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CemTech International Cement Conference

Global Leaders in
Sustainability Performance

Jim O’Brien
Jim O’Brien CSR Consulting
Manila, Philippines, June 20, 2016

Jim O’Brien CSR Consulting 1


Presentation Overview

1. Setting the Context


2. Process & Energy
3. Air Emissions
4. Water, Biodiversity
5. Safety Imperative
6. Assisting Society
7. Sustainable Construction
8. Industry Ambitions

Jim O’Brien CSR Consulting 2


The 25 WBCSD/CSI Members
ƒ There are
currently 25
CSI Members

ƒ CSI covers
30% of global
cement
production

ƒ ~5% of global
aggregates
production

ƒ ~15% of
global
readymix
production

Jim O’Brien CSR Consulting 3


The 20 available 2014/15 CSR Reports
ƒ Argos (2015)
ƒ CEMEX (2015)
ƒ CIMSA (2015)
ƒ CNBM (2014)
ƒ CRCH (2104)
ƒ CRH (2014)
ƒ Dalmia (2013-14)
ƒ HeidelbergCement (2013-14)
ƒ Holcim (2014)
ƒ Intercement (2014)
ƒ Italcementi (2015)
ƒ Lafarge (2014)
ƒ SCG (2015)
ƒ Secil (2014)
ƒ Shree (2014-15)
ƒ Siam City (2015)
ƒ Taiheiyo (2015)
ƒ Titan (2014)
ƒ Ultratech (2014-15)
ƒ Votorantim Cimentos (2014)
Jim O’Brien CSR Consulting 4
Scope of Cohort Analysed
Cementitous Products mt, 2014/15
200 ƒ These 20 companies
together represent 1bnt of
180
160
140 cement, 1bnt aggregates
120
100 and 330m m3 of
80
60
readymixed concrete
40
ƒ And employ 650,000
20
0 people at 15,500 locations
in about 100 countries

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Aggregates mt, 2014/15 Readymix m m3, 2014/15


300 100
90
250
80
200 70
60
150 50
40
100 30
50
20
10
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Jim O’Brien CSR Consulting 5


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Presentation Overview

1. Setting the Context


2. Process & Energy
3. Air Emissions
4. Water, Biodiversity
5. Safety Imperative
6. Assisting Society
7. Sustainable Construction
8. Industry Ambitions

Jim O’Brien CSR Consulting 6


High Growth in use of Alternative Fuels
Top 10, % Alternative Fuels, 2014/15
30%

25% Other AF
Biomass
20%

15%

10%

5%

0%
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ƒ Remarkable growth continues, best now >25%


ƒ Interestingly, about 40% of total is biomass….
ƒ Use of Alternative Fuels brings very significant
financial dividends!
Jim O’Brien CSR Consulting 7
Trend in use of Alternative Fuels
Top 10 Trend, % Alternative Fuels
30%
2011
25% 2012
2013
20% 2014
2015
15%

10%

5%

0%

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ƒ Holcim, Lafarge and CRH have achieved


steady growth, others have recently declined
ƒ Demonstrates ongoing challenge to provide
continuous Alternative Fuel stream
ƒ Also more competition from cheaper coal?
Jim O’Brien CSR Consulting 8
Steady Growth in use of Alternative Materials
Top 10, % Alternative Materials, 2014/15
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
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ƒ Generally increasing, best now hitting 20%


ƒ However Alternative Materials dependent on power & steel industries
ƒ Some players are backward-integrating with those industries

Jim O’Brien CSR Consulting 9


Trend in use of Alternative Materials
Top 10 Trend, % Alternative Materials
20% 2011
18% 2012
16% 2013
14% 2014
12% 2015
10%
8%
6%
4%
2%
0%
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ƒ Several companies struggling to maintain AM usage rate


ƒ Likely impacts of regional declines in coal-fired power generation
ƒ Also challenges from declining or relocating steel production

Jim O’Brien CSR Consulting 10


Steady Reduction in Clinker/Cement Ratios

Top 10, Clinker/Cement Ratio, 2014/15


80%
78%
76%
74%
72%
70%
68%
66%
64%
62%
60% os

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ƒ Steady progress, best now <70%, top six <75%!


ƒ In some countries, OPC is still favoured, mitigating against
changing to blended cements
Jim O’Brien CSR Consulting 11
Trends in Clinker/Cement Ratios
Top 10 Trend, Clinker/Cement Ratio
80%
78% 2011
2012
76% 2013
2014
74% 2015
72%
70%
68%
66%
64%
62%
60%

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ƒ Only Holcim and Lafarge have continued a downward trend


ƒ Others are struggling to maintain momentum….

Jim O’Brien CSR Consulting 12


Thermal Efficiency Steadily Improving

Top 10, Thermal Effic, MJ/t Clinker, 2014/15


3600

3400

3200

3000

2800

2600
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ƒ Steady progress, best now just on 3,000 MJ/t clinker


ƒ Influenced also by extent of Waste Heat Recovery

Jim O’Brien CSR Consulting 13


Thermal Efficiency Steadily Improving

Top 10 Trend, Thermal Efficiency MJ/t Clinker


4000
2011
3800 2012
2013
2014
3600 2015

3400
3200
3000
2800
2600
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ƒ Erratic progress by some players, probably due to market changes


ƒ May be slowed by less-optimal kiln utilisation post-recession?

Jim O’Brien CSR Consulting 14


Significant Reduction in Net CO2/tonne
Top 10, Net CO2/t Cem Prod, 2014/15
660
640
620
600
580
560
540
520
500
s
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ƒ Industry continues to dramatically reduce net CO2/t


ƒ Top 10 now <650 net CO2/t….top 4 now <580kg net CO2/t

Jim O’Brien CSR Consulting 15


Significant Reduction in Net CO2/tonne

Top 10 Trend, Net CO2/t Cementitous Product


750
2011
2012
700 2013
2014
2015
650

600

550

500
s
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ƒ Remarkable progress by CRH, Heidelberg, Shree, Holcim & Lafarge


ƒ Majors improving by up to 10 net CO2/t/year….

Jim O’Brien CSR Consulting 16


Most on track with CO2 Reduction Commitments
Top 10 CO2/t Reductions v Targets (1990 v 2020/2025)
0.0%

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-15.0%

-20.0%

-25.0%

-30.0%
Reduction
-35.0% Target
-40.0%

ƒ Typically achieved 20-25% specific CO2 reduction 1990-2015!


ƒ That is, approx 1% reduction per year
ƒ If continued would mean another 15% reduction by 2030, 40% v 1990
ƒ Leaders are way ahead of the general GNR trend
Jim O’Brien CSR Consulting 17
Good Progress on CSI/IEA Roadmap to 2050

Globally 2007 2050


ƒ Most benchmarks
Production 3.5Bnt 4.4Bnt
are on track
towards 2050 Thermal Efficiency 3580MJ/t 3200MJ/t
targets Alternative Fuels 5-10% 37%
ƒ Though CCS may Clinker/Cement Ratio 75% 71%
instead be Carbon CCS Units 0 200-400
sequestration! Net CO2/tonne 650kg/t 420kg/t
Jim O’Brien CSR Consulting 18
Recent Commitment on Pathway to 2030

ƒ As the CSI contribution to COP21 in Paris, 18 CEOs signed up to a new


commitment – the Low Carbon Technology Partnership
ƒ Ambition is that CO2 emissions should be reduced by 25-30% by 2030
compared to “business-as-usual”
ƒ Means CSI average should reach same level as will the 2020 leaders

Jim O’Brien CSR Consulting 19


Presentation Overview

1. Setting the Context


2. Process & Energy
3. Air Emissions
4. Water, Biodiversity
5. Safety Imperative
6. Assisting Society
7. Sustainable Construction
8. Industry Ambitions

Jim O’Brien CSR Consulting 20


Trend in Kiln Dust Emissions

Top 10, 5-Year Trend, Kiln Dust g/t Clinker


250

2011
200 2012
2013
2014
150 2015

100

50

0
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ƒ Remarkable progress on reduction in kiln dust


emissions due to ongoing investment in filters and
phasing out of old (wet) plants; Shree, CRH and
Titan have reduced emissions by factors of 2-5
ƒ The top 7 now achieve less than ~50mg/t clinker
Jim O’Brien CSR Consulting 21
Trend in Kiln NOx Emissions
Top 10, 5-Year Trend, Kiln NOx g/t Clinker 2011
2000 2012
1800 2013
2014
1600 2015

1400
1200
1000
800
600
400
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ƒ Improvements may have reached kiln technology limits for some,


and may have to be balanced against higher operating costs
ƒ Significant progress achieved by Italcementi, Lafarge, CRH & Secil
Jim O’Brien CSR Consulting 22
Trend in Kiln SOx Emissions

Top 10, 5-Year Trend, Kiln SOx g/t Clinker


500
450 2011
400 2012
350 2013
2014
300 2015
250
200
150
100
50
0
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ƒ Results depend on raw materials and fuels used, which may vary over
time; possible economic limits on levels ultimately achievable
ƒ The top 4 now achieve under 100g/t clinker, SCG = 13g/t clinker

Jim O’Brien CSR Consulting 23


Kiln Minor Emissions - 1
2014/15 Minor Emissions
100
Hg mg/t
90
VOC g/t
80
70 D/F ng/t
60
50
40
30
20
10
0
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SA

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ƒ Eleven companies are now report trace emissions (Mercury, VOCs and
Dioxin/Furans), though the results often not yet cover all kilns
ƒ Reported data can vary from year to year, indicating some difficulty in
precise measurement of such trace emissions
ƒ The results reflect a serious commitment by the industry………
Jim O’Brien CSR Consulting 24
Kiln Minor Emissions - 2
HM I, mg/t Clinker, 2014/15 HM II, mg/t Clinker, 2014/15
30 1000
25 800
20
600
15
400
10
5 200

0 0
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ƒ Only eight companies report on other minor Heavy Metal emissions
(HMI and HMII as defined in the CSI Protocol)
ƒ Results again can vary quite widely, indicating the big challenges the
industry is facing in accurately measuring these trace emissions
ƒ Viable abatement technologies are on the industry research agenda

Jim O’Brien CSR Consulting 25


Presentation Overview

1. Setting the Context


2. Process & Energy
3. Air Emissions
4. Water, Biodiversity
5. Safety Imperative
6. Assisting Society
7. Sustainable Construction
8. Industry Ambitions

Jim O’Brien CSR Consulting 26


Water Usage by Activity
Water Usage, Litres/t Cement ƒ Water conservation is
becoming an increasing
600
2014
industry focus
500

400
2015

300 ƒ Shree and Holcim report


200 <100 litres/t cement
100 ƒ Noted improvements by
0
Argos, Italcementi,
CEMEX and Ultratech
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Ita

In

300
Water Used Litres/t Aggregates
350
Water Used Litres/m3 Rmix
operations
250 2014 300 2014
in water-
stressed
250 2015
200 2015
200
150
150 regions
100

50
100
50
ƒ Industry is a
0 0 major global
consumer of
X
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Jim O’Brien CSR Consulting 27


Restoration of Quarries
2014/15 % Sites with
Restoration Plans
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
s

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ƒ Most report on restoration plans for all quarries (for both cement and
aggregates), several already approaching the 90-100% mark
ƒ Most have commitments to achieve 100% within the coming years
ƒ Increasingly seen as a key part of society’s “licence to operate”
Jim O’Brien CSR Consulting 28
Fostering Biodiversity in Quarries
% Sites Assessed - Biodiversity
100%
80%

60%
40%

20%
0%
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ƒ Biodiversity has become a priority (and


very PR-positive) topic for the industry
ƒ Quarries are biodiversity havens!
ƒ Many have forged links with IUCN, WWF,
BirdLife International and local NGOs
Jim O’Brien CSR Consulting 29
Waste Management & Hazardous Substances
Top 10, Recycled Materials mt, 2014/15
100
90
80
70
60
50
40
30
20
10
0
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ƒ Industry recycles over 200mt of fuels, raw materials, asphalt, etc; top 4
recycle over 20mt each, CNBM no less than 100mt
ƒ Only 6 companies report on management of financial risk items like
asbestos-containing materials, PCBs, ODSs, etc, as well as their
numbers of non-compliances and fines; compliments on most detailed
reporting in this area go to CRH, Italcementi, SCG and Taiheiyo
Jim O’Brien CSR Consulting 30
Presentation Overview

1. Setting the Context


2. Process & Energy
3. Air Emissions
4. Water, Biodiversity
5. Safety Imperative
6. Assisting Society
7. Sustainable Construction
8. Industry Ambitions

Jim O’Brien CSR Consulting 31


Preventing Fatalities

250
Trend in Total Fatalities ƒ Regrettably, 150 fatalities
Third Party were reported by the 20
200 Contractor companies for 2014/15, of
150
Em ployee which 21 were employees,
71 contractors and 58 were
100 third parties
50 ƒ Companies continue to
implement the CSI Driving
0
and Contractor
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Management Guidelines

Jim O’Brien CSR Consulting 32


Employee Fatality Rate
Top 12, 2014/15 Trend in Employee Fatality Rate
1.6
Employee Fatality Rate
1 1.4
0.9
0.8 1.2
0.7 1
0.6
0.5 0.8
0.4
0.3 0.6
0.2 0.4
0.1
0 0.2
0
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08
09
10
11
12
13
14
15
05
06
07
lc
It a

20
20
20
20
20
20
20
20
20
20
20
ƒ Twelve companies had zero employee fatalities – it can be done!
ƒ The good news is that the combined Employee Fatality Rate has now
declined by 77% from 1.45 in 2005 to 0.34 in 2014/15, reflecting
sustained prevention campaigns by all companies; target is Zero
ƒ (Fatality Rate = #Fatalities/10,000 Employed)

Jim O’Brien CSR Consulting 33


Employee LTIFR
Top 10, Employee LTIFR, 2014/15 Trend in Employee LTIFR
1.8
9
1.6
8
1.4
7
1.2
6
1
5
0.8
4
0.6
3
0.4
2
0.2
1
0
0
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05 0 06 0 07 0 08 0 09 0 10 0 11 0 12 0 13 0 14 0 15
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ƒ Seven companies report a remarkable LTIFR of <1


ƒ Employee LTIFR declined by 83% from 8.2 in 2005 to 1.38 in 2014/15
ƒ (LTIFR is the number of Lost Time Injuries causing 1 or more days or shifts of absence
per million manhours worked; LTIFR of 1 = 10% probability of an accident in 50 years)

Jim O’Brien CSR Consulting 34


Contractor Fatality Rate and LTIFR

2014/15 Fatality Rate Contractors 2014/15 Contractor LTIFR


10 1.8
9 1.6
8 1.4
7
1.2
6
5 1
4 0.8
3 0.6
2
0.4
1
0 0.2

ity
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ƒ Impressive that 6 companies now also report


a Contractor Fatality Rate, and that these are
approaching the Employee Fatality Rate
ƒ Equally that 9 companies report a Contractor
LTIFR, also are approaching Employee LTIFR

Jim O’Brien CSR Consulting 35


Total Recordable Injury Rate (TRIR)
TRIR, 2014/15
9.0
8.0 TRIR Employees
7.0 TRIR Contractors
6.0
5.0
4.0
3.0
2.0
1.0
0.0
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ƒ Seven companies are now “going the extra mile” in reporting


Employee TRIR and two also report Contractor TRIR
ƒ (“Recordables” are workplace injuries requiring medical treatment, including those not
involving lost time; TRIR is the number of “Recordables” per million manhours worked)

Jim O’Brien CSR Consulting 36


Gender Diversity
2014/15 % Female Employees
25%

20%

15%

10%

5%

0%
Ar CH
fa s
Ti X

Si CN H
M
Ta Se A

el im

G
CI ech

SC y
He Ho tan
CE tim
tra ee

l e l
Vo cem iyo

CRe
ra ti

CRrg

La go
Ita ih ci

t
rg
S

am B
to en

Ci
id lc
Ul Shr

be
M
M

n
t

ƒ The percentage of female employees varies by culture, tradition and


particular company portfolio of businesses
ƒ Big changes in an industry hitherto male-dominated – top three have
more than 20% female in overall workforce

Jim O’Brien CSR Consulting 37


Employee Development
Top 12, Training Hrs/Y, 2014/15 2014/15 % Absenteeism
70 9%
60 8%
7%
50 6%
40 5%
4%
30
3%
20 2%
10 1%
0%
0

s
CE H
id EX
l c SA
Sh l
Ta ree

CI o

ti

rg
go
ci
H

os
tim
h

D m

m A
ity
H H

CR
La g

or e

y
n

de ia

en
ec

C
ot rg

Se
er

He M

be
S MS
R
ta

ei

Ita M
ci

ei m

rg
C

Ar
R
C

an

em
lb
at

V fa

ih
Ti

ol

H al

el
C

A
I
C
ltr

ia
U

2014/15 Employee Turnover Rate


ƒ Top 12 companies provide >20h/y 16%

employee training, top 2 >50h/y 12%

ƒ Absenteeism rates very low for a 8%


cyclical/seasonal industry, top 2 <1% 4%

ƒ Turnover rates vary by type of 0%


business, with top 3 at <5%
H e H o os

U l ME t y
It a T S A

e im
CI H

Se G
l
CR e

em n

Sh c h
tr a X
A r nti

SC e

ci
a m rg
rg

lc i t a

re
CE Ci
g
id l c

te
S i lb e
M

e
fa
La

Jim O’Brien CSR Consulting 38


Presentation Overview

1. Setting the Context


2. Process & Energy
3. Air Emissions
4. Water, Biodiversity
5. Safety Imperative
6. Assisting Society
7. Sustainable Construction
8. Industry Ambitions

Jim O’Brien CSR Consulting 39


Promoting Affordable Housing

ƒ CEMEX funded 2,400 affordable homes in 13


countries in 2015; Patrimonio Hoy, Construyo
Contigo…
ƒ Lafarge Affordable Housing program befitted
300k people in 18 countries in 2014
ƒ Argos funded Affordable Housing and other
projects, benefitting 562k people in 6 countries
ƒ Ultratech’s “Compassionate Capitalism”
benefitted 1.3m people in 407 villages in India
ƒ CRH supported Habitat for Humanity projects in
the USA
Jim O’Brien CSR Consulting 40
Community Health & Educational Initiatives

ƒ Holcim’s Inclusive Business Model


included Sanitation in India, up to
500k/y by 2025
ƒ Ultratech supports extensive
Preventive, Curative, Reproductive
and Child Healthcare programs in
India
ƒ Shree supports 33 villages in India
on education, healthcare, basic
infrastructure and women
empowerment
ƒ SCG supported 80 communities in
20 provinces in Thailand
ƒ Dalmia ran extensive community
water and energy infrastructure, as
well as health and education
programs in India

Jim O’Brien CSR Consulting 41


Improving the Lives of Millions
People Impact m
45
40
35 Cum to 2014/15
30 Am bition 2020 cum
25
20
15
10
5
0
s
EX
m

e
go
ec

rg CEMEX has volunteering programs in


ci

ƒ
M

Ar

fa
at
l
Ho

CE

La
tr

70% of its countries; over 15 years,


Ul

CEMEX’s social programs have


assisted over 9m people
ƒ Siam City Cement provided drought
relief assistance to neighbour
communities in Thailand
ƒ Taiheiyo supported community
projects in several Pacific Rim
countries, benefitting 20k people
Jim O’Brien CSR Consulting 42
Presentation Overview

1. Setting the Context


2. Process & Energy
3. Air Emissions
4. Water, Biodiversity
5. Safety Imperative
6. Assisting Society
7. Sustainable Construction
8. Industry Ambitions

Jim O’Brien CSR Consulting 43


Product Innovation, Sustainable Construction
ƒ Innovation is proceeding apace
on many fronts:
ƒ Cement Process, including
Carbon Sequestration (eg
Heidelberg)
ƒ New clinker mineralisation
techniques, including use of
nanotechnology (eg Argos,
Taiheiyo)
ƒ New market-niche cement
types, including eco-marking
(eg CEMEX, SCG, Siam City)
ƒ New mix types of concretes,
mortars and precast (eg
CEMEX, CIMSA, Lafarge, Secil,
Titan, Ultratech, Votorantim)
ƒ Optimal Concrete/Energy Use
in Infrastructure and Buildings
(eg CRH, Lafarge)
Jim O’Brien CSR Consulting 44
Driving and Benchmarking Innovation
Innovation Spend €m, 2014/15 % Revenue from Innovation
150 40%
120
30%
90
20%
60
30 10%
0
0%
em s
Ta E X
CE G
BM

e
e

yo

Sh i

G
g

M
EX

os

m
re
SC

ge
rg

ti
I ta Arg

en
er

SC

NB
M

en
ei

ci
CN

rg
EM

ar
fa

lb

ol
ih

m
A

C
f
La

La

H
C

e
id

lc

lc
He

Ita
ƒ Innovation being driven through:
ƒ Employee/customer suggestion schemes, eg “Ideaxion”, Click-Lab”, “i.Lab”
ƒ Central Research laboratories, eg Argos, CEMEX, CNBM, Lafarge, Italcementi
ƒ External consultants, eg ECRA
ƒ Key benchmarks emerging are:
ƒ Innovation spend, with top 3 spending >€90m each
ƒ % company revenue from innovative products, target ~30%
ƒ Do we have a “Silver Bullet” in Solidia, CarbonCure, Carbonate Looping?

Jim O’Brien CSR Consulting 45


Presentation Overview

1. Setting the Context


2. Process & Energy
3. Air Emissions
4. Water, Biodiversity
5. Safety Imperative
6. Assisting Society
7. Sustainable Construction
8. Industry Ambitions

Jim O’Brien CSR Consulting 46


Ten Key Sustainability Ambitions for 2030?

1. Energy/Climate <3,000MJ/t, AF>25%, Cl/C<70%, Net CO2 ~600kg/t?


2. Process, quantum leap in C-reduction in process/product technology?
3. Air Emissions, particularly trace emissions, new process solutions?
4. Water-frugal, <100l/t cement and aggregates, <200l/m3 readymix?
5. Biodiversity-rich, biodiversity action plans at 100% of sensitive sites?
6. Circular Economy, zero waste, recycling of intermediate/end products?
7. Minding People - “Triple 0-0-0”, zero fatalities, zero LTIs, zero illness?
8. Assisting Society – industry reaching out to 100 million people total?
9. Innovation - >33% revenue from eco-value products?
10. Financial - continuing to be a profitable industry!

Jim O’Brien CSR Consulting 47


Conclusions…

ƒ The Cement Industry has uniquely


reinvented itself in the last 15 years
under the Sustainability banner, which
action has also been perfectly aligned
with the Business Case

ƒ It may be more challenging to work


towards the industry 2030 ambitions,
with less easy Sustainability payback,
but doubtless industry innovation,
acumen and determination will prevail

ƒ The CSI Global Leaders will continue to


lead the way also in future years!

Jim O’Brien CSR Consulting 48

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