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

Direct emissions from fuel consumption at mobile combustion sources

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

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

Consumption

Discharges

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:

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:

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

403-5 Health and safety training

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

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:

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:

* 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

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

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 by water type

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.

Priority concerning systems for water discharges

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.

* 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)

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

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

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

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

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

Distribution of employees by employment agreement

Distribution of collaborators by region

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

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

Total weight of non-hazardous waste by elimination method

Total waste generated during the past 4 years

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.

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:

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.