Value Added Statement

At Argos, we believe in working with others to become part of the solution to many of the global challenges we face today. This is why we strive to create value for our stakeholders through responsible operations and effective management strategies.

The value we create for society is reflected in our financial statements, but we create additional intangible value through the economic, environmental, and social effects of our operations. Such effects are costs and benefits that are involuntarily assumed by society and are also known as externalities.

Conscious of this, we launched an initiative that allows us to assess and actively manage each of the main externalities associated to our operation. Using KPMG’s True Value methodology, we developed the Value Added Statement (VAS), a tool that provides important insights on the ways through which we retain, add, or reduce value for the society as a whole.

This approach allows for a wide range of applications within our company, which we will further explore in order to achieve 3 main objectives:


1. Make better informed and more responsible business decisions.

2. Manage our risks more accurately.

3. Enhance our transparency by presenting our stakeholders more holistic, fact-based information.

the Value Added Statement (VAS), is a tool that provides important insights on the ways through which we retain, add or reduce value for the society as a whole

The statement

Martinsburg plant, USA Region

The VAS model is designed to calculate the net value we add to society during a given fiscal year. Final results are portrayed as a financial bridge graph, which begins with the value we retain in the form of earnings. The positive or negative amount in each of the subsequent bars shows the societal value created or reduced by each externality. The final bar represents the net value added to society after all externalities have been accounted for.

The VAS results to date are calculated through a customized model based on a set of assumptions*.

Current approaches could be refined further as new studies become available. Nevertheless, they reflect the order of magnitude of our added value in monetized terms, which can help us to increase our corporate and societal value over time.

Methodology

During 2016 we went through the following steps:


Defining the scope:
Company-wide identification of positive and negative externalities and boundaries.

Building the model:
Data collection and monetization based on research of most accurate multipliers available to date.

Gathering insights:
Analysis and public disclosure of key findings and planning of next steps.

Externalities

Economic*

Salaries and benefits
Impacts on the economy deriving from the remuneration of employees.
Interests and dividends
Impacts on the economy related to interest and dividend payments to financial institutions and investors.
Taxes
Impacts on the economy associated with tax payments to the governments of the countries in which we operate.

Social

Talent development
Impacts deriving from human capital development enhanced by training programs.
Community investment
Impacts of projects on housing, community, and educational infrastructure, scholarships and others.
Health and safety
Impacts on workers and communities associated with occupational incidents (injuries & fatalities) and illnesses.

Environmental

GHG emissions

Climate change impact through GHG emissions (Scope 1 & 2).
Air emissions
Air pollution impacts associated with Cementos Argos’ emissions of NOx, SOx and particulate matter.
Water consumption
Impacts on water scarcity caused by our water consumption.
Biodiversity
Impacts on biodiversity via extraction operations and facilities as well as offsets and rehabilitation programs
Alternative materials and fuels
Impacts of replacing raw materials and fuels with alternative ones, which results in avoided CO2 emissions.

*The data used for calculating both Retained Benefit and Economic Externalities includes our recently acquired Martinsburg plant in West Virginia, USA, in line with our financial statements. Societal value created by economic externalities was corrected to reflect potential economic inefficiencies, i.e. corruption-related activities in the economy.



Click here for more information on our full VAS report

Value Added Statement for 2015

Figures in USD million
Positive | (Negative)

Click the image to enlarge

Economic

We create indirect economic effects through increased demand and spending from households and sectors in the economy. These effects arise from the payments regarding salaries & benefits, taxes, interests and dividends.

Salaries and benefits
Interests and dividends
Taxes
Net value
USD 820.5
million

Social

The net benefit associated to social externalities accounted for USD32.3 million, which resulted mainly from Community Investment. In 2015, they accounted for 93% of total benefits derived from social externalities.

Talent development
Community investment
Health and safety
Net value
USD 32.3
million

Environmental

GHG emissions are currently the most significant environmental externality, accounting in 2015 for 78% of the overall costs to society derived from environmental impacts. However, during this year the increasing use of alternative materials and fuels also allowed us to avoid 10.5% of the societal cost of GHG emissions.

GHG emissions
Air emissions
Water consumption
Biodiversity
Alternative fuels and materials
Net value
USD (294.6)
million
Net Value to Society
The net value added to society in 2015 was USD 842.5 million, 2.96 times higher than the benefit we retained during the same period.
Net value
USD 842.5
million

Value Added Statement for 2016

Figures in USD million
Positive | (Negative)

Click the image to enlarge

Economic

In 2016, economic externalities accounted for a net benefit of USD920.2 million and increased by 12% compared to 2015.

Salaries and benefits
Interests and dividends
Taxes
Net value
USD 920.2
million

Social

The net benefit from our social externalities in 2016 derived mainly from Community Investment. Thanks to the I Promise project, the societal cost associated to occupational incidents and illnesses decreased by 47% compared to 2015.

Talent development
Community investment
Health and safety
Net value
USD 25.8
million

Environmental

The environmental effects of our operations accounted for a net cost to society of USD287.5 million in 2016. This amount is 2% lower than the net environmental cost in 2015. This result is mostly explained by an 8% decrease of our GHG emissions. Also, by the fact that 11% of the societal cost derived from our GHG emissions was avoided through the use of alternative materials and fuels during 2016. Another significant reduction was the societal cost derived from our Water Consumption, which decreased by more than 13%. There was an additional reduction of almost 2% in the net cost associated to Biodiversity with respect to 2015.

GHG emissions
Air emissions
Water consumption
Biodiversity
Alternative fuels and materials
Net value
USD (287.5)
million
Net Value to Society
In 2016, the net value added to society was 3.43 times higher than our retained benefit, and it increased by 10% compared to 2015.
Net value
USD 929.3
million