SUSTAINABILITY REPORT 2018 - LAFARGEHOLCIM
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Sustainability Report 2018
Highlights 2018
We reduced our net CO2 emissions
per tonne of cementitious material by
25 percent compared to the 1990 baseline.
CLIMATE
AND ENERGY
We reused 52 million tonnes of waste in
our operations, making us one of the world’s
largest waste solution companies.
CIRCULAR
ECONOMY
Freshwater withdrawal per tonne of
cementitious material was reduced by
19 percent since 2015.
ENVIRONMENT
An additional three million people
benefited from our community investments.
COMMUNITY
Cover picture: Colleagues working on the Grand Paris Express (GPE), the largest infrastructure project in Europe. Our building materials and sustainable solutions
are helping to make sure the GPE is environmentally friendly and in line with the Universal Climate Agreement signed at COP21. Aggregates come from our nearby
quarries in the Seine valley. These are delivered by barge, which is a more environmentally friendly method than by road (two barges can handle the load of 220
trucks). Most of the earth excavated from the GPE tunnels and stations will be removed the same way, traveling as far as Le Havre to re-landscape some of our
quarries along the Seine.
Contents
Page
Introduction HSSC Chairman’s statement
10–13
CEO statement
Embedding
sustainability
Sustainability ambitions
14–17
Materiality
Achievements and targets
Creating
value
Value creation
18–21
The LafargeHolcim Integrated
Profit & Loss Statement
Climate
and energy
2030 commitment
22–29
CO2 emissions overview
Our actions
Task Force on Climate-related
Financial Disclosures
Circular
economy
Using alternative resources
30–35
Co-processing
Sustainable construction and solutions
Environment Saving water
36–41
Managing biodiversity
Community Stakeholder engagement
42–49
Human and labor rights
Responsible sourcing
Innovation Innovating to lead
50–53
Patents
Affordable housing
People Health & Safety
54–61
Employees
Governance, Governance, compliance and integrity
62–73
performance Performance data tables
and assurance Methodology and consolidation
Assurance statement
Global citizenship
Note: The Group is LafargeHolcim. However, both Lafarge and Holcim are names used in various countries
where those brands are established and recognized, and this is reflected throughout the report.
This report also serves as our Communication of Progress (COP) to the UN Global Compact.
LafargeHolcim Sustainability Report 2018 Introduction 01
Untervaz, Switzerland
Cement plant, operating since 1957
02
Our 2018 performance of 576 kg of
net CO2 per tonne of cementitious
material has positioned us as the
most carbon-efficient cement and
concrete company in our peer group.
LafargeHolcim Sustainability Report 2018 Introduction 03
04
We are keeping plastic out of
the oceans with projects in
Egypt, Mexico, Morocco and the
Philippines. In 2018, we repurposed
2 million tonnes of plastic waste.
LafargeHolcim Sustainability Report 2018 Introduction 05
Quarry Mülligen, Switzerland
The terrain is constantly renaturalized and
recultivated after the gravel has been removed.
06
In many communities we have a
net positive water impact. In India,
Ambuja Cement is calculated as
being six times water positive.
LafargeHolcim Sustainability Report 2018 Introduction 07
Ewekoro, Nigeria
Community medical center
08In 2018, LafargeHolcim
spent CHF 47.8 million on
community programs.
LafargeHolcim Sustainability Report 2018 Introduction 09Health, Safety and Sustainability Committee
(HSSC) Chairman’s statement
Dear stakeholders
In 2018, LafargeHolcim consolidated its 2018 while working for LafargeHolcim. policies and relevant new studies. Other
position as a global leader in building This is unacceptable and everyone in our agenda items are reviews of sustainability
materials and solutions. At the same time, organization, starting with the Board, reports and results, sustainability risks and
we are conscious of the bigger picture recognizes their responsibility to ensure we opportunities and a review of sustainability
and strive to ensure that we live up to develop and practice a zero-harm culture. targets and action plans. In 2019, we
the responsibilities that come with our will additionally conduct a materiality
presence in many diverse countries. We The Health, Safety and Sustainability review with inputs from an external
aim to demonstrate, with our actions, Committee (HSSC) has been working closely stakeholder panel.
how we are a responsible and ethical with the sustainability team reviewing our
company, with sustainability as a core sustainability framework and receiving Finally, we thank the company’s employees
value. Sustainability creates value for our regular updates on key environmental and for living up to our commitment to health
business, our shareholders and society, and social topics as well as on our performance and safety and sustainability. Our success
we aspire to be a leader in this field and against key indicators. We have noted depends on their dedication and efforts.
leverage resulting opportunities. the positive trends of reduced net CO2
emissions and water withdrawal per tonne
It is pleasing to see that our safety of cementitious material, and we are
program, supported by the dedication and committed to go further.
hard work of our employees, is having
an impact. Our global Lost Time Injury To ensure that we approach sustainability
Frequency Rate has improved significantly in a structured manner, the HSSC has set
over the last three years for employees an agenda of topics to be discussed at Adrian Loader
and contractors alike. However, despite scheduled meetings. Standing agenda Chairman of the Health, Safety
a notable reduction in year-on-year items for each meeting are an update on and Sustainability Committee
fatalities, 19 people lost their lives in achievements, results, controversial issues,
10Adrian Loader Member of LafargeHolcim Board of Directors and Chairman of the Health, Safety and Sustainability Committee “We aim to demonstrate, with our actions, how we are a responsible and ethical company, with sustainability as a core value.” LafargeHolcim Sustainability Report 2018 Introduction 11
CEO statement
The various activities of our 75,000
employees have a direct impact on
people’s lives.
Dear stakeholders
Our products are the basis for human Our cement plants provide an excellent contribute to projects in areas ranging
development and prosperity, and indeed, a opportunity to address society’s from education and training through basic
world without concrete is hard to imagine. waste problem. healthcare and safe water. Over the past
It provides infrastructure, housing, and four years, more than 15 million people
mobility for billions of people around In 2018, we treated over 51 million tonnes have benefited from our community
the world. Compared with other building of waste. This increase of 6 percent versus programs worldwide. Every contribution
materials, concrete is resilient, versatile, 2017 makes us one of the largest waste of a LafargeHolcim employee has a direct
affordable, recyclable and essentially processors. Plastic waste and marine impact on people’s lives. As a participant in
local. Not only does it have many benefits, littering moved to the forefront of public the United Nations (UN) Global Compact,
but those benefits endure for decades or attention. We are part of the solution with LafargeHolcim stays committed to the ten
even centuries. two million tonnes of plastic waste treated, universal principles.
predominantly in emerging countries
In 2018, we made excellent progress in where the problem is most urgent. I would like to thank our employees,
executing our Strategy 2022 – “Building customers and suppliers for their
for Growth.” In the context of our growth Last year, we reduced our water partnership in creating sustainable value
strategy, I believe that sustainability is a withdrawal in our cement plants by and growth.
great opportunity for us. Our innovative 7.5 percent worldwide, with a special
products and solutions enable customers focus on water in dry areas. In some
around the world to reduce their impact communities we already have a net
on the environment and build more quickly positive water impact, for example those
and efficiently. served by our subsidiary Ambuja Cement
in India.
We are cogniscent of the carbon footprint
of the building materials industry. Our business is truly local. We are Jan Jenisch
LafargeHolcim is at the forefront of efforts determined that our activities continue Chief Executive Officer
to mitigate climate change. Since 1990, we adding value to the communities and
have reduced our net carbon emissions countries in which we operate. Many of
per tonne of cement by 25 percent. our 75,000 employees around the world
12Jan Jenisch Chief Executive Officer 75,000 Employees 2,300 Operating sites CHF 27.5 billion In net sales (2018) LafargeHolcim Sustainability Report 2018 Introduction 13
Sustainability ambitions 15
Embedding
sustainability Materiality 15
Achievements and targets 17
4
Strategic
sustainability pillars
7
High focus
materiality issues
14Embedding sustainability
Sustainability ambitions
The global megatrends of population Buildings and infrastructure have come At LafargeHolcim we are committed to
growth, urbanization and rising living into focus in this challenge. While on one contribute our share along our entire
standards offer significant business and side they form the very basis for societal value chain. Our 2050 vision for the built
growth opportunities in our industry. The development, they also account for 30 to environment rests on four strategic drivers:
global building materials market is worth 40 percent of worldwide CO2 emissions, Climate and Energy, Circular Economy,
CHF 2.5 trillion annually and is continually with around 5 percent occurring during the Environment and Community.
growing. At the same time, these trends construction phase. Also, they consume
are challenging our planet through substantial amounts of raw materials In the center of all our activities to address
increased carbon emissions, depletion and generate significant volumes of the four drivers is Innovation. We will
of natural resources and an increase of waste. Society thus urgently needs to continue to develop innovative products
waste. As countries develop, solutions for find solutions for a more sustainable and solutions for a built environment
sustainable prosperity are needed. built environment. that meet these criteria, satisfying a
continuously growing market demand for
sustainable solutions.
Our materiality matrix
Size of impact is estimated
based on actual or potential
High
Monitor and manage Focus
short-term financial, Renewable Health and safety**
energy sourcing
environmental or social
impacts, whether positive Biodiversity Business ethics and compliance
management
or negative. Greenhouse gas emissions
and energy management
** ocal community engagement
L
Every incident is a and impact
tragedy − we do not
Corporate governance
try to quantify impact
Sustainable products
and innovation
Key
Societal concern
Water management
Global focus
and standards,
local accountability Maintain Monitor and manage
Internal waste Air emissions Local economic
Local focus and management management value creation
accountability Employee diversity Materials recycling and Supply chain
and inclusion circular economy management
Significant impact Employee relations Human rights Customer relations
and engagement management and satisfaction
Medium impact
Transport and Risk Employee training
Low impact logistics management and development
Employee work-life ricing integrity and
P
balance and well-being anti-trust compliance
Medium
Medium Importance to LafargeHolcim High
Materiality internal update of our material issues matrix, we present the focus of our
Alongside our robust business risk matrix, shown above. In preparation for efforts and where we monitor and
management process, we conduct the transition to integrated reporting, manage, giving an estimated size of the
material issue reviews to ensure a full material issues review will be impact of the most material issues and
that sustainability risks, as well as conducted in 2019. showing how we approach each issue –
opportunities, are correctly prioritized. either globally or locally.
The issues material to our stakeholders
In 2018, the Health, Safety and are environmental, social and
Sustainability Committee reviewed an governance-related. In the revised
LafargeHolcim Sustainability Report 2018 Embedding sustainability 15Embedding sustainability
continued
Strategic pillars
The graphic below shows our four strategy pillars and the lead metric and targets we are aiming to achieve. 2017 performance
and targets have been restated according to the revised scope of consolidation. Details on our scope can be found on page 69.
Sustainability
pillars CLIMATE CIRCULAR ENVIRONMENT COMMUNITY
AND ENERGY ECONOMY
Objective Reduction of CO2 Increased reuse Reduction of Creation of
emissions of waste-derived freshwater shared value
resources withdrawal
Lead metric Quantity of Freshwater Number of new
CO2 emitted
(kg CO2/t waste reused withdrawn beneficiaries
cementitious) (M tonnes) (liters freshwater/ per year
tonne cementitious) (M new beneficiaries)
Performance 2018 576 52 305 2.9
2017 582 49 330 2.8
restated with 2018 scope
Target 2022
restated with 2018 scope 560 60 291 5.0
Target 2030
restated with 2018 scope 520 80 262 5.0
Note: See methodology and assurance section for details of consolidation scope.
Our performance against all targets and operating principles is shown in the performance data tables on pages 64–68.
16Achievements and targets Climate Environment
Aligning with the timeframe of the Group In 2018, our net CO2 emissions per tonne Over the last four years we have reduced
Strategy 2022, we are now stating interim of cementitious material decreased to water withdrawal in our cement plants by
2022 targets, replacing the 2020 and 2025 576 kg CO2/tonne, a 1 percent reduction around 19 percent (or 73 liters per tonne
targets previously in place. For climate from 2017 and equal to a 25 percent of cementitious material). Over this period
and water, we have adapted the targets to reduction compared with 1990 emissions. the initiative has created water awareness
reflect the performance level we will achieve, This exceeds our year-on-year reduction in our plants and we have refined our
rather than a percentage reduction. We objective and positions us well to deliver measurement methodologies. Today,
have revisited our climate target based on our new carbon reduction target of we are shifting our focus to consider
new external references and accounting for 520 kg CO2/tonne by 2030. We have our total impact on water resources in
current national climate change ambitions achieved this by reducing our clinker- the communities where we operate,
in the countries in which we operate (see to-cement ratio and consuming less particularly in water-scarce areas. In
page 23 for more details). For beneficiaries energy per tonne of product, mostly by consequence, we will revise our ambitions
we now state the target as a yearly figure using alternative fuels and improving the to reflect water impact, which we intend to
rather than an accumulative total. efficiency of our processes. reduce by focusing on the most vulnerable
areas of operation. In some communities
We are operating 270 cement and grinding Circular economy we already have a net positive water
plants, 663 aggregates plants and 1,448 We are one of the world’s largest waste impact, such as those served by Ambuja
ready-mix concrete plants globally for processing companies. In 2018, we treated Cement, which we have calculated as being
which we are setting higher standards on 52 million tonnes of waste, an increase of six times water positive.
key environmental, social and corporate 6 percent versus 2017. More than 11 million
governance topics. In some cases, these tonnes was used as fuel and alternative raw Community
have replaced former targets. These materials that we fed into our kilns. In many countries we enlarge the positive
operating principles cover human rights, impacts of our operations – such as direct
drinking water and sanitation, stakeholder We co-process all types of waste, including employment, tax revenues, infrastructure
engagement, quarry rehabilitation and solid shredded waste from industrial and development and local procurement –
biodiversity, environmental management municipal origin, spent solvents, used tires, beyond the factory gate. In 2018,
systems, air emissions, our Code of waste oils, contaminated soils, industrial 2.9 million people benefited from our
Business Conduct and our Supplier and sewage sludges and demolition community programs worldwide – with
Code of Conduct. We will continue waste. Depending on the waste regulation over 15 million having benefited over the
reporting our performance against these in a country and the development of its last four years.
principles annually. waste market we can reach a fossil fuel
replacement rate of more than 90 percent.
Besides using waste as a fuel substitute,
we also use waste streams from the power
and steel industries to replace clinker
in our cement, thus saving primary raw
material and reducing CO2 emissions. In
some of our markets replacement rates
reach 50 percent.
LafargeHolcim Sustainability Report 2018 Embedding sustainability 17Value creation 19
value
Creating
The LafargeHolcim Integrated
Profit & Loss Statement 19
CHF 3.0 billion
Retained value
CHF 5.2 billion
Estimated triple bottom line value
18Value creation
Creating value through sustainability a vital role in helping us achieve our valuation can be practically implemented
The building materials market is worth sustainability ambitions. The LafargeHolcim and shared it with the World Business
CHF 2.5 trillion per annum globally and IP&L 2018 results are displayed in the Council for Sustainable Development
is expected to continue to grow by graph on page 21. (WBCSD) and other parties.
2–3 percent each year. LafargeHolcim
is the leader in building materials that Why impact valuation?
The IP&L statement tool complements
provide infrastructure, housing and The IP&L is not intended to be a definitive
our traditional financial and
mobility for billions of people all over the statement of our financial accounts.
sustainability metrics to give us
world. Our products are resilient, versatile, Rather, it is a tool to allow us to understand
an indication of the scale of our
affordable and increasingly recyclable. and share with stakeholders the extent of
extended impacts. It provides a
These benefits endure for decades or even our impacts and to track progress against
compass, pointing us in the direction
centuries, making them an investment our sustainability framework. The tool
of increasing sustainable value
in our collective future. Indeed, a world enhances decision-making processes
creation for shareholders, society and
without our products is unimaginable. and sustains value creation in the long
the environment. This is the fourth
term, by raising awareness of risks and
consecutive year we have produced
The Group Strategy 2022 is focused on opportunities posed by externalities
an IP&L.
building for growth, and sustainability is (through quantification), and enabling
a key element. Our vision is to be analysis on what the impact could be on
recognized by our industry and by society the bottom line.
as being at the forefront of sustainable
construction solutions and innovation,
and by our stakeholders as a responsible
The discipline of impact valuation
We published our first IP&L together
CHF 3.0 billion
Retained value
and ethical company. with our subsidiary Ambuja Cement in
2014. Since then, the discipline of impact
CHF 2.2 billion
The LafargeHolcim Integrated valuation1 has been further developed and
Profit & Loss Statement adopted by different companies. Currently
This is the fourth consecutive year that we are working with a number of leading
LafargeHolcim displayed the order of companies, which are in various stages of Net positive socio-economic and
magnitude of its financial impacts across piloting, implementing and communicating environmental impacts
the triple bottom line. The LafargeHolcim their efforts on impact valuation, as part of
Integrated Profit & Loss Statement (IP&L) a roundtable to develop this discipline and
represents our approach to impact
valuation. It is also a key element of our
sustainability reporting tools and plays
share best practices with other interested
companies. In 2017, this group published
a white paper2 describing how impact
CHF 5.2 billion
Estimated triple bottom line value
Understand the Shape the mindset Enhance decision-
extent of impacts Have a comprehensive view making process
Assess and quantify the of company performance/ Investments lock
risks of externalities on the impact, track progress over LafargeHolcim into assets
LafargeHolcim bottom line, time and engage, mobilize and for a long period of time.
and translate environmental inform beyond sustainable The IP&L enables us to start
and social KPIs into a common development experts. assessing decisions from
language, understandable the bottom up, working
throughout the organization. with interested companies.
1 Impact valuation refers to the application of welfare economics to determine the positive and negative value contribution
of business activities to society in monetary terms.
2
Available at: https://www.lafargeholcim.com/sites/lafargeholcim.com/files/atoms/files/impact-valuation-white-paper.pdf
LafargeHolcim Sustainability Report 2018 Creating value 19Manta, Ecuador
At our customer’s site.
20Financial Socio-economic Environmental TBL
8,216 97 4 5
-54
919 5,234
-5,236
-548
2,987 -971 -152 -34
Retained value
Stakeholder value
investments
Strategic social
Inclusive business
Industrial accidents
Employee education
own operations
CO2 upstream and
Air
Water
Biodiversity
Waste
Secondary resources
line calculation
Triple bottom
TRIPLE BOTTOM LINE CAN BE USED TO ASSESS OPPORTUNITIES BEYOND COMPLIANCE
COMPLIANCE WITH GOVERNANCE, SOCIAL AND ENVIRONMENTAL REQUIREMENTS AND STANDARDS
The IP&L statement is not part of LafargeHolcim’s financial reporting or projections. The IP&L is intended to raise awareness of externalities that may or may not affect
LafargeHolcim’s business, and to assess their relative importance. It contains preliminary considerations that may be subject to change. Furthermore, the IP&L may
also change, for example as valuation techniques and methodologies evolve. It should be considered as indicative and it neither represents any final factual conclusions
nor is intended to assert any factual admission by any person regarding the impact of LafargeHolcim or any of its related parties on environment or society.
What the IP&L tells us In the Environmental dimension, the where we operate, and particularly in
The IP&L indicates that our triple-bottom- most significant externality is our CO2 water-scarce areas. In some communities,
line calculation – taking into account the emissions. These account for 75 percent of we already have a net positive water
monetized social and environmental our total cost to society, and represent the impact, such as those served by Ambuja
impacts – is 1.8 times the company’s largest negative impact of our operations. Cement, where we calculate being six times
retained financial earnings. In 2018, our net CO2 emissions per tonne water positive (see case study on page 38).
of cementitious material decreased to
The value created in the Socio-Economic 576 kg CO2/tonne, a 1 percent reduction The IP&L highlights challenges but
dimension is mainly driven by the from 2017 and equal to a 25 percent also opportunities that can help us to
“stakeholder value” externality, which reduction compared with 1990 emissions. maximize our sustainable value creation for
measures our contribution to local This exceeds our year-on-year reduction shareholders, society and the environment.
economies through the multiplied effect of objective and positions us well to deliver We are confident that, as we continue to
salaries, taxes and social investment. our new carbon reduction target of implement our sustainability framework,
520 kg CO2/tonne by 2030. We have the IP&L will assist us to measure the
Sadly, and despite all our efforts, we regret achieved this by reducing our clinker- effectiveness of our programs.
that 19 employees and contractors lost their to-cement ratio and consuming less
lives in 2018, down from 31 in 2017. The energy per tonne of product, mostly by Where can I find more details?
human cost of an occupational accident using alternative fuels and improving A document containing all the assumptions
cannot be monetized, but even if only the the efficiency of our processes. and the calculation values used, together
lost capacity of a person to generate income with a short animation explaining the
is considered, the cost is considerable. Water usage continues to have a negative IP&L statement, can be found on
impact. However, over the last four years our website (www.lafargeholcim.com/
The impact on lives and families is we have reduced water withdrawal in our Sustainability-reports).
immeasurable. Health and safety is a core cement plants by around 19 percent (or
value of the LafargeHolcim Group and we 73 liters per tonne of cementitious
will continue to act to improve the safety material). We now believe that we should
and the health of employees, contractors, shift our focus to consider our total impact
third parties and communities.3 on water resources in the communities
3 See “People” section on page 55.
LafargeHolcim Sustainability Report 2018 Creating value 212030 commitment 23
energy
Climate and
CO2 emissions overview: our
2018 performance 23
Our actions 24
Task Force on Climate-related
Financial Disclosures 26
576 kg
net CO2 per tonne cementitious material
25%
reduction of specific CO2 emissions since
1990. This is equivalent to over 40 million
tonnes CO2 avoided compared to 1990
performance levels
22Climate and energy
Highest reduction in peer group.
2030 commitment compared to 1990 – translating to net in Paris. Aligning with the Group Strategy
LafargeHolcim cement is among the most emissions of around 460 kg CO2/tonne – 2022, we have now stated an interim 2022
carbon efficient in the world. Since 1990, exceeds the standard for a 2 degree target of 560 kg CO2/tonne, replacing our
we have reduced our net carbon emissions scenario, consistent with the low-carbon previous 2020 and 2025 targets.
per tonne of cement by 25 percent. We technology roadmap defined for our sector
lead the international cement companies, by the International Energy Agency (IEA). In our scenario planning, we considered
with the highest reduction compared to the impact of a high, medium and low
our 1990 baseline. We are revisiting this ambition based on variability of regulatory framework
new external references and revised internal incentives on our potential to reduce
We have achieved this by reducing our scenario planning, and accounting for emissions. Our goal is consistent with
clinker-to-cement ratio and consuming less current national climate change ambitions in a “medium” variability of regulatory
energy per tonne of product, mostly by the countries in which we operate, as well as framework incentives, which we arrived at
using alternative fuels and improving the limited progress toward those targets. by following the recommendations of the
efficiency of our processes. Task Force on Climate-related Financial
With our revised target of 520 kg CO2/tonne Disclosures (TCFD). We will continue to
We measure our climate goal in terms of by 2030, we remain the most ambitious monitor developments and update our
reduced net CO2 emissions (measured in company in our sector. We are still scenario planning in line with the TCFD
kilograms of CO2 per tonne of cementitious committed to reducing emission levels in recommendations.
material, or kg CO2/tonne). Our current 2030 line with a 2 degree scenario, as agreed
emissions reduction target of 40 percent at the COP21 world climate conference
CO2 emissions overview: our 2018 performance
135 million 8 million 22 million
tCO2/year tCO2/year tCO2/year
Scope 1: Direct emissions from our Scope 2: Indirect emissions from the Scope 31: Other indirect emissions
operations: decarbonation of raw materials generation of purchased electricity assessed (extraction and production of
and fuel consumption for cement consumed in the company’s owned or purchased materials and fuels, transport-
production and on-site power generation. controlled equipment. related activities in vehicles, employee
commuting).
Our CO2 reporting is aligned with the WBCSD-CSI | GCCA CO2 Accounting and Reporting Standard for the Cement Industry
and aligned with TCFD recommendations on data disclosure. Further details can be found in our performance data tables and
CDP disclosure.
2018
1
LafargeHolcim’s Scope 3 emissions have been assessed according to WBCSD-CSI Scope 3 methodology. For this purpose, we assessed the most significant of our
suppliers’ emissions due to clinker bought and used in the production process during 2018. We also consider fuel- and energy-related activities (not included in
Scope 1 and 2), upstream and downstream transportation and distribution, business travel and employee commuting.
LafargeHolcim Sustainability Report 2018 Climate and energy 23Climate and energy
continued
Progress toward target average of 28 percent of constituents to providing a solution to the growing waste
In 2018, our net CO2 emissions per tonne replace clinker, resulting in one of disposal problems faced by society, and
of cementitious material decreased to the lowest levels of clinker content in helping to keep fossil fuels in the ground.
576 kg CO2/tonne, a 1 percent reduction the sector. At the same time they help to reduce
from 2017 and equal to a 25 percent our CO2 emissions, as most of them emit
reduction compared with 1990 emissions. While we aim to further reduce our clinker less CO2 than traditional fuels. Other
This exceeds our year-on-year reduction factor, the limited availability of mineral sources, such as biomass, are considered
objective and positions us well to deliver components in some markets, or the carbon neutral.
our new carbon reduction target of absence of specific product properties in
520 kg CO2/tonne by 2030. others, act as limiting factors. In markets Energy efficiency
where these factors are favorable, our Cement production is an energy-intensive
Our actions replacement rates have reached 50 percent. process. Energy costs and security of
supply are key business drivers. Improving
Clinker substitution Waste-derived fuels and biomass our energy efficiency reduces the carbon
It is during the production of clinker, the Another key way to reduce the carbon intensity of our products and lowers our
main component of cement, when most intensity of our cement production is to production costs.
CO2 emissions associated with cement use pretreated waste and low-carbon fuels.
occur. The majority of these emissions These serve as a replacement for fossil We have reduced our energy consumption
are unavoidable, as they result from the fuels that provide the energy needed to per tonne of clinker to 3,518 megajoules in
chemical reaction that occurs when the raw operate a cement kiln. 2018 (1990: 4,532 megajoules), among the
material (limestone) calcinates into clinker lowest rates in the sector. Since 1990, we
in the kiln. This decarbonation process We currently source 18 percent of our have increased our cement production
is our largest source of CO2 emissions, energy from alternative fuels, low- by around 79 percent, while our annual
accounting for 68 percent of our total carbon fuels and biomass. In some of our energy consumption has increased by
Scope 1 emissions in cement production. operations, we have been able to meet just 18 percent.
90 percent of our energy requirements
Replacing the clinker in our final cement with alternative fuels, but we also Our cement manufacturing facilities
products with alternative mineral acknowledge our potential to increase alone account for around 85 percent of
components such as pozzolan, slag or this rate significantly in the coming years. LafargeHolcim’s total energy consumption.
fly ash reduces the carbon intensity (See further information on our Geocycle Our technical center of expertise – the
of the cement. A significant portion of operations on page 31). Cement Excellence Manufacturing team,
these constituents come from waste based in Holderbank, Switzerland – is
or byproducts recovered from other Using these alternative energy sources responsible for monitoring and optimizing
industries. Currently, our products use an diverts waste from incineration or landfill, all Group cement operations, including
energy efficiency.
Specific net CO2
(kg CO2/tonne cementitious)
25%
reduction
since 1990
585
582
576
2016 2017 2018
In 2018 we co-processed over 465,000 tonnes
of old tires.
24Renewable electrical energy Carbon capture and low-carbon products We have significantly invested in the
and on-site electricity generation Innovation has played, and will development of low-carbon solutions, led
In 2018, we continued to expand our continue to play an important role in by our R&D center in Lyon, France. Thanks
renewable energy portfolio. We invested in reducing emissions from the cement to this commitment, today we have a broad
or purchased renewable power when it was and construction sectors. We are portfolio of low-carbon projects – including
economically advantageous, and optimized continuously exploring new strategies low-carbon clinker, cement, concrete, and
our low-carbon power-producing assets and technologies, such as carbon capture binders – and we are seeking opportunities
(such as waste heat recovery units) across and usage or storage. LafargeHolcim is in carbon sequestration. (For more
our production plant portfolio. working on several projects with different information on our innovation program
partners to test and demonstrate new and products, please see the “Creating
We are also investigating opportunities for breakthrough technologies for the future value” chapter on page 18).
generating renewable energy by using our of carbon capture.
land for wind turbines or solar panel farms.
For example, ACC in India has started using
solar power in the cement manufacturing
process at its grinding units at Kudithini
and Thondebhavi in Karnataka. We intend
to use about 30 megawatts of solar power
at these plants, to meet more than half of
their annual power requirement. Switching
to solar power will reduce CO2 emissions
by 38,000 tonnes a year – the equivalent
of planting 45,000 trees and saving
90 million liters of water – by avoiding the
consumption of coal-fired electricity.
(See also the case study on wind energy
on page 29.)
Transport efficiency
When transporting the products we
manufacture, we aim to use low-fuel-
intensity options, such as rail, wherever
possible. Our trading division also has
well-established routes to transport
intermediate and final products by boat
or barge. Nonetheless, road transport
remains our principal logistics method.
We have initiatives in place to optimize
road transport operations. With our
in-vehicle monitoring systems (IVMSs), we
monitor critical aspects of driver behavior
such as speeding, harsh acceleration
and braking, and excessive cornering. In
Europe, the IVMS is complemented with
a load optimization initiative that aims
to minimize and, when possible, avoid
empty trips. These measures not only
have a significant impact on reducing fuel
consumption, but also improve our road
safety performance and customer service.
Nante de Drance Dam, Switzerland
Construction on the power plant began in 2008
and it has an installed capacity of 900 MW.
LafargeHolcim Sustainability Report 2018 Climate and energy 25Climate and energy
continued
Our advocacy: Carbon pricing We engage proactively and transparently The identification, assessment and
mechanisms with governments and other external effective management of climate-related
In implementing our CO2 reduction plan, stakeholders on climate policies and risks and opportunities are fully embedded
we focus on countries where a relevant carbon pricing mechanisms. We support in our risk management process, and
value is placed on carbon efficiency, the use of carbon pricing as a means to subject to continuous improvement.
such as emissions trading or comparable incentivize the uptake of innovative low-
regulations. For example, in 2018, against carbon solutions and ensure a level playing In the table below we map where the
the backdrop of the revised Phase 4 of the field across geographies and among recommended TCFD disclosures can be
EU Emissions Trading Scheme, we began industries. We advocate for stable, fair and found in our mainstream reports. We will
a project to optimize our CO2 emissions consistent policy frameworks. continue to enhance our disclosures in
performance in Europe, with clear targets, future reporting cycles.
actions and accountabilities. Task Force on Climate-related
Financial Disclosures Additional metrics and targets are detailed
Increases in carbon pricing can have a As a leading business committed to in our submissions to CDP. Documents are
significant impact on our company as a ensuring transparency and action around available on www.cdp.net.
large carbon emitter. In the short term, climate-related risks and opportunities, we
the evolving legislative environment on support the voluntary recommendations of
greenhouse gas emissions could impact the Financial Stability Board TCFD.
around one third of our existing clinker
production.
Task Force on Climate-related Financial Disclosures alignment
GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS
Disclose the organization’s Disclose the actual and potential Disclose how the organization Disclose the metrics and targets
governance around climate impacts of climate-related identifies, assesses, and used to assess and manage
related risks and opportunities. risks and opportunities on manages climate-related risks. relevant climate-related risks
the organization’s businesses, and opportunities where
strategy, and financial planning such information is material.
where such information
is material.
Board oversight Risk and opportunities CO2 risk identification Reporting CO2 metrics
AR page: 67, 96 AR page: 71 AR page: 66, 71 AR page: 46
SR page: 15, 63 SR page: 3, 23, 24, 65
Management’s role Link to financial planning CO2 risk management Details Scope 1, 2 and 3
AR page: 67 AR page: 71 AR page: 67, 71 SR page: 23
SR page: 63 SR page: 24, 25
Scenario planning Integration into overall risk CO2 targets
AR page: 71 AR page: 98 AR page: 46
SR page: 23 SR page: 16, 17, 23
AR – LafargeHolcim Annual Report 2018
SR – LafargeHolcim Sustainability Report 2018
26Concrete absorbs CO2 during in the air, but also in secondary These can include weather (rain and
its life cycle products such as crushed concrete used moisture), surface coatings, surfaces under
as a base course for a road. Recent studies2 water and soil, and the quality of concrete.
demonstrate that more than 20% of the Current regulations and GHG inventories
In addition to our range of measures
CO2 emissions from the manufacturing guidelines do not yet consider the effects
taken to reduce our carbon emissions,
of clinker can be reabsorbed by concrete of carbonation. LafargeHolcim continues
our final product, concrete, absorbs
structures and secondary concrete to collaborate with industry peers and key
significant amounts of CO2 from the
products. stakeholders to incorporate this aspect
atmosphere during its life cycle. This
into existing GHG inventory and life cycle
process is called “carbonation” and results
The impacts of carbonation are an assessment methodologies.
from the reaction between the CO2
important parameter to be considered
present in the air with hydrated cement
when comparing the carbon performance
phases in concrete.
of different building materials over the life
cycle. Calculation models of CO2 uptake in
Carbonation is a slow process that can Ready-mix concrete trucks loading
concrete are complex and involve many Concrete can absorb more than 20% of CO2
last for many years and takes place not
different factors controlling the uptake. emissions from clinker manufacturing.
only in concrete surfaces exposed to CO2
2 CO2 uptake in cement-containing products: Background and calculation models for IPCC implementation.
LafargeHolcim Sustainability Report 2018 Climate and energy 27Climate and energy
continued
Lafarge Paulding Cement Plant expected to generate more than 12 million Supporting SDGs
becomes the first LafargeHolcim kilowatt hours a year, enough to power
operation in North America to approximately 1,200 average households,3
harness wind energy and should eliminate the equivalent of at
least 9,000 tonnes of CO2.
In November 2018, LafargeHolcim
announced plans to build three wind To contribute to the community
turbines to help power its cement plant surrounding the Paulding plant,
in Paulding, Ohio. Adding the turbines we are creating three $5,000 Megawatt
is part of our commitment to improving Scholarships (one per turbine) to be
manufacturing operations, controlling awarded each year the turbines are in
costs and operating sustainably. operation. The scholarships will be given
Construction began in December to local high-school graduates pursuing
2018, in partnership with One Energy, a two- or four-year degree in a STEM Paulding, Ohio, USA
a local wind energy developer and (science, technology, engineering and Wind energy project inauguration
operator. The three turbines are mathematics) subject. at the cement plant.
3 According to the U.S. Energy Information Administration.
28Harnessing the wind in Morocco plant supplies its own wind energy, the
rest was obtained through purchase
Echoing a sentiment felt across the agreements with local wind energy
company, LafargeHolcim in Morocco partners. In 2018, the substitution rate
is convinced that growth and reached 75 percent (8 percent of which was
competitiveness rely on reducing costs, as provided by Tétouan’s wind farm), reaching
the investment in renewable energy over a record high of 97 percent in August.
the last 13 years demonstrates.
Our current wind energy purchase
The Tétouan plant is the first cement agreements supply about 70 percent of our
plant in the world to have its own annual electrical energy needs, but we plan
wind farm. Opened in 2005, with two to increase this to 90 percent by 2020.
extensions in 2008, the plant’s total
capacity is now 32 megawatts. The
motivation to switch to wind power was Supporting SDGs
driven by a desire to lower CO2 emissions
and reduce energy costs, as wind power
is less expensive than energy from the
national provider.
During the past few years, fossil fuel-
based energy has been substituted by
wind power at all nine plants in Morocco.
In 2017, the country achieved 60 percent Morocco
electrical substitution. While the Tétouan Tétouan plant wind farm.
The UN Sustainable Development Goals
SDG 7: Affordable and SDG 9: Industry, SDG 13: Climate action SDG 17: Partnerships
clean energy innovation and Our targets to reduce for the goals
Our use of waste as an infrastructure carbon intensity, Our partnerships with
energy source and our Our solutions for promotion of sustainable initiatives such as the Energy
use of renewable energy sustainable and efficient construction, and Efficiency in Buildings
sources contribute to infrastructure and the innovative solutions Coalition and membership
this goal. most advanced R&D contribute to this goal. of organizations such as the
capability in the sector World Business Council for
contribute to this goal. Sustainable Development and
GCCA contribute to this goal.
LafargeHolcim Sustainability Report 2018 Climate and energy 29Using alternative resources 31
economy
Circular
Co-processing 31
Sustainable construction
and solutions 31
Ocean plastics 34
52 million
tonnes of waste materials reused
in our operations
28%
constituents used to
replace clinker
30Circular economy
52 million tonnes of waste materials reused – a new record.
In 2018, we reused 52 million tonnes of Co-processing Sustainable construction and solutions
waste materials in our operations. By 2030, Co-processing is a secure and recognized Population growth, rising living standards and
we aim to increase that to 80 million tonnes. form of waste management. It fully recovers greater urbanization offer significant business
And in our Aggregates, Ready-Mix Concrete the energy and recycles mineral content opportunities for LafargeHolcim. At the same
and Asphalt businesses we use around from waste in the cement manufacturing time, these trends bring major challenges
11 million tonnes of recycled material per process. We co-process many types of for the planet. Issues like climate change and
year (mostly recycled aggregates) to make waste, including solid shredded waste increasing demand for limited resources, such
our products. At some sites this represents from industrial and municipal origin, as materials and land, require companies to
more than 90 percent of the material used. spent solvents, used tires, waste oils, go beyond “business as usual,” innovate their
contaminated soils, industrial and sewage solution portfolio and, ultimately, consider
In our vision for 2050, the built environment sludges and demolition waste. Increasingly, alternative business models.
is fully recyclable, with maximum recycled we are processing non-recyclable plastic
content. In line with this, we are exploring and are making a conscious effort to reduce As a response, we have developed a range
ways to close the loop of sustainable plastic leakage into the ocean. In 2018, of sustainable solutions, which in 2018
sourcing, using and reusing of materials. the company repurposed an estimated represented 11 percent of net sales, including
We approach building from a circular two million tonnes of plastic waste in its several related to the circular economy
economy perspective, aiming to reuse plants. In addition, LafargeHolcim launched and recycling. However, there needs to be
construction and recycle demolition specific waste management solutions in increased customer acceptance of these,
waste. And, as a global leader in building Mexico, the Philippines, Egypt and Morocco and the adoption of progressive regulatory
materials, we can offer recycled solutions where marine plastic littering is a major and building standards, to drive increasing
(such as aggneo® recycled aggregates) concern to help reduce plastic leakage into demand for these sustainable solutions.
to our customers. the ocean. We help selected municipalities
improve their solid waste management As an example, construction and demolition
We also focus on managing industrial, systems, which is the most effective way to waste (CDW) can be recycled into new
agricultural and municipal waste through prevent marine litter. In these four target structural concrete, if there are strict quality
co-processing in cement kilns and countries we have started to establish control processes in place. Indeed, it is
replacing clinker with waste-derived collection and recovery systems for waste both ecologically and economically positive.
mineral components. This enables fractions particularly prone to become However, virgin aggregates are too cheap,
recovery of energy and recycling of marine litter, focusing on the involvement and the general perception of recycled
materials from waste. of the informal waste sector, raising concrete is poor, with both the public and
awareness and establishing policy dialogues customers believing it is less resilient,
Replacing clinker with industrial and regulatory frameworks (see case study more expensive and of lower quality.
byproducts on page 34). Another big hurdle is the lack of standards
Our operations use the byproducts of covering concrete recycling. However, with
other industrial processes, such as fly ash Through our wholly owned waste the correct regulatory encouragement,
from the power industry and blast furnace management services company Geocycle, progress is possible. For example, the city
slag from the iron and steel industry, to we continue to innovate with energy of Zürich launched an awareness campaign,
replace clinker in the final cement product. recovery and materials recycling throughout backed by technical studies and guidance,
We do this where it is geographically the cement manufacturing process. At and set minimum requirements for recycled
and economically feasible and where Geocycle, we offer safe, ecologically sound concrete in all its construction projects.
these materials are available. We are also waste management solutions, applying
exploring increasing the use of other the highest international standards – The European Union mandate that
materials as a replacement for clinker, including German development agency countries must be capable of recycling at
such as the “fines” from construction waste GIZ guidelines on co-processing waste least 70 percent of their CDW by 2020 is a
and calcined clay. Currently, the products and the Basel Convention – for superior further incentive to drive these sustainable
we market use, on average, 28 percent governance and performance. solutions. LafargeHolcim’s aggneo® solution
constituents to replace clinker, a significant is well placed to meet the anticipated
proportion of which come from waste or In 2018, we co-processed around 11 million growth in demand. Read more about the
recovered byproducts. tonnes of waste, providing 18 percent of our Geocycle solutions for CDW in Retznei,
thermal energy demand for clinker. Austria (see case study on page 32).
LafargeHolcim Sustainability Report 2018 Circular economy 31Circular economy
continued
Circular economy at work – community for the heating of buildings. By implementing this solution, Geocycle
management of construction and With the Geocycle Recycling Center, demonstrates that it can contribute
demolition waste the team is also setting a standard in to achieving the EU’s ambitious target.
recycling CDW. The company will continue to give a
LafargeHolcim continuously develops second life to discarded demolition
new business models that address waste By 2020, the European Union has materials and reduce the CDW going
challenges. One such case is Geocycle mandated that countries must be capable to landfills. This initiative has also
Austria, which is developing innovative of recycling at least 70 percent of their been recognized as a circular economy
solutions for construction and demolition CDW waste. Out of the total CDW coming best practice by the European Circular
waste (CDW). to the Geocycle Recycling Center, Economy Industry Platform.
35 percent is co-processed in our cement,
The Geocycle Recycling Center in Retznei, while another 35 percent is treated
Austria processes 130,000 tonnes of and used as recycled aggregates by
CDW every year. Geocycle, in cooperation construction companies. The remaining
with the biggest aggregate and concrete unrecyclable 30 percent is used as
partner in Austria, processes this waste backfilling material for the cement
and renders it reusable. plant quarry.
Supporting SDG
Our cement plant in Retznei is setting While we provide cement for construction
new benchmarks in recycling and through our manufacturing facilities, we
recovery, and the majority of the energy also offer a deconstruction and sorting
used by the plant is recovered from local service for CDW, and ensure it is recycled
pretreated waste. In addition, the waste at the Geocycle Recycling Center. This
heat from the kiln is reused by the local approach truly brings the circular economy
to life by closing the CDW loop.
Retznei, Austria
CDW being prepared.
32Advancing sustainability
jury meetings. This network connects our methods in Niger and a community-driven
along the value chain of the Group to the drivers and decision-makers, neighborhood engagement project in
construction industry – the architects and designers, engineers, urban Detroit, USA. The winners were selected
LafargeHolcim Foundation for planners, contractors, NGOs and authorities, from more than 5,000 entries received
Sustainable Construction in addition to researchers and students of from 121 countries. The next Awards will be
the respective disciplines. open for submission from June 2019 until
The LafargeHolcim Foundation for February 2020.
Sustainable Construction plays an Expert conferences on
important role in promoting a greater sustainable construction More about the LafargeHolcim
focus on sustainability across the life The Foundation’s activities operate in Foundation and its activities at:
cycle of structures – from design to three-year cycles. Each cycle commences www.lafargeholcim-foundation.org
construction, use and maintenance, with an international symposium on
through to removal and recycling. The a contemporary theme of sustainable
Foundation enables us to interact with construction, bringing together Supporting SDGs
stakeholders along the value chain of construction professionals and specialists
our industry and encourage sustainable to exchange knowledge. The next cycle will
responses to the technological, begin in 2019 with a symposium on “Re-
environmental, socioeconomic and materializing construction” at the American
cultural issues affecting building University in Cairo, Egypt.
and construction.
LafargeHolcim Awards competition
To advance and endorse sustainable The Foundation also conducts the world’s
construction at national, regional and most significant competition for sustainable Reinterpreted construction traditions and new
global levels, our Foundation has created a design – the LafargeHolcim Awards. In techniques using renewable resources created
a community center open to all in the village of
unique and extensive network of renowned 2018, Global LafargeHolcim Awards were
Dandaji, Niger. The project, by Yasaman Esamili
experts. These include some of the world’s presented to a publicly accessible water (Iran) and Mariam Kamara (Niger), was honored
leading technical universities, which host infrastructure project in Mexico City, a village with a Global LafargeHolcim Award in 2018.
the Foundation’s symposiums and Awards complex supporting traditional construction (Photo: James Wang)
LafargeHolcim Sustainability Report 2018 Circular economy 33Circular economy
continued
Keeping plastic out of oceans Initiated in four urban areas in Egypt,
Mexico, Morocco and the Philippines, the
At least eight million tonnes of plastics project aims to create sustainable systems
leak into the ocean each year. If for collection and recovery of different
significant and timely action is not taken, types of plastic waste that form the main
there may be more plastic than fish in the volume of marine litter.
ocean (by weight) by 2050.
To effectively address the issue of marine
littering, it is important to stem this flow
through land-based interventions. Supporting SDG
Geocycle has launched a project to
address the issue of marine littering, with
the aim of establishing environmentally
and socially sound solutions for reducing
plastic leakage into the oceans. In 2018,
around two million tonnes of plastic
waste have been treated in our cement
kilns. We are committed to increase
these volumes by actively growing the
processing of plastic waste.
Bulacan, Philippines
Material ready for co-processing in cement kiln.
The UN Sustainable Development Goals
SDG 6: Affordable and SDG 12: Responsible SDG 13: Climate SDG 14: Life below SDG 17: Partnerships
clean energy consumption and action water for the goals
Our water production Our commitment Our programs to Our collaboration with
management The use of waste- to demonstrating prevent plastics academic partners to
programs and targets derived resources a positive global leaking into the promote sustainable
contribute to this goal. as alternative fuel change for biodiversity oceans contribute construction
and raw material contributes to this goal. contributes to
sources contributes to this goal. this goal.
to this goal.
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