Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Increased reuse of byproducts from production processes.
• Achieved 31% reuse of waste materials in 2019, with ecogravilla being the primary reused material.
• Met the goal of collecting 325,000 tons of domestic scrap metal.

Social Achievements

• Obtained the Socially Responsible Company - DESR distinction for the second consecutive year.
• Won the National 5S Award for the third consecutive year.
• Implemented a corporate volunteer program.

Governance Achievements

• Strengthened anti-corruption management throughout the company.
• 100% of key personnel were sensitized about the code against acts of fraud and corruption and the code of ethics.
• Created an Ethics Committee.

Climate Goals & Targets

Environmental Challenges

• Identified 41 risks related to corruption.
• Received a complaint of denigrating advertising (under investigation).

Mitigation Strategies

• Implemented an anti-corruption management approach starting from the Board of Directors and Senior Management.
• Established an Ethics Line managed by Ernst & Young (EY).
• Implemented a Crime Prevention Model.

Supply Chain Management

Supplier Audits: 7 new suppliers evaluated in 2019 (3% of total)

Responsible Procurement

• Prioritization of local suppliers
• Policy of Corporate Purchases
• Supplier declaration of compliance with regulations

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI (Essential)

Certifications: ISO 9001, ISO 14001, ISO 45001, ISO 17025

Third-party Assurance: External auditor

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Eco-blocks

Awards & Recognition

• Socially Responsible Company - DESR distinction
• National 5S Award
• Silver Award in the Leaders of Excellence Quality Competition

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced water consumption by 40% per ton of steel
• Processed nearly 15,000 tons of zinc oxide from steel dust (7 times more than in 2021)
• Received the "Perú Limpio" seal for complying with the Clean Production Agreement
• Acería #2's electric furnace allows for more efficient energy consumption and water recovery system for washing gravel filters.

Social Achievements

• Implemented a trainee program for female engineers ("Ingenieras de Acero")
• Created a new distribution center in Lurín (25 hectares)
• Opened a shaped tubes and profiles plant in Bolivia
• Hired a business unit manager in Ecuador to start commercial activities
• Launched two product lines (profiles and nails) in Colombia
• Received the DESR award for Socially Responsible Company for the fifth consecutive year

Governance Achievements

• Joined the UN Global Compact
• Maintained membership in the Dow Jones MILA Pacific Alliance Index for 3 consecutive years and achieved Top 5% global distinction
• Implemented an anti-bribery management system in line with ISO 37001 standards (applying for certification in 2023)
• Implemented a protocol for interaction with public officials
• Implemented a more comprehensive donation management process
• Acquired a new online tool to strengthen due diligence with business partners
• Strengthened ethical guidelines training for employees

Climate Goals & Targets

Environmental Challenges

• Higher costs of raw materials and products sold resulting in lower gross profit
• Contraction of markets due to reduced economic activity
• Increased financial expenses due to higher working capital requirements, higher interest rates, and the recording of lease interest for the new steel mill
• Uncertainty in the political climate affecting sales estimations for 2023

Mitigation Strategies

• Implemented cost reduction strategies through efficient energy and water consumption
• Focused on increasing productivity and availability of raw materials for Acería #2
• Implemented automation of processes and innovation
• Strengthened customer service
• Continued internationalization process
• Improved quality of products and processes
• Minimized the gap between assets and liabilities denominated in dollars to mitigate the impact of exchange rate fluctuations

Supply Chain Management

Supplier Audits: 33 suppliers evaluated in 2022 (17 strategic, 16 corporate)

Responsible Procurement

• Code of Ethics for Suppliers and Contractors
• ESG criteria included in supplier selection and evaluation (13% weight)
• Prioritization of environmentally friendly products
• Supplier training on the use of the supplier portal

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products and processes

Reporting Standards

Frameworks Used: GRI Standards 2021, UN Sustainable Development Goals (SDGs)

Certifications: ISO 9001, ISO 14001, ISO 45001, Authorized Economic Operator (OEA)

Third-party Assurance: Lloyd’s Register (2019, 2020); SGS del Perú (2021)

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 9 (Industry, Innovation, and Infrastructure)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)
• Goal 8 (Decent Work and Economic Growth)
• Goal 4 (Quality Education)
• Goal 3 (Good Health and Well-being)

Initiatives contribute to these goals through sustainable practices, community development, and employee well-being programs.

Sustainable Products & Innovation

• Ecoblocks
• Zinc oxide from steel dust

Awards & Recognition

• Dow Jones Sustainability Index – MILA Pacific Alliance (3 consecutive years)
• S&P Global Sustainability Yearbook 2023
• Top 5% S&P Global ESG Score 2022
• Perú Limpio seal
• Great Place To Work® certification
• DESR award (5 consecutive years)

Environmental Metrics

ESG Focus Areas

• Research, development and innovation
• Corporate governance and risk management
• ESG Supply Chain Management
• Response to climate change and energy management
• Adoption of circular economy and waste management
• Water management
• Strengthening occupational health and safety
• Relationship with clients
• Talent management
• Protection of human rights
• Promoting diversity and equal opportunity

Environmental Achievements

• Aceros Arequipa stands out as one of the steel mills with the lowest carbon footprint worldwide, at less than 0.5 tons of CO2 equivalent per ton of liquid steel.
• Implementation of more sustainable processes and technologies has made it possible to reduce dependence on natural resources and reduce the consumption of non-recycled raw materials.
• Reduction of GHGs in the environment through the use of cleaner technologies by the company and throughout its value chain.

Social Achievements

• Strengthened its suggestions program, encouraging the active participation of employees in identifying opportunities to improve customer satisfaction.
• Implemented comprehensive programs for developing employees' skills, providing significant opportunities for growth within the organization.
• Implementation of the due diligence model comprehensively supports our commitment, generating awareness and promoting responsible practices at every stage in our operations.

Governance Achievements

• Implementation of rules, processes and principles that guide the company's governing bodies in making efficient decisions for the integral management of the company.
• Ethical awareness and training programs were implemented, with robust incident response protocols established.
• Aceros Arequipa has a system of governance and ethics; we have a Code of Ethics, a Code to Combat Acts of fraud, a Prevention Model, and an Anti-bribery Management System.

Climate Goals & Targets

Environmental Challenges

• Disruption to the flow of operations due to interruptions in the supply of raw materials
• Weak reputation due to leakage of private information or non-compliance with good practices or breaches of the code of ethics
• Violation of the human rights of workers of strategic partners (outsourcing and suppliers)
• Accelerating climate change, driving changes in regulations related to climate change that result in high costs
• Increase in industrial by-products
• Accelerated depletion of water resources due to uncontrolled water use
• Increased occupational health and safety risks
• Loss of customers and decrease in sales due to poor service or dissatisfaction
• Increased turnover, loss of employment, lack of employee growth, generating a bad working environment and economic losses

Mitigation Strategies

• A comprehensive supply chain management strategy has been implemented, ensuring a timely and efficient supply of raw materials.
• Ethical awareness and training programs were implemented, with robust incident response protocols established.
• Rigorous supplier evaluation and monitoring programs have been implemented through periodic audit protocols, which include the review of employment conditions and compliance with ethical and human rights regulations.
• As part of its strategy to reduce its carbon footprint, Aceros Arequipa has established mandatory purchasing requirements for technologies used in the industry.
• Strengthen measures for the identification and use of industrial by-products at all stages of the value chain.
• To strengthen water availability, we have entered into a contract for the supply of desalinated seawater for our operations at the Steel Complex.
• A solid occupational health and safety policy has been established, as well as the implementation of internal occupational health and safety regulations.
• The introduction of a corporate digital transformation initiative and significant investment in technological development have allowed us to effectively incorporate customer needs into an agile and digital service.
• We have implemented comprehensive programs for developing employees' skills, providing significant opportunities for growth within the organization.

Supply Chain Management

Responsible Procurement

• Rigorous supplier evaluation and monitoring programs have been implemented through periodic audit protocols, which include the review of employment conditions and compliance with ethical and human rights regulations.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards

Certifications: ISO 9001, ISO 14001, ISO 45001, ISO 37001

Third-party Assurance: SGS del PERU S.A.C.

Awards & Recognition

• Distinction of Company with Sustainable Management from Sustainable Peru