Climate Change Data

Environmental Metrics

ESG Focus Areas

• Social Responsibility
• Human Resources
• Environmental Protection

Environmental Achievements

• Decreased cardboard waste in product packaging.
• Alamo and Santa Anita ranches recognized as Wildlife Management Units by the Ministry of Environment and Natural Resources.

Social Achievements

• Alliance with "Casa de la Amistad para niños con cáncer" to support children with cancer.
• Support provided to 26 charitable institutions, feeding over 4,530 children, elderly, and disabled people.
• More than 129,500 man-hours of training provided in over 70 courses.
• Improved productivity without reducing workforce.
• Reduced accounts receivable days by 7% and inventory days by 44%.

Governance Achievements

• Implementation and training on the ERP SAP system, improving efficiency and productivity.

Climate Goals & Targets

Environmental Challenges

• Severe impact of the international financial crisis on Mexico, including unprecedented GDP fall, record unemployment, and low consumer confidence.
• Outbreak of influenza A/H1N1, aggravating economic downturn and impacting sales.
• Increase in raw material costs and rise in exchange rate.

Mitigation Strategies

• Actions implemented to counteract the effects of the crisis, substantially reducing costs and expenses, and increasing operating efficiency.
• Improved productivity without reducing the workforce.
• Increased efficiency in operation by reducing accounts receivable days and inventory days.
• Strengthened financial capability by reducing bank liabilities.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Social Responsibility

Social Achievements

• Launched Socio Sports Schools program in alliance with Real Madrid Foundation, with over 700 participants by the end of 2012.
• Donated over 2 tons of food and supported health and environmental programs through collaborations with private and public organizations.
• Held the Sixth Health and Safety Week 2012, providing health screenings and educational talks.
• Provided a corneal implant for a child in need.

Governance Achievements

• Implemented a Money Laundering Prevention System in Vextor.

Climate Goals & Targets

Environmental Challenges

• Market pressures and increased raw material prices (meat and milk) leading to higher production costs.
• Uncertainty in global markets due to fiscal problems and unemployment in Europe and the United States.

Mitigation Strategies

• Corporate restructuring to exit the livestock feed business (low profitability).
• Focus on products with higher profitability.
• Investment in infrastructure and modernization of production lines ($300 million pesos).
• Implementation of a change process in Vextor to improve operational efficiency and focus on results.
• Strengthening of human capital in Vextor through new positions, training programs, and compliance with legal requirements.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Third-party Assurance: Galaz, Yamazaki, Ruiz Urquiza, S.C. (Deloitte Touche Tohmatsu)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions by approximately 2,300 tons annually through B Energy plant.
• Invested in renewable energy technologies such as LED and solar panels.
• Participated in reforestation and donated a water treatment plant.

Social Achievements

• Implemented Escuelas Socio-Deportivas program benefiting 13,500 children.
• Launched ANSPAC Mujer program supporting over 1,851 women.
• Provided 4,530,654 meals through Fundación Grupo Bafar.

Governance Achievements

• Established a Code of Ethics and grievance mechanisms.
• Implemented a compensation plan based on shares to incentivize employee loyalty.
• Formed FIBRA NOVA, a real estate investment trust.

Climate Goals & Targets

Environmental Challenges

• Volatility in commodity prices for meat and other raw materials.
• Fluctuations in exchange rates and interest rates.
• Risks related to Mexico's economic and political environment.

Mitigation Strategies

• Strategic purchasing of products when prices are low.
• Use of financial instruments to hedge against exchange rate and interest rate risks.
• Maintaining appropriate reserves and banking facilities.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards 2016 (reference)

Third-party Assurance: Vert, Desarrollo Sustentable (limited assurance)

Awards & Recognition

• Premio Nacional de Mercadotecnia (2003)
• Premio Nacional Agroalimentario (2007)
• Premio Nacional Agroindustrial (2007)
• Las 10 grandes marcas de México (Sabori, 2008)
• Galardón Tameme (2008)
• Premio Nacional de Calidad y Competitividad (2008)
• Premio Nacional de Tecnología (2008)
• Empresa Mexicana del Año (2010)
• Certificación UCON (2010)
• Máster de Oro Institucional (2010)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Implemented a Wastewater Treatment Plant (PTAR) that reuses 95% of the water consumed in the Chihuahua plant.
• Reduced CO2 emissions by approximately 2,300 tons through the use of a tri-generation power plant.

Social Achievements

• Provided scholarships to 19,300 children and benefited 1.6 million families through the socio-sports schools program.
• Renewed a strategic agreement with Grupo Christus Muguerza, offering better benefits and discounts on healthcare services for thousands of employees and their families.
• Organized the annual "Famiolimpiada," an event that brought together more than 6,000 employees and their families.

Governance Achievements

• Consolidated all operations related to the consumption and retail sector under a single division, Bafar Alimentos.
• Launched a new financial product to provide meat financing to SME clients of its own stores through Vextor Activo.

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI

Third-party Assurance: Vert, Desarrollo Sustentable (limited assurance)

Sustainable Products & Innovation

• Sabori Al Natural® healthy product line
• Griller’s® quick line
• Own-brand biodegradable packaging

Awards & Recognition

• "La empresa más admirable" (Expansión Magazine)
• "Premio Nacional de Mercadotecnia"
• "Premio Nacional de Calidad y Competitividad"
• "Premio Nacional de Tecnología"
• "Galardón Tameme"
• "Las 10 grandes marcas de México" (Sabori®)
• "Premio Nacional Agroalimentario"
• "Empresa Mexicana del Año" (Latin American Quality Institute)
• "Certificación UCON"
• Effie Awards México 2017 (Bronze)

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Adverse global macroeconomic environment (recession since 2008, economic slowdown, oil price drops, geopolitical events, market uncertainty, currency volatility, commodity price volatility, liquidity shortage, reduced business activity, interest rate increases, loss of consumer confidence).
• Significant portion of operations concentrated in Mexico, making the company vulnerable to the Mexican economy's performance.
• Exposure to economic, legal, and regulatory risks (currency controls, inflation, barriers to entry, changes in labor and tax laws, exchange rate fluctuations, interest rates, inflation, social stability, political and socio-economic events).
• Potential for increased operating costs or operational restrictions due to new laws, regulations, or stricter enforcement.
• Variations in employment and wage levels affecting consumer income and sales.
• Changes in consumer purchasing power and economic conditions impacting sales.
• Fluctuations in interest rates, labor costs, and other factors affecting consumer purchasing power.
• Organized crime affecting business activity in Mexico.
• Highly competitive industry with numerous regional, national, and international competitors.
• Increased competition potentially reducing market share or forcing price reductions and increased promotional spending.
• Competitors introducing new or similar products, potentially decreasing consumption of Grupo Bafar's products.
• Inability to maintain pricing structure and keep pace with competitors' product and process innovations.
• Consolidation of retail channels increasing the bargaining power of supermarkets.
• Deterioration in sales performance of supermarket chains affecting Grupo Bafar's results.
• Supermarket chains favoring competitors' products.
• Supermarket chains leveraging their power to negotiate better prices, change policies, promote private labels, or modify business or payment terms.
• Constant involvement in litigation from ordinary operations (class-action lawsuits, labor disputes, antitrust, securities, environmental issues).
• Litigation costs and negative publicity potentially affecting brand reputation and consumer preference.
• Sophisticated IT systems vulnerable to disruptions from natural disasters, fires, power outages, and telecommunications failures.
• IT system failures potentially disrupting operations and adversely affecting results.
• Credit agreements requiring maintaining specific financial ratios (Debt/EBITDA, EBITDA/Interest, EBITDA/Debt Service).
• Failure to meet these ratios could lead to early termination of credit lines.
• Cross-default provisions in debt instruments.
• Inability to obtain waivers or consent to avoid termination of credit lines.
• Financial obligations limiting the ability to make strategic investments or capitalize on market opportunities.
• Transactions in foreign currency (primarily US dollars) creating exposure to exchange rate fluctuations.
• Exposure to interest rate risk due to loans with both fixed and variable interest rates.
• Risk of price fluctuations in raw materials (chicken, turkey, pork, fuel) due to supply and demand dynamics, exchange rate fluctuations, and cereal prices (used as animal feed).
• Increased global demand for cereals and fuel, reduced supply due to alternative uses, climate change, weather events, exchange rate volatility, geopolitical factors, export blockades, or health contingencies.
• Credit risk of counterparties failing to meet contractual obligations.
• Risk mitigation strategies include engaging only with solvent parties, obtaining sufficient collateral, and continuously monitoring creditworthiness.

Mitigation Strategies

• Maintaining an appropriate mix of fixed and variable rate loans to manage interest rate risk.
• Regularly evaluating hedging activities to align with interest rates and risk appetite.
• Strategic purchasing of products during periods of low price fluctuations.
• Transacting only with entities with approved risk ratings based on public financial information and commercial records.
• Continuously monitoring counterparty credit ratings and distributing transaction value among approved counterparties.
• Controlling credit exposure through counterparty limits reviewed and approved annually.
• For loans exceeding $100,000, transacting only with entities with investment-grade or higher credit ratings.
• Requiring all business loans to be authorized by the credit committee.
• Continuously evaluating the financial condition of receivables and obtaining credit insurance or mortgage guarantees when appropriate.
• Ensuring credit recovery by suspending the supply of raw materials and products in case of default.
• Using financial instruments to hedge risk exposures, governed by company policies approved by the Board of Directors.
• Regular internal audit reviews of compliance with policies and exposure limits.
• Not subscribing or trading financial instruments, including derivatives, for speculative purposes.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Third-party Assurance: Grupo Bursatil Mexicano SA de CV Casa de Bolsa

Environmental Metrics

ESG Focus Areas

• Labor Culture
• Community Development
• Environmental Licensing

Environmental Achievements

• The Agroindustrial Complex in La Piedad obtained the Single Environmental License.

Social Achievements

• Grupo Bafar was included in the Super Companies Ranking of Expansión magazine, which evaluates work culture.
• The food division was recognized by ANTAD with the Business Excellence Award.
• Fundación Grupo Bafar continues to support the development of communities in the face of the health contingency.

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• The pandemic implied changes in the purchasing behavior and preferences of our clients, which initially affected our sales volume.
• It brought volatility and uncertainty in the markets, causing increases in raw material prices and volatility in the exchange rate.
• It implied new forms of operation and organization to guarantee the safety of our collaborators, suppliers, and clients, all in a very short period of time.

Mitigation Strategies

• The company was able to face the challenges of an unprecedented situation on a global scale.
• The company capitalized on the strengths it had built over the years, achieving unprecedented results in the history of Grupo Bafar.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Super Companies Ranking of Expansión magazine
• Business Excellence Award from ANTAD

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Initiated a project to develop a robust and well-founded sustainable strategy. Published the first ESG report in accordance with GRI standards.

Social Achievements

• Fundación Grupo Bafar continued supporting community development through social programs, benefiting over 23,000 children through the Escuelas SocioDeportivas program in partnership with the Real Madrid Foundation. Delivered food packages and other aid to families in need.

Governance Achievements

• Strengthened corporate governance by promoting gender diversity in the board of directors. Added Gabriela Eugenia Sepúlveda Elizondo and Maria Ariza García Migoya as independent board members.

Climate Goals & Targets

Environmental Challenges

• Increased costs of raw materials
• Macroeconomic pressures
• Fluctuations in exchange rates

Mitigation Strategies

• Re-structuring of liabilities at more competitive rates
• Strengthening of brands in the national market
• Finding opportunities to excel despite macroeconomic pressures

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI

Awards & Recognition

• Honorable Mention, Ethics and Values Award, CONCAMIN

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Social Achievements

• Renewal of the Socio-Sports Schools program in alliance with the Real Madrid Foundation, benefiting over 22,800 children.
• Expansion of the Socio-Sports Schools program to new locations.
• Support provided to 550 new institutions through donations from CarneMart stores.
• Successful fourteenth edition of the "Famiolimpiada" event with 7,000 attendees.

Climate Goals & Targets

Environmental Challenges

• Complex and uncertain market conditions, both nationally and internationally.
• Increased interest rates due to inflationary pressures.
• Increased costs across all production chains.

Mitigation Strategies

• Focus on continuous improvement, digitized and automated processes, and strategic diversification.
• Refinancing of bank debt and expansion of the food division through a private placement with Prudential Private Capital.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI

Awards & Recognition

• Ranked 146th in Expansión magazine's "Top 500 Most Important Companies in Mexico"
• Included in the Súper Empresas 2022 ranking
• "Committed Company for Health" recognition from Fundación CIMA Chihuahua, A.C.

Environmental Metrics

ESG Focus Areas

• Ecoeficiencia
• Social Responsibility
• Governance

Environmental Achievements

• Reduction of 12,300 tons of CO2 monthly with the implementation of a natural gas pipeline in La Piedad plant.
• B-Energy, a subsidiary, supplies part of the thermal energy needs of the Chihuahua plant and produces approximately 8 megawatts of energy per hour through trigeneration processes, saving approximately 2,300 tons of CO2 annually.
• Implementation of a Wastewater Treatment Plant (PTAR) in Chihuahua plant that reuses a large percentage of the water consumed.

Social Achievements

• Alliance with the Real Madrid Foundation's “Socio-Deportivas Schools” program, supporting over 27,000 children in marginalized areas.
• Expansion of “Socio-Deportivas Schools” to two new locations in Mexico City through a partnership with the Dr. Simi Foundation, reaching a total of 21 schools in 4 states.
• 12th Golf Tournament "Une-T por Mejores Mexicanos" raised over $20 million pesos.

Governance Achievements

• Development of an ESG strategy with a focus on eco-efficiency.
• Publication of the second Sustainability Report in 2022 and the third in 2023.
• Implementation of a measurement tool with Diligent Corporation to improve the ESG data reporting process.

Climate Goals & Targets

Environmental Challenges

• Inflationary pressures and a global slowdown.
• Increased financing costs due to rising benchmark interest rates.
• Supply chain disruptions.
• High levels of corruption in Mexico.
• Climate-related risks (earthquakes, hurricanes, floods, droughts, power outages, health threats, water scarcity).
• Increased cargo theft.

Mitigation Strategies

• Rapid adaptation to market conditions.
• Diversification of suppliers.
• Strengthened health and safety measures.
• Implementation of internal controls to prevent corruption.
• Development of response plans for climate-related risks.
• Implementation of geolocation systems in the delivery fleet to recover stolen vehicles.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Diversified supplier base
• Supplier certifications (TIF, USDA, SQF, BRC, ISO 22000)

Climate-Related Risks & Opportunities

Physical Risks

• Earthquakes
• Hurricanes
• Floods
• Droughts
• Power outages
• Health threats
• Water scarcity

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: ISO 9001:2000, TIF 90, TIF 126, USDA, MAFF

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Honorable mention for Ethics and Values in Industry from the Confederation of Industrial Chambers of the United Mexican States