remuneration for senior executives incorporates climate change performance. In 2023, Argos defined an internal carbon price of USD 15.8 per tonne of CO2. Moreover, the company demonstrates transparency by detailing its consideration of different scenarios, including those for a low-carbon economy, and incorporates various parameters and assumptions into its climate change scenario analysis. It describes the results both qualitatively and in financial terms.

No leading practices were identified for this company.

No leading practices were identified for this company.

Cementos Argos has the potential to enhance its ambition and align with the 1.5°C pathway. It has established a long-term goal of producing carbon-neutral concrete by 2050 along with intermediate targets for reducing its scope 1 and 2 emissions by 2030. However, the company should set intermediate targets at gaps of no more than five years to incentivise near-term action on longer-term goals. Furthermore, Argos recently saw an increase in its scope 1 and 2 emissions intensity, contrasting with the company’s 1.5°C pathway, which requires nearly 3% reductions annually over the next 5 years. Moreover, as of now, the company’s locked-in emissions from current and planned assets are not expected to stay within its carbon budget for the period between 2023 to 2037.

Cementos Argos can enhance its transition plan by instituting regular monitoring, reviewing, and updating processes. Revenue from low-carbon products constituted 17% of the company’s total revenue in 2022. However, the company’s product classification relies on life cycle assessment and needs to be EU Taxonomy-aligned. Argos demonstrates dedication to advancing carbon capture projects with an ambitious growth trajectory. However, it can extend this level of ambition to other low-carbon business models and further broaden its scope, for example, developing zero-clinker cement products or contributing to the low-carbon optimisation of construction products.

Cementos Argos has not disclosed its total research and development (R&D) expenditure in the last three years. It has disclosed its investment in low-carbon and non-mature technologies for 2022 and has an opportunity to report this consistently in the coming years. The current share of alternative fuels used by the company is less than 10%.

Cementos Argos’ resilient supply chain strategy emphasises knowledge transfer, promoting good practices and recognising sustainable suppliers, but it lacks focus on reducing suppliers’ emissions. In addition to clarifying the scope of this strategy, the company can incorporate emissions reduction and reporting requirements for suppliers. Argos should also publicly disclose its strategy to influence client behaviour to reduce emissions apart from promoting its Green Solutions portfolio products. While Cementos Argos’ engagement policy encompasses the entire company, there is an opportunity to ensure better alignment between its climate change policy and the climate positions adopted by the trade associations it is a member of. Furthermore, it should establish a monitoring and review process to ensure that its policy positions are consistent with the goals of the Paris Agreement.

Cementos Argos has committed to reduce scope 1 and 2 emissions per tonne of cementitious material by 21% across its operations by 2030 that is verified by the SBTi. Additionally, it plans to decrease direct net carbon dioxide emissions for its cement operations by 29% compared to 2006 levels and reduce emissions linked to its electrical energy consumption by 23% by 2030 compared to 2021. Furthermore, it is committed to advancing R&D of carbon capture technologies and investing in a project for carbon capture through microalgae.

Cementos Argos USA’s presence on the board of the Portland Cement Association is a cause for concern, as this association is known for its climate-negative stance. This discrepancy raises questions about the alignment between the company’s climate policy and its trade association affiliations.

Cementos Argos’ in-use emissions intensity trend increased between 2017 and 2022. This is in contrast with the company’s 1.5°C pathway, which requires the company to reduce the in-use emissions intensity of its portfolio in the coming five years by 2.4% annually. While the company obtained a 3% reduction in specific scope 2 carbon dioxide emissions, its scope 1 emissions rose by 0.3%, attributed to higher caloric consumption in clinker production. Additionally, the energy crisis led to higher global fuel prices, impacting the company’s domestic supply and quality of thermal coals.

Cementos Argos invested USD 12.8 million in low-carbon capital expenditure, which accounted for roughly 7% of its total capital expenditure during 2022. Furthermore, it directed 69% of its R&D budget towards low-carbon product development. Investment in carbon capture constituted 56% of the company’s total R&D investment over the last three years. In 2022, 17% of the company’s total revenues came from low-carbon products, although this determination was based on life cycle assessment (LCA) rather than alignment with the EU Taxonomy. Further, the company is increasing the substitution of conventional fuels with alternative fuels, reaching a substitution rate of 5.7% at the company level.

Cementos Argos plans to reduce scope 1 and 2 emissions per tonne of cementitious material by 21% across its operations by 2030 and to produce carbon-neutral concrete by 2050. The decarbonisation levers it aims to use include increasing the use of alternative fuels to replace fossil fuels, reducing the clinker-to-cement ratio, improving thermal efficiency, increasing purchase and use of energy from renewable sources and developing CCUS technologies.

No evidence was found of the company’s commitment to social dialogue or of the categories of stakeholders the company engages with on a just transition. Furthermore, no evidence was found to demonstrate the company’s ongoing social dialogue and meaningful engagement with affected stakeholders. No evidence was found of the company undertaking low-carbon transition planning to mitigate the social impacts of the transition on workers, affected stakeholders and its business relationships. Additionally, no evidence was found to demonstrate the company’s engagement in social dialogue and with stakeholders in its just transition planning.

The company discloses the actions it takes to create jobs, including particular plant expansions. However, no public commitment by the company was found stating its intention to create and support access to green and decent jobs as part of the low-carbon transition. Moreover, no evidence was found of the company’s actions to promote these jobs in a way that ensures gender balance and inclusion of vulnerable groups. No relevant disclosure was found of the company’s assessment of employment dislocation risks. The company discloses the measures it takes to embed equality of opportunity for women and vulnerable groups in the reskilling and upskilling opportunities it provides. It does this through support for initiatives that help upskilling women in the trucking business and supporting young people in higher education. However, no evidence was found of the company having a process for identifying skills gaps for workers and stakeholders affected by the low-carbon transition or a public commitment to help workers displaced by the transition to reskill or upskill.

No relevant disclosure was found to show if the company identifies the impacts of the low-carbon transition on social protection for workers and affected stakeholders, nor how it contributes to their social protection. Additionally, no evidence was found that the company expects its business relationships to contribute to the social protection of their workers and affected stakeholders. No relevant disclosure was found to show how the company identifies any misalignment of its lobbying activities with policies and regulations that support the just transition, nor of the measures it takes to address misalignment. Furthermore, no evidence was found that the company lobbies for policies and regulations for green and decent job creation; retention, education and reskilling; and social protection for workers.

The company commits to respecting human rights, and it describes its process to identify its human rights risks and impacts. Additionally, the company discloses the categories of stakeholders whose human rights may have been affected by its activities. However, no evidence was found of the company’s process to assess and integrate its human rights risks and impacts. The company does, however, have a grievance mechanism available to workers and external stakeholders.

The company commits to respecting the health and safety of its workers and expects the same commitment from its business relationships. However, no evidence was found of the company having a time-bound target for paying all workers a living wage. While the company discloses the proportion of its direct workforce covered by collective bargaining agreements, no relevant disclosure was found of the company’s required working hours. The company discloses some indicators of workforce diversity, such as the gender of its workforce by employee category. Additionally, the company has a public commitment to promote gender equality and women’s empowerment.

The company has a policy prohibiting bribery and corruption, and it includes corresponding clauses in its business relationship contracts. It also discloses its global tax strategy and the amount of corporate income tax it pays in each relevant jurisdiction. Furthermore, the company discloses its political contributions. However, the company can strengthen its disclosure on lobbying and political engagement, and other key ethical business topics, including personal data protection.