General contents

Organization profile

Strategy

Corporate governance

Stakeholder engagement

Reporting practices

Significant contents

Economic performance

Legal compliance

Labor conditions and relations

Occupational health, safety and welfare

Ethics and anti-corruption

Consumption and energy efficiency

Water management

Materials

Consumer health, safety and welfare

Quality and safety in the value chain

Transparency in product information

Innovation

102-1 Name of the organization
102-10 Significant changes to the organization and its supply chain
102-11 Precautionary Principle or approach
102-13 Membership in associations
102-15 Key impacts, risks and opportunities
102-18 Governance structure
102-20 Executive-level responsibility for economic, environmental and social topics
102-22 Composition of the highest governance body and its committees
102-23 Chair of the highest governance body
102-24 Nominating and selecting the highest governance body
102-25 Conflicts of interest
102-29 Identifying and managing economic, environmental and social impacts
102-3 Location of headquarters
102-35 Remuneration policies
102-36 Process for determining remuneration
102-43 Approach to stakeholder engagement
102-45 Entities included in the consolidated financial statements
102-5 Ownership and legal denomination
102-51 Date of Last Report
102-6 Markets served
102-7 Scale of the organization
102-8 Information on employees and other workers
201-1 Direct economic value generated and distributed (EVG&D)
201-4 Financial assistance received from government
205-1 Operations assessed for risks related to corruption
205-3 Confirmed incidents of corruption and actions taken
206-1 Legal actions for anti-competitive behavior and monopoly practices
207-1 Approach to tax
207-2 Tax governance, control and risk management
207-3 Stakeholder engagement and management of concerns related to taxes
207-4 Country-by-country reporting
301-1 Materials used by weight or volume
301-2 Recycled input materials used
302-1 Energy consumption within the organization
302-3 Energy intensity
302-4 Reduction of Energy Consumption
303-1 Interactions with water as a shared resource
303-2 Management of water discharge-related impacts
303-3 Water withdrawal
303-4 Water discharge
303-5 Water consumption
305-1 Direct (Scope 1) GHG emissions
305-2 Indirect (Scope 2) GHG emissions
305-4 GHG emissions intensity
305-5 Reduction of Greenhouse Gases
305-6 Emissions of ozone-depleting substances (ODS)
305-7 Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions
306-1 Water discharge by quality and destination
306-2 Waste by type and disposal method
306-3 Significant spills
306-4 Transport of hazardous waste
306-5 Water bodies affected by water discharges and/or runoff
307-1 Violation of Environmental Laws and Regulations
308-1 New suppliers that were screened using environmental criteria
403-1 Occupational health and safety management system
403-2 Hazard and Risk Identification
403-5 Health and safety training
403-6 Employee Health Promotion
403-7 Prevention and mitigation of occupational health and safety impacts directly linked to business relationships
403-8 Safety and Health Management System
405-2 Ratio of basic salary and remuneration of women to men
406-1 Incidents of discrimination and corrective actions taken
407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk
408-1 Risk of Child Labor
409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor, including child labor
415-1 Political contributions
416-1 Assessment of the health and safety impacts of product and service categories
416-2 Incidents of non-compliance concerning the health and safety impacts of products and services
417-2 Incidents of non-compliance concerning product and service information and labeling
417-3 Incidents of non-compliance concerning marketing communications
419-1 Violation of Economic and Social Laws and Regulations
IP-1 Clients and consumers relationship
IP-7 Innovation Management
IP-8 Consumer Communication Policies and Practices
IP-9 Health and Nutrition Care Strategy Development

301-1. Materials used by weight or volume

305-5. Reduction of Greenhouse Gases

Reduction of GHG emissions
(Ton CO₂ eq.)

Equipment Conversion and Adaptations – 309
Employee Behavior Change – 4
Savings actions in process equipment – 4,775

Total: 5,088

Note 1: The gases included in the calculation were CO₂, CH₄ and N₂O.
Note 2: The reductions were presented in both scope 1 and scope 2.

A specific base year or baseline has not been established, only a comparison of consumption per unit of production between 2018 and 2019 was made.

The data is obtained from direct measurements for both electrical energy and fuel consumption, which were reported by suppliers through invoices. All reported emissions were estimated using the emission factors that correspond to each type of energy.

305-4. GHG emissions intensity

Considering the emissions from the Plants and Distribution Centers at the same time, including direct (mobile and fixed source) and indirect (electricity from non-renewable resources) emissions, the intensity of greenhouse gas emissions for 2020 is 0.122 Tons of CO2e/Ton produced, which represents an approximate 28.7% decrease compared to the previous year.

The intensity of greenhouse gas emissions is expressed in tons of CO2e per Ton Produced, and it is expressed based on the sum of direct and indirect emissions reported in the emission indicators above, adding emissions from the consumption of fuels and emissions from the consumption of electricity from the CFE’s grid.

305-2. Indirect (Scope 2) GHG emissions

Total indirect emissions
(ton CO2 equivalent)

2020 – 32,783
2019 – 25,019
2018 – 25,929

Note: The gases included in the calculation were CO₂, CH₄, and N₂O.

For the case of GEI emissions from indirect sources (for consumption of EE from non-renewable sources), we currently do not have a base year, what we do is an annual comparison of indicators taking the previous year as reference. Currently, the group does not have five-year or medium or long-term goals.
The emissions estimated were CO2eq (using the emission factor from energy generation reported by the Energy Regulatory Commission (CRE) and published by the SEMARNAT in its website as reference.
With respect to the uncertainty mentioned in item 3.4, the declared percentage was obtained by making a comparison between the emissions that Grupo Herdez estimated using the emission factors mentioned below, and the emissions that were estimated for 2019, using the electronic platform that the GEI Mexico program makes available to those interested in reporting emissions in such program.
In comparison with the total accounting of indirect emissions for 2019, the difference between both data was 0.00%, in other words, using the GEI Mexico platform, the resulting total indirect emissions were 25,019.39 Ton of CO2eq for both methodologies. This, since the same emission factors reported by the CRE-SEMARNAT were used.

305-6. Emissions of ozone-depleting substances (ODS)

Grupo Herdez does not produce, import, or export CFC-11 (R-11) and R-14 y R-22 type substances.

Coolants mostly used are R-410A, R-134A, R-407C, R-404A, R-507, R-147, R-427, and R-MO99. For 2020, some facilities still monitor that no R-22 coolant and other prohibited coolants are used.

305-1. Direct (Scope 1) GHG emissions

Direct emissions from fuel consumption at stationary combustion sources

Source Fuel 2020 2019 2018
ton CO2 equivalent ton CO2 equivalent ton CO2 equivalent
Primary Natural Gas 22,433 12,330 12,525
Secondary Fuel Oil 16,573 13,067 19,820
Secondary Residual Fish Oil 277
Secondary Residual Fish Oil 1,173 1,084 178
Secondary LPG 3,507 7,028 3,294
Secondary Gasoline
Subtotal 43,686 33,786 35,817

Direct emissions from fuel consumption at mobile combustion sources

Source Fuel 2020 2019 2018
ton CO2 equivalent ton CO2 equivalent ton CO2 equivalent
Secondary LPG 1,543 1,595 1,326
Secondary Marine Diesel 30,649 31,782
Secondary Industrial Diesel 531 16 37
Secondary Gasoline 139 287 265
Secondary Jet Fuel 609 687
Subtotal 2,213 33,156 34,097

Total direct emissions
(ton CO2 equivalent)

2020 – 45,899
2019 – 66,942
2018 – 69,914

Note: The gases included in the calculation were CO₂, CH₄, and N₂O.

Biogenic CO2 emissions have not been determined at Grupo Herdez for any type of waste or biomass generated, since the waste is not sent to incineration, and is also not used as alternative fuel in our Plants.
For the case of GEI emissions from direct sources (fixed and mobile – for use of fuel -) there is currently not a single base year, an annual indicator comparison is made taking the immediately preceding year as a reference.
For direct and indirect sources, we used the direct estimation methodology, using emission factors established in internationally recognized sources, some of them adopted by the SEMARNAT, which due to the units in which they are expressed were applied directly to the consumption of each of the fuels reported to estimate the tons of CO2e. To determine this, we worked under the assumption that Grupo Herdez does not have direct or accidental emissions or releases (whether leaks or spills) of HFC, PFC, SF6, and/or NF3 that may be deemed part of emissions to the atmosphere.
For direct sources (fixed and mobile), the emission factors were taken from GHG-PI, version 4.0 (fixed sources) and 2.3 (mobile sources).

302-4. Reduction of Energy Consumption

Reduction Initiatives:
Conversion and adjustment of equipment 3,157 GJ
Changes in employee behavior 31 GJ
Other (savings actions in consumption equipment) 52,789 GJ

Total 55,977 GJ

The criterion to estimate the reduction in electricity consumption was consumption in Kwh/Ton Produced.

The sources consulted are related to the conversion factors used and fuel calorific power.

1. The conversion factors in GJ/m3 were obtained directly from the GHG Protocol Report, version 1.0, September 2006, units of heat.
2. 2011 National Energy Balance, Ministry of Energy; Conversion of units of energy.
3. Liquefied Petroleum Gas Market Outlook 2012 – 2026, Ministry of Energy.

305-7. Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions

Atmospheric emissions 2020 (Ton)
NOx 65.17
SOx 75.99
COP (Persistent org. contaminants) NA
COV (Volatile org. compounds) 0.99
HAP (Hazardous air pollutants) NA
PM (partículas) NA
OTRAS
CO 22.91
PS 2.77
COT 3.27
SO2 75.24
SO3 0.75
Filterable PS 5.47
NMCOV´s 0.23

The methodology used is that of direct determination using specific emission factors for each type of contaminant as recommended by the GreenHouseGas Protocol (GHGP) for emissions from both fixed (stationary) and mobile direct sources.

To determine the emission factors to be used, we considered what was established by the UK Department for Environment, Food and Rural Affairs (DEFRA), the US Environmental Protection Agency (EPA), and the Intergovermental Panel on Climate Change’s (IPCC) 2006 Guidelines for National Greenhouse Gas Inventories through the Mobile Combustión GHG Emissions Calculation Tools and the Stationary Combustion GHG Emissions Calculation Tools that may in turn be checked at the GHG Protocol Website.
Additionally, even though the data is the concentrated data of the Group, the estimate is based on specific data provided for each facility, considering fuel consumption -measured directly- in fixed and mobile sources of Grupo Herdez. Additionally, unit conversion factors were used based on the decimal metric system to convert from kilograms to tons.

302-3. Energy intensity

In relation to the consumption of electricity, the energy intensity for 2020 was 175.97 Kwh/ton produced, that is, 19% higher than the previous year.

In relation to the consumption of fuels, the energy intensity for 2020 was 19.21 m3/ton produced, that is, 67% higher than the previous year.

The total energy intensity of the group in GJ/Ton produced was 2.01, 14% lower compared to the previous year.

• 2020: 2.01 GJ/Ton produced
• 2019: 2.35 GJ/Ton produced
• 2018: 2.52 GJ/Ton produced

The increase in intensity is due to the inclusion of the Avomex Plant, the Cogeneration Plant, the Tea Plant, and CAF of Lagos de Moreno.

Notes:
1. Energy intensity is expressed in tons produced, and fuel consumption and electricity consumption are expressed separately.
2. Energy intensity reported in m3 considers the sum of all fuels used by the Plants and Distribution Centers.
3. Energy intensity reported in KWh considers the consumption of electricity from the Federal Electricity Commission (CFE) and electricity from the Wind Farm and the Cogeneration Plant for the Plants and Distribution Centers
4. Production was obtained from the sum of tons produced in all Plants.

302-1. Energy consumption within the organization

The total consumption of all energy in 2020 amounted to 1,249,836 GJ, including fuels and electricity, a 1% decrease compared to the previous year.

Fuel consumption

2020: 802,955 GJ
2019: 975,667 GJ

Electricity consumption

2020: 446,882 GJ
2019: 285,855 GJ

Our calculation methodology is based on the conversion of consumption in m3 of fuel to units of heat (gigajoules), and KWh of electricity used to gigajoules by conversion factors applied nationally.

Notes:
1. This information corresponds to operations reported in 2019, adding the Avomex Plant, the Cogeneration Plant, the Tea Plant, and CAF Lagos de Moreno.
2. In 2020, we stopped consuming marine diesel oil, residual fish oil, and aviation gasoline due to the sale of the tuna business. This resulted in an 18% decrease in the total consumption of non-renewable fuels.

415-1. Political contributions

In compliance with our Code of Ethics, which provides the obligation to maintain a strictly neutral position on political and religious matters, at Grupo Herdez and subsidiaries we do not make financial contributions and/or contributions in kind to political parties or related institutions, and we do not receive financial aid from the Government.

We have an Ethics Committee composed of six members from different departments, who combine efforts with our executives to give counsel in favor of ethical and legal conduct.

You can consult our Code of Ethics at: https://grupoherdez.com.mx/sustentabilidad/codigos-y-politicas/

205-3. Confirmed incidents of corruption and actions taken

Incidents related to violations of the Code of Ethics on corruption and violation of human rights are confidentially reported through the Ethics Hotline.

This line is monitored by an external provider, which periodically prepares a consolidated report delivered to the Human Resources and the Internal Audit departments. The Internal Audit area is in charge of following up on all complaints, investigating them and giving a resolution, from a verbal or written reprimand to dismissal from the Company and legal follow-up of the case.

Considering the procedure, 4 corruptions cases were confirmed in 2020, a 64% decrease compared to 2019. All cases resulted in dismissal from the Company, 1 in 2020 and 3 to be carried out in 2021.

303-1. Interactions with water as a shared resource

Extraction

Source Extraction Method Location and name of the body of water * Description of related impacts
Rivers, lakes Pumping 1 en Canal Lateral 18+420 del Canal Valle del Fuerte, Cuenca Río Fuerte, Afluente canal principal Valle del Fuerte Distrito de Riego 075, Región Hidrológica Sinaloa, Localidad El Fuerte, Sinaloa. 1 en Canal Lateral 18+420 del Canal Valle del Fuerte, Cuenca Río Fuerte, Región Hidrológica Sinaloa, Localidad Campo 35, Ahome, Sinaloa. Potential depletion of the resource, although this is a low probability given the extraction volumes.
Seas, oceans Not Applicable Not Applicable Not Applicable
Underground (wells) Submergible pump 2 at Cuenca Presa San José Los Pilares y Otras, Acuífero San Luis Potosí, Región Hidrológica Salado en SLP San Luis Potosí. 1 at Cuenca Laja, Acuífero Valle de Celaya, Región Hidrológica Lerma-Santiago, Villagrán Guanajuato. 1 at Cuenca Rio Verde Grande, Acuífero Lagos de Moreno, Región Hidrológica Lerma-Santiago, Lagos de Moreno, Jalisco. 1 at Cuenca Río Moctezuma, Acuífero Cuautitlán-Pachuca, Región Hidrológica Panuco, Localidad Barrio de San Juan, Teoloyucan, Estado de México. Potential depletion of the resource, although this is a low probability given the extraction volumes .for the case of San Luis Potosí, Guanajuato, Jalisco, and the State of Mexico.
Municipal network Direct supply from the network 1 in San Luis Potosí, SLP 1 in Tijuana, Baja California 1 in Monterrey, Nuevo León 1 in Tlaquepaque, Jalisco 1 in Sabinas, Coahuila
1 in Lagos de Moreno Jalisco”1 en Lagos de Moreno Jalisco
Potential depletion of the resource, although this is a low probability given the extraction volumes.
Rainwater (collected and stored directly by the organization) Channel and rainwater collection ditches infrastructure “1 in the Industrial Complex Duque de Herdez in SLP, San Luis Potosí 1 in the Industrial Complex Herdez México at Cuautitlán, State of Mexico” Not Applicable
Wastewater from another organization. Not Applicable Not Applicable Not Applicable
Water from Tank trucks Direct supply from Tank Trucks “1 in the Municipality of Chalco, State of Mexico. 1 in the Municipality of Sabinas, Coahuila.” Potential depletion of the resource, and a potential water deficit in the region, although the extraction volumes are relatively low.
Wastewater of the organization Not Applicable 2 in the Industrial Complex Herdez México at Cuautitlán, State of Mexico (1 in the Plant and 1 in the Distribution Center).
1 in the Municipality of Sabinas, Coahuila.”1 en el Municipio de Sabinas, Coahuila.
The Avomex Plant recycles 30% of the wastewater that it generates and treats in bathrooms, fence cleaning, PTAR equipment, and maneuvering yard.
The Mexico Plant and the Mexico Distribution Center recycle 35% and 100%, respectively, of their wastewater treated in watering gardens.”Planta México y Cedis México reciclan el 35% y 100% respectivamente de sus aguas residuales tratadas en el riego de jardines.

Consumption

Source Extraction Method Location where it is consumed * Description of related impacts
Rivers, lakes. Industrial Production (ancillary services and bathrooms) 2 in Los Mochis Sinaloa. Potential depletion of the resource, although the probability is low given the low extraction volumes.
Seas, oceans Industrial Production (ancillary services and bathrooms) “1 in Cuautitlán Estado de México. 3 in San Luis Potosí.
2 in Lagos de Moreno Jalisco.
1 in Villagrán Guanajuato.”
Potential depletion of the resource, although the probability is low given the low extraction volumes.
Underground (wells) Industrial Production (ancillary services and bathrooms) “1 in Cuautitlán Estado de México. 3 in San Luis Potosí.
2 in Lagos de Moreno Jalisco.
1 in Villagrán Guanajuato.”
Potential depletion of the resource, although the probability is low given the low extraction volumes.
Municipal network Industrial Production (ancillary services and bathrooms) 1 in San Luis Potosí, SLP 1 in Tijuana, Baja California 1 in Monterrey, Nuevo León 1 in Tlaquepaque, Jalisco 1 in Sabinas, Coahuila.
1 in Lagos de Moreno Jalisco.1 en Lagos de Moreno Jalisco.
Potential depletion of the resource, although the probability is low given the low extraction volumes.
Rainwater (collected and stored directly by the organization) Industrial Production (ancillary services and bathrooms) “2 in Cuautitlán State of Mexico
1 in San Luis Potosí SLP.”
Reduction in extraction and consumption of well water due to the use of rainwater to water green areas.
Wastewater from another organization Not Applicable No Not Applicable Not Applicable
Tank truck water Industrial (Producción, servicios auxiliares y servicios sanitarios) 1 in Chalco Estado de México.
1 in Sabinas Coahuila.
Potential depletion of the resource, and a possible water deficit in the region, although the extraction volumes are relatively low.
Wastewater of the organization Industrial (bathrooms and watering of green areas) 2 en el Complejo Industrial Herdez México en Cuautitlán.
1 en el Municipio de Sabinas, Coahuila.
“The Avomex recycles in bathrooms 30% of the wastewater that it generates and treats.
The Mexico Plant recycles 35% and the Mexico Distribution Center recycles 100% of the wastewater that they generate and treat, using it to water gardens.”Planta México recicla el 35% y Cedis México recicla el 100% de las aguas residuales que generan y tratan, usándolas en el riego de jardines.

Discharges

Source Discharge Method Use of the discharge * Description of related impacts
Rivers, lakes. By direct discharge to the body of water through the drainpipe channel In the lateral channel of the Valle del Fuerte channel, Río Fuerte Basin, main channel Valle del Fuerte Irrigation District 075, Sinaloa Hydrological Region, Localidad El Fuerte, Sonora Wastewater discharge is treated in accordance with the applicable standard, therefore, its significance level has not been determined.
Seas, oceans Not Applicable Not Applicable Not Applicable
Underground (wells) By direct discharge to the body of water through the drainpipe channel “Wastewater discharges of the Lagos de Moreno Plant, the Té and El Duque Plant are sent to the municipal sewage.
Wastewater discharge from the Celaya Plant and a part of the Mexico Plant are discharged in federal sewage.
100% of the wastewater of the Mexico Distribution Center and of the Cogeneration Plant, and 35% of the wastewater of the Mexico Plant seeps into the ground.”La descarga de aguas residuales de la Planta Celaya y una parte de la de Planta México se descargan a un dren federal.
El 100% de las aguas residuales del Cedis México y de la Planta de Cogeneración y el 35% de las aguas residuales de Planta México se infiltran al suelo.
Wastewater discharge is treated in accordance with the applicable standard, therefore, its significance level has not been determined.
Municipal network By gravity and direct conduction to the recipient sewage or body Municipal sewage Discharge of contaminants in recipient body
Rainwater (collected and stored directly by the organization) By pump Rainwater is used for green areas and the remainder is sent to the drainage pipe channel. Rainwater consumption allows to avoid extraction of drinking water from wells, therefore, it has a positive impact, although its significance has not been estimated.
Wastewater from another organization Not Applicable Not Applicable Not Applicable
Tank Truck Water By direct discharge to the body of water through the drainpipe channel Wastewater discharge is treated in accordance with the applicable standard, therefore, its significance level has not been determined. Wastewater discharge is treated in accordance with the applicable standard, therefore, its significance level has not been determined.
Wastewater of the organization By gravity and direct conduction to the sewerage Municipal sewage “The Ayomex Plant recycles 23% of the wastewater it generates and treats in sanitary sewage.
The Mexico Plant recycles 35% and the Mexico Distribution Center recycles 100% of the wastewater that it generates and treats, using it to water gardens.”Planta México recicla el 35% y Cedis México el 100% de las aguas residuales que generan y tratan, usandolas en el riego de jardines.

Note: The quality of wastewater discharges sent to recipient bodies is watched by complying with the maximum permissible limits provided in the relevant Mexican Official Standards.

Basins where water is extracted by the organization:

Basin * Description of related impacts
Río Fuerte Basin, Sinaloa Hydrological Region, Localities of Campo 35, Ahome and El Fuerte, Sinaloa. “Extraction and Consumption: Except for Chiapas, our Plants and Distribution Centers are located in basins and hydrological regions with low or very low water availability, but consumptions at our facilities are low.
Discharge: Notwithstanding that the wastewater generated in the facilities of Grupo Herdez is treated before it is poured, the generation and discharge of such treated water represents a negative impact due to the emission of contaminants to municipal sewerage networks and surface bodies of water, in spite of the low discharge volumes.
Descarga: No obstante que las aguas residuales que se generan en las instalaciones de Grupo Herdez son tratadas antes de su vertido, la generación y descarga de estas aguas tratadas representan un impacto negativo por la emisión de contaminantes a redes de drenaje municipal y cuerpos de agua superficiales, a pesar de que ser volúmenes de descarga muy pequeño.
Presa San José Los Pilares and Others Basin, San Luis Potosí Aquifer, Salado Hydrological Region in SLP San Luis Potosí.
Laja Basin, Valle de Celaya Aquifer, Lerma-Santiago Hydrological Region, Villagrán Guanajuato.
Rio Verde Grande Basin, Lagos de Moreno Aquifer, Lerma-Santiago Hydrological Region, Lagos de Moreno, Jalisco.
Río Moctezuma Basin, Cuautitlán-Pachuca Aquifer, Panuco Hydrological Region, Localidad Barrio de San Juan, Teoloyucan, State of Mexico.

Related Impacts
The goals regarding water are set by taking as the basis the indicators of water consumption and wastewater discharge carried out for each facility. Currently, each facility identifies areas of opportunity in its processes, and it makes estimates on the potential savings that each of these may provide, to then propose an attainable annual goal. Such goals are not related to the local context of their locations.
Note: An analytical, holistic, or deep focus is not used to identify the potential impacts, rather we only intuitively consider the potential impacts that may be caused by the water consumption volumes at the sources and, by the amount of contaminants present in the wastewater discharged to the different recipient bodies.

205-1. Operations assessed for risks related to corruption

The Human Resources Department, together with the Internal Audit Department, is responsible for monitoring all reports related to violations of the Code of Ethics, including complaints and reports related to corruption and money laundering, in addition to violations of human rights, workplace violence, and psychosocial risks.

We do not make a formal risk analysis on these subjects; however, this monitoring allows us to detect the issues that arise most frequently: abuse of authority, abuse of trust, preferential treatment, removal of property, conflicts of interest, and thus establish the necessary measures to prevent actions of this kind.

The following training and communication efforts were made by Human Resources in 2020:

1. Culture of Ethics and Legality Program.
In 2020, 34 in-person meetings and 19 remote meetings were held, and 2 virtual courses accredited by Asociación México Unido Contra la Delincuencia A. C. were used, thus training 3,584 collaborators (888 union workers/2,696 non-union workers) and generating a total of 7,188.5 hours of training.

2. Code of Ethics Onboarding Meetings.
Training sessions were held to provide information about the Code of Ethics, its significance, and the different guidelines and values that compose it, such as: Illegal Payments/Bribes, Human Rights, Prevention of Psychosocial Risks, and Labor Rights.

In total, 260 sessions were held in different cities —59 more sessions than in 2019— providing training to 5,001 collaborators, with a total of 5,049 hours of training, doubling the number of hours of the previous year.

403-8. Safety and Health Management System

The Environmental, Health, and Safety (CASH) department monitors our health and safety management systems. Such systems are applicable to all facilities of Grupo Herdez, including Plants, Distribution Centers, and Corporate Offices. Additionally, it covers all personnel that works or is located inside our facilities.

The occupational health and safety management systems implemented apply for 100% of our employees and for workers that are not employees of Grupo Herdez.

 

403-7. Prevention and mitigation of occupational health and safety impacts directly linked to business relationships

Grupo Herdez has an Industrial Safety Policy in place that applies to any person who works at, or is located inside, the facilities of the Group, and to employed or outsourced personnel.

You can consult the Industrial Safety Policy at https://grupoherdez.com.mx/conocenos/codigos-y-politicas/

403-6. Employee Health Promotion

Grupo Herdez facilitates workers’ access to medical and health services. We have the following mechanisms:

Strategy Scope Evidence
File creation Assessment of worker approval Medical test of personnel
Doctor’s office for plants All workers Medical checkups and registry thereof
Integration of internal health campaigns Integrating workers where applicable Attendance list or assessments
Test for risky work Where required, perform work considered risky Medical assessment and/or work permit
Private Institutions All workers Service agreement or purchase orders
Regulatory Health Studies Audiometry
Chest X-ray
Annual health campaigns Prevention campaigns for personnel on health talks, given by external personnel
Internal nutrition program for overweight personnel and nutritional control All workers

Additionally, we offer non-work related voluntary health promotion services and programs:

Service / Program Description Evidence
Medical assistance in case of disease Workers must inform their immediate superior of any anomaly or physical discomfort to be sent to and attended in the service area of the staff doctor, to be assessed and given medical assistance. Medical pass, intentions log.
Prevenimss Prevenimss campaigns with vaccine applications, size, weight, pressure measurements, etc.
Seasonal Diseases Bulletins to prevent summer, autumn, or winter diseases.
Descacharro Campaign to prevent the proliferation of vectors that spread diseases such as dengue, among others.
Health campaigns with ISEMIM Parasite removal, breast cancer, prostate cancer campaigns, etc. Photographs, registries.
Government hospitals Prevention campaigns, conferences. Attendance lists, registries.

403-5 Health and safety training

Training Description / Subjects
Safety Induction Identification of unsafe acts and conditions, policies, regulations, and management systems on safety matters
STPS Standards Annual training on the applicable STPS standards, for knowledge levels of all operational personnel and levels of knowledge for specialized personnel, according to the worksite, including AR and AST.
SafeStart Safety philosophy promoting a safety culture through awareness of the personnel, generating safety habits that reduce the occurrence of injuries caused by human behavior, critical errors, and the practice of error reduction techniques.
Lockout Training (LOTO) Technical training on the application of blockage systems for crucial operation, maintenance, and cleaning works where it is necessary for the personnel to intervene in moving equipment and/or equipment that uses electricity for the purpose of eliminating sources of hazardous energy that may endanger workers.
Emergency response Training the personnel in emergency response activities applicable in operations such as natural disasters, firefighting, first aid, evacuations, search, rescue, response to spillage, sabotage, etc.
CT PAT Property security (security of the facilities, personnel, training, transportation, reporting culture, process and internal informatics).
STOP Safety process for identification and correction of unsafe acts at their work site.

403-2. Hazard and Risk Identification

Identification

The main process to identify the hazards related to the work and assessing risk is through the SAI CASH internal system (Environmental Control, Health, and Safety Comprehensive Management System).
This system is based on regulatory legal follow-up, including preventive observation on how to act. For this, we do training on the 5S’s and in ASTs (Task Safety Analysis).

Follow-up

To ensure correct compliance with SAI CASH, measurements and indicators are made, which are strategically reviewed on a weekly, monthly, and annual basis. The work plans for the following year are derived from the results of the monthly and annual measurements, which are approved by local managers, the CASH manager, and the Supply Chain Director.

Continuous improvement

The results of the CASH measurements and indicators show areas of opportunity, which are set forth in the future work plans. Additionally, we conduct meetings on a weekly basis with leaders in safety, with presentations on the progress achieved, with prompt follow-up on each identified area of opportunity.

Identified hazards report

The main reporting process is through cards deposited in mailboxes, documented reports through verification lists, and through reports from the Health and Safety Commission.

The three aforementioned reports are confidential. A Review Committee participates in the report process, with support from management, which provides particular support on the case.

Policies and processes in case of incidents

Policy / Process Description
Preventive Observation System The hazardous situation is determined, and it is reported according to relevance and importance, based on the impact that it may have. Once analyzed, a determination is made as to whether the process entails a stoppage of operations until the situation is resolved.
Industrial Health, Safety, and the Environment Grounded on commitment by the Chief Executive Officer. It considers health, safety, and environmental matters.
5 S’s System There are visible standards by area and rules with the standards for entry. If at any time, this is not complied with, any person may make the decision not to allow any person into the area backed by the implementation of such programs.
Accident investigation / Health and safety commission Accident investigation / Health and safety commission

403-1. Occupational health and safety management system

The Environmental Control, Health, and Safety (CASH, for its acronym in Spanish) department monitors our internal health and safety systems. Such systems are applicable for all facilities of Grupo Herdez, including Plants, Distribution Centers, Stores, and Corporate Offices. Likewise, it covers all personnel that works at or is inside our facilities.

The occupational health and safety management systems implemented for employees and for workers that are not employees of Grupo Herdez, but whose work and/or workplace is controlled by the organization are:

System Standards / directives on which it is based List of standards / directives
SAI CASH STPS Standards NOM-001-STPS-2008, NOM-002-STPS-2010, NOM-004-STPS-1999 NOM-005-STPS-1998, NOM-006-STPS-2014 NOM-009-STPS-2011, NOM-010-STPS-2014 NOM-011-STPS-2001, NOM-015-STPS-2001 NOM-017-STPS-2008, NOM-018-STPS-2015 NOM-019-STPS-2011, NOM-020-STPS-2011 NOM-022-STPS-2015, NOM-024-STPS-2001 NOM-025-STPS-2008, NOM-026-STPS-2008 NOM-027-STPS-2008, NOM-028-STPS-2012 NOM-029-STPS-2011, NOM-030-STPS-2009 NOM-033-STPS-2015, NOM-034-STPS-2016, NOM-035-STPS-2018
WCM (World Classs Manufacturing) Mexican Official Standards, Best Industry Practices
SafeStart SafeStart Behavior-based safety
Direct Observation Work System STOP Unsafe act detection and correction
Property Security System CT PAT Safety of the facilities, Safety of the Personnel, Training of the personnel
OHSAS 18001 International standard focused on occupational health and safety matters List of applicable Mexican Official Standards according to the industrial line of business, and international standards applicable to occupational health and safety matters

With the foregoing, we protect the integrity and wellbeing of the operational personnel; we prevent and mitigate incidents that affect the environment, and we maintain a culture of safety and risk-prevention, thus guaranteeing the continuity of our operations.

407-1. Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk

The guidelines provided by Law to exercise freedom of association and collective bargaining are observed at all facilities of Grupo Herdez.

https://grupoherdez.com.mx/sustentabilidad/codigos-y-politicas/

406-1. Incidents of discrimination and corrective actions taken

Any type of harassment and discrimination based on ethnic origin, religion, nationality, gender, sexual orientation, marital status, age, disability, or otherwise is prohibited in all aspects of our work activities.

You can consult our Code of Ethics and other Policies at: https://grupoherdez.com.mx/sustentabilidad/codigos-y-politicas/

No events of discrimination occurred in 2020.

405-2. Ratio of basic salary and remuneration of women to men

In line with our commitment to gender equality and the Sustainable Development Goals, we estimate the female-male base salary ratio that allows us to focus our efforts on closing the salary gap.

Breakdown according to labor category and female-male base salary ratio:
Operating: 89%
Operating – Regulatory: 95%
Tactical: 92%
Strategic: 153%

303-2. Management of water discharge-related impacts

The minimum standards set for the discharge quality of effluents of Grupo Herdez are:

Standard Determination method (for facilities without specific discharge requirements) Internal standard quality guide Specific standard of the sector
Biochemical Demand for Oxygen (BDO) Not Applicable Not Applicable “.- NOM-001-SEMARNAT-1996, .- NOM-002-SEMARNAT-1996, .- State Technical Standard: NTE-SLP-AR-001/05 .- Particular Discharge Conditions”
Total Suspended Solids (TSS) Not Applicable Not Applicable
Total Dissolved Solids (TDS) Not Applicable Not Applicable
Sedimentable Solids (SS) Not Applicable Not Applicable
Hydrogen Potential (PH) Not Applicable Not Applicable
Electrical Conductivity (EC) Not Applicable Not Applicable
Greases and Oils (G&A) Not Applicable Not Applicable
Chemical Demand for Oxygen (CDO) Not Applicable Spectrophotometry Method Not Applicable

* NOM-001-SEMARNAT-1996; Which sets forth the maximum permissible limits of contaminants in wastewater discharges in national waters and property.
* NOM-002-SEMARNAT-1996; Which sets forth the maximum permissible limits of contaminants in wastewater discharges to the urban or municipal sewerage systems.
* State Technical Standard: NTE-SLP-AR-001/05 which sets forth the particular conditions for wastewater discharges to the sewage and sewerage network of the Municipalities of San Luis Potosí, Soledad de Graciano Sánchez, and Cerro de San Pedro.
“*Particular Discharge Conditions: Set forth by Federal authorities in accordance with Article 140 of the Regulations to the National Waters Law.

303-3. Water withdrawal

Source 2020   2019   2018  
Total Volume (Ml) Areas with water stress Total Volume (Ml) Areas with water stress Total Volume (Ml) Areas with water stress
Rivers, lakes. 702 702 669 669 657 657
Underground (wells) 537 537 770 604 777 597
Seas, oceans
Municipal network 256 256 23 4 7 2
Rainwater
Wastewater from another organization 0 0 1 1 8 8
Others 47 47 22 22 22 22
Total 1,542 1,542 1,484 1,299 1,471 1,286

Total water extraction in megaliters, for each facility with areas with water stress

Source Facility (Plant or Distribution Center) 2020 Volume 2019 Volume 2018 Volume
Rivers, lakes Santa Rosa Tomates 403 366 395
Santa Rosa Vegetables 298 300 257
Mochis Distribution Center 1 2 5
Underground (wells) Barilla 51 47 49
El Duque 41 41 40
Mexico Plant 76 77 73
San Luis Potosí Plant 201 259 247
Villagrán Plant 28 39 49
Lagos de Moreno Plant 111 129 130
Cogeneracion Plant 15 0 0
Té Plant 0 0 0
Municipal network San Luis Potosí Distribution Center 9 7 6
Mexico Distribution Center 4 4 3
San Luis Potosí Plant 1 0 0
Té Plant 1 0 0
Wastewater Avomex Plant 241 0 0
Others Tijuana Distribution Center 1 0 0
Monterrey Distribution Center 1 1 1
San Luis Potosí Distribution Center 4 2 1
Total 1,542 1,299 1,286

419-1. Violation of Economic and Social Laws and Regulations

For Grupo Herdez, significant fines are those that exceed or equal one million pesos. In 2020, there were no incidents that led to non-compliance with social and/or economic laws or regulations and which resulted in significant fines.

307-1. Violation of Environmental Laws and Regulations

There were no environmental violations in 2020.

https://grupoherdez.com.mx/file/2018/09/Pol%C3%ADtica-Ambiental.pdf

206-1. Legal actions for anti-competitive behavior and monopoly practices

No lawsuits were filed in relation to monopolistic or unfair practices in 2020. However, and even though no cases of this nature have arisen in the past years, we have an Antitrust and Economic Competition Policy.

https://grupoherdez.com.mx/file/2018/11/Pol%C3%ADtica-de-competencia-econ%C3%B3mica-vf-firmada.pdf

303-4. Water discharge

Discharge of water by source

Discharge Source Volume Unit
2020 2019 2018
Rivers, lakes (federal bodies) 509 477 513 Ml
Underground (wells) Ml
Seas, oceans Ml
Municipal network (municipal sewage) 421 286 462 Ml
Rainwater Ml
Discharged water from another organization Ml
Others (subsoil) 63 60 67 Ml
Toal 994 823 1,042 Ml

Discharge by water type

  2020   2019   2018  
Total Volume (Ml) Areas with water stress Total Volume (Ml) Areas with water stress Total Volume (Ml) Areas with water stress
Fresh water (≤1,000 mg / l of total dissolved solids)
Other water (> 1,000 mg / l of total dissolved solids) 994 993 823 702 1,042 898

Note: We took as the criterion for determination of water stress that which is reported by the Acueduct Water Risk Atlas 2019 since it is an internationally recognized tool, except for those of Chiapas and Merida, where we considered the criterion of the CONAGUA, since we considered that it more closely repreesnts the reality of the country.

Treatment level Method to determine the type of treatment
Mainly Secondary – Biological Treatment – Followed by Simple Tertiary Treatment “The treatment system of each facility is planned and designed in accordance with the characteristics of the wastewater generated and the discharge conditions that must be complied with, however, all of our treatment systems generally have the following treatment process:

Pretreatment: Grease and oil, and/or large solids traps.
Primary Treatment: usually the linear or circular Dissolved Air Flotation “DAF” Chemical Physical system.
Secondary Treatment: Conventional Mud Biological Systems with Clarification Systems.
Tertiary Treatment: Sand and gravel filter Filtration System with activated carbon and manual or linear and/or Ultraviolet Light Clarification Systems to mainly eliminate fecal coliforms and other biological microorganisms.”
1. Pretratamiento: trampas para grasas y aceites y/o sólidos de gran tamaño.

2. Tratamiento Primario: normalmente un Sistema Físico Químico de Floculación por Aire Disuelto “DAF” de tipo lineal o circular.

3. Tratamiento Secundario: Sistemas Biológicos de Lodos Convencionales con Sistemas de Clarificación.

4. Tratamiento Terciario: Sistema de Filtración en filtro de arena y grava y de carbón activado y Sistemas de Clarificación manual o en línea y/o Luz Ultravioleta para eliminar principalmente coliformes fecales y otros microorganismos biológicos.

Priority concerning systems for water discharges

Substance Method to define their importance (international standard, authorized list, or criterion used)
Biochemical Demand for Oxygen (BDO) Compliance with national standards and particular discharge conditions set by the Mexican government.
Sólidos Suspendidos Totales (SST)
Total Suspended Solids (TSS)
Sedimentable Solids (SS)
Hydrogen Potential (PH)
Electrical Conductivity (EC)
Greases and Oils (G&A)
Chemical Demand for Oxygen (CDO)
Biochemical Demand for Oxygen (BDO) Standard determined for the operational control of the system.

Note:
The standards that the Grupo Herdez facilities comply with to respect the priority substance discharge limits are:

  • NOM-001-SEMARNAT-1996; Which sets forth the maximum permissible limits of contaminants in wastewater discharges in national waters and property.
  • NOM-002-SEMARNAT-1996; Which sets forth the maximum permissible limits of contaminants in wastewater discharges to the urban or municipal sewerage systems.
    State Technical Standard: NTE-SLP-AR-001/05 which sets forth the particular conditions for wastewater discharges to the sewage and sewerage network of the Municipalities of San Luis Potosí, Soledad de Graciano Sánchez, and Cerro de San Pedro.
  • Particular Discharge Conditions: Set forth by Federal authorities in accordance with Article 140 of the Regulations to the National Waters Law, which provides that to determine the particular discharge conditions, “The Commission” will consider the parameters and maximum permissible limits contained in the Mexican Official standards issued by the authorities with jurisdiction on matters of wastewater, and for the treatment of water for human use or consumption, and the parameters and maximum limits derived from the Declaration of Classification of National Water Bodies published under the terms of Article 97 of the Law.

207-4. Country-by-country reporting

Grupo Herdez’s tax jurisdiction is Mexico.

Name of the Entity Grupo Herdez, S.A.B de C.V.
Main activities of the organization Manufacturing, purchase, distribution, and marketing of canned and packaged foods in Mexico, and ice cream, in addition to food aimed at the Mexican food segment in the United States of America.
Number of employees 9,687
Income from third-party sales $23,893,025,184
Income from intragroup transactions with other tax jurisdictions $1,571,191,857
Profit / loss before taxes $3,689,377,074
Tangible assets other than cash and cash equivalents $11,161,635,707
Corporate income tax paid in cash $1,002,537,988
Corporate tax accrued in profit and loss $970,815,830
Reasons for the difference between the corporate income tax accrued on profit / loss and the tax owed if the legal tax rate is applied to profit / loss before taxes.

* BEPS (Base Erosion and Profit Shifting) figures are reported with a year’s delay. All company results are aggregated and eliminations for consolidation method of financial information is not followed. Therefore, the BEPS and consolidated figures are not comparable.

207-3. Stakeholder engagement and management of concerns related to taxes

At Grupo Herdez, there are no compliance agreements with tax authorities, or promotion or participation of public policy on taxes.

207-2. Tax governance, control and risk management

The Deputy Chief Management Officer and the Tax Management Department of Grupo Herdez are jointly responsible for complying with the taxpayer obligations.

The mechanisms for ensuring compliance with tax obligations are:

• Control and record of compliance with Tax Returns and tax obligations
• Federal and State tax compliance reports
• Delivery of Financial Reports
• Matrix and control of Local and International Studies and Transfer Pricing
• Continuous training of personnel in tax matters
• External Legal and Tax Advisors

Moreover, any person can report any kind of violation at:

• 01800 (01800 CONFIANZA – 01800 266342692).
• Confianza email (confianza@herdez.com).
• Suggestion Box.

These mechanisms are available 24 hours a day, 365 days a year, and are completely anonymous.

207-1. Approach to tax

At Grupo Herdez, we fully comply with applicable law, both local and internal law.

201-4. Financial assistance received from government

At Grupo Herdez, we do not receive any kind of financial aid from the government.

201-1. Direct economic value generated and distributed (EVG&D)

Direct economic value created
2019 2020
Income + (cash flow) sale of real estate + cash flows generated from financing activities 22,420,369.64 24,036,279.00
Other income (dividends charged, interest collected, funds from the sale of fixed assets and royalties) 1,078,912.00 2,221,889.00
Direct economic value created (EVC) 23,499,281.64 26,258,168.0
Operating costs (costs of sale, increase in suppliers and increase in receivables) 14,512,832.00 15,283,609.00
Wages and social benefits for employees 2,555,454.00 2,740,938.00
Payments to capital providers (dividends paid, interest paid, payment of long-term bank loans) 2,693,217.00 4,490,493.00
Payments to governments (income taxes) 929,665.00 973,658.00
Community investments 42,957.97 65,696.00
Distributed economic value (DEV) 20,734,125.97 23,554,394.00
Retained economic value (REV) 2,765,155.67 2,703,774.00

102-51. Date of Last Report

The last Report covers January 1 to December 31, 2020.

102-45. Entities included in the consolidated financial statements

102-43. Approach to stakeholder engagement

Stakeholdeer

Participation Approach

Key problems and assessment

Communication channels

Participation frequency

Shareholders

Interest with respect to the impact of environmental and social risks in the performance of the Company

Continuous improvement of share and sustainability performance

Annual report

Anual

Positioning of the Group as a company committed to sustainable development

Website

Permanent

Quarterly reports

Trimestral

Collaborators

Adequate management of resources and inputs consumed in the production processes

Establecer un estándar competitivo en nuestros colaboradores, generando desarrollo de talento, confianza y compromiso

Revista interna “Hechos con Amor”

Bimonthly

Tableros de comunicación en todas las localidades

Folletos informativos

Execution of training programs and development plans

Universidad Grupo Herdez Online Platform

Permanent

Print and digital internal communications, with organizational and local coverage

Fundamental piece in the development of operations and achievement of goals

Life programs that focus on improving well-being

Organizational climate survey and Herdez Man

Every three years

Benefits and business continuity

Training and awareness courses

Permanent

Community

The Saber Nutrir program is focused on improving nutrition conditions in Mexico. An important part of this movement is to improve the quality of life of the communities where we operate, therefore, we implement projects that boost the local economy, improve eating habits, and assist in food security.

Diversifying projects in the community to achieve food health, and emphasize its purpose.

Website sabernutrir.com.mx

Permanent

Nutritional health in families through projects

Monthly

Continuous monitoring of children with malnutrition

Quarterly operational report

Customers

Positioning Grupo Herdez as a sustainable company, conscious of its impacts on the environment

Transparency in our environmental and social performance

Campaigns in mass media and digital media

Permanent

Growing consumer interest in the corporate sustainability practices, objectives, and goals of the Company

Communicating the impact of our products on society and the environment

Website

Growing interest in the consumption of our environmentally-friendly products

Dissemination of social projects that may contribute to generate value

Participation in different forums (congresses, workshops, etc.)

Promoting responsible consumption practices in our customers

Suppliers

Promover una adecuada obtención, aprovechamiento y uso eficiente de los recursos para garantizar la sostenibilidad de las operaciones

Complying with the certification of the quality and innocuity system of Grupo Herdez

Questionnaire and feedback by email

Permanent

Obtaining a performance assessment

By email

102-36. Process for determining remuneration

The Corporate Practices Committee is responsible for validating the compensation of the main executives of the Company, including compensation of the Chief Executive Officer.

102-35. Remuneration policies

In accordance with the bylaws of the Company, compensation for members of the Board is three gold coins of $50.00 pesos (centenario) or its equivalent, for attending each meeting. This remuneration is not subject to the Group’s own performance.

303-5. Water consumption

Source 2020   2019   2018  
Total Volume (Ml) Areas with water stress Total Volume (Ml) Areas with water stress Total Volume (Ml) Areas with water stress
Rivers and lakes 217 217 229 229 161 161
Wells 310 310 396 355 238 207
Municipal network 20 20 0 0 0 0
Others 6 6 11 11 12 12
Total 554 554 637 637 410 379

Total consumption of water, in megaliters, for each facility in areas with water stress

Source Barilla Plant El Duque Plant Mexico Plant Industrias Plant Santa Rosa Tomatoes
Plant
Santa Rosa Vegetables Plant Villagrán
Plant
Nutrisa
Plant
Lagos
Plant
Cogeneración
Plant

Plant
Avomex
Plant
Lagos
Distribution Center
Rivers and lakes 161 56
Wells 45 7 33 115 2 95 14 0.1
Municipal network 0.8 16 3.6
Tank truck water 6
Total 554


The volume of rainwater collected and stored on a yearly basis is 76 megaliters corresponding to the maximum installed capacity.
Notes:
The reported consumptions are directly measured through measurement instruments that are overseen and some certifications by the federal, state, and municipal authorities. These consumptions are reported to such authorities through different reporting formats and mechanisms.
The volume of rainwater is an estimated volume of what the Herdez Duque Complex, Mexico Plant, and Mexico Distribution center recover and use to water gardens.
Since we are not using rainwater in production processes, it will be reported separately.

102-29. Identifying and managing economic, environmental and social impacts

The Board convenes on a quarterly basis and has intermediate bodies that are responsible for overseeing management and fulfillment of the Company’s objectives. A sustainability performance report is submitted at the meetings of the Board, which contemplates economic, social, and environmental performance.

102-25. Conflicts of interest

To prevent conflict of interest, each Director signs a statement that ensures the absence of conflict. Additionally, each Committee has rules and regulations in place that provide their responsibilities and relationship with the Board of Directors.

We also have a Code of Ethics and a Conflict of Interest Policy, mandatory binding documents that apply to all collaborators.

You can consult these documents at: https://grupoherdez.com.mx/sustentabilidad/codigos-y-politicas/

102-24. Nominating and selecting the highest governance body

Shareholders vote at the annual Meeting to ratify directors. To be elected, directors must meet the following requirements:

1. Professional training in economic and management sciences, and desirable post-graduate studies in these areas;
2. Minimum professional experience of 20 years in executive positions in consumer goods companies and/or in the financial sector;
3. Experience as director in companies of the manufacturing industry and/or financial sector; and
4. Member of business organizations.

102-23. Chair of the highest governance body

The Chairman of the Board of Directors is also the Chief Executive Officer of the organization.

102-22. Composition of the highest governance body and its committees

Background and skills

Héctor Hernández-Pons Torres
Chairman of the Board of Directors
Chief Executive Officer

He holds a Bachelor’s degree of Law from Universidad Anáhuac and a Master’s in Business Administration (MBA) from National University of San Diego in California. He joined the Legal department of Herdez in 1978, and since then has performed different duties within the Company. In 2004, he was appointed Chairman of the Board of Directors and Grupo Herdez Chief Executive Officer.
In addition to his responsibilities within the Group, he has held several positions like: Regional Director at Banamex and Nacional Financiera, Vice-president at Concamín (Confedereación de Cámaras Industriales), Chairman of the Board of Directors of Papalote Museo del Niño and of the CANAINCA (Cámara Nacional de la Industria de Conservas Alimenticias). He is currently Chairman of Fundación Herdez, Director of Papalote Museo del Niño and of Canainca, and he participates as member of the Board of Trustees of the Mexican Business Council (Consejo Mexicano de Negocios) and of the Communication Council (Consejo de la Comunicación).

Enrique Hernández-Pons Torres
Vice-chairman of the Board of Directors
Deputy Chief Executive Officer

He holds a Bachelor’s degree in Business Administration and has postgraduate studies abroad in Marketing and Business Administration. He joined Grupo Herdez in 1971 and has held several positions in different departments like Sales, Marketing, Accounting, and other departments. Currently, he is Vice-chairman of the Board and Deputy Chief Executive Officer and Chairman of the Board of MegaMex in the United States.s.

Anasofía Sánchez Juárez Cardoze
Independent Director

She holds a Bachelor’s degree in Marketing from Tecnológico de Monterrey, and a Master’s degree in Communication, Advertising and New Media from Institut National Supérieur Des Hautes Etudes Economiques et Commercial (INSEEC) in France. She also has studies at HEC Paris and University of Wharton, Philadelphia. She is a professor of the Master’s in E-Business at Instituto Superior para el Desarrollo de Internet (ISDI). Currently, she is Chief Executive Officer at Waze Mexico, and before joining Waze, she served a little over five years as Business Director Mexico & Central America at Facebook. Previously, she worked as a Brand Solutions Manager at Google and Commercial Leader at YouTube Mexico.

Enrique Castillo Sánchez Mejorada
Independent Director

He holds a Bachelor’s degree in Business Administration. He began his professional career at Banco Nacional de México. He held several executive positions in Mexico at Nacional Financiera, Casa de Bolsa Inverlat, Seguros América, Inverméxico/Banco Mexicano, Credit Suisse México, and he was Chairman of the Board of IXE Grupo Financiero. He was also Vice-Chairman and President of the Mexican Bank Association (Asociación de Bancos de México). Currently, he is the Chairman of the Board of Directors of Maxcom Telecomunicaciones, and Non-Executive Chairman of the Board of Directors of Banco Nacional de México, and he is a member of the Boards of Directors of Grupo Alfa, Southern Copper Corporation, and Médica Sur.

Eduardo Ortiz Tirado Serrano
Independent Director

He holds a Bachelor’s degree in Business Administration from Universidad Anáhuac. He started his professional career at Herdez, where he worked in the marketing department; then, he worked at Richardson Vicks and Procter and Gamble in marketing for six years. In 1988, he joined SC Johnson and Son as Chief Marketing Officer. In 1992, he participated in a sales training program as an International Associate in Los Angeles, California. In 1993, he returned to Mexico as Chief Commercial Officer at SC Johnson Mexico, and in 1995 he was promoted to Chief Executive Officer at SC Johnson Mexico and Central America. In 2001, he is appointed Corporate Vice-president and Chief Executive Officer for Mexico and Central America. He retired from SC Johnson in 2013. He was Director of CONAR (Consejo de Autorregulación y Ética Publicitaria); Director of CEMEFI (Centro Mexicano para la Filantropía), and member of the Advisory Board of a Great Place to Work-Mexico.

Currently, he is Chief Executive Officer of Grupo Zapata and Director of Grupo Herdez, and member of the Audit Committee. He is also Director of Un Mañana para la Comunidad foundation, and member of the Advisory Board of Fundación Xochitla.

José Roberto Danel Díaz
Independent Director

Certified Public Accountant from Universidad Iberoamericana. He has postgraduate studies in Administration at Instituto Tecnológico Autónomo de México (ITAM), Senior Management at Instituto Panamericano de Alta Dirección de Empresa (IPADE), and Corporate Governance at Yale School of Management, Standford Graduate School of Business, and Harvard Business School.
As Independent Director, he is part of the Board of Directors and chairs or forms part of several committees of the board, in public and private companies and financial institutions. Member of the Association of Public Accounts in Mexico (Colegio de Contadores Públicos de México), of the Mexican Institute of Public Accounts (Instituto Mexicano de Contadores Públicos), and was a member of the Mexican Institute of Finance Executives (Instituto Mexicano de Ejecutivos de Finanzas).
Chairman of the Best Corporate Governance Practices Committee of the Business Coordination Council (Consejo Coordinador Empresarial); member of the Latin American Institute of Corporate Governance (OECD-World Bank), of the National Association of Corporate Directors (USA), of the International Corporate Governance Network (UK) and its Risk Committee.

Luis Rebollar Corona
Independent Director

Chemical Engineer from Universidad Autónoma de México (UNAM), with experience as Chief Executive Officer and Chairman of the board at manufacturing and telecommunication companies. Currently, he is a Director on the Boards of Grupo Gigante, Grupo Sánchez, and Grupo Industrial Mexicano. He participated in the restructuring of Satélites Mexicanos as Chairman of the Board.

Michael Bernhard Jost
Independent Director
Professional financier with a degree in Business/Managerial Economics from University of Bern, with more than 25 years of experience in Latin America, of which he has served as CFO in different entities of Grupo Nestle for 17 years. He has led initiatives on mergers, acquisitions, disinvestments; implemented restructuring initiatives; supported strategic planning processes and business risk management. He served as member of the Remuneration Committee and Compliance Committee at Nestlé Brazil and Nestlé Mexico.

102-20. Executive-level responsibility for economic, environmental and social topics

A sustainability performance report is submitted at quarterly meetings of the Board, which contemplates environmental performance and quality of life indicators of collaborators. In this regard, the members of the Board responsible are as follows:

• Eduardo Ortiz Tirado Serrano – Labor practices
• Luis Rebollar Corona – Environmental practices
• José Roberto Danel Díaz – Chairman of the Corporate Practices and Audit Committee

102-18. Governance structure

Governance bodies Women Men Total members
Menor a 30 años 30 a 50 años Mayor a 50 años Menor a 30 años 30 a 50 años Mayor a 50 años
Board of Directors 1 1 7 9
Audit Committee 3 3
(100% independent)
Corporate Practices Committee 4 4
(50% independent)
Risk Committee 2 2 4 8
Sustainability Committee 1 2 8 11
Crisis Committee 1 5 7 9 22
Ethics Subcommittee 2 2 4

Duties of Committees
Committee Responsibilities
Audit Committee To provide support, opinion, and advice on: internal control and audit guidelines; accounting criteria and policies; financial statements; engagement of external auditors; risks to which the Company is exposed; information policies; and communication with shareholders and financial markets.
Corporate Practices Committee To give its opinion on policies and guidelines for the use or enjoyment of the assets that make up the Company’s equity and the operations it intends to carry out; appointment and election of the Chief Executive Officer; policies for granting mutual funds and contracting loans or credits; waivers to take advantage of business opportunities. Likewise, to support the Board of Directors in the development of activities under Article 42 of the Securities Market Law and the Code of Best Corporate Practices.
Risk Committee Identify the risks that affect To identify the risks that affect the achievement of the objectives of the areas under its responsibility, as well as to carry out their measurement, analysis and monitoring; to formulate appropriate response mechanisms for the risks identified and to implement effective controls; and to establish the basis for reporting to the Risk Committee.
Sustainability Committee To follow-up on the Sustainability Strategy in the three pillars: Persons, Community, and Planet.
Ethics Subcommittee Issue ethical behavior To design and promote guidelines for ethical behavior; to contribute to the ethical management of the Company through regulatory documents (policies and procedures), and to resolve disputes of appreciation, conflicts of interest, and conduct among our stakeholders.

102-15. Key impacts, risks and opportunities

At Grupo Herdez, we promote a culture of prevention that allows us to identify the risks to which our business might be exposed, and capitalize opportunities to add stability and growth to the Group.

In 2020, we published our Comprehensive Risk Management Policy based on ISO 31000 to improve our risk identification and management processes.

We prepared an operational risk matrix and a Crisis Manual. Crisis categories include:
• Industry
(fires, leaks, environmental damage)
• Product
(serious contamination or defect, adulteration, consumer preference)
• Transportation
(traffic accidents, roadblocks, suppliers)
• Social
(protests, obstruction of facilities, social activism)
• Natural Disasters
(earthquakes, drought, frost, hurricanes)
• Security
(Personal and property security, theft)
• Information Technology
(DRP for computer systems, telecommunication)

To understand the development of our strategic risks and proper handling thereof, we have designed a protocol that is implemented each year, which is based on the following:
• Questionnaires and interviews with Chief Executive Officers and Plant Managers
• Process mapping to identify deviations
• Accident rate
• National and international trends.

The results of this exercise are submitted to the Risk Committee for approval of plans proposed.

Consult the Policy at https://grupoherdez.com.mx/file/2021/03/Politica-de-Administracion-de-Riesgos-1.pdf

102-13. Membership in associations

Industry

  • Mexican Association of the Coffee Production Chain (AMECAFE; Asociación Mexicana de la Cadena Productiva del Café)
  • National Chamber of Metal Containers (CANAFEM; Cámara Nacional de Fabricantes de Envases Metálicos)
  • Mexican Association of Biscuit and Pasta Manufacturers (AMEXIGAPA; Asociación Mexicana de Industriales de Galletas y Pastas)
  • National Association of the Food Supplements Industry (ANAISA; Asociación Nacional de la Industria de Suplementos Alimenticios)
  • National Chamber of the Canned Food Industry (CANAINCA; Cámara Nacional de la Industria de Conservas Alimenticias)
  • National Chamber of Milk Industries (CANILEC; Cámara Nacional de Industriales de la Leche)
  • Mexican Council of the Consumer Products Industry (CONMEXICO; Consejo Mexicano de la Industria de Productos de Consumo)
  • National Council for Organic Production (CNPO; Consejo Nacional de Producción Orgánica; chaired by SAGARPA)
  • International Federation of Organic Agriculture Movements (IFOAM; Federación Internacional de
  • Movimientos en Agricultura Orgánica)
  • Mexican Organic Movement

Business

  • Mexican Association of Standards for Electronic Commerce (AMECE; Asociación Mexicana de Estándares para el Comercio Electrónico)
  • Canadian, British, Spanish and American Chambers of Commerce of Mexico
  • Confederation of Industrial Chambers (CONCAMIN; Confederación de Cámaras Industriales)
  • Business Coordinating Council (CCE; Consejo Coordinador Empresarial)

Sustainability

  • Mexican Center for Philanthropy (CEMEFI; Centro Mexicano para la Filantropía)
  • Commission of Studies on the Private Sector for Sustainable Development (CESPEDES; Comisión de Estudios del Sector Privado para el Desarrollo Sustentable)
  • Business Commitment to Integrated Solid Waste Management (SUSTENTA; Compromiso Empresarial para el
  • Manejo Integral de Residuos Sólidos)
  • Basin Councils (Consejos de Cuenca chaired by CONAGUA; Comisión Nacional del Agua)
  • Nonprofit Environmental Association (ECOCE)
  • Global Environmental Management Initiative (GEMI)
  • United Nations Global Compact

102-11. Precautionary Principle or approach

At Grupo Herdez, we promote a culture of prevention that allows us to identify the risks to which our business might be exposed, and capitalize opportunities to add stability and growth to the Group.

Aware of operational, environmental, safety, and quality risks, Grupo Herdez implements the precautionary principle through the Department of Environmental Control, Safety and Health (Control Ambiental, Seguridad e Higiene, CASH in spanish) and the Risk department, whose purpose is to safeguard the integrity of collaborators, facilities, and operations to ensure business continuity.

In 2020, we published our Comprehensive Risk Management Policy based on ISO 31000 to improve our risk identification and management processes.

Consult the Policy at https://grupoherdez.com.mx/file/2021/03/Politica-de-Administracion-de-Riesgos-1.pdf

Prevention Plans
Grupo Herdez has a World Class Manufacturing (WCM) system in place, the purpose of which is to manage continuous improvement in all our plants. This plan has helped us to:

• Achieve competitive costs.
• Improve productivity.
• Have a quality reference.
• Achieve world-class management and operations.
• Have effective information systems in place.

Grupo Herdez also has a major emergency plan that is designed to respond to any contingency at the plants and distribution centers. This plan consists of emergency response teams that provide support and coordinate communication between surrounding areas affected and corporate offices.

Participation in Associations
Grupo Herdez participates in the Confederation of Employers of the Mexican Republic (Coparmex) as advisor and consultant on safety, health, and the environment. It is also an active member of CONMEXICO’s safety committee.

Certifications

• Clean Industry Certification issued by the Federal Environmental Protection Agency (Procuraduría Federal para la Protección al Ambiente, PROFEPA).
• Safe Industry Certification issued by the Ministry of Labor and Social Welfare (Secretaría del Trabajo y Previsión Social, STPS).
• Certification issued by the Federal Commission for the Protection Against Health Risks (Comisión Federal para la Protección contra Riesgos Sanitarios, COFEPRIS).
• An internal protection program focused on measures for preventing risks by fire, spills, leaks, and others is implemented each year, which is audited by personnel of this agency.

102-10. Significant changes to the organization and its supply chain

In 2020, we had a significant change in the operations of Group Herdez, which was the sale of the tuna business in Chiapas, including the sale of all vessels and the plant.

102-8. Information on employees and other workers

Distribution of employees by gender

Year Gender Total
2020 Man 5,352
Woman 4,335
Total 9,687

Distribution of employees by employment agreement

Year Gender Permanent Temporary Total
2019 Male 4,737 615
Female 3,762 573
Total 9,687

Distribution of collaborators by region

Year Region Permanent Temporary Total
2019 Corporate Office 2,642 145 2,787
Plant 3,339 920 4,259
Distribution Center 672 100 772
Store 1,846 23 1,869
Total 9,687

For Grupo Herdez, the places with significant operations are offices, plants, distribution centers, and stores in Mexico.

We do not have part-time agreements, all our collaborators, including those hired on a temporary basis have a direct agreement from the company, we have also reduced workdays.

102-7. Scale of the organization

The Group’s infrastructure is composed of:

• 13 plants (12 in Mexico and 1 in the United States)
• 24 distribution centers (22 in Mexico and 2 in the United States)
• 642 stores: Nutrisa, Lavazza, Cielito Querida Café, and Moyo.
• 9,687 collaborators
• 24,036 MM MXN Net Sales
• 4,197 MM MXN EBITDA
• 2.77% of net profits in social investment

* MM MXN: Millions of Mexican Pesos

The Company was founded in 1914 and is listed on the Mexican Stock Exchange since 1991 with ticker symbol HERDEZ *.

102-6. Markets served

Grupo Herdez’s main operations are concentrated in Mexico.

102-5. Ownership and legal denomination

We are a business corporation listed on the Mexican Stock Exchange (BMV) since 1991, with ticker symbol HERDEZ*.

We are also part of BMV’s Sustainable Price and Quotation Index, which recognizes companies with best practices on social, environmental, and corporate governance matters.

306-1. Water discharge by quality and destination

Poured currents Volume (m3) 2020
Discharge to federal sewage 509,449
Discharge to municipal sewage 420,995
Discharge to the subsoil 63,366
Other discharges 0
Total 993,810

The water discharge volume increased 13% with respect to 2019 due to the incorporation of three plants to the reporting of information.
Notes:
1. The wastewater is discharged to federal and municipal recipient bodies, and it complies with the maximum permissible limits set forth in the applicable Mexican Official Standards (NOM-001-SEMARNAT-1996 and NOM-002-SEMARNAT-1996).
2. The Grupo Herdez treatment plants are designed specifically for each facility and for each type of effluent to be treated and thus be able to give adequate treatment to process waters and, as applicable, sanitary sewage.
Discharged Water Quality
For 2020, the estimated amounts of discharges are carried out through wastewater that is treated at Grupo Herdez, expressed in tons:

  • Greases and Oils: 5.78 Ton
  • BDO: 23.97 Ton
  • CDO: 86.39 Ton
  • TSS: 23.77 Ton
  • TDS: 119.99 Ton
  • SS: 0.06 Ton

306-2. Waste by type and disposal method

In 2020, we generated 64,335 tons of hazardous and non-hazardous waste.

Total weight of hazardous waste by elimination method

Elimination method 2020 (ton) 2019 (ton)
Recycling 23 71
Others (final disposal) 79 43
Total 102 114

Total weight of non-hazardous waste by elimination method

Elimination method 2020 (Ton) 2019 (Ton)
Recycling 53,261 31,604
Others (Sanitary filling: it includes special handling waste and non-assessed urban solid waste) 10,972 10,327
Total 64,233 41,931

Total waste generated during the past 4 years

Waste generated Unit 2020 2019 2018 2017
Waste generated Metric tons 64,335 42,045 34,231 36,856

301-2. Recycled input materials used

At Grupo Herdez, we are starting our path to a circular economy and working on detailed initiatives to achieve our 2025 goals. In relation to recycled raw materials, these are byproducts of corrugated cardboard like boxes and trays, in an estimated 80%.

% of Recycled Materials in 2018 = 3.47
% of Recycled Materials in 2019 = 2.59
% of Recycled Materials in 2020 = 2.24

306-3. Significant spills

We have no spills of any material, waste, substance, and/or liquid recorded in 2020.

306-4. Transport of hazardous waste

At Grupo Herdez, we do not transport, import, export, or treat any hazardous waste. Hazardous waste generated by the Group is sent to collection centers and/or controlled containment facilities.

306-5. Water bodies affected by water discharges and/or runoff

Wastewater from the facilities of Grupo Herdez is mainly discharged into the municipal sewer system. We have no technical proof of the impact of discharge into surface water or federal canals. Nevertheless, all water discharged is previously treated, and water volume is low/medium.

102-3. Location of headquarters

Our headquarters are located at Monte Pelvoux 215, Lomas de Chapultepec, Mexico City, C.P. 11000, MEXICO.

308-1. New suppliers that were screened using environmental criteria

No audits were conducted on new suppliers in 2020; however, the traceability of our raw materials and our relationship with suppliers is fundamental to ensure that our products reach the table of our consumers on time, form, and with the quality that characterizes us.

Nonetheless, we provided the Sustainable Agriculture Program with continuity and validity with a team of six in-house auditors that assess and monitor the condition of the properties, monitor whether suppliers are located in ecologically sensitive areas and measures that are being implemented to protect them, in addition to measures implemented to improve soil quality, increase recycling, and reduce the generation of waste.

Producers are audited in accordance with the guidelines of the Good Agricultural Practices Manual with respect to two main criteria: Good Agricultural Practices Manual and Sustainable Agricultural Plan.

In 2020, 58 suppliers were evaluated, 29% of which are new suppliers.

416-1. Assessment of the health and safety impacts of product and service categories

The Research and Development department of Grupo Herdez is responsible not only for conceptualizing products that foresee or adapt to the changing lifestyles and needs of our customers and consumers, but also for making the necessary changes on health, safety, quality, and nutrition to our existing and extensive product portfolio.

We have a Quality and Safety Management System in place, certified under the FSC22K standard, in accordance with the requirements of our customers and governmental entities, both locally (COFEPRIS) and for export to the United States (FDA).

All products, both domestic and export products, are assessed on health and safety to promote improvements.

416-2. Incidents of non-compliance concerning the health and safety impacts of products and services

In 2020, we had a case related to the health and safety of our products since there were products that had no expiration date in the Coacalco branch. An Insignificant monetary fine was paid.

IP-9. Health and Nutrition Care Strategy Development

The Scientific and Regulatory Affairs department, under the Technical Division, validates that products developed within Grupo Herdez contain permitted ingredients, in the amounts indicated by applicable law for each product category. It also determines the nutrition icons that the Front Label has to include so that consumers have the nutrition facts of the product.

Similarly, the Nutrition, Health, and Wellness coordination made a Nutritional Outlook for all of the food and beverage portfolio of the Group. This includes the product line, innovations, reformulations, and new products. This Outlook consists of making an evaluation of the nutritional profile of each formula, mainly reflecting nutrients that are considered critical.

Thus, Nutritional Guidelines were published for the development of new products, which provides nutritional criteria. These criteria are guides for the maximum content that each category has to have with respect to added critical nutrients.

In relation to innovation, development, and reformulation of existing products, the recommendations of the World Health Organization on nutrition and healthy diet are used as a reference internationally .

Locally, NOM-086-SSA1 (food and non-alcoholic beverages with modifications to their composition) and NOM-051-SCFI/SSA (general labeling specifications for prepackaged food and non-alcoholic beverages) are used as a reference.

In 2020, 56 reformulations were made on different products of the product line to reduce or remove added critical nutrients like sugars, sodium, and saturated fat. Sweeteners were also removed from some products.

The reformulations include:

• Reduction of sodium. Our Balance mayonnaise, Nutrisa snacks, cooking sauces, and Parmesan sauce.

• Reduction of sugar. Sandwich mayonnaise, Nutrisa foods, Nutrisa hard ice cream and ice pops, chipotle sauce.

• Reduction of saturated fat. Nutrisa foods and Parmesan sauce.

• Removal of salt. Canned tuna and tuna in water (pouch).

• Removal of sugar. Seasoning for meat fajitas.

• Removal of sweetener. Blackberry jam, natural yogurt ice cream, mango with chili ice pop, and crujibran.

408-1. Risk of Child Labor

We have a strict control in place in our hiring processes and a Supplier Code of Conduct, which each supplier has to sign upon establishing a business relationship with Grupo Herdez.

The Code provides clauses that prohibit hiring child labor or forced labor. This as a measure to prevent the risk of employing child labor throughout our value chain, particularly in the most vulnerable sectors like the agriculture and fishing sectors.

You can consult the Supplier Code of Conduct at: https://grupoherdez.com.mx/sustentabilidad/codigos-y-politicas/

409-1. Operations and suppliers at significant risk for incidents of forced or compulsory labor, including child labor

Our Supplier Code of Conduct provides the minimum guidelines that our suppliers, both current and potential, must observe in relation to social and environmental conditions for the development of their operations and services.

This document is based on the standards of the International Labor Organization (ILO), the ten principles of the United Nations Global Compact, the Human Rights Policy, and the Grupo Herdez Code of Ethics.

417-2. Incidents of non-compliance concerning product and service information and labeling

There were no incidents related to the labeling of our products in 2020.

417-3. Incidents of non-compliance concerning marketing communications

There were no incidents related to breach of marketing communications in 2020.

IP-1. Clients and consumers relationship

We have several communication channels to address the comments and needs of our customers and consumers.

Contact:

01-800 Lines: each brand has an assigned number to resolve quality problems, complaints, or suggestions regarding our products.

Digital media: We have official websites for most of our brands, where customers and consumers may find out all information on these. We also have more than 20 brand social network profiles, where the “questions and answers” interaction allows us to monitor what we do right, concerns, and questions of our customers.

Brand Website Facebook Instagram Twitter Youtube
Aires de Campo X X X X X
Barilla México X X X X X
Blasón X X X NA NA
Búfalo X X X X X
Carlota X X X NA X
Del Fuerte X X X NA X
Doña María X X X NA X
Embasa X X NA NA NA
Frank’s México X X X NA X
French’s México X X NA X
Herdez X X X NA X
Helados Nestlé X X X X NA
McCormick México X X X NA X
Nutrisa X X X X X
Yemina X X X NA X
Kikkoman México X X X NA NA
Corporate and CSR Facebook Instagram Twitter Youtube
Grupo Herdez X X NA NA X
Fundación Herdez X X X NA X
Saber Nutrir X X NA NA X

 

IP-8. Consumer Communication Policies and Practices

“Labeling Requirements

Relevant regulatory labeling requirements for the market of our products varies depending on the product category; the specific Mexican Official Standard (NOM) is applied for the domestic market. If there is no specific NOM, general guidelines and regulations are applied, such as: Product and Service Health Control, General Health Law on activity, establishment, product, and service health control, Resolution determining additives in food, beverages, and food supplements, their use and health provisions; Resolution determining prohibited or permitted plants for teas, infusions, and edible vegetable oils, among others.

For Export products, the applicable laws of the country to which the products will be exported are applied.

As a voluntary practice that goes beyond legal requirements, we examine the sub-ingredients in raw materials that are included in the formula to record any additive or contaminant that might affect product safety. Additionally, the results of a contaminant analysis are requested from certain suppliers, depending on the nature of the ingredient or product, and particularly for products exported to the United States.

Content and Ingredient Information

All of our products under the Food, Non-alcoholic Beverages, and Food Supplements categories include a list of ingredients and their respective nutrition facts.

• Food and beverages must include: calories, protein, total fat, saturated fat, carbohydrates, total sugars, dietary fiber, and sodium.
• Food supplements include: calories, protein, total fat, Carbohydrates, and Sodium, per serving and per 100 g.

The label is the main source of nutritional information. However, some web pages of the company include such information. Additionally, the 01800 consumer hotline of each of our food and non-alcoholic beverage brands has updated information.
All statements included on labels must be supported by scientific evidence in order to include them on labels, and comply with regulations that apply to the product and market in which the product will be sold.

Our internal guidelines include the following information that must be included on labels:
• whether coloring is artificial or natural
• whether flavor is natural, artificial, or identical to natural. Hydrolyzed protein and MSG are declared as such.
• there is no policy to declare GMOs under Mexican law.
• sweeteners are declared as required by the Resolution on additives
• all allergens present and those that might be present in the product are declared.
• practically none of our products are fortified, unless required by law.
• the methods used to ensure food safety during food processing are indicated.”

IP-7. Innovation Management

The Research and Development expenses during the past 4 years has been:

  Unit 2017 2018 2019 2020
Total R&D Expenses Millions of Pesos (MXN) $13,115,879 $18,112,998 $8,155,422 $36,782,615
Number of modified products Amount 33 43 57 73
R&D Expenses as a % of sales EXPENSES IN MXN / % OF NET SALES 6% 5.9% 7.2% 0.15%

At Grupo Herdez we seek to promote open innovation, to contribute to external knowledge and supplement our internal strategy.

In 2020, we carried out 7 projects to take advantage of knowledge and supplement the internal strategy of Innovation:

  • “Plug & Play” Open Innovation Pilot: We conducted 26 interviews on all departments of the Group, through which we identified 80 potential projects aimed at resolving specific issues of the department.
  • Plug & Play Ecosystem: We created an alliance with access to an ecosystem of more than 30 thousand startups that may give a solution to ingredient innovation, data analysis, food safety, biotechnology, food and packaging supply chain.
  • Innovation Playbook: In 2020, the Grupo Herdez Innovation model was designed based on the best practices of our business partners, considering all areas involved (+18), providing a Playbook guide with processes and tools for implementation. The Model has 4 dimensions: Purpose and strategy, resources, portfolio leadership, and management.
  • Doña María Innovation: Through Crowd Sourcing, we had a development of product concepts for Tea production lines, with an estimated potential of 38% of plastic use elimination.
  • Natural conservation development. Through access to new ingredient technologies, we sought to have Clean Labels in the Del Fuerte and Herdez Tomato line by the end of 2020.
  • Tea line automation and plastic reduction project. We developed a new machine with new technologies, which did not exist in Mexico for Tea production lines, with an estimated potential of 38% plastic use elimination.
  • Automation of line 2 of Barilla packaging. Seeking greater efficiency in production lines, material exploitation, and homologation of resources led us to reduce our use of cardboard and to cost efficiencies.

102-1. Name of the organization

Grupo Herdez, S.A.B. de C.V.