Cementir Group internal control and risk management system takes into consideration all main risks that could jeopardize the achievement of Group objectives.
Risks are identified and assessed according to uniform criteria of probability and impact in the following categories: strategic risks, compliance risks, financial risks, operational risks and sustainability risks.
The Group should assess and manage the risks associated with climate change, as the cement production process has environmental impacts in terms of CO2 emissions into the atmosphere, the risks associated with the protection of workers' health and respect for human rights.
Such risks are linked to four key areas: transition risks, physical risks, transition opportunities, social risks.
For this type of risk, we calculate Cementir's exposure to the risks associated with the transition to a low-carbon economy, through an analysis of emissions and the intensity of thermal energy and exposure to related regulations.
For example, the tightening of European regulations on emissions could result in an increase in CO2 emissions rights linked to the Emission Trading Scheme (ETS) quotas. According to the scenario developed by the Group, Cementir will have CO₂ allowances until the end of 2021. Starting from 2022, approximately 600,000 CO₂ allowances will have to be purchased every year.
Several actions have been planned to manage this risk, covering different time horizons:
Specific investments are included in the 2021-2023 Industrial Plan. For example we have planned the modernization of the Belgian cement plant kiln to bring the use of alternative fuels from current 40% to 80%.
The objective of around 30% reduction of CO2 emissions per ton of cement by 2030, will be achieved through a greater use of alternative fuels (by 2030 we forecast we will use 77% of alternative fuels for production of grey cement) and a reduction in thermal consumption and the quantity of clinker in cement.
The involvement in global partnership for sustainable development at global and national level including: climate change, sustainable infrastructures, innovation and digital transformation, operational efficiency, health and safety, circular economy, alternative fuels and waste management.
For this type of risk, we assess the Group's exposure to acute natural hazards such as hurricanes, cyclones or typhoons and to the risk of water stress with the resulting potential water supply problems.
All plants located in areas characterized by extreme climatic conditions, such as snow and very low temperatures in winter in Norway and Turkey, are exposed to the risk of reduced sales due to the slowdown in the execution of construction projects due to bad weather. To cope with this type of inconvenience, we implement different solutions such as organizing training courses for customers on how to cast concrete in winter (especially for foreign companies that are carrying out construction projects in Norway but are not familiar with the climate).
In recent years, extreme weather phenomena have been on the rise: hurricanes, cyclones, typhoons, droughts, floods, rain and snow are becoming increasingly violent due to global warming. This means that in the medium / long term, this risk could also become significant for the other Group plants.
We constantly monitor innovations in alternative fuels and low-carbon products. We have developed FUTURECEM™, a proprietary innovative technology allowing to replace around 40% of clinker with limestone and calcined clay. This combination allows for a much more sustainable high-quality cement, with CO₂ emissions up to 30% lower than normal Portland cement.
The low carbon benefits of FUTURECEM ™ have been obtained without compromising its strength and quality.
This type of risk includes workplace safety, the protection of workers' health and respect of human rights. The implementation and maintenance of effective and efficient management systems for the purpose of accident prevention is one of the key objectives in terms of health and safety at the Group level. During 2020, all certified cement plants completed the migration process to ISO 45001 (Health and Safety certification), finding full compliance with the requirements of the standard. At the end of 2020, 73% of cement plants were fully ISO 45001 certified. The Group plans to certify all cement plants by 2022.
The current market scenario and the increasingly global context in which we operate require targeted and timely choices that can also respond to the various organizational, pay, development, labor and trade union needs. Within this context, we have identified a specific risk related to people management, namely the risk of losing professional knowledge and skills that cannot be replaced promptly. To monitor this risk, we are evaluating the adoption of KPI's and specific objectives.
With regards to human rights, we are committed to maintaining and improving systems and processes designed to eliminate human rights risks throughout the Group and to implement corrective actions, in accordance with local constraints and requirements.
Furthermore, we are dedicated to continuous improvement of our environmental impact and we are committed to improve relationships with local communities. We have identified the risk that our operations, in particular those related to the production of concrete and waste treatment, lead to an unfavorable relationship with local communities and local stakeholders, consequently leading to a deterioration of the Company's image.
Actions to mitigate this risk, particularly present in Turkey, include local communication, the organization of community meetings with feedback sessions, stakeholder analysis and the definition of a communication plan.